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Laboring for Trade

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Laboring for Trade

Labor provisions are an increasingly important feature in trade agreements. But do they work?

How countries treat their workers might seem unconnected to the movement of goods and services across national borders. Yet in many trade negotiations, a trading partner’s labor standards are an increasingly important concern.

The fate of the pending United States-Mexico-Canada Agreement (USMCA), for instance, hinged for months on bipartisan support for the pact’s provisions around labor. In fact, the Trump Administration made major efforts to woo organized labor and ultimately secured the support of the AFL-CIO, thereby ensuring the agreement’s passage through the Democratically-controlled House.

But despite the attention paid to labor provisions in trade deals like USMCA, domestic policy, not trade agreements, might be the most direct – and most effective – way to improve workers’ lot, especially in advanced countries like the United States. As important as labor provisions have become to trade agreements, available research points to a mixed record on their impacts.

More and more common in trade agreements

Trade and labor standards have been linked concerns since at least the 19th century, according to the International Labour Organization (ILO). As early as the mid-1800s, European social activists were agitating for international labor norms such as an eight-hour workday and the abolition of forced labor. By the end of the century, countries such as the United Kingdom, Australia, Canada and New Zealand had passed laws banning the import of products made by prisoners.

But it wasn’t until the signing of the North American Free Trade Agreement (NAFTA) in 1993 that trade agreements explicitly addressed labor (technically the 1947 Havana Charter contained an article on Fair Labour Standards but did not go into effect). NAFTA included the first side agreement on labor standards, the North American Agreement on Labor Cooperation (NAALC), which established a system of “cooperative activities” that the United States, Mexico and Canada agreed to undertake together to improve worker treatment.

The floodgates opened after NAFTA. In 1996, the World Trade Organization (WTO) adopted The Singapore Ministerial Declaration, embodying a new global consensus on trade and labor. Among other things, the Declaration included a commitment to international core labor standards while rejecting the use of labor standards for “protectionist purposes.”

Today, labor provisions are increasingly de rigeur in trade deals. By the ILO’s count, 77 trade agreements negotiated globally in 2016 included labor provisions, compared to just three in 1995. Overall, says the ILO, more than a quarter of global trade pacts reached in 2016 – 28.8 percent – addressed labor standards in some way.

 

# ageements with L provisions text

Rationale for labor provisions

Proponents of labor standards in trade agreements cite several justifications for including these provisions. The first is moral: Trade agreements set the rules for international trade, and the inclusion of labor standards reinforces the social and human rights norms valued by the international community. Some argue that rich countries like the United States have a particular duty to use their leverage and buying power to raise standards in developing nations.

Another rationale is economic. As the ILO notes, “[L]abour provisions are tools against unfair competition, the main idea being that violations of labour standards can distort competitiveness (‘social dumping’) and should be addressed in a manner similar to that employed against other unfair trading practices.” In particular, labor standards arguably prevent a “race to the bottom,” where countries compete to produce ever-cheaper goods by shortchanging their workers. Some U.S. advocates further argue that labor standards can level the field between workers in competing countries, potentially stemming the tide of offshoring from wealthier countries to lower-paying ones and protecting domestic jobs. (More on this argument below.)

A third rationale for these provisions is political. Labor provisions, especially in the United States, have become a powerful bargaining chip for competing interests, as the USMCA and other trade agreements have shown. The strength of a trade pact’s labor provisions has also become a proxy for the “fair” trade that the public increasingly wants to see; trade deals might be more likely to win public approval if its advocates can tout “tough” labor provisions that purport to protect U.S. jobs.

ILO chart of provisions in agreements

Carrots, sticks and helping hands

While becoming increasingly complex, labor provisions tend to fall into several basic categories. First, so-called “promotional” provisions aim to encourage countries to raise labor standards by defining a set of commitments and detailing a variety of “cooperative” activities countries might do to discuss, implement and monitor these obligations.

For instance, in the CAFTA-DR agreement involving the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic, the United States agreed to finance an array of “capacity building” activities aimed at improving countries’ infrastructure around workers’ rights. These projects, according to the ILO, included “increasing workers’ awareness of their labour rights, increasing the budget and equipment of labour ministries and labour judiciaries, training labour officials, and setting up centres providing legal assistance to workers.”

