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This Week In Trade

As NAFTA negotiators meet in DC, MC11 could end without a joint declaration – and without Lighthizer

Posted: December 11, 2017

The focus on trade this week is divided between Washington, DC, and Buenos Aires, Argentina, where trade ministers some 5,000 miles south of the U.S. capital are meeting to advance the World Trade Organization’s agenda -- a meeting U.S. Trade Representative Robert Lighthizer is expected to leave early.

The U.S. could also keep the ministerial from ending with a joint declaration. Talks on a draft declaration broke down in Geneva in part because the U.S. pushed back against language that would have recognized the WTO as the center of the multilateral trading system, sources told Inside U.S. Trade’s Jack Caporal and Brett Fortnam in Buenos Aires. These sources described the chances that the conference would end with a ministerial declaration as “fading.”

Lighthizer, in a speech at the plenary session on Monday, said the WTO “does an enormous amount of good” and that the U.S. is “interested in revitalizing the standing bodies to ensure they are focused on new challenges such as chronic overcapacity and the influence of state-owned enterprises.” However, the USTR reiterated, “serious challenges exist.”

Among the challenges he listed was a need for countries to “clarify our understanding of development at the WTO.” He faulted those countries with “self-proclaimed development status”  for appearing to be better off with the exemption of certain rules, which he said member countries should be “troubled” by.

WTO Director-General Roberto Azevêdo, who met with Lighthizer on Sunday, said at a press conference beforehand he would ask the U.S. trade chief “for political commitment, political will, for flexibility -- because without flexibility we don’t go anywhere.”

Lighthizer is expected to leave the ministerial ahead of its conclusion on Wednesday. Sources also said the USTR was expected to hold “very few” bilateral meetings, which one source estimated at 10 or fewer.

Lighthizer has stated on several occasions that he does not believe meaningful outcomes can be negotiated at the Buenos Aires meeting.

Senior USTR officials will remain in Argentina through the close of the conference.

Monday also marks the last day of WTO Appellate Body member Peter Van den Bossche’s second four-year term, leaving the panel with only four fully active judges amid a U.S. block of a selection process for new members -- an issue sources said would be discussed at the ministerial in Buenos Aires this week.

Sources told Inside U.S. Trade the U.S. was unlikely to propose solutions to resolve those concerns because doing so could allow other WTO members to condition support for them on U.S. support for other proposals -- essentially taking U.S. demands hostage.

In Washington, NAFTA negotiators are meeting for a week-long intersessional that began on Saturday and is scheduled to run through Friday. The teams from the U.S., Canada and Mexico have sent 15 of the 29 negotiating groups to a hotel in downtown DC to “advance the technical discussion and prepare for round six in January,” Mexico’s chief negotiator, Kenneth Smith Ramos, said on Twitter.

According to a schedule for the session obtained by Inside U.S. Trade, controversial topics such as dispute settlement and government procurement will not be among the items discussed this week, which sources said was a move to ensure negotiators can focus on areas in which the most progress is possible. Those chapters include digital trade, trade facilitation, good regulatory practices, telecommunications, customs, technical barriers to trade and sanitary and phytosanitary measures.

NAFTA will also be a topic for discussion at a number of events in Washington this week. On Monday, former USTR Carla Hills was set to give keynote remarks at a Center for Strategic and International Studies event on “The Costs and Consequences of Exiting NAFTA.” A panel will feature Ambassador Earl Anthony Wayne, senior adviser with the Project on Prosperity and Development at CSIS and former U.S. ambassador to Mexico and Argentina; Arturo Sarukhan, former Mexican ambassador to the United States; and Michael Wilson, former Canadian ambassador to the United States and former minister of Finance for Canada.

On Tuesday, the Washington International Trade Association will host Senate Agriculture Committee Chairman Pat Roberts (R-KS); former Senate Finance Committee Chairman and Ambassador to China Max Baucus (D-MT); and Grant Aldonas, former under secretary of Commerce for international trade, to discuss trade and American leadership.

The Heritage Foundation will be discussing what’s at stake for agriculture in the NAFTA talks with former USTR chief ag negotiator Darci Vetter; Yohai Baisburd, partner at Dentons; and Bryan Riley, former senior trade policy analyst at the Center for International Trade and Economics.

Also on Tuesday, the National Press Club will hold a luncheon with Agriculture Secretary Sonny Perdue, who has been a champion of NAFTA and is seen by many lawmakers as a key mediator between worried stakeholders and members of Congress and President Trump and Lighthizer, who seem to be prepared to walk away from the talks or withdraw from the agreement if Canada and Mexico do not cave to U.S. demands.

The future of NAFTA will be examined at a House Foreign Affairs terrorism, nonproliferation and trade subcommittee hearing on Tuesday. AFL-CIO trade policy specialist Celeste Drake, Council of the Americas Vice President Eric Farnsworth, ARC Specialties President Daniel Allford and McLarty Associates Vice Chairman John Negroponte are slated to testify before the subcommittee. Negroponte is a former ambassador to Mexico.

U.S. Chamber of Commerce CEO Tom Donohue on Tuesday evening will discuss NAFTA at a Foreign Policy Association corporate dinner in New York. Donohue will participate in a panel discussion with Canadian Chamber of Commerce president Perrin Beatty to talk about the ongoing negotiations as well as the role of international trade in the U.S.-Canada relationship.

On Wednesday, the U.S. Chamber's Global Energy Institute president, Karen Harbert, will testify before the House Energy and Power subcommittee on the state of North American energy trade.

NAFTA will also be discussed on Friday in Milwaukee, where the Chamber and its Wisconsin partners will host a conversation on the future of the agreement and what is at stake for Wisconsin agriculture and business. Wisconsin Sen. Ron Johnson (R) will deliver keynote remarks. Wisconsin Agriculture, Trade, and Consumer Protection Secretary Sheila Harsdorf and U.S. Chamber Executive Director for International Policy Christopher Wenk are slated to speak as well.

Commerce Secretary Wilbur Ross and Secretary of State Rex Tillerson will appear at an Atlantic Council and Korea Foundation forum on Tuesday. Also set to speak: Korean Ambassador to the U.S. Yoon-je Lee; Korea Foundation president Sihyung Lee; former U.S. National Security Adviser Gen. James Jones; former National Security Adviser Stephen Hadley; and former Korean Minister of Foreign Affairs Young-kwan Yoon.

The Chamber on Tuesday will release its 2017 Global Business Rule of Law Dashboard at its Washington headquarters; UPS President of Global Public Affairs Laura Lane, Peruvian Ambassador to the U.S. Carlos Pareja and World Justice Project chief research officer Alejandro Ponce will speak.   

The Center for Strategic and International Studies is hosting former USTR Michael Froman and other former USTR officials Wednesday for an event on “building a U.S. trade enforcement agenda that works.”

The House Monetary Policy and Trade subcommittee on Thursday plans a hearing to examine the operations of the Committee on Foreign Investment in the United States (CFIUS). A witness list has not yet been made public.

The MC11 closing session will be held on Wednesday in Buenos Aires, at 2 p.m. EST. -- Jenny Leonard (jleonard@iwpnews.com)