WJ Byrnes banner

Global Partner for Personalized Logistics Services

TradeInFocus   Our compilation of news to keep you in focus on key trade matters

Obama Renews Call for TPP Ratification in Final State of the Union Speech
The HILL - 14 January 2016
US President Barack Obama openly called upon domestic lawmakers to ratify the Trans-Pacific Partnership (TPP) Agreement, referring once more to the need for Washington to play a leading role in setting trade rules in Asia.
Speaking at a joint session of Congress on Tuesday evening for his final State of the Union address, the US president said that the 12-country trade pact would ?open markets, and protect workers and the environment, and advance American leadership in Asia.?

?With TPP, China does not set the rules in that region, we do. We want to show our strength in this new century? Approve this agreement, give us the tools to enforce it. It?s the right thing to do,? Obama said. The speech otherwise featured little on trade, besides a call upon lawmakers to vote to lift the US embargo on Cuba, building upon last year?s restoration of diplomatic relations and steps to increase travel and trade with the island nation.

No mention was made by Obama of either the ongoing negotiations with the EU for a Transatlantic Trade and Investment Partnership (TTIP) agreement, nor of his thoughts for the WTO?s future following the Nairobi ministerial conference last month. Even regarding the TPP, little detail on what the president aims to do ? or what he would like to see from Congress during the ratification process ? was included in the speech, and no reference was made as to the possible timing of a vote.

Obama did note, however, that the US has ?recovered from the worst economic crisis in generations? and raised the issue of how to give people a ?fair shot at opportunity and security in this new economy? as one of the questions he says the country must aim to address. ?Anyone claiming that America?s economy is in decline is peddling fiction,? he said. ?What is true ? and the reason that a lot of Americans feel anxious ? is that the economy has been changing in profound ways, changes that started long before the Great Recession hit, changes that have not let up.?

The State of the Union speech comes just weeks before leaders from the 12 TPP nations are set to meet in New Zealand on 4 February to sign the agreement. The signing of the deal kicks off a two-year window for the original signatories to finish their domestic approval, legislative, and ratification processes. Should that timeline be met, the deal would enter into force within 60 days.

Otherwise, 60 days following the end of that two-year window the agreement will still enter into force as long as six of the signatories have notified the completion of domestic legal procedures, and that those six make up 85 percent of the group?s combined GDP under 2013 figures. Should that threshold not be met, the TPP will enter into force 60 days following whenever a minimum of six signatories making up 85 percent GDP is reached.

The US is the largest economy of the Trans-Pacific Partnership members, with the 12-country group together making up 40 percent of global GDP. Negotiations for the proposed agreement were concluded in October 2015 following a ministerial-level meeting in the US city of Atlanta, Georgia. In recent weeks the pact has drawn the support of some key US business groups, such as the National Foreign Trade Council, the American Farm Bureau Federation, the Business Roundtable, and the US Chamber of Commerce.

The Chamber of Commerce, for example, has cited the results of a new World Bank report on the TPP?s implications, which found that the trade pact could boost the GDP of participating economies by an average of 1.1. percent by 2030, while increasing their trade by 11 percent. The report also found that, given the ?positive spillovers? the TPP would have for other countries, the deal would only have a limited ?detrimental impact? as a result of trade diversion and preference erosion for countries outside the agreement.

While the trade references were brief, one of the key themes of the president?s speech was on the importance of tackling the challenges of climate change and transitioning more quickly from ?old, dirtier energy sources? to cleaner ones, suggesting that doing so would not only be good for the planet but also give a chance for US companies to play a leading role in the production and sale of ?the energy of the future.?

Along with calling for energy sources to better reflect their actual cost to taxpayers, specifically by changing the management of coal and oil resources, Obama also noted that wind and solar power are becoming cheaper along with creating new jobs. The US president made multiple references in praise of the universal climate deal reached by nearly 200 nations in December during their annual UN meeting, which in 2015 was hosted by Paris, France.

Addressing climate change ? an issue that has been raised repeatedly by Obama during his years in office ? was also linked to national security, one of the speech?s overarching themes, with the US president also raising the challenges posed in areas ranging from terrorism to economic security.

?The future we want, all of us want ? opportunity and security for our families, a rising standard of living, a sustainable, peaceful planet for our kids ? all that is within our reach. But it will only happen if we work together. It will only happen if we have rational, constructive debates. It will only happen if we fix our politics,? said Obama toward the end of the speech.

The US President urged lawmakers to move past the ?rancour and suspicion between the parties,? which he noted has worsened over the course of his presidency, while addressing the American people more broadly in urging them to change the existing system to one that ?reflect[s] our better selves.? ICTSD reporting; ?Govt confirms plans to sign TPP in Auckland,? RADIO NEW ZEALAND, 13 January 2016.?

Details: THE HILL, 14 January 2016.

On the Release of the World Bank's 2016 World Development Report - - Digital Dividends
Under Secretary for Economic Growth, Energy, and the Environment - Washington, DC - January 14, 2016
Today?s World Development Report from the World Bank powerfully demonstrates the digital dividends for nations and people available from the expanding use of digital technologies. It should serve as a wakeup call for leaders and institutions committed to the economic and social advancement of the world to invest in the development of the digital economy and people?s ability to use it.

For the 60 percent of the world?s population that lacks access to the internet, reaping the benefits of the digital revolution is difficult or impossible. But what this report makes clear is that expanding connectivity is necessary but not sufficient. To fully realize the economic and social benefits from the digital dividend requires a technology environment that fosters competition among businesses, adapts workers? skills to the demands of the new economy, and ensures that institutions are accountable.

This is a global challenge. Meeting it requires a global partnership and leadership that leverages the talent and creativity of everyone ? public and private, bilateral and multilateral ? to ensure everyone benefits from the digital revolution.

