|
Washington Trade Daily
Volume 19, Number 47 Monday, March 8, 2010
_______________________________Trade Reports International Group___________________________
US, Russia Resolve Pork Dispute
The United States and Russia late last week reached an agreement to reopen the Russian market to US pork and pork products, the Agriculture Department announced on Friday (WTD, 2/25/10).
Russia – which had been a major outlet for US pork producers – imported only $257 million worth last year because of the dispute over sanitary and phytosanitary issues.
Negotiations with the Russian Veterinary Service have been going on since last December when Moscow notified the United States of its intent to restrict pork shipments from 13 US pork plants – which accounted for more than 90 percent of US pork exports to Russia.
Successful negotiations led to the development of a new veterinary certificate to ensure that pork exports from the United States meet specific Russian microbiological and tetracycline-group antibiotic residue requirements, Agriculture stated.
Next Step
The next step is for US plants to apply for approval with the Agricultural Marketing Service. AMS, in collaboration with the Food Safety and Inspection Service, has developed an Export Verification program for pork to Russia to address specific product requirements. US firms wishing to participate in the programs must meet the specified product requirements through a Quality System Assessment Program to ensure that the specified product requirements are supported by a documented quality management system. Products produced under an approved EV program are eligible to be issued an FSIS Export certificate, Agriculture stated.
AMS is expected to approve the first plants as early as next week, Agriculture stated. FSIS will then provide Russian authorities with a list of approved US facilities.
The US delegation – led by Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller and Assistant US Trade Representative for Agricultural Affairs Jim Murphy – had been meeting with Russian officials in Moscow since early in the week on pork and Russia’s continued ban on poultry imports.
Discussions on poultry will continue in the coming weeks, Agriculture said.
Deputy USTR Marantis’ Voyage
In his first extended visit abroad last month, Deputy US Trade Representative Demetrios Marantis ran the gamut of his portfolio – from pressing Japan on a fair “cash-for-clunkers” program to reviewing the successes and challenges of the African Growth and Opportunity law with some major users (WTD, 2/26/10).
Mr. Marantis spoke to WTD last week on the topics. His visit coincided with a record snowfall in the Washington area – which closed his office and the rest of the federal government for a week. After viewing reports of the storm on CNN International while in Swaziland during a warm African summer morning, the deputy USTR admitted a “tinge” of guilt – but agreed such happenstance was part of the job.
The deputy USTR began his global tour in Japan just after the announcement that it would include imported automobiles under its “eco-friendly vehicle purchase program.” Japan, however, has limited the program for trade-ins based on miles-per-gallon performance on a city mileage standard. The United States wants Japan to mirror the US program and consider city/highway average miles-per-gallon figures as the qualifying criteria.
The United States, said Mr. Marantis, is very disappointed that Japan picked the combined mileage rate as the criteria – leaving a number of US auto models outside the program. His message to Tokyo, he told WTD, was that the Japanese program should be “transparent and inclusive.” He said Washington will continue to monitor its implementation.
On what looks like a stalled effort to privatize Japan Post, Mr. Marantis said he told Japanese officials that the United States did not want to interfere in the reform process – only to make sure that what emerges provides a level playing field for US and other foreign insurance providers, financial service institutions and express couriers.
Expectations are that Tokyo will announce how the process will move forward – or not – in the coming weeks.
Japan, Mr. Marantis told WTD and the Japanese, has restricted imports of US beef for far too long. The deputy USTR delivered “a very strong” message that Japan needs to follow repeated rulings from the World Organization for Animal Health that US beef of all ages is safe.
Like South Korea and Taiwan, Japan allows only the importation of US meat from cattle less than 20 months old.
Malaysia
The second stop on the tour involved a discussion of bilateral and regional issues with Malaysia. Mr. Marantis has said that the United States would like Kuala Lumpur to join the emerging TransPacific Partnership trade arrangement. The eight original members of the negotiations – the United States, Singapore, Brunei, Peru, Chile, Australia, New Zealand and Vietnam – are expected to meet in Melbourne next week to discuss the parameters of an accord.
