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

EU Parliament Committee Approves Draft TTIP Recommendations
International Centre for Trade - 04 June 2015
Members of the European map Parliament’s international trade committee (INTA) signed off last week on a series of draft recommendations for what it would like to see in a planned trade deal with the US, including a highly-anticipated position on the investment protection component of the talks.

While the recommendations approved by the committee on 28 May are not binding, it does give an indication of what EU parliamentarians could potentially deem acceptable in a final trade deal. The 751-member chamber will need to approve the terms of the agreement – known as the Transatlantic Trade and Investment Partnership (TTIP) – when one is reached, with lawmakers stating repeatedly that their input must be taken into account for them to consider a final EU-US trade pact.

Furthermore, the recommendations agreed in the INTA committee last week still need the approval of the full European Parliament. That vote is currently set for next week, with amendments to the recommendations possible during the plenary process. Given the slow pace of the talks, various analysts have noted that the Parliament’s stance on TTIP could help spur the negotiations forward. A similar process is underway in Washington, with Congressional lawmakers in the process of debating legislation that sets the US’ negotiating objectives in trade deals, while also setting the terms for how the US legislature approves such agreements.

The talks on investor protections and ISDS within the TTIP context have been suspended for nearly 18 months, a decision made by Brussels in order for the 28-nation EU to hold a public consultation on these provisions and how they could be improved. The results of those public consultations were released earlier this year, and last month EU Trade Commissioner Cecilia Malmström presented to the INTA committee a concept paper that outlined a series of suggested reforms to the investor-state dispute settlement (ISDS) mechanism which aimed to take into account the feedback received

These suggestions included a call to create in the medium-term a permanent multilateral court and appellate mechanism to arbitrate investment disputes, as well as outlining reforms in the areas of the right to regulate; improving the establishment and functioning of arbitral tribunals; including an appellate mechanism in TTIP; and addressing the relationship between ISDS and domestic courts.

The TTIP talks involve three areas where the two sides are aiming to improve market access: tariffs, services, and government procurement. To date, the two sides have exchanged one set of offers on goods tariffs, which are still under discussion, and are preparing to exchange revised offers on services ahead of the July round.

While welcoming the effort at full tariff elimination, INTA parliamentarians indicated that they would like to see an “exhaustive list” to address sensitivities in agricultural and industrial goods to either face longer transitional periods or be exempt from liberalization entirely. Other recommendations by the committee’s lawmakers involved the inclusion of a “safeguard clause” for temporarily restricting entry of specific food products in the case of an increase in imports that could hurt domestic production, as well as asking that for strong protection of the EU’s geographical indications (GI) system.

GIs are used to denominate products with a specific geographical origin and which possess qualities, reputation, or characteristics that are essentially attributable to that same place, with common examples including Feta cheese or Parma ham. Another unresolved issue in the TTIP negotiations will be how exactly to deal with the issue of energy. While the EU has been pushing for a dedicated energy chapter in the agreement text, the US has indicated that these provisions could also be dealt with across other chapters.

INTA parliamentarians last week called for including an energy chapter, as well as the abolishment on any “existing restrictions or impediments” on fuel exports, such as crude oil and liquefied natural gas (LNG). EU Trade Commissioner Cecilia Malmstrom reaffirmed on Wednesday that this is indeed one of the objectives being pursued by Brussels in the negotiations.

“Today, US gas exports are subject to cumbersome licensing procedures and oil exports are essentially banned. These limits can be removed in the agreement. To do this, the EU believes that TTIP should include a legally binding commitment by both sides not to restrict exports of oil and gas to the other partner,” the EU trade chief said at a conference on TTIP organized by the Alliance for Liberals and Democrats in Europe (ALDE) group in the European Parliament.

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EU, Japan Leaders Pledge to Speed Up Trade Talks
International Centre for Trade - 04 June 2015
Leaders from the EU and Japan agreed last week at a Tokyo summit to speed up the pace of their bilateral trade negotiations, which have been underway since 2013. The push to advance discussions comes as both trading partners are also working to advance other “mega-regional” trade talks, namely the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP).

The trade deal, referred to as both an Economic Partnership Agreement (EPA) and Free Trade Agreement (FTA), is being negotiated in parallel with a Strategic Partnership Agreement (SPA) between the two sides. Both were key topics during the 29 May meeting, which saw the EU represented by Commission President Jean-Claude Juncker and Council President Donald Tusk. Japan was represented by Prime Minister Shinzo Abe.

“The SPA and EPA/ FTA hold the potential to lift our relations to a new strategic level,” leaders said in a joint press statement following the meeting, highlighting the importance of reaching a “highly comprehensive and ambitious” trade deal. This deal should particularly focus on areas such as goods, services, and investment market access; government procurement, with the inclusion of railways; non-tariff measures; and intellectual property issues, including the protection of geographical indications.

