[CTC] Couple NAFTA articles...

[Arthur Stamoulis]

Two articles below...

INSIDE US TRADE
Administration’s NAFTA objectives vague on investment, currency, rules of origin

July 17, 2017 
The Trump administration's summary of its negotiating objectives <https://insidetrade.com/node/159566> for a redo of the North American Free Trade Agreement, unveiled Monday, leads with the goal of reducing the U.S. trade deficit -- without explaining how -- and includes broad language on controversial topics like the investor-state dispute settlement mechanism, currency and rules of origin.

While providing clarity on the goal of eliminating the Chapter 19 dispute settlement mechanism -- which the U.S. lumber industry in particular has called for, and which U.S. Trade Representative Robert Lighthizer committed to <https://insidetrade.com/node/158765> in a May briefing with the Senate Finance Committee -- the document’s language on investment, as one source described it, is “totally unclear.”

USTR said it seeks to “establish rules that reduce or eliminate barriers to U.S. investment in all sectors in the NAFTA countries.” The administration also said it wants to “secure for U.S. investors in the NAFTA countries important rights consistent with U.S. legal principles and practice, while ensuring that NAFTA country investors in the United States are not accorded greater substantive rights than domestic investors,” which is language consistent with that in the 2015 Trade Promotion Authority law.

The investment section, however, does not outline objectives on the controversial investor-state dispute settlement mechanism and does not hint at whether the Trump administration plans to incorporate the provision in a new NAFTA. Many Democrats on Capitol Hill and union leaders have bashed existing free trade agreements for including the mechanism and have urged Trump’s team to get rid of it.

One source told Inside U.S. Trade the administration is being “extremely cautious,” choosing to be vague on the more controversial issues. Several sources also osaid it is likely that Trump’s trade team is pushing for vague language because on some issues it has not yet developed policies.

“In a lot of these areas they haven’t decided what to do,” one source said. “So they’re using placeholder language until they have decided what they’re going to do.”

USTR, pursuant to TPA, was required to publish the objectives on its website “at least 30 calendar days before initiating negotiations.” Sources said the administration is seeking to begin talks with Canada and Mexico on Aug. 16.

Section 105(a)(1)(D) of TPA requires that USTR issues, after consulting with the Senate Finance and House Ways & Means committees, “a detailed and comprehensive summary of the specific objectives with respect to the negotiations, and a description of how the agreement, if successfully concluded, will further those objectives and benefit the United States.”

TPA also requires USTR to “regularly update” the objectives after initial publication.

On currency, the Trump administration said it is seeking, “through an appropriate mechanism,” to ensure that NAFTA countries “avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”

Democrats on Capitol Hill and union leaders have long lamented the lack of enforceable currency disciplines in free trade agreements and have insisted that a new NAFTA deal and any other future trade agreements include such a provision. President Trump, once vocal about the issue of currency manipulation, has since adopted a softer stance on countries he claimed were manipulating their currencies at the expense of the United States.

Lighthizer told lawmakers in May that he was seeking “a model statute on currency <https://insidetrade.com/node/158776>” but would not elaborate on what such a provision entailed.

The USTR was pressed on the issue by Senate Finance Committee ranking member Ron Wyden (D-OR) in questions for the record, obtained by Inside U.S. Trade, following Lighthizer's testimony before the panel.

“As you know, TPA includes principal negotiating objectives with respect to unfair currency practices,” Lighthizer said in response to Wyden. “We are consulting with the Treasury Department, which is responsible for currency issues, regarding efforts to address exchange rates through our bilateral and international engagements and in the context of our trade agreements.”

Sources said USTR, which is reportedly pushing for a currency provision in NAFTA, and Treasury, which historically has opposed including currency disciplines in free trade agreements, have been debating the issue in recent weeks.

The vague language in Monday’s summary, one source said, was reflective of that disagreement within the administration.

On rules of origin, which many observers have said will be the subject of one of the biggest debates over how to modernize the 23-year-old deal, one source said the administration was “trying to maintain flexibility to figure out details later.”

Noting the lack of detail in the administration’s objectives -- and the time constraints for a NAFTA redo given the Mexican presidential elections next year -- another source said the document reflects that “the entire goal is to start this process.”

“Timing is driving the administration while substance is driving the Hill,” the source said.

USTR, in its summary, says it is seeking to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.”

The objectives also seek to ensure that rules of origin “incentivize the sourcing of goods and materials from the United States and North America” and “establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles.”

In line with the Trump administration’s focus on bilateral trade deficits and their reduction, USTR begins its summary by saying it wants to “improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries,” but does not explain how it would seek to do so.

USTR said in a press release that the U.S., “for the first time <https://insidetrade.com/node/159568>,” had “included deficit reduction as a specific objective for the NAFTA negotiations.”

With respect to trade in industrial goods, the administration wants to “maintain existing duty-free access to NAFTA country markets for U.S. textile and apparel products” and “improve competitive opportunities for exports of U.S. textile and apparel products while taking into account U.S. import sensitivities,” USTR said.

The focus on “import sensitivities,” one source said, could be a hint at an attempt at greater protection for apparel imports.

USTR, in its introduction, said the new NAFTA “will be modernized to reflect 21st century standards and will reflect a fairer deal, addressing America’s persistent trade imbalances in North America.” A successful renegotiation, the document added, will involve “maintaining and improving market access for American agriculture, manufacturing, and services.”

The modernized agreement, according to USTR, will also “ensure that the United States obtains more open, equitable, secure, and reciprocal market access, and that our trade agreement with our two largest export markets is effectively implemented and enforced.”

