Tag: WTO

U.S. Scores WTO Victory Against Discriminatory Argentine Import Restrictions; Manufacturers Look for Quick Redress

The World Trade Organization (WTO) Appellate Body issued a decision on January 15 finding Argentina’s import restrictions on U.S. and other imported goods breached the international trade rules that Argentina had adopted in joining the WTO.

Since 2012, Argentina had, through its Declaración Jurada Anticipada de Importación or “DJAI,” and other measures, imposed limits on imports and other trade restrictive measures that have limited the ability of U.S. manufacturers to export and participate successfully in the Argentine market. These measures are estimated to affect billions of dollars of U.S. exports each year. (continue reading…)

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NAM Partners with Global Business Dialogue to Promote Environmental Goods Agreement

This morning the NAM and the Global Business Dialogue hosted a discussion about the Environmental Goods Agreement (EGA) negotiations underway at the World Trade Organization (WTO). NAM’s Linda Dempsey, Vice President for International Economic Affairs, spoke about the benefits to manufacturing of a broad EGA, mentioning that, “increased trade and global engagement is vital for our manufacturers. With only a 9 percent share of the global $11 trillion market in manufactured goods trade outside our borders, manufacturers can and should be able to expand commercial opportunities.

(continue reading…)

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Global Manufacturing Economic Update – August 8, 2014

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

The International Monetary Fund (IMF) predicts that world output will grow 3.4 percent in 2014, down from 3.7 percent in its April forecast. Much of the downward movement stems from weaker-than-expected data from the first quarter. In the United States, for instance, real GDP declined by a disappointing 2.1 percent, and even with a rebound in the second quarter, the economy expanded by just 0.9 percent in the first half. Fortunately, manufacturers are mostly upbeat about the second half, and the IMF predicts 1.7 percent and 3.0 percent growth in the United States for 2014 and 2015, respectively. Europe is anticipated to grow 1.1 percent this year, and the Chinese economy should increase by 7.4 percent. While the emerging markets as a whole have started to see signs of improvement, notable weaknesses still exist in Brazil, Russia and South Africa, to name just a few. Geopolitical risks abound, of course, with crises around the world also negatively impacting activity.

The good news is that global manufacturing activity continues to expand modestly, with the pace little changed in July from June. New orders, production and employment growth slipped a little for the month, but exports picked up. In July, 8 of the top 10 markets for U.S.-manufactured goods had expanding economies, with Brazil and South Korea contracting once again. Among the expanding nations, Canada and China saw accelerating levels of manufacturing demand and production in July, with relatively decent growth seen in both the Netherlands and the United Kingdom. At the same time, manufacturers in the United States have continued to rebound from softness earlier in the year. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) increased to its highest level since November on strong output and sales growth.

The Chinese economy has begun to stabilize, with manufacturers in China expanding for the second straight month. New orders, exports and production growth all strengthened in July, and we anticipate a pickup in industrial production and fixed-asset investment rates when they are released next week. China’s real GDP has increased slightly, from 7.4 percent at the annual rate in the first quarter to 7.5 percent in the second quarter. Meanwhile, Eurozone manufacturers have now expanded for 13 straight months, but activity has decelerated since January. Confidence measures have weakened, year-over-year inflation remains very low and the unemployment rate stayed elevated (even as it fell to 11.5 percent). Still, the latest industrial production and retail sales have reflected a rebound.

In general, we have seen the U.S. trade deficit narrow over the past couple years as we have become less dependent on foreign sources of energy. In June, the trade deficit was at its smallest level since January, as goods imports declined at a faster pace than goods exports increased. Still, we continue to see relatively slow growth for U.S.-manufactured goods exports, which have increased 1.7 percent year-to-date. Ideally, we will see improvements moving into the second half, as the current pace represents a deceleration from last year’s 2.6 percent rate of growth.

The last month saw important progress in ongoing trade negotiations with Europe and 11 Pacific Rim nations, as well as environmental goods talks in the World Trade Organization (WTO). However, India and others successfully blocked agreement on a global trade facilitation package that would add an estimated $1 trillion to the world economy, potentially setting up a last-ditch effort to revive the deal in September. Responding to rising tensions in the Ukraine, the United States and the European Union (EU) imposed fresh sanctions on Russia in the financial, energy and defense sectors.