While these types of provisions could be considered “carrots,” agreements can also include “sticks” in the form of “conditional” provisions requiring a trading partner to meet certain obligations before a deal is ratified. The United States’ trade agreement with Morocco, for instance, required Morocco to raise its minimum working age from 12 to 15 and to lower the maximum number of hours in its workweek from 48 to 44 as a precondition to ratification.

Text graphic weak enforcement criticism of NAFTA

Other “sticks” include provisions calling for sanctions if a country’s commitments aren’t met and specifying the mechanisms for policing and enforcement. Among the processes detailed would be who is entitled to file a complaint and how disputes will be settled (e.g, through arbitration). Among the chief complaints of NAFTA’s critics was weak enforcement, which is one reason why this issue became a major sticking point in negotiations over NAFTA’s successor, the USMCA. For instance, while more than 40 labor complaints were filed under NAFTA, none have so far led to sanctions, a result that many labor advocates wanted to see remedied.

Impacts on workers’ conditions and on trade flows

Research on the impacts of labor provisions in trade agreements is relatively scant. For one thing, measuring the direct impacts of these provisions on workers’ circumstances is hard to do. What research there is, however, shows that labor provisions can benefit workers in developing countries, especially if they have the support of wealthier trading partners in building capacity for creating and implementing reforms.

In a 2017 survey of existing research, the ILO found that labor provisions in trade agreements can provide a modest boost to workforce participation in some countries, particularly among women, and even help ease the gender gap in wages. According to the ILO, the average workforce participation rates in countries subject to labor provisions is about 1.6 percentage points higher than in countries without such obligations. “One possible explanation for this effect is that labour provision-related policy dialogue and awareness-raising can influence people’s expectations of better working conditions, which in turn increase their willingness to enter the labour force,” says the ILO.

In certain circumstances, conditional labor provisions can dramatically benefit workers. In Cambodia, for instance, according to the ILO, labor provisions included in the Cambodia–United States Bilateral Textile Agreement helped reduce the gender gap in Cambodia’s textile sector by as much as 80 percent between 1999 and 2004. “These results are partly due to the incentive structure of the agreement, which tied export quotas to compliance with labour standards, but also to a monitoring programme (Better Factories Cambodia) that was implemented with the support of the ILO and backed by the social partners,” the ILO found.

What the evidence does not show is that higher labor standards in developing countries dampens the flow of trade by raising the price of goods produced. In fact, research shows the opposite – countries subject to labor provisions often see a slight increase in their exports. According to a 2017 analysis by the World Trade Organization (WTO), labor provisions can benefit low-income countries by “increas[ing] demand for products by concerned consumers” in richer countries, thereby leading to more trade. (Consider, for instance, the growing consumer demand for “fair trade” coffee.) Similarly, the ILO finds that countries entering trade agreements with labor provisions see a slightly greater increase in the value of trade compared to countries without such provisions.

L provisions no substitute for domestic action

Both the WTO and ILO analyses caution, however, that the countries seeing the biggest impacts on their workers also enjoyed strong domestic support for labor reforms. While entering a trade agreement with labor provisions might have helped catalyze important shifts in domestic policy, the agreements themselves are no substitute for domestic action. In fact, in places where domestic enthusiasm for labor market reforms are weak, the impacts of labor provisions have been minimal.

One case in point is Guatemala, where the AFL-CIO and six Guatemalan trade unions filed a complaint in 2008 alleging that Guatemala was failing its obligations under CAFTA-DR. After nine years of procedural and other delays, an arbitration panel convened under the auspices of CAFTA-DR in Guatemala failed to find that Guatemala had breached its obligations under the agreement, despite the lack of progress on systemic reforms and widespread reports of anti-union violence.

No replacement for domestic policy

The inclusion of robust labor provisions in trade agreements reinforces international norms for just worker treatment. It can also promote much-needed reforms in nations with weak standards and help protect workers from exploitation.

Wealthy countries should not, however, count on labor provisions in trade agreements as a principal mechanism for protecting domestic jobs.

