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 Volume 24, Number 13                                                                                                                          Monday, January 19, 2015

Trade Reports International Group


Setting US, India on Steady Course

  Since the successful visit here in September of new Indian Prime Minister Modi, moves toward a revitalized strategic relationship seems to be on a good step, Sen. Mark Warner (D-Va) suggested (WTD, 1/12/15).

 The chair of the large Senate India Caucus on Friday addressed the Atlantic Council.  He is accompanying the President on his trip later this month.

 Sen. Warner suggested that if the visit to India is as successful as the one with Prime Modi that President Obama is reciprocating, then the new start should stay on solid grounds.  One big plus, the senator said, is the Modi government’s quick moves to accept – at least in part – more than half of the dozen recommendations the Senate caucus made last year to repair ties that have been on the down-slope for several years.

 Some big pluses are India’s lifting the cap on foreign direct investment, including in the defense and services sectors.  Several joint energy projects with the United States also are in the planning stages since the visit.  And New Delhi is working on an up-to-date electronic banking system.

 On the US side, the Defense Department is putting together a policy group to work on enhanced defense cooperation with the country.  India has been pleading for more fighter aircraft from the United States.  But it continues to insist on some stiff offset rules, which the United States views as trade restrictive.  The senator suggested there could be room for compromise on both sides.

 “Small wins,” the senator said, often lead to substantive moves.

 But there are challenges in the relationship, which Sen. Warner suggested could be addressed in the second leader-to-leader meeting.

Investment Ceilings

 New Delhi, the senator noted, has lagged behind in promises to lift direct investment ceilings in the electronic communications sector.  India – as does the United States – needs to move ahead on ambitious plans for a trade regulatory “single window.”  Turn-around times even for the simplest business applications face long delays.  The Prime Minister has set a goal of a 72-hour turn around.

 But perhaps the biggest challenge for India is essentially a domestic one.  Unless New Delhi can get a deeply rooted system of bureaucratic “red tape” under control, economic growth will move slowly and not reach the targeted 10-percent growth rate for the year or even exceed last year’s 7-percent rate, the senator commented.

 One area where the United States can help immensely, Sen. Warner suggested, is in skills development.  India’s higher education institutions are among the best in the world, but the country falls down when it comes to skills development and training.  The Virginia senator suggested there could be more cooperative relations with US mid-level education and training institutions.

 More cooperation between the United States and India also is needed in cyber-security.

 On the US side of the equation is the lack of movement on US promises to address visa problems with Indian services professionals and other business executives.

 Another disagreement that will be difficult to overcome is intellectual property rights protection in India, Sen. Warner stated.  He noted little progress so far in negotiating a bilateral investment treaty, but said that neither side should give up on the initiative.

 Getting final implementation of a nearly decade-old civil nuclear agreement also has been frustrating.  Disagreement over accident liability continues to stymie US participation in an otherwise lucrative energy market, the senator noted.

       




An Agenda For Post-Bali

 Geneva – Host Switzerland wants the dozen or so trade ministers invited to the informal summit in Davos on Saturday to suggest what is feasible to finalize for a post-Bali work program by the end of July and what needs to be accomplished in the three months leading up to the regular World Trade Organization ministerial meeting in December, WTD has learned (WTD, 12/16/14).

 In a communication sent to the invited members last week, Switzerland posed two direct questions for trade ministers –

 ●        what elements need to be finalized as part of the post-Bali work program, including possible modalities in the three market access areas of the Doha Development Agenda, and the work plan for the three months after the normal break in August and

 ●        how to go about achieving the post-Bali targets in the next 12 months.

 Switzerland is hosting two closed-door sessions in Davos – one for ministers along with their senior trade officials and the other a ministers-only lunch.

 Swiss Economics Minister Johann Schneider-Ammann and World Trade Organization Director General Roberto Azevêdo will lead the discussions which are expected to last for about five hours, WTD was told.

 Ahead of the meeting, the Director General will convene an informal heads of delegations meeting on Wednesday here to elicit views on the post-Bali work program.

       



Bangladesh Fails Worker Safety Review

 Bangladesh must take further steps to improve worker safety before the country would be eligible again to receive duty-free access to the US market under the US Generalized System of Preferences program, the Administration announced Friday (WTD, 7/1/14).

