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President’s 2014 Trade Policy Agenda Focuses on TPP, TTIP, High-Tech, Services

Thursday, March 06, 2014
Sandler, Travis & Rosenberg Trade Report

The Obama administration delivered to Congress this week its 2014 Trade Policy Agenda and 2013 Annual Report, which describes steps the administration intends to take to “promote open markets to enable additional job-supporting U.S. exports and sustained economic growth.” Priority issues for 2014 will include concluding the Trans-Pacific Partnership agreement talks, advancing negotiations on the Transatlantic Trade and Investment Partnership with the European Union, and moving ahead with efforts within the World Trade Organization on information technology, services and environmental goods. The administration is also working with Congress to support “broad, bipartisan passage” of trade promotion authority to guide current and future negotiations and ensure the completion of trade agreements.

In its discussion of ways to expand U.S. trade, this year’s report tempers the previous year’s emphasis on exports with a paragraph on lowering barriers to imports. There is no discussion of the National Export Initiative, which sought to double overall U.S. exports of goods and services by the end of 2014 but which by all accounts will not be able to reach that goal. The report continues to note that every $1 billion in U.S. goods exports supports an estimated 5,400 domestic jobs and that this figure is nearly 5,900 for exports of services. At the same time, the report points out that more than half of U.S. imports provide inputs to value-added production in the U.S. and that modern supply chains for many U.S. businesses are “truly global,” with inputs that can cross borders multiple times before a finished product is completed. It is therefore “critical,” the report states, that the U.S. work to “improve the efficiency of global trade with our key trading partners, in terms of both exports and imports.”

TPP. The U.S. will work to conclude TPP negotiations in 2014, will conduct “robust bilateral negotiations with Japan … to address issues related to automotive trade, insurance and other non-tariff measures,” and will continue to engage with potential candidate countries.

TTIP. The U.S. expects to make “significant progress” in the TTIP negotiations this year and plans to maintain a similar pace for the talks as in 2013.

GSP. The administration will work with Congress to renew authorization of the Generalized System of Preferences, which expired July 31, 2013, taking into account that GSP aids U.S. manufacturing by lowering the cost of imported goods used as inputs in domestic production; and to consider possible reforms to GSP to reflect the growing competitiveness of many emerging market beneficiaries.

WTO. The U.S. will “work vigorously” to advance negotiations with nearly two dozen other countries on the Trade in Services Agreement, through which the U.S. seeks to “enable service suppliers to compete on the basis of quality and competence rather than nationality, … permit greater transparency and predictability from our trading partners regarding policies that present barriers to trade in services and hinder U.S. exports, … and address issues affecting services trade through electronic channels and include appropriate new provisions to support such trade.” The U.S. also wants to conclude this year negotiations on a “balanced and commercially meaningful expansion of the WTO Information Technology Agreement, an effort that stalled in 2013 due to obstacles raised by China; will implement the Trade Facilitation Agreement reached at the WTO ministerial meeting last December; will advance negotiations on a plurilateral agreement to eliminate tariffs on environmental goods; and anticipates completing negotiations on Kazakhstan’s accession to the WTO.

Investment. Unchanged from the 2013 report is the administration’s goal of seeking to secure bilateral investment treaties with trading partners such as China, India and Mauritius and continuing exploratory BIT discussions with Russia, Cambodia, Ghana, Gabon and the East African Community.

Labor. The U.S. will advance the implementation of the labor action plan associated with the U.S.-Colombia Trade Promotion Agreement, continue to consult with Bangladesh on the implementation of the action plan designed to restore that country’s eligibility for GSP benefits, continue to engage with Guatemala on a labor enforcement plan the two countries signed in April 2013, follow through on consultations with Bahrain on improving respect for labor rights in that country, follow up with the Dominican Republic on labor law enforcement in the sugar sector, and work with Honduras as part of an ongoing review of a submission from the AFL-CIO and 26 Honduran unions and non-governmental organizations.

Enforcement. The U.S. will continue to “hold China accountable to its WTO obligations,” including by monitoring China’s current and future actions in WTO cases in which the U.S. prevailed (e.g., steel and electronic payment services). In addition, the Interagency Trade Enforcement Center will “continue to push further and dig deeper into the complex web of industrial policies and bureaucratic systems of key trading partners like China,” continue to research support provided by China and other governments to various industries, and monitor the compliance of trading partners such as Russia, Brazil and India with their WTO commitments.

Bilateral/Regional Initiatives. To maintain open markets and create additional bilateral and regional trade and investment opportunities to help increase U.S. exports, the administration will pursue the following efforts.

China – work to substantially advance BIT negotiations “consistent with our negative list approach and a commitment to national treatment in the pre-establishment phase” and to “make real progress” on China’s Government Procurement Agreement accession negotiations, including by “deepening engagement on difficult systemic issues such as SOEs and sub-central coverage and China’s domestic procurement regimes”

Russia – encourage Russia to fully implement its WTO commitments and seek to “make progress on systemic issues aimed at bolstering bilateral trade and investment” (a reference to discussing a potential trade and investment framework agreement in the 2013 report was not included this year)

Americas – develop a strategy to foster fair trade in the North American lumber market ahead of the 2015 expiration of the U.S.-Canada Softwood Lumber Agreement and work with DR-CAFTA partners to address outstanding issues related to intellectual property, sanitary and phytosanitary measures, worker rights, and customs and border measures

Africa – hold the first U.S.-Africa Leaders’ Summit, conclude a comprehensive review of the African Growth and Opportunity Act and work with Congress on a timely renewal, explore launching a BIT with the East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda), and complete negotiations on a TIFA with the West African Economic Community

Middle East – as in 2013, seek to advance with Middle East and North Africa countries agreements on trade facilitation, joint principles on foreign investment, and joint principles on information and communication technology services trade

Southeast Asia – intensify work to enhance regional trade and investment with partners in the Association of Southeast Asian Nations by concluding agreements under the Expanded Economic Engagement (E3) initiative and the U.S.-ASEAN TIFA, work to achieve further improvements in worker rights protection in Burma

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