For one thing, as we’ve written elsewhere on this site, companies’ decisions about where to put their factories depends on many factors other than the cost of labor, such as proximity to markets, intellectual property protections, tax and regulatory considerations, and the skill of the workforce. Second, labor provisions in trade agreements are, at best, a highly indirect way of leveling the playing field between workers from one country to another. Third and most significantly, the biggest future threat to a worker’s job might not be a lower-paid worker in a maquila but a robot.

While apocalyptic forecasts of automation’s impacts are no doubt overblown, there’s little question that advances in automation will prove immensely disruptive in coming decades. For instance, one 2018 analysis by Price Waterhouse Cooper predicts that nearly 40 percent of U.S. jobs could be susceptible to automation by 2030.

Ultimately, the best protection for workers are domestic policies that prepare workers for disruption and smooth their transition in the event of displacement. These policies can include better and more robust adjustment assistance for displaced workers; bigger government investments in career and technical education, particularly for incumbent workers; greater coordination among governments, businesses and schools so that workers have the right skills to fill gaps in the workforce; and increased public support for research into innovations that will lead to more jobs.

This is not to say that the energy spent on negotiating labor provisions in trade agreements isn’t time well-spent. What policymakers and the public need to know is what these provisions can — and can’t — do.

__________________________________________________________________

Anne Kim

Anne Kim is a contributing editor to Washington Monthly and the author of Abandoned: America’s Lost Youth and the Crisis of Disconnection, forthcoming in 2020 from the New Press. Her writings on economic opportunity, social policy, and higher education have appeared in numerous national outlets, including the Washington Monthly, the Washington Post, Governing and Atlantic.com, among others. She is a veteran of the think tanks the Progressive Policy Institute and Third Way as well as of Capitol Hill, where she worked for Rep. Jim Cooper (D-TN). Anne has a law degree from Duke University and a bachelor’s in journalism from the University of Missouri-Columbia.

This article originally appeared on TradeVistas.org. Republished with permission.

SMEs

HOW TO EXPORT TO THE UNITED STATES: 6 SIMPLE STEPS FOR SMEs

According to the Organization for Economic Cooperation and Development, International Trade Statistics 1, participation in exports remains largely led by large enterprises (250 or more employees) in industrialized countries. In developing countries, the story is the same, and only a small percentage of small and medium sized businesses export at all. The World Trade Organization (WTO) reports that SMEs in developing countries make up roughly 45%, on average, of a country’s Gross Domestic Product (WTO, 2016), but SMEs’ exports represent on average 7.6 per cent of total manufacturing sales, compared to 14.1 per cent in the case of large manufacturing firms (WTO, 2016).

If you want your small or medium-sized business to get a piece of the export pie, according to the OECD Trade Committee, there are a number of challenges to be overcome. These include everything from limited access to credit, insufficient use of technology, and lack of export experience, to border controls. The most significant challenge posed, remains learning the ins and outs of getting your product from your country to foreign markets in a cost effective manner. These tips can help your small business become better equipped to enter the exciting world of exports.

The first stage in export planning is to investigate the market and identify your reasons for exporting to customers.
First, determine demand. You need to know where in the U.S. your product is needed. If you sell bathing suits, better export to Florida and California than to Nebraska or Alaska.

Second, you’ll need access to buyers. Start with researching buyers on the Internet, use your local U.S. Chamber of Commerce as a first resource, followed by the Economic Officer in the U.S. Embassy or Consulate in your country. Then, watch for upcoming trade shows where your goods could be featured.

Next, either start selling directly on your own ecommerce platform (secure payment and delivery systems should be integrated), or build a relationship with an international trade agent, whom you trust to help you navigate state and city markets, regulations, and opportunities for you to sell your goods in the U.S. , either to wholesale distributors, or directly to retailers. Improved logistics channels, eCommerce, and free trade agreements make that possible.

Third, find out what, if any, tariffs or exemptions exist for your goods. If there are no trade agreements between your country and the U.S., exempting your goods from tariffs, you’ll need the help of a U.S. licensed Customs Broker. A U.S. Customs Broker will be familiar with the Harmonized Tariff Schedule of the United States (“HTSUS”), and help you classify your goods and determine the tariffs you’ll have to pay to the U.S. Customs and Border Patrol, before your goods can enter the United States.

