TTIP services offers in focus

With help from Doug Palmer

TTIP SERVICES OFFERS IN FOCUS: Against the backdrop of President Barack Obama’s campaign to inspire enthusiasm for TTIP, U.S. and EU negotiators are gathering in New York City this week in an effort to close out the bilateral trade talks before the end of the year. But major differences continue to threaten chances that can happen.

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Sticking points on a wide range of issues aren’t getting any easier to resolve. Even setting aside stalemates on such things as whether European cheese names are generic, or a controversial dispute mechanism that allows investors to challenge government regulations, the U.S. and EU have even been quarreling over the starting point for market access offers in the services sector.

The United States is disappointed that the EU has offered less than what it gave to Canada in their bilateral trade deal. “We are both quite open markets when it comes to services,” U.S. Trade Representative Michael Froman said in an interview. “In TTIP, at a minimum, we should be able to lock in the current level of openness so that together we can turn to China, India, others and use that as a standard.”

A source with the European Commission agreed that it should be the goal to go beyond any previous agreement in TTIP on services. But he noted that “the Canadians offered us a number of very important issues that have not been offered by the U.S.,” citing U.S. reluctance to put maritime transport on the table. Under the “Jones Act,” or the Merchant Marine Act of 1920, only U.S.-flagged ships can transfer goods between U.S. ports. Stay tuned for more later today. Also, click here to see the presentation schedule for the stakeholder event at this TTIP round.

IT’S MONDAY, APRIL 25! Welcome to Morning Trade, where your host is preparing to head midweek to New York City for the TTIP round. If you’re going to be there, or have any tips on what to watch out for, let me know: vguida@politico.com or @vtg2.

OBAMA MAKES TTIP CASE IN EU, BUT U.S. ISN’T SURE EITHER: President Obama, who traveled to Germany this weekend in part to make the case for TTIP, didn’t exactly arrive with the political trade winds at his back, POLITICO Europe Brief’s Ben Oreskes and POLITICO Europe’s Hans von der Burchard report. Anti-trade sentiment in the U.S. is the highest in a generation, and nearly all of his potential successors are hardening their views on the subject — with potential implications for TTIP.

“[T]here is a sense it would be a miracle to see [TTIP] concluded” during the Obama administration, John Engler, a former governor of Michigan who now heads the Business Roundtable, told POLITICO. Click here to read their story.

In a speech Sunday, at the opening ceremony of the Hannover Messe, Obama made a geo-strategic argument for why TTIP is now more important than ever, including slow growth in Southern Europe and Russia’s stranglehold on Europe’s energy supply.

“At a time when some are questioning the future of European integration, TTIP will encourage a higher long-term growth Europe need to create more jobs,” he said. “In this time of uncertainty when others would use trade and energy as a weapon, TTIP would help Europe diversify energy markets and increase energy security.”

OBAMA SEES ACTION ON TPP AFTER PRIMARIES: In the same speech, Obama said he still believed Congress would vote this year on TPP once some of the harsh primary election rhetoric subsides. “I think after the primary season is over, the politics settle down a little bit in Congress and we’ll be in a position to start moving forward. Because I know that we have had a majority of members in the past who were in favor of this deal,” Obama said, referring to the vote last year on trade promotion authority.

TTIP PROTESTERS MAKE NOISE: Tens of thousands of TTIP opponents made a pre-buttal of sorts to Obama’s efforts to rally new support for TTIP. The protest — estimates of its size ranged from 35,000 to 90,000 people — underscored the deep public skepticism in Germany towards the trans-Atlantic pact, which is supported by the government, Oreskes reports. Protesters demonstrated in the city’s main public squares and choked off traffic in Hanover’s downtown as tractors carrying speakers followed citizens carrying signs in a litany of languages. “Trading Trust Immoral Profit,” was just one example.

Many sat on the cobblestones of the Hanover’s Opernplatz drinking bottles of beer as the loudspeakers alternated between German bands and speakers deriding deals like TTIP and a recently completed trade agreement with Canada. Some carried rubber chickens — a reference to chlorine-water-washed American chickens that many fear they’d be forced to eat under TTIP.

U.S. SENATORS TO USTR: DON’T LET EU OFF THE HOOK ON AG: In the U.S., meanwhile, more than a quarter of the Senate is urging Froman to resolve a wide range of agricultural issues that represent some of the most difficult pieces of TTIP to resolve. Twenty-six senators representing both parties, including Senate Majority Leader Mitch McConnell, in a letter Friday asked the USTR to push the EU to eliminate tariffs on all agricultural products in the negotiations. The EU has so far agreed to eliminate tariffs on 97 percent of its products under TTIP. The remaining 3 percent are all agricultural products, including beef, pork, poultry, rice and fruits and vegetables.

