The National Association of Manufacturers on April 14 joined other trade associations in a letter to Obama Administration officials opposing the latest proposal from the European Union on international standardization under the Non-Agricultural Market Access portion of the WTO negotiations, that is, provisions dealing with limits on trade of such items as manufactured goods. From the letter:

The EU’s newest NAMA proposal on international standards restricts choice and flexibility not only by naming their list of preferred standardizing bodies and suggesting that only standards developed by these bodies are relevant internationally within the context of the WTO Agreement on Technical Barriers to Trade, but by essentially requiring countries to use standards from those bodies. While this proposal is consistent with traditional European standards strategy, it fails to recognize that thousands of international standards and test methods that emanate from other globally respected standardizing bodies that currently serve as the basis for effective technical regulations or conformity assessment procedures which facilitate trade and enhance protection of public health, safety and the environment across many WTO Members and observers. The proposal also ignores significant proposals in Europe, Japan and elsewhere to expand the range of legally acceptable standards, including those developed by fora and consortia. (continue reading…)

With China’s top government official, Hu Jintao, meeting with President Obama today, The Washington Post uses the experience of a Wisconsin equipment manufacturer, Manitowoc Co., to highlight the positives and negatives of business dealings and U.S. economic relations with China.

From “Wisconsin firm learns ups and downs of doing business in China“:

MANITOWOC, WIS. – As much as any U.S. firm, Manitowoc Co. has tied its fortunes to China’s star, designing its corporate strategy around the promise of a booming billion-person market.

But as President Obama and Chinese President Hu Jintao prepare to meet this week, Manitowoc’s fitful performance illustrates the challenges of U.S. trade with China, even as it has become crucial for many companies, particularly in the decade since Beijing joined the World Trade Organization.

From the shores of Lake Michigan, the oddly diverse company – a manufacturer of industrial cranes, commercial ice makers and high-tech ovens – has pumped out exports for China and helped sustain a workforce of about 8,000, mostly in Wisconsin. But the company has also been slapped by China with unexpected import taxes that threaten to put some of the employees out of work.

It’s a thorough, serious story. (Although we’d say “oddly diverse” isn’t right: Many manufacturers produce a wide variety of products, the result of innovation, growth, acquisitions and mergers.)

UPDATE (9:35 a.m.): AP reports on other business concerns with China, including theft of intellectual property and the anti-competitive procurement policy, “indigenous innovation.” From “US companies expand goals as China leader arrives“:

When it joined the World Trade Organization 9 years ago, Beijing promised to give foreign companies a fair chance to sell to the government. By most accounts, it hasn’t done so.

“In terms of government procurement, every year is the year of the snail in China,” said Frank Vargo, vice president for international affairs at the National Association of Manufacturers. “China is still a state-managed economy, and government procurement is enormous. China has simply not opened that market.”

But Hu told the Journal and the Post that foreign companies’ “innovation, production and business operations in China enjoy the same treatment as Chinese enterprises.

In Washington, D.C., the local Fox News affiliate reports on the impact of a potential shortage in rare earths on consumer electronics, “China Mineral Shortage Could Affect Consumer Electronics”>China Mineral Shortage Could Affect Consumer Electronics.” The NAM devote a lot of energy to this issue.

[Manufacturers] of everything from automobiles to MRI machines are nervous about a potential shortage.

“And they have reason to be,” says Patricia Mears, director of International Commercial Affairs for the National Association of Manufacturers. “There are probably going to be short term difficulties with this.”…

Rare earths are essential in industry and defense. They’re used to refine petroleum, create green energy technologies like hybrid batteries, wind turbines, and compact fluorescent bulbs. They also help operate radar and missile guidance systems, which is why the United States is “very concerned” about China’s actions. (continue reading…)

Trying to regain the momentum for the Doha Round of global trade talks, the National Association of Manufacturers and other business groups outlined a set of priorities and strategies in a letter Wednesday to Karel De Gucht, the European Union’s trade commissioner, and U.S. Trade Rep Ron Kirk.

Reuters covered the story today, “Business groups press emerging economies over Doha“:

BRUSSELS, July 22 (Reuters) – Brazil, China and India must use their growing economic might to help revive deadlocked global trade talks, a coalition of business lobby groups said in a letter to U.S. and European Union trade negotiators.

The letter …is the latest sign that interest is growing in completing the Doha round of talks, which was launched in 2001 to help poor countries prosper through trade but has been stalled since 2008.

The business groups, from Europe or the United States, said the Doha round would progress only if Europe and the United States convince the big emerging economies to reduce tariffs on important industrial sectors and services.