With Congress now in recess for the month of August, manufacturers are engaging Senators and Representatives in their states and districts and gearing up for action in the fall on a range of stalled trade measures—including reauthorization of the Export-Import Bank, Trade Promotion Authority, a miscellaneous tariff bill and the Generalized System of Preferences. A House bill that would provide access to federal civil enforcement for trade secrets theft is fast gaining cosponsors, laying the groundwork for a Judiciary Committee markup and possible passage in September. The planned official visit of India’s new Prime Minister, Narendra Modi, to Washington at the end of next month will provide another opportunity to address outstanding trade and investment barriers in that important market.

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

manufactured exports growth - aug2014

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Global Manufacturing Economic Update – July 11, 2014

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

The global economy improved slightly in June, showing some signs of stabilization from weaknesses in prior months. The J.P. Morgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 52.1 in May to 52.7 in June, its fastest pace since February. Various measures of activity were mostly higher, including new orders, production and employment. Behind this figure, the data also reflected economic progress in countries such as China, Hong Kong and Japan, each of which shifted from a contraction in May to slight growth in June. As a result, just 2 of the top 10 markets for U.S.-manufactured goods had PMI values below 50 in June, an improvement from the five that registered contracting levels in May. Our largest trading partner’s values, the RBC Canadian Manufacturing PMI, increased from 52.2 to 53.5, reaching its highest point since December.

Europe dominated economic headlines on July 10, with worries about a large Portuguese bank and falling industrial production figures for France (down 1.7 percent), Germany (down 1.8 percent) and Italy (down 1.2 percent). Indeed, European growth has continued to ease, with the Markit European Manufacturing PMI down from 52.2 to 51.8. On the positive side, manufacturing activity has now expanded for 12 straight months, but the economy in the Eurozone remains subpar overall. Real GDP was up just 0.2 percent in the first quarter and is expected to increase around 1 percent in 2014 as a whole. Still, growth varied widely from country to country. France sits on one end of the spectrum, with manufacturing sentiment worsening and falling to a six-month low. Meanwhile, Ireland and Spain experienced multiyear highs for sales growth, and new orders in the United Kingdom expanded rather robustly (up from 59.5 to 61.0).

In the emerging markets, manufacturers in Brazil, Russia, South Korea and Turkey reported contracting levels of activity in June, although Russian production grew for the first time in six months and South Korean exports began to stabilize. Overall, however, manufacturing activity in the emerging markets expanded for the second straight month, spurred higher by better news in some Asian economies. Stronger sales and output resulted in increased manufacturing PMI data for China, India, Indonesia and Taiwan. India also benefited from greater export growth. Next week, we will get new data on Chinese GDP, industrial production, fixed-asset investment and retail sales. Real GDP is expected to pick up slightly, from the 7.4 percent annualized growth rate experienced in the first quarter, with a consensus estimate of around 7.5 percent. While this is a marginal improvement, it also continues to reflect decelerating rates of growth from what was experienced in the past.

Looking at U.S. trade flows, petroleum helped to narrow the U.S. trade deficit in May, with more exports and fewer imports improving the headline figure. This continues a trend seen over the past few years whereby improved energy production in the United States has slightly helped balance the trade picture. Outside of petroleum, the numbers were less favorable. The average monthly deficit so far in 2014 reached $43.65 billion, higher than the $39.70 billion average for all of 2013. In addition, U.S.-manufactured goods exports continue to grow at a disappointing rate, up just 0.5 percent year-to-date versus this time last year using non-seasonally adjusted data. Nonetheless, exports of manufactured goods increased to all five of our largest trading partners through the first five months of this year: Canada, Mexico, China, Japan and Germany. That is an encouraging sign, even if we would like to see faster growth in our international sales overall.

On the policy front, the congressional debate on reauthorization of the Export-Import (Ex-Im) Bank continues to move forward, while action on other trade legislation is currently stalled. The World Trade Organization (WTO) officially began environmental goods negotiations, while both the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) continue. The U.S. trading relationship with key partners, including India, China and Russia, continues to be a focus.

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

china pmi - jul2014

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Global Manufacturing Economic Update – December 13, 2013

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

The Organisation for Economic Co-operation and Development (OECD) says that world trade should rebound next year, with growth increasing from its annual pace of 3.7 percent in 2013 to 5.5 percent in 2014. The OECD also forecasts improvements in real GDP for the United States (up from 1.7 percent to 2.9 percent), Europe (up from -0.4 percent to 1.0 percent) and China (up from 7.7 percent to 8.2 percent). Despite such gains, weaknesses persist in emerging markets, and continued political risks could dampen the prospects for better growth.

