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 Volume 24, Number 58                                                                                                                  Monday, March 23, 2015

Trade Reports International Group


The Cabinet And TPA

    Trade is President Obama’s top legislative economic priority, but he is largely depending on his Cabinet to get out and sell his trade agenda to lawmakers and the public, chief White House economic advisor Jeffrey Zients said Friday (WTD, 3/20/15).

 The President’s trade agenda starts with passage of Trade Promotion Authority, Mr. Zients told reporters.  Mr. Obama is very committed to completing “strong” trade agreements that benefit US workers.

 The Administration is currently negotiating two trade agreements – the TransPacific Partnership with 11 other Asian-Pacific countries and the TransAtlantic Trade and Investment Partnership with the European Union.

 The President is spending a lot of time in small group meetings with both House and Senate lawmakers to discuss trade, Mr. Zients said at a program sponsored by the Christian Science Monitor.  That follows on a “full-throated argument” in favor of trade made by the President earlier this year in his State of the Union address.

 Members of the President’s Cabinet, meanwhile, are spending time both on Capitol Hill and around the country making the case for trade agreements and the importance of TPA, Mr. Zients said.  Administration officials – including Treasury Secretary Jack Lew and US Trade Representative Michael Froman – were on the Hill last week meeting with House Democrats on the need for TPA and the TPP.

 Just a day earlier, Mr. Zients pointed out, the Treasury Secretary was speaking about TPA to audiences in Miami.

TPP and CAFTA

 Separately, Virginia Democrat Sen. Tim Kaine said Friday that although he tends to be pro-trade, he is unsure about the TPP.  One the senator’s chief concerns is the potential impact of the agreement on Central American countries that are part of the US-Central America free trade agreement.  Those countries are concerned that the textile and apparel industries they have built up as a result of CAFTA will be undermined by cheap imports from TPP countries, particularly Vietnam, he told a program sponsored by the Council of the Americas.

 Sen. Kaine commented that he has a lot of questions for USTR Froman.

 Meanwhile on Friday, House Ways and Means ranking Democrat Sander Levin (Mich) raised concerns about investor-state dispute settlement provisions in the TPP.  The investment chapter needs to undergo both procedural and substantive reforms, he wrote in a blog.  USTR has said that the TPP will make clear that governments can regulate in the public interest, but “that will not be meaningful unless incorporated into specific reforms, and careful attention must be paid to the exact language in any ‘public interest’ provision to ensure that it achieves the goal,” he wrote.

       



The 600 ‘Green Goods’ List

 Geneva – The group of countries pursuing a plurilateral initiative to liberalize trade in environmental goods has prepared an initial list of 600 “green” goods which will be subject to further negotiations beginning on May 5, WTD has learned (WTD, 2/2/15).

 The number of proposed eligible items for zero tariffs built on the 400 suggested in May.

 At the end of the fifth round of negotiations, 16 members of the Environmental Goods Agreement came up with the list based on “environmental-credibility” criterion.  The products are further divided into 10 categories, such as energy efficiency, clean and renewable energy, air pollution management, solid and toxic waste management and waste-water and resource management.

 Technical experts from countries involved in the exercise will hold meetings in May, June and July on each product in hopes of preparing a first draft after the August break, said one participant.

 Negotiating members are Australia, Canada, China, Taiwan, Costa Rica, the European Union, Hong Kong, Iceland, Israel, Japan, South Korea, New Zealand, Norway, Switzerland, the United States and Turkey.

 Important products included in the latest list are LED-related products, solar panels and chromatography items.  The largest category are solar panels.

 Negotiators hope to finish an agreement by the time of this December’s United Nations Climate Change Conference.

       



Bumps in the Road for Food Security

 Geneva – Efforts to find common ground on finalizing a food security scheme for developing countries got nowhere last week, stalling efforts to draw up a post-Bali plan to conclude the Doha Development Agenda, WTD has learned (WTD, 3/20/15).

 At an informal meeting of the Doha agriculture negotiating body, differences cropped up over a permanent solution on public stockholding for food security purposes.  Members also discussed how to move forward on agriculture domestic supports and market access.