Right. As the letter (available here) stated:

The success of the Doha Round depends on the willingness of the large emerging countries —especially Brazil, China and India—to assume the responsibility commensurate with the economic benefits they have been realizing as a result of global trade and investment liberalization. The large emerging countries now have the fastest growing economies in the G-20, and will clearly be major beneficiaries of the Doha Round. With their new economic power, they are now clearly distinguished from the least developed members of the WTO and, as a result, have a new and greater responsibility to share in leading the Doha Round forward in the NAMA, agriculture and services negotiations. Indeed, most of the significant additional market access available for the least developed countries lies in the reduction of market access barriers to the rapidly emerging economies—which could substantially boost south-south trade.

The NAM was joined by Business Europe, the Business Roundtable, Coalition of Service Industries, European Services Forum and the U.S. Chamber of Commerce. Chris Wenk of the Chamber writes about the letter at the Chamber Post, “Deliverable from Chamber Doha Mission.”

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: (continue reading…)

The National Association of Manufacturers (NAM) Vice President for International Economic Affairs Frank Vargo issued the following trade commentary regarding the Paris meeting of trade ministers this week to discuss the Doha Round:

The only way that a balanced Doha Round outcome that benefits all nations – including the United States, but especially including the least developed countries – can be obtained is if U.S. Trade Representative Ron Kirk and his negotiating team make it plain that the United States will settle for nothing less.  The U.S. has been the primary force for global liberalization in all previous rounds of global trade negotiations, and that role now falls to Ambassador Kirk in the Doha Round. In Paris this week, Ambassador Kirk stood firm, saying “The real question is whether India and Brazil and China are ready to assume a role and responsibility commensurate with their benefits that have been realized under global liberalization…We can talk around it, but that’s the only way this is going to happen.”  The NAM agrees, and believes this is the only way a successful Doha Round is possible.  We appreciate Ambassador Kirk’s clear and determined position, which has led to a growing number of WTO members beginning to support the U.S. view. 

The Wall Street Journal editorial Friday (“The Madness of Cotton“) on resolution of the U.S.-Brazil Cotton dispute overlooks completely the most salient and important point – that the U.S. deal with Brazil forestalled the imposition of ruinous retaliatory duties not only on American manufactured products and agricultural goods, but on the key currency of America’s best hopes for 21^st century economic growth and innovation – intellectual property rights (IPR).

The United States was found to be in violation of subsidies on cotton by the World Trade Organization, and Brazil was authorized to retaliate against American products because those subsidies still exist. However, in a precedent-setting decision that should send chills down the spine of every advanced manufacturing nation on earth, Brazil was also given the right to retaliate against our IPR. Break patents, steal licenses, refuse payment of royalties – this is far from the standard practice of tariff retaliation that follows some WTO dispute settlement decisions.

Can you imagine the economic devastation to American companies that would have resulted from a billion dollars worth of retaliation against American IPR by Brazil? The ability to generate new ideas and new products, new processes and innovations is at the heart of America’s manufacturing competitiveness. Facing a very real threat to this key element of our economy, the Office of the U.S. Trade Representative and the U.S. Department of Agriculture should be commended for reaching a deal with Brazil.

Keep in mind, this is a stop-gap deal. If we could prevail upon Congress to immediately make changes to this particular subsidy, Brazil would lose its rights to retaliate. However, that won’t happen, and the best place for alterations is the next Farm Bill. Until we can get the necessary changes made, we’d be facing enormous retaliation on manufactured goods AND IPR by Brazil. Rather than have more than a billion dollars worth of U.S. goods and IPR face retaliation, USTR and Agriculture signed this shorter-term agreement. It’s the right move, it’s the smart move, and the business community strongly supported it.

In that deal, the United States agreed to provide funding for agricultural research in Brazil for a short time period while we reform the underlying cotton subsidy practices in the 2012 Farm Bill that resulted in the WTO judgment against us. That’s how the WTO works – an unfair trading practice is identified and most often immediately or quickly modified. The U.S. Congress will need to examine these subsidy programs and modify them to prevent future trade disputes.

But this is a far less onerous task than to watch the innovations, inventions and uniqueness of our manufacturers’ intellectual property rights be taken and used against us. Retaliation against our goods and farm products would have been bad enough – we’ve been watching it happen in the Mexico trucking dispute for over 14 months. But to have IPR targeted would have been a terrible precedent that, in the future, would have emboldened China, India and other nations to action as well.

Reuters, “WTO Doha round deal unlikely in 2010“:

US business groups said on Wednesday they expect slow progress in world trade talks in 2010 despite a goal set by President Barack Obama and other leaders to finish the long-running negotiations this year.

“I think it’s going to be difficult to conclude in 2010,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers. “I think it will probably be next year.”

(Frank Vargo, the National Association of Manufacturers’s vice president for international economic affairs, has blogged from Geneva this week at the ministerial meeting of the WTO.  This is his final report.)

Ah well, the strangeness and wonder of the WTO negotiating process continues. Consider, for example, the Chairman’s report at the conclusion of the 7th WTO Ministerial meeting that ended yesterday. (Report available here as .doc.)