The prospects for faster global growth should help drive more manufacturing exports in the coming months. The U.S. trade deficit narrowed in October, averaging $40.2 billion through the first 10 months of 2013. That is lower than the $46.4 billion and $44.6 billion deficits in 2011 and 2012, respectively. Yet, growth in U.S.-manufactured goods continues to be frustratingly slow so far this year, up just 1.9 percent year-to-date relative to the same time period last year. Such a sluggish rate will make it hard to meet the President’s goal of doubling exports by 2015, as outlined in the National Export Initiative. Yet, we hope export sales will improve in 2014, especially with stabilizing economies in our largest international markets.

The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) rose to its highest level in more than two years, up from 52.1 in October to 53.2 in November. The key drivers of the increased activity were higher levels for new orders (up from 53.3 to 54.8), exports (up from 51.9 to 52.8) and output (up from 52.9 to 55.3). With the exception of Brazil, all of the other top 10 markets for U.S.-manufactured goods expanded in November. This is an improvement from September, when only six of these economies were growing. The recent progress worldwide has produced notable strides in manufacturing activity for a number of countries, with many reaching PMI levels not seen in several months or even several years. For instance, Japan’s manufacturing PMI reported new orders up at their fastest pace since February 2006. Such data are indicative of the recent gains in the global market, which, while not growing robustly, have made progress of late.

Meanwhile, we are often reminded that we live in an ever-increasing global marketplace, with China’s influence continuing to grow. Last week, we got another example of this. The Society for Worldwide Interbank Financial Telecommunication reported that the Chinese yuan has overtaken the euro as the second-most used currency for foreign trade transactions. In October, the yuan was used 8.66 percent of the time in such transactions, up from just 1.89 percent in January 2012. This suggests a substantial increase in the use of the yuan in trade in a very short period of time. The U.S. dollar continues to be the dominant currency used in trade finance, with parties using the dollar 81.08 percent of the time. However, it does illustrate the changing nature of international commerce and the rising stature of China on the trade front.

Much of the policy news recently has focused on trade negotiations and global competitiveness. While the World Trade Organization (WTO) reached a Trade Facilitation Agreement in Bali, other negotiations with the Asia-Pacific, with Europe and separately on information technology will continue into 2014. Preparations are also underway for major legislative activity in 2014, including on Trade Promotion Authority (TPA), reauthorization of the Export-Import (Ex-Im) Bank and international tax reform.

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

global pmi values - dec2013

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A Trade Facilitation Win for Manufacturers and the WTO

Just hours ago in Bali, Indonesia, trade ministers from across the globe approved on a package of multilateral trade agreements. In the final hours of the Ninth Ministerial Conference of the World Trade Organization (WTO), negotiators found consensus on customs, agricultural and development issues. Linda Dempsey, NAM’s Vice President of International Economic Affairs, applauded the strong and binding trade facilitation agreement while underscoring manufacturers’ frustration with an open-ended “peace clause” for agricultural subsidies and the WTO’s failure to secure expansion of the Information Technology Agreement (ITA).  The dedication and persistence of U.S. Trade Representative Michael Froman, Deputy U.S. Trade Representative Michael Punke and WTO Director-General Roberto Azevêdo were critical to this outcome.

Predictable, efficient and transparent customs procedures will help manufacturers in the United States access more effectively and efficiently the 95 percent of global customers that live outside our borders. Director-General Azevêdo reminded delegates that removing barriers to trade and cutting red tape in half, as part of a multilateral Trade Facilitation Agreement, could stimulate the world economy by more than $1 trillion. With support for capacity building in development and least-developed countries, this agreement is likely to have significant and far-reaching economic benefits.

The agreement approved today includes many of the provisions that the NAM has supported, including increased transparency and accountability in global customs rules and regulations—with requirements for advance rulings and appeal procedures—that will greatly facilitate trade around the world. Further, the agreement highlights the value of pre-arrival customs processing, risk-management systems, trusted trader programs and single window document submissions. Separating the release of goods from final determination of customs duties, taxes and fees will also streamline trade flows.

