Washington Trade Daily
Volume 22, Number 99 Monday, May 20, 2013
Trade Reports International Group
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Getting Down to Specifics in TTIP
If a TransAtlantic Trade and Investment Partnership agreement is to be negotiated successfully and in a reasonable period of time, it will be necessary for both sides to sit down first and decide what can be realistically achieved, commented visiting European Union agriculture official Joâo Pacheco on Friday (WTD, 5/17/13).
Speaking on a panel on agricultural issues in the upcoming cross-Atlantic trade negotiations, the European Commission Director-General for Agriculture said insisting on reaching “impossible” goals in the accord is certain to sink the effort.
The official spoke at a forum sponsored by the Washington International Trade Association.
Two years ago, the official commented, there would have been no way both Washington and Brussels would embank on such an ambitious effort. At least on the EU side, the reasons to do so are simple. One is that the EC is in the middle of furthering its liberalization of agricultural policy which began 10 years ago; the other reason is that things in the world have changed. He cited the deteriorating economic situation on both sides of the Atlantic and the stalled state of the Doha Development Agenda trade negotiations.
Among the chief advances of the agricultural reform has been the almost total demise of import quotas – including from wine, milk and sugar. Mr. Pacheo hinted the United States should be willing to do the same – including doing away with a market order for olive oil now contained in the draft farm bill.
‘Precautionary Principle’
Mr. Pacheo suggested that Brussels can be expected to compromise on some particular issues of importance to the US side. But there are some subjects than cannot be transversed. One is the broad subject of the “precautionary principle” which is embedded in the Lisbon treaty. “Precautions,” which pertain to a ban on hormone-treated beef sales, for instance, deal more with public desires than simple science. The other “no-go” area, he suggested, is any negotiated effort to weaken expanding farm animal welfare standards.
But both, Mr. Pacheco suggested, can be approached in the negotiations in specific ways. Mr. Pacheo suggested that the current agreement between Washington and Brussels on beef can be finally formalized. On animal welfare issues, he expressed some satisfaction that Congress is addressing the issue in the current farm bill debate (WTD, 5/17/13). Dealing with environmental issues in the negotiations would be another “no-go” area, he added.
Genetically Modified Organizations is another touchy area for negotiators, the official continued. But the real concern by the United States is the slow pace of approving new GMO food products. That certainly be addressed in the negotiations.
Mr. Pacheo also warned the United States to say away from pushing the “cloning” issue, where a sensitive discussion is going on internally – among the Commission, the European Parliament and member states.
It also will be difficult for Brussels to bend on Geological Indications issues. He pointed to strong provisions in two recent EU free trade agreements – one with Singapore and the other with South Korea – which treat GIs as intellectual property rights protection issues and not a matter of market access.
Still Stalled on G-33 Food Proposal
Geneva – Industrialized countries – along with Chile – last week objected to a Group-of-33 proposal to amend the World Trade Organization agreement on agriculture to help assure developing countries that they will continue to be able to protect their populations from food shortages (WTD, 5/17/13).
The United States last week said the entire issue is very complex and expressed skepticism about finding a lasting solution to the issue between now and the early December Bali ministerial meeting. Washington cautioned against any amendment to the agriculture agreement on grounds that it would be a step backwards from the Uruguay Round agreement, said a farm trade negotiation familiar with the discussion.
Agriculture negotiations chair John Adank last week convened two meetings with trade envoys from select industrialized and developing countries. The chair asked participants to give their views on two questions he posed earlier in the week. One was whether it is possible to amend the agreement on agriculture as proposed by the G-33 farm coalition because of the allegedly flawed variables in the calculation of de-minimis support for developing countries. A second question to envoys was whether they could consider country-specific solutions to address the public stockholding programs.
Reference Prices
Developing countries have said commodity prices during 1986 to 1988 referenced in the current agreement have caused “lots of problems” in the calculation of de-minimis support. They argued that external reference prices failed to take into consideration inflation of 300 percent for rice and wheat and 500 percent in input costs.
The G-33 members are pressing for either increasing the de-minimis support to 15 percent as proposed by the former Doha agriculture negotiations chair in 2008 or update the reference prices to a more recent period.
Canada suggested that the difficulties faced by developing countries differ from country to country. Australia joined with the United States in saying that it opposes amending the current agriculture agreement, WTD was told.
Mr. Adank urged members to look into ideas offered by Australia and Canada giving consideration to excessive rates of inflation on the ability of any member to abide by its domestic support commitments. The chair will hold an open-ended meeting on Thursday.
More Language on Trade Facilitation
Geneva – Members involved in negotiating a World Trade Organization agreement on trade facilitation last week circulated clean texts on their respective proposals concerning pre-arrival processing, publication of average release time of goods, post-clearance audit, risk management, electronic payment and advanced rulings, WTD has learned (WTD, 5/17/13).