The report states, “There was wide support for building on progress made to date. There was also support for not attempting to reopen stabilized texts.” (My emphasis.) This statement refers, among other texts, to the Non-Agricultural Market Access (NAMA) text that the U.S. has not accepted. The clear implication from yesterday, though, is that many consider the text to be done, agreed, and not to be revisited.

Stabilized texts? Excuse me, but when the NAMA chairman Luzius Wasescha wrote that text at the end of last year, he stated right in his own text that, “Even though the included text is accepted as a basis for further work, we are far from a consensus among Members.” He also added “Anyhow, everything is conditional in the deepest sense.”

Whoa! By what magic elixir do we move from that December statement to the Ministerial Chairman’s statement yesterday that there is strong support for considering the text wrapped up and immutable? Is this sleight of hand? Or does the WTO have all the collective memory of a computer with a fried hard drive?

Example two: Press reports indicate at the end of the conference European officials lamented, “Doha does not seem to be fully on the agenda of the United States … there is no sign today that the Americans are ready to go forward.” (AFP report.) One said, “They want more concessions for a more acceptable package for the US Congress. Now, the problem is to find a way without damaging what has been achieved so far.”

What hypocrisy! In private, European government officials and business representatives are quite free in admitting their analysis conforms perfectly with the U.S. view – they are getting virtually no new market access out of the proposal so far. But they are willing to accept that, because they believe if they were to press for more industrial market access, the developing countries would turn right around and demand more European concessions in agriculture.

That has the Europeans terrified, for they feel they have given all they possibly can in agriculture. One more grain of wheat will break the European back and result in a revolt that will cause them to pull out of the whole deal. So they would rather build Fortress Europe around their agriculture and forgo market access gains in the rest of the world.

Example three: Indian officials still indicate a reluctance to have India participate in sectorals (but not the same degree of “shut-the-door” resistance I saw last year). But at the same time, India has free trade agreements cooking or under discussion with China, Japan, the European Union and Canada – and when India’s Prime Minister visited Washington recently, he indicated a free trade agreement could be possible with the United States as well. So my question is, who’s left? Why can’t you make cuts in the Doha Round?

The problem isn’t that the United States isn’t showing leadership, for it is. I spoke with Ambassador Ron Kirk a couple of times in Geneva this week. He knows the point to the Doha Round is getting meaningful market opening, and he knows the road to Doha goes through Beijing, New Delhi, and Brasilia. The problem isn’t U.S. leadership. The problem is getting others to get off their defensive agendas and join the United States is a commitment to open markets and grow world trade. (continue reading…)

(Frank Vargo, the National Association of Manufacturers’s vice president for international economic affairs, is blogging from Geneva this week at the ministerial meeting of the WTO. )

You know, the process here in Geneva is really interesting. It’s like a plane that forever flies at 50,000 feet and can never get lower. The WTO Doha process just can’t seem to get below the big picture. Ministers from WTO countries are gathered here this week to take stock of the Doha Round, state their political will for a conclusion in 2010, and think of what can be done to move forward. And guess what some of them have come up with? Another ministerial meeting!

They would gather together in Geneva in a couple of months to take stock of where things are, issue serious statements about how things have to move faster –- and probably call for yet another ministerial. If the process were facilitated by ministerial meetings and “mini-ministerials,” we could have had three trade rounds by now.

Fortunately, calling another ministerial meeting in a couple of months is an idea that does not seem to have elicited broad support –- and hopefully won’t before the ministers leave Geneva tomorrow. The U.S. Trade Representative, Ron Kirk, has the right idea – let’s do some work, some eyeball-to-eyeball negotiating and horse-trading, with support from the WTO process. You have to have produce something for the stockroom before you can take stock.

It is rather remarkable, I think, that the gulfs that have prevented agreement are well-known, very visible, have obvious solutions, and yet keep being ignored in terms of a work plan. The WTO negotiating process is a managerial nightmare, lacking substantive goals, management strategies, and tactical plans for achievement. Frankly, the process could benefit from fewer PhD’s and more MBA’s.

The goal of negotiating rounds is to liberalize trade by reducing trade barriers. The Doha Round, in addition, has the goal of creating the maximum new market access for the poorest countries. This is not rocket science. You identify where the market access obstacles are, and you devise plans for reducing or eliminating them.

In the industrial trade negotiations, one thing you have to do is cut tariffs. And if you are going to cut tariffs, you have to go where the tariffs are. And by the WTO staff’s own calculus, about 2/3rds of the tariffs assessed on global industrial trade are collected by the advanced developing countries – especially Brazil, China, and India.

Yet instead of pinpointing reduction of those barriers as a key objective back in 2001, when the round started, as the years passed by, the WTO negotiating process continuously reduced the pressure to cut those tariffs. The consequence has been the prospect of less and less market access for everyone – for the least developed countries, the United States, and everyone in between. (continue reading…)