Mr. Marantis told WTD that the meeting will focus on process – primarily how to move the negotiations forward. Likely to arise is how to integrate other nations as negotiations move forward. The question will be whether candidate countries will be able to meet the high-standards of the eventual accord and how to integrate them while negotiations continue, he said. There will be no observers at the session.
Indonesia, the next stop on the Marantis tour, also is a likely candidate for TPP membership. President Obama – who lived there for four years in his childhood – will visit there in two weeks on his way to Australia.
In Jakarta the President will announce a Comprehensive Partnership with the country, the White House has announced. The United States has a trade and investment framework agreement with Indonesia – which will continue its work on bilateral trade and investment issues – but broader economic as well as security and political issues will fall under the rubric of the Comprehensive Partnership, Mr. Marantis said. He said his staff now is working on some economic issues that might contribute to the overall framework.
While in Jakarta, Mr. Marantis took officials to task over a recent law that severely restricts the importation of foreign films.
Since the Marantis visit, trade officials of both Southeast Asian nations have expressed strong desires to join the TPP.
Indonesia
While in Indonesia, Mr. Marantis discussed regional issues with Association of Southeast Asian Nations Secretary General Surin Pitsuwan. The United States has had a trade and investment framework agreement with the 10-member regional organization since 2006.
In remarks at the Georgetown University Law Center just after his return, Mr. Marantis noted the strong practical trade relationship ASEAN enjoys with the United States. The 10 member countries combined are the fifth largest US trading partner for goods and services.
The focus with the ASEAN TIFA now is how the United States can better integrate with the region – especially in areas like customs facilitation. He said USTR Ron Kirk will host a ministerial ASEAN delegation in May – and accompany them on a small business tour around the nation in an effort to elevate the region’s profile. The United States is anxious to provide more trade capacity building funds to the region and to promote direct business-to-business contacts, Mr. Marantis said.
From Indonesia, the deputy USTR jetted to Swaziland – where he talked mostly about the successes and challenges of AGOA. Congress, he told WTD, wants to do a comprehensive review of US preference programs – and that could have an impact on how AGOA functions.
AGOA’s success was encapsulated in a small preserved foods producer and exporter. Eswatini Kitchens in Manzini was set up – with the help of Dutch and Australian charities – to supply much needed foods to the local community. Most of its 90 workers are disadvantaged women, many HIV positive, Mr. Marantis noted.
Now the small firm gains substantially through duty-free access to the US market under AGOA. “Eswatini Kitchens is an amazing model of success of how AGOA can work in combination with trade development assistance,” he told WTD.
But there are challenges for Africa in other AGOA-qualified sectors – including textiles. Mr. Marantis noted that textile trade between Swaziland and the United States has fallen off lately – due mostly to competition from other countries and the increasing infrastructure cost of production and delivery to port.
Mr. Marantis also had a warning to Swazi officials – including its prime minister directly – about labor rights. The latest State Department report on human rights criticizes Swaziland for cracking down on civil demonstrations and restricting freedom of the press.
The Prime Minister, Mr. Marantis said, was very receptive to the US concerns.
AGOA
AGOA maintains labor and human rights eligibility criteria. The United States, the deputy USTR told WTD, will continue ongoing dialogue with the country over human rights.
A final stop was in Uganda, where Mr. Marantis participated in the first meeting of the US-East African Community Trade and Investment Framework Council. A TIFA was signed with the five East African nations – Kenya, Rwanda, Burundi, Tanzania and Uganda – in 2008.
The TIFA session began with a discussion of an “action plan” to address both the impediments of two-way trade with East Africa as well as set priorities for closer economic cooperation.
Washington, Mr. Marantis said, wants to encourage economic integration in the region. A lot also can be done to improve access under AGOA. He suggested the countries seek out products that would be especially competitive in the US market – such as cut flowers from Kenya and hand-woven baskets from Rwanda.
Macy’s department store chain in the United States currently is marketing the Rwanda baskets across the country.