Manufacturers had also been advocating, though, for the first significant expansion of the ITA since it came into effect in 1996. The current ITA has helped generate significant economic benefits, but a significant expansion would bring the agreement into the 21st century and boost high-tech trade.  Manufacturers are urging that all countries come back to the table to get this important deal done.

Further, manufacturers are disappointed by the “Peace Clause” outcome that further extends exceptions to the binding nature of existing WTO rules, without addressing effectively the underlying food security issues. Manufacturers want to see strong negotiations move forward that recognize, as the Asia Pacific Economic Cooperation forum has, that market-based outcomes and trade liberalization are best able to promote food security worldwide.

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India takes the low road, dragging down the WTO and the developing world with it

The Economist appropriately dubbed it “The Indian Problem” to explain why the World Trade Organization (WTO) has been unable to reach a deal that would help the world’s poorest countries by cutting red tape at the border. In its Nov. 23rd issue, the Economist lays the blame squarely at India’s door:  “Opposition to a global trade deal risks hurting the very countries India claims it is trying to protect… [India’s] stubborn opposition could deliver a serious blow to the poorest countries in the emerging world.”

India’s machinations to seek yet another exemption from the international trading system  agricultural rules was a prime cause of the demise of the Trade Facilitation negotiations– negotiations that the Organization for Economic Cooperation and Development (OECD) estimates would reduce total trade costs by 10 percent annually in advanced economies and by 13 percent to 15.5 percent in developing countries, helping to boost worldwide income more than $40 billion – with most of the benefits going to developing countries.

Sadly, no one should be surprised by India’s approach.  It is the same approach India is using more broadly in its trade relations.  Flouting the basic rules of the global trading system it helped create more than sixty years ago, India’s manufacturing policy seeks to force Indian production of a wide range of products, from solar and power generation equipment to pharmaceutical and other medical equipment,  at the expense of global producers everywhere.  The United States has already filed a WTO cases against India’s requirement that Indian developers of solar photovoltaic projects use Indian-only solar cells.

And there is no end in sight as India’s Commerce Minister, Anand Sharma, emphasized just yesterday that his government is “committed . . . to protect Indian generics” and grow its own pharmaceutical industry.  He failed to mention that this policy, like Indian policies on manufacturing broadly, is based on forcing local production of as many products as possible, even as basic protections for intellectual property are broken again and again.

India’s actions are unfair and violate the basic rules of the global trading system. Not only are they hurting manufacturers in the United States, they are hurting India and as importantly developing countries that are trying to grow their economies through increased trade and investment. The Economist urges the Indian government to make the “hard choice” to embrace the global trading system which will “likely pay dividends over time.” We agree.


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Global Manufacturing Economic Update – November 8, 2013

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

The global economy continues to see progress this autumn, with manufacturing activity picking up from recent softness. The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 51.8 in September to 52.1 in October, its highest point since May 2011. While this still reflects only modest growth, stabilization in Europe and Asia has helped to lift overall sentiment, new orders and production in many key markets. Moreover, all top 10 export destinations for U.S.-manufactured goods grew on net in October, with a PMI value greater than 50. This was the first time since we began preparing this report that no countries contracted, and it represents a nice turnaround from only two months ago when half of these markets contracted.

This progress can also be seen in much of the underlying data, but with slow growth overall. For example, the Markit Eurozone Manufacturing PMI has shown modest expansion for four consecutive months—a sign that Europe has begun to rebound after its deep two-year recession. Despite the more uplifting news, the European Commission this week slightly lowered its forecast for European real GDP to 1.1 percent growth in 2014, down from an earlier estimate of 1.2 percent growth. France and Greece  both continue to contract, suggesting pockets of weakness are still present. Moreover, recent data on retail sales and employment continue to suggest challenges. The European Central Bank continues to worry about sluggish economic growth and disinflation, and yesterday, it surprised the market by lowering its key interest rate to 0.25 percent. On a more positive note, the prospect of even minimal growth has lifted spirits across the continent, with the ZEW Indicator of Economic Sentiment reflecting increased relative optimism in October.

