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APEC: TRADE ACCELERATOR IN THE ASIA-PACIFIC & BEYOND

APEC: TRADE ACCELERATOR IN THE ASIA-PACIFIC & BEYOND

Menu of Options to Grow Trade

Countries utilize multiple platforms to open markets, set standards or other rules of trade, and resolve disputes. Progress in reducing barriers to trade and facilitating the flows of goods and services may be an outcome of negotiated free trade agreements between two or more countries or result from legally binding instruments agreed to in multilateral fora like the World Trade Organization (WTO).

In contrast, decisions in the Asia-Pacific Economic Cooperation (APEC) forum, a grouping of 21 economies that border the Pacific Ocean, are reached by consensus but undertaken on a voluntary basis. This format is credited with enabling members to “incubate” content for new trade negotiations and to work collaboratively on pragmatic regulatory and policy approaches to common challenges.

The APEC forum culminates each fall in a meeting of the 21 leaders, a gathering many associate with the annual “silly shirts” photo of top officials genially wearing the national garb of the host economy, rather than their typical business suit. However, the work of APEC goes on for many months before this fashion summitry takes center stage to solidify each member’s commitments.

This article introduces this cooperative, regional forum; highlights the priority focus areas set out by this year’s APEC host, Chile; and shines a spotlight on one such area – digital trade – as a case study into how APEC serves as a building block in the iterative process of co-creating norms for trade.

Spotlight on APEC

The 21 members of APEC, which includes economies as diverse as the United States and Papua New Guinea (last year’s APEC host), are home to almost three billion people and represent close to half of world trade.

When the organization formed in 1989, APEC had Australia, Brunei Darussalam, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and the United States as founding members. China; Hong Kong, China; and Chinese Taipei joined in 1991. Mexico and Papua New Guinea acceded in 1993, and Chile joined in 1994. In 1998, the addition of Peru, Russia, and Vietnam brought the organization to its current membership level.

APEC Members

Every year one of the 21 APEC member economies serves as the APEC Chair. Over the course of a year and typically in multiple cities, the Chair hosts a series of senior officials’ meetings, ministerial meetings, and a Leaders meeting. Ministerial meetings include gatherings of Trade and Foreign Ministers from each of the economies, as well as sectoral ministers overseeing other key areas, including energy, finance, and education. The host economy also welcomes the APEC Business Advisory Council (ABAC), up to three senior business leaders per economy, appointed by their governments, who provide private sector input into the APEC process.

Between 1989-1992, APEC dialogues were held at the senior official and minister level. In 1993, former U.S. President Bill Clinton began the practice of an annual leader meeting when he hosted an APEC meeting in Seattle. The following year, APEC leaders made a commitment to jointly work toward free and open trade in the Asia-Pacific by 2020. This commitment is known as the Bogor Goals for the Indonesian city where APEC leaders met in 1994.

A defining feature of APEC is that members voluntarily take actions to reduce barriers to trade and investment without a requirement to make legally binding obligations. Beyond a core focus on trade and investment liberalization, APEC also promotes business facilitation, with the goal of taking time, cost, and uncertainty out of doing business across the region, as well as technical cooperation, to boost the technical capacity of APEC’s less developed members to drive secure and sustainable economic growth.

From Idea to Fruition

Notable accomplishments within APEC include its work on environmental goods, where members have undertaken tariff reductions on a list of 54 environmentally friendly goods. This tariff-cutting effort laid the groundwork for ongoing negotiations at the WTO on an Environmental Goods Agreement with expanded product coverage.

Another key APEC deliverable has been the APEC Privacy Framework, which established principles and implementation guidelines for privacy protection, and which underpins the APEC Cross-Border Privacy Rules (CBPR) system. Currently, eight APEC members—Australia, Canada, Chinese Taipei, Japan, Korea, Mexico, Singapore and the United States—participate in the CBPR system.

APEC also delighted many travelers on the APEC circuit with the creation of the APEC Business Travel Card, which allows cardholders visa-free access to APEC economies for up to 90 days and special APEC fast lanes in the major airports of APEC members. According to the 2018 report of the APEC Committee on Trade and Investment to Ministers, as of the end of June 2018, over 278,000 cards had been issued.