Turkey and ‘Zeroing’
Geneva – Turkey – a member of the “Friends of Antidumping” coalition – said last week the condemned “zeroing” methodology used in calculating antidumping margins in the United States should be applicable in targeted dumping cases during original and review investigations, WTD has learned (WTD, 3/3/10).
The “Friends” coalition had insisted on eliminating the controversial “zeroing” methodology in all instances, saying it is inconsistent with the World Trade Organization antidumping provisions. But Turkey has maintained that it never supported any “Friends” position on prohibiting “zeroing”. Instead, it says “zeroing” is applicable in targeted dumping cases in original and review investigations, a Turkish official told WTD. The issue of “zeroing,” the official said, is a technical one – not a political problem. Therefore, it should be clarified through negotiations.
In the absence of a clear understanding of Article 2.4.2 in the antidumping agreement, there is room for “zeroing,” the official he told WTD.
Article 2.4.2 expresses a preference for comparing normal value and export prices on a weighted average-to-weighted average basis or on a transaction-to-transaction basis, but allows for a third method – comparison of a weighted average normal value to individual export transactions – if particular conditions exist, Turkey said. The official suggested that exceptional circumstances would allow authorities to counter three forms of “hidden” or “targeted dumping” where there is a pattern of export prices differing significantly by purchaser, region or time period.
“Zeroing” should be applicable because otherwise the exception would produce results identical to the weighted average-to-weighted average methodology – and thus be meaningless in practice, Turkey argued.
The official suggested that the WTO Appellate Body should not go beyond its sphere of duty – interpretation of the provision of this article. The Appellate Body “is not a legislator of the agreement,” Turkey said. “Members are legislators of the agreement through negotiations.”
Last week, the United States criticized the Appellate Body for its rulings against the use of “zeroing”, saying it is violating members’ rights and obligations. Washington has demanded continuation of “zeroing” at all stages of investigations.
Turkey called its position “a midway, reasonable, acceptable and applicable by all the members.”
‘Pro-Rating’ and the G-33
Geneva – The Group-of-33 coalition – led by Indonesia – has called for the removal of the “pro-rating” concept from the proposed Doha Development Agenda architecture for the special safeguard mechanism flexibility for developing countries, WTD has learned (WTD, 3/1/10).
Instead, developing countries should be allowed to continue with the three-year rolling average to determine import trends for possible action through the safeguard.
Ahead of this week’s agriculture negotiating session on templates for scheduling commitments and outstanding issues in the December 2008 modalities text, the G-33 challenged the need to have “pro-rating” and the thresholds in the price-based special safeguard mechanism in the 2008 draft text.
In two separate confidential papers on pro-rating and the price-based special safeguard mechanism – obtained by WTD – the developing country coalition is seeking substantial amendments to the revised draft.
Leading farm exporters such as the United States, Australia and Uruguay have proposed a “pro rata” concept to ensure that normal trade is not affected in finalizing an special safeguard action. The concept was devised to counter perceived declines in trigger thresholds arising from successive application of the volume-based special safeguard mechanism.
Data
The G-33 coalition offered data on international trade flows in major agricultural commodities to argue its case that pro-rating will undermine an easy and simple mechanism that was mandated in the 2005 Hong Kong Ministerial Declaration. Findings from the simulations confirm that “pro-rating” is an unnecessary additional layer of restriction, the coalition argued.
Farm exporters point out that the special safeguard mechanism will have a negative effect on import growth – of double or triple digits as seen recently. They have pressed for “pro-rating” to ensure that normal trade in farm products should be left free – and only the additional growth over normal trade should be factored into the safeguard measures.
“The SSM cannot achieve simultaneously two opposite objectives of addressing the import surges and providing a remedy for foregone trade through concepts such as pro-rating,” the coalition argued. It cautioned that “pro-rating can drastically and dramatically inflate the base imports and triggers at levels that can effectively restrict access to the already constrained SSM....” Because of the inflationary effect, “pro-rating” also acts as an additional layer to access to the special safeguard mechanism in terms of product coverage, frequency and duration, the coalition argued.
In a separate paper on “issues and concerns” on the price-based special safeguard mechanism, the G-33 argued that the 85 percent trigger along with mandatory volume “cross-check” would unnecessarily restrict access to the safeguard – and should be deleted from the negotiating text.
