[CTC] Negotiations on IPEF, APEP and other new initiatives set to intensify in 2023

Tue Jan 3 06:36:39 PST 2023

Negotiations on IPEF, APEP and other new initiatives set to intensify in 2023
Inside US Trade, 12/30/22

The third year of the Biden administration promises to be an eventful one for U.S. trade talks the world over, with the Indo-Pacific region atop a lengthening list of targets for the nontraditional economic arrangements at the center of its approach.

In its Asia-Pacific Economic Cooperation host year, the U.S. plans a slate of negotiating sessions for the Indo-Pacific Economic Framework for Prosperity, beginning with a three-pillar round (sans trade) to be hosted by India in early February. An APEC trade ministerial in May promises to be a key moment for the trade pillar in advance of a leaders summit in November.

U.S. Trade Representative Katherine Tai is in a hurry for IPEF to produce results.

“I think this is meant to be an economic framework to address the challenges that we are facing now,” she said in November <https://insidetrade.com/node/175461>. “And so part of the design of this [is] not being a traditional free trade agreement negotiation -- those types of negotiations typically go on for several years. By the time you’ve finished them, get them across the finish line, implement them, you’ve discovered that they are designed for an economy that has already been progressed beyond.”

“The key to our vision across the four pillars is to be able to deliver timely results and that is what 2023 will be all about,” she said, calling the administration “very excited” heading into 2023.

IPEF
At the first in-person IPEF negotiations in Australia, the 14 partner countries in December reviewed U.S.-drafted texts for the trade pillar that covered areas including trade facilitation, good regulatory practices for goods and services, and agriculture. They also agreed to a slate of meetings in 2023 that haven’t been disclosed beyond the Feb. 8-11 India round, which won’t cover trade.

Tai this month said three more prominent and time-consuming areas would be up for discussion at the next round of IPEF trade talks: the environment, labor and digital trade <https://insidetrade.com/node/175756>.
Each of those areas, she said, “will take us more time, which is why we're doing it in the second tranche.”

One other issue to watch in 2023: Whether IPEF will be expanded, as U.S. officials have said it will be. Canada appears to be a lock, though when the members might agree to let it join isn’t clear. Bangladesh also has shown interest in a least some of the pillars.

Taiwan initiative
Taiwan, locked out of IPEF and still not able to convince the U.S. to open free trade agreement talks, instead is pushing hard to ensure meaningful outcomes in 2023 <https://insidetrade.com/node/175604> from the U.S.-Taiwan Initiative on 21st-Century Trade. Taiwan’s deputy trade representative, Yang Jen-ni, said in December that the goal was to ink a deal before the APEC meeting in November. The U.S. is the APEC host.

Talks began last November. As with IPEF, the negotiations do not cover market access.

Nonetheless, Taiwan is eager to show the rest of the world it can be counted on as a reliable trade partner, as John Deng, the island government’s minister without portfolio and top trade official, has said.

“This is the first time the U.S. and Taiwan have held talks of this scale since our World Trade Organization accession efforts two decades ago,” he said in December <https://topics.amcham.com.tw/2022/12/u-s-and-taiwan-prepare-for-21st-century-trade/>. “We’re very enthusiastic and hope to produce results that give the business community confidence in Taiwan.”

APEP
A kind of Western Hemisphere-focused twin to IPEF, covering many of the same areas, the Americas Partnership for Economic Prosperity hasn’t advanced much since it was formally unveiled last June at the Summit of the Americas in Los Angeles. A promised December “declaration” expected to include more details, including initial partnerships, hasn’t materialized. But senior administration voices including Secretary of State Antony Blinken and top Commerce Department officials make a point of touting APEP along with IPEF in public remarks, and the nascent deal has come up in high-level talks with likely partners in the region including Ecuador.

Expect more details early in 2023, with formal talks to kick off later in the year.

TTC
The U.S.-European Union Trade and Technology Council is a different animal, with some similar spots. The U.S. and the EU have held three in-person meetings under its auspices, two in the U.S. and one in Europe; it’s the bloc’s turn, and EU Commission Executive Vice President Margrethe Vestager said in early December that officials were eyeing Sweden in spring or early summer <https://insidetrade.com/node/175620>.