Another round of negotiations will be held tomorrow.
In anticipation of that meeting, Japan tabled a clean text on pre-arrival process which calls on each member to “adopt or maintain procedures allowing for the submission of import documentation and other required information, including manifests, in order to begin processing prior to the arrival of goods with a view to expediting the release of goods upon arrival.”
The Japanese proposal says “members shall, as appropriate, provide for advance lodging of documents in electronic format for pre-arrival processing of such documents.”
Tokyo also urged members “to measure and publish their average release time of goods periodically and in a consistent manner, using tools such as, inter alia, the WCO Time Release Study.”
Similarly, China and South Korea circulated clean texts on post-clearance audit and risk management. The two north Asian countries – both major exporters – offered flexibility language in risk management obligations.
Canada and Switzerland circulated a text on electronic payment, while Australia offered a simplified proposal on advance rulings. “Each Member shall issue an advance ruling in a reasonable, time-bound manner [not exceeding a maximum period of 150 days] to an applicant that has submitted a written request containing all necessary information. If [a Member/the competent authority of a Member] declines to issue an advance ruling it shall promptly notify the applicant in writing, setting out the relevant facts and the basis for its decision,” said the Australian proposal.
The trade facilitation draft negotiating text still contains more than 600 square brackets.
A Second Export Permit for LNG
The Energy Department on Friday announced it has give a Texas liquid natural gas terminal authority to export to countries that do not have free trade agreements with the United States (WTD, 2/5/13).
Energy approved the request of Freeport LNG Expansion LP and FLNG Liquefaction LLC to export domestically produced liquefied natural gas to non-FTA countries from the Freeport LNG Terminal on Quintana Island, Texas. Subject to environmental review and final regulatory approval, the facility is conditionally authorized to export at a rate of up to 1.4 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years.
US law generally does not allow the export of liquid natural gas to non-FTA countries without explicit authorization from Energy. With US production of LNG rising sharply, Energy has received numerous requests for LNG exports. The department said it will continue to process the applications on a case-by-case basis.
The Japanese government praised the US decision, which will pave the way for a new much-needed energy source, according to press reports from Tokyo.
A New Steel Dumping Petition
Three US steel companies have petitioned the government for relief from imports of welded stainless pressure pipe from Malaysia, Thailand and Vietnam that they allege are being dumped in the US market at less than fair value.
Bristol Metals LLC, Felker Brothers Corporation and Outokumpu Stainless Pipe last Thursday filed antidumping petitions with the Commerce Department and International Trade Commission. Between 2010 and 2012 imports of welded stainless steel pressure pipe from Malaysia, Thailand and Vietnam increased from 14,000 tons to 17,000 tons and have taken a significant share of a relatively stagnant US market, according to a statement from Bristol Metals.
The petitions alleged dumping margins of 15 percent to 17 percent for Malaysia, 13 percent to 15 percent for Thailand and 70 percent to 71 percent for Vietnam.
Around the Globe
Negotiators from the 11 Trans-Pacific Partnership Countries paused talks to meet with more than 300 global stakeholders at an engagement event hosted by the Government of Peru. Representatives from academia, labor unions, the private sector, and non-governmental organizations from around the world spoke with and heard from negotiating teams about priorities for and progress on the pending trade agreement, the US Trade Representative’s office reported yesterday (WTD, 5/17/13). The negotiations also had the opportunity to listen to 48 lecture-style stakeholder presentations.
Following the 4 hour engagement event, the TPP chief negotiations convened a stakeholder briefing session at which they provided updates on the ongoing negotiations and answered questions related to the subject matter of the proposed agreement.
The following negating groups met on May 19 – financial services; labor; rules of origin (with textiles); intellectual property rights, as well as the chief negotiations from the 11 TPP countries. Negotiating groups meeting Monday, May 20 are the groups discussing investment; cross border trade in services; labor; market access; environment; legal issues; and technical barriers to trade issues. Additional bilateral meetings are occurring throughout the week.
Commerce Undersecretary for International Trade Francisco Sánchez is in Hanoi, Vietnam, for a civil nuclear trade policy mission, according to Commerce. Mr. Sánchez is leading a delegation of US government officials and executives from 18 US civil nuclear sector firms. Hanoi is the first stop of the mission that includes visits to Beijing and Ningbo, China.
While in Hanoi, Mr. Sánchez will advocate on behalf of US companies to ensure they gain access to commercial opportunities in Vietnam, and emphasize the importance of deepening bilateral civil nuclear cooperation. US exports of goods to Vietnam totaled $4.6 billion in 2012, an increase of 7.3 percent from the previous year. Vietnam is the 29th largest trade market for the United States, with total trade of nearly $25 billion in 2012, up more than 14 percent since 2011. In 2011, U.S. foreign direct investment in Vietnam totaled $747 million.