 The United States presented a proposal on elements for discussion on public stockholding.  It suggested three elements – a review of efficacy and trade effects of public stockholding policies; a review of countries’ public stockholding for food security policies and the development of best practices and recommendations.

 Washington wants WTO members “to evaluate and review existing food security policies, in particular public stockholding for food security programs, to consider their efficacy as food security tools and their effects on trade, including any unintended consequences that may be trade distorting or adversely impact the food security of other members,” according to the paper.  It urged members to share their experiences and review the literature on such programs.

Evaluate Food Security Policies

 The United States wants members to “evaluate and review food security policies that are currently permitted under WTO rules and how the existing policies are constrained by those rules.”  In addition, members should prepare a permanent solution based on the outcomes of the information gathered as part of these discussions.

 In response, India insisted that the US “elements” are not consistent with what was decided last year when members adopted the modified decision on the Bali outcome for public stockholding programs.  It argued that the mandate required members to talk about the conditions that would go into the permanent solution by the end of the year, but not food security policies of member countries.

 India was backed by China, Indonesia and the Philippines, among others.  The European Union reiterated its position that public stockholding programs cannot be included under the “green box” disciplines which are exempt from reduction commitments.

 Indonesia – leading the Group-of-33 developing and least-developed countries – called on Doha agriculture negotiations chair John Adank to nominate a “Friend of the Chair” for facilitating the negotiations toward a successful conclusion.

       



Around the Globe

 ●         Japanese Economy Minister Akira Amari said on Friday it would be difficult to reach an agreement in two-way trade talks between Japan and the United States unless U.S. lawmakers fast-tracked trade promotion legislation, Reuters news service reported from Tokyo (see related report in this issue).  The two countries have been working toward an agreement over access to agriculture and auto markets and a bilateral deal between them is considered key to a 12-nation Trans-Pacific Partnership (TPP) deal.

 A delay in agreeing on the legislation in the United States to streamline the passage of trade deals, known as trade promotion authority (TPA), through Congress is blamed for pushing back the timetable on the TPP.  “Not only Japan but also other member nations share a view that TPA is an essential condition for the TPP agreement. I would like President Obama to make the utmost effort,” Amari told a news conference.  “It is very high hurdle to reach an agreement to Japan-the U.S. trade talks unless we see clarity on the prospect for TPA bill.”

 Amari said this week that he wanted to reach a broad agreement on the two-way trade talks before Japanese Prime Minister Shinzo Abe’s expected visit to the United States from late April to early May.  A source familiar with Japan’s stance on TPP told Reuters he did not know if the two allies could clinch an agreement before Abe’s visit, primarily because of a lack of clarity on the outlook for TPA.  “I know there are issues pending and I know the solutions are not easy,” he said. “It’s certainly doable but I don’t know if the U.S. is prepared.”  Another source said talks on the TPP were unlikely to gather momentum if prospects for the passage of TPA remained unclear.  “It will certainly be good if we can reach an agreement when leaders from the two nations are to meet,” he said.  “But is there any definite reason that we have to reach an agreement in a situation where both the prospect for TPA bill and TPP talks are uncertain?”

 New Zealand Trade Minister Tim Groser told Reuters in an interview this week that passing legislation to grant TPA was “crucial” and certain countries would not close the deal with out it.

             ●          US Trade Representative Michael Froman and EU Commissioner for Trade Cecilia Malmström met Friday in Brussels to take stock of the ongoing negotiations on a Transatlantic Trade and Investment Partnership (WTD, 3/20/15).  At their meeting, the two discussed the state of play in all areas of the negotiations, and the agendas for the two upcoming negotiating rounds.

 “We’ve had good discussions today, in a friendly and constructive atmosphere. Our talks built on the intense contacts had by our negotiators during and after the last negotiating round in February,” said Commissioner Malmström in a comment.  “We have made considerable progress today on how to move further in our negotiations in the field of services, and how to move towards new offers before the tenth round. Both sides have shown a good understanding of each other’s sensitivities.”