USTR, in line with TPA, also committed to update its objectives as work on NAFTA advances and to continue consulting with Congress.

Although the U.S. to date has not officially designated its lead NAFTA negotiator, sources told Inside U.S. Trade that Assistant USTR for the Western Hemisphere John Melle will be responsible for the file. Melle has been with the agency since 1988 and has covered Mexico and Canada issues for decades. -- Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)


Democrats pan Trump’s NAFTA objectives, Republicans praise them

July 17, 2017 
Democrat and Republicans leading the trade committees in Congress are split on the Trump administration’s objectives for renegotiating NAFTA, with Democrats blasting them and Republicans embracing the document as a framework for successful negotiations.

House Ways & Means Committee Chairman Kevin Brady (R-TX) described the 18-page document, released Monday, as “detailed,” while the ranking member of the committee, Richard Neal (D-MA), and the ranking member of the Senate Finance Committee, Ron Wyden (D-OR), slammed the objectives for being too vague.

Republicans and Democrats are also divided on the ambition behind the objectives. Republicans claim the Office of the U.S. Trade Representative’s goals will build and improve upon previously negotiated agreements, including the Trans-Pacific Partnership. Democrats argue the objectives are similar to what was negotiated in TPP, which they -- and President Trump -- largely rejected.

Senate Finance Committee Chairman Orrin Hatch (R-UT) said the objectives “will be further developed as the negotiations proceed” and “are an important part of the public discussion about the launch of the upcoming trade talks among our three nations.”

Hatch added that the objectives show the administration is committed to following the rules laid out in the Trade Promotion Authority law and intends to closely work with Congress on NAFTA going forward.

While he was generally upbeat on the objectives, Hatch did have some suggestions for improvement.

If the U.S. is to “truly modernize NAFTA and establish the most advantageous rules for selling American goods and services around the globe,” he said, “future negotiating objectives must include stronger protections for intellectual property rights, upgraded rules and enforcement procedures for American exporters and investors, and improved regulatory practices that treat American goods and services fairly.”

Brady said “these objectives set an ambitious standard for improving NAFTA and make clear that the United States is seeking strong, enforceable rules that go beyond any agreement ever negotiated."

“For example, the Administration intends to go well beyond TPP in imposing disciplines on state-owned enterprises that distort trade,” he added. “Setting such high standards allows us to use an improved NAFTA as a model for future trade agreements, which means that the United States would be setting global rules -- not our competitors.”

Chairman of the Ways & Means trade subcommittee Dave Reichert (R-WA) added that objectives on electronic commerce, data localization, cross-border data flows and customs will address challenges companies face in the digital economy.

“The need for modern trade rules is clear -- particularly in light of our withdrawal from TPP earlier this year,” Reichert said. “We must continue to lead in setting the high standards needed for today’s economy. These objectives will do just that.”

But Neal, along with Ron Wyden (D-OR) and Ranking Ways & Means trade subcommittee member Bill Pascrell (D-NJ), slammed the Trump administration for allegedly using TPP as a template for NAFTA renegotiation objectives, failing to move to a new trade paradigm, and being too vague about its objectives.

Wyden said the published objectives were, overall, unacceptable. “Before sitting down with Canada and Mexico, I expect the Administration to update this summary, shine some daylight on its negotiations, and set the bar high for American workers, businesses and farmers, as it promised it would,” he said.

Wyden added that the negotiation objectives are “hopelessly vague both in explaining how the Administration’s specific objectives will benefit the United States on key topics ranging from intellectual property rights and investment, to currency manipulation and government procurement.”

Wyden also took issue with the administration's objectives in the area of digital trade, one he has consistently labeled a top priority <https://insidetrade.com/node/159358>.

“Even on digital trade, which this administration has touted as a prime area for improvement, the summary lacks the level of ambition I would expect given the promises this president has made,” he said.

Neal said “the summary of objectives published today raises more questions than it answers."

“In certain areas, there continues to be a complete lack of clarity or specificity, suggesting the Administration may not even know what it wants in a new NAFTA,” he added.

“The gravest concern,” Neal said, “is that the Administration is seeking to modernize NAFTA without any plan for how it will create jobs, raise living standards, and help hardworking, middle-class families in America. I urge the Administration to figure out its game plan quickly and actually work closely with Congress to make sure that there are good answers for these questions.”

Wyden and his colleagues also called out the Trump administration for crafting objectives similar to TPP outcomes after blasting and withdrawing from that agreement.

Wyden said “it is surprising that in key areas the Trump Administration is seeking outcomes that were achieved in the TPP, which the President said was a bad agreement.”

Wyden slammed the administration for publishing objectives suggesting that in certain areas, like the environment, “the Administration is planning to come to the table with watered-down versions of TPP proposals.”

Neal, Wyden and Pascrell criticized the administration for not seeking a complete overhaul of U.S. trade policy.Pascrell noted that he and Trump were in agreement on the need to renegotiate NAFTA, “but today’s negotiating objectives reads like President Trump is only seeking to bevel the edges of a trade pact in need of an overhaul,” he said.

“In fact, it looks as if he wants to take the contents of the TPP, a deal he rejected in his first week in office, and call it NAFTA,” he continued.

Neal said that in those areas in which the administration’s objectives are not vague, they “reveal an approach to trade negotiations that looks like the same, conventional approach taken in previous trade agreements -- suggesting that the ‘new’ NAFTA might not be new at all.” -- Jack Caporal(jcaporal at iwpnews.com <mailto:jcaporal at iwpnews.com>)
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20170718/552a3c90/attachment.htm>