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Trade, investment and infrastructure – A View from APEC 2013

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From the joint blog with Jay Timmons and Business New Zealand’s Phil O’Reilly to meetings and hallway discussions, trade, investment and infrastructure dominated our first full day at the APEC CEO Summit.

In meetings with Secretary of Commerce, Penny Pritzker, U.S. Trade Representative (USTR) Ambassador Michael Froman, and Deputy USTRs Wendy Cutler and Michael Punke, the discussion centered on opening markets, eliminating forced localization and other barriers to greater growth in the region, and promoting high standards that will advance competitiveness and economic opportunity.

Jay and I kept our focus on the importance of pro-growth outcomes that will connect businesses with customers throughout the region.  We emphasized the importance of the strongest possible outcomes in the Trans Pacific Partnership (TPP) on concrete new market access and strong standards, including on investment and intellectual property. We met with manufacturers throughout the day, and the same themes continued to emerge:

  • Improving connectivity and economic engagement by reducing trade barriers, including the red tape at the border and behind the border such as that created by differing and costly regulations, product standards and assessments;
  • Emphasizing core disciplines and standards that are vital to promote growth in the Asia Pacific and advance the competitiveness of America’s manufacturers, from intellectual property to investment rules; and
  • Creating trading systems that keep in step with the technological advances that are critical to new growth.

At lunch, Jay joined Ed Rapp, Group President of Caterpillar Inc. in a discussion roundtable to release a new NAM, NCAPEC and ABAC report Attracting and Harnessing Infrastructure FDI to Secure Lasting Economic Growth and companion checklist to spur governments to adopt policies and eliminate barriers to growing investment in infrastructure.  Melody Meyer, President of Chevron Asia Pacific Exploration and Production Company, and Bob Prieto, Senior Vice President, Strategy for Fluor discussed growth opportunities, but also challenges in the region. Secretary Pritzker and many other Asia Pacific business delegates joined the discussion.

There was widespread agreement on the need for further action to build and modernize the infrastructure that is vital for everything from transportation, water and electricity to energy production, technological connectivity and greater trade flows.  Many of the recommendations to governments centered on some of the same topics we covered in the trade discussions – from the protection of investment and intellectual property, keeping up with technology, fair rules and the elimination of unnecessary barriers. With an estimated $8 trillion in infrastructure needs in the Asia Pacific over the next ten years, APEC economies have an unprecedented opportunity to take action that will promote not just infrastructure growth, trade and investment, but also the broader economic growth that all economies seek.

Tomorrow, I’ll share some of the technology focus and a new report on growth prospects for technology leaders and laggards.

Linda Dempsey, the NAM’s Vice President of International Economic Affairs, is blogging from the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Bali, Indonesia.

Manufacturers Emphasize Importance of Infrastructure Investment and Trade Liberalization at APEC Summit

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This week NAM President and CEO Jay Timmons and Vice President for International Economic Affairs Linda Dempsey travel to Bali, Indonesia for the Asia–Pacific Economic Cooperation (APEC) CEO Summit that takes place in tandem with the APEC Leaders meeting.

At the summit, the NAM will be partnering with the National Center for APEC (NCAPEC) and the APEC Business Advisory Council (ABAC) in releasing a report highlighting opportunities for much more significant growth in infrastructure investment in the Asia Pacific. With over $11 trillion in unmet infrastructure needs throughout the region, all APEC economies can and should do more to modernize and develop new infrastructure to meet the needs of their populations and to expand connectivity and opportunities in a growing and highly competitive global marketplace. Manufacturers could see enormous new opportunities in the region if the Asia-Pacific economies prioritize and implement policies to attract investment in infrastructure, from transportation networks, electricity and clean water to broadband and internet connectivity. The NAM is looking to prompt not only discussion but government action to boost infrastructure investments here in the United States and throughout the APEC region.

Jay and Linda will also meet with a number of business leaders and trade and economic officials from many of the APEC economies. During their discussions – which will range from infrastructure to the Trans-Pacific Partnership (TPP) negotiations – they will emphasize the importance of APEC’s work in opening markets, liberalizing trade and embracing best practices and policy recommendations that will advance growth in all our economies.

