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This Week In Trade

Froman's Travels; Friends Of TPP; Government Shutdown; Farm Bill Expiry

Posted: September 30, 2013

Posted: September 30, 2013

This week, the major trade initiatives in which the United States is involved are being highlighted by a round-the world trip by U.S. Trade Representative Michael Froman that takes him to Brussels, Geneva and Bali, Indonesia, even as the looming government shutdown threatens to throw other travel plans and negotiating schedules into question.

At press time on Sept. 30, the chances of a shutdown increased dramatically when the Senate voted 54 to 46 to reject the House-passed funding measure, which would have provided no money for implementing the Affordable Care Act. Efforts by Senate Republicans to pass a one-week continuing resolution also seem to have failed over House resistance.

What a shutdown -- especially an extended one -- would mean for the second round of the Transatlantic Trade and Investment Partnership (TTIP)  negotiations scheduled to take place in Brussels starting on Oct. 7 is still an open question. USTR would have just 24 percent of its staff on hand in the event of a shutdown, according to the Executive Office of the President.

Other trade-related agencies would also be impacted. Most of the functions of the Commerce Department's International Trade Administration (ITA) would be inactive and the Bureau of Industry and Security (BIS) would retain only roughly one-third of its staff if Congress and the White House fail to agree on a continuing resolution funding the government by tomorrow (Oct. 1).

One of the immediate victims of the looming government shutdown is the launch of a new congressional group on Oct. 1 that planned to work on building support for the Trans-Pacific Partnership (TPP) trade initiative.

The group will be headed by three Ways and Means Members: Reps. Dave Reichert (R-WA), New Democrat Chairman Ron Kind (D-WI), and Charles Boustany (R-LA). The fourth member slated for a leadership role is Rep. Gregory Meeks (D-NY), who is chairman of the New Democrat Trade Task Force.

In another example of Congress' inability to address critical deadlines, the 2008 farm bill formally expires today, with no solution in sight to the longstanding trade fight between the U.S. and Brazil over U.S domestic subsidies for cotton producers and other agricultural commodity exporters.

Under a settlement deal with Brazil, the U.S. is supposed to bring itself into compliance with an adverse World Trade Organization ruling through the successor legislation to the 2008 farm bill. But despite typically being passed every five years, Congress has been unable to pass a bill, largely due to a political battle between Democrats and Republicans in the House over a program of domestic food aid.

What happens next with respect to Brazil is an open question. U.S. Agriculture Secretary Tom Vilsack has said that, as of tomorrow (Oct. 1), he will no longer have the authority to continue to make the $147 million in annual payments to Brazil under the settlement -- although experts say that is a tactical decision being taken by the administration with the clear intent of pressuring Congress to pass a new farm bill. But if the administration follows through, that would put the U.S. in violation of the settlement, opening the door to WTO-authorized trade retaliation from Brazil.

On TTIP, Froman today highlighted his vision for regulatory cooperation in a big policy speech in Brussels that hinted at the different stances the two sides are taking -- with the U.S. focused on creating cross-cutting rules, and the EU interested more on sector-specific regulations.

Froman was in Brussels to meet with EU Trade Commissioner Karel De Gucht, who said in a separate statement that he hopes the TTIP negotiators can present an “agreed outline of the regulatory and rules component of TTIP” for political review in January 2014.

The U.S. trade representative was also scheduled to meet with European Commission Director-General for Enterprise and Industry Daniel Calleja Crespo, as well as members of the European Parliament and representatives of member states, according to USTR.

Froman is then scheduled to visit Geneva on Oct. 1 for meetings with World Trade Organization Director-General Roberto Azevedo, who today (Sept. 30) warned members that the current pace of progress on developing a mini-trade package for a December ministerial in Bali is too slow to be successful.

Azevedo emphasized that more political engagement from national governments is critical, and announced he has sent a letter to ministers urging their personal involvement in the efforts to develop a Bali deal.

Froman will travel to Bali for critical meetings on TPP negotiations, where he hopes to narrow as much as possible what are still considerable gaps in the hope of driving the deal to conclusion as soon as possible.

Froman is meeting Oct. 3 and on Oct. 4 with TPP trade ministers on the sidelines of a ministerial meeting of the Asia-Pacific Economic Cooperation (APEC) forum.  TPP is not only moving into focus not only through Froman's trip, but also through a Sept. 30-Oct. 1 trip by Acting Deputy U.S. Trade Representative Wendy Cutler to Japan to conduct the second round of U.S.-Japan parallel negotiations on motor vehicles, insurance and other non-tariff measures.

Also scheduled for this week is a speech by Ambassador Islam Siddiqui on global food security and agriculture trade, and a speech by Assistant U.S. Trade Representative Florie Lizer on U.S.-Africa Trade Relations. The U.S. seems to be wrestling with the renewal of the African Growth and Opportunity Act (AGOA), with some stakeholders advocating a more reciprocal trade relationship for such AGOA beneficiaries such as South Africa.