The National Customs Brokers and Freight Forwarders Association of America can easily provide brokers in the state or region you’re targeting.

Fourth, once you’ve got a better understanding of your profit margin to determine how you’ll sell your goods in the export market, you may wish to consider how to potentially mitigate any risks that can occur while your goods are being shipped, or once your goods arrive at their destination and are with the buyer(s). There are payment risks, damage or destruction of goods risks, documentary risks with customs, and many others.

You may have access to a good trade and customs attorney in the originating country, but he or she may not be thoroughly familiar with U.S. trade compliance requirements. In that case, you may benefit from consulting with a U.S. international trade lawyer to learn how they can help you mitigate risks in exporting by intervening with customs on your behalf, managing disputes through a properly drafted contract, and putting you in touch with relevant agents for information on U.S. trade insurance and compliance with government regulations.

In the U.S., generally, a phone or email consultation with a reputable lawyer would be free. If they want you to pay to talk with them for a few minutes about your problem and find out if they can help you, then hang up and call another lawyer.

Fifth, you need to build a relationship with a reputable freight forwarder or consolidator, who will help you decide: whether to ship by air or by sea; what documents are required for the country you are exporting to; how to pack your products for shipment; label them, and insure them. Normally, the freight forwarder will take care of it all, for a premium, but beware of INCOTERMS (regulations that define the responsibilities of buyers and sellers involved in commercial trade).

You must have at least a basic understanding of them to comprehend the shipping documents your freight forwarder will have you sign, and to protect your rights and limit liability.

Sixth, yes exporting is exciting, but it’s also risky doing business across oceans and continents with buyers you don’t know and may never see. To that end, there are many export resources in the originating country that companies, small and large, can benefit from. Usually Chambers of Commerce are a good starting point. There are associations of American Chambers of Commerce in every region of the world; just check the American Chamber of Commerce online directory for the specific one in your region or country.

Your own government’s resources can usually also offer invaluable information and global networks, including relevant contacts in the U.S. This is particularly helpful if you have a problem that can be fixed by your government seeking the intervention of commercial or economic officers at the local U.S. embassy in your country (keep in mind though that the Embassy is meant to assist U.S. citizens and residents, not foreigners).

Further, your local manufacturers association(s) may have members who have exported in the past, and can share their expertise. Lastly, commercial banks and local Export-Import Banks can guide you on how to leverage export financing, and minimize your financial exposure, when transacting business with foreign buyers.

Against this backdrop, you can reduce the external challenges SMEs face in trading, and better manage the uncertainty inherent in doing business internationally, all while making a healthy profit and expanding to new markets.

Magda Theodate is an international trade attorney and Director of Global Executive Trade Consulting Ltd. She works as a senior consultant for international development agencies in lower and middle income countries, resolving project execution challenges affecting trade, procurement and governance. To learn more, please visit: www.globalexecutivetrade.com

south american

Embracing the South American Ecommerce Marketplace

Ecommerce is on the rise in South America. Double-digit growth is expected for 2019 with sales of $71.34 billion (USD), tying it with the Middle East and Africa as the world’s second-fastest-growing retail ecommerce market. 

That’s great news for shippers looking to expand their online retail presence in South America.

A diamond in the rough

Online retailers in South America have been struggling for years to overcome several obstacles to success, including extensive customs delays, poor transportation infrastructure, and the lack of end-to-end supply chain visibility. Progress has been made on all three of these “challenges,” but more work is necessary to ensure the region’s continued double-digit growth. 

Within each challenge lies opportunity

While these obstacles may keep a few shippers from expanding into South America, others are viewing the area as a “diamond in the rough” and working diligently to reap the rewards of this truly untapped region. 

Having the right information is the first step to wading through the muck and mire of this complicated ecommerce marketplace:

South America customs vary by country

Red tape and bureaucracy pose the biggest obstacles for importing products into South American countries. In addition to customs taxes, tariffs, and fees, it can take 30+ days for some goods to be cleared through customs, especially in Brazil and Argentina. As a result, inventory builds up, costs rise, and customers wait longer for their products to arrive. In comparison, however, Chilean customs are very similar to the U.S. and allow products to flow through relatively quickly.

