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USTR Annual Report Sets Ambitious Trade Agenda; Responds to Criticisms

The Office of the United States Trade Representative (USTR) released its annual trade report detailing an ambitious agenda for 2014. Besides the conclusion of major outstanding trade negotiations, it intends to focus on boosting domestic employment, solidifying new strategic partnerships, advancing the cause of human rights and increasing the transparency of its operations.

As should be expected, the report gives a central place to the settlement the Trans-Pacific Partnership (TPP), an agreement which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam, comprising approximately 40 percent of the global economy.The TPP has been both a tinderbox of controversy and a lighting rod of enthusiastic hope ever since negotiations begun. And the opportunities, as well as risks, are unusually high. The eleven countries involved in the negotiations sent $15.1 billion worth of apparel and textile imports to the U.S. last year.

The TPP has withered under recent disputes, particularly regarding agriculture, between the U.S. and Japan. The U.S. has insisted that Japan move toward a tariff-free regime under the TPP, but Japan has resisted fully liberalizing its agricultural sector, nominating five product areas as “sacred,” which means effectively taken off the table for negotiation. Problematically, beef and rice are among the areas the U.S. has been equally insistent are, at the very least, open to the possibility of future revision.

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According to the USTR report just released, the U.S. has made “substantial” progress moving TPP discussions towards an ultimate resolution. “In pursuit of job-supporting trade opportunities, the Administration will work to conclude negotiations of the TPP in 2014, producing a high-standard, comprehensive, 21st-century agreement that provides new export opportunities for US industry and agriculture, opens markets for US services and investment, protects worker rights, and enhances environmental protection.”

Also, the report cited the “significant” progress the U.S. accomplished in 2013, ushering the Transatlantic Trade and Investment Partnership (T-TIP) towards a final agreement. T-TIP negotiations officially began in July 2013. It has largely been negotiated quietly, avoiding the same journalistic scrutiny lavished upon the TPP or Pacific Alliance. Nevertheless, the T-TIP negotiations have been gaining ground and, if successfully settled, could have wide-ranging consequences, allowing the U.S. and the E.U. to set common rules between them on emerging trade issues like regulatory standards and regional cooperation.

The primary objective for the fourth round of T-TIP negotiations is to review the progress made in the first three rounds and to prepare each nation’s chief negotiators’ with revised agendas. According to a study issued by the Center for Economic Policy Research, the E.U. could capture an additional $161 billion a year from a fully implemented free trade agreement, mostly on the strength of an anticipated 28 percent rise in exports to the U.S. More than 80 percent of the overall gain for both sides will result from deep cost-cutting, particularly with the removal of regulatory trade barriers, and the liberalization of trade in services and public procurement.

The USTR report indicated the overarching significance of the T-TIP discussions to American business. “Negotiators will seek ambitious market openings in goods, services, and investment. A successful T-TIP agreement could generate new business and employment by expanding trade and investment opportunities, and pioneering new trade rules and disciplines.”

Much of the report seemed specifically designed to respond to a steady drumbeat of criticism the USTR has weathered in recent months. For example, it emphasized the boon all the new impending trade agreements would ultimately give to job creation, countering those who argue they will disadvantage U.S. business, squandering competitiveness. “International trade supports millions of jobs here in the United States, sustaining American families and businesses alike. Trade links American workers and their high-quality “Made in America” products with customers around the world. Data from 2013 showed that every $1 billion in U.S. goods exports supported an estimated 5,400 American jobs, and every $1 billion of U.S. services exports supported nearly 5,900 U.S. jobs. Many export-related jobs are in some of the United States’ fastest-growing and most globally competitive sectors, from manufacturing to agriculture to services.”

Also, there have been many activists who have pointedly criticized the U.S. government for brokering trade deals with countries that have questionable records on human rights like Russia, Vietnam and China. The report, however, makes the promotion of human rights a principal objective. “In 2014, the Obama Administration will continue to monitor and enforce WTO obligations, along with those in our bilateral, plurilateral, and regional trade agreements. As we continue to defend and enforce U.S. trade rights, our goal remains to ensure that Americans can compete successfully in world markets where intellectual property is protected, labor and environmental standards are enforced, agricultural and industrial regulations are based on science, and transparent rules and regulations are applied without discrimination.”

The report specifically cites the U.S.’s intent to pressure Russia to take compliance on commercial issues more seriously but neglects to mention the issue of human rights in this context, or the recent political crisis involving the Ukraine. “In 2014, the United States will seek to improve the United States-Russian trade and investment relationship by urging Russia to implement fully its WTO commitments, while also continuing our bilateral dialogue to address stakeholders’ other important concerns. Last year, we inaugurated two annual reports on Russia in the WTO — one on WTO Enforcement and one on WTO Implementation. We believe that Russia has taken many important steps to implement the WTO Agreement in most areas, but at the same time there are several areas where more progress is needed. We will monitor Russia’s implementation of its WTO obligations in 2014 and take any actions necessary to ensure that U.S. exports are treated consistently with those commitments. We will also seek to make progress on systemic issues aimed at bolstering bilateral trade and investment.”

The Obama administration has come under fire for a lack of transparency regarding the negotiation of major trade agreements, especially the TPP. The USTR report responds to these grievances by insisting upon the cultivation of a more inclusive dialogue regarding trade discussions. “In 2014, while Congress considers new legislation to assert its role in trade policy through a renewal of trade promotion authority, the Obama Administration will continue to consult with Congress and seek input from a wide range of advisors, stakeholders, and the public at large to develop and sustain U.S. trade policies that support American jobs and strengthen the global trading system. This dialogue is critical at every stage of the negotiating process, and for our efforts to ensure implementation and robust enforcement of trade rules. Throughout these processes, we seek to craft trade policy solutions that are balanced and responsive to a diverse array of American voices.”

The renewal of President Obama’s trade promotion authority (TPA), or “fast-tracking” authority, was also emphasized in the report, an indiction of how contentious that issue has become among U.S. legislators. “Negotiators will seek ambitious market openings in goods, services, and investment. A successful T-TIP agreement could generate new business and employment by expanding trade and investment opportunities, and pioneering new trade rules and disciplines.”

Some believe the TPP could potentially be undermined by the issue of trade promotion authority, or “fast-tracking,” which has only become more hotly disputed with time. Many experts attribute the stalled TPP talks, originally expected to conclude in December, to anxieties among the sovereign participants that, without trade promotion authority, Obama would be unable to make good on whatever promises he delivered. It has been widely reported that the most recent hurdle to an imminent settlement to negotiations is such an anxiety on the part of Japan, whose role in the talks is crucial to an eventual compromise. Japanese authorities worry that Obama no longer has the power to confidently promise congressional approval of any deal he might accept. This concern has only been exacerbated by intense disagreement among U.S. legislators over Obama’s executive trade promotion powers, or his power to expedite trade-related treaties through the process of congressional review.

Despite candidly acknowledging many challenges to its agenda, as well as many hopeful aspirations, the USTR report ended on an optimistic note. “The Obama Administration is pursuing an ambitious trade policy that supports jobs, promotes growth and strengthens the middle class. We are opening markets and raising standards, consistent with our values. Thanks to these efforts, U.S. producers and exporters are selling more goods and services around the world than ever before, and we are steadily raising environmental and labor standards in our partner countries. In 2014, we look forward to engaging with our global trading partners, with Congress, and with the American public to ensure that trade continues to move the country forward toward President Obama’s goal of an economy that will sustain and grow a thriving American middle class in the 21st century.”