Negotiators prep TTIP for next administration
With help from Doug Palmer and Adam Behsudi
NEGOTIATORS PREP TTIP FOR NEXT ADMINISTRATION: U.S. and EU trade officials huddled in New York City this week for Transatlantic Trade and Investment Partnership talks say they’re in full-on negotiating mode, but any progress they make in the next couple of days likely isn’t enough to move the deal to completion before the end of the year, Pro Trade’s Adam Behsudi reports from Manhattan.
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More than three years after the negotiations began, the 15th round of discussions this week remains focused on the micro level: completing work on legal text, resolving technical differences on regulatory cooperation provisions, and tinkering with tariff phase-out periods for those products that would see duties eliminated. At this point, negotiators may wind up just preparing the deal for hibernation until the next president takes over — but it could be a deal that Hillary Clinton or Donald Trump might be able to support.
“If I were Hillary, on TTIP, I would use it as an opportunity to pursue the kind of trade policy that she says would be good,” said Bill Reinsch, a senior trade adviser for the firm Kelley Drye who formerly led the National Foreign Trade Council. “One that’s good for workers and good for the environment, and one that addresses those concerns, which happen to be a lot of the same concerns that people in Europe want addressed.”
As for all the outstanding tough issues like investment and agriculture, they only mean the deal is ripe for the next U.S. president to use as a test case for a new approach to trade policy, Behsudi reports. Read the full story here.
IT’S THURSDAY, OCT. 6! Welcome to Morning Trade, where the one-year anniversary of TPP’s completion this week has us wondering how long it might be until we get to cover the conclusion of a trade agreement again. Think we’ll see some negotiations wrap up before the end of the year, or will we have to wait until we have President Trump or Clinton? Let me know what you think: email@example.com or @mmcassella.
U.S. CHAMBER: DON’T RUSH CHINA INVESTMENT DEAL: With just a little more than 100 days left in office, the Obama administration is looking to shore up its legacy on a number of fronts, including through a bilateral investment pact with China. But the U.S. Chamber of Commerce’s top official on China urged the administration on Wednesday not to settle for a second-rate pact just to get it done by Jan. 20.
“We certainly support the ongoing BIT negotiations with China,” Jeremie Waterman, the group’s executive director for Greater China, said at a hearing Wednesday chaired by the Office of the U.S. Trade Representative. But “the substance, with an emphasis on achieving a high-standard and comprehensive agreement, should drive the timing.”
The annual hearing on China’s compliance with its World Trade Organization commitments is taking place this year against the backdrop of a raucous presidential campaign in which Republican candidate Donald Trump has accused China of stealing American jobs. To read Doug Palmer’s story on the hearing, click here.
U.S. WHEAT’S CHINA TARIFF-RATE QUOTA BLUES: The U.S. Wheat Associates, at the USTR-led meeting, aired its frustration over Beijing’s administration of a tariff-rate quota for wheat. In most years, China’s actual imports are only about one-third of what are allowed under the TRQ and sometimes the imports are even lower than that, the group told the panel in a prepared statement. USTR’s recent decision to challenge China’s trade-distorting farm subsidies is a welcome step, but even a successful outcome in that case “will be significantly impaired unless China also removes its troublesome restrictions on wheat imports,” the group said.
BATTLEGROUND ANALYSIS: PORTMAN IN, TOOMEY A TOSS-UP: Former U.S. Trade Representative Rob Portman looks to be in good shape in his Ohio Senate race against Ted Strickland, even as the presidential contest remains one of the hardest to predict there, two election analysts said Wednesday. But one of Portman’s fellow pro-trade Republicans, Pennsylvania Sen. Pat Toomey, doesn’t appear to be quite as safe in his reelection campaign, America Votes President Greg Speed and Ellis Insight President Jim Ellis said.
Ellis, a former political consultant for the House Republican majority, said a win or strong lead for Democrat Hillary Clinton in Pennsylvania could be good news not for Clinton’s party, but for Toomey. Clinton is currently leading Donald Trump by about 4 points in the state, according to a RealClearPolitics polling average.
If that lead “begins to hold up, and she’s pulling away, then I definitely think you’re going to see the argument being made that you’ve got to split your ticket, you don’t want to give her all the power,” Ellis said, referring to the idea of voters dividing their ballot by voting for candidates from both parties. If Pennsylvania voters choose Clinton not for her merits but because they can’t stand Trump, for example, then they may vote for the opposite party further down the ballot in an attempt to restrict Clinton’s ability to get things done once in office.
That strategy “may work,” Ellis said at a lunchtime event hosted by Kelley Drye. “I would expect the Toomey operation to do that if they feel Trump is going down.” Toomey has been strongly pro-trade in the past and praised the TPP as recently as last year, though he came out against it over the summer as his reelection campaign against Democrat Katie McGinty began to heat up.
