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

In Beijing, Global Business Strongly Urges Governments to Conclude An Ambitious Environmental Goods Agreement Before The End Of 2016
Inside US Trade - October 28, 2016
On Tuesday, the Coalition for Green Trade, together with representatives from green industries and business associations from around the world met at an international business seminar in Beijing to highlight their strong support of an ambitious Environmental Goods Agreement (EGA).

The seminar emphasized both the economic and environmental benefits of an EGA for China and other countries. Participants also discussed the evolution of global value chains in the environmental industry and the many shared benefits for China and other countries' consumers and manufacturers.

During the seminar, a variety of participants emphasized their hope that EGA negotiators will adopt in Geneva the first international, biding environmental trade agreement in the WTO during the first week of December 2016.

Details: here.

Inaugural US-Argentina Commercial Dialogue Signals New Step for Economic Relationship
US Commerce Dept. - October 27, 2016
Today, US Secretary of Commerce Penny Pritzker met with her Argentine counterpart Minister of Production Francisco Cabrera for the inaugural US-Argentina Commercial Dialogue in Washington, DC. Established last March during Secretary Pritzker and President Obama's visit to Argentina, the Dialogue aims to strengthen the economic and commercial ties between the two countries by fostering communication across our respective public and private sectors. Throughout the day, Secretary Pritzker met with business leaders and public officials from both countries to discuss how Argentina can play a greater role in the global economy, and how to make doing business in Argentina more transparent and predictable.

In addition, Secretary Pritzker delivered remarks at the US.-Argentina Commercial Dialogue Private Sector Readout hosted by the Council of the Americas. Private sector representatives were invited to participate and share their recommendations on how to best support Argentina as it continues to reshape its economic regulations and develops key trade policies, institutions and capacities.

The recent engagement between United States and Argentina represents a significant effort on the part of Argentina to open the door to new business as they substantially revise policy frameworks in how to regulate and facilitate trade, conduct economic development and investment promotion, and conduct trade remedy activities. The Secretary emphasized building a solid foundation is instrumental in order to foster the long term economic relationship between the United States and Argentina.

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Canada, EU Sign Major Trade Deal
American Shipper - November 01, 2016
At a time when the United States seems to be pulling back from free trade agreements, leaders of Canada and the European Union signed a major trade deal over the weekend that will eliminate virtually all tariffs on goods traded between them and open new markets for businesses in both regions.
Some estimates say the free trade agreement will boost Canada?s economy by $12 billion Canadian (U.S. $8.96 billion).
Editorial comment by Leitner: Sadly here in the US we continue to be blindsided by a minority who are misleading the public about the value of Global Trade. Time to WAKE UP AMERICA!

"The signing of the Comprehensive Economic and Trade Agreement (CETA) is a historic occasion. This modern and progressive agreement will reinforce the strong links between Canada and the EU, and create vast new opportunities for Canadians and Europeans alike - opening new markets for our exporters, offering more choices and better prices to consumers, and forging stronger ties between our economies," Canadian Prime Minister Justin Trudeau said. "CETA will offer significant benefits for most sectors of the Canadian economy, from fishermen in Newfoundland and Labrador, to aerospace workers in Quebec, and from people assembling automobiles in Ontario, to forest industry workers in British Columbia to miners in the Northwest Territories."

The Port of Halifax issued a statement saying CETA offers export-growth opportunities, with containerized and non-containerized project cargo from Nova Scotia and Atlantic Canadian to Europe.
The European market accounts for 38 percent of total containerized throughput at Halifax.

Whether the agreement is implemented remains uncertain because it requires approval of almost 40 national and regional parliaments in Europe, according to Clifford Sosnow, a partner at the Fasken Martineau law firm. He previously served as senior counsel with the trade law division of the Canadian Department of Foreign Affairs and International Trade.

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In the President's Words
The White House - October 27, 2016
This week, President Barack Obama explained in his own words why ratification of the Trans-Pacific Partnership (TPP) is essential for our economy, and for our position of strength in the Asia-Pacific. Why is the TPP so controversial? This is an important question. And the answer reflects a larger paradox we're facing today ? including some misconceptions about the effects of globalization, technology, past trade agreements, as well as some misunderstandings about the TPP itself.

President Obama made it clear that without TPP, the United States will lose out on a crucial opportunity to shape the rules of the road in the Pacific, cede our leadership to our competitors in the region, and put American workers, farmers, and businesses at a competitive disadvantage in global trade. With TPP, however, we can ensure American workers and industries can compete on a fair and level playing field - growing American businesses and strengthening our economy for the long-term.

READ MORE in the President's own words.