Growth Energy and the Renewable Fuels Association have filed a complaint with the General Court in Luxembourg challenging the European Commission’s 9.6 percent antidumping duty on all ethanol imported from the United States (WTD, 5/15/13). Growth Energy CEO Tom Buis says they want a complete and total end of the duty which is having a damaging effect on U.S. ethanol producers.
Buis says they’re not stopping with the case in Luxembourg, they’re also working on another challenge. Buis says the actions by the Europeans does not sit well if they’re serious about entering into a free trade deal with the U.S. through a transatlantic agreement.
Finance Minister P Chidambaram has said that India offers “unlimited” opportunities for investment in infrastructure sector as the country needs more roads, airports and seaports, the Press Trust of India reported (WTD, 5/19/13). “What I am telling the investors here and the government here is that there is a huge opportunity in India, especially in infrastructure,” said Chidambaram.
“There is no other country in the world which requires so many thousand kilometres of road, so many airports, so many seaports, so much more capacity of steel, mining, power. So I think the opportunities are unlimited,” he said. India requires investment to the tune of USD 1 trillion in the 12th Five Year Plan ending March 2017 for development of various infrastructure projects. The share of infrastructure investment in GDP is planned to be increased to more than 10 per cent by the end of the 12th Plan.
Canada has said the negotiations for an ambitious Comprehensive Economic Partnership Agreement with India are progressing “very well” despite delay in early conclusion of bilateral foreign investment promotion and protection agreement, the Press Trust of India reported (WTD, 4/19/13). “The talks will see a meaningful closure with both sides having an agreement which is both ambitious as well as balanced,” Canadian Minister of International Trade Ed Fast said yesterday.
He was addressing a meeting organized by the Indo-Canada Chamber of Commerce (ICCC) and the Brampton Board of Trade. To date, the Canada-India trade negotiations have undergone seven official rounds. A Comprehensive Economic Partnership Agreement (CEPA) would benefit Canadian workers and SMEs by eliminating or reducing tariffs on goods, cutting red tape and facilitating trade in services. Canada has identified core economic opportunities in India in the energy, agriculture, infrastructure and education sectors, the Minister said.
India has raised concerns with Japan over the rising trade deficit with the country following implementation of the bilateral comprehensive economic partnership agreement (CEPA) about two years ago, The Hindu reported. It has sought more market access for Indian pharmaceuticals and agriculture and marine produce to help bridge the deficit.
Commerce and Industry Minister Anand Sharma in a meeting with Japanese Foreign Minister Fumio Kishida in Tokyo on Friday, pointed out that while trade was growing satisfactorily after the implementation of the CEPA, the increasing trade deficit was an area of great concern. “The Minister specially urged for market access for Indian agricultural and marine produce and Indian pharmaceuticals,” an official release said. India’s trade deficit with Japan was at $3.6 billion in 2010-11 before the CEPA was implemented and it almost doubled in 2012-13 to $6.3 billion. Its export to Japan in 2012-13 was $6.26 billion compared with imports of $12.50 billion.
China is sending an investment promotion mission and one of the biggest ever business delegations to India next week to accompany Premier Li Keqiang on his State visit, top officials said on Thursday, to demonstrate that the government was taking ‘very seriously’ the widening trade imbalance. China and India are, next week, expected to sign a number of business cooperation agreements, including investment and financing deals, as Mr. Li travels to New Delhi and Mumbai.
His visit takes place against the backdrop of fast-rising bilateral trade, which reached $66 billion last year as China became India’s second-largest trading partner. Bilateral trade stood at a few billion dollars a decade ago. Despite the rapid increase in overall trade, the increasingly unbalanced nature of the relationship has emerged as a source of concern, with the deficit reaching a record $29 billion last year, in China’s favour. Indian imports of Chinese machinery and equipment, particularly in the power and telecom sectors, have emerged as a key driver of trade, while India continues to export raw materials such as iron ore. While India is pushing for greater market access for information technology and pharmaceuticals companies, it has had limited success so far.
The European Union said that the second high-level meeting under the Interim Economic Partnership Agreement for Eastern and Southern Africa was successfully held in Mauritius last week. The EPA Committee met exactly one year after Madagascar, Mauritius, the Seychelles and Zimbabwe started implementing the agreement with the European Union. The partners reviewed trade, development and customs aspects of the agreement, and adopted a Joint Communique on all issues involved.
Peter Thompson, Director at the European Commission’s Directorate-General for Trade, expressed his satisfaction over the real benefits that the agreement is already delivering in terms of free access for ESA products to the EU market, according to a press release. The European Union started applying duty and quota free access for all ESA products in 2008. He concluded that the ESA-EU partnership is an active and productive one, and that this meeting was important to review how the agreement is working for ESA’s development. The committee meetings are annual and the next meetings are due to take place in 2014.