UKRAINE COURTS INVESTMENT TO SHAKE OFF RUSSIA WOES: The breadbasket of Europe wants to move up the value chain and become a major exporter of organic food to help it overcome its continuing problems with Russia, a top Ukrainian official said Wednesday.
“We have all resources. … We are already one of the top three exporters of wheat and corn worldwide,” Ukrainian First Deputy Minister of Economic Development and Trade Yuliya Kovaliv told POLITICO. “But we want the investment in the country to make more sophisticated agri products. And of course, one of the more important trends is the organic food. … It’s also the niche where Ukraine could be very strong and competitive worldwide.”
Kovaliv is Washington this week to meet with U.S. trade officials and follow up on Commerce Secretary Penny Pritzker’s recent trip to Kiev to discuss Ukrainian economic reforms and bilateral trade. To read more from Doug, click here.
TOP ECONOMIC OFFICIALS CALL ON GOVERNMENTS TO SELL TRADE: International Monetary Fund Managing Director Christine Lagarde, World Bank Group President Jim Yong Kim and World Trade Organization Director-General Roberto Azevedo argued in a Wall Street Journal op-ed published Wednesday that trade must be used as a tool to boost economic growth worldwide.
“National governments and international institutions should build public support for open trade policies,” the leaders wrote. “They need to emphasize how trade promotes innovation, employment and higher living standards, and make clear the opportunities, as well as the challenges, that globalization brings.”
Governments also must “complete what they’ve begun” and ratify the Trade Facilitation Agreement if they haven’t done so already, the officials wrote, as well as boost domestic investment in supportive adjustment policies in areas like education, job training and temporary income support.
“Such prolonged weak trade growth is nearly unprecedented in modern history,” they wrote. “It’s clear what must be done. Restoring the role of trade in driving economic growth and development begins with sound macroeconomic policies, including support for aggregate demand, and with structural reforms.”
REPORT: LATIN AMERICAN GROWTH DEPENDS ON TRADE: Economies in Latin America and the Caribbean are on the upswing after a prolonged period of sluggish economic growth, but they are now dependent on boosted exports and strong global trade in order for the recovery to continue, according to a new semi-annual report on the region.
“We are emphasizing the need for a major switch of resources (workers, capital, entrepreneurial talent, financing) towards the production of goods and services that are traded in international markets — that is, towards tradable activities,” Augusto de la Torre, World Bank Chief Economist for Latin America and the Caribbean, said in a news release announcing the report.
The report shows that because of lower commodity prices, the region can no longer rely solely on domestic demand but instead must turn toward outside buyers to increase demand, the World Bank said in its release. As the region readies itself to increase its presence internationally, however, global trade is shrinking as nations turn inward and as China and East Asian countries reduce their volume of imports, it said.
COMMERCE REPORT: TRADE GAP WIDENS ON HIGHER AUGUST IMPORTS: The U.S. trade deficit in goods and services widened in August to $40.7 billion amid rising exports, a Commerce Department report out Wednesday showed. The shift reflects a $1.5 billion rise in exports and a $2.6 billion rise in imports.
The goods deficit stayed roughly the same last month at $60.3 billion, while the services surplus dropped $1.2 billion to $19.6 billion. That drop is likely to be a one-time occurrence, as Commerce said it was largely due to an increase in charges for the use of intellectual property of $1.2 billion, which included payments for the rights to broadcast the Olympics in Rio.
Since the start of the year, the overall goods and services deficit has narrowed by $4.3 billion, or 1.3 percent, compared to the same period in 2015.
AN ANNIVERSARY IN THE BOOKS, WITH NOTHING TO SHOW: The U.S. Coalition for TPP on Wednesday highlighted the first anniversary of the beleaguered Pacific Rim trade deal being completed and used the milestone to once again call on Congress to approve the deal before the end of the year. In a press release, the coalition argued that the deal would benefit U.S. industry, workers and the economy while also advancing “core American values” including transparency and non-discrimination.
“Outstanding issues that have been identified by our groups and congressional leaders must be resolved,” the coalition wrote in the release. “To that end, we appreciate the work that has been done to address concerns over financial data localization provisions in the TPP, and strongly urge the administration and Congress to find substantive solutions on remaining issues quickly to ensure that a successful vote on the TPP can take place.”
— Large parts of Donald Trump’s economic plan, including his tax cut proposals, could ultimately drive up the trade deficit, the Wall Street Journal reports.
— China and Georgia have concluded negotiations on their free trade deal, Sputnik International reports.
— China’s foreign trade remains under increasing downward pressure, Xinhua news agency reports.
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