Onward to Santiago

Like a Chilean fine wine, the business travel card is something nice to have in hand given the over 200 working group meetings, workshops, ministerial, academic, and business meetings taking place over Chile’s APEC year. Chile’s host year will culminate in the summit of the 21 APEC leaders in November in Santiago. As the host economy, Chile has identified four priority areas on which it seeks concrete deliverables:

Digital Society, an initiative encompassing efforts to develop cross-border digital trade standards and make needed changes to education and labor systems;

Integration 4.0, which seeks to tackle some of the newer sources of trade frictions and enhance connectivity through customs coordination and border automation;

Women, Small and Medium Enterprises and Inclusive Growth, an agenda designed to increase women’s participation in the economy and to enhance the ability of small and medium-sized business to realize the benefits of trade in the region, including in the area of digital trade; and

Sustainable Growth, which includes initiatives to protect the marine ecosystem and promote cooperation on both energy and smart cities.

Division of Labor on Digital Trade Rules

Chile’s focus on the digital economy reflects the priority that APEC leaders have increasingly placed on promoting sound policies to govern digital trade in the Asia-Pacific region. The spotlight on digital policy is also a good case study in the iterative way global trade norms are shaped and how an organization like APEC both influences and is influenced by parallel policymaking efforts.

APEC prides itself on its role as an incubator of ideas and driver of initiatives in emerging areas of trade that matter not only to the Asia-Pacific region, but also globally.

Dating back to its 1998 APEC Blueprint for Action on Electronic Commerce, which defined principles for the development of e-commerce in the region, APEC members have recognized that without a framework to govern the surge in digitally enabled trade, the full potential of digital technologies may not be realized. They also understood the challenges associated with designing regulatory frameworks that encourage growth while protecting privacy and security, particularly given differing domestic regulatory approaches on key issues like treatment of data. In its work on the various building blocks for digital trade – from cross-border privacy rules to trade facilitation and services liberalization – APEC has engaged multiple outside organizations, including the International Chamber of Commerce, the Organization for Economic Cooperation and Development (OECD), and the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFAT), facilitating mutually beneficial idea exchange.

In 2016, 12 APEC economies signed the Trans-Pacific Partnership Agreement or TPP (the United States later withdrew). The TPP’s e-commerce chapter covered a range of traditional and emerging issues, including customs duties, electronic authorization and signatures, cross-border data flows, source code, cybersecurity, and privacy protections. Initiatives like the APEC Privacy Framework inspired certain TPP provisions but, unlike the APEC framework, what is now known as the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) is a binding agreement with enforcement provisions. The reforms required by the agreement, including prohibitions on data localization and protections for the movement of data, will set a new bar as CPTPP potentially expands to new members and as new trade agreements are forged.

For example, in mid-May, on the sidelines of this year’s APEC meeting of Ministers Responsible for Trade, Chile’s Minister of Foreign Affairs, Singapore’s Minister of Trade and Industry, and New Zealand’s Minister for Trade and Export Growth announced the start of negotiations towards a Digital Economy Partnership Agreement. The officials announced an intent to build on the CPTPP e-commerce chapter, but also look at emerging areas like digital identity and artificial intelligence. Any agreement reached between Chile, New Zealand and Singapore will be open for accession by other WTO members who can meet the high-quality standards to be established in the agreement.

Underscoring the iterative nature of trade policy building, the three APEC and CPTPP members indicated that their work would build on the work underway within APEC, the OECD, and other international forums; generate ideas for use by countries negotiating free trade agreements; and complement current WTO negotiations on e-commerce. In the latter talks, 76 WTO members (including all APEC members except Indonesia, Philippines, Papua New Guinea, and Vietnam) are working to create multilateral rules governing electronic transactions.

Family Photos APEC

Culture and Consensus

APEC members leverage their APEC host year to drive progress on their national trade priorities in the spirit of collaboration and consensus. The various APEC meetings throughout the year also provide an opportunity to showcase the member’s unique achievements before large audiences of distinguished visitors, while also showing off the cities where the meetings take place. This year, for example, Chile will welcome more than 15,000 representatives of member economies, APEC observers, business leaders, and international press in Viña del Mar, Puerto Varas, and Santiago.

Shining a spotlight on the unique cultural offerings of a host economy – such as the Royal Barge Procession for APEC leaders on the Chao Phraya River in Bangkok in 2003 or China’s grand 2014 APEC welcome ceremony with light shows, singing, and dancing – is also a time-honored tradition. Unfortunately, the infamous “silly-shirted” photos tradition may be wavering. The last time the United States hosted APEC in 2011 in Hawaii, President Obama found APEC-like consensus agreement to nix the collective donning of aloha shirts and grass skirts, quipping, “I didn’t hear a lot of complaints about us breaking precedent on that one. I thought this may be a tradition that we might want to break.”

