China takes the hot seat at USTR hearing
With help from Doug Palmer and Adam Behsudi
CHINA TAKES THE HOT SEAT AT USTR HEARING: China’s trade record will go under the microscope today as the Office of the U.S. Trade Representative prepares its annual report to Congress on how well China is honoring commitments made when it joined the World Trade Organization in 2001. At the USTR-led hearing, the first witness, Erin Ennis, vice president at the U.S.-China Business Council, plans to tell the interagency panel that the situation for U.S. companies is mixed 15 years after Beijing’s entry into the WTO.
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“On balance, China’s WTO entry has been positive,” Ennis says in prepared remarks. ”China’s economy is more open now than it was in 2000, even if too many market access barriers remain. The United States benefits from having a rules-based system through which China can be held accountable when it falls short of its commitments. At the same time, there are numerous policies implemented by China after WTO accession that appear to be done purely for the purpose of protecting or promoting domestic industry at the expense of foreign companies, which calls into question China’s commitment to the WTO’s national treatment principles.”
The mixed review mirrors the 2015 report from the USTR on China’s WTO compliance, which highlighted a “dramatic expansion” in trade between the two nations while adding that “despite these positive results, the overall picture … remains complex.” This year’s report will be released in December.
Other witnesses at today’s hearing will include representatives from the U.S. Chamber of Commerce, the U.S. Council for International Business, the U.S. Wheat Associates and several technology groups, including the Information Technology Industry Council.
IT’S WEDNESDAY, OCT. 5! Welcome to Morning Trade, where your host is celebrating both her return to Washington after a week in Geneva at the WTO, as well as the official one-year anniversary of the completion of the TPP. Where might the deal be another year from now? Let me know what you think: email@example.com or @mmcassella.
THE TOPIC THAT WASN’T IN THE VEEP DEBATE: For all the attention trade has received on the campaign trail, there was hardly a mention of it in last night’s vice presidential debate between Sen. Tim Kaine and Gov. Mike Pence. Pence twice waded close to the topic, first to mention “trade deals that’ll put the American worker first” as part of his and Donald Trump’s plan to boost economic growth. Later, in closing, the Indiana governor described a “weakened America” that had been brought down by the leadership of President Barack Obama and Hillary Clinton and an economy that was stifled by “the kind of trade deals that put American workers in the back seat.”
Morning Trade was let down — along with many on Twitter — that there was no mention of the TPP, a deal that both vice presidential candidates initially supported until they signed on as running-mates and flip-flopped.
MEXICO BIZ LEADERS BLAST TRUMP’S ‘STUPID’ TRADE IDEAS: Mexican business leaders on Tuesday criticized Trump’s pledges to build a wall along the U.S. border and to slap tariffs on Mexican goods, and said his attacks on the North American Free Trade Agreement ignored the pact’s real economic benefits, Pro Trade’s Doug Palmer reports.
“I think revoking NAFTA and raising trade tariffs between our two countries is bad business for both countries,” Alejandro Ramirez, chief executive officer of Cinepolis, the largest movie theater company in Latin America, told reporters at a meeting of the Association of Mexican Entrepreneurs, or AEM as it known by its Spanish language initials. Ramirez added of Trump: “I hope he doesn’t win.”
The meeting is AEM’s 20th anniversary conference, held in Washington to help combat the damage Mexican business and industry leaders believe Trump has done to their country’s image in his quest to the White House. During one panel discussion, leaders from the cement, plastics and textiles sector expressed concern about Trump’s proposals and defended NAFTA and the U.S.-Mexico trade relationship.
The two sides need to “stop talking about stupid things like walls and tariffs” and focus instead on how they can work together to create jobs and economic growth in both countries, said Juan Pablo de Valle Perochena, chairman of Mexichem, a major Mexican manufacturer that has invested $2 billion in the United States over the past six years. If the two countries are truly partners, “then there’s no way one can succeed if the other one fails,” Perochena continued. “Everyone understands that.”
‘WE’RE NOT GOING TO BUILD A WALL. WE’RE JUST NOT.’ That was the reassuring message from Jodi Bond, vice president for the Americas at the U.S. Chamber of Commerce, to the meeting of Mexican business leaders on Tuesday at the Mandarin Oriental Hotel, despite Trump’s promise to do that if elected president.
But Bond told the Association of Mexican Entrepreneurs that business groups on both sides of the border need to do a much better job of convincing the American public of the benefits of U.S.-Mexican trade. “We have a $236 billion market because of Mexico … but we’re missing the personal, emotional [story] that has be part of an ongoing campaign that doesn’t occur just when there is a presidential election,” Bond said.
Bond and other panelists encouraged Mexican companies that invest or do business in the United States to become much more visible in order to create a new narrative about U.S.-Mexico trade. “You have to start talking about Mexican foreign direct investment in the United States” and the millions of jobs it creates, Bond said.