A second concern is the structure and ineffectiveness of the remedy, the coalition said. “These are further compounded by the introduction of the pre-Doha cap as this will penalize products that undertook early liberalization (already low tariff regime).” For the special safeguard mechanism to be truly effective and meaningful, the remedy must be 100-percent compensation and the pre-Doha cap must be removed, the G-33 argued.
Sen. Specter’s ‘Private Right of Action’
Senate Judiciary Committee member Sen. Arlen Specter (D-Pa) introduced legislation Friday that provides a private right of action for domestic manufacturers injured by illegal subsidization or dumping of foreign products into US markets.
The Unfair Foreign Competition Act of 2010 would allow petitioning parties to bring a civil action in a US district court for an injury finding in lieu of a determination by the International Trade Commission. This would give injured domestic producers the opportunity to serve as private plaintiffs in seeking enforcement of trade remedy laws. The nonpolitical venue would also alleviate the potential for inconsistencies and partisanship in enforcement remedies, according to the senator.
The district court would apply the same standards as the ITC in determining injury.
ITC staff would compile a record on which interested parties may file a brief or make oral arguments before the court.
An order issued by the district court would be appealable to a US Court of Appeals. The civil action may be brought in a judicial district where a manufacturing facility, sales office or headquarters is located. Under the bill time constraints similar to those of the ITC would be placed on the court to issue determinations.
The bill is cosponsored by Sens. Bob Casey (D-Pa) and Sherrod Brown (D-Ohio).
Around the Globe
China's central bank governor indicated Saturday that the government was unlikely to detach the value of China's currency from that of the dollar anytime soon, echoing Prime Minister Wen Jiabao's statement on Friday that exchange rates would remain “basically stable” for now, the New York Times reported (WTD, 3/5/10). At a Saturday news conference, the central bank head, Zhou Xiaochuan, said China should be “very cautious” about revaluing its currency, also known as the yuan, as long as major economies remained mired in slow growth.
He called China's practice of pegging the renminbi to the dollar a “special foreign exchange mechanism” made to respond to the world financial crisis. Such mechanisms will be abandoned “sooner or later,” he said, but “we must be very cautious and discreet in choosing the timing.”
On Saturday, Mr. Zhou offered no timetable for allowing the renminbi to resume its rise against the dollar, but he noted that it could take two or three years for global export markets to recover from the financial collapse.
China’s Ministry of Commerce said Friday that US efforts to increase exports while erecting import barriers would be counterproductive and worsen the international trade environment, after the US said it found that some paper and salt imports from China received subsidies, Dow Jones news service reported (WTD, 3/3/10). “If one country wants to boost its own exports on the one hand, and wants to curb exports from other countries, this will only lead to a deterioration in the international trade environment and ultimately be counterproductive,” spokesman Yao Jian said in a statement.
He repeated that China hopes the US will reduce or remove the curbs on Chinese imports and resolve trade disputes through dialogue. President Barack Obama wants to double US exports in five years, to create jobs. Earlier this week, the Department of Commerce said it found that some Chinese coated paper and potassium phosphate salt imports received subsidies. Yao said China is paying close attention to both cases, which he described as an attempt to pass the burden of the financial crisis to Chinese manufacturers, away from companies in the US.
Two senior US officials will travel to Brazil this week to submit a proposal for resolving a bilateral dispute over US cotton subsidy programs, World Trade Interactive reported (WTD, 2/12/10). The visit comes as Brazil prepares to issue a final list of US exports that could be subject to retaliatory sanctions in response to Washington's failure to comply with a World Trade Organization ruling on the matter.
During a visit to Brazil last week, Secretary of State Hillary Clinton said the US will be sending two officials to Brazil to “discuss a countervailing proposal” in the cotton subsidy dispute, although she provided no details. It is expected that those officials will be Commerce Secretary Gary Locke and Deputy National Security Adviser for International Economic Affairs Michael Froman, who were already scheduled to be in Brazil to participate in the US-Brazil CEO Forum. “There is time for us to try to resolve this in a peaceful and productive way without any further action,” Clinton said. “There's so much trade between our two countries, and it is an area of such potential growth between our two countries, that we hope we're able to work through this issue and get to a resolution.”