With this in mind, the US Department of State has launched the Global Connect Initiative to promote and support action from key stakeholders, including governments, industry, civil society, and the technical community, to help bring an additional 1.5 billion people online by 2020. We look forward to hosting a high level multi-stakeholder conference at the Department of State in Washington, DC to bring greater international attention and support for bridging the digital divide. The conference will be held on the margins of the World Bank/IMF meeting in April 2016.

Details: US Department Of State

Obama Highlights Trade Opportunities in State of Union
American Shipper ? January 13, 2016
The Trans-Pacific Partnership and normalizing trade relations with Cuba are two accomplishments that President Obama said he wants to reach their final conclusion. President Obama urged Congress during his final State of the Union message last night to ratify the Trans-Pacific Partnership free trade agreement and lift the trade embargo on Cuba, saying both policies would enhance American leadership in Asia and the Latin America.

Obama used the speech to defend his economic and foreign policy decisions, saying the United States has the strongest economy in the world in part because of actions his administration took to rescue the auto industry and stabilize the financial system in the wake of the great recession. He said the ability to partner with other nations and build global coalitions to address problems is as much a sign of US strength as its military power.

According to Obama, the TPP ?cuts 18,000 taxes on products Made in America, and supports more good jobs."
With TPP, China doesn?t set the rules in that region, we do,? he said. He also said that restoring diplomatic relations with Cuba is the right thing to do after 50 of isolation have done little to promote democracy in the Communist nation. ?Recognize that the Cold War is over. Lift the embargo,? Obama told lawmakers assembled in the Capitol building.

The president acknowledged that Americans might not feel as wealthy as they would like despite the economic recovery, saying the slow progress is due to forces such as globalization, that result in competition for jobs with people in low-wage countries, and the proliferation of technology. Business groups continued to voice strong support for TPP and the opening to Cuba, which could lead to export opportunities. The TPP would give U.S. companies much easier access to 11 Pacific Rim countries, including Japan.

?This landmark agreement will enhance American competitiveness, support U.S. jobs, eliminate thousands of tariffs and expand the rule of law in the Asia-Pacific region,? Peter Robinson, president of the U.S. Council for International Business, said in a statement. Good governance, transparency and establishing American commercial values in the region are important benefits for the United States, he added.

Political observers say Obama faces a difficult battle to win approval for TPP in Congress this year. A statement issued by Rep. Peter DeFazio, a Democrat from Oregon, illustrated the political challenge to TPP. "If we truly want economic security and opportunities for all, we need to prioritize the needs of the American people over those of massive corporations," the congressman said, calling TPP "a dangerous agreement that would export jobs, drive down wages, and devastate American manufacturing."

Details


US Repeals Country-of-Origin Labelling, Avoiding Retaliation
International Centre for Trade ? 14 January 2016
The US? country-of-origin labelling (COOL) scheme for pork and beef was repealed by Congress late last month, averting hefty countermeasures that Canada and Mexico were preparing to impose following a prolonged WTO dispute. ?The omnibus bill repealed the country of origin labelling (COOL) requirements for muscle cuts of beef and pork, and ground beef and pork.

Effective immediately, USDA is not enforcing the COOL requirements for muscle cut and ground beef and pork outlined in the January 2009 and May 2013 final rules,? explained US Agriculture Secretary Tom Vilsack following the repeal. While it removes COOL for pork and beef, it does allow the labelling to continue for lamb and chicken. The repeal was included in language for a multi-trillion dollar spending bill passed by the US legislature on 18 December and signed into law by President Barack Obama.

Washington revised the policy in an effort to bring it into compliance with trade rules, with Ottawa and Mexico City challenging whether the changes were indeed sufficient to address the problems found by the global trade arbiter. A compliance panel and the Appellate Body ultimately found that the changes were not enough to resolve the WTO-inconsistent elements.

An arbitrator later deemed on 7 December that Canada has effectively lost benefits worth C$1.054 billion (US$740 million) annually as a result of COOL, with Mexico having suffered losses amounting to US$227.758 million annually. In both cases, in line with global trade rules, the arbitrator had granted those two countries with permission to ask for WTO-authorized retaliation up to those respective amounts.

The level of countermeasures approved by the arbitrator were lower than what the two complainants had earlier requested. Canada had pushed for over C$3 billion annually in authorized retaliation, while Mexico had called for US$713.4 million, with both countries citing losses from both export revenue and domestic price suppression. During the arbitration process, the US had challenged the inclusion of domestic price suppression losses in the level of countermeasures, which the arbitrator ultimately agreed with, then focusing the remainder of its analysis on potential countermeasures on the ?claimed level of export revenue losses caused by the COOL measures.? The arbitrator?s report subsequently explained the differences and rationale in the econometric approaches advocated by the parties in determining the level of ?nullification or impairment of benefits,? as well as what approach the arbitrator found to be appropriate in making its final determination of export revenue losses and level of countermeasures.

The WTO?s Dispute Settlement Body (DSB) granted authorization to both Canada and Mexico on 21 December for retaliation at the levels found by the arbitrator, following those countries? respective requests.

Whether Washington will later pursue a voluntary meat labelling regime is not yet clear, though has been raised in earlier discussions of alternative ways to meet the objective of providing consumers with origin information while attempting not to run afoul of trade rules as the mandatory scheme had. ?Repealing the six-year-old Country-of-Origin Labelling program for beef and pork prevents the loss of millions of dollars of US dairy exports that would have resulted from the World Trade Organization ruling? said Jim Mulhern, President and CEO of the US-based National Milk Producers Federation.

Details: Bridges Weekly



tradeinfocus is a summary of news and events on the trade policy front for clients, trade & legislative colleagues, and professional friends of W.J. Byrnes & Co.