 An interagency review led by the US Trade Representative’s office said that Bangladesh has made progress over the last year to address fire and building safety issues in the ready-made garment sector.  But more progress is needed – including addressing serious worker rights issues – before the Administration will consider reinstating the country’s preferential trade benefits.

 Bangladesh’s GSP benefits were suspended in June 2013 following two apparel factory fires that resulted in the deaths of over a thousand workers.

 The country exported $34.7 million worth of goods to the United States in 2012, the last year it had GSP benefits.

 GSP lapsed in August  2013.

 The interagency review found that there has been progress in some important areas, particularly with respect to fire and building safety issues.  Under the general supervision of the Bangladesh government, over 2,000 initial factory safety inspections over the last year, most done by teams organized by the private sector.  The inspections resulted in the closure of at least 31 factories, the partial closure of 17 additional factories and the identification of needed remedial measures in hundreds more.

North American, European Brands

 The private- sector initiatives are led by North American and European brands and retailers.

 The government is responsible for the inspection of several hundred more factories and has hired additional inspection teams to carry out and sustain the inspection effort.

 But the review also found that further progress is needed in several key areas under the Action Plan.  In particular, urgent progress is needed to address reports of unfair labor practices and to advance and implement needed legal reforms.  The US government is concerned about continuing reports of harassment and violence against union activists seeking to establish new unions or to exercise their legal rights, USTR said.  There has also been little progress in advancing the labor law reforms called for in the Action Plan, including changes to ensure that workers are afforded the same rights and protections in Export Processing Zones as in the rest of the country.

       



Around the Globe

             ●          Japan and the United States have agreed that 12 countries discussing a Trans-Pacific Partnership free trade deal should hold a ministerial meeting in the first half of March to reach a broad agreement, informed sources said on Friday according to a Jiji Press news service report (WTD, 1/15/15).  Officials from Japan and the United States, which ended their latest bilateral TPP meeting in Tokyo on Friday, also confirmed how the two sides should proceed with bilateral talks which are crucial to the success of the broader negotiations, the sources said.

 Chief negotiators from the 12 countries are scheduled to meet in New York later this month, the sources said.  Japan and the United States will hold bilateral working-level talks in Washington soon after the New York session, and TPP Minister Akira Amari and U.S. Trade Representative Michael Froman will meet in February, the sources said.

 Japanese and U.S. officials signaled that the two sides narrowed gaps over auto trade, during the latest Tokyo session. Deputy chief TPP negotiator Hiroshi Oe said he strongly feels that the United States is serious about concluding talks successfully.  But Japan and the United States remain apart over farm trade. Elsewhere in the broader TPP talks, the United States and emerging market economies such as Malaysia are in dispute over intellectual property protection.

 According to Reuters, Japan’s deputy chief trade negotiator Hiroshi Oe said on Wednesday he got the impression during talks that the United States intends to wrap up overall TPP discussions within a few months.  Oe, speaking to reporters after talks with his counterpart Wendy Cutler, acting deputy U.S. trade representative, said he felt the United States is seriously trying to find common ground in their discussions.  But Oe also said more work needed to be done and it was not yet a situation in which a “political decision” could be arranged.

             ●          Surrounded by garment workers at Hickey Freeman on Friday morning, Rep. Louise Slaughter, D-Fairport, again reintroduced the Reciprocal Market Access Act, the Democrat and Chronicle reported (WTD, 11/13/14).  She said the legislation, which she introduced in 2007 and reintroduced in 2013, would level the playing field for American companies doing business overseas and protect American manufacturing jobs.

 The bill would authorize federal trade and labor agencies to revoke tariff concessions if an overseas trading partner falls short on its commitments to reciprocal market access. Manufacturers, labor unions, trade associations and congressional members could request these snap-back provisions.  “I have never seen a trade bill have enforcement,” said Slaughter.  Slaughter also devoted time at the podium to criticism of the Trans-Pacific Partnership, a trade deal being negotiated with 11 other countries that is modeled after the North American Free Trade Agreement, which Slaughter also opposed.  Her concerns over the trade deal are especially grave because backers want to fast-track it through Congress without the chance to make amendments.

 She said the deal would give countries such as Vietnam, where workers are paid $1 an hour with no benefits or protections, an unfair advantage. “Free trade is what we’ve had, fair trade is what we need,” said Slaughter.