The officials' visit will come just as Brazil releases a final list of US goods that could be subject to higher import duties in retaliation for Washington's lack of compliance with a WTO ruling against its cotton subsidy programs. That list has been delayed several times and is now expected to be made public March 8. Press reports indicate that the list will cover about 100-120 goods worth as much as $560 million. However, Clinton said, the retaliatory tariffs will not take effect for 30 days, giving the two sides time to reach a negotiated solution. In addition to the higher tariffs, Brazil has indicated an intent to suspend concessions on about $270 million worth of US services and intellectual property rights. However, press reports state that Brazil is not expected to finalize its plans for this step until later in the month.
The United States and India will launch an economic and financial partnership next month, with a permanent cabinet-level bilateral dialogue a key feature, the US Treasury said Thursday according to a Agence France-Presse news service report (WTD, 2/15/10). Treasury Secretary Timothy Geithner will travel to India on April 6-7 to launch the US-India Economic and Financial Partnership in New Delhi with Indian Finance Minister Pranab Mukherjee.
The partnership, to focus on macroeconomic policy, the financial sector and infrastructure financing, will meet at the cabinet level, alternately in the United States and India, led by Geithner and Mukherjee, a Treasury statement said. Working group meetings will be held throughout the year to advance discussions on specific economic areas, it said. The partnership was first announced in November when President Barack Obama hosted Indian Prime Minister Manmohan Singh on the first state visit since he entered the White House in January.
The United States already has a standing dialogue with fellow emerging Asian giant China. Officials said that unlike the dialogue with China, which is multi-ministerial, the forum with India was focused purely on economic and financial regulatory policy, led by the US Treasury and the Indian finance ministry. “We are still working through how frequently the ministers will meet,” one official told AFP.
The Agriculture Department is developing a new trade strategy to complement President Obama’s National Export Initiative, Agriculture Secretary Tom Vilsack said Friday (WTD, 3/5/10). Speaking to the 2010 Commodity Classic in Anaheim, California, Mr. Vilsack said Agriculture will look at countries based on their position on an agricultural market continuum, which will enable the department to tailored strategies to increase exports to each individual market.
The continuum goes from fragile markets/food security states, to potential growth markets, to restricted access markets, to rapid growth markets, to developed consumer markets, he said. The new strategy will improve collaboration among USDA agencies and guide priorities for international staffing, foreign assistance, and agricultural research. For example, he said, in potential growth markets, USDA programs will now emphasize building the institutional and human capacity needed to support increased trade, while in restricted access markets, USDA efforts are designed to remove trade barriers. In rapid growth markets, USDA will now emphasize using a full range of programs to build trade capacity, remove trade barriers and develop new markets for U.S. products.
China's trade surplus may have been about $8 billion in February, data provided by Commerce Minister Chen Deming suggests according to a Bloomberg news service report. The nation's trade gap in the first two month through February dropped 50.2 percent from a year earlier, Chen told reporters at a press conference in Beijing, without elaborating. China's trade surplus in the first two months of 2009 was $43.95 billion, indicating the gap shrank to about $22 billion this year. The nation's trade surplus was $14 billion in January, meaning the gap was about $8 billion last month. The customs bureau is expected to report February trade data on March 10.
— —
***** WTD is intended for readers within the office that subscribes. PLEASE do not redistribute. *****
Sign up for WTD’s special email alert system which keeps you informed of major trade-related news throughout the day. Simply email WTD your email address and we will add you to the list.
Email: wtdtrade@cs.com
WTD now has available for sale compact disks for all of 2005 through 2009 – for $35 each.
To order call 301-946-0817, fax us at 301-946-2631 or e-mail us at trigtrig@aol.com
Join us on twitter at http://twitter.com/washtradedaily
On the Web......
