Tag: USTR

Time to Expand the ITA

Official negotiations to expand the Information Technology Agreement (ITA) have been suspended due to a lack of progress by the Chinese delegation on its negotiation position. China’s delegation has asked for the removal of more than 100 products from the ITA negotiation – a so-called “sensitivities list.” No date to resume discussions has been announced.

The NAM recently joined a diverse coalition of businesses and business groups this week to renew our call for a meaningful expansion of the ITA.

The ITA is one of the most commercially successful trade agreements in the history of the World Trade Organization (WTO) and has boosted innovation and productivity, lowered consumer costs, and created jobs in its brief 16 years in existence.

From 1996 to 2008, total global trade in information and communications technology products increased more than 10 percent annually, from $1.2 trillion to $4.0 trillion. An expanded ITA could bring an additional $400 billion in high-tech trade under ITA coverage and increase world GDP by $190 billion, ITIF reported.

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Manufacturers Welcome USTR’s Review of GSP Eligibility

Stability and certainty are critical to ensuring U.S. trade preferences deliver on their promise to promote economic development abroad and provide access to manufacturing inputs lower prices here at home. So when the U.S. Administration decides to review a country’s eligibility for benefits under a trade preference program, it’s based on serious and longstanding concerns – not a temporary diplomatic dust-up.

The NAM welcomed last week’s announcement by the Office of the U.S. Trade Representative (USTR) regarding its 2012 Annual Review under the Generalized System of Preferences (GSP).  GSP is a trade preference program that has been in place since 1976. It allows duty-free imports from 127 developing countries.  The NAM supports GSP as a means to further international development, to bring developing countries in compliance with basic standards of the rule of law, and to reduce the cost of manufacturing inputs imported from those countries.

As part of the annual review, USTR considered petitions to suspend or withdraw GSP benefits from certain countries — including from Ecuador, which shipped products worth $107 million to the United States under the program last year. There are a number of criteria considered when determining eligibility for GSP, including the extent to which a country provides adequate and effective protection for intellectual property rights and whether it acts in good faith to enforce arbitral awards in favor of the United States.  USTR has accepted a petition for review against Ecuador related to serious concerns about its enforcement of arbitral wards. According to USTR, next steps in reviewing Ecuador’s eligibility will be announced by a Federal Register Notice.

The NAM strongly urges USTR to examine carefully whether Ecuador has lived up to its GSP eligibility requirements, including as they relate to the recognition and enforcement of arbitral awards. The NAM has long been concerned with Ecuador’s repudiation of its legal obligations and its breaches of the basic rule of law.

U.S. preference programs should not be treated as entitlements, but rather as partnerships between the United States and nations willing to live up to strong eligibility criteria that are fully implemented. Ecuador’s eligibility must be reviewed thoroughly and rigorously based on statutory eligibility criteria to ensure that it is meeting these standards.

The next steps in the GSP review process present an opportunity for Ecuador to demonstrate its capacity to abide by the rule of law and become a role model for other developing nations. If Ecuador can sufficiently prove its willingness to meet the high-standards of the GSP program and its other international obligations, that nation and its many small businesses that gain from GSP will continue to enjoy the benefits of the program.

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A Full Plate for the Next USTR

This morning, President Obama made it official this morning when he announced the nomination of Michael Froman to serve as United States Trade Representative (USTR).

Mr. Froman’s plate will be full as our global challenges mount with ongoing weakness in the global economy. However, these are issues that he has keenly been aware of in his position as deputy national security advisor for international economic affairs and in his prior work in and out of the government over the past two decades. Mr. Froman’s experience in international trade and with senior foreign government officials should be a strong asset as he becomes the lead trade official for the United States.

Trade is a vital issue for manufacturers as 95 percent of consumers live outside the United States. Opening new markets and leveling the playing field is critical for manufacturers’ success in creating more opportunities for the 12 million men and women who make things here, as well as for their communities and our economy.

Topping our list of action items:

First, market-opening trade and investment agreements. Recently, NAM President and CEO Jay Timmons laid out manufacturers’ goals for ongoing trade negotiations, and we remain hopeful that these talks can achieve the robust outcomes that are necessary to spur growth and innovation.