             ●         To take down the Castro regime in Cuba, open up the country to trade, Sen. Charles Schumer said Sunday according to Newsday (WTD, 1/18/15). Schumer said Cubans should get a look at what freedom means in the U.S., praising Gov. Andrew Cuomo and U.S. lawmakers for trips to the Communist country in the Caribbean country led by Raul Castro, the 83-year-old brother of Fidel.

 “Castro and the Castro regime are a terrible regime, but I’ve always felt the best way to topple them is to open Cuba up, to let the Cuban people see what freedom’s all about: political freedom but also economic freedom,” Schumer said.  Four of Schumer’s Senate colleagues arrived in Cuba on Saturday as part of the first congressional delegation to the island after President Barack Obama announced the return of diplomatic relations between the countries. Meanwhile, Cuomo’s office announced Saturday that the governor is planning a trade mission to Cuba as part of a series of international trips to tout the Empire State.

 Schumer said the U.S. delegation to Cuba will explore ways to open up trade, though “that will be a fight.” He said there could be common ground with lawmakers from states with an agricultural industry, which Schumer said has been “very eager to trade with Cuba for a while. There are many in the Congress who are opposed to it,” Schumer said. “I think the majority are for it.”

 Opelousas Daily World reported that Louisiana is ready to regain a major industry it lost 50 years ago when the United States placed an embargo on Cuba.  “Prior to the embargo, Cuba was the largest importer of Louisiana rice,” said Kevin M. Berken, chairman of Louisiana Rice Promotion Board, Friday inside the Petroleum Club. “So it is critically important for us to be able open trade with other countries, Cuba being the main focus. It has been a focus for the last 20 or 30 years.”

 Berken was one of four panelists Friday who spoke during a conference addressing the recent U.S. decision to lift portions of the longstanding embargo. The conference was hosted by Le Centre International de Lafayette.

             ●          World Trade Organisation Director General, Roberto Azevedo, on Friday, said that the Bali Package would enhance the abilities of the developing countries’ to integrate into the world economy, Reuters news service reported (WTD, 12/19/14).  Speaking at the Partnership Summit here on Friday, Mr. Azevedo — his first public address since the WTO turned 20 this year — used the occasion to highlight India’s contribution in breaking the impasse.

 “The first decision, and clearly the most important for India, was a clarification on the Bali decision on Public Stockholding for Food Security Purposes — to unequivocally state that the peace agreement would remain in force until a permanent solution is found,” he said.  The second decision was to formally add the Trade Facilitation Agreement Facility to the WTO rulebook, clearing the path for the Trade Facilitation Agreement agreed upon in Bali and its implementation.

 WTO Members are now working to ratify the agreement according to their domestic procedures.  The WTO DG noted that the benefits of the TFA would be visible to Indian industry as competitiveness and exports will receive a boost once members ratify the agreement.

             ●          Rajeev Kher, Commerce Secretary, Government of India, has said that the world of foreign trade is moving towards a higher regulatory regime as mega-regionals such as the Trans-Pacific Partnership (TTP) and Trans-Atlantic Trade and Investment Partnership (TTIP) looked to set a new rules paradigm, the Dollar Business reported.  Kher was speaking on the second day of the 21st edition of Partnership Summit in Jaipur summit organised by the Confederation of Indian Industry (CII) in Jaipur, Rajasthan, India from January 15-17, 2015. The summit was first held in 1995 and has now become CII’s flagship international event.

 The theme for this year’s summit was “Partnerships for Shared New Realities” and it was organised with an aim to provide an engaging platform to discuss and share knowledge about best strategies for both developed and developing economies to encourage and build new bridges which foster balanced and equitable growth, said CII.

 Speaking at the inaugural session of the summit Suresh Prabhu, Union Railway Minister, stated that the true potential of India could only be realised once the country had a unified market with the implementation of the Goods and Services Tax (GST) in the country. Inviting businesses to partner in Rajasthan’s progress, Vasundhara Raje, Chief Minister, Rajasthan, said that the state government has announced a slew of reforms, particularly in the labour front, to help businesses.

