[CTC] A bunch on IPEF...

[Arthur Stamoulis]

Politico Pro
IPEF TENSIONS MOUNTING AMONG DEMS: As the unveiling of the Indo-Pacific Economic Framework nears next week, skepticism on Capitol Hill is mounting.

ICYMI: Late Wednesday, Senate Banking Chair Sherrod Brown <https://go.politicoemail.com/?qs=7ac2d7b199970e87b51b3061c6a8c70cb757958afef23db83928efff9df8d8ecc8ea49c73815e9cdbf22f1a5056b9f8a8f485e003bdc58f3> (D-Ohio) and Finance Chair Ron Wyden <https://go.politicoemail.com/?qs=7ac2d7b199970e8782361d44fe6d1345350d9803157bbcc89f7cb36cffe9bbae780e391dea298ccb14bc32037735dc1f4456aac17845524b> (D-Ore.) both urged the administration to drop the trade pillar of the IPEF pact <https://go.politicoemail.com/?qs=7ac2d7b199970e87c7b2f02a724ecdb7555b22559c156143801d6c03b04b05c8657e790cfcf9c348d376bfc706749d5641aa113b34fe8342>. Brown even said he would oppose the entire thing if trade was not jettisoned.

Rep. Earl Blumenauer <https://go.politicoemail.com/?qs=7ac2d7b199970e872c5cc21c8e75a9658a0f6465b11be0cb94f2fe33a5f246678e6145add874159a896345b42495aec86068acb1b1409b25> (Ore.), the top Democrat on the House Ways and Means trade panel, is wary of the agreement as well. But he isn’t willing to throw the whole thing out yet.

“I'm not willing to throw it over the edge at this point,” Blumenauer said of the trade pillar on Thursday. “I think there's some signals that they would be better served to engage Congress.”

Blumenauer, like many lawmakers this week, said he will ultimately reserve his judgment until he sees details of the full agreement, expected to be released next week. Until then, he remains in a similar state to many when it comes to the new-look trade pact: quizzical.

“I don't fully understand this IPEF stuff,” he said. “I've sat through several briefings and kind of left scratching my head.”

USTR is listening: A source familiar says the agency has been in contact with the senators about their concerns in recent days.

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https://www.reuters.com/world/race-finish-indo-pacific-trade-deals-hit-snags-ahead-apec-summit-2023-11-09/ <https://www.reuters.com/world/race-finish-indo-pacific-trade-deals-hit-snags-ahead-apec-summit-2023-11-09/>

Race to finish Indo-Pacific trade deals hit snags ahead of APEC summit <https://www.reuters.com/world/race-finish-indo-pacific-trade-deals-hit-snags-ahead-apec-summit-2023-11-09/>
By David Lawder <https://www.reuters.com/authors/david-lawder/> November 9, 202311:23 AM EST
 
SAN FRANCISCO, Nov 9 (Reuters) - The United States is aiming to show that its key Asian economic initiative is making progress as Pacific Rim leaders gather in San Francisco next week, but significant holes remain on trade-related chapters, according to people familiar with the talks.

Negotiators from 14 countries are racing to close out chapters of the Indo-Pacific Economic Framework for Prosperity in hastily arranged talks this week, with announcements expected on cooperation to accelerate the clean energy transition and to fight corruption and tax evasion.

U.S. President Joe Biden is eager to portray IPEF as producing meaningful outcomes to leaders of Asia Pacific Economic Cooperation countries, as he seeks to offer them a U.S.-led alternative to deeper economic ties to China.

When the Biden administration launched the IPEF concept in October 2021, it made clear that the U.S.-hosted APEC summit was a key deadline, "and that has raised expectations," said Wendy Cutler, a former U.S. trade negotiator who now heads the Asia Society Policy Center in Washington.

"The importance of this is to show that the U.S. is stepping up, through APEC and IPEF, to say, 'We're back in Asia and we're going to remain a close economic partner,'" Cutler said.

Former President Donald Trump's administration abandoned the 12-country Trans-Pacific Partnership (TPP) free trade deal in 2017, but IPEF is far more limited in scope, foregoing traditional tariff reductions and other market-access improvements. Instead, it promised cooperation on supply chains and clean energy along with higher standards for labor, environment and regulatory practices and digital trade.

Countries participating in IPEF are Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, the United States and Vietnam. All but India and Fiji are also members of APEC.

Only one of the four IPEF "pillars," on strengthening supply chains, has a completed text <https://www.ups.com/WebTracking/processInputRequest?tracknum=1ZU0B01T0327140038&loc=en_US>, with deals reached in May on an early warning system for potential supply disruptions like those experienced after the pandemic, as well as a council to consult on supply chain issues such as those involving national security or critical economic sectors.
People familiar with the talks said that two other pillars led by the Commerce Department are likely to reach substantial conclusion in the next week with announcements on boosting cooperation on de-carbonization efforts <https://www.commerce.gov/sites/default/files/2023-03/IPEF-Pillar-III-Clean-Economy-Public-Summary.pdf> and to combat corruption <https://www.commerce.gov/sites/default/files/2023-03/IPEF-Pillar-IV-Fair-Economy-Public-Summary.pdf> and tax evasion.
DIGITAL SHIFT

The trade pillar has proven more difficult, with many countries not willing to meet U.S. demands to meet certain labor and environmental standards or needing more time to consider them, three people familiar with the talks said.