As you can tell, customs procedures can differ significantly, making it difficult for shippers to ensure compliance with each region’s unique customs. For a more seamless process, it’s essential shippers work with a customs broker or third party logistics provider (3PL) with local offices in the area. They’ll know the customs standards and understand the paperwork necessary to ensure products are approved for import.

Free trade agreements 

The United States-Chile trade agreement allows all U.S. exports of consumer and industrial products to enter Chile duty free. While still in the works, the United States-Brazil free trade agreement can help facilitate trade and boost investment between the two countries, especially in infrastructure. The United States-Colombia Trade Promotion Agreement eliminates tariffs on 80% of U.S. consumer and industrial imports into Colombia. 

South America infrastructure at port and inland

South America is hobbled by its inadequate infrastructure, and it’s probably not going to change anytime soon. Roads remain the primary means of transportation, but 60% are unpaved, hampering the speed of delivery by truck to inland locations. Improvements are slowly occurring, thanks to increased government funding (but corruption hampers many efforts). It’s worth mentioning that China, the largest trading partner of Brazil, Chile, and Peru, invests heavily in the region, providing more than $140 billion (USD) in loans for infrastructure improvements in the past decade, according to The Business Year.  

While surface transportation remains stagnant, ocean freight shows promise. According to icontainers.com, routes going to and from South America represent 15% of the total number of trade services.

The largest container port in South America is in the city of Santos in Brazil’s Sao Paulo state. Its location provides easy access to the hinterlands via the Serra do Mar mountain range. More than 40% of Brazil’s containers are handled by the Port of Santos as well as nearly 33% of its trade, and 60 % of Brazil’s GDP, according to JOC.com

In 2018, Brazil’s busiest container cargo port handled 4.3 million TEUs, compared with 3.85 million TEUs in 2017. 

For Argentina, Zarate serves as the critical port for roll-on/roll-off (ro-ro) and breakbulk cargo, while Buenos Aires and Rosario serve as the top container ports. Only two countries in South America are landlocked, Paraguay and Bolivia. 

Shippers and ocean carriers using the Port of Santos have been complaining about congestion and labor disputes at the port, and about politicization and time-consuming bureaucracy. That’s why it’s essential that shippers must have the latest information on traffic through these South American ports. Global freight forwarding companies in the area will have the newest information available to help you choose the right port of entry for your freight.

End-to-end supply chain visibility

Most online retailers and carriers understand that the sale is not complete until the product is delivered to the consumer. If merchandise is damaged during transport or arrives much later than promised, it reflects poorly on both parties and undermines consumer trust in ecommerce purchases. 

Lack of adequate infrastructure has forced many online retailers to put logistics on the back burner, focusing on the user experience through purchase. That’s why many products take weeks to arrive at the customer’s door, setting a bad precedent that must change. 

The South America trucking industry is highly fragmented, with providers ranging from owner-operators (about one-third of the industry) to sizable fleet operators and experienced freight forwarders who may not own any trucks at all, according to Tire Business newspaper. 

Final mile, LTL services paramount in South America

Once your product reaches port in South America and makes it through customs, how it gets delivered to the customer’s door can add extensive costs to your supply chain. Less than truckload (LTL) and final mile services are paramount to successfully operating in the region. Especially those carriers that can provide GPS freight tracking capabilities, such as C.H. Robinson’s Navisphere® technology

Final thoughts

Yes, there are obstacles to operating a supply chain in South American countries. Knowing the ins and outs of each country’s unique customs procedure, understanding which South American ports are best for your freight, and being able to track your shipments end-to-end will ensure your success in the region. Shippers who realize the potential of this “diamond in the rough” marketplace should work with a freight forwarder who will be extra focused and diligent in ensuring their freight moves quickly from customs fiscal warehouses to the final destinations. 

Enlist the aid of a global freight forwarding provider, like C.H. Robinson, who offers a global suite of services and has offices in the region that can help navigate any disruption in your supply chain.