Leslie Griffin is Principal of Boston-based Allinea LLC. She was previously Senior Vice President for International Public Policy for UPS and is a past president of the Association of Women in International Trade in Washington, D.C.

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

How Modern Networks are Supporting Humanitarian Aid and Disaster Recovery

Ensuring how lifesaving medicines and supplies are distributed is challenging, especially when it involves moving supplies in a hurry. Whether overseeing how disaster relief services are distributed in a time of crisis or to secure the medical supply chain to help eliminate counterfeit drugs, locking lock down the global supply chain and achieving transparency has never been more critical.

Traditionally, many U.S. based nonprofits have been penalized by potential donors for having high administrative costs. Thanks, in part, to this increased spending scrutiny, investments in technologies that could be transformational in the fight against poverty and disease have been shelved to keep spending at bay and to avoid doling out the high price tag the technology could cost. Dan Pallotta’s Ted Talk called out the double standard that drives our broken relationship to charities when he urged companies to start rewarding charities for their big goals and big accomplishments even if that comes with big expense. Having worked with hundreds of nonprofit organizations, I have witnessed their Herculean efforts to get the right aid, to the right people, at the right time despite the fact they were saddled with antiquated technology.  Nonprofit organizations, especially those delivering lifesaving aid, need world-class tools as much, if not more, than for-profit organizations.

Coping with Supply Chain Management Challenges

The sheer number of constituents involved in the aid ecosystem – nonprofits, first responders, governments, funders, suppliers, logistics providers, warehouses, food banks, clinics, etc. – each rely on different systems, applications, and formats that make custom integrations necessary for them to collaborate.

For instance, many non-government organizations (NGOs) are working to end AIDS, tuberculosis, and malaria in Africa. However, they all face a number of logistical challenges as they deal with naturally occurring data silos that are scattered across various geographic locations. Also, the scale of these programs is massive. In Ethiopia alone there are more than 435,000 square miles with more than 30M people living in poverty.

In the humanitarian arena, challenges are also amplified by poor infrastructure. When it comes to internet speed, most of Africa ranks at the bottom of the list with Ethiopia coming in at 139 out of 196 countries worldwide. And as one could imagine, the internet access declines the further one  travels into more rural areas.

While distributing international aid is challenging, managing a supply chain moving pharmaceuticals is especially difficult. First, there’s a lot of product to deal with and pharmaceuticals require a hyper focus on expiration dates, medical oversight and, for some products including vaccines, a temperature-controlled supply chain.

Then, there is the growing epidemic of fraudulent and counterfeit products that are entering the supply chain. According to a World Health Organization (WHO) report, substandard and counterfeit drugs cause improper dosing, compromise the effectiveness of medicines and can even lead to overdose and death. The WHO says that one in ten medicines are counterfeit, and 100,000 people in Africa die every year due to counterfeit medicines.

As if the above challenges aren’t bad enough, a disaster can make them exponentially more difficult. Communication problems are magnified, internet access can be lost in affected communities, and new players are introduced. Consequently, needs are changing even more rapidly and time is of the essence.

Humanitarian Aid Reaches a Tipping Point

Nonprofits and the partners they rely on are realizing that the flawed architecture of single enterprise-centric solutions cannot support the highly dynamic and interconnected business environment that is required to deliver aid. Just as cloud-based social networks such as LinkedIn and Facebook have created new approaches to how we manage our personal and business relationships, new network platforms and the resulting communities are changing how business is conducted between the end consumer and all the companies on the network.

Similar to when you change your status or job, your entire network has access to this information in real time, and supply chain networks work the same way. With you and all of your partners on the same page at the same time brings unprecedented value to the humanitarian aid ecosystem.

In a network model, costs are reduced for all parties as the network grows, because they are shared by the members. In addition, these networks operate using a monthly subscription fee versus the traditional large up-front costs. This lowers the barrier to entry, provides a predictable ongoing run rate, and enables all parties to leverage the same platform and infrastructure.

In the network model, the technology is by the community for the community. The community defines best practices and as new features are added, they are shared across the network. The technology is evergreen versus stagnant; constituents stay on the leading edge, rather than having to invest in expensive upgrades.

