April showers bring TTIP flowers
With help from Doug Palmer and Sabrina Rodriguez
APRIL SHOWERS BRING TTIP FLOWERS: The United States and European Union will hold their next formal round of bilateral trade negotiations the week of April 25 in New York City, according to U.S. business sources. And they’ve got their work cut out for them.
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A business source expressed pessimism that the TTIP deal would be able to get done this year, pointing to several areas, such as agricultural market access, geographical indications and procurement, where the two sides have completely separate ideas of what a final outcome might look like.
“Quite frankly, I don’t believe Europeans want to compromise” on the protection of food names, he said, adding that the Europeans also don’t think they need to cover the remaining 3 percent of sensitive agricultural tariffs not included in their current offer. “There’s just too many of those areas” of fundamental disagreement to get the deal wrapped up.
As for procurement, a major offensive interest for the European Union, the business source said there’s not much the U.S. side can do because of Buy American laws. “I don’t think they can expect anything,” he said of the Europeans. “If there were changes, that’s something Congress would fight tooth and nail.”
But a trade lobbyist said that even so, the administration is “serious as a heart attack” when it says it wants to conclude the talks this year. “There are few things more powerful than an administration desperate for achievement,” the lobbyist said.
REICHERT SETS MTB HEARING: While TTIP negotiations continue, and the administration continues to wrangle with complaints from Congress on TPP, lawmakers are turning quietly to more straightforward trade legislation. The House Ways and Means Trade Subcommittee will hold a hearing on legislation to reform the process for selecting tariff waivers for inclusion in the miscellaneous tariff bill package at 2 p.m. April 14, Chairman Dave Reichert announced Thursday.
The bill, which would put the U.S. International Trade Commission in charge of initially vetting business petitions for the tariff waivers, is expected to be introduced when that chamber returns from its recess next week. Senate Finance Committee Chairman Orrin Hatch and House Speaker Paul Ryan both support the proposal, adding fuel to manufacturers’ hopes that it could move before the summer recess.
“American businesses are hurting because there is no longer a process in place to help them cut costs and compete with companies around the world,” Reichert said in a statement, adding that the new bill would “develop a fair, transparent, and bipartisan process for considering manufacturing tax cuts” and uphold the House earmark ban.
PANAMA PAPERS AND TRADE, THE SEQUEL: Rep. Sander Levin and his brother, former Sen. Carl Levin, on Thursday called out Sen. Bernie Sanders for his argument that the U.S.-Panama free trade agreement made it harder for the U.S. to punish tax evasion.
“Senator Sanders has it backwards,” they said in a statement. “We in Congress used the negotiations on the Panama FTA as leverage to force Panama to sign the Tax Information Exchange Agreement (TIEA),” which gives the Internal Revenue Service “critical tools to go after U.S. tax cheats who use Panama.”
“Do the ‘Panama Papers’ illustrate nefarious activities? Yes,” the brothers wrote. “But do they illustrate that the Panama FTA facilitated further tax haven activity, or effectively barred the United States from addressing U.S. tax evasion in Panama? Clearly not. The signing of the TIEA provided the U.S. access to critically needed information on the U.S. tax cheats using Panama as a tax haven.”
HOLLEYMAN: WE’RE WORKING ON DATA CONCERNS: The Obama administration has heard the concerns of the financial services industry about a key data storage provision of TPP and is trying to develop a plan to address the issue in future deals like TTIP and the Trade in Services Agreement, Deputy U.S. Trade Representative Robert Holleyman said Thursday.
Banks, insurance companies and other financial firms are upset the TPP agreement would allow governments to require them to store data locally, despite explicitly prohibiting such a requirement for all other sectors. Holleyman at a Washington International Trade Association event reiterated that the language was included because regulators say they need access to certain types of data in order to do their job. At the same time, he touted the overall prohibition on data localization in TPP as one the most groundbreaking provisions of the agreement.
“We are continuing to work within the government, with our regulators, as we look to future trade agreements, whether it’s TTIP, TISA or others, to determine if there is a balance that can be struck that may bring some of those benefits to the remaining 20 percent of the economy that was not fully addressed in TPP, but to do so in a way that ensures regulators have access to the kind of data and information that they need,” Holleyman added, referring to the financial services sector.
