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This Week In Trade

Focus On TPP, TTIP And TISA; North American Leaders' Summit

Posted: February 18, 2014

Posted: February 18, 2014

This week in trade brings to the forefront three plurilateral trade initiatives of the Obama administration: high-level meetings in Singapore on the Trans-Pacific Partnership (TPP), a stocktaking session for the Transatlantic Trade and Investment Partnership (TTIP) aimed at instructing negotiators, and a week of negotiations on the Trade In Services Agreement (TISA) among selected members of the World Trade Organization.

The week also indirectly harks back to North American Free Trade Agreement (NAFTA) as President Obama meets with his Mexican and Canadian counterparts for the one-day North American Leaders' summit in Mexico.

According to the White House, the leaders will talk about TPP, which senior officials said could be seen as addressing the shortcomings of NAFTA by placing labor and environmental obligations into the core of the agreement instead of making them subject to side agreements.

The meeting, which U.S. Trade Representative Michael Froman will also attend, will also focus on security issues, narcotrafficking, energy cooperation and the effort to combat climate change as well immigration reform.

Froman will also give a speech on the U.S. trade agenda to the U.S. Department of Agriculture 2014 Agricultural Outlook Forum on Thursday, Feb. 20, according to USTR.

In addition, the AFL-CIO Executive Council is expected to pass a trade-related resolution mid-week that reflects its skepticism on TPP and its opposition to fast track, or Trade Promotion Authority (TPA). It will place the two initiatives in the context of its push for rising wages -- the union federation's No. 1 issue -- and better environmental standards, AFL-CIO President Richard Trumka said in a Feb. 17 press conference.

He said the council's TPP and TPA statement will not be “significantly different” from the resolution passed by last year's AFL-CIO convention since TPP has not changed and the fast-track renewal bill reflects the same “tired old model” of trade liberalization that has failed to produce benefits for U.S. workers.

Last year's resolution warned of a “national campaign” to oppose TPP if it appears to favor corporate interests at the expense of workers by failing to spread the benefits of trade.

On TPP, chief negotiators will meet from Feb. 17-21, followed by a three-day ministerial ending on Feb. 25, which Froman will travel to on Feb. 21, according to USTR. Froman and other administration officials have tried to drive home the message that there is momentum behind the negotiations that could lead to an near-term conclusion. Inside U.S. Trade will have a reporter on the ground in Singapore, so watch for continuing coverage starting this week.

Key to that stated goal of TPP conclusion is the extent to which the U.S. and Japan can narrow their differences over market access for agriculture and automotive products, because other countries are reluctant to make their concessions until they see the U.S. and Japan have a deal.

After a Feb. 15 meeting with Japanese Minister of State for Economic and Fiscal Policy Akira Amari, Froman said in a statement that differences remain between the two sides, particularly on automotive trade. He did not specify whether they relate to U.S. demands for more access to the Japanese market or for a 25-year phaseout of the U.S. tariffs on autos and parts.

The Froman statement also said the two sides had instructed their negotiators to keep addressing the outstanding issues “next week in Singapore and Tokyo.”

On agriculture, Japan has sought to protect from tariff cuts the categories of rice, sugar, dairy, beef and pork, as well as wheat and barley, but has backed off from that position in closed-door negotiations with the United States. Instead, the two sides have been focused on how many tariff lines each side would be allowed to protect from full liberalization in TPP.

Dairy remains a sensitive issue both in TPP and in TTIP, and Froman is slated to meet with the U.S. Dairy Export Council and the National Milk Producers Federation on Feb. 18, according to USTR.

In the context of the two-day TTIP stocktaking this week, EU Trade Commissioner Karel De Gucht said today (Feb. 18) that the U.S. tariff offer made last week is not as ambitious as the one put forward by the European Union. The EU's offer linked some proposed tariff cuts to removing regulatory obstacles and reciprocity of U.S. concessions.

The stocktaking is meant to be a political review of the progress achieved so far in TTIP, which by all accounts is stuck in a preliminary phase where each side states its offensive interest, but officials have not engaged in actual negotiations. Froman and De Gucht were expected to some degree to plot a course for the months ahead.

The expectations for the meeting were low on both sides, and observers questioned whether the meeting will yield significant concrete outcomes or clear policy directions to negotiators.

Some sources said this reflects the fact that both sides realize the political environments in Washington and Brussels are not conducive to making controversial trade decisions. One observer argued that USTR may not want to move too far ahead in the TTIP talks, particularly with respect to regulatory issues, for fear it could further inflame the debate over TPA. He and others noted that regulatory cooperation is bound to be seen as deregulation, particularly by Democrats in Congress.

Other sources have said the low expectations may be due to the preliminary nature of the talks so far. For example, the architecture of the overall agreement remains outstanding, as does the full scope of the regulatory cooperation agenda -- an aspect of TTIP that has been touted by both sides as the most potentially beneficial to their economies.

In Geneva, the TISA talks kicked off on Feb. 17 and will go through Feb. 24, with the EU as host. The EU scheduled the talks back-to-back with regular meetings under the General Agreement on Trade in Services, with the aim of increasing “synergies” with those efforts and ensuring the participation of capital-based officials, according to a Feb. 17 announcement by the EU mission to the WTO.

Of the 23 TISA participants, 19 have presented offers, which were to reflect the best concessions each trading partner has made in bilateral free trade agreements. The four countries that have no yet tabled their offers are Paraguay, Chile, Peru and Pakistan. Chile is undergoing a change of government, with the newly elected President Michelle Bachelet scheduled to take office on March 11.

The talks will kick off with trading partners explaining their respective offers for three days, with the next five days taken up with the discussion of sectoral disciplines in six selected areas. They are financial services, telecommunications and electronic commerce, maritime transport, domestic regulation and transparency, professional services and Mode 4, the movement of natural persons.

The U.S. delegation to the fifth round of TISA talks will be led by Deputy Assistant U.S. Trade Representative Christopher Melly, according to USTR.