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

Statement on the WTO Environmental Goods Agreement (EGA) Negotiations
Office of the United States Trade Representative -Paris 7 June 2016
Today, Trade Ministers and senior officials from seven EGA members - Australia, Canada, the European Union, Japan, Korea, New Zealand, and the United States - met in Paris to discuss progress in the negotiations and to chart a path toward successful conclusion later this year. This group has been working closely together with the aim of concluding an ambitious EGA with all participants ahead of when G20 Leaders meet in Hangzhou in September for the G20 Summit.

The Trade Ministers and senior officials welcomed the significant progress that has been made over the 13 negotiating rounds held to date. This includes recent efforts in smaller groups and different configurations to focus negotiations towards a potential EGA landing zone.

The Ministers and senior officials reiterated their commitment to a high-standard, ambitious EGA that eliminates tariffs on a broad range of environmental goods, in the context of a future-oriented agreement. They committed to intensify their work together and with other EGA partners to successfully conclude the negotiations, and to find common ground on an EGA that will improve environmental protection, promote economic growth, and create green jobs, through an increase in global trade in environmental goods. The Ministers and senior officials encourage other WTO Members with a similar level of ambition and interest to join the EGA.


Inaugural World Trade Symposium in London June 7th & 8th, 2016
Global Trade Review - 8 June, 2016
1 - Trade driven growth is over - Such was the provocative statement made by Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE). He believes the years of trade spurring global growth are over, and something else will soon emerge as the main global driving force, though it remains to be seen what that something could be.

Roberto Azevedo, director general of the World Trade Organization (WTO), made concurring comments, as he said trade growth would not go back to pre-2008 levels, but would instead settle around 1.5 times the pace of global GDP growth in the coming years. For his part, Pascal Lamy, the WTO's former director general, said that the speed of trade growth may change "but it won't stop or reverse".

2 - Technology should be supportive, not disruptive - That was the point of view of Gadi Ruschin, CEO of Wave, a fintech company focused on block chain applications for trade finance. He added that block chain has managed to get banks in "super collaborative mode", but was pessimistic about them sharing data, which could block the progress made so far.

Philippe Gelis, CEO of foreign exchange platform Kantox, pointed to the internet of things as a game changer -because it makes it possible to measure absolutely anything". He added that the EU Payments Services Directive coming into force this year will force banks to collaborate with fintech or become obsolete, as it entails them allowing complete access to third parties wanting to move money for their clients.

3 - KYC harmonization is critical creation of a KYC gold standard - At an off-the-record roundtable chaired by GTR as part of the event, participants identified priorities to improve the current regulatory environment and limit its negative impact on trade. These included international harmonization through the creation of a KYC gold standard that all financial institutions can adopt. This would avoid the repetition of the KYC process by various institutions or even various country branches of the same institution banking the same client. Participants also called for the creation of an international utility with accredited domestic arms doing KYC and "validating" clients, instead of it being performed by individual financial institutions. Speakers said KYC regulations are hindering trade inclusion, as trade banks are retreating from their correspondent relationships and leaving whole regions "orphaned". But efforts are being made to harmonize these rules, notably between the UK's Financial Conduct Authority (FCA) and the Monetary Authority of Singapore.

4 - Inequality trend needs to be reversed - As various organizations are pointing to the growth of social inequalities in developed countries, speakers at the World Trade Symposium noted the importance of economic and social inclusion. Michael Gidney, chief executive of the Fairtrade Foundation UK, pointed out that "producers" share of value in commodities trade has actually fallen in the past 30 years". Azevedo said that although trade is under siege and the specter of protectionism is rising, "the path to greater inclusion will be through more trade, not less".