 The EU and US side also agreed on a joint statement about the importance of protecting public services when negotiating TTIP, as well as TISA.  Malmström and Froman, along with head negotiators and others, met for close to six hours and ended their meeting with a working lunch.

 The next round of TTIP negotiations will take place in the US next month.

             ●          Germany’s economy minister has promised to block any clauses in a trade deal between the European Union and the United States that go against the ideals of his centre-left Social Democrats (SPD), including investor protection clauses wanted by the Americans, Reuters news service reported.  “What the SPD doesn’t want won’t happen,” Sigmar Gabriel, who is also Germany’s deputy chancellor, told the Sueddeutsche Zeitung newspaper in an interview published on Saturday.

 The European Commission is trying to prevent differences on arbitration from blocking the Transatlantic Trade and Investment Partnership (TTIP), which would encompass almost half the global economy and could generate $100 billion (67 billion pounds) a year in additional economic output on both sides of the Atlantic.  Many in Europe, including the European Parliament, fear U.S. multinationals will use a so-called investor-to-state dispute settlement (ISDS) mechanism to challenge Europe’s food, labour and environmental laws on the grounds that these restrict free commerce. The United States will not accept a deal without it.

 Unblocking the issue with a revamped form of ISDS could help negotiators reach a trade deal by the end of 2015.  European Trade Commissioner Cecilia Malmstrom defended the ISDS mechanism this week, saying European companies needed it because U.S. law does not bar discrimination against foreign investors and that if ISDS were modernised, governments would not be bullied by big multinationals to change national laws.  Gabriel appeared adamant that Europe should not accept what he termed the “privatisation” of arbitration, though he added that Malmstrom was helping to overcome scepticism about TTIP.

             ●          EU leaders have decided to maintain economic sanctions on Russia until the end of the year, the EU Observer reported (WTD, 3/12/15).  They said in a joint statement on Thursday (19 March) in Brussels the “restrictive measures against the Russian Federation … should be clearly linked to the complete implementation of the Minsk agreements, bearing in mind that this is only foreseen by 31 December 2015.”

 The Minsk accords, negotiated by France, Germany, Russia and Ukraine last month, envisage 13 measures over the next nine months.  They include - crucially - restoring Ukraine’s control of its border with Russia under international monitoring.  EU leaders noted that “necessary decisions” - the legal acts needed to extend the sanctions regime - “will be taken in the coming months.”  They added: “The European Council stands ready to take further measures if necessary.”

 The sanctions prohibit purchase of long-term bonds from leading Russian banks, energy, and arms firms. They also forbid exports of high-end technology for oil and gas exploration.  They were imposed last July for one year and must be renewed by EU consensus before they expire.

             ●         The current level of China’s yuan is appropriate because it reflects foreign exchange supply and demand and economic fundamentals, a top central bank researcher said on Saturday according to the China Daily newspaper (WTD, 3/20/15).  On Friday, the yuan ended its best week since 2007 after a rush of dollar sales over the past few days by major State-owned banks.

 Lu Lei, head of the research bureau at the People’s Bank of China, reiterated the policy goal of keeping the yuan “basically stable on a reasonable and balanced level.  We believe the current level is appropriate, it reflects the situation of the real economy, reflects the surplus and shortfall in global capital, also reflects money supply of our country and other countries,” he told reporters on the sidelines of a forum.  The yuan’s jump of close to 1 percent during the week followed months of weakness.

 Lu also said the government would conduct more experiments in making the yuan convertible on the capital account, but would take steps to manage risks from cross-border capital flows.

             ●          New Zealand’s spy agency the Government Communications Security Bureau (GCSB) used the United States National Security Agency’s (NSA) XKeyscore mass surveillance tool to spy on candidates from around the world vying to lead the World Trade Organisation (WTO), ZD Net reported.  GCSB used XKeyscore to set up searches for communications about candidates from Brazil, South Korea, Indonesia, Mexico, Ghana, Jordan, Kenya, and Costa Rica, according to a document released by NSA whistleblower Edward Snowden.