"If the past two decades have taught us anything, it's that the biggest challenges we face can't be solved in isolation. We live in an age of global supply chains, cargo ships that crisscross oceans, and online commerce that can render borders obsolete. The answer isn't to stop trading with other countries - in this global economy that's not even possible. The answer is to do trade the right way, by negotiating with other countries so that they raise their labor and environmental standards; to make sure they don't impose unfair tariffs on American goods or steal our intellectual property. That's how we make sure international rules are consistent with our values, including human rights. That's how we get better wages. That's how we help our workers compete on a level playing field. And that's exactly what TPP does."

--- President Barack Obama
[url "https://www.quora.com/Why-is-the-TPP-so-controversial/answer/Barack-Obama?srid=7hDetails [/url]

CEA Issue Brief: Industries and Jobs at Risk if the Trans-Pacific Partnership Does Not Pass
The White House - November 3, 2016
Today, the Council of Economic Advisers released an issue brief on the risks to American workers and businesses of Congress failing to act on the Trans-Pacific Partnership. Read the full brief
HERE

Introduction:
In 2015, the United States shipped $680 billion dollars of goods and $184 billion in services exports to the 11 other countries who participated in negotiating the Trans-Pacific Partnership (TPP). As documented in a number of independent economic analyses, the TPP agreement provides many opportunities for American consumers, workers, and businesses. It would lift growth rates over time and contribute to rising living standards. Studies also suggest that the majority of the gains from TPP would accrue to workers as increasing productivity and demand for labor would both contribute to wage increases relative to a world without TPP"consistent with the evidence that exporters tend to pay higher wages than similar non-exporting firms.

Yet the cost of not passing TPP would likely be substantially larger than just the foregone benefits because existing trade relationships would not necessarily remain unchanged, as other countries would not wait indefinitely for the United States to ratify the agreement. Instead, in the absence of TPP, countries have already made it clear that they will move forward in negotiating their own trade agreements that exclude the United States. These agreements would improve market access and trading opportunities for member countries, while US businesses would continue to face existing trade barriers. One such agreement is the Regional Comprehensive Economic Partnership (RCEP), a trade agreement that involves China, Japan, and many of the dynamic and fast-growing economies of Asia, which could potentially fill the void left if Congress fails to pass TPP.

If TPP did not pass, the United States would not only forego substantial economic gains, but would also face trade diversion and enjoy less market access compared with other countries such as China. RCEP will provide its member countries with improved access to the markets of seven countries that are members of the TPP, putting US exporters at a disadvantage and threatening the billions of dollars of exports the United States currently sells in the region, in addition to squandering the new export opportunities that TPP would provide. Nearly 45 percent of current US goods exports go to TPP countries?highlighting the importance of improved market access, trade facilitation, and clear rules of the road for trade with these countries. More than $225 billion in US exports?roughly 10 percent of total US exports to the world?go to the seven countries that are in TPP but would also be in RCEP in the event TPP is not passed and RCEP goes forward.

Beyond aggregate evidence based on models or historical experience, it is helpful to take a more straightforward, micro-level look at which industries within the United States are likely to directly lose out if TPP does not pass. It is important to remember that the baseline comparison for understanding the economic impact of TPP is not the current set of trade relationships that the United States enjoys but rather the counterfactual trade relationships and rules that will very likely develop if TPP does not pass. The status quo is not guaranteed into the future and not passing TPP would likely create new challenges for American exporters and their employees. In particular, if TPP is not passed, trade agreements between other countries will continue. And these other trade agreements in Asia that do not include the United States will not be based on U.S. values or a strong vision for raising standards and leveling the competitive playing field for global commerce.

This brief analyzes one aspect of the economic impact if TPP does not pass and RCEP takes effect. In particular, it examines the Japanese market and compares the tariffs that US and Chinese firms would face under RCEP, showing that Chinese firms would enjoy meaningful tariff cuts that would improve their competitive position relative to US firms. This is just one of scores of bilateral trading relationships between the 16 countries currently involved in RCEP negotiations and provides an illustrative example of the challenges that U.S. businesses would face if RCEP takes effect instead of TPP.

Nearly 5 million people work in US goods-exporting industries that could face a direct loss of competitive position relative to China if RCEP were to give its member countries preferential access to the Japanese market over US firms. Losses to these industries would compound the foregone benefits of TPP for US firms who would have benefited from improved market access.

This issue brief documents some of the potential economic losses in the event that TPP does not pass. In particular, these losses fall into two categories: (1) the impact to specific industries that would face an erosion of relative market access in the event RCEP passes; and (2) foregone benefits to industries which currently export to TPP countries and would fail to see improved market access if TPP does not pass. The brief takes Japan as one example of an important market for US goods, as the largest TPP country that would also enter RCEP, and China as one possible competitor for that market who would gain preferential access under RCEP. But this example captures only a small fraction of the potential losses to U.S. firms across the Asia-Pacific market if TPP does not pass.

