[CTC] ICYMI: Three articles on IPEF

Mon Apr 18 06:52:09 PDT 2022

Three articles below…

Morning Trade: Labor raises red flag on some potential IPEF countries
Politico Pro
By Doug Palmer with help from Sarah Anne Aarup and Steven Overly
4/13/22 

QUICK FIX
— The AFL-CIO and other labor groups that sit on a Biden administration trade advisory panel group are raising concerns about some countries that could participate in the proposed Indo-Pacific Economic Framework. 
— The U.S. Chamber of Commerce would rather the U.S. join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. But the administration’s decision to pursue the IPEF is better than doing nothing and watching China increasingly dominate the region, the group said.

DRIVING THE DAY
LABOR ADVISORY COMMITTEE FLAGS COUNTRIES OF CONCERN: The administration’s Labor Advisory Committee on Trade Policy and Negotiations endorsed President Joe Biden’s decision not to join the CPTPP, saying that would lead to more offshoring of jobs.

The panel, which is chaired by United Steelworkers President Tom Conway, also backed the administration’s decision not to offer any tariff cuts <https://subscriber.politicopro.com/f/?id=00000180-1f82-da0f-a5c6-3fe66bd20000> as part of the IPEF negotiations. It argued the U.S. already has very low duties on imports and runs “higher and higher trade deficits” with many countries in the region.

Countries singled out: However, the LAC identified several countries where it said “severe labor and human rights challenges” raise concerns about their participation in the IPEF. Those include Malaysia, Thailand, the Philippines, Indonesia, Vietnam and South Korea.

“In short, not every country identified in the administration’s broad Indo-Pacific Strategy of the United States <https://www.whitehouse.gov/wp-content/uploads/2022/02/U.S.-Indo-Pacific-Strategy.pdf> may be an appropriate participant in IPEF,” the LAC said. That’s one sign of the challenge the administration will face balancing labor and commercial interests as it pursues the agreement, considering the highlighted countries are some of the biggest markets in the region.

The advisory panel called for strong and enforceable labor standards and corporate accountability measures “throughout each of the framework’s modules or pillars,” despite the U.S. decision not to offer preferential tariff cuts to entice countries to make those commitments.

It also said the rapid response labor mechanism contained in the U.S.-Mexico-Canada Agreement should be incorporated into the proposed IPEF.
Supply chains: The IPEF must not undermine the Biden administration’s efforts to use domestic preference programs to increase U.S. government purchases of American-made goods, the LAC said. It must also not become a framework to replace existing supply chains in China with new ones with other countries in the region, the panel said.

In another area, the Biden administration should also prioritize the enforcement of U.S. trade remedy laws against IPEF countries, since roughly one-sixth of existing U.S. anti-dumping and countervailing duty orders apply to “anticipated initial IPEF participants,” the panel said.

Environment: The LAC urged the Biden administration to require IPEF countries to join and enforce the Paris Agreement on Climate Change, as well as seven other older multilateral environmental agreements. That would be the first time the Paris Agreement has been incorporated into any U.S. trade pact.

U.S. CHAMBER SAYS REJOINING TPP WOULD BE A BETTER IDEA: The U.S. Chamber of Commerce, in comments filed with USTR and the Commerce Department, made no attempt to hide its preference for rejoining the 11-nation Trans-Pacific Partnership agreement, now known by the longer acronym CPTPP.

“The administration’s proposed alternative, the Indo-Pacific Economic Framework, lacks the precision, specificity, economic impact and enforceability of that clear first choice,” the Chamber said. “Indeed, even the name of the new initiative seems to suggest a reluctance to be forthright that trade is essential to U.S. relations with the Indo-Pacific and supports many jobs in the United States.”

Don’t dilly-dally: Those reservations aside, the Chamber urged the Biden administration to make the most of the initiative and to act quickly to bring a deal into force because the region is already “moving ahead without the United States.”

In addition to the CPTPP, there is also the Regional Comprehensive Economic Partnership between China and 14 other countries, and the Digital Economic Partnership Agreement between New Zealand, Chile and Singapore.

Unlike the U.S., China wants to join both the CPTPP and the DEPA “as it moves to the pole position in the competition for regional leadership,” the Chamber said.

Don’t get fancy: The business group urged U.S. negotiators not to try to “reinvent” U.S. trade policy in pursuing the administration’s “worker-focused” trade agenda and other goals like gender and racial equity, supply chain resiliency and addressing climate change.

Trying to “reshape the entire global economic agenda to reflect the political forces in Washington is cumbersome, fraught with uncertainty and far less likely to be successful,” the group said.

Go at variable speeds: The Biden administration has already said it plans the IPEF to include four different modules: one led by USTR on fair and resilient trade and three others led by the Commerce Department on supply chain resilience; infrastructure, clean energy and decarbonization; and tax and anti-corruption.

Given that configuration, U.S. negotiators should use a “staggered approach” to strike deals on different timetables, while remembering “it is important that the IPEF include high standards and enforceable commitments that create meaningful outcomes,” the Chamber said.