5 - UK should NOT leave the EU - The World Trade Symposium was the scene of a very lively Brexit debate, but trade experts were unanimous: the UK should vote remain. Answering arguments that the UK is too important to EU exporters not to keep open trade even after leaving the union, Azevedo explained that trade negotiations are complex and need willing counterparts. "In the event of Brexit, all trade agreements the UK currently has through the EU would have to be renegotiated, and countries won't have the negotiation of a UK trade deal as a priority," he added. Meanwhile Lamy found "the notion that you can advocate Brexit on trade grounds incredible", and said the EU would lose 50% of its weight in economic terms without the UK.


Current, Future Trade Deals in Focus at Paris Ministerial Gathering
International Centre for Trade and Sustainable Development
Making progress in current and future trade negotiations was touted as a valuable way for increasing productivity and generating inclusive growth, according to a joint ministerial communiqu- issued following the annual forum of the Organization for Economic Co-operation and Development (OECD) in Paris, France.

The 1-2 June gathering came in tandem with new economic figures from the Paris-based organization, which support findings from other international agencies that indicate a continuation of the low economic growth seen in recent years. "We see the world economy stuck in a low-growth trap," said OECD Secretary-General Angel Gurria in announcing the latest statistics. "Global growth is projected to continue to limp along at around three percent this year, and to pick up only modestly in 2017."

World real trade growth, meanwhile, is predicted to reach 2.1 percent this year, under the OECD?s new estimates - below the 2.6 percent seen in 2015 - and should then reach 3.2 percent in 2017. The OECD chief also warned that potential growth improvements could still suffer, due to risks ranging from a UK exit of the European Union to the potential financial difficulties being seen in some emerging economies.

Given this context, ministers in Paris devoted much of their communique to the potential policy steps that could help address the myriad challenges facing the global economy, including with regard to trade and investment. "We recognize the need to boost trade and investment to both foster productivity, and inclusive and sustainable growth," said ministers in their closing communique. Other topics for discussion included adopting new social and education policies; working to take advantage of current digitalization and innovation trends; and helping support the implementation of the Paris climate agreement, the UN 2030 Agenda for Sustainable Development, and the Addis Ababa Action Agenda on financing for development.

The final OECD communique also called for progress in various trade deals - both plurilateral and multilateral - while noting the importance these would have for the global economy. These included the implementation of the expanded Information Technology Agreement (ITA-II) and the entry into force of a multilateral pact aimed at easing customs procedures and red tape at the border, known as the WTO's Trade Facilitation Agreement (TFA).
Ministers also called for progress in ongoing trade negotiations, including talks among 17 WTO members for a tariff-liberalizing deal on a list of environmental goods. Specifically, they urged for negotiators to conclude this Environmental Goods Agreement (EGA) by the September G-20 Summit, being hosted this year by China.
The Paris gathering also gave ministers and senior officials from some EGA participants the chance to meet on the sidelines, bringing together officials from Australia, Canada, the European Union, Japan, Korea, New Zealand, and the United States. "[The group] committed to intensify their work together and with other EGA partners to successfully conclude the negotiations, and to find common ground on an EGA that will improve environmental protection, promote economic growth, and create green jobs, through an increase in global trade in environmental goods," said a statement released following the talks. The next EGA round is scheduled for later this month.

Ministers in Paris also addressed the prospects for agreed outcomes at the WTO's next ministerial conference, slated for the end of 2017. "Following the Nairobi Ministerial Conference, there remains a strong commitment to advance negotiations on pending Doha issues," said ministers in Paris. "We agree that a range of issues of importance to today's global economy, that are currently subject of trade rulemaking in regional trade agreements, are highly relevant issues for consideration in the WTO."

In the months since last December's ministerial meeting in the Kenyan capital, trade talks in Geneva have been relatively quiet, as members evaluate how to proceed. Various WTO members have begun pushing for an outcome on agricultural domestic support for the 2017 ministerial, along with discussing areas that could be addressed in future negotiations at either the plurilateral and/or the multilateral level. Trade sources note that these talks are still in the very early stages, as members gauge ambition and interest in different possible areas for future negotiations as well as how to approach these.