In the event RCEP is implemented and TPP is not, within the finite example of just the China-Japan goods export relationship:
? China likely would see substantial tariff cuts when selling to Japan, with typical reductions of over 5 percentage points where tariffs are cut and many tariffs cut by more than 10 percentage points. The average tariff on goods covered by RCEP would likely be less than half the average rate faced by the same goods if exported from the United States.

Japan a year would see an erosion of their market access to Japan relative to Chinese firms due to tariff cuts under RCEP. These US industries include 162,000 business establishments and employ nearly 5 million workers nationwide.

and employ nearly 12 million workers in 360,000 business establishments nationwide would fail to see improved market access if TPP is not passed. Further, the rules of the road in Asia formed in the absence of TPP could substantially disadvantage US firms and workers in these industries.

If TPP is not passed, this would also prevent the United States from helping to shape trade in Asia to adhere to high standards and US values.

This is just an illustration of some of the many consequences of not passing TPP. The implications of RCEP itself would encompass more countries. Potentially other bilateral and plurilateral trade agreements would be concluded that would leave out the United States, leading to further trade diversion. And provisions in TPP to level the playing field, including on rules for labor, the environment, and state-owned enterprises would not go into effect, nor would the Joint Declaration by TPP countries to address currency manipulation and competitive devaluation that is contingent on TPP.
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BIS Chief Says US Export Control Reform Must be Ongoing
American Shipper ? November 01, 2016
In the final months of the Obama administration, officials at the Commerce Department?s Bureau of Industry and Security (BIS) said they remain as busy as ever on the reform of the nation?s export control system. President Obama mandated in August 2009 that the mostly Cold War-era US export controls, which are administered by the Commerce, State and Defense departments, be updated to reflect current national security threats and economic realities.

A hallmark of this effort has been the in-depth review by the administration of the State Department?s US Munitions List (USML), which is part of the International Traffic in Arms Regulations (ITAR), and the shift of less sensitive components and technologies, including commercial satellites, from that list to the Commerce Control List (CCL).

With the reform?s changes so far, the United States now has much better "interoperability" between federal agencies in charge of export oversight, as well as the country's NATO and other allies, and reduced the licensing burden for the US export industry, Eric Hirschhorn, Commerce?s undersecretary for industry and security, told attendees at the BIS Update conference in Washington Monday.

This summer, Commerce and State published the so-called ?definitions? rule, which harmonized definitions for key regulatory export terms found in both the Export Administration Regulations (EAR) and ITAR, such as ?export? and ?reexport,? among others. Hirschhorn said a key to the export control reform initiative is that it will remain ongoing, even after the Obama administration departs. The rules should be ?regularly revisited in the future? by both the agencies and export industry, he added.

For example, as a result of comments received from a March 2015 notice of inquiry, Hirschhorn noted BIS and the State?s Directorate of Defense Trade Controls (DDTC) in February published proposed revisions to USML Categories VII (military aircraft) and XIX (military engines). He explained that revisiting those two categories was the result of continued changes in technology and the need to further clarify the original rulemaking's language for transferring certain items from those USML categories to the CCL. Hirschhorn has previously stated that both BIS and DDTC plan to issue similar notices of inquiry for other revised USML categories after they have been in effect for 18 to 24 months.

However, Hirschhorn warned the reform doesn?t mean an easing of enforcement against those who violate the export control regulations. ?Without strong enforcement, people that comply with the rules are put at a disadvantage by those who flout the rules,? he said. A significant goal for the US export reform initiative is to establish a single agency that will use one information technology system to process all export license applications. This aspect of the reform is expected to carry over into the next administration. Meanwhile, Hirschhorn, and his counterpart at the agency, Assistant Secretary for Export Administration Kevin Wolf, are widely credited within the Obama administration, as well as by the export industry, for leading the charge on export control reform within the Commerce Department for the past seven years.

?All of us in this room will miss [Hirschhorn?s] leadership when he departs. But he will leave you in the capable hands of BIS?s experienced and talented career staff, including Deputy Undersecretary Dan Hill, Deputy Assistant Secretary Matt Borman, and Deputy Assistant Secretary Rich Majauskas. Now and into the next administration, I have great confidence in this team,? said Commerce Secretary Penny Pritzker in her keynote speech at the Update conference.

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Administration Close to Reaching Biologics Solution with Hatch, TPP Countries
Inside US Trade - October 28, 2016
Roughly two weeks before Congress returns for a lame-duck session, the Obama administration appears close to a solution that could satisfy Senate Finance Committee Chairman Orrin Hatch (R-UT) on his main Trans-Pacific Partnership concern, clarifying each country's commitments on the market exclusivity period for biologics. The ?fix,? sources said, could move previously undeclared lawmakers to support the TPP implementing bill in the lame-duck. Sources told Inside US Trade that Hatch's team has been working ?very hard behind the scenes?.

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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.