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This Week In Trade

Argentina GSP, WTO Currency, USTR Trip To China Headline Trade Action

Posted: March 26, 2012

Posted: March 26, 2012

Trade news got off to a quick start today (March 26) when President Obama announced he is suspending Argentina's eligibility for unilateral trade preferences under the Generalized System of Preferences (GSP) program due to its failure to honor international investment arbitration awards.

But plenty of other trade action is on tap this week as well, including a currency seminar at the World Trade Organization, a USTR trip to China focused on agriculture, and new USTR reports detailing foreign trade barriers. WTO members are also poised to formally adopt an updated Government Procurement Agreement approved last December.

Tomorrow (March 27), World Trade Organization members will begin two days of informal talks on the relationship between exchange rates and trade. While they are not expected to delve into the most controversial topics, this seminar has garnered high-level attention from Capitol Hill, and has put Geneva officials a bit on edge due to the limited WTO mandate on currency and the fact that the WTO has not really discussed currency issues for many years.

Islam Siddiqui, USTR's chief agricultural negotiator, travels to China this week in order to take part in a USDA trade mission and meet with officials in Beijing from the Ministry of Agriculture and the Administration of Quality Supervision, Inspection and Quarantine. According to a USTR spokeswoman, Siddiqui will discuss “beef market access issues” and other U.S.-China agricultural trade issues.

China presents some of the most intractable sanitary and phytosanitary (SPS) barriers for U.S. exports, but SPS barriers in all countries will be detailed in a USTR report expected to be released this week. At the same time, USTR will issue a report on foreign technical barriers to trade and the overarching USTR National Trade Estimate report; together, these three reports will outline what USTR sees as its priorities for bilateral work on trade irritants in the coming year.

This administration has made a special point of emphasizing its commitment to tackling foreign SPS barriers, but Rep. Devin Nunes (R-CA) is pressing USTR to also support his idea that the U.S. should consider SPS barriers when deciding whether to grant a foreign country preferences under the GSP program.

In addition to the currency seminar, Geneva officials this week will formally adopt the changes to the Government Procurement Agreement (GPA), which ministers agreed to last December. The agreement will take effect once two-thirds of GPA members have implemented it and have formally deposited their "instruments of ratification."

While this may seem a mere formality for the U.S., which does not have to take any steps to implement the GPA changes, other GPA members will have to secure the approval of their legislatures. That said, the GPA renegotiation results will likely be less controversial than ACTA, which was formally approved last year but still has not entered into force amidst intense public outcry over its provisions, especially in Europe.

The European Union signed up to the new GPA deal last December even though it did not achieve all it wanted to when it comes to opening up the U.S. federal and sub-federal procurement market. However, the EU is now moving ahead with other measures to try to pressure the U.S. and others to further open up their procurement markets to EU companies.

It also is emphasizing the importance of new procurement opportunities at the sub-federal level in the context of the High-Level Working Group, which is to find ways of deepening trans-Atlantic trade by the end of the year. This poses a sensitive issue for USTR, which cannot compel states to open their procurement markets.

Also controversial in the U.S. is another EU priority, which is to enshrine rules on geographical indications (GIs) that are favorable to its agricultural exporters. The U.S. Dairy Export Coalition today launched a new initiative to ensure that GIs do not harm U.S. export interests. U.S. companies fear the EU wants to negotiate rules its own trade agreements that would complicate the marketing of U.S. products in those countries.

GIs are also being discussed in the context of the Trans-Pacific Partnership negotiations. Assistant USTR Barbara Weisel is giving an update on the talks tomorrow (March 27) at a breakfast event hosted by the law firm Akin, Gump Strauss Hauer & Feld LLP.

Weisel may shed new light on consultations being held with Canada, Mexico and Japan on their interest in joining the TPP talks. Canada, while pushing hard to get into TPP, is also moving ahead with other trade initiatives in Asia. In the past few days, it has announced exploratory discussions towards an FTA with Thailand, and launched talks towards a new "economic partnership" with Japan.

Finally, official documents will likely surface this week related to the U.S. appeal of the WTO panel ruling that faulted its country of origin labeling (COOL) system for beef and pork. USTR waited until the last moment to file this appeal, possibly because U.S. industry groups were divided about whether to do so.