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This Week In Trade

Firm Deadline For Bali, ITA Talks, TPP Intersessionals; Cutler To Korea, Japan

Posted: November 18, 2013

Posted: November 18, 2013

This week will mark the final chance for members of the World Trade Organization to pull together the major parts of a trade package for the Dec. 3-6 ministerial conference in Bali, as the Nov. 21 General Council meeting in Geneva looms as a firm deadline by which they need to report negotiating results to their capitals.

If the package fails, there is little chance that a fallback “deliverable” will be the conclusion of negotiations to expand the product coverage of the Information Technology Agreement (ITA). Those talks continue to be plagued by major problems over China’s insistence to protect such critical items as certain semiconductors from tariff elimination.

The chairmen and ranking members of the trade committees in the U.S. Congress last week made clear to U.S. Trade Representative Michael Froman that China needs to improve its offer in order for a deal to be commercially meaningful for U.S. industry, and also raised questions about whether the talks can be completed in time for the Bali meeting.

Negotiations on the ITA in Geneva are slated to continue until Nov. 20. But with the chances of conclusion already slim, it means that likely there will be no major announcements on the plurilateral front at the upcoming Bali ministerial. It is already clear that there will be no announcement at the ministerial that the revised Government Procurement Agreement (GPA) has entered into force, since not enough signatories have ratified the deal, although ministers from GPA parties are slated to meet anyway in Bali to encourage entry into force by early 2014.

The WTO Government Procurement Committee, which oversees the GPA, is meeting this week in Geneva, but China has not yet submitted an improved offer to join the plurilateral deal despite its commitment to do so before the end of 2013. China initiated negotiations to join the GPA in 2008, after pledging in its 2001 WTO accession protocol to start those talks as soon as possible.

Froman last week seemed to take a very distant approach to the Bali negotiations when he said the “the WTO right now is in the throes of … around the clock negotiation over whether they can come up with an agreement” by next month. At the same time, he seemed to do some damage control in case of failure when he said that, even in the absence of a Bali package, the WTO will continue to serve an important function as a dispute settlement forum.

Froman has been in California over the past few days, meeting with stakeholders including Disney, Paramount and wine producers. He has engaged in meetings covering a range of issues, such as intellectual property (IP), technology and agriculture. For example, yesterday (Nov. 17), he was scheduled to participate in an Agricultural Export Roundtable with Secretary of Agriculture Tom Vilsack. Froman will conclude his visit today with a discussion in San Francisco on the president’s trade agenda.

Following last week’s negotiating round of the Transatlantic Trade and Investment Partnership (TTIP), this week will be more focused on the Trans-Pacific Partnership (TPP). Chief negotiators and negotiators in key areas are slated to meet in Salt Lake City from Nov. 19-24, in what bears resemblance to a negotiating round but is not formally being called one.

These meetings are taking place in the shadow of the leaked IP chapter that shows just how far apart negotiators are in this critical area. Still looming is a reward of roughly $75,000 for the leak of the entire TPP text, which would not be unprecedented for a major trade agreement given the release in the 1990s of an entire text of the North American Free Trade Agreement (NAFTA). This week marks the 20th anniversary of congressional approval of NAFTA, which the House passed on Nov. 17, 1993, by a vote of 234-200 after a bitter, divisive fight.

On the TPP front, Acting Deputy USTR Wendy Cutler will lead a U.S. delegation to Japan for the fourth round of U.S.-Japan parallel negotiations on motor vehicles, insurance and other non-tariff measures, which will take place Nov. 20-22. The auto talks are proving to be particularly difficult, a point which Cutler highlighted in a press release following the third round held in Washington last month.

Meanwhile, U.S. auto companies are keeping up the drumbeat over what they charge is the much more significant issue of Japan’s alleged currency manipulation. Ways and Means Ranking Member Sander Levin (D-MI) made clear last week at a roundtable attended by Ford Motor Company and the American Automotive Policy Council that he will soon make a proposal for including currency manipulation disciplines in TPP, based on the work of Fred Bergsten, a scholar at the Peterson Institute for International Economics.

Before Cutler goes to Japan, she will meet Nov. 17-19 with senior government officials in South Korea. The South Korean government is interested in joining the TPP talks but thus far has not made an official announcement that it will seek to join the negotiations. South Korea's Ministry of Trade, Industry and Energy (MOTIE) was slated to hold a public hearing in Seoul on Nov. 15 regarding Korea's participation in the trade talks.

Taiwan is also seeking to eventually join TPP. In a Nov. 7 press release, the Taiwanese government touted recent trade agreements it signed with New Zealand and Singapore -- both TPP members -- as paving the way for its eventual entry into TPP and the Regional Comprehensive Economic Partnership.

Taiwan's interest in joining TPP is likely to be raised by a delegation of roughly 20 Taiwanese CEOs, led by former Vice President Vincent Siew, that will visit New York and Washington this week, U.S.-Taiwan Business Council President Rupert Hammond-Chambers said in an interview. The delegation will stop in Washington Nov. 20-21.

Siew is scheduled to speak at a Brookings Institution event on Nov. 20 at an event titled “Taiwan and the Trans-Pacific Partnership: Issues and Opportunities.” In a Nov. 7 article, Taiwanese official news agency CNA said the speech will mark the first time that a former vice president publicly advocates for Taiwan to join TPP.

Also on the Washington calendar this week, the Senate Finance Committee will consider the nomination of Rhonda Schmidtlein to be a commissioner at the U.S. International Trade Commission. Schmidtlein was nominated to take over the post currently held by Shara Aranoff, whose term expired on Dec. 16, 2012, though ITC commissioners can continue to serve until a replacement takes office. If confirmed, Schmidtlein's term would last through Dec. 16, 2021.

The ITC will play a critical role in assessing the TPP once a deal is completed, and Chairman Irvin Williamson has said it will take the ITC, at a minimum, almost twice as much time to evaluate a final deal as is prescribed in the 2002 fast-track law.

Also facing a confirmation hearing this week is Arun Kumar, the president's nominee for assistant secretary of Commerce for global markets and director-general of the U.S. and Foreign Commercial Service, a post that currently is being filled on an acting basis by Judy Reinke. Kumar will appear before the Senate Commerce Committee on Nov. 21.

On the TTIP front, the ITC will hold a hearing on Nov. 20 to explore trade barriers facing U.S. small business exports to Europe. The commission is doing so to solicit input for a report, which USTR requested in June, to identify EU barriers that disproportionately affect small business exports in order to help guide U.S. negotiators in TTIP. The report is due to USTR by Feb. 28, 2014. The hearing was originally scheduled for Oct. 8 but was postponed due to the U.S. government shutdown.