Second, the protection and enforcement of intellectual property (IP) rights globally. Manufacturers’ concerns over the theft of IP grow by the day. Challenges remain strong in India and China and in other parts of the world. If left unchallenged, these threats to IP protection will destroy manufacturers’ ability to compete—and compete fairly.

These are just two big issues that we must address as a nation. Manufacturers need action on a robust trade and investment agenda, and we stand ready to work with Mr. Froman to tackle these challenges in the days ahead.

Linda Dempsey is vice president of international economic affairs, National Association of Manufacturers.

 

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Mixed Messages on Trade in President’s Budget

President Obama’s FY2014 budget was released this morning, and it includes some mixed messages on trade. Perhaps most significantly, the budget proposal includes a plan to reorganize – and consolidate – the government’s trade functions. As outlined in the FY2014 budget proposal, the President would like to consolidate six primary business and trade agencies into a new Department. The new Department would include the Commerce Department’s core business and trade functions, the Small Business Administration (SBA), the Office of the U.S. Trade Representative (USTR), the U.S. Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the U.S. Trade and Development Agency. It would also incorporate related programs from a number of other departments, including the Agriculture Department’s business development programs, the Treasury Department’s Community Development Financial Institutions Fund program, the National Science Foundation’s (NSF) statistical agency and industry partnership programs, and the Bureau of Labor Statistics.

The President outlined a similar proposal in his 2012 State of the Union address, with a resoundingly negative reaction from the business community. In response to that plan, the NAM joined more than 80 other business groups in a letter arguing that subsuming USTR into a broader trade and business government department would severely harm its credibility and hamper USTR’s ability to play its unique coordinating role within the U.S. government. USTR is statutorily responsible for developing and coordinating U.S. international trade and direct investment policy as well as overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the President’s principal trade advisor, negotiator, and spokesperson on trade issues. The NAM continues to be troubled by this reorganization proposal, given the importance of trade to manufacturers in the United States.

In looking at the budget proposals for specific departments, the budget proposal would provide additional resources for trade promotion initiatives and agencies. The Commerce Department budget overview includes an increase for the International Trade Administration (ITA), with a proposed a budget of $520 – or a 14 percent increase over the 2012 enacted level. ITA helps promote U.S. trade and investment and also ensures fair trade through rigorous enforcement of trade laws and agreements. The agency is home to the U.S. and Foreign Commercial Service, which promotes U.S. exports and provides commercial diplomacy support for U.S. business interests around the world.

The Commerce Department’s budget proposal also supports the President’s Export Control Reform Initiative, with $112 million for the Bureau of Industry & Security (BIS) to help sustain export licensing and enforcement activities while moving toward a more predictable, efficient and transparent export control system. The proposal would give BIS an $11 million increase from the 2012 enacted level.

The State Department’s budget proposal includes $307 million for the U.S. Trade and Development Agency, USTR, U.S. International Trade Commission and OPIC – a combined $46 million increase over the 2012 enacted level. The President’s budget proposal also includes $131 million for the Ex-Im Bank’s administrative expenses and Inspector General, a $37 million increase over the 2012 enacted level.

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President Obama Announces Plan to Reorganize Trade Agencies

Today we heard from President Obama about his plan to reorganize several federal agencies – many of which are critical to manufacturers and their ability to create and retain jobs.

Changes would include combining the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency into a single department in an effort to improve government efficiency and to help promote business. The key question in reviewing this proposal is will it help manufacturers compete, export, invest and create jobs?

Any changes that are considered must focus on improving intellectual property protection, opening markets for exports, improving market access, and more. Additionally, while manufacturers have done well in leaning their processes to improve their competitiveness and would vigorously support the federal government doing the same in this difficult debt and deficit environment, the agencies affected must continue to have the necessary resources to meet their missions.

If the streamlining and efficiency undertaken in this proposed combination of agencies will mean that manufacturers will have less intellectual property protection, for example, it would be a devastating mistake. If, on the other hand, this leaning process will mean doing more with less, it would be a great step forward.