Even so, Mexico may have to battle the negative images perpetuated by the Trump campaign for years to come, said Peter Schechter, director of the Latin American Center at the Atlantic Council. “I do not think the problems are going away after this election. … I think that the anti-trade, anti-Mexico catnip that has been out there is going to continue to attract a whole bunch of attention and I think the politicians are going to see this as an opportunity,” he said.
TRUMP FACES NEW BATTLEGROUND THREAT FROM STEELWORKERS: The United Steelworkers union is pledging to make sure every one of its workers in make-or-break states like Pennsylvania, Michigan and Ohio are well aware that the Republican presidential candidate may have circumvented U.S. laws to import Chinese steel, Pro Trade’s Adam Behsudi reports.
“We’re going to handbill every one of our plants in America, whether they’re in Arizona or the Mahoning Valley in Ohio,” USW President Leo Gerard said Tuesday in a press call. “We want the entire country to know this guy is nothing but a fraud.”
The threat comes on the heels of a Newsweek story earlier this week that showed Trump had brought in cheap Chinese steel and aluminum to complete construction projects in Las Vegas and Chicago. Gerard said the union’s lawyers were looking into whether the steel Trump imported was subject to sanctions or retaliatory duties and said they would not leave “any stone unturned” in seeing whether there was a case to be filed against the real-estate mogul.
KERRY CASTS BLAME ON EU LEADERS FOR ANTI-TTIP WAVE: With this week’s round of negotiations focused on the Transatlantic Trade and Investment Partnership well underway in New York, Secretary of State John Kerry told an audience halfway across the globe on Tuesday that European leaders need to make a greater effort to dispel what he said were myths that have undermined the EU-U.S. deal, our POLITICO colleague in Europe Hans von der Burchard reports.
“You really need to get some folks who are ready to go out and present facts to the people,” Kerry said in Brussels. He added that TTIP would “send a signal to the rest of the world” that high labor, environmental and consumer protection standards are needed.
He argued that TTIP “could provide a powerful rebuttal to those who see trade agreements as the starter’s gun for an economic race to the bottom,” as von der Burchard reported. “Europe has high standards and nothing in this agreement would lower them,” Kerry said.
KERRY WEIGHS IN ON TTIP’S EFFECT ON EUROPEAN CHEESES: And on the issue of geographic indications in general, though cheese was the example the secretary of State used on Tuesday when explaining how the differing opinions between the U.S. and EU on geographic protections of certain foods should not hinder the TTIP negotiations.
“We have great respect for geographical location, geographic identified and produced goods,” Kerry said in response to a question from von der Burchard, after a speech in Brussels on transatlantic relations. “Whether it is Champagne, or Camembert, or Brie … there are ways to protect appropriate identification of legitimate products in ways that doesn’t diminish [sales].”
The European Commission is arguing for protection of certain foods under TTIP based on their geographical origin, a move to support makers of cheeses like Parmigiano Reggiano or Feta who argue that foreign imitations should be distinguished by carrying different names. U.S. producers, meanwhile, worry that they may be forced to stop using generic names such as “Parmesan” if the EU negotiators win out.
“This trade agreement will mean people will have the ability to sell a lot more of what they produce in a lot more places,” Kerry added. “And quality goods that are identified by their geographic location will remain quality goods that people will always want to see, because of what they represent.”
DELAURO: CHEAP GOODS AREN’T WORTH JOB LOSSES: Rep. Rosa DeLauro delivered a detailed rebuttal on Tuesday to some of the main arguments in support of the TPP, telling a Yale Law School audience that while international trade used to be an “engine of growth” for the United States after World War II, agreements today have become more about pitting organized labor against big corporations — at labor’s expense.
DeLauro, a Connecticut Democrat who has become a leader of sorts of the anti-TPP movement, countered the argument that job losses in manufacturing and other sectors are due to globalization and updates in technology rather than trade deals. She pointed to the Industrial Revolution as an example of a time when developments in technology instead boosted the U.S. economy.
“This is not the first period of global disruption brought about by technology and trade, lest we forget the Industrial Revolution,” DeLauro said. “The major conclusion that we should draw from the Industrial Revolution is not that technology and trade will harm human development, but that progressive policies are required to harness the energy of innovation and industry and focus it in a productive direction to achieve human progress.” Those necessary progressive policies, she said, have now been overshadowed by corporate interests.
As for the argument that some small job losses are the price to pay for the benefits of trade, including cheaper goods for consumers, DeLauro noted: “Quite honestly, cheap goods at Walmart are no substitute for a union job.”
— U.K. trade ministers are looking to negotiate a transitional trade deal with the EU to ease Britain’s exit from the European Union, the Financial Times reports.
— Austrian chancellor Christian Kern, who has been critical of the EU-Canada free trade deal, said negotiations are now right on track, EurActiv reports.
— Free trade is a win-win for the United States, Free Market Institute director Benjamin Powell writes in an op-ed in the Detroit News.
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