“To this end we have entrusted our negotiators with the mandate to settle the outstanding differences with a view to reaching agreement encompassing all the key issues preferably by the end of 2015,” they affirmed. “I strongly believe in the necessity to have a free trade agreement with Japan being concluded as soon as possible, possibly by the end of this year. If not, in the first months of 2016,” said Juncker following the meetings in Tokyo. Along those lines, the EU Commission chief said, a five-point “Action Plan” has been submitted to Abe on ways to move forward in the negotiations.

EU Trade Commissioner Cecilia Malmström, who was also in Tokyo for meetings with various Japanese ministers, including Foreign Affairs Minister Fumio Kishida and Minister of Economy, Trade, and Industry Yoichi Miyazawa, outlined in a speech what Brussels currently envisions as an “ambitious” trade deal. “We believe that if this deal is worth doing, it’s worth doing right. We have to be ambitious on the substance as well as on the timing,” she said at Keindanren, the Japan Business Federation.

An ambitious deal, she said, would specifically involve outcomes in tariffs, investment, public procurement, and regulatory compatibility. For example, on tariffs, the two sides should aim for elimination, including in areas such as food, agriculture, and cars, while respecting “core sensitivities.” On public procurement, she noted that the two sides have already reached a deal on “non-discriminatory and transparent access to procurement” by Japan’s top railway companies, suggesting that similar ambition across all public tenders at both city and central government levels is an EU goal.

Regulatory compatibility “is essential” for ensuring major gains from trade, with the EU trade chief qualifying that cooperation in this area will not entail undermining consumer and environmental protections. Meanwhile, an improved investment climate is necessary for boosting investment flows.

The two trading partners combined make up over a third of global GDP, according to EU data. Japan is the EU’s second largest trading partner in Asia, preceded only by China, with goods trade between the two sides being dominated by products such as motor vehicles, electrical machinery, optical and medical instruments, chemicals, and pharmaceuticals.

The push for a bilateral trade pact comes as both Tokyo and Brussels pursue various avenues for boosting trade, and in turn their growth and jobs prospects, with other key partners. For example, the EU is working to advance talks for the planned TTIP deal with the US, while Japan is one of the 12 countries involved in the TPP. The former is not expected to be completed until 2016 at the earliest. The latter, for its part, could be finished in the coming months, depending partly on whether Washington lawmakers sign off on major trade legislation.

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US House of Representatives Gears Up for Trade Skirmish
International Centre for Trade - 04 June 2015
The US House of Representatives resumed session this week, with lawmakers soon expected to take up controversial legislation that would grant President Barack Obama with renewed “fast track” trade powers. The legislation, known as Trade Promotion Authority (TPA), was approved in the Senate late by a 62-37 vote margin, after a bruising fight among lawmakers on issues ranging from the overall merits of international trade deals to how to deal with alleged currency manipulation by other countries.

The draft TPA legislation sets out Washington’s principal negotiating objectives in trade deals, while allowing for completed agreements to be submitted to Congress for a straight up-or-down vote without the possibility of amendment. The previous version of TPA was enacted in 2002 and expired in 2007.

House Majority Leader Kevin McCarthy, a Republican from the state of California, confirmed this week his plans to bring the TPA legislation to the floor for a vote in June. The majority leader, among other tasks, schedules legislation for floor consideration in the House. “It’s my intent to get that done this month,” the lawmaker said. However, no formal date for the vote has been announced. The upcoming fight in the House, however, is widely expected to be more difficult than in the Senate.

Paul Ryan, the Wisconsin Republican who chairs the House Ways and Means Committee, has attempted to dispel some of those concerns. “I’m proud that so many of you are ready to support TPA and all that it represents. I know some say you don’t trust the president. That’s exactly why we need this TPA,” Ryan said. “It provides unprecedented accountability and transparency. It empowers you, not him. And it gives us our best opportunity to advance fair, effective trade agreements over the next six years.”

The lawmaker was referring to the provision in TPA that would allow the legislation to be extended from three years – to mid-2018 – to six years upon the President’s request, so long as neither chamber of Congress passes a disapproval resolution. That would leave TPA in place until 2021, well into the next Administration, with Obama due to leave the White House in January 2017.

The top Democrat on the Ways and Means Committee, Sander Levin of Michigan, has instead been vocal in his opposition to advancing TPA without first seeing various concerns addressed in the ongoing Trans-Pacific Partnership (TPP) trade negotiations. Those talks, which aim to establish a 12-country deal spanning various Pacific Rim countries, is said to be in the “endgame,” but has struggled to cross the finish line given the lack of clarity on TPA’s fate.

The impending House vote has sparked fierce competition among lobby groups in Washington, in an effort to influence undecided lawmakers in one direction or another. Reports have emerged of massive letter, phone, and e-mail campaigns, as well as protests by some groups in key congressional districts.
Labor unions such as the AFL-CIO, which is the dominant federation of US unions, have said that the trade deal could hurt American workers, lobbying intensely against both TPA and TPP.