Talk to everyone: The administration should establish “a formalized but flexible mechanism” to get advice from the business community and other interested groups as it pursues the negotiations, the Chamber said.

IT’S NOT A RACE: By late Tuesday evening, the Commerce Department had posted about 60 comments <https://www.regulations.gov/document/ITA-2022-0001-0001> it received on the IPEF, while USTR had posted none. <https://www.regulations.gov/document/USTR-2022-0002-0001> The deadline for groups to file their submissions was Monday.

NO BIG ANNOUNCEMENT FROM U.S.-INDIA MEETINGS: U.S. Trade Representative Katherine Tai and Indian Minister of External Affairs Subrahmanyam Jaishankar had the opportunity after their meeting on Tuesday to issue a joint statement saying that India plans to be part of the IPEF.

Instead, there was only a USTR readout <https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/april/readout-ambassador-katherine-tais-meeting-indian-minister-external-affairs-subrahmanyam-jaishankar> saying they exchanged views on the potential for that initiative to strengthen “regional economic cooperation in critical areas such as supply chain resilience.” In other words, only one of the four IPEF pillars was even mentioned.

That followed a virtual meeting between Biden and Indian Prime Minister Narendra Modi on Monday, where IPEF was also discussed.

In another sign that India might be a minor IPEF member, at best, USTR said Tai and Jaishankar “shared the perspective that the U.S.-India Trade Policy Forum … holds substantial promise as a mechanism for expanding bilateral trade and reducing barriers, including with respect to trade in agriculture.”

A Commerce Department readout <https://www.commerce.gov/news/press-releases/2022/04/readout-secretary-raimondos-meeting-indian-minister-external-affairs-dr> of Secretary Gina Raimondo’s meeting with Jaishankar also had no news on the IPEF front. But it did refer to the U.S.-India CEO Forum as “an important mechanism for the United States and India to deepen commercial ties and reduce barriers to trade.”

OKONJO-IWEALA: WTO MUST ‘KEEP GOING’ DESPITE THE WAR: The geopolitical effects <https://pro.politico.eu/news/148469> of the war in Ukraine are challenging the World Trade Organization, WTO boss Ngozi Okonjo-Iweala told reporters on Tuesday, but the organization is finding ways to keep up the work ahead of its 12th Ministerial Conference, she said.

Not paralyzed: “Proceedings at the WTO have not been immune to challenges resulting from this conflict. But it is simply inaccurate to say — as some have — that the WTO has been paralyzed since the outbreak of the war,” Okonjo-Iweala said. “We have developed workarounds that have enabled us to conduct business even with diplomatic tensions running high.”

Negotiation gymnastics: “True, some smaller meetings have slowed down or have been canceled at the beginning,” the director-general said. But now, Okonjo-Iweala says that the WTO is using a new system “in all our negotiations,” whereby the Russian delegates speak bilaterally with the negotiations’ chairs and no longer attend the small-group talks.

No-pomp MC12: The director-general emphasized that the 12th Ministerial Conference scheduled for June will be “a business-like, streamlined affair with little pomp and circumstance.” When asked by Morning Trade whether she saw the possibility for a ministerial declaration amongst all members, Okonjo-Iweala remained evasive, saying that “various options are being explored” and “we’re actively meeting and working on that.”

The war ate my MC12 homework: Okonjo-Iweala said that “it’s a highly uncertain environment, so I can’t promise that … we will be able to deliver all three [negotiations],” referring to fisheries subsidies, agriculture and the IP talks. She added that the idea is to arrive as close as possible to convergence ahead of MC12.

On WTO reform, “what we are hoping to do is to perhaps agree on a process to move forward on this so that by MC13, we would have a series of … work programs to be done.”

Begin forwarded message:

From: Melanie Foley <mfoley at citizen.org <mailto:mfoley at citizen.org>>
Subject: Two articles on IPEF + Liz Warren, Bob Casey comments on IPEF
Date: April 12, 2022 at 11:49:29 AM EDT

Two articles on IPEF below. 

Senators Elizabeth Warren and Bob Casey sent a hopeful letter to USTR Tai and a critical letter to Commerce Secretary Raimondo on IPEF. These letters (attached) reflect the division within the administration on goals for IPEF.

Politico 
CSIS REPORT: ADMINISTRATION ONLY WANTS A FEW ASEAN COUNTRIES IN IPEF: The Biden administration could invite less than half of the ten countries in the Association of Southeast Asian Nations to join talks to form the proposed Indo-Pacific Economic Framework, the Center for Strategic and International Studies said in a new report that is based on interviews with officials in the region <https://go.politicoemail.com/?qs=5b1db4563aa7152536fb7e3ae7d473301341befa62723e094fa7d38721997923e10fa4145d0adcf8d2c6f1ce887769d075cb194a96e14b5d>.

“All recognized that political and human rights concerns rule out the United States inviting Myanmar under current conditions,” CSIS said. ASEAN officials also “seemed resigned to the likelihood that the administration would invite, at most, only the six largest ASEAN economies. Privately, administration officials initially signaled a focus on just four of these — Indonesia, Vietnam, Malaysia, and Singapore — again with no clear explanation as to why Thailand and the Philippines were less worthy of inclusion.”