Treasury Secretary Jack Lew has said a side deal may be possible to address the sector’s concern about TPP. David Ross, a lawyer at Wilmer Hale, said Treasury and industry seem to be making good progress in their talks. “The core issue seems to be … giving regulators the comfort that if these localization issues did apply in the financial services sector, that that wouldn’t prevent them from getting access to the information they need in order to regulate,” Ross said during the WITA discussion.
BOEING CEO: KEEP PRESSURE ON CONGRESS: Boeing CEO Dennis Muilenburg on Thursday called on supporters of the Export-Import Bank to keep pressure on the Senate Banking Committee to move a nominee to the bank’s board of directors so that it will have a three-person quorum, allowing the agency to approve transactions of more than $10 million.
“The administration has put forward the nomination for the third board slot,” Muilenburg said at the bank’s annual conference, referring to John Mark McWatters, a former aide to House Financial Services Chairman Jeb Hensarling, one of Ex-Im’s top opponents. “It’s a Republican that’s well respected. And it’s time to let that nomination go through. We need the Senate Banking Committee to … allow that nomination to come forward and have a vote made.”
“We ask for support from all of you to keep the appropriate pressure on our congressional members to allow that to happen,” he added.
Muilenburg said the aircraft maker is starting to lose deals without a fully functioning Ex-Im, citing a letter from Ethiopian Airlines that said it would not accept delivery of jets without financing from the agency.
The Ex-Im conference continues today with remarks from U.S. Trade Representative Michael Froman, Treasury Secretary Jack Lew and Commerce Secretary Penny Pritzker. Pritzker will be interviewed by our own Doug Palmer.
TOOMEY AHEAD IN PENNSYLVANIA POLL: Sen. Pat Toomey, who sits on the Senate Finance Committee, leads both of the major Democrats battling for the right to challenge him in November, according to a new Quinnipiac University poll. The Pennsylvania Republican is one of the senators who voted “yes” on trade promotion authority but faces a tough re-election this fall. Another Republican senator facing a difficult reelection race, Rob Portman, has come out against TPP.
Toomey leads former Rep. Joe Sestak, 47 percent to 39 percent. His lead over former White House and gubernatorial aide Katie McGinty is nearly identical at 47 percent to 38 percent. Primary polls have shown Sestak with a healthy lead over McGinty, who has the backing of the DSCC and President Barack Obama. Half of all voters approve of Toomey’s job performance, while 29 percent disapprove. At the same time, Sestak and McGinty are little-known.
Meanwhile, general election polls show Rob Portman is in a dead heat with his Democratic opponent, former Ohio Gov. Ted Strickland.
CALI WALNUT LOBBY THROWS IN FOR TPP: The California walnut industry voiced support for TPP on Thursday, saying the proposed trade pact will help growers crack open more of the Asia-Pacific market.
“Duty relief provides a tremendous opportunity to further grow an important and established market,” said Jack Gilbert, chairman of the California Walnut Commission’s Issues Management Committee. “We eagerly anticipate the new opportunities for growth the TPP agreement provides.”
The pact would reduce or eliminate tariffs on walnut imports in Japan, Malaysia, Vietnam and New Zealand — markets where U.S. growers and exporters are trying to expand, the group said. Japan, the industry’s third-largest export market, would drop tariffs from 10 percent to zero under the deal, creating an immediate benefit to U.S. growers. American walnut farmers exported $392 million worth of the product to the Asia-Pacific in the 2014-2015 crop season, about 16 percent of the industry’s total exports, the trade group said.
WORLD TRADE GROWTH UNIMPRESSIVE: World trade is expected to grow a sluggish 2.8 percent in 2016, unchanged from last year and marking the fifth consecutive year of less than 3 percent growth, the World Trade Organization said Thursday.
“Trade is still registering positive growth, albeit at a disappointing rate,” WTO Director General Roberto Azevêdo said in a statement. “While the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries.”
Azevêdo urged WTO members to take a number of steps to restore trade growth, including implementing the Trade Facilitation Agreement approved more than two years ago in Bali, Indonesia, and rolling back any trade restrictive measures that they have imposed.
India is one of the first countries to make a market access offer in the Regional Comprehensive Economic Partnership, according to the Economic Times.
A confidential Canadian memo, sent the day TPP was agreed to, warned the Asia-Pacific pact would undermine the country’s market share in the U.S., The Toronto Star reports.
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