Negotiations on digital trade standards - once seen as a marquee feature of the IPEF trade pillar - are largely frozen as the Biden administration has suspended discussions on key rules after reversing longstanding U.S. positions on e-commerce.

The U.S. Trade Representative's office last month dropped its insistence <https://www.reuters.com/world/us/us-drops-digital-trade-demands-wto-allow-room-stronger-tech-regulation-2023-10-25/> on rules to protect free cross-border data flows and to prohibit national requirements for data localization and reviews of software source code, arguing that the change was needed to give Congress room to enact stronger regulations on large technology firms. The move has pleased liberal Democrats who want to rein in Big Tech but angered many business groups.
"It's tough. By adopting these fringe views on digital trade, USTR really brings the main substance on digital trade to a halt," said John Murphy, senior vice president for international policy for the U.S. Chamber of Commerce.

But the Biden administration remains determined to announce some agreements on the trade pillar, with the most likely deals seen in the area of trade facilitation measures, such as adoption of digital customs forms and electronic signature standards.

One of the sources familiar with the talks said that early enthusiasm on the IPEF trade pillar - which excludes India - has given way to frustration over the difficulty and complexity of issues involved.

"Trade negotiations take a long time, even when you're offering market access," said Cutler, who was USTR's lead negotiator on TPP a decade ago. "But when you're not offering market access, the onus is more on the demander - in this case, the United States - to show these other countries that there are benefits."

A group of moderate Democrats on Thursday urged Biden <https://newdemocratcoalition.house.gov/imo/media/doc/ndc_trade_task_force_letter.pdf> in a letter to strengthen IPEF but go a step further to turn it into a traditional market-opening trade agreement.
The New Democrat Coalition said, "We must pursue a more robust trade agenda in the critically important Indo-Pacific region and urge the Biden administration to finalize a deal that bolsters U.S. global leadership and meaningfully delivers for American workers, farmers and businesses."

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Politico Pro

NEW DEM MEMBERS PUSH FOR MORE ROBUST TRADE AGENDA: A group of centrist Democrats want the Biden administration to drop its moratorium on new free trade agreements and pursue a much more ambitious trade agenda.
In a letter being sent to Biden today <https://go.politicoemail.com/?qs=5ffa101f3728842e1edc8e8e0ca468e3a6c21d21db6d83cb801b858d94733d50f29a8dd1657255311271ccc63e882f20b812978a43d0d9b3>, the New Democrat Coalition’s Trade Task Force calls for free trade agreements with the United Kingdom, Taiwan and Kenya. It also urged Biden to beef up the administration’s signature trade initiative, the proposed Indo-Pacific Economic Framework, to make it more commercially meaningful.
“New Dems believe we must pursue a more robust trade agenda in the critically important Indo-Pacific region and urge the Biden Administration to finalize a deal that bolsters U.S.global leadership and meaningfully delivers for American workers, farmers, and businesses,” Reps. Lizzie Fletcher <https://go.politicoemail.com/?qs=5ffa101f3728842e9502cec475f31edbcd68a4c1fd9f031d2d47e8d5d83debd8e41c885617538e3a798bdf20e7d73207397a2ec5441e6ece> (D-Texas), Don Beyer <https://go.politicoemail.com/?qs=5ffa101f3728842e9676c293a1b989a0d2b36997e989ddd5b0c2c5ffd298ab0b9935bdbc252d312e9da2a08ff49c9595023418f7f07bddf3> (D-Va.), Jimmy Panetta <https://go.politicoemail.com/?qs=5ffa101f3728842e81ca434a6354842b03e22c3f505d3f352f21b852fa8d63a90a3c335412f3038976a55b71fac1e07be49eb5e9f9462834> (D-Calif.) and other members of the Trade Task Force wrote.
The group’s other recommendations include countering competitive threats and abuses from China; establishing a durable and sustainable approach to trade; negotiating digital trade agreements; and supporting U.S. farm exports by reducing tariffs and non-tariff barriers.
The members also urge the administration to prioritize the renewal of long-standing trade programs that have expired or could expire soon, including the Generalized System of Preferences, the Miscellaneous Tariff Bill, the African Growth and Opportunity Act and two programs for Haiti.
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Moderate House Democrats revive calls for tariff cuts ahead of IPEF ministerial
Inside US Trade
By Oliver Ward | November 9, 2023
The U.S. should reduce tariffs by including market access in the Indo-Pacific Economic Framework for Prosperity negotiations, pursue traditional free trade agreements and prioritize the renewal of key preference programs, the New Democrat Coalition said in a letter to President Biden on Thursday, days before ministers of IPEF countries are due to meet in San Francisco.