USTR and Commerce have not identified any participating countries yet. CSIS noted it is “widely expected” Japan, South Korea, Australia, New Zealand and Singapore will be included.

The proposed framework will not take the form of a traditional free trade deal. The U.S. will offer no tariff cuts as part of the arrangement, and countries will be able to pick and choose which elements of the framework to join. That has raised questions about whether it will actually compel countries to reform practices around labor and the environment, or alter their digital laws, to come into compliance with the arrangement.

The administration is expected to announce formal negotiations in the coming weeks and has pledged to do so with a broad range of countries at the table.

WHITE HOUSE MUM ON INDIA’S INCLUSION IN IPEF: Biden and Indian Prime Minister Narendra Modi touched on the proposed Indo-Pacific Economic Framework during their hour-long conversation on Monday. [info on this below] But what exactly the pair discussed and whether India is on board with the arrangement remains a mystery. The White House declined to elaborate.

CSIS, in its report, said India “is studying the benefits of participation but appears to have a preference for bilateral economic forums with the United States, as well as for smaller plurilateral arrangements, such as the Quadrilateral Security Dialogue.”

The think tank also noted other potential IPEF members might have reservations about including India, after it dragged out negotiations on the Regional Comprehensive Economic Partnership for eight years and then decided not to join the final agreement. Still, India’s “exclusion from the IPEF would raise questions about how ‘Indo’ the Indo-Pacific Economic Framework truly is,” CSIS said.

WARREN, CASEY PRESS WORKER ISSUES IN IPEF: In comments shared exclusively with Morning Trade, Warren <https://go.politicoemail.com/?qs=5b1db4563aa7152540a7c6ca7a605ae5a451524aa7c2d166503ae29bfe6a4eba0c3b9aa65712f8d5920e43f6c0dcb3c322f7a98993c3551b> and Sen. Bob Casey <https://go.politicoemail.com/?qs=5b1db4563aa715252f95f08bdeafe9bf4f8d0bfb7dbdb3f7f8cc9017c554d4e6b0beb426f65f6df5d50c1bba5275b3927e695e6ddd0409d5> (D-Pa.) praised Katherine Tai’s negotiations on IPEF’s trade pillar, <https://go.politicoemail.com/?qs=5b1db4563aa71525e51e4a5c1d9f2cbddfcbf4d758c24601efd985cc809d3fc1dce629d06474f43fc8ca0a8acb6269b8f7a84dcddcf0471c> while offering some sharp criticism for Raimondo’s approach <https://go.politicoemail.com/?qs=5b1db4563aa71525d0302f39993b0ffc45ef2d0832c4523b0f2d9d3e43a31667b5bc3a606a4b0631b8bd16d50d84dbd4f0b06ddb079823a6>.

“We are particularly concerned that your agency’s request for comments on IPEF failed to include any reference to labor standards or U.S. domestic manufacturing,” they wrote to Raimondo, saying they were concerned that her approach to IPEF could “repeat the mistakes of previous trade policy” like the Trans-Pacific Partnership, which they maligned for prioritizing corporate profits.

Commerce leadership questioned: The duo also questioned Raimondo’s leadership of negotiations on tax and infrastructure issues in their letter to the Commerce Secretary, reiterating Warren’s criticism from a Senate finance hearing late last month.

Tax negotiations “should be the sole purview of the Treasury Department,” they wrote, adding that “Department of Energy and Department of Transportation expertise also seem crucial to negotiations on the clean energy, decarbonization, and infrastructure pillar.”

Monday was the deadline for comments on the IPEF process, with submissions from corporate and labor groups set to be posted by USTR and Commerce this week.

Washington Trade Daily

Biden, Modi Talk IPEF, Russia 

President Biden and Indian Prime Minister Modi discussed the Indo-Pacific Economic Framework in a virtual, hour-long “very candid conversation” yesterday, according to a senior Administration official.

“The leaders were able to talk about joint efforts on the global effort to end the COVID-19 pandemic. They talked about climate. They talked about strengthening the global economy,” the official told reporters following the meeting. “And they talked about upholding a free and open Indo-Pacific, including the development of the Indo-Pacific Economic Framework and infrastructure. “

But the bulk of the conversation revolved around Russia’s invasion of Ukraine and the IndiaRussia relationship. President Biden urged his Indian counterpart not to increase purchases of Russian oil and gas in the wake of bans on Russian energy imports by the United States and other countries. 

But the senior official downplayed the importance of India’s energy purchases from Russia. “We know that not all countries will be able to do what we've done,” the official said.

“We know that India is not a major consumer of Russian oil. Its current imports are about 1 to 2 percent of its total energy imports.” India is not violating any sanctions, according to the official.

“That said, we don’t think India should accelerate or increase imports of Russian energy. And the US is ready to support India, remain in a conversation with India about its diversification of imports.”

India essentially has taken a neutral stance so far on the Russia-Ukraine conflict. But Mr. Modi described the situation in Ukraine as “very worrying,” particularly the killings of civilians.

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