The lawmakers, led by Senate Agriculture Committee Chairman Pat Roberts, pointed to a $12 billion ag trade deficit with the EU, even though the economic bloc is the world’s top importer of food and agricultural products. “A final agreement that does not include a strong framework for agriculture could have a negative impact on congressional support for this deal,” they wrote. “The EU must be willing to work towards liberalization in all sectors of agriculture.”

The senators also called for resolution of “long-standing regulatory barriers, such as hormone use in U.S. beef, maximum residue limits in fruits and vegetables, and dairy certification requirements.” They also urged Froman to fight against EU efforts to establish protections for geographically related food names and to push for timely approval of new biotech products.

TTIP PROCUREMENT DISAGREEMENT: Access to government procurement bids is another TTIP area where the two sides have been engaged in intense sparring, with the EU insisting on more access to U.S. government contract bids, which are often restricted by “Buy America” laws. A source with the European Commission reiterated that the EU would like to see the U.S. update its offer from February, which Brussels saw as inadequate. “We will be having more discussions on public procurement in New York,” he said.

Kerneis of the ESF said, from his understanding, the U.S. has largely offered what it already provides under the WTO’s Government Procurement Agreement. He suggested a couple workarounds that wouldn’t involve repeal of Buy America, such as requiring state and local authorities to give preference to EU firms in procurement bids in order to receive federal grant money. Or the EU could receive access to at least one or two of the 13 states that have no commitments under the GPA, he said.

“You have many ways of doing something better,” Kerneis said. “Some evidence of goodwill should be put on the table.”

But Froman argued that the reality on the ground is that the EU successfully participates in more U.S. bids than vice versa. “Unfortunately, there’s a lot of misinformation out there on [government procurement],” he told POLITICO. “European firms are actually guaranteed access to twice the procurement opportunities in the U.S. as American firms are in the EU — and that’s using the EU’s own numbers and excluding any procurements covered by Buy America or other restrictions.”

ALUMINUM DUTY SAGA COMES ABRUPTLY TO A CLOSE: Canada is relieved that the United Steelworkers union, in a dramatic turnaround, has abruptly dropped a request for emergency duties on imports of billions of dollars of primary unwrought aluminum, just four days after it filed its petition.

“This is great news, and I applaud the union for taking this course of action,” Canadian Trade Minister Chrystia Freeland said in a statement. “Canada is the main supplier of aluminum to the United States, and U.S. manufacturers depend on access to primary unwrought aluminum products from Canada for their operations.” She said the decision came after a phone call with USW President Leo Gerard, a fellow Canadian, on Thursday.

The union, which represents industrial workers on both sides of the U.S.-Canada border, found itself without industry support to pursue the case, Gerard said in a statement. Click here to read more from Pro Trade’s Doug Palmer.

THINK TANK BACKS FINSERV FIRMS IN TPP FLAP: Financial services firm are unhappy they were carved out of a TPP provision guaranteeing the free movement of electronic data across borders. Now, they have a new report from the Information Technology & Innovation Foundation to back up their position.

“First, giving countries a free pass to require certain data to be stored within their borders will raise costs for financial services firms, and the firms will have to pass those costs on to the businesses and customers they serve,” the technology policy think tank said. “Second, the carve-out validates the false belief that storing data outside a nation is somehow inherently riskier than storing it locally.”

The report also argues that the 2010 Dodd-Frank regulatory reform act gives federal regulators adequate and more appropriate tools for financial services regulatory oversight than requiring financial services firms to store their data in the United States. To read more, click here.

WTO AIRBUS RULING COMING, BUT REALLY THIS TIME: The World Trade Organization has sent a ruling to the United States and European Union on the EU’s compliance in a decade-long dispute over subsidies provided to aircraft maker Airbus. The panel expects to release the decision publicly by early September. (The dispute, along with a parallel dispute brought by the EU against U.S. subsidies for Boeing, is somewhat of a fixture in U.S. trade policy.)

INTERNATIONAL OVERNIGHT

Taiwanese pig farmers are threatening to protest if their government changes its policy toward allowing imports of pork raised with the feed additive ractopamine, CNA reports.

Indian stakeholders are mixed on whether the Regional Comprehensive Economic Partnership agreement will be good for the country, according to the Business Standard.

The Philippines is set to sign a free trade agreement with Iceland, Liechtenstein, Norway and Switzerland, Filipino newspaper The Standard reports.

China is inching closer to the idea that it should join TPP, according to Voice of America.

A new Commerce Department report shows the economic opportunity in each of the TPP countries if the deal is approved.

ICYMI: An analysis from Public Citizen’s Global Trade Watch debunks the administration’s claim that TPP would lead to 18,000 tariff cuts.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: abehsudi@politico.com and @ABehsudi; vguida@politico.com and @vtg2; dpalmer@politico.com and @tradereporter; mkorade@politico.com and @mjkorade; and jhuffman@politico.com and @JsonHuffman. You can also follow @POLITICOPro and @Morning_Trade.

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