From USA-ITA OFF THE CUFF for August 10, 2012
On August 6th, USA-ITA attended a briefing at the Woodrow Wilson Center for International Trade in Washington titled, “The Trans-Pacific Partnership & the Future of International Trade.” The event brought together leaders in international trade and key players in the TPP negotiations, including Deputy U.S. Trade Representative Ambassador Demetrios Marantis, who gave a keynote and addressed a wide range of issues including services, transparency, and especially, China.
Ambassador Marantis kicked off the event, which set a Wilson Center record for RSVPs, by reiterating the Administration’s goals for the TPP, including making it a high-standard, comprehensive, 21st-century, regionally diverse agreement that would be a “living” and innovative agreement. There has been a remarkable amount of progress since negotiations began in November 2009, he said, but noted that “there’s a lot more work that needs to be done.”
Though the conversation wasn’t especially new to informed followers of the TPP negotiations, Marantis talked about the Administration’s priorities as they move toward the 14th round of negotiations. In his keynote, he focused primarily on the idea that the TPP should be a truly comprehensive and 21st-century agreement that can remain relevant as we advance technologically, especially in the realm of services. In particular, the Administration wants the agreement to include not only current services, but also “services of the future.” For example, existing trade agreements like NAFTA don’t account for services such as social networking or cloud computing, so the Administration wants services to be included on a “negative-list basis,” meaning that partners would need to specifically exclude particular services in order for them not to be covered under TPP. He also touched on the Administration’s desire to address non-tariff barriers and regulatory coherence, as well as include new, innovative environmental protections, and strong intellectual property protections. He conceded that the IP work has been controversial, especially with regards to pharmaceuticals.
Of note to importers, Ambassador Marantis also talked about the importance of TPP to jobs in the United States. He explained that a regionally diverse agreement would allow U.S. businesses to stay here and participate in the regional supply chain in the TPP agreement, rather than move their operations offshore. While we are happy that Ambassador Marantis is talking about supply chains, we of course wish he had also talked about the importance of the high-value jobs at U.S. apparel brands and retailers.
The majority of the audience questions, both to Marantis and the other panelists throughout the afternoon, revolved around China. Ambassador Marantis strongly noted that the TPP is meant to be a platform for regional integration and is open to any country that can meet the high standard. Countries are not “invited” to join the negotiations, but must be serious about joining and demonstrate readiness to comply in order for the current partners to consider their involvement. With regards to China, then, he said this agreement is definitely not directed at China, as far as the Administration is concerned. He said the same about Taiwan, as well as other countries in the Pacific region—the potential partners must prove that they are reliable trading partners and ready to take on the high standards.
Following Ambassador Marantis was a panel titled, “New & Future Participants,” with discussions about Canada, Mexico, Japan, and of course, China. Laura Dawson, President of Dawson Strategic and previously a senior advisor on U.S.-Canada economic affairs at the U.S. Embassy in Ottawa, spoke on behalf of Canada, who was recently invited to join the negotiations. She noted that the primary reason why Canada wanted to join was to gain a foothold in the Asia Pacific, as they don’t currently have any trade agreements there, and to be part of a new model for trade agreements. She also noted that Canada has “used up” everything it can with NAFTA and is looking to the TPP as a beachhead for new investments. In addition, she noted that Canada has concerns about market access—specifically about the United States negotiating separate market access agreements with each partner—and hopes that this will not be the case.
Next, Luz Maria De La Mora Sanchez spoke about Mexico’s perspective, as Mexico also recently was invited to join the negotiations. She explained why Mexico was a latecomer—primarily, the government lost perspective on trade due to the private sector’s protectionism—but now wants to guarantee it’s U.S. market share and like Canada, build stronger bridges with Asia. Of note, she said that Mexican industry is on the defensive about textiles and apparel with Malaysia and Vietnam.
Regarding Japan and China, the message was “don’t hold your breath” on them joining soon, although the experts thought that China might be more likely to join than Japan. Edward Lincoln, a professor at George Washington University, said that while Japan has embraced the notion of Free Trade Agreements, their existing agreements are not high standard and don’t even discuss services, so he does not think Japan is ready. There is also strong opposition in Japan to the TPP, and there could be a change in government, too. Speaking on China, Jeff Schott, a Senior Fellow at the Peterson Institute for International Economics, noted that because all the participants have significant ties with China, China is involved “one way or another.” He added that we should not discount the possibility of China joining in the medium term, especially since China’s talks with Korea could push them to a higher standard on trade.
The second panel, titled “Key U.S. Interests,” featured key stakeholders, including the Emergency Committee for American Trade (ECAT), the AFL-CIO, Oxfam America, and the agricultural industry. Of note, ECAT Vice President Linda Menghetti reiterated the need for a comprehensive, regional, 21st-century agreement. She emphasized that the TPP Rules of Origin must actually allow for trade in major products (like apparel) in order for the agreement to work and should seek to simplify trade and make it more cost effective. The speakers from the AFL-CIO and Oxfam both called for more transparency in the negotiations.
Overall, with so many attendees and a presentation that ran nearly an hour over due to enthusiastic questions, it’s clear that the TPP is on the minds of many—and while there’s a lot of work left to do, we all look forward to it getting done.