The story is similar in Canada, throughout Asia and in the emerging markets. The RBC Canadian Manufacturing PMI rose to 55.6 in October, its fastest pace since April 2011. New orders and production have rebounded from softness during the spring and summer. We hope better economic news in Canada—our largest trading partner—will increase demand for our exports there. Likewise, the HSBC China Manufacturing PMI has expanded for three straight months, albeit slowly, up from 50.2 in September to 50.9 in October. Moreover, while economic growth has decelerated over the past few years, real GDP picked up from 7.5 percent in the second quarter to 7.8 percent in the third quarter. Industrial production and fixed asset investments have also been higher in the third quarter, suggesting improvements in overall activity. Furthermore, stabilization in Europe and Asia has helped to buoy most of the emerging markets, with the HSBC Emerging Markets Index up from 50.7 to 51.7.

Nonetheless, growth in U.S.-manufactured goods exports remains frustratingly low so far this year despite modest gains in the economies of our major trading partners. U.S.-manufactured goods exports have risen just 1.8 percent through the first eight months of 2013 relative to the same time period in 2012, using non-seasonally adjusted data. This represents only marginal improvement from July’s 1.6 percent pace, and it presents a challenge in our nation’s ability to double exports by 2015 as outlined in the President’s National Export Initiative. Reduced year-to-date exports to Europe account for much of the slower pace of U.S.-manufactured goods exports, with eased growth rates to many of our other large trading partners as well. However, the recent deceleration in the U.S.–euro exchange rate should help to boost our exports to the EU.

Next week, we will get industrial production data from a number of countries, including the United States. Output is expected to continue to show signs of improvement in the United States and China, but production is predicted to decline somewhat in the Eurozone. Europe is also anticipated to report its second straight month of positive real GDP growth, with third-quarter data similar to the second-quarter growth rate of 0.3 percent.

On the trade front, negotiations continue around the clock on the Trans-Pacific Partnership (TPP) talks, while the Administration, Congress and the business community accelerate efforts to move forward on Trade Promotion Authority (TPA). Manufacturers worked across the Atlantic to support the inclusion of key trade secret issues in the Transatlantic Trade and Investment Partnership (T-TIP) trade discussions as U.S. and EU negotiators prepare to return to the table this month and next to make progress on these negotiations. All eyes turn again toward Bali as the World Trade Organization (WTO) seeks to address trade facilitation and information technology liberalization to cut red tape and unnecessary costs at the border.

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

euro exchange rate - nov2013

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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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USTR Issues First Annual Report on Russia’s Compliance with WTO Commitments

According to a recent report by the U.S. Trade Representative (USTR), annual U.S. exports to Russia increased 29% in 2012 and are up another 10.5% through the first quarter of 2013 as compared with Q1 2012. Russia is the world’s sixth largest economy, and there continues to be an enormous opportunity for U.S. manufacturers to increase exports into this sizeable market.

On August 22, 2012, Russia became a formal member of the World Trade Organization (WTO) after 18 long years of negotiations. In December, Congress extended Permanent Normal Trade Relations (PNTR) to Russia, terminating the Jackson-Vanick amendment. The full scope of the WTO rules, with an established system of enforceable multilateral trade rules, now apply to the United States and Russia. The report, published in June, was required by the PNTR legislation passed by Congress in December 2012.

Russia still has much to do, though, to fully comply with its WTO accession agreement. One of the concerns specifically addressed in the report is Russia’s discriminatory motor vehicle “recycling fee” on the sale of imported vehicles. USTR has been working with Russia on this issue, and the Russian legislature has since published a proposed amendment to revise the program to apply the fee to domestically produced vehicles. Russia has also failed to include several tariff lines in the submitted Information Technology Agreement (ITA) schedule. USTR indicates that after engagement from the U.S. and other WTO member nations on this issue, Russia has agreed to modify the schedule to include missing tariff line items and has sent the schedule to be reviewed by the Customs Union. Russia’s commitments on transparency and intellectual property rights continue to be a concern, as well. The report also includes updates on sanitary and phyto-sanitary (SPS) measures, safeguard investigations, trade-related investment measures, the Government Procurement Agreement, and technical regulations governing alcoholic beverages. USTR is committed to monitoring the continued progress of Russia’s commitments to ensure that U.S. objectives are achieved.

Russia’s WTO commitments benefit U.S. businesses and workers by improving market access for good and services and by providing a rules-based system for dispute settlement resolution. The NAM strongly supported extending PNTR to Russia in 2012, and we will continue working to ensure that manufacturers have the tools they need to take advantage of expanding market opportunities in Russia.

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