 At the time in 2013, New Zealand’s Minister of Trade Tim Groser was himself a candidate for the role.  The use of the tool for such a purpose appears to be far removed from the primary justification used by New Zealand Prime Minister John Key for GCSB’s participation in the Five Eyes spy alliance; namely, fighting terrorism.  The government has refused to comment on the latest in a series of revelations about New Zealand’s role in mass surveillance.

 Of particular interest in the WTO surveillance was Indonesia’s candidate, former Trade Minister Mari Pangestu.  South Korea’s candidate Dr Taeho Bark was also among those targeted. New Zealand is scheduled to sign a free trade agreement with South Korea on Monday.

             ●          Trade Minister Tim Groser will today seal a free trade deal with South Korea that will essentially steer New Zealand towards a level playing field with its competitors in the fast-growing market, the New Zealand Herald  reported.  It is sometimes called the “catch-up trade deal” although it will take 10 to 15 years for many products to become tariff-free.  New Zealand has almost been the last cab of developed countries off the rank to conclude a free trade agreement with Korea, and the deals with about 50 other countries (EU representing 28) were putting New Zealand exporters at a disadvantage.

 “If we didn’t conclude this deal, we were facing the prospect of slowly being squeezed out of this market as Korea expanded its network of FTAs,” Mr Groser said last night. “Our key argument was ‘for heaven’s sake, we New Zealand, are supplying under 4 per cent of your agricultural imports. You are already on a path towards free trade in the very long term with the world so why would you discriminate against New Zealand.  Essentially it was a political argument, not a trade argument.”

 The main winners are exporters of kiwifruit, wine, beef and dairy (except for milk powder which keeps its 176 per cent tariff).

             ●          Philippines and Canada have agreed to enhance bilateral trade and investment relations between the two countries, the Manila Bulletin reported.  Ed Fast, Canada’s Minister of International Trade, and Gregory L. Domingo, the Philippines’ Secretary of Trade and Industry, met in Manila to discuss the potential for enhanced bilateral trade and investment relations between our two countries. Minister Fast’s mission here followed after the visit by Prime Minister Harper to the Philippines in November, 2012 and the meeting between the two leaders on the margins of APEC in November, 2014.

 “We also discussed ways to build on our current commercial relationship, which is already supported by existing agreements, such as a double taxation agreement, an investment promotion and protection agreement, and a recently expanded air transportation agreement,” the joint statement stated.  Both parties also commit to explore ways to deepen and modernize our trade, investments and collaboration partnerships in areas of common interest, such as agri-food, transport, energy, infrastructure, education, defense and security. They also agreed to resolve a number of market access issues in a timely fashion.

             ●          The Ghana Chamber of Commerce and Industry (GCCI) has signed a Letter of Collaboration with the United States Agency for International Development’s (USAID) West African Trade Hub and African Partners Network, to establish a framework for cooperation between the two parties in the implementation of the AGOA Trade Resource Centre, Ghanaian media reported (WTD, 3/5/15).  Ghana’s deputy minister of trade and industry Ibrahim Murtala Muhammed said the AGOA Trade Resource Centre will provide advisory services to Ghanaian companies to increase their competitiveness, and increase regional trade and value-added global exports, especially textile exports, particularly to the United States under the African Growth and Opportunities Act (AGOA).

 The Centre will also facilitate strategic investments to expand exports by providing technical assistance and industry-specific best practices to government and the private sector, Muhammed said.  The minister said the development of a trade hub has become necessary in view of the myriad of challenges confronting the country’s export business, particularly those within the textiles sector, to maximise fully the prospects of AGOA and other trade pacts available to Ghana.

             ●          Algeria may submit its World Trade Organization (WTO) accession file to the 10th WTO ministerial conference to be he held next December in Kenya, said Tuesday in Algiers Minister of Commerce, Amara Benyounes, according to Algiers Press Service.  “If the accession dossier will be ready, we will submit at the coming ministerial conference of the WTO, otherwise it will be for next year,” the minister told the press on the sidelines of a meeting of the National Commission in charge of the negotiations for Algeria’s accession to WTO.

 According to him, Algeria accession to this Organization does not face any major obstacle and it’s in the “last stage.”