How Networks are Supporting Universal Visibility and Transparency

Sophisticated permissions technology is also enabling new found visibility, as advanced networks can partition data and provide the right information to the right person. Now, logistic providers know the exact location of their trucks, program managers can see who received aid, and funders will see their impact quantified.

Networks also provide a single version of truth to all the constituents so the entire humanitarian ecosystem can be on the same page and focus on the recipients changing needs. This is especially important in a disaster, when every moment counts.

The network can also be used to fight the counterfeit problem as the technology can store a library of authentic products by dosage form all the way down to the molecule. At any point in the supply chain products can be validated to ensure they are legitimate using sophisticated scanners. If a counterfeit product is detected, networks provide the ability to track and trace through serialization which greatly helps in the event of recalls and the removal of counterfeit products.

As more organizations join the network, the value of being a participant increases. New companies will find that many of their business partners are already on the network, which reduces time for on-boarding. This enables the humanitarian response to be agile and expand as required, which is especially important in disaster response because you never know when or where the next disaster will strike. Even with no internet access, some sophisticated network providers offer the ability to work offline and then synch up when an internet connection becomes available. In a disaster response scenario or working in developing countries, this is a game changer. Today, nonprofits have the opportunity to leap frog some traditional challenges and investments. For example, they can skip ERP and go straight to a network platform.

Whether working domestically or internationally, networks give humanitarian organizations transformational abilities that can magnify bottom of pyramid impact. By allowing the supply chain to bypass ERP solutions, participants have the ability to create bi-directional supply chains versus the traditional push model. This enables them to better understand what is needed and ultimately help relieve the suffering for those inflicted.

About the Author:

Melis Jones, Global Marketing Director at One Network Enterprises., a provider of the blockchain-and AI-enabled network platform, The Real Time Value Network.  To learn more, visit https://www.onenetwork.com/ or follow them at@onenetwork

America First: Is U.S. Trade Policy Too Rough, or Too Fast?

With just a few months left until the end of the year, enforcement of the current U.S. Administration’s trade policy agenda remains in full swing. From the renegotiation of NAFTA, to the imposition of two rounds of massive tariffs on China and others, few in the international trade community can point to a period in recent memory when the U.S. has been more active on the global trade stage.

Even the Chair of the World Trade Organization (WTO) dispute settlement appellate body has signaled an unprecedented challenge in managing its caseload given the “high number and complexity of appeals” currently before the body. The United States has logged no less than 123 disputes as complainant before the dispute settlement panel, even as the U.S. President threatens to pull out of the WTO for perceived “unfair treatment”.

In order to keep open the trade doors of foreign markets, the U.S. must leverage its size as the world’s largest economy. To do so, the Office of the U.S. Trade Representative (USTR) must maintain incentives that go beyond size, and sharpen trade policy attention through five priority areas established by the U.S. President on:

(1) integrating national security in policy decisions; (2) encouraging use of taxes and deregulation to strengthen the U.S. economy; (3) revising or terminating trade agreements that don’t meet current objectives, while creating new ones that do; (4) enforcing U.S. trade laws ranging from invoking a Section 301 investigation under the U.S. Trade Act of 1974 ( for the first time since 2001), to ensuring the Federal Trade Commission reviews labels to prevent unfair export competition; and (5) reforming the multilateral trading system. On the latter, it remains to be seen, what actions the U.S. will take, and how other WTO members will respond.

The American private sector, for its part, depends on USTR’s leadership, to lift barriers to cross-border trade so that it can focus on manufacturing competitive products, managing global value chains with its many foreign partners, and continuing to provide innovative services to consumers. In fact, with the United States being by far the largest exporter of services in the world (to the tune of US$760 billion in 2016), the U.S. service sector, from banking, energy, and courier services, to insurance and information technology, among others, depend on friendly business opportunities overseas to keep their huge profits.

But leadership must be accompanied by diplomacy. Renegotiating trade deals, or implementing new trade policies, only has value when the private sector gains access to better trade opportunities, and economic activity is buoyed in both the affected export and import markets.  According to the U.S. association of “Women in International Trade”,  the only way for the U.S. to have a win-win with its international trade policy, is for the current Administration to demonstrate “…firm, but fair behavior” in its trade dealings. There, the private sector has an important role to play.

If the latest round of U.S. trade policy changes is to have the desired effect, the American private sector, with international supply chains spanning the globe, must take a more active role as a diplomatic buffer, using its huge cross- border, “soft diplomacy” influence to hold open the doors of riled foreign markets that sustain millions of jobs riding on “made in America” exports.