Start the discussion with an expert in South America to accelerate your ecommerce trade. 

pension reform

Long-Awaited Brazilian Pension Reform Reopens Doors for US Investors Ahead of US Secretary Wilbur Ross’s Trip to Brazil

Nearly two weeks ago, Brazil’s House of Representatives approved, in a first round of voting, a long-debated reform of the country’s convoluted pension system. For the millions of Brazilians following the Reforma da Previdência (Pension Reform), this first round of approvals is a positive step forward and one that ensures a reasonable forecast for the estimated economic impact this will have on Brazil over the next decade.

But Brazilians are not the only ones who should celebrate the outcomes of this first round of voting. For US investors, the House’s approval of Brazil’s pension reform is a green light for far greater opportunities to come. Ahead of US Secretary of Commerce Wilbur Ross’s trip to Brazil in the coming week, this move will also help the US evaluate how domestic reforms in Brazil can facilitate US-Brazil bilateral commercial engagement.

The Pension Reform, as it stands, is expected to help revamp Brazil’s costly pension system, bolster Brazilian public finances and bring budget numbers down to a sustainable level within the next years. More importantly, it will be a trigger for much-needed tax reform. Implementation of both pension and tax reforms would be a real turning point for the country’s economy.

Though Brazilians and investors are right to celebrate this progress, a number of additional hurdles lie ahead for the Reforma da Previdência before it is approved. Over the coming weeks, the reform will have to pass through a vote by the Special Committee, a second round of approvals by the House, and two rounds of approvals by the Brazilian Senate.

Nevertheless, for President Jair Bolsonaro’s economic team, headed by economist Paulo Guedes, this is a victory. Since Bolsonaro’s visit to Washington in March 2019, companies interested in investing in Brazil have kept their eyes peeled for concrete outcomes from Brazil’s new administration. This is one such outcome.

Does the Pension Reform solve all of Brazil’s problems? Far from it. The text itself is not perfect and can be (in fact has been) criticized, especially as it pertains to the benefits provided for different categories of workers. But despite its imperfections, foreign investors can take this step forward as a sign that the Brazilian government is committed to making difficult decisions to improve its economic circumstances. There is now an opportunity for Brazil to embark on a growth cycle.

Relying on the assumption that the reform will pass, the Brazilian real has strengthened in the past weeks. This will foster investments in the middle to long term. In addition, it is important to note the government has encouraged the expansion of actions related to the Investment Partnership Program (PPI) in an effort to create a more business friendly and less bureaucratic environment for foreign investors in several sectors of the economy.

Over the long term, in addition to opening a door to other relevant and necessary legislative changes, the approval of the Pension Reform shows Brazil’s commitment to implementing broader necessary reforms, a positive sign to the members of the Organization for Economic Cooperation and Development (OECD) currently evaluating Brazil’s request for accession.

Along with the excitement around the approval of the pension reform text in the past weeks, Brazil can count on another recent victory: the signing of the Mercosur-European Union Agreement. After twenty years of negotiations, under the leadership of Mauricio Macri and Jair Bolsonaro Mercosur reached a final and comprehensive trade agreement with the European Union on June 28, sending a message to the world that Mercosur’s member countries are committed to the multilateral trading system and are looking to expand their trade relationships.

Today’s Brazil is open to investments and to competition; the US private sector should rejoice in these changes. The Brazilian House’s approval of the Pension Reform is at the heart of changes deemed necessary to reduce red tape and improve business performance in Brazil. As President Bolsonaro marks 200 days in office, investors should be ready to once again seize on the opportunities Latin America’s largest economy has to offer.

 

Renata Vargas Amaral is a Visiting Scholar in the Trade, Investment and Development Program at the Washington College of Law at American University. She is the founder of Women Inside Trade.

 Roberta Braga is an Associate Director at the Adrienne Arsht Latin America Center of the Atlantic Council

 With Valentina Sader, Program Assistant at the Adrienne Arsht Latin America Center of the Atlantic Council

White House ‘Optimistic’ on Pacific Trade Deal

Los Angeles, CA – The White House is optimistic on the chances that negotiators can forge a strong, comprehensive Trans-Pacific Partnership (TPP) deal that would impact 11 countries and encompass nearly 40 percent of the world economy.

“I’m much more optimistic about us being able to close out an agreement with our TPP partners than I was last year,” said President Barack Obama at a recent meeting of the President’s Export Council.