Jay and Linda will be focused on manufacturers’ trade and investment priorities, including seeking trade policies and agreements that provide concrete new market access, eliminate barriers and enshrine strong rules to promote innovation and growth, including on transparency, intellectual property and investment, that will also promote a stronger rules-based trading system.

Jessica Lemos is the Director for International Trade Policy at the NAM 

Global Manufacturing Economic Update – September 13, 2013

By | Economy, General, Trade | No Comments

Here is the summary for this month’s Global Manufacturing Economic Update:

The world economy appears to be stabilizing somewhat from weaknesses in the past few months, with the latest data indicating improvements in manufacturing activity in several countries. Europe, which had been in a recession for nearly two years, has now had two straight months of slow—but positive—growth. The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) increased from 50.3 in July to 51.4 in August, with growth in new orders, exports and output. Other macroeconomic variables reflecting gains include real GDP and retail sales. Nonetheless, hiring growth continues to lag behind, and from the U.S. perspective, manufactured goods exports to Europe have been lower year-to-date. Industrial production declined 1.5 percent in July, suggesting that significant weaknesses remain even with a more upbeat outlook.

Likewise, China’s economy has also rebounded from recent softness. The HSBC China Manufacturing PMI shifted from contraction (47.7) in July to very slight growth (50.1) in August. This marked the first expansionary figure since April. The Chinese economy has decelerated from past years, with year-over-year real GDP growth of 7.5 percent in the second quarter, down from double-digit rates of growth just a couple years ago. Production, fixed asset investments, and retail sales have also all picked up the pace in July from weaknesses in prior months.

The higher levels of activity in China have helped to boost much of the rest of Asia, as well. While several Asian countries continue to contract, they are also beginning to stabilize. There are some exceptions to this, of course. For instance, India’s economy is suffering from a sharp devaluation in the rupee (see the graphic above) and its own economic policies. The HSBC India Manufacturing PMI declined from 50.1 to 48.5, its first contraction since March 2009. The other outlier, Japan, increased from 50.7 to 52.2 and has been expanding each month since March, according to the Markit/JMMA Japan Manufacturing PMI. In general, these gains mirror improvements in the Japanese macroeconomy since the end of last year.

Despite some better data abroad, the U.S. trade deficit widened in July on higher goods imports and a slight decrease in goods exports. As we have been saying all year, growth in manufactured goods exports have been frustratingly slow in 2013, up just 1.6 percent through the first seven months of the year relative to the same time period last year. This compares to 15.9 percent and 5.7 percent growth in 2011 and 2012, respectively. Exports to China have been one of the bright spots, but other regions have seen some significant easing compared to last year’s pace. Hopefully, as the global economy continues to improve, manufacturers will see demand for their goods increase.

Along those lines, we will be closely watching the economic data coming out over the next couple weeks to see if more progress materializes for global manufacturers. A number of countries will be releasing their industrial production data next week, including the United States, which is expected to report a slight uptick in activity in August after being flat in July. Much of the other new data will focus on pricing pressures, both at the consumer and producer level. Overall, inflation has been modest, but with rising petroleum costs, crude costs have edged marginally higher in the most recent reports. The other key date to focus on will be September 23, when Markit releases its Flash estimates of PMI for China, the Eurozone and the United States.

On the policy front, following robust discussions on the Trans-Pacific Partnership (TPP) in August, negotiators are seeking to close gaps and push aggressively for progress in the lead-up to the Bali meeting of Asia–Pacific Economic Cooperation (APEC) forum. The World Trade Organization (WTO) has a new director general, who will be seeking to make progress on customs and trade facilitation talks and an expansion of the Information Technology Agreement (ITA) by the end of the year. U.S. bilateral economic relations with India will move to the leader level as President Barack Obama and Prime Minister Manmohan Singh meet in September. U.S.–E.U. negotiations head for the second round next month, while the National Association of Manufacturers (NAM) works to promote legislative action on Trade Promotion Authority (TPA) that is critical to expedite and implement major new trade agreements.

Chad Moutray is the chief economist, National Association of Manufacturers.

indian rupee exchange rate - sept2013

Recognizing the Doha Round is Broken

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The Asia-Pacific Economic Cooperation (APEC) trade ministers who met in Big Sky, Montana, today finally took a hard-nosed look at the state of the World Trade Organization Doha negotiations and admitted that what the United States has been saying for several years: the gaps in expectations for opening new market opportunities around the world are unbridgeable in the current context.  As Ambassador Kirk noted, “we are not in good shape.”  

