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What we’re covering this week -
It’s a quiet week here because of the Thanksgiving holiday. But action continues in Geneva as the World Trade Organization prepares for its ministerial meeting next month in Nairobi.
Here are some of the events we’ll be following this week:
● On Tuesday, the Council on Foreign Relations sponsors a program with Republican Presidential nominee Chris Christie.
● Wednesday, the World Trade Organization Dispute Settlement Body meets.
● On Thursday, WTO Director General Roberto Azevêdo speaks at a Geneva Week program for representatives of WTO members who do not have permanent missions in Geneva and later gives a press conference.
Volume 24, Number 228 Monday, November 16, 2015
Trade Reports International Group
TPP Approval Early Next Year?
President Obama said Friday he thinks lawmakers should approve the TransPacific Partnership agreement early next year once the next session of Congress convenes (WTD, 11/13/15).
The President spoke after a meeting with former national security officials from both Democratic and Republican Administrations. This week he will be in Asia for meetings with other TPP leaders and the heads of state of other Asian countries.
Mr. Obama said that he and the former top-
Attending the meeting were former secretaries of state Madeleine Albright, Colin Powell, Henry Kissinger and James Baker; former Defense Secretary William Cohen and former chairman of the Joint Chiefs of Staff Mike Mullen.
The former officials “believe that our economic prosperity and our national security cannot be separated,” the President said. “And if we are going to be a serious player in this critical region of the world, then we’ve got to get the economics right and we’ve got to get the national security right. That’s why all of us agree that the TransPacific Partnership agreement that we have forged is so important and that it is critical for Congress to act.”
US To Play Active Role
Thanks to the TPP, countries in the Asia-
US Trade Representative Michael Froman made a similar argument in an interview Friday aired on National Public Radio. The United States is not the only country negotiating trade deals in the region, he said. China is working on a trade deal with 16 countries that does not have the same high standards as the TPP – there are no protections for workers and the environment, no commitment to the free flow of data across borders. “And the question is, what is the better world for American workers? .... It’s got to be the TPP world than the world in which TPP is not there and these other initiatives move forward,” he commented
Mr. Froman defended the TPP against critics that say the investor-
The TPP raises the standard for when a claim could be brought under the investor state system, Mr. Froman stated. A claimant must prove a violation of international law. A company cannot sue simply because it lost profits or a regulation has changed.
Geneva – The European Union and Brazil today will circulate a joint negotiating proposal to the World Trade Organization for deliverables in the export competition pillar at next month’s Nairobi ministerial meeting that will suggest major “adjustments” in the 2008 revised draft modalities in export credits and food aid, WTD has learned (WTD, 11/12/15).
Brazil and the EU have often been on opposite sides of issues in the Doha negotiations.
The two are suggesting major changes in disciplines concerning export subsidies, export credits and food aid provisions of the 2008 revised draft modalities – or Rev 4 – to placate concerns raised by the United States. The proposed changes take into consideration the memorandum of understanding between the United States and Brazil on “cotton” along with aspects of US farm law, WTD was told.
The proposed export subsidies changes are tantamount to a “Rev 4-
The proposal contains the following changes –
● industrial countries will eliminate export subsidies in three years instead of five as laid out in Rev 4. Effectively developed countries will terminate their export subsidies by end-
● developing countries will eliminate their subsidies in five years – as per Article 9.4, which will remain without changes. Developing countries will phase out subsidies by 2020;
● developed countries will have a minimum repayment period for export credits, export credit guarantees and insurance programs of 15 months instead of six contained in the Rev 4. Brazil and the EU had proposed nine months; the United States demanded 18 months. The current US farm bill allows for 24 months. There will be further discussion on the repayment period, WTD was told;
● the terms for interest rates on export credits are largely based on the understanding reached between Brazil and the United States in the cotton dispute. Minimum rates for private operators will be 90 percent of the OECD benchmark credit risk associated with that country;
● on food aid, the in-
● the joint proposal contains no changes from Rev.4 regarding the treatment of state trading enterprises.