"The period of reflection was valuable and many good ideas have been explored and tested. But we must now move to the next stage where governments make concrete proposals on what they would like to see in terms of outcomes at the 11th Ministerial Conference and beyond," said WTO Director-General Roberto Azevedo after the Paris discussions. However, the WTO chief warned, regular political engagement at the ministerial level will be key for achieving any agreed outcomes going forward. The OECD ministerial communique also calls for the conclusion of talks for a Trade in Services Agreement (TISA) "possibly the end of 2016," confirming related statements made publicly and privately by various officials involved in the services liberalization initiative.

Furthermore, the Paris gathering included a meeting on the margins of ministers from countries participating in the TISA talks. The group currently counts 23 participants, with the 28-nation EU as one, which together make up 70 percent of global services trade.

"Today's meeting shows that we may not be far from reaching an agreement on TISA by the end of this year," said EU Trade Commissioner Cecilia Malmstr?m in a statement following the TISA ministers" meeting, which she chaired. While noting improvements in the recently exchanged revised offers, she urged participants to demonstrate ?more ambition? going forward. "The EU is ready to go an additional mile but everyone needs to join if we want to achieve an agreement able to shape the global economy of the 21st century," she said.

The ministerial meet coincided with a nine-day TISA negotiating round, held in Geneva, Switzerland, and also hosted by the European Union. The chairmanship of the TISA talks rotates between the EU, Australia, and the United States. The round, held from 26 May to 3 June, included significant discussions on the revised market access offers, according to trade sources familiar with the talks, with all parties except one able to submit theirs earlier this month.

Sources say that while different participants have their own assessments regarding the improvements made in these offers, compared to their earlier iterations, they have generally signed off on various common criteria for how to evaluate them. These criteria include ensuring that the final TISA deal meets, at a minimum, the commitments already inherent in the WTO's General Agreement on Trade in Services (GATS); making good quality commitments and improving sectoral coverage in various areas, such as maritime, education, audiovisual, energy, environment, financial and professional services, career services, and health and wellbeing; and providing commitments that at least match their "best FTA."

They also involve removing some of the party space reservations; improving the level of commitments under Mode 4; delivering on "new services" and removing reservations in these; and improving transparency on sub-federal measures and whether there are limitations on these.

Trade sources indicate that despite the advances in the revised offers, much work remains across the board for bringing these to the desired level of ambition, and that different views exist as to their quality. Negotiations also continue on the various different "annexes" for inclusion in a final TISA accord.

The next TISA round is slated for July, with another exchange of offers due in October.

Five TPP 'Firsts': Breaking New Ground on Trade
TPP Coalition - 9 June 2016
The Trans-Pacific Partnership (TPP) is a modern trade agreement that reflects the realities of today?s global economy. The TPP goes beyond prior trade agreements in many areas to address 21st century barriers and issues that have limited American competitiveness in the region.

In addition to slashing more than 18,000 tariffs, the TPP breaks new ground. As a result ...

Digital Trade is Protected: Binding provisions in the Electronic Commerce Chapter will ensure the free flow of data and prevent forced data localization.

State-Owned Enterprises Are Included: New rules for competition with enterprises owned by governments will level the playing field.

Trade Secrets Are Defended: For the first time in a trade agreement, trade secret theft is subject to criminal penalty.

Boosts Access for US Food and Ag: The Sanitary and Phytosanitary (SPS) Chapter includes enforceable obligations that go beyond the World Trade Organization SPS Agreement and prevent foreign non-scientific barriers from blocking US food and agricultural product exports.

Small Guys Win: Small and medium-sized enterprises will benefit from tariff cuts, elimination of red tape, improved customs and trade facilitation measures, and a chapter dedicated to helping them take advantage of the TPP to the fullest extent.

For more details on TPP and how trade with TPP countries benefits the United States: www.tppcoalition.org .

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.