             ●          The 16-member Regional Comprehensive Economic Partnership negotiating for a mega trade will deliberate on paper on modalities of merchandise trade, submitted by India, China and Korea, in Bangkok next month, the Economic Times reported (WTD, 12/3/14).  The Regional Comprehensive Economic Partnership (RCEP) comprises 10 ASEAN members and its six Free Trade Agreement partners – India, China, Japan, Korea, Australia and New Zealand.

 The group is negotiating a big trade agreement that aims at reducing or eliminating tariffs, facilitating movement of professionals and providing a level-playing field to each other’s investors. “India, Korea and China have submitted a paper on modalities of merchandise trade. It will be discussed during the seventh round of the RCEP meeting,” a top government official told the media.

             ●         India’s trade deficit with the rest of the world narrowed to a 10-month low in December, as imports declined more than exports, according to the latest trade data released by the Ministry of Commerce and Industry.  Exports in December slipped nearly 3.8  percent year-over-year to $25.4 billion, partly because of a fall in the value of petroleum exports. Imports for the month shrank 4.78 percent to $34.8 billion, with the monthly trade deficit estimated at $9.4 billion, which was 44 percent lower than in November and lowest since February 2014 when the imbalance was $8.1 billion.  From April to December, the first three quarters of fiscal year 2014-15, total exports climbed 4 percent from the same period in 2013-14 to $241 billion.




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On the Web......

 

Agriculture


Corn.  National Corn Growers Association annual report.  (available at:  http://www.ncga.com/upload/files/documents/pdf/publications/Annual-Report-2014.pdf )  issued:  1/16/15.



Argentina


Japan.  Japanese government statement on World Trade Organization Appellate Body report on Argentina’s trade restrictions.  (available at:  http://www.meti.go.jp/english/speeches/20150115_01.html )  issued:  1/16/15.



Asia


ASEAN.  Association of Southeast Asian Nations statement on relations with India.  (available at:  http://www.asean.org/news/asean-secretariat-news/item/asean-india-to-further-develop-mutually-beneficial-relations?category_id=27 )  issued:  1/16/15.



Bangladesh


Labor.  Statement by Rep. Levin on the US Trade Representative’s office review of labor conditions in Bangladesh.  (available at:  http://democrats.waysandmeans.house.gov )  issued:  1/16/15.  



China


Pakistan.  Chinese statement on a China-Pakistan free trade agreement.  (available at: http://english.mofcom.gov.cn/article/newsrelease/significantnews/201501/20150100868575.shtml )  issued:  1/16/15.

 

TFA.  Chinese government statement on the Trade Facilitation Agreement.  (available at:  http://english.mofcom.gov.cn/article/newsrelease/significantnews/201501/20150100867448.shtml )  issued:  1/15/15.



Congress


Financial Services.  House Finance Services committee oversight plan for the 114th Congress.  (available at:  http://financialservices.house.gov/uploadedfiles/114thcongressovplan.pdf )  issued:  1/16/15.



Cuba


US Relations.  Consumer Electronics Association statement on US relations with Cuba.  (available at:  http://www.ce.org )  issued:  1/16/15.



Customs


China.  Chinese government statement on the Trade Facilitation Agreement.  (available at:  http://english.mofcom.gov.cn/article/newsrelease/significantnews/201501/20150100867448.shtml )  issued:  1/15/15.



India


ASEAN.  Association of Southeast Asian Nations statement on relations with India.  (available at:  http://www.asean.org/news/asean-secretariat-news/item/asean-india-to-further-develop-mutually-beneficial-relations?category_id=27 )  issued:  1/16/15.


Azevedo Remarks.  Remarks by World Trade Organization Director General Azevedo to the Confederation of Indian Industries.  (available at:  http://www.wto.org/english/news_e/spra_e/spra46_e.htm )  issued:  1/16/15.


US Relations.  Center for Strategic and International Studies transcript on briefing on upcoming visit to India by President Obama.  (available at:  http://csis.org/files/attachments/150116_India_Press_Briefing.pdf )  issued:  1/16/15.



Japan


Argentina.  Japanese government statement on World Trade Organization Appellate Body report on Argentina’s trade restrictions.  (available at:  http://www.meti.go.jp/english/speeches/20150115_01.html )  issued:  1/16/15.



Labor


Bangladesh.  Statement by Rep. Levin on the US Trade Representative’s office review of labor conditions in Bangladesh.  (available at:  http://democrats.waysandmeans.house.gov )  issued:  1/16/15.  



