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WTO: Global Customs Agreement Deal In a Fortnight

WTO: Global Customs Agreement Deal In a Fortnight

Los Angeles, CA – There is a “high probability” that a major deal on streamlining global customs rules will be implemented within two weeks now that the U.S., the European Union and India have reached a compromise agreement on agricultural subsidies.

India said it will sign the Trade Facilitation Agreement (TFA) as the U.S. and the EU have said they will accept India’s demand that it be allowed to stockpile food without observing the usual World Trade Organization rules on government subsidies and that developing countries be provided flexibility in fixing minimum support price for farm products.

India’s stand plunged the WTO into a crisis that effectively paralyzed the global trade group and risked derailing the customs reforms that are seen affecting an estimated $1 trillion to global trade.

“I would say that we have a high probability that the Bali package will be implemented very shortly,” said WTO Director-General Roberto Azevedo. “I’m hopeful that we can do it in a very short period of time, certainly within the next two weeks.”

Implementation of all aspects of the Trade Facilitation Agreement package, he added, “would be a major boost to the WTO, enhancing our ability to deliver beneficial outcomes to all our members.”

Azevedo made his comments ahead of the recent Group of 20 Leaders Summit in Brisbane, Australia.

The compromise U.S./EU/India agricultural subsidy deal included no major revision of the original WTO deal struck last December, which provided for India’s food stockpiling to be shielded from legal challenge by a “peace clause.”

A food security law passed by India’s last government expanded the number of people entitled to receive cheap food grains to 850 million.

India recently disclosed that its state food procurement cost $13.8 billion in 2010-11, part of the total of $56.1 billion it spends on farm support. Wheat stocks, at 30 million tons, are more than double official target levels.

The deal, which needs to be backed by all 160 WTO members, has resurrected hopes that the trade body can now push through those reforms, opening the way up for further negotiations.


EXIM Defends Itself Against Defunding Campaign

Washington, DC – With talk of defunding its operations circulating on Capitol Hill, the US Export-Import Bank (EXIM) has released its latest Annual Competiveness Report to Congress in an effort to “underscore the need for continued EXIM support for American exporters to help level the playing field in an increasingly competitive global marketplace.”

According to the report, while for decades, global export competition was governed by international standards put in place to ensure that companies could compete on free-market factors like price and quality rather than on aggressive government financing, today the global marketplace is changing.

“While 100 percent of official support for trade operated under these international rules 15 years ago, today that number has plummeted to 34 percent. Currently Russia, China and other countries offer subsidies and financing terms – including support of their state-sponsored companies – that threaten American jobs and export opportunities,” it said.

The report also stated that “the rapid growth of export financing from three Asian competitors: Korea, Japan and China.”

Those countries, it added, “provided significantly more export-credit support to their respective domestic companies and industries than did the United States in 2013.”

“Unregulated Competition is Expanding”

In addition, the report asserts that unregulated competition is expanding and commercial banks have largely withdrawn from pockets of the export-finance arena, including providing support for small businesses.

“The United States faces more robust competition from export-credit agencies offering terms that are not regulated by the Organization for Economic Co-operation and Development (OECD), which encourages global export competition based on free-market principles and mutually agreed-upon standards,” it said.

For example, EXIM support for all of its $15 billion in medium- and long-term financing was regulated by the OECD Arrangement, but other OECD member countries offered more than $60 billion alone of unregulated export financing support (on top of $83 billion in export financing governed by the OECD Arrangement).

“Nations that are not subject to the OECD framework, including Brazil, Russia, India and China, provided $115 billion in trade-related financing,” according to the study.

Unregulated support, it said, totaled substantially more than all OECD-regulated support, “a trend the report expects to continue and one which is poised to place US exporters at a competitive disadvantage absent the tools made available by EXIM.”

The report also stated that “the appetite of commercial banks for long-term projects continued to diminish” since the implementation of Basel III and other banking reforms.

“As liquidity sources for certain projects remain scarce, export-credit agency support has become more necessary to fill gaps in the trade finance marketplace and ensure that American exporters remain competitive,” it said.

“Consequently, US exporters will continue to rely upon EXIM support as they seek to take advantage of emerging economies and the 95 percent of consumers that live abroad.”

In the statement accompanying the report, EXIM Chairman and President Fred P. Hochberg, said, “There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to US jobs.”

The bank’s job, he said, “is to back American workers and ensure that US exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”