Magda Theodate is an international trade attorney, and global trade facilitation consultant. She has more than a decade of experience applying her legal skills in support of international trade reforms, trade policy development, and governance initiatives that enhance economic development in lower and middle income countries. To learn more, please visit : www.globalexecutivetrade.com

USTR: China Must “Allow Market Forces to Operate”

Washington, D.C. – If China is going to deal successfully with its economic challenges at home, “it must allow market forces to operate, which requires altering the role of the state in planning the economy,” according to the latest Report to Congress on China’s WTO Compliance compiled by the Office of the U.S. Trade Representative (USTR).

The country, the report added, likewise “must reform state-owned enterprises, eliminate preferences for domestic national champions and remove market access barriers currently confronting foreign goods and services.”

The report cited a “dramatic expansion in trade and investment” among China and its many trading partners since the country acceded to the WTO in December 2001.

U.S. exports of goods to China totaled $122 billion in 2013, representing an increase of 535 percent since 2001 and positioning China as the U.S.’ largest goods export market outside of North America, while U.S. services exports reached $38 billion in 2013, representing an increase of 603 percent since 2001.

Services supplied through majority U.S.-invested companies in China also have been increasing dramatically, totaling an additional $39 billion in 2012, the latest year for which data is available.

“Despite these results, however, the overall picture currently presented by China’s WTO membership remains complex, largely due to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy,” the report said.

In 2014, as in past years, when trade frictions have arisen, the U.S. “pursued dialogue with China to resolve them,” it said.

But, when dialogue with China “has not led to the resolution of key trade issues, the United States has not hesitated to invoke the WTO’s dispute settlement mechanism.”

Since China’s accession to the WTO, the U.S. has brought 15 WTO cases against China, more than twice as many WTO cases as any other WTO member has brought against China, according to data supplied by the Geneva-headquartered global trade group.

In doing so, “the United States has placed a strong emphasis on the need for China to adhere to WTO rules, holding China fully accountable as a mature participant in, and a major beneficiary of, the WTO’s global trading system,” the USTR report said.

“The United States views economic reform in China as a win-win for the United States and China,” the report concludes “not only because the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises in China’s economy are principal drivers of trade frictions, but also because a sustainable Chinese economy will lead to increased U.S. exports and a more balanced U.S.-China trade and investment relationship will help drive global economic growth.”

12/31/2014

EU Files Boeing 777X Tax Incentive Dispute With WTO

Los Angeles, CA – The European Union (EU) has filed a dispute with the WTO Secretariat in Geneva against the U.S. regarding “conditional tax incentives” offered by the state of Washington to “commercial airplane manufacturers.”

The EU asserts in the dispute – a not-so-veiled slap at Boeing and its new 777X commercial jetliner – that the “vastly expanded tax incentives are conditioned on local content requirements prohibited by the WTO Agreement on Subsidies and Countervailing Measures.”

The request for consultations was made, the European Commission (EC) said, in response to a decision by the state of Washington in November 2013, to extend to 2040 subsidies to Boeing that were originally granted through 2024.

The EC is charging that the broadened subsidies were contrary to the WTO rules, “because they require the beneficiary to use domestic goods rather than imported ones.”

“The subsidies scheme extension is estimated to be worth $8.7 billion and will be the largest subsidy for the civil aerospace industry in U.S. history,” according to a Commission statement.

The 777X is a new version of Boeing’s successful 777 twin-engine wide-body jet. It’s scheduled to go into service in 2020. The company has reportedly received orders amounting to billions of dollars for the aircraft from a number of air carriers.

The EU’s request Friday for consultations is the first step in a dispute within the WTO’s Dispute Settlement System.

WTO rules call for Washington, D.C. to respond to the request within 10 days, but due to the Christmas holidays, the EU has agreed to extend the deadline until January 7.

The consultations will give the U.S. and the EU the opportunity to discuss the dispute and reach a solution without proceeding to litigation. The talks must begin within 30 days and generally cannot last longer than two months.

If both parties fail to reach an agreement, the EU can request that a “panel of experts” be commissioned to study the dispute and reach a verdict.

12/23/2014

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 Planning New Hi-Tech Tariff Cut Agreement

Los Angeles, CA – The U.S. and China have reached an “understanding” on a deal that would eliminate more than 200 tariffs on certain high-tech goods.