   —  —



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On the Web......

 

Agriculture


Developing Countries.  US proposal at the World Trade Organization on finalizing a food security initiative for developing countries.   issued:  3/20/15.


Developing Countries.  G-33 proposal at the World Trade Organization on finalizing a food security initiative for developing countries.  issued:  3/19/15.



Asia


AIDB.  Center for Strategic and International Affairs background paper on the new Asian Infrastructure Development Bank.  (available at:  http://csis.org )  issued:  3/20/15.



Asia-Pacific


TPP.  Article by Rep. Levin on the TransPacific Partnership.  (available at:  http://democrats.waysandmeans.house.gov )  issued:  3/20/15.


TPP.  Statements by Reps. Tonko, Kaptur and DeLauro on the TransPacific Partnership.  (available in the Congressional Record of March 17 ).



Developing Countries


AIDB.  Center for Strategic and International Affairs background paper on the new Asian Infrastructure Development Bank.  (available at:  http://csis.org )  issued:  3/20/15.


Food Security.  US proposal at the World Trade Organization on finalizing a food security initiative for developing countries.  )  issued:  3/20/15.


Food Security.  G-33 proposal at the World Trade Organization on finalizing a food security initiative for developing countries.  issued:  3/19/15.


WTO.  World Trade Organization statement on the Enhanced Integrated Framework.  (available at:  https://www.wto.org/english/news_e/spra_e/spra49_e.htm )  issued:  3/22/15.



Canada


India.  Canadian statement on trade with India.  (available at:  http://www.international.gc.ca/media/comm/news-communiques/2015/03/21a.aspx?lang=eng )  issued:  3/21/15.


Philippines.  Canadian statement on trade with the Philippines.  (available at:  http://www.international.gc.ca/media/comm/photos/2015/03/20a.aspx?lang=eng )  issued:  3/20/15.



European Union


CA.  European Union January current account estimate.  (available at:  http://europa.eu/rapid/press-release_STAT-15-4643_en.htm )  issued:  3/20/15.



TTIP.  Summary of conversations between US Trade Representative Froman and European Commissioner for Trade Malmstrom on the TransAtlantic Trade and Investment Partnership.  (available at:  http://trade.ec.europa.eu/doclib/press/index.cfm?id=1282 )  issued:  3/20/15.


TTIP.  Joint US-European Union statement on public services in the TransAtlantic Trade and Investment Partnership.  (available at:  https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/march/eu-us-joint-statement-public-services )  issued:  3/20/15.

TTIP.  List of documents sent by the European Commission to the European Parliament on the TransAtlantic Trade and Investment Partnership.  (available at:  http://trade.ec.europa.eu/doclib/docs/2015/march/tradoc_153263.pdf )  issued:  3/20/15.



Export-Import Bank


Small Business.  US Export-Import Bank announcement of small business loan.  (available at:  http://www.exim.gov/newsandevents/releases/2015/SemiBulk-Systems-of-Fenton-Mo.cfm )  issued:  3/20/15.



India


Canada.  Canadian statement on trade with India.  (available at:  http://www.international.gc.ca/media/comm/news-communiques/2015/03/21a.aspx?lang=eng )  issued:  3/21/15.



Intellectual Property Rights


TPA.  Business Software Alliance letter to members of Congress on Trade Promotion Authority.  (available at:  http://bsa.org )  issued:  3/20/15.



Malaysia


Economy.  Asian Development Bank statement on Malaysia’s economy.  (available at:  http://www.adb.org/news/adb-president-highlights-malaysia-s-progress-asean-s-potential?utm_source=daily&utm_medium=email&utm_campaign=alerts )  issued:  3/20/15.



Philippines


Canada.  Canadian statement on trade with the Philippines.  (available at:  http://www.international.gc.ca/media/comm/photos/2015/03/20a.aspx?lang=eng )  issued:  3/20/15.



Services


TTIP.  Joint US-European Union statement on public services in the TransAtlantic Trade and Investment Partnership.  (available at:  https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/march/eu-us-joint-statement-public-services )  issued:  3/20/15.