As policymakers respond to the President’s proposals today, we are hopeful that the discussion centers on the key question for manufacturers – will they be better able to compete, export, invest and create jobs as a result? With a 20 percent cost disadvantage already, manufacturers will deeply care about the impact these proposals will have on their ability to compete.

Aric Newhouse is senior vice president for policy and government relations, National Association of Manufacturers.

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World Not Waiting for U.S. on Trade Agreements

It is no secret other countries are racing ahead with trade agreements while the U.S. stands idly by. There are 120 free trade agreements being negotiated around the world, and the U.S. is a party to just one.

As for pending trade pacts, the U.S. free trade agreements with Panama, Colombia and South Korea have languished for four years.  (But see this post from Monday for a dose of optimism.)

Those countries aren’t waiting for the U.S.  The Wall Street Journal reports today that Colombia is seeking to increase its trade ties with China.

Colombian lawmakers passed legislation they hope will open the floodgates of trade with China, where the government plans two high-level trade missions over the next three months, as a long-delayed U.S. trade deal with the South American nation stalls in Congress.

Colombia Trade Minister Sergio Díaz-Granados said Tuesday’s passage of the “Chinese Trade Promotion and Protection” bill—which affords China certain legal guarantees on its investments in Colombia—could also propel talks with China to build a railway that would link Colombia’s Caribbean and Pacific coasts, and would serve as an alternative to the Panama Canal.

Trade officials in Bogotá expressed frustration with the slow pace of progress in Washington, which they say contrasts with Chinese eagerness to invest in Colombia, Washington’s closest ally in South America.

In an interview, Mr. Díaz-Granados said he remained hopeful a free-trade pact with the U.S. would be passed before year’s end, but that Colombia can no longer “sit with its arms crossed, waiting.”

“We’ve been talking about a U.S.-Colombia free trade deal for 20 years, and it’s certainly the trade deal we want more than any other,” Mr. Díaz-Granados said. “But in the meantime, we have to continue working in other directions. Our business leaders need to pursue other markets and diversify.”

The U.S. has been waiting for too long.  Every day that lawmakers sit on the trade agreements is a day the country is missing out on opportunities for growth and jobs.

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Senate Holds Panama FTA Hearing

The Senate Finance Committee held a hearing on the U.S.-Panama Free Trade Agreement this morning.  Watch the hearing here.

The Committee heard testimony from NAM member Jason Speer, vice president and general manager of Quality Float Works.  Jason had just returned from Panama, so he was able to offer a particularly informed perspective about what the trade agreement would mean for manufacturers.

Jason also spoke with the NAM while he was in Washington:

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Timmons on Free Trade in the Daily Caller

NAM President and CEO Jay Timmons highlights the pending free trade agreements with Colombia, Panama, and South Korea and discusses why they are critical to U.S. competitiveness this morning in the Daily Caller. He writes,

The pending trade agreements with Colombia, Panama and South Korea offer our elected officials a choice — support economic expansion and job growth or retreat from the world economy and watch U.S. manufacturing stagnate as our foreign competitors thrive. U.S. manufacturers are eager to remove the burdens on trade and grow their businesses.

The trade agreements have been pending for years now, and it’s time for Congress and the President to act.

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Governors Push for FTA Approval

This week the Senate Finance Committee holds two hearings on pending free trade agreements (FTAs).  Tomorrow, the committee will consider the Panama FTA, and Thursday the committee will turn to the South Korea agreement.

Ahead of those hearings, 25 governors have written congressional leaders urging them to pass the Colombia, Panama, and Korea FTAs.  The bipartisan group writes,

As the chief executives of our respective states and territories, we appreciate how important international trade and investment are to the economic vitality of our jurisdictions, presenting important opportunities for workers, and enhancing our overall competitiveness.  Export-related jobs pay better than non-exporting industries and, with nearly 95 percent of the world’s consumers living outside of the U.S., exports have been the focus of increased job growth in recent years.

These trade agreements have been awaiting congressional approval since 2007 (and 2006 for the Colombia deal).

Read the whole letter here.

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Recognizing the Doha Round is Broken

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.  

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