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This Week In Trade

U.S.-Japan TPP Talks Continue, EU TTIP Papers, Currency, AGOA, Sugar

Posted: April 14, 2014

This week will see continued efforts by the U.S. and Japan to bridge their gaps on agriculture and autos issues under the Trans-Pacific Partnership (TPP) negotiations – which may or may not yield progress – as well as more detailed signals from the European Commission about where it wants to take the trans-Atlantic trade talks.

Roughly one week before President Obama travels to Tokyo to meet with Prime Minister Shinzo Abe to discuss TPP and other issues, Acting Deputy U.S. Trade Representative Wendy Cutler will meet April 15-17 in Washingtonwith Japanese officials Hiroshi Oe and Takeo Mori to try to advance talks on autos and agriculture, according to USTR.

The meetings come after USTR Michael Froman last week said “considerable differences” remain between the two sides. He made his comments after two days of talks in Tokyo with Japanese TPP Minister Akira Amari, who may follow up with a visit to the United States this week.

As for the trans-Atlantic trade talks, the European Commission is slated to release several concept papers on its negotiating proposals covering regulatory issues in various sectors. It did something similar before the Transatlantic Trade and Investment Partnership (TTIP) talks were formally launched last July.

The U.S. government is also slated to issue several key reports this week. April 15 is the date by which the Treasury Department is supposed to issue its semiannual report about whether U.S. trading partners are manipulating their currency to gain a trade advantage – although the release of that report often comes late. The U.S. has not named any country as a currency manipulator in that report since the early 1990s.

More than half the House and Senate have called for strong, enforceable currency provisions to be included in TPP, in a move backed by U.S. automakers, who have long been worried about devaluation of the Japanese yen.

Separately, on April 17, the U.S. International Trade Commission must submit three reports to the Office of the U.S. Trade Representative on the African Growth and Opportunity Act (AGOA) preference program. Only one of those reports will be made public. AGOA expires in September 2015, and the public report will broadly answer questions pertaining to potential AGOA reforms, such as the impact that AGOA has had on economies in sub-Saharan Africa, its effect on the business and investment climate, and the relationship between AGOA and current or potential sub-Saharan African reciprocal trade agreements.

In addition, the Commerce Department must decide by April 18 whether to initiate a full-blown investigation into a petition by American sugar producers that calls for the imposition of antidumping and countervailing duties on sugar imports from Mexico. Agriculture Secretary Tom Vilsack earlier this month signaled his discomfort with the petition, saying he would “have liked to have seen this perhaps not occur or not occur at this time.”

On TPP, some U.S. industry sources say a breakthrough in the U.S.-Japan talks is unlikely during Obama'svisit next week, arguing that the market access negotiations between the two countries will likely last several more months. U.S. trade officials have privately downplayed expectations of a TPP breakthrough during Obama's trip.

Despite this dynamic, TPP countries are moving ahead with plans to hold their next major negotiating meetings in Asia around the time of a May 17-18 meeting of Asia-Pacific Economic Cooperation (APEC) trade ministers in China.

Specifically, TPP chief negotiators are planning to meet May 12-15 in Vietnam prior to the APEC ministerial, according to informed sources. TPP ministers would then meet after the APEC ministerial, and that meeting would also likely take place in Vietnam, one source said.

In another TPP development, Froman is slated to meet on April 17 with Andres Rebolledo, the top trade official in Chile's foreign ministry with a rank equivalent to that of vice minister. TPP will also likely to be front-and-center when Froman meets the same day with National Cattlemen's Beef Association (NCBA) CEO Forrest Roberts, as beef is one of the key areas in which the U.S. is pressing Japan to remove import barriers.

NCBA was one of several U.S. agriculture groups that criticized a free trade agreement reached last week by Australia and Japan that failed to eliminate Japanese tariffs on beef, but the only one to openly express worries that the bilateral deal sets a bad precedent for TPP.

Also on Froman's agenda this week is a meeting on April 16 with Indian Ambassador S. Jaishankar, which comes as U.S. business groups are calling for India to receive the harshest designation in USTR's annual Special 301 report on intellectual property practices around the world. That report is set to be released around April 30.

Froman is also visiting Boston today (April 14), where he will meet with Massachusetts Gov. Deval Patrick, visit a local exporter, give a speech at the New England Council, and speak at a business roundtable with House Ways and Means Member Richard Neal (D-MA).

European Trade Commissioner Karel De Gucht last week said the commission would be releasing “a series of European negotiating proposals on regulatory issues in a number of important sectors.”  The proposals will likely cover some of the sectors that the two sides have been discussing, which include medical devices, cosmetics, pharmaceuticals, chemicals, pesticides, information and communication technology, and automobiles.

However, top U.S. and EU trade officials have staked out different priorities for the regulatory component of TTIP, with the EU leaning in favor of an outcome that addresses many sector-specific regulatory differences and the U.S. pressing a horizontal approach to increase transparency in the EU rule-making process across the board.

TTIP will be the subject of a panel discussion on April 16 at the Embassy of Greece, which is the country that currently holds the rotating presidency of the Council of the EU. Among those slated to speak at the event are Hiddo Houben, who heads the trade section of the EU delegation in Washington, and congressional staff from the Senate Finance and House Ways and Means committees.

Also relevant to TTIP, this week marks the final session of the European Parliament before it adjourns for parliamentary elections next month. This kicks off a process of political change in Brussels that will see the formation of a new parliament and eventually a new commission.

EU sources have characterized the elections as likely leading to an erosion of the political center, with more people on the left who oppose trade liberalization in and of itself, and more people on the right who may oppose a commission-negotiated trade deal because they are Euroskeptics.