Brussels and Brasilia took on board all the major concerns raised by the United States in both export credits and food aid, WTD was told. In export credits, Washington had demanded a “safe harbor” provision to ensure that it would not face any legal challenges arising from disciplines in subsidies and countervailing measures. A “safe harbor” provision is no longer necessary, WTD was told.
No SSM at Nairobi
Geneva – The European Union, Brazil, the United States and Norway – among others – on Friday ruled out any outcome on the a special safeguard mechanism for developing countries at next month’s Nairobi ministerial conference, WTD has learned (see related report this issue).
But Indonesia, the Philippines, China, Turkey, the Dominican Republic – on behalf of the small and vulnerable economies – Bangladesh for the least-
coordinator for the 47-
Indonesia rejected the idea that a multilateral special safeguard instrument be subject to rules of stand-
At the meeting China reminded members that the SSM is not the only deliverable for Nairobi on which divergences exist. It would be difficult to go along with no discussion on SSM while issues in the export competition pillar remain unresolved.
Turkey said opponents of the SSM are drawing the linkage to market access merely to block an outcome before Nairobi. SSM is a stand-
Ankara asked members to suggest ways the multilateral system can adjust to different rules contained in free trade accords.
India said members must take the G-
But some major advanced economies, along with several developing countries, said a solution is not possible by Nairobi. The United States maintained that it would be difficult to justify the SSM proposal since it fails to address the core concern of market access.
Chair Vangelis Vitalis said consultations will continue.
Expanded ITA on Nairobi Agenda
Geneva – The European Union is confident that an expanded Information Technology Agreement will be wrapped-
EU trade envoy Ambassador Marc Vanheukelen told WTD that there was lots of progress during meetings last week “and we are pressing the participants to be as ambitious as possible in eliminating tariffs within a short timeframe.”
There is no agreement yet, but there has been considerable progress by several countries – including China, the ambassador stated. Brussels wants ITA participants to shorten the timeframe by grouping as many items as possible for immediate tariff elimination and reducing the current timeframe of five years to three, and seven to five in other categories, the ambassador told WTD.
China has placed 19 out of the 201 products in the seven-
The European Union, the United States and Japan – along with some others – want immediate tariff elimination on 201 lines.
A Very Small Package for Nairobi
A very small package of “deliverables” – mostly for least developed countries – will be on the table for acceptance by World Trade Organization members at next month’s Nairobi ministerial conference, but there is a lot of uncertainty still over a “post-
This year marks the 20th anniversary of the WTO. The WTO official spoke at a webinar sponsored by the Bretton Woods Committee.
Set for acceptance at Nairobi, said Mr. Sharp, will be a “meaningful package” including duty-
It is increasingly likely, as well, said Mr. Shark that there will be agreement in the agricultural export competition area – particularly for the phase-
Members in Nairobi also are expected to adopt a proposal calling for more transparency in WTO dispute settlement, agricultural and fisheries subsidies and services regulations.
Afghanistan, Liberia, Kazakhstan
In addition, members are expected to formally welcome Afghanistan as a new WTO member. Liberia and Kazakhstan will join the organization just before the start of Nairobi. There are currently 161 members.
It also is hoped that members will announce completion of the latest iteration of the Information Technology Agreement and hear an update on members’ ratifications of the Trade Facilitation Agreement.
As for a post-
Ongoing agricultural market access discussions remain difficult, Mr. Shark pointed out.
A good outcome from Nairobi will only come from a commitment by members to move forward – despite some strong disagreements now, Mr. Shark added. Dependence on more regional and bilateral trade agreements can become a problem for the WTO if members start taking their business elsewhere, he said.
ITC Votes on Stainless Steel From India
The International Trade Commission unanimously determined Friday that there is a reasonable indication that a US industry is materially injured by imports of welded stainless steel pressure pipe from India that are allegedly subsidized and sold in the United States at less than fair value (WTD, 10/1/15).
As a result of the Commission’s affirmative determinations, the Commerce Department will continue its investigations on the imports, with its preliminary countervailing duty determinations due by December 24 and its preliminary antidumping duty determinations due by March 8.
The United States imported $64.7 million worth of welded stainless steel pressure pipe from India in 2014.