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Africa
AGOA. Letter to President Obama by Rep. Royce on the African Growth and Opportunity Act. (available at: http://foreignaffairs.house.gov/sites/republicans.foreignaffairs.house.gov/files/113.LTR_.Royce_.pdf ) issued: 5/17/13.
Cotton. World Trade Organization committee report on assistance to African countries under the cotton initiative. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-1.aspx?language=E&CatalogueIdList=116780,116781,116784,116795,116794,116798,116797,116796,116792,116773&CurrentCatalogueIdIndex=3&FullTextSearch= ) issued: 5/17/13.
European Union. Joint communique from the Eastern and Southern African countries and the European Union on a economic partnership agreement. (available at: http://trade.ec.europa.eu/doclib/docs/2013/may/tradoc_151145.pdf ) issued: 5/15/13.
Agriculture
COOL. National Farmers Union statement on public attitudes toward country-of-origin labeling. (available at: http://www.nfudc.org ) issued: 5/17/13.
Africa. World Trade Organization committee report on assistance to African countries under the cotton initiative. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-1.aspx?language=E&CatalogueIdList=116780,116781,116784,116795,116794,116798,116797,116796,116792,116773&CurrentCatalogueIdIndex=3&FullTextSearch= ) issued: 5/17/13.
Bangladesh
Textiles. Group of textile and apparel organizations letter to the President of Bangladesh on garment factory safety. (available at: https://www.wewear.org/assets/1/7/Bangladesh_-_NorthAm_Assoc_Ltr_2_PM_Sheikh_Hasina_17May13_(3).pdf ) issued: 5/17/13.
Textiles. Letters to several US retail companies by senior House Democrats on the garment factory collapse in Bangladesh. (available at: http://www.democraticwhip.gov/content/hoyer-senior-house-democrats-urge-us-retailers-join-coalition-supporting-accord-fire-and-bui ) issued: 5/17/13.
Canada
India. Canadian government statement on Canada-India trade. (available at: http://www.international.gc.ca/media_commerce/comm/news-communiques/2013/05/17a.aspx ) issued: 5/17/13.
Colombia
FTA. US Trade Representative’s office statement on the US-Colombia free trade agreement. (available at: http://www.ustr.gov/about-us/press-office/blog/2013/may/sapiro-colombia-one-year ) issued: 5/17/13.
Ecuador
Energy
LNG. Energy Department announcement of second export license for liquified natural gas exports. (available at: http://energy.gov/articles/energy-department-authorizes-second-proposed-facility-export-liquefied-natural-gas ) issued: 5/17/13.
LNG. Statement by the Congressional LNG
Working Group on the export of natural gas. (available at: http://tim.ryan.house.gov ) issued: 5/17/13.
LNG. US Chamber of Commerce statement on second license to export liquified natural gas. (available at: http://www.uschamber.com ) issued: 5/17/13.
Vietnam. Commerce Department statement on nuclear trade mission in Vietnam. (available at: http://trade.gov/press/press-releases/2013/civil-nuclear-trade-misison-launches-in-hanoi-051713.asp ) issued: 5/17/13.
European Union
Africa. Joint communique from the Eastern and Southern African countries and the European Union on a economic partnership agreement. (available at: http://trade.ec.europa.eu/doclib/docs/2013/may/tradoc_151145.pdf ) issued: 5/15/13.
Export Controls
India
Canada. Canadian government statement on Canada-India trade. (available at: http://www.international.gc.ca/media_commerce/comm/news-communiques/2013/05/17a.aspx ) issued: 5/17/13.
Middle East
Panama
US Trade. Commerce Department statement on trade with Panama. (available at: http://www.commerce.gov/blog/2013/05/17/acting-secretary-blank-highlights-success-us-panama-trade-promotion-agreement ) issued: 5/17/13.
US Trade. Commerce Department fact sheet on trade with Panama. (available at: http://trade.gov/press/press-releases/2013/panama-factsheet-051713.pdf ) issued: 5/19/13.
Textiles
Bangladesh. Group of textile and apparel organizations letter to the President of Bangladesh on garment factory safety. (available at: https://www.wewear.org/assets/1/7/Bangladesh_-_NorthAm_Assoc_Ltr_2_PM_Sheikh_Hasina_17May13_(3).pdf ) issued: 5/17/13.
Trade Policy
World Trade Week. White House statement on World Trade Week. (available at: http://www.whitehouse.gov/the-press-office/2013/05/17/presidential-proclamation-world-trade-week-2013 ) issued: 5/17/13.
Vietnam
Energy. Commerce Department statement on nuclear trade mission in Vietnam. (available at: http://trade.gov/press/press-releases/2013/civil-nuclear-trade-misison-launches-in-hanoi-051713.asp ) issued: 5/17/13.
World Trade
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