Froman goes country to sell TPP pact
With help from Doug Palmer, Adam Behsudi and Alberto Mucci
FROMAN GOES COUNTRY TO SELL TPP PACT: Many pundits are writing off the TPP as all but dead after a brutal election campaign, but don’t tell that to U.S. Trade Representative Michael Froman, who is hanging out in Nashville today with country-western songwriters and whiskey distillers to gin up support for the pact.
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Froman will start at 1710 Roy Acuff Place, home of Nashville Songwriters Association International, to talk about how the pact boosts intellectual property protections for music and other creative works. Then he’ll meet with local distillers to highlight how TPP tariff cuts will help their exports. He’ll tour Nelson’s Green Brier Distillery and meet with the press to tout how the state’s farmers and manufacturers will benefit from the 12-nation pact.
Tennessee whiskey and bourbon account for over half of American spirits exports to TPP countries, which totaled over $557 million last year, according to USTR. The TPP agreement would eliminate spirits tariffs that are now as high as 45 percent. New Zealand, Malaysia, Japan, and Vietnam also would recognize Tennessee whiskey and bourbon as distinctive U.S. products, giving them special protection in those markets.
Nashville is home to Rep. Jim Cooper, one of 28 House Democrats who voted last year for trade promotion authority to help Froman finish the TPP talks. In fact, seven of Tennessee’s nine House members voted for TPA, and so did both of its senators, Republicans Bob Corker and Lamar Alexander. The two Tennessee congressmen who voted against the fast track trade bill were Reps. Steve Cohen, a Democrat, and John Duncan, a Republican.
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LEVIN: TIME FOR FRESH LOOK AT TRADE, CURRENCY: The United States needs to rethink its approach to trade and finally deal seriously with concerns about currency manipulation, the top Democrat on the House Ways and Means Committee told Morning Trade. “I think the lesson [of the 2016 election] is there has to be an active shaping of trade,” Rep. Sander Levin said. “The old notion that more trade is always better is really outdated.”
The veteran lawmaker expressed confidence that Hillary Clinton would win the presidential election, including in his home state of Michigan. If Democrats also take control of the House, “I think there will be a fresh look at currency manipulation and this is a good time to do it because there’s kind of a hiatus at the moment,” Levin said. “But we’ve learned from the past that currency manipulation will rear its ugly head again and we need to prepare for it.”
Congress should also examine ways of raising international labor standards and take “a real hard look at ISDS,” Levin said, referring to the controversy over the investor-state dispute settlement mechanism contained in U.S. free-trade agreements. “I think all of these issues need much more than a shrug of the shoulders.”
Levin repeated his conviction that President Barack Obama should not submit the TPP to Congress for a vote in the lame-duck session after the election, and predicted it would be defeated if he does. “It would be a mistake. It would lose and it should lose. There needs to be an overall fresh look at trade policy,” Levin said.
TWO OUT OF THREE ANALYSTS GLUM ON TPP: Meanwhile, over at an American University trade discussion on Thursday, a pair of longtime trade watchers — Gary Hufbauer of the Peterson Institute for International Economics and former Undersecretary of Commerce Grant Aldonas — were both bleak about prospects for TPP in the lame-duck session.
Clinton has made clear she’s firmly opposed to the pact and “I don’t think she’s going to give a pass to Obama to do it,” Hufbauer said. Aldonas said he did not believe the White House’s legislative affairs office was up to the task of corralling lawmakers to vote for the agreement, especially after the current election. He also criticized the administration for striking a deal that cost them votes on the Republican side without gaining any among Democrats.
However, Joshua Meltzer, a senior fellow at The Brookings Institution, said he believes it’s “premature” to say TPP won’t happen. There are ample votes to approve it in the Senate, so “the key question is whether [House Speaker Paul] Ryan will bring it to a vote,” Meltzer said. There are a couple of reasons Ryan might want to do that, including as a repudiation of Trump’s attempt to recast the party as a foe of trade agreements. It also probably helps Ryan that Clinton opposes the agreement, in terms of rallying Republican support, he said.
EUROPE’S TRADE POLICY GETS ANOTHER CHANCE: European trade officials are hoping that brighter days are on the horizon for its free-trade deal with Canada after senior diplomats from all 28 member states agreed last night to a compromise of sorts. After three of Belgium’s five regional governments — most prominently the French-speaking portion of Wallonia — threatened to derail the entire agreement, EU trade representatives agreed to demands like the addition of clauses to safeguard farmers and to ensure Belgium’s continued right to veto, two sources told Morning Trade.
The Walloons also asked, perhaps most significantly, for the European Court of Justice to test the legality of the court system in the deal through which foreign investors can sue governments. “If they want, [the Belgians] can request the ECJ opinion on anything in line with the established procedures,” one diplomat told Morning Trade. “There’s no big deal here because it doesn’t really change anything.”
European officials are branding the progress as a breakthrough, even as discussion of the Belgian text continues today and the concluding EU-Canada summit remains unscheduled. The larger issue, however, is that these steps are more of a patch on the EU’s wounded trade policy than a full rehabilitation that’s needed. The European Commission will have to decide whether it can continue to be taken seriously as a partner in international trade talks if it ratifies deals as “mixed agreements” — requiring ratification by the EU’s 38 national and regional parliaments.
From a U.S. perspective, one immediate consequence could be trouble surrounding the Trade in Services Agreement, which is slated to wrap up at a concluding ministerial on Dec. 5-6. A senior official involved in the TISA talks told Morning Trade last week that the Europeans declared the services deal would also be a so-called mixed agreement, which — among other outstanding issues — could hinder negotiators’ ability to cross the finish line this year.
