U.S. Trade Policy in Gridlock›
The Obama Administration is negotiating a number of extremely important trade agreements that will have enormous commercial and geopolitical significance if successful. The farthest along is the Trans Pacific Partnership (TPP) which aims to eliminate barriers to trade between 12 Asia-Pacific economies. Another major negotiation is for a free trade agreement between the U.S. and the European Union (TTIP), and there are also a slew of multilateral negotiations including one to eliminate tariffs on environmental goods, a second on information technology and a third to liberalize barriers to trade in services. Combined, these negotiations would open markets with nearly 1 billion consumers, covering nearly two-thirds of the global GDP and 65% of global trade; the services agreement would cover over 70% of global services trade. In light of these numbers, the importance of these negotiations cannot be overstated.MORE
Guest Blog : Air Transport Services Liberalization›By Lyman Stone // Tuesday, October 28, 2014
Millions of Americans every year will board airplanes in the United States and fly somewhere else, either within the country, or to a foreign location. As long as they fly somewhere within the United States, they are guaranteed to fly on an airline operated by an American company (though precisely what this means can be problematic). But, as anyone who rides Washington, DC’s metro is aware, flights to other countries (like the well-advertised Icelandair weekend getaways) are regularly operated by foreign air carriers. We buy and consume foreign-made clothes, food, and computers with regularity as well. Even the planes we fly on are sometimes foreign-made in Canada, Brazil, or the European Union. Yet the air carrier operating that Canadian, Brazilian, European, or American-made plane to fly us back home for Christmas has an American flag, every time.
When the United States signed the North American Free Trade Agreement, it included, in its list of “reservations,” or areas it does not have to liberalize, industry classifications SIC 4512, 4513, and 4522, which are three categories of air transport services. By so doing, it established that only air carriers that are “citizens of the United States” can operate within the country. Even ownership shares and senior management of airlines can be reserved for American citizens. NAFTA is typical of other international agreements in this regard, such that the United States (like most countries) has preserved near perfect closure of the domestic aviation market to foreign carriers and owners. While Irish-owned discount airline Ryanair is free to operate regional flights within Spain, France, or Italy, (the EU has extensively liberalized air transit services) it cannot within the United States. Such restrictions are known as “cabotage” rules.MORE
The Future of ISDS/TTIP will be Decided in Karlsruhe (Germany)›By Emre Karaca // Wednesday, October 22, 2014
After the Fukushima disaster, German Chancellor Angela Merkel and her party decided in a unilateral move to apply a three month moratorium on nuclear energy as of March 2011. Several months later, the German Parliament passed new amendments to the Atomic Energy Act, which required eight older plants to end their operations and the remaining commercial nuclear power plants to phase out operations by 2022.
Since 2011, the nuclear power industry brought several cases against the Federal Republic of Germany (FRG) in German courts, and a Swedish company, Vattenfall, additionally filed a case under the investor-state dispute settlement (ISDS) provisions pursuant to the Energy Charter Treaty. Given the manner in which the German government quickly made decisions in the wake of Fukushima, it is questionable whether the German government will be able to successfully utilize a public policy or national security exemption. The domestic cases are now being considered by the Federal Constitutional Court in Karlsruhe, and what happens there will have far reaching implications for the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations. Understanding the background of these cases is critical to understanding Germany’s strong opposition to including ISDS in the TTIP.MORE
Guest Blog: How to Resolve the Ukraine Crisis – Start with Trade›By Will Pomeranz, Deputy Director, Kenan Institute, Woodrow Wilson Center // Tuesday, October 14, 2014
The Ukraine crisis has come full circle. While images of revolution, war, annexation, and invasion remain fresh, it is important to remember that this upheaval actually began as a trade dispute. The EU and Ukraine wanted to increase trade via the association agreement, and Russia loudly objected, first with words and soon thereafter with guns. A shaky cease-fire is now in place, but any lasting solution to this crisis begins where it started, namely with trade.
The EU implicitly recognized this fact when it decided to only partially implement the association agreement. The EU opened its borders to Ukrainian goods but delayed the implementation of the free trade zone for EU products entering Ukraine until January 1, 2016. The EU granted this extension specifically to address Russia’s reservations about the agreement.
Russia already has voiced several objections, most notably dealing with Ukraine’s membership in two adjoining free trade zones. According to Russia, Ukraine theoretically could bring EU goods into Ukraine duty free and then re-export them to Russia, thereby circumventing Russian tariffs on European products. A second major concern raised by Russia involves Ukraine’s planned switch to EU standards under the association agreement. From Russia’s perspective, these enhanced standards will disadvantage its future exports to Ukraine.MORE
Guest Blog: Why Prompt Adoption and Implementation of the WTO’s Trade Facilitation Agreement Is Important›By Stephen Michael Creskoff // Tuesday, October 7, 2014
Economists and international business leaders agree that improvements in trade facilitation may be a greater benefit to expanded trade in goods and world GDP than further tariff reductions. Peterson Institute economists estimated last year that trade facilitation improvements could increase world GDP by almost $1 trillion annually. World Bank research estimates that for each day shipment time can be reduced, trade will increase from 1% to 7%. Improved trade facilitation is particularly important to the development of international supply chains and “just in time” delivery of goods.MORE
What is an “American Company”? And Does It Matter?›By Bill Krist // Thursday, October 2, 2014
Thirty years ago companies headquartered in the U.S. purchased most of their parts and materials and sold most of their products here in America. They were “American companies” clearly dependent on the U.S. government and society.
