Background

U.S. Trade Representative Robert Lighthizer recently gave the following updates on trade agreement negotiations the U.S. is conducting or considering in answers to written questions posed by members of the Senate Finance and House Ways and Means committees. Lighthizer said that while some of these talks are aimed at concluding comprehensive agreements, this is “a complex and time consuming process.” In the meantime, U.S. businesses “face trade problems every day,” and so the Trump administration will continue to consider a phased approach for other agreements in an effort to resolve those problems “as effectively and efficiently as possible.”

 

Japan

 

A U.S.-Japan agreement eliminating or reducing tariffs on some agricultural and industrial products, as well as a separate agreement on digital trade, took effect Jan. 1. The two sides had planned to begin in spring 2020 negotiations on a broader agreement covering customs duties, trade restrictions, barriers to trade in services and investment, and other issues. Lighthizer said those talks have been delayed due to the COVID-19 pandemic but should begin “in the next few months.”

 

United Kingdom

 

The U.S. and the UK recently concluded a third round of talks on a bilateral trade agreement that would come into force after the UK officially leaves the European Union. Lighthizer said the two sides are working at “an accelerated pace” in their virtual negotiations and that his intent is to “move as quickly as possible.” However, he emphasized that the U.S. is seeking “an ambitious and comprehensive agreement” and that the likelihood of concluding an agreement by the end of 2020 is therefore low.

 

Lighthizer said the U.S. “will be seeking for the UK to make independent decisions regarding food safety, animal health, and plant health, based on science and risk analysis, and not maintain EU regulations that limit market access for U.S. agricultural products.” He added that the agreement will have “a significant emphasis on financial services” and build on related provisions in the USMCA, including ensuring data flows for financial services. The U.S. also wants “strong provisions on market distorting behavior that can make it difficult for our producers and exporters to compete on a level playing field” as well as “a dispute settlement mechanism that is effective, transparent, and timely.”

 

Kenya

 

The U.S. and Kenya recently held their first round of trade agreement talks but Lighthizer said it is “difficult to predict how quickly the negotiations could be completed” and “which issues will be the most challenging.” The U.S. wants this agreement to “serve as a model for additional accords” in Africa that will “help create an enabling environment, boost competitiveness, and drive the sort of investment that African countries seek.”

 

With respect to specific objectives, Lighthizer said the U.S. wants “a high-standard investment chapter” that includes protections like those in the USMCA (but may or may not include investor-state dispute settlement), provisions that support African regional economic integration efforts, and rules requiring state-owned enterprises to follow fair and transparent bidding practices and treat U.S. goods, services, and suppliers no less favorably than domestic or third-country suppliers.

 

Lighthizer said a renewal of the African Growth and Opportunity Act, which is currently slated to expire in 2025, would “undermine” efforts to negotiate FTAs with Kenya and other countries in the region. AGOA “has been beneficial,” he noted, but “has not been as transformative as we hoped, and the gains have not been evenly shared.” The U.S. is therefore preparing for “a future that reflects the economic and commercial opportunities our modern comprehensive trade agreements can help support—opportunities that unilateral trade preferences like AGOA simply cannot.”

 

India

 

The U.S. and India have been discussing a limited trade agreement since early 2020 and Lighthizer said the U.S. wants a deal that “resolves longstanding market access issues, including reduction of tariff rates on key U.S. agricultural and industrial exports,” and secures progress in areas such as intellectual property protection and digital trade.

 

Several lawmakers emphasized the importance of restoring India’s eligibility for duty-free treatment under the Generalized System of Preferences, which the U.S. suspended in 2019, but Lighthizer said India “has not yet offered a proposal that would adequately address issues to warrant GSP reinstatement.” In particular, he said, the U.S. wants India to “remove barriers that have historically impeded market access for U.S. goods and services so that it is providing reasonable and equitable access to its market.” One press source said the U.S. is specifically pushing India to purchase dairy and agriculture products worth $6 billion, which is the value of India’s previous trade benefits under GSP.

 

Taiwan

 

Taiwanese officials have ramped up their expressions of interest in a trade agreement with the U.S. in recent weeks, and the idea has some support in Congress as well amid increasing Sino-U.S. tensions. However, Lighthizer said further deepening the bilateral trade and investment relationship will depend on Taiwan resolving “longstanding trade barriers that restrict market access for U.S. beef and pork products, despite previous commitments by Taiwan to fix these problems.” He added that the U.S. has used the bilateral trade and investment framework agreement process to pursue such a resolution and “will schedule the next TIFA meeting at the appropriate time.”

 

Other

 

Lighthizer reiterated that the Trump administration is not inclined to pursue multilateral trade agreements, stating that bilateral deals “allow us to better address the particular needs of our workers, farmers, ranchers, and businesses” and “have resulted in major improvements in market access in key export markets.” He added that while the U.S. has made “extensive efforts to coordinate with like-minded trading partners,” they are “not always willing to coordinate and work with us.”

Copyright © 2020 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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