We welcome this recognition of reality that should help the WTO move forward in a constructive way, rather than continuing to chase its tail in a desperate hope that given enough time the pieces will magically fall into place. 

So the question now becomes what to do with the pieces of Doha that aren’t broken.  We hope that in this period of reflection WTO Members will give serious consideration to moving ahead in concluding negotiations in areas that can garner consensus. One of these issues should be the trade facilitation negotiations aimed at simplifying and speeding procedures for getting goods through customs formalities.

In an age when a large portion of exports are delivered in hours by air rather than weeks or months by sea, the length of time and costs of customs clearance procedures needs to be reduced so components can get to manufacturers and finished products to customers more rapidly. This is not a zero-sum negotiation that involves mercantilist concessions; it is classic win-win. 

Ministers should also give greater consideration to so-called plurilateral agreements that don’t require every WTO country to sign on, such as the Information Technology Agreement. It should be expanded to provide zero-duty treatment for more high-tech products. The existing agreement dating from 1997 has been very successful and reduced costs for manufacturers that rely on information technology products to enhance their competitiveness. There could be other plurilateral agreements that could garner sufficient support–perhaps environmental goods and services.

The WTO is a strong and vital organization and its value should not be assessed on what happens with the Doha negotiations. An organization that deals forthrightly with the situation it faces will be a strong one. 

As is said, the first step to recovery is the recognition that there is a problem.

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.  

Dispatch from the Front: The Week of November 8

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The President travels further in Asia, the lameduck Congress draws closers, and the G20 meets in Seoul. Thursday is a federal holiday, Veterans Day, and the National Association of Manufacturers will be closed.

President Obama’s Trans-Asian Express takes him to Indonesia — barring further volcanic eruptions — South Korea and Japan. The G20 opens Wednesday in Seoul, with the President in attendance. Expect more public comments embracing trade, with the possibility of an announcement about moving forward with the U.S.-Korea Free Trade Agreement after the President parleys with his Korean peer, Lee Myung-bak. The President also attends the APEC summit in Yokohama starting Saturday, a stop that includes a tête-à-tête with new Japanese Prime Minister Naoto Kan.

It is the final week before 111th Congress returns for its first lameduck session on Monday, Nov. 15. Every day that passes brings the Jan. 1, 2011, tax increases closer, so expect more pre-session disputes, arguments, and “partisan squabbling.” But better a lameduck flap than a lameduck flop.

Economic Reports: On Tuesday, the Commerce Department releases wholesale trade inventories for September. Commerce releases international trade figures for September on Wednesday, with economists anticipating a narrowing of the trade deficit.

Executive Branch: U.S. Trade Representative Ron Kirk travels to Yokohama for the APEC summit  (USTR schedule). Fresh off his trip to Scotland and Ireland to promote “clean” energy, Energy Secretary Chu starts a new tour Sunday to China and Japan. Stops  include a visit to Huaneng Power’s carbon capture and storage project and on Monday, a tour of  GE’s China Technology Center. Interior Secretary Ken Salazar and HHS Secretary Kathleen Sebelius on Friday attend a groundbreaking ceremony for a new visitors center at the Tallgrass Prairie National Preserve in central Kansas.

Starting today in Washington, D.C., the National Oil Spill Commission and its Chief Counsel Fred Bartlit hold a two-day hearing on preliminary findings regarding BP’s Macondo well blowout

Renewed Momentum for Doha? One Can Hope.

By | Trade | One Comment

Trade ministers from the Asian-Pacific Economic Cooperation group have finished their meeting in Sapporo, Japan, with a statement pushing for a conclusion to the Doha Round of WTO negotiations, “Statement on Supporting the Multilateral Trading System and Resisting Protectionism.” Excerpt:

We, the APEC Ministers responsible for Trade, gathering for our XVI meeting in Sapporo, Japan, express our strong commitment to the multilateral trading system and our unwavering determination to bring the Doha Development Agenda (DDA) to a successful conclusion as soon as possible.