Around the Globe
● The German government has urged American authorities to give German MPs access to key documents in the EU-
Some German government officials, but not MPs, can read documents that reveal the EU and US negotiating positions, at the US embassy in Berlin. Less sensitive TTIP texts are online. TTIP stands for Transatlantic Trade and Investment Partnership. EU and US officials hope to complete the wide-
Opponents say it is undemocratic, favours big corporations and threatens consumer and worker rights. An online campaign called Stop TTIP has collected more than three million signatures and handed over a European Citizens’ Initiative (ECI), which the European Commission must now examine. The Commission and many politicians argue that a TTIP deal would bring major benefits for the US and Europe, creating new jobs and business opportunities. A study by the Centre for Economic Policy Research (CEPR) estimated the potential gains for the EU as up to Euro 119bn (£84bn; $128bn) a year and Euro 95bn for the US.
National politicians in Europe have no automatic right to read the TTIP consolidated texts, which reveal both sides’ negotiating positions. US Congress members can, however, read those documents, as can European Parliament members (MEPs) in a high-
On Thursday the EU Commission also gave the US a plan for new investment courts to arbitrate in trade disputes. It says the new courts should be transparent and include an appeals process.
● In a telephone call to reporters from Havana late Friday, Agriculture Secretary Tom Vilsack said he sees the need to open Foreign Agricultural Service and Animal and Plant Health Inspection Service offices in Cuba and that he will “make the case” for those offices being opened when he gets back to Washington, according to the Hagstrom Report (WTD, 11/13/15). “I come away from this trip with the hope that USDA can have a more permanent presence here,” Vilsack said, adding that he was referring to FAS and APHIS so that “more technical conversations can take place.”
The U.S. embassy in Havana, which re-
Vilsack said he had met with the vice president of Cuba as well as Agriculture Ministry and foreign trade and investment officials. One of the major issues that Cubans brought up, Vilsack said, was an objection to the U.S. regulations on banking and credit. The importance of the credit issue, he said, is one of the reasons President Barack Obama believes Congress should lift the embargo, the secretary added.
● The Cultural Affairs Agency is considering revising the copyright laws after Japan and 11 other countries last month agreed to strengthen protection of intellectual property rights as part of the Trans-
But some are concerned that tighter protection will negatively affect certain areas, such as free use of material whose copyright has expired. The legal copyright protection period in Japan is expected to be extended to 70 years after the author’s death from the current 50 years. For example, comics by Osamu Tezuka, who passed away in 1989, will be protected until 2059, instead of 2039 under the current law.
Other legal changes under consideration include allowing the authorities to investigate intellectual-
● The heads of the world’s 20 largest economies pledged to use all of their policy tools to tackle uneven economic growth that falls short of expectations, according to a draft Group of 20 communique seen by Reuters on Sunday. As the G20 leaders gathered in Turkey for a two-
In a nod to uncertainty in financial markets and worries about lagging output in much of the world, the leaders said they would stick to a target to boost the G20's collective economic output by an additional 2 percent by 2018. “Global economic growth is uneven and falls short of our expectations, despite the positive outlook in some major economies,” they said in the draft document, the final version of which is due to be released on Monday. “A shortfall in global demand and structural problems continue to weigh on actual and potential growth.”
● President Xi Jinping and Western leaders reached wide consensus on international financial governance reform during their recent meetings, a senior Chinese official said on Saturday, when commenting on the International Monetary Fund managing director’s support for the yuan join the special drawing rights (SDR) basket of currencies, the China Daily newspaper reported. “President Xi Jinping has exchanged ideas on prospects of global financial governance reform during his meeting with leaders of the US, UK, Germany and France, and much consensus has been reached,” Zhu Guangyao, vice-
Zhu said they have discussed international monetary reform and the SDR currency basket of currencies, especially the prospects for the inclusion of the yuan, or renminbi (RMB). Xi paid state visits to the US and UK in September and October, and shortly after that, German Chancellor Angela Merkel and French President Francois Hollande visited China. “Their meetings were fruitful,” Zhu said.