Agriculture
Exports. Agriculture Secretary Vilsack remarks to the Commodity Classic on agricultural exports. (available at: http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB/.cmd/ad/.ar/sa.retrievecontent/.c/6_2_1UH/.ce/7_2_5JM/.p/5_2_4TQ/.d/0/_th/J_2_9D/_s.7_0_A/7_0_1OB?PC_7_2_5JM_contentid=2010%2F03%2F0105.xml&PC_7_2_5JM_parentnav=LATEST_RELEASES&PC_7_2_5JM_navid=NEWS_RELEASE#7_2_5JM ) issued: 3/5/10.
Japan. Statement by Sen. Johanns on US-Japan beef trade. (available at: http://johanns.senate.gov/public/?p=PressReleases&ContentRecord_id=72584c4c-4a53-4281-9532-aa96e5a99691&ContentType_id=bc82adff-27b4-4832-8fd6-aecbe3e7d8e3 ) issued: 3/5/10.
Russia. Agriculture Department announcement of reopening of pork market in Russia. (available at: http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB/.cmd/ad/.ar/sa.retrievecontent/.c/6_2_1UH/.ce/7_2_5JM/.p/5_2_4TQ/.d/0/_th/J_2_9D/_s.7_0_A/7_0_1OB?PC_7_2_5JM_contentid=2010%2F03%2F0103.xml&PC_7_2_5JM_parentnav=LATEST_RELEASES&PC_7_2_5JM_navid=NEWS_RELEASE#7_2_5JM ) issued: 3/5/10.
Russia. National Pork Producers Council statement on reopening of Russian pork market. (available at: http://www.nppc.org ) issued: 3/5/10.
Environment
Water. World Trade Organization report on fresh water and trade. (available at: http://www.wto.org/english/res_e/publications_e/wtr10_hoekstra_e.htm ) issued: 3/5/10.
Export Controls
Iran. Statement by Rep. Scott on US trade with Iran. (available at: http://www.house.gov/apps/list/press/il08_bean/030410hireoppose.html ) issued: 3/4/10.
US. Letter from Sen. Kyl and Feingold to National Security Advisor Jones on US export controls. issued: 2/23/10.
Iran
Export Controls. Statement by Rep. Scott on US trade with Iran. (available at: http://www.house.gov/apps/list/press/il08_bean/030410hireoppose.html ) issued: 3/4/10.
Japan
Agriculture. Statement by Sen. Johanns on US-Japan beef trade. (available at: http://johanns.senate.gov/public/?p=PressReleases&ContentRecord_id=72584c4c-4a53-4281-9532-aa96e5a99691&ContentType_id=bc82adff-27b4-4832-8fd6-aecbe3e7d8e3 ) issued: 3/5/10.
Mongolia
US Relations. US Trade Representative’s office statement on US trade with Mongolia. (available at: http://www.ustr.gov/about-us/press-office/blog/2010/march/ask-ambassador-us-mongolia-trade ) issued: 3/5/10.
Russia
Agriculture. Agriculture Department announcement of reopening of pork market in Russia. (available at: http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB/.cmd/ad/.ar/sa.retrievecontent/.c/6_2_1UH/.ce/7_2_5JM/.p/5_2_4TQ/.d/0/_th/J_2_9D/_s.7_0_A/7_0_1OB?PC_7_2_5JM_contentid=2010%2F03%2F0103.xml&PC_7_2_5JM_parentnav=LATEST_RELEASES&PC_7_2_5JM_navid=NEWS_RELEASE#7_2_5JM ) issued: 3/5/10.
Agriculture. National Pork Producers Council statement on reopening of Russian pork market. (available at: http://www.nppc.org ) issued: 3/5/10.
Small Business
Exports. Statement by Sen. Klobucher on the
Exports. National Conference of State Legislatures letter to US Trade Representative Kirk on US exports and small business. (available at: http://www.ustr.gov/webfm_send/1709 ) issued: 3/1/10.
States
Small Business. National Conference of State Legislatures letter to US Trade Representative Kirk on US exports and small business. (available at: http://www.ustr.gov/webfm_send/1709 ) issued: 3/1/10.
|