Small Business


Ex-Im Bank.  US Export-Import Bank announcement of small business loan.  (available at:  http://www.exim.gov/newsandevents/releases/2015/SemiBulk-Systems-of-Fenton-Mo.cfm )  issued:  3/20/15.



Trade Balance


US.  Public Citizen analysis of how US trade statistics are skewed.  (available at:  http://www.adb.org/news/adb-president-highlights-malaysia-s-progress-asean-s-potential?utm_source=daily&utm_medium=email&utm_campaign=alerts )  issued:  3/20/15.



Trade Policy


Enforcement.  Statement by Sen. Stabenow on S 758 creating an interagency trade enforcement center.  (available in the Congressional Record of March 17 ).


Enforcement.  Text of S 758 introduced March 17 by Sen. Stabenow to create an interagency trade enforcement center.  (available at:  http://thomas.loc.gov )  issued:  3/17/15.


TPA.  Letter from 20 citizen groups to Congress on Trade Promotion Authority.  (available at:  http://keionline.org/node/2197 )  issued:  3/20/15.


TPA.  Business Software Alliance letter to members of Congress on Trade Promotion Authority.  (available at:  http://bsa.org )  issued:  3/20/15.


US.  Peterson Institute for International Economics material on US trade and the economy.  (available at:  http://blogs.piie.com/trade/?p=211 )  issued:  3/20/15.


US.  Text of HR 1403 introduced March 17 by Rep. Kaptur to promote a more balanced trade relationship with US surplus countries.  (available at:  http://thomas.loc.gov ).


US.  Statement by Sen. Sherrod Brown on trade transparency.  (available in the Congressional Record of March 12 ).



Travel and Tourism


Tourism.  Text of HR 1401 introduced March 17 by Rep. Heck to promote international tourism.  (available at:  http://thomas.loc.gov ).



World Trade Organization


EIF.  World Trade Organization statement on the Enhanced Integrated Framework.  (available at:  https://www.wto.org/english/news_e/spra_e/spra49_e.htm )  issued:  3/22/15.


What we’re covering this week –

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

             ●          Monday, Acting Deputy US Trade Representative Wendy Cutler discusses the TransPacific Partnership at the Japan Society in New York City.

             ●          The Brookings Institution sponsors a program on opportunities for the US and Japan in trade and the digital economy.  Deputy Assistant Secretary of State Dan Sepulveda is among the speakers.

             ●          On Tuesday, Brookings sponsors a program on globalization with Swedish Prime Minister Stefan Lofven.

             ●          Wednesday, Wharton holds a Cuba opportunity summit in New York City with speakers including Commerce Undersecretary for International Trade Stephen Selig and Assistant Secretary of State Roberta Jacobson.

             ●          Thursday, Howard University holds its annual two-day Women Ambassadors Conference.

             ●          On Friday, Brookings sponsors a program on the upcoming Summit of the Americas with Assistant Secretary of State Roberta Jacobson.


Our  Blog


Updated:    3/6/15

 WTD’s

Friday Afternoon

Podcast

2015podcast0327.mp3

Straight talk.   

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

•  A brief intellectual exchange on trade between AFL-CIO President Richard Tumka and Peterson Institute for International Economics President Adam Posen heard March 18.

•  Here’s an impassioned response from trade critic Rep. Rosa DeLauro to a stock “blame it on China” response about why we need a TransPacific Partnership agreement given during a House Appropriations agriculture funding hearing by Administrator of the Foreign Agricultural Service Phil Karsting on March 19.

•  The sound of one hand clapping.  Here’s the applause President Obama got on March 9 when he spoke to the National League of Cities asking for their support for his trade policies.

•  Senate Finance Committee Chairman Orrin Hatch tells WTD that he will talk to his ranking Democratic Ron Wyden again on Trade Promotion Authority legislation, but  he is death on any proposal to make trade more difficult than it already is.

•  Comments by two veteran trade officials on secrecy in the TransPacific Partnership negotiations – first Chile Ambassador to the United States Juan Galbriel Valdes and then Taiwan Minister of Economic Development John Chen-Chung Deng.