Speaking with the media at the current Asia Pacific Economic Cooperation (APEC) conference in Beijing, U.S. officials said that the quasi-agreement is yet to be finalized in detail.

They did say, however, that an agreement would include the phased-out removal of tariffs on such goods as medical devices, global positioning systems, computer software, and video game consoles.

No specific timeline was given on finalizing a broader agreement, which would have to be vetted by the World Trade Organization.

Talks on a proposed hi-tech trade deal collapsed last summer due to disagreements over what products would be covered by an expanded agreement. A finalized deal would mark the first major tariff reduction agreement by the WTO in 17 years.

According to the Office of the U.S. Trade Representative (USTR), a new agreement would affect $4 trillion in annual trade and dismantle a tariff system that adds as much as 25 percent to the cost of imported high-tech products sold in the U.S.

“We already export over $2 billion of high-tech, high-end semiconductors, even with 25 percent tariffs,” said USTR Michael Froman. “Eliminating those tariffs will obviously expand that trade significantly. It’s an area where we have a comparative advantage, and where we can support a lot of good, well-paying American jobs.”

11/12/2014

WTO Slams US ‘COOL’ Meat Import Labeling Rules

Los Angeles, CA – Canada and Mexico are lauding a finding by the World Trade Organization that the US has failed to bring its Country of Origin Labeling (COOL) meat labeling regulations fully in line with international fair trading rules.

In a joint statement, the governments of Canada and Mexico issued a statement saying, “The WTO has confirmed once again what we have known all along: that the United States’ mandatory COOL requirement for beef and pork is a blatant breach of its international obligations as a member of the WTO.”

The WTO ruling, the statement said, “provides an opportunity for the U.S. to cease this harm and to comply with its international obligations.”

COOL rules require retailers such as grocery stores and meat markets to list the country of origin on the products they sell.

The WTO ruled in June 2012 that the COOL program “unfairly discriminated” against Canadian and Mexican beef and pork imports because it gave “less favorable treatment” to those products than that given US-produced beef and pork in violation of WTO rules.

The US responded, saying that it had met a deadline to change the rules, but Canada and Mexico said it had not done enough.

Unless the revised COOL rules are given the all-clear by the WTO’s Appellate Body, both Mexico and Canada can ask the trade body to let them impose trade sanctions on the US.

US pork producers have urged Congress and the administration to fix the rules and avoid “financially devastating” retaliation, while several other groups including the US Chamber of Commerce, the National Association of Manufacturers, farmer cooperatives and corn refiners said the offending sections should be immediately rescinded.

“The WTO dispute panel on the US Country of Origin Labeling rule brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners,” said National Cattlemen’s Beef Association President Bob McCan.

Canada and Mexico said they “remain extremely disappointed that the United States has continued, to date, to attempt to defend this clearly protectionist policy, which harms trade with the United States’ largest export markets and also hurts domestic US livestock producers and meat processors and retailers.”

10/22/2014

WTO Downgrades Trade Growth Forecasts

Geneva, Switzerland – The World Trade Organization has reduced its forecast for world trade growth in 2014 to 3.1 percent, a significant drop from the 4.6 percent it made in April.

In addition, it also cut its estimate for 2015 to 4.0 percent from its previous 5.3 percent forecast.

The downgrade “comes in response to weaker-than-expected GDP growth and muted import demand in the first half of 2014, particularly in natural resource exporting regions such as South and Central America,” the global trade group said.

Beyond the specific downward revisions, it said, “risks to the forecast remain predominantly on the downside, as global growth remains uneven and as geopolitical tensions and risks have risen,” while “international institutions have significantly revised their GDP forecasts after disappointing economic growth in the first half of the year,” said WTO Director-General Roberto Azevêdo.

When the last forecast was released in April 2014, conditions for stronger trade growth seemed to be falling into place after a two year slump that saw world merchandise trade grow just 2.2 percent on average during 2012–13, with leading indicators at the time pointing to an upturn in developed economies and Europe in particular.

“Although growth has strengthened somewhat in 2014, it has remained unsteady,” the WTO said with output in the US during the first quarter of this year falling by –2.1 percent, annualized rates and in the second quarter in Germany by –0.6 percent, “sapping global import demand.”

China’s GDP growth also slowed from 7.7 percent in 2013 to 6.1 percent in the first quarter of this year before rebounding in the second. The slow first quarter contributed to weak exports in trading partners.