Pakistan


China.  Chinese statement on a China-Pakistan free trade agreement.  (available at: http://english.mofcom.gov.cn/article/newsrelease/significantnews/201501/20150100868575.shtml )  issued:  1/16/15.



World Trade Organization


Azevedo Remarks.  Remarks by World Trade Organization Director General Azevedo to the Confederation of Indian Industries.  (available at:  http://www.wto.org/english/news_e/spra_e/spra46_e.htm )  issued:  1/16/15.


What we’re covering this week –

       President Obama delivers his State of the Union address this week.  Meanwhile, new Senate Finance Committee Chairman Orrin Hatch (R-Utah) lays out his agenda for the committee in the 114th Congress.

 Here are some of the things we’ll be following this week:


             ●          Tuesday, President Obama delivers his State of the Union address to a joint session of Congress.

             ●          Also Tuesday, Senate Finance Committee Chairman Hatch discusses the committee’s agenda at the US Chamber of Commerce.

             ●          The Brookings Institution sponsors a program on transAtlantic relations with European Union Vice President Federica Mogherini.

             ●          Wednesday, the National Conference of Mayors holds its annual meeting.  US Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack address the meeting.

             ●          The German Marshall Fund sponsors a program with the Congressional Transatlantic Trade and Investment Partnership Caucus co-chairs – Reps. Bill Keating, Richard Neal, Erik Paulsen and Todd Young.

             ●          On Thursday, US Export Import Bank President Fred Hochberg addresses the Mayors.



Our  Blog


Updated:  1/6/15

 WTD’s

Friday Afternoon

Podcast

Straight talk.   

Click the highlighted text to hear snippets from WTD’s straight talk.

•  House Speaker John Boehner on December 4 comments on President Obama’s call for Trade Promotion Authority.

•  Canadian Ambassador to the United States Gary Doer comments on Trade Promotion Authority and the TransPacific Partnership on October 9 at the Financial Services Roundtable.

•  House Ways and Means Committee Chairman Dave Camp speaks to WTD about prospects for Trade Promotion Authority legislation on September 18.

•  Visiting South African President Jacob Zuma was asked at the National Press Club on August 4 what impact has President Obama’s color had on US relations with Africa.

•  Comments by Senate Finance Committee Chairman Ron Wyden to the press on trade and transparency on July 16.

•  Australia News Network interviews World Trade Organization Director General Roberto Azevedo during his visit to the G-20 meetings in Sydney on July 17.

•  New House Majority Leader Kevin McCarthy on June 22 tells Fox News Sunday why the US Export-Import Bank should end.

•  Here’s why Congressional ignorance can be very dangerous when it comes to willy-nilly support for free trade agreements, according to consumer advocate Ralph Nader.

 •  Here’s what’s at stake with Trade Promotion Authority and why Louisiana Republican Rep. Charles Boustany can’t sleep at night.

 •  Here’s what Wisconsin Republican Rep. Tom Petri said on the House floor April 10 about TTIP and Bratwurst.

 •  Here’s a brief interview with the Heritage Foundation’s Foundry report with House Financial Services Chair Rep. Jeb Hensarling (R-Texas) on the dangers of renewing the US Export-Import Bank given April 17.

 •  Here’s a brief snippet from remarks April 8 by Senate Finance Committee ranking Republican Orrin Hatch saying he is befuddled over why the President says he supports Trade Promotion Authority but doesn’t do anything about.

 •  Here’s Aspen Institute scholar and former Reagan Administration Assistant Secretary of Commerce speaking about with WTD on the many iterations of a US-European Union free trade agreement after a recent Hudson Institute event.

 •  Here’s what veteran House Democrat Richard Neal (Mass) – one of four cochairs of the new House TTIP Caucus – told WTD during a reception celebrating the caucus creation on April 3.

 •  Here’s what World Trade Organization chief spokesperson Keith Rockwell said in Washington on how and why the WTO is back.

 •  Here’s what Council of Economic Advisors Chair Jason Furman told the Joint Economic Committee last week about why there is so little mention of trade in the Economic Report of the President.

 •  This is why the European Union is wrong when it says it will never allow imports of US hormone-treated beef, Agriculture Secretary Vilsack tells WTD.