“By coming together to pass TPA, a bipartisan majority in the Senate clearly demonstrated confidence in the ability of American workers and farmers to compete and win in world markets – if the playing field is level,” said US Chamber of Commerce President and CEO Thomas Donohue last month, urging House lawmakers to do the same.

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AgTC Applauds Congressional Action on Ports
Agriculture Transportation Coalition - June 5, 2015
The Agriculture Transportation Coalition (AgTC) applauds initiatives to prevent another calamity from occurring at West Coast ports. We strongly support two legislative efforts by South Dakota Senator John Thune and Colorado Senator Cory Gardner. Senator Thune's Bill, S. 1298 creates port marine terminal productivity metrics, while Senator Gardner's PORTS Act amends Taft-Hartley to give Governors a larger role during port disruption. The AgTC and many other agriculture organizations joined manufacturers and retail associations, for a total of 118 signatories on a letter to Senator Gardner supporting this initiative. Click here for the Press Release from Senator Gardner's Office.

West Coast ports are themselves working to prevent further disruption. The AgTC has been invited by the Ports of Los Angeles and Long Beach to participate in their stakeholder outreach initiatives. AgTC Advisory Board member Greg Jackson of Border Valley Trading, will represent the AgTC and AgTC member National Hay Association on the Ports of LA and Long Beach's Peak Season Working Group convening this coming week. This legislation, hiccups with the ILWU-PMA Contract, and port initiatives nationwide, will be front and center in three weeks at the AgTC Annual Meeting.

The AgTC was founded on the premise that there is nothing that we produce in agriculture and forest products here in the US that cannot be sourced somewhere else in the world. Disruption and dysfunction of our West Coast gateway container terminals over the course of the past 11 months has severely injured the agriculture and forest products sector, causing literally billions of dollars of lost sales, and many lost customers who had to turn to foreign suppliers for the products which we could not deliver to them due to the collapse of our West Coast ports.

The US cannot afford another collapse of our gateway container ports. We cannot standby and wait for US West Coast ports, which have now shut down twice over the past 13 years, to do it again when the recently approved ILWU-PMA contract expires in just four years, in 2019.

America's agriculture and forest products comprise the largest volume of US exports. They are critical to our economy, not only at the gateway ports where they are loaded on ships, but all the way to the heartland where they are grown, where millions of Americans are employed growing, processing, packing farming ranching food, farm and fiber for the world.

US farmers fight every day to remain competitive in the global marketplace. We know we have competition for every product that we grow and produce, process and pack here and export. While many importers and some exporters were able to shift to US East Coast and Gulf ports as well as Canadian ports, and are continuing to expand to shift away from dependence on West Coast ports, for US agriculture and forest products this is less feasible. The major foreign customers for US agriculture and forest products are in Asia and agriculture products must move the most direct route, directly east to US West Coast ports and then directly west across the Pacific to our Asian customers. Longer routes are not feasible for many agricultural exports and our customers have already proven that they will not wait for us when there are so many other suppliers around the world eager to step into our shoes.

The AgTC, on behalf of exporters of agriculture and forest products in all 50 states, recognizes and commends the leadership of those US senators who are concerned about the viability of our US economy. They are concerned that recent Department of Commerce reports show the slowing of the economy due in part to the collapse of US West Coast ports and our inability to export.

These senators have introduced legislation designed to protect the livelihoods of millions of Americans employ throughout the country in agriculture and forest products production for export. The senators have introduced two bills, S. 1298 to collect metrics of port marine terminal productivity so that we can have an early warning system to know when terminals are ceasing to operate normally and when it may be time for the federal government to step in to protect the interest of the greater American economy. The PORTS Act, would extend the authority to invoke Taft-Hartley to Governors of states in which the marine terminals are located, ensuring that should a port strike lockout or slowdown again, those governors can step in and intervene. This year, the President choose not to utilize authority under Taft-Hartley over the past 11 months when West Coast ports ceased to function with even close to normal productivity.

On behalf of the our membership, we are asking every senator and every congressperson to consider the interests of the US economy as a whole and of their constituents in particular all of whom were injured during this last West Coast port collapse. We ask those members of Congress to join with Senators Thune, Gardner, and all others to support their legislation and support any other legislation necessary to avoid the catastrophe which so injured the U.S economy and the agriculture and forest products sectors over these past eleven months.

Members of the US agriculture and forest products community must work to reestablish their reputation as dependable suppliers to the world. This will be difficult as many foreign customers have been sorely tested when our ports ceased functioning.

As we anticipate what might happen four years from now, or even three years from now when the US East Coast longshore contract expires, we need our federal representatives to be ready to step forward, and if they are not ready and willing to step forward, then the authority needs to be provided to the governors of the states where the ports are located so that they can protect their agriculture and forest products exporters, and all those whose livelihood depends upon the flow of international commerce.


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.