Confident that the administration could make a “strong case” in Congress for a TPP, Obama added, “It doesn’t mean it’s a done deal, but I think the odds of us being able to get a strong agreement are significantly higher than 50-50.”

According to the Office of the U.S. Trade Representative, the White House has held more than 1,500 meetings with members of Congress on TPP, including sharing negotiating text, and would continue to consult closely.

U.S. Representative Sander Levin of Michigan, the senior Democrat on the House of Representatives Ways and Means Committee, which has jurisdiction over trade, has said there was still a long list of “major issues” impacting the final make-up of the proposed trade pact.

Levin is calling for Congress to have more input into the deal, asserting that workers’ rights, access to medicines in developing countries and the phase-out period for U.S. tariffs on Japanese cars top the list of of major issues still to be resolved.

With the ongoing talks wrapping-up this week in Washington, D.C., negotiators may meet again next month in either the U.S. or Australia.

The 11 countries included in the TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S.

12/16/2014

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.

11/19/2014

U.S., China Have Diverging ‘Vision’ for Pacific Trade

Washington, D.C. – The U.S. will continue to focus on its own blueprint for a comprehensive Free Trade Area of the Asia-Pacific (FTAAP), according to U.S. Trade Representative Michael Froman.

Speaking at the APEC Summit in Beijing, Froman told reporters that a China-backed “vision” for Asia-Pacific free trade is only a “long-term aspiration, not the launch of a new FTA (free trade area).”

“It’s a reaffirmation of a long-term aspiration for the region that’s to be achieved through other ongoing negotiations,” he said.

Froman remarks define an on-going divergence in the approach to a Pacific regional trade accord by the two largest trade players in the region, the U.S. and China.

Beijing has thrown its support behind the FTAAP idea, while the U.S. is working towards crafting the long-sought 12-nation Trans-Pacific Partnership (TPP), which excludes China.

According to media reports, a draft final communique of the Beijing-hosted summit prominently mentions the importance of FTAAP calling for steps to be taken to “translate the FTAAP from a vision to reality” and craft a “strategic study.”

In response, Froman said, the TPP remains “a priority” and that it would serve as a “building block” for the FTAAP, which has a 2025 target date.

“TPP of course is the major focus of our economic pillar of the rebalance to this region,” he said, referring to the White House’s publically-stated goal of giving greater attention to the Asia-Pacific area.

“We certainly view TPP as our contribution to expanding trade and integrating the region,” he said, adding that, despite sluggish negotiations and frustrating snags, the TPP discussions have made “very significant progress”, but he refused to be drawn on a timetable for completing the process.

11/18/2014

TPP Hinges on Successful Japan, US Trade Pact

Washington, DC – The successful forging of a comprehensive Trans-Pacific Partnership (TPP) trade pact by the end of this year hinges on the US and Japan “reaching a compromise in bilateral trade negotiations,” according to a top level Japanese trade official.

Speaking at a recent meeting of the Center for International Strategic Studies, Hiroyuki Ishige, chairman of the Japan External Trade Organization (JETRO), said that leaders in both Washington and Tokyo “need to make bold decisions and recognize the strategic importance of finalizing the Trans-Pacific Partnership.”

Each side, he said, “knows his counterpart’s red line. It’s time for them to show the political urge for compromise. There is no perfect TPP.”

Ishige’s comments come as the US and Japan continue with negotiations to resolve their own, often contentious, differences that have become a major hurdle in finalizing the pact, whose 12-member nations account for more than a quarter of total international trade and 40 percent of global economic output.

The US wants Tokyo to open up its rice, beef and pork, dairy and sugar sectors and smooth the way for US car dealerships, while Japan is keen for a timetable on Washington’s promise to eliminate tariffs of 2.5 percent on imports of passenger cars and 25 percent on light trucks.

The TPP is aimed at cutting tariffs and setting trade rules, and is central to the Obama Administration’s attempt to boost American exports to Asia and re-orient US foreign policy toward a region of growing economic importance.

The pact is seen as a precursor to a future wide-ranging free-trade arrangement for the entire Pacific Rim region.

The other countries negotiating the TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

06/30/2014