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

12 Member Nations Sign Trans-Pacific Partnership (TPP0)
American Shipper ? February 4, 2016
The trade ministers of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam at a meeting in Auckland on Wednesday signed the Trans-Pacific Partnership agreement. TPP member countries comprise about 40 percent of global GDP and represent about one third of world trade. It took the 12 countries more than five years to negotiate the comprehensive trade agreement. The individual countries must now ratify the agreement for it to take effect. For the United States, this means President Obama and other supporters of the TPP must begin the arduous task of convincing Congress to vote in favor of the agreement.

The TPP is designed to promote trade between 12 economies. The TPP aims at trade liberalization in goods and services, including the reduction of over 18,000 specific tariffs. Of particular interest to the US are the reduction of tariffs on agricultural products, lower barriers in services, and intellectual property (IP) protections. Despite the benefits of access to new markets and increased trade, there are still risks associated with the TPP.

TPP promises a number of trade benefits for US exporters, including reduction or outright elimination of tariffs and non-tariff barriers, increase in market access for agricultural products, new binding commitments in e-commerce, stricter controls for state-owned enterprises, strong trade enforcement, good governance standards, streamlined treatment of cross-border shipments, promotion of regulatory transparency, and supports for small to midsized businesses.

A group of large U.S. companies and trade associations are lobbying Capitol Hill lawmakers to pass TPP. ?We encourage Congress to give the agreement timely consideration and ultimately support its passage," the US Coalition for TPP, which represents a broad range of companies and trade associations, said in a statement.

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Asia-Pacific Economic Cooperation (APEC) Meeting in Lima Peru
APEC ? 18 January 2016
APEC?s recent supply chain work has centered on meeting the 2015 target of a ten percent improvement in terms of reduction of time, cost, and uncertainty of moving goods and services through the region. Now, in 2016, APEC finds itself in a critical year, looking to determine the focus of this next phase of supply chain work efforts that remain of the utmost priority through the region.

In addition to helping to shape APEC?s next phase of supply chain work, the February A2C2 meeting will also continue to review outcomes of ongoing technical assistance activities. We also look forward to discussing plans that will focus on best practices on critical issues in the Asia-Pacific region for the implementation of WTO Trade Facilitation Agreement. Both the WTO and WCO will be participating in these meetings.

Realizing the growing importance of Global Trade to the US economy the United States Government made a commitment to support this effort and formed the ?US-APEC Technical Assistance to Advance Regional Integration (US-ATAARI).

Mr. Leitner was first appointed as a US Delegate to APEC in 1999 by the US Secretary of Commerce and was reappointed in 2007 by the Executive Office of the White House, an appointment he still holds. Mr. Leitner and W.J. Byrnes & Co. are the only licensed US Customs Broker & Forwarder member of the US Delegation. He will be in Lima Peru for this session of meetings February 22 thru 25. We look forward to reading the results of these meetings in a forthcoming edition of TradeInFocus.

Vietnam Prepares for Belt and Road
HKTDC ? 26 January 2016
Many Vietnamese companies are upbeat over the country's prospects as part of the Belt and Road Initiative, despite concerns over territorial disputes with China. Vietnam is considered a key part of the maritime component of China's ambitious Belt and Road Initiative. In particular, there has been a focus on Northern Vietnam's Haiphong Port, with plans to complete a major facilities upgrade by the end of 2017.

Overall, Haiphong is a key nexus along two of the proposed trade corridors. One is along a route connecting Nam Ninh, Lang Son, Hanoi and Haiphong, while the second connects Kunming, Lao Cai, Hanoi and Haiphong. These proposals would see Vietnam playing an enhanced role in transporting goods produced in the Chinese mainland, while opening the local consumer market to external suppliers. Improved links are also expected to help develop Vietnam's own industrial base.

With Vietnam ideally placed as a transportation hub for other countries along the Mekong River ? including Cambodia, Laos, Thailand and Myanmar ? the country would play an important logistics role in serving the ASEAN bloc. The only real barrier to such a development is the lingering territorial disagreements between the mainland and Vietnam, particularly relating to the South China Sea.