Today, however, many companies are global, even though their headquarters may still be in the U.S. They source raw materials from around the world, they do business in many countries, and their boards of directors include citizens of many nations. Often they employ more people overseas than they do in the U.S. and they often sell more in other countries than in the U.S.
These global companies contribute a great deal to America and indeed to the countries in which they do business. They are major employers and they support many small businesses that sell them parts and materials. Additionally, they often give a lot to their communities.
So does it matter that they are now global companies, rather than what we traditionally think of as an “American company”. With regard to trade policy and tax policy – and indeed sometimes even foreign policy – the answer is yes.MORE
TRANSATLANTIC CONCERNS REGARDING TTIP›By Emre Karaca // Thursday, September 25, 2014
Negotiations for the Trans-Atlantic Trade and Investment Partnership (TTIP) present a historic opportunity to promote commerce and economic growth in Europe and the United States; however, these negotiations have raised a number of major transatlantic concerns. Most notably, there have been fierce discussions over the alleged lack of transparency, issues of regulations and standards, as well as the provisions for investor-state dispute settlement (ISDS). Many stakeholders question the utility of TTIP and Free Trade Agreements (FTAs) in general. Nevertheless, if properly structured, TTIP could provide a succesful framework for 21st century trade rules.MORE
Guest Blog: TPP and TTIP Government Procurement Negotiations›By Jean Heilman Grier // Tuesday, September 16, 2014
The Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) are free trade agreements (FTAs) that will include government procurement chapters. The goal of the TPP procurement negotiations, as in other FTAs, is relatively straightforward. It is to open comparable procurement among the TPP partners and develop rules to ensure that the procurement is conducted in a fair, transparent and non-discriminatory manner.
By contrast, the TTIP negotiations are more complex. They build on a deep, but often contentious, procurement relationship that has developed over nearly 35 years. To be successful, the TTIP will need to set a higher standard of procurement commitments than prior agreements, as well as address issues that have been around since the negotiation of the WTO Government Procurement Agreement (GPA) during the Uruguay Round. Therefore, the procurement negotiations in the TPP and TTIP differ significantly.MORE
WTO Reform Misses the Point›By Bill Reinsch // Tuesday, September 9, 2014
The failure of the Doha Round and the hopefully temporary setback in implementing the Bali Trade Facilitation Agreement has once again raised questions about the World Trade Organization’s viability. Once we get past blaming India (correctly) for the most recent disaster, attention will inevitably turn to the question of whether the WTO is up to the task of reaching agreements on complex trade issues and, if not, how to “fix” it.
Focusing on institutional reform is an attractive road to go down politically. It allows governments to postpone, if not ignore, the real trade issues that divide them, and it allows them to place blame on the organization itself or, at worst, their predecessors who created it, rather than on themselves. Tempting though that is, however, it is ultimately self-defeating because it only postpones the day of reckoning when difficult trade issues will have to be dealt with. It is also a dead end.MORE
Ebola is a Humanitarian – and an Economic – Disaster›By Bill Krist // Thursday, September 4, 2014
Ebola has infected over 3,000 people in West Africa as of August 30, and the World Health Organization estimates that it could infect some 20,000 before it runs its course. There is no cure for this disease and more than half of the victims die a horrible death. The epicenter of the Ebola outbreak is the border between Liberia, Guinea and Sierra Leone, three countries that lack the capacity to deal with such a crisis.
Ebola was first identified in 1976 in the Congo, and West Africa had never experienced the disease prior to this. Previous outbreaks had been in rural areas in Central Africa where it was possible to isolate and contain the virus, but this outbreak is threatening to spread to major cities – Monrovia, Conakry and Freetown – where its impact could be catastrophic.
Sierra Leone and Liberia were just starting to recover from terrible civil wars that finally ended just over a decade ago, and Guinea held its first democratic election in 2010. The future was just beginning to look better for these three countries; in fact, this year Sierra Leone’s economy had been projected to grow at a14% rate, and the economies of Liberia and Guinea were also starting to improve. But now the economic future of these three countries is dark. In fact, the Ebola crisis may affect the economic outlook for all of Africa.MORE
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What We’re Tweeting
- U.S. Trade Policy in Gridlock
- Guest Blog : Air Transport Services Liberalization
- The Future of ISDS/TTIP will be Decided in Karlsruhe (Germany)
- Guest Blog: How to Resolve the Ukraine Crisis – Start with Trade
- Guest Blog: Why Prompt Adoption and Implementation of the WTO’s Trade Facilitation Agreement Is Important