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This Week In Trade

Trade Policy Heats Up With TPP Consultations, EU Meeting, Russia Trip

Posted: February 21, 2012

U.S. trade policy is kicking into high gear this week as officials focus on bolstering the U.S. trade relationship with Asia-Pacific countries, including through the Trans-Pacific Partnership (TPP) negotiations, and with the European Union by exploring how the two sides could deepen their vast trade and investment relationship.

On TPP, USTR today (Feb. 21) is starting two days of meetings with Japanese officials at the technical level in order to continue discussions on Japan's interest in joining the TPP talks. This follows up on a senior-level meeting held between the two sides earlier this month.

By the end of this month, Japan will have held consultations with all current TPP partners. Canada and Mexico, which also want to join, are working just as intensely. Last week, high-level Mexican officials met with USTR to discuss their interest, and Canadian Trade Minister Ed Fast outlined his desire to meet with USTR in the next two months.

These countries know that current members are expected to discuss whether to let them join at the next formal round to be held in Australia in early March.

USTR is also preparing for this round by sending Deputy USTR Demetrios Marantis on a trip through Asia, starting this week, to discuss TPP with Vietnam and Brunei, which are both current TPP partners, and the Philippines, which has indicated some interest in joining. According to USTR, Marantis will not participate in the Australia round.

On deepening trans-Atlantic trade and investment, Deputy USTR Miriam Sapiro and EU Director General For Trade Jean Luc Demarty are heading up the first organizational meeting this week of a high-level working group tasked with finding ways to create jobs and economic growth through increased trade.

Sapiro is also slated to meet with Panamanian Vice Minister for Foreign Affairs Alvarez de Soto this Friday (Feb. 24), likely in order to continue discussions on implementation of the Panama FTA. The Panama FTA appears to be on a slower track than the U.S.-Korea FTA, which USTR announced today (Feb. 21) will enter into force on March 15.

If TPP is the administration's trade negotiating priority this year, extending Most Favored Nation (MFN) status to Russia is its legislative focus. On that front, Finance Committee Chairman Max Baucus (D-MT) traveled to Russia last Friday (Feb. 17) to discuss "key economic, trade and foreign affairs issues" with Russian officials.

Baucus is expected to intensify efforts to help the administration extend permanent MFN to Russia after this trip concludes tomorrow (Feb. 22), although that may be difficult.

This week also brings some new developments in World Trade Organization litigation. The WTO's Dispute Settlement Body is slated to meet tomorrow (Feb. 22) to establish a panel in South Korea's challenge of the U.S. use of zeroing. This move is sure to irk USTR, which wants WTO members to drop their zeroing challenges after the United States committed last week to move away from using zeroing in calculating AD margins.

But the United States has reached a deal in another WTO dispute, one that it launched against China in 2007 on Chinese trade restrictions on films for theatrical release. Late Friday night, on the heels of a high-level visit from Chinese Vice President Xi Jinping, the White House announced that China had agreed to significantly increase market access for U.S. movies in response to the U.S. victory in the case.

Also late last week, President Obama announced a new series of administrative measures meant to further boost his efforts to promote manufacturing and increase U.S. exports. These measures include a reshuffling of inter-agency responsibilities on trade, perhaps because Congress is unlikely to agree to more fundamental changes.