Addressing the need to resolve such issues, President Xi Jinping has said that: "We must strictly adhere to the important agreements that the leaders of the two countries have achieved. Together, we can handle and control any disagreement over the situation, and maintain peace and stability on the East Coast." If such issues can be resolved or even merely set aside, many parties in both the mainland and Vietnam would welcome the closer economic and logistics ties outlined as part of the Belt and Road proposal. One such advocate is Eric Fang, Director of the Shunfang Company, a Shanghai-based fabric trading company.

"Vietnam is one of our major buyers,? said Mr Fang. ?The fact that Vietnam has agreed to be part of the Silk Road project is great news for us. We have been working with Vietnamese companies for many years and until now, the process of shipping goods by sea has been lengthy, while also requiring the completion of a substantial amount of paperwork. In future, if we could use rail transportation, there would be considerable savings in both time and costs." While some have been less certain about the upside for Vietnam, the Vietnamese business community sentiment appears largely upbeat about the initiative, with expectations of enhancing trade prospects in the long term.

"I expect Vietnam will participate in the Belt and Road project and that, in future, relationships between the two countries will be less complicated,? said David Wong, Director, Wintec Company, a specialist polyurethane foam manufacturer based in Vietnam's Long An province. ?It can only lead to a much improved situation and not only in terms of international trade. "I believe it will create the ideal conditions to develop and extend our business domestically. It will also benefit other Vietnamese enterprises and the Vietnamese economy in general."

Such optimism was echoed by Tran Lam, a Senior Sales Representative of the Au Viet Moc Trading Import Export Company, a wooden furniture manufacturing company based in Hi Chi Minh City. "When foreign companies invest in Vietnam, there will inevitably be more job opportunities for the people here,? said Mr Lam. ?That means the unemployment rate will drop and the overall quality of life will improve. That has to be a good thing."

Others, however, highlighted the importance of settling outstanding territorial matters. "In terms of our businesses, if the relationship between Vietnam and China improves, it can only be a good thing,? said Nguyen Van Hoang, Deputy Director of Vietnam Textile and Garment Corporation. ?Many of last year's problems relating to the South China Sea had a hugely negative impact on our business. With sales frozen for months, there was nothing for our workers to do. Despite this, we still had to pay our staff in order to retain them."

Overall, the Belt and Road Initiative is seen to offer several clear opportunities for Vietnam?s economy. While most of them would enable Vietnam to attract more investment from overseas companies, especially those based in the mainland, the project will also support the development of the country's infrastructure, particularly in utility and logistics facilities.

A prime example is the recently completed work on the hydroelectric power generation plant in Binh Thuan on Vietnam's south central coast. About 95 per cent of the project's total capital cost of US$1.75 billion came from Chinese venture investors ? the Southern China Power Grid Company and Chinese International Power Company, with the remaining five per cent covered by the Vietnam Coal and Mining Group (Vinacomin).

The same consortium is also behind the development of the Vinh Tan thermal power plant in Binh Thuan. With a total capacity of 1,200MW, the project?s initial phase will come on line before the end of 2018, with the second phase scheduled for completion about six months later.

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The Economic Effects of the Trans- Pacific Partnership: New Estimates
Peter A. Petri and Michael G. Plummer, Peterson Institute for International Economics - January 2016
This Working Paper estimates the effects of the Trans-Pacific Partnership (TPP) using a comprehensive, quantitative trade model, updating results reported in Petri, Plummer, and Zhai (2012) with recent data and information from the agreement. The new estimates suggest that the TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented.

Annual income gains by 2030 will be $492 billion for the world. While the United States will be the largest beneficiary of the TPP in absolute terms, the agreement will generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members. The agreement will raiseUS wages but is not projected to change US employment levels; it will slightly increase ?job churn? (movements of jobs between firms) and impose adjustment costs on some workers.

Note: The authors thank the Brandeis Asia-Pacific Center for financial support. Some of the research included in this study was supported by funding from the UN Development Program and the World Bank. This Working Paper is a chapter in volume 1 of the forthcoming PIIE Briefing on Assessing the Trans-Pacific Partnership.

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