    (Promoting the Doha Development Agenda)

  1. The strengthened multilateral trading system is a source of economic growth, development and stability. Bearing in mind that further reform and liberalization of trade policies will bolster economic recovery, we reaffirmed our resolve to seek an ambitious, balanced, and prompt conclusion to the DDA, consistent with its mandate, built on the progress achieved, including with regard to modalities.
  2. When the G20 finance ministers meet again in Toronto later this month, they’ll be asked to support the political momentum to speed up negotiations on the stalled Doha talks on global trade. That was the pledge made by a meeting of Asia Pacific trade ministers in Japan at the weekend. The ministers of the Asia-Pacific Economic Cooperation forum also agreed to outline a plan on possible ways to reach a regional free trade area.

Radio Australia has a good interview with Simon Creen, Australia’s trade minister, on the APEC meeting: Read More

Embracing the Opportunities in Trans-Pacific Trade

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President Obama gave a speech in Tokyo Saturday announcing the Administration’s plans to engage with the Trans Pacific Partnership countries to shape a regional agreement, an engagement that could produce real benefits for U.S. exporters and manufacturers. The Asia-Pacific region is the world’s fastest growing both in terms of trade and in the number of trade agreements being negotiated.  The NAM has long called for a trans-pacific trade agreement that would open up the region to U.S. exports.  America’s manufacturers cannot afford to be on the outside of an Asian trade wall looking in.

Reacting to the President in a statement, U.S. Trade Representative Ron Kirk made the case that a high-standard regional trade agreement under the Trans Pacific Partnership could help generate American jobs and economic prosperity.  (USTR fact sheet.) Exports will be the driver of U.S. economic recovery, but only if they have open access to world markets.

Strong U.S. leadership will be necessary to achieve a regional Pacific agreement that includes the highest standards already incorporated in U.S. bilateral agreements.  The United States currently has bilateral agreements with four of the seven Trans Pacific partners – Australia, Chile, Peru, and Singapore. (The others are New Zealand, Brunei, and Vietnam.) None of the gains for American manufacturers that were negotiated in those agreements should be abridged in any way, including intellectual property and investment protections and market access commitments. 

We were also pleased to see President Obama’s urging other nations to join the United States in demanding an ambitious and balanced Doha agreement, “not any agreement, but an agreement that will open up markets and increase exports around the world.”  This is the only road to success for the Doha Round.

The President’s focus on trade and trade agreements highlighted in his Asian trip should not, however, push other trade priorities off the table. On the contrary, they should produce a concerted effort to resolve any last issues with the three pending trade agreements – Colombia, Korea, and Panama – so these can be sent to Congress for approval.

News coverage…

Frank Vargo is Vice President, International Economic Affairs, National Association of Manufacturers

Reaffirming Trade, Prosperity, Democracy in Colombia

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  • CTV, “Canada signs free-trade agreement with Colombia“: “Canadian Prime Minister Stephen Harper and Colombian President Alvaro Uribe signed a free trade agreement between the two countries while at the Asia-Pacific Economic Cooperation meeting in Lima Friday.”


  • Japan Economic Newswire, “Japan, Colombia to start talks on investment pact“: “Japanese Prime Minister Taro Aso and Colombian President Alvaro Uribe agreed Saturday to launch talks on a treaty to increase protection of their bilateral investments, a Japanese official said.”


  • AFP, “Bush asks US to look after ‘good friend’ Uribe“: “‘He is a strong leader. He’s a good friend. And our Congress and our government must never turn our back on a friend like Uribe,’ Bush said during a speech at an APEC summit in Lima that was his last foreign trip as US leader.”


  • The Oregonian, “Keep the Faith with Colombia“: “The United States, and especially a trade-dependent state like Oregon, which sent more than $27 million in goods to Colombia last year, should welcome an improvement in the climate for selling goods to Colombia. And it should reward a friendly, effective government in Colombia for its support for American interests in South America.”


“Who can say there’s a dictatorship in Venezuela?” Chavez said, in a jab at his many critics.

“A new stage is beginning. For me, as the leader of the Venezuelan socialist project, the people are telling me: ‘Chavez, keep on the same path,'” the anti-US leader said.

The polls were seen as a test for Chavez and his drive for nationalization and social projects, amid growing discontent over escalating crime, corruption and inflation.