Both sides have been effusive in their praise for the TTC, particularly in areas related to cooperation on technology -- that second T in the TTC that by all rights should be first, as traditional trade talks aren’t part of the arrangement. On trade, in fact, the U.S. and the EU are again at loggerheads after early agreements on steel and aluminum tariffs and aircraft subsidies; the EU is irked by a U.S. decision to ignore World Trade Organization rulings calling those tariffs, which the U.S. justifies as key to national security and thereby beyond review, against WTO rules. European officials also remain concerned about incentives for electric vehicles and others in the U.S. Inflation Reduction Act, and while the two sides have set up a separate task force to address those concerns, the TTC talks have been and will again be affected.

Notably, the U.S. has delayed its implementation guidelines for the IRA’s electric vehicle tax credits until March, and near the end of 2022 it said it likely would take a broad view <https://insidetrade.com/node/175833> of the meaning of “free trade agreement” as it evaluates how to move forward -- which could ease the concerns of the EU and other close trading partners.

U.S.-UK ‘dialogues’
Across the English Channel, the UK -- still pining for a free trade agreement the Biden administration has not pursued -- is trying another tack, barnstorming across America in search of non-binding deals with individual states. It’s struck three so far, with Utah up next and California also in the picture.

In early 2022, though, the U.S. and the UK took a step toward something bigger -- not a market-access deal, but something more akin to the TTC: The so-called “Dialogue on the Future of Atlantic Trade.”

After an initial meeting in Baltimore, Tai headed to Scotland in April for a second session at which she and her counterpart agreed to develop, within weeks, an “ambitious roadmap with economically meaningful outcomes <https://insidetrade.com/node/173856>” in a host of areas including digital trade, labor and environmental standards and support for small and medium-sized enterprises.

Since then? Not much -- and neither side will say for sure if the dialogues are still a thing.

A USTR official noted two dialogues on small and medium-sized enterprises held since the Scotland talks and said, “our staff is in close coordination with the United Kingdom on a range of worker-centered trade issues as we discuss how to cooperate on a bilateral basis and deepen this relationship moving forward.” The official declined to say more on the future of the dialogues.

A UK official, meanwhile, had more to say -- but no more on whether additional dialogues are planned.

“Over the last year the UK and U.S. have worked together to lift barriers and improve the trading landscape, such as agreeing a solution to the US Section 232 tariffs on UK steel and aluminium, resolving the long-running Large Civil Aircraft dispute, agreeing to terminate the Section 301 investigation, and suspend tariffs in response to the Digital Services Tax,” the official told Inside U.S. Trade in an email. “We look forward to future collaboration in the new year.”

The official also talked of the UK’s “twin-track” approach, “seeking out ways to unlock barriers for businesses at the state level in addition to our engagement at the federal level,” and touted the SME talks.

APEC
The U.S. host year will include a May trade ministers meeting in Detroit, eyed as a likely spot for IPEF trade discussions among the countries in both. Tai has said IPEF and APEC are key reasons why she is “bullish” about 2023.

APEC has been a priority from the start: In October 2021, Assistant USTR for Japan, Korea and APEC Michael Beeman said the administration viewed APEC, “with its informal, non-binding nature,” as “an ideal forum for moving the administration’s trade agenda and these priorities forward in the region.”

Kenya
In Africa, the U.S. under Biden has not resumed trade talks with Kenya opened by the Trump administration, but it has set up a “Strategic Trade and Investment Partnership” that will cover issues like digital trade, agriculture, small and medium-sized businesses, labor and environment. Again, market access is not on the table. Talks are expected to intensify in 2023.

New Kenyan President William Ruto on Monday said in October that the country was eager to expand trade with the U.S. and had “plenty more to offer <https://insidetrade.com/node/175338>.”

On Dec. 12, Tai and Kenyan Cabinet Secretary Moses Kuria, minister of investments, trade and industry, met in Washington, DC, and “discussed plans to begin expert engagement on the issues identified” at the outset of the partnership, USTR said in a readout <https://insidetrade.com/sites/insidetrade.com/files/documents/2022/dec/wto2022_0907.pdf>. “They highlighted how the initiative aligns with the Ruto Administration’s domestic objective of greater economic inclusiveness as well as its objective of advancing African continental trade integration.”

The Biden administration made a statement about its interest in boosting ties to Africa in December, when it hosted leaders from many countries on the continent. The future of the African Growth and Opportunity Act, as well as U.S. efforts to support the African Continental Free Trade Area, are factors in all trade interactions with African nations. -- Dan Dupont (ddupont at iwpnews.com <mailto:ddupont at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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