Before her departure for the G20 summit, Christine Lagarde, managing director of the IMF, said her staff issued a paper to the IMF Executive Board on Saturday on the quinquennial review of the SDR. She said a key focus of the board review is whether the renminbi, which continues to meet the export criterion for inclusion in the SDR basket, also meets the other existing criteria, that the currency be “freely usable,” which is defined as being “widely used” for international transactions and “widely traded” in the principal foreign exchange markets. In the paper, she said IMF staff agree that the RMB meets the requirements to be a freely usable currency and, accordingly, the staff proposes that the executive board determine the RMB to be freely usable and include it in the SDR basket as a fifth currency, along with the British pound, euro, Japanese yen and the US dollar.
● Turkey says it will actively take part in Beijing’s “One Belt, One Road” economic and trade initiative, but has cancelled a controversial tender for a Chinese-
The Nato member’s decision to award the tender to China Precision Machinery Import and Export Corp as the preferred candidate for the deal had stirred American and Western concern. But the official told Reuters Turkey was now planning to launch its own project to build such a system.
The news came hours after President Xi Jinping arrived in the Turkish city of Antalya for the G20 summit and held a meeting with Turkish counterpart Recep Tayyip Erdogan. Erdogan said his country was ready to join hands with China to lift bilateral trade to a higher level. Turkey was willing to actively participate in the One Belt, One Road initiative and was glad to see Chinese enterprises invest more in Turkey in fields such as infrastructure, Erdogan said. The initiative was proposed by Beijing in 2013 as a trade and infrastructure network. It will connect Asia to Europe and Africa through the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
● The EU and Australia have agreed to start negotiations on a free trade agreement. The two sides are looking to boost growth and investment, and counterbalance potential trade pacts with the US, Deutsche Welle reported. The announcement was made as leaders from the top world’s economies gathered for the G20 summit in Turkey on Sunday.
“We believe that a FTA will support sustainable growth and investment, open up new commercial opportunities and promote innovation and employment in Australia and the EU,” European Commission President Jean-
A trade pact between Australia and the EU would make each side’s products and services competitive in the other’s market, counteracting any potential negative impact on bilateral trade as a result of TPP and TTIP.
● Vietnam and New Zealand have signed several cooperation agreements during a visit by Prime Minister John Key to Hanoi as they seek to double bilateral trade in the next five years, the Associated Press news service reported. Key is on his first visit to the Southeast Asian country since 2010. He said Sunday that the agreements covering education, aviation and health care will facilitate companies from both countries to do more business.
“Today we’ve signed a number of agreements which will see greater opportunities for New Zealand and Vietnamese companies to do more business together, for more students to be educated both in New Zealand and through New Zealand universities here in Vietnam and also see greater exchange of people-
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On the Web......
TPP. Remarks by President Obama on the TransPacific Partnership. (available at: http://whitehouse.gov ) issued: 11/13/15.
TPP. Commerce Department series of industrial fact sheets on the TransPacific Partnership. (available at: http://commerce.gov ) issued: 11/13/15.
FCPA. Justice Department statement on violation of the Foreign Corrupt Practices Act. (available at: http://www.justice.gov/opa/pr/alstom-
Trade Balance. European Union report on the September trade balance. (available at: http://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_151969.pdf ) issued: 11/13/15.
US Relations. US-
Korea (North). Treasury Department statement on sanctions against North Korea. (available at: http://www.treasury.gov/press-
Fish and Fisheries
WTO. Proposal on fishery subsidies for the Nairobi trade ministerial. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
Export Controls. Treasury Department statement on sanctions against North Korea. (available at: http://www.treasury.gov/press-
US Relations. Treasury Secretary Lew statement on US relations with Ukraine. (available at: http://www.treasury.gov/press-
World Trade Organization
Fisheries. Proposal on fishery subsidies for the Nairobi trade ministerial. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
Nairobi. Russia proposal in the World Trade Organization for the Nairobi ministerial meeting on transparency on rules. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
Nairobi. Russian proposal for the World Trade Organization ministerial meeting on the Doha negotiations. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
Nairobi. Turkey proposal to the World Trade Organization on the post-
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