EU-JAPAN DEAL POSSIBLE BY YEAR’S END: Damien Levie, head of the trade and agriculture office at the EU delegation office in Washington, said the EU is moving full steam ahead on a number of trade fronts, and hopes to wrap up free-trade talks with Japan by the end of the year. “The fact that trade policy is being questioned does not stop us from being able to work aggressively,” Levie said at the American University event. The EU agenda also includes investment talks with China and Myanmar and plans for negotiations with Indonesia, Chile and Turkey. It also hopes to ratify already-concluded pacts with Vietnam and Singapore, he said.
USTR SCOPING OUT ‘APPROPRIATE TIME’ TO SEND TPP TO CONGRESS: He neglected to provide any specifics, but Froman said Thursday that the administration is working with congressional committees, including the House Ways and Means and Senate Finance committees, to determine when it should send implementing legislation to the House.
“We’ve been working with them during the negotiations and since the agreement was completed to move this package forward at the appropriate time,” Froman said on a conference call organized by Business Forward. “We’re working with Congress as we seek to scope out when and how the implementing bill should be formally introduced and how it will proceed through Congress under the TPA procedures.
The time to send it should be once Congress has the votes to pass it, Secretary of State John Kerry said during a podcast with David Axelrod, the chief strategist for Obama’s presidential campaigns.
“I’d like to see them take it up, but I think they’ve got to take it up when they can pass it,” Kerry said on “The Axe Files.” “I don’t think we should lose it. We need to pass it, and we need to take the time necessary to find the equation where it is that we can pass it. But I think the sooner the better, because other countries are waiting on us.”
U.S. PUTS ARGENTINA ON PATH TOWARD TRADE FACILITATION: That’s one of a few concrete steps the two countries have pledged to take after meeting in Washington this week for the inaugural U.S.-Argentina Commercial Dialogue. Buenos Aires plans to ratify the World Trade Organization’s Trade Facilitation Agreement “as soon as possible,” likely sometime this year, Commerce Secretary Penny Pritzker said Thursday at a press conference following the joint meeting.
The dialogue aimed to set in stone some of the Obama administration’s efforts to deepen trade relations between the two countries before the next president takes office. “The Department of Commerce and the Ministry of Production have identified pragmatic steps … that will force our governments to take these steps to tie our commercial relationship more closely together and to remove the impediments to increase bilateral trade and investment,” Pritzker said.
Argentine Minister of Production Francisco Cabrera added during the press conference that besides trade facilitation, bilateral work in the immediate future will focus on four additional areas: regulatory coherence, institutional cooperation, trade and investment promotion, and financing. The goal, he added, is to hold the next ministerial meeting as soon as March of next year: “I don’t want to lose the momentum and want to take advantage of the commitment of the team of the secretary of Commerce,” he said.
NEW EXPERTS ON EXPORTS: In other Commerce news, Pritzker announced on Thursday the appointment of 20 members to the new Trade Finance Advisory Committee, which was established in August to help facilitate communication between the agency and U.S. exporters who are looking for access to finance or other government resources. The group will meet for the first time on Nov. 18.
The 20 members represent banks, research institutions, major corporations and small businesses — among other entities — and are based across the country, from Baltimore, Md., to Newport Beach, Calif. The council will be led by Merrill Lynch Managing Director Chris Bozek, the head of trade and global trade product for North America, and National Association of Manufacturers’ Lauren Wilk, who works as the director of trade facilitation policy there.
Other names on the list include: Todd McCracken, president and CEO of the National Small Business Association based in Washington; Timothy Gaul, the international export finance director for Caterpillar Financial Services Corp. based in Nashville; and Kevin Klowden, the executive director of the California Center at the Milken Institute. View the full list here.
SENATORS MAKE WASHING MACHINE APPEAL: Sens. Rob Portman and Sherrod Brown are joining forces to press the Commerce Department to go after South Korean washing machine manufacturers for what they call “serial dumping and duty evasion” at the expense of U.S. manufacturer Whirlpool.
“We believe Samsung and LG are engaged in a strategy to dump washing machines into the U.S. market until domestic producers can no longer compete,” Portman, a Republican, and Brown, a Democrat, wrote in a letter to Commerce Secretary Penny Pritzker released Thursday. “We ask you to use all authority available to you to respond to these producers’ efforts to evade anti-dumping duties by shifting production.”
Whirlpool petitioned for a trade case against the companies’ exports from South Korea in 2012. Seoul challenged the duties at the WTO, which overturned the U.S. duties after faulting the methodology Commerce used to calculate dumping margins. The Michigan-based company, which has plants in Ohio, subsequently petitioned for a case against China, where they accused Samsung and LG of shifting production to avoid duties and continue dumping into the U.S. After imports from China were hit with duties, Brown and Portman now say the companies are relocating washing machine production to Vietnam and Thailand.
Samsung rebuffed those accusations: “Samsung does not engage in unfair trade practices. American consumers stand to lose the most with limited choices and higher prices,” a company spokeswoman said. “We remain committed to fair competition and delivering innovation to the marketplace.”
— President Barack Obama explains in an op-ed in Newsweek why he thinks the TPP is so controversial.
— UPS CEO says he’s seeing increased commitment from the Obama administration to push TPP through during the lame duck, Reuters reports.
— China warned India that a boycott of its goods would negatively affect bilateral cooperation as well as Chinese investments in India, the Times of India reports.
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