“As a result of these and other factors, global trade stagnated in the first half of 2014, as the gradual recovery of import demand in developed countries was offset by declines in developing countries,” the WTO said.

Growth in trade and output “is expected to be somewhat stronger in the second half of 2014 as governments and central banks may provide policy support to boost growth, and as idiosyncratic factors such as harsh weather conditions in the US and a sales tax rise in Japan weighted on trade in the first half of this year begin to fade.”

However, the WTO said, “several risk factors on the horizon have the potential to produce worse economic outcomes.”

For example, it said, tensions between the European Union and the US on the one hand and the Russian Federation on the other over Ukraine have already resulted in trade sanctions on certain agricultural commodities, and the number of products affected could widen if the crisis persists.

At the same time, the continuing conflict in the Middle East “is also stoking uncertainty, and could lead to a spike in oil prices if the security of oil supplies is threatened.”

This is the moment, he said, “to remind ourselves that trade can play a positive role here. Cutting trade costs and broadening trade opportunities can be a key ingredient to reversing this trend,” said the WTO’s Azevêdo.

09/24/2014

Economist: India ‘Scuttles’ WTO Trade Talks

Los Angeles, CA – India “has apparently chosen to scuttle the ‘good ship’ WTO-Bali, the first truly multilateral agreement achieved since the founding of the WTO in 1995,” says Dr. Kent Jones, professor of economics at Babson College in Massachusetts.

“This is not the only ship in the WTO fleet, but it is the only one of its kind that has been successfully floated under its multilateral negotiating mandate. It is now taking on water, thereby endangering the entire multilateral trading system,” says Jones, a published author and an acknowledged expert on trade and policy issues who served as a senior economist for trade policy at the US State Department.

India, said Jones, “agreed last December to accept a deal in Bali that combined new rules on trade facilitation with a 2017 timeline on reconciling WTO agricultural rules with India’s food security policies.”

Trade facilitation provisions, he said, “would combine reductions in red tape and improvements in customs logistics with aid for developing countries’ trade infrastructure. The lion’s share of economic welfare gains, estimated at $1 trillion, would flow to developing countries, most of which are not amused at India’s decision to renege on the deal at the last minute.”

India’s system of food subsidies and stockpiling, Jones asserts, “currently runs afoul of WTO agricultural rules, but beyond that requires a wasteful domestic bureaucracy and market distortions that cannot help the poor in a sustainable manner. In addition, it cannot improve agricultural productivity, which is what is really needed for a lasting solution to its food security problem.”

Nonetheless, he adds, “the Bali deal set a moratorium on challenges to such policies until 2017, by which time negotiations on reforming the rules could take place. In the interim, alternatives and compromises could be considered that could allow India’s food security policies to coexist with WTO rules for global markets.”

The new government “feels that this timeline is not good enough, and hopes to hold the globally popular trade facilitation deal hostage in order to force a global agricultural deal immediately that will make its current policy legal under WTO rules. India professes to support trade facilitation, which only lays bare its cynical strategy to renege on its earlier commitments and blame everyone else for failing to re-negotiate,” Jones says.

“DESTRUCTIVE BRINKMANSHIP”

India’s “strategy of brinkmanship appears not only destructive to the WTO’s credibility as a negotiating forum, but to India’s global interests as well. Most major trading countries are so furious at India for breaking its word at Bali that many are planning to implement trade facilitation outside the regular WTO framework, through bilateral, regional or ‘pluritaleral’ agreements,” he says. “Global WTO agreements are the best way to expand trade, but countries have already shown that they will strike their own deals if WTO negotiations break down.”

According to Jones, “These initiatives outside the WTO would deprive India of any leverage in pursuing agricultural rules reform in its favor, while forfeiting its potential leadership role among developing and emerging economies. Brazil and China, in particular, reportedly criticized India’s veto.”

Without a deal forged in Bali, the “peace clause” preventing disputes against India’s agricultural policies would be suspended, which could lead to trade sanctions. India’s export industries would also suffer from abandoning the WTO negotiations. It stands to lose a lot from this misadventure,” he asserts.

“Indian trade diplomats insist that they have presented viable compromise measures that could lead to a new deal in September,” says Jones.

“Diplomats can always walk back from the brink, but it seems clear that there will be no fundamental renegotiation of what was agreed in Bali last December. By throwing rocks in its own harbors, India’s economy will remain tethered to a costly protectionist regime, while the rest of the world will seek other shores—and negotiating venues.”

08/07/2014