The Nov. 9 letter <https://fletcher.house.gov/news/documentsingle.aspx?DocumentID=4967#:~:text=Congresswoman%20Lizzie%20Fletcher%2C%20Chair%20of,growers%2C%20producers%2C%20and%20businesses.> from the New Democrats’ Trade Task Force describes eight trade objectives that, it says, will strengthen U.S. trade policy. They include countering China, returning to bilateral and regional trade agreements, bolstering IPEF, deepening U.S.-Taiwan relations, leading international agreements on digital trade and reducing barriers in the agriculture sector.

“Being actively engaged in global trade allows us to lead geopolitically, grow our economy, expand opportunity, and export our goods, services, and values,” the letter reads, adding that Trade Task Force members are working “to maintain the United States as a leader in the global marketplace and enact trade policies that will benefit American workers, consumers, growers and producers, and businesses.”

The 11 signatories, which include task force Chair Lizzie Fletcher (D-TX) and Ways & Means trade subcommittee members Reps. Jimmy Panetta (D-CA), Suzan DelBene (D-WA), Don Beyer (D-VA) and Terri Sewell (D-AL), contend that “frameworks are not substitutes for trade agreements approved by Congress that open markets for U.S. products” and urge Biden to include tariff reductions in IPEF and support “meaningful enforcement provisions for binding commitments.”

The letter, also sent to U.S. Trade Representative Katherine Tai and other senior Biden administration officials, comes as the seventh round <https://insidetrade.com/node/178254> of IPEF negotiations is underway in San Francisco, ahead of the ministerial slated for Nov. 13-14. President Biden next week will travel to San Francisco to meet with representatives from the 21 Asia-Pacific Economic Cooperation countries.

The group of centrist Democrats also took the opportunity to press the administration to begin negotiating free trade agreements and listed the United Kingdom, Kenya and Taiwan as priority candidates, echoing similar calls from the group <https://insidetrade.com/node/177403> in July.

Taiwan warrants particular attention, the group argues. The letter suggests seizing “an opportunity to deepen our economic relationship and advance mutual trade priorities” by supporting a U.S.-Taiwan tax agreement, exploring ways to promote U.S. exports to the island and grow Taiwanese investment in the U.S.

Countering China is a persistent theme. “New Dems believe we must leverage and enhance diplomatic, trade, and economic tools with strong congressional oversight to strengthen American competitiveness in the global economy and meet the challenge of the People's Republic of China’s unfair trade practices, market manipulations, censorship and surveillance, and human rights abuses,” the letter reads.

Among their suggestions: Reauthorize the Generalized System of Preferences, counter China’s “digital sovereignty” campaigns in international organizations, insist on the free flow of digital information across borders, assert U.S. global leadership in digital trade discussions and protect the forced transfer of American technologies.

The group’s digital trade ideas might not match the administration’s. USTR announced last month <https://insidetrade.com/node/178191> that it would withdraw its support for proposals on cross-border data flows, data localization and source code in World Trade Organization e-commerce negotiations, prompting a bipartisan outcry and some support from progressive lawmakers who say the agency is making similar moves in IPEF talks <https://insidetrade.com/node/178313>.

The letter also calls for the prioritization of legislation to renew expired or expiring programs including the Miscellaneous Tariff Bill and the African Growth and Opportunity Act. -- Oliver Ward (oward at iwpnews.com <mailto:oward at iwpnews.com>)

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Politico Pro
WITH FRIENDS LIKE THESE: The U.S. trade representative’s decision to withdraw support from a trio of e-commerce initiatives has already divided much of Congress.

It’s the Biden administration’s turn.

Behind the scenes, officials at the National Security Council have urged USTR in recent weeks not to pull support from the WTO proposals, concerned it would cede ground to China and threaten U.S. credibility in Geneva. NSC spokesperson John Kirby acknowledged the divide in comments to reporters on Thursday.

“The whole purpose of an interagency discussion is to gather and listen to multiple perspectives, and not all of them are going to be the same,” he said. “So we're working this through the interagency process and we think that we're gonna be able to continue to do that going forward.”

That’s a pretty tepid admission. But a source close to the dispute put it more bluntly, saying there’s an “ongoing meltdown” at NSC over the decision.

The issue has driven a wedge between two agencies previously aligned on some major aspects of Biden’s trade policy. Last year, both USTR and NSC were against removing tariffs on China, facing off against officials at the Treasury and Commerce Departments, who wanted the duties lifted.

USTR, for its part, has argued that removing U.S. support from the WTO proposals is necessary to align the U.S. position in Geneva with the position that USTR has taken in negotiating the Indo-Pacific Economic Framework, Biden’s new-look trade deal for Asia. As a result, we don’t expect any agreements on digital trade when IPEF is unveiled next week in San Francisco. 

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NSC, USTR at odds over digital trade decision at WTO
The National Security Council argued against the trade chief's decision to withdraw U.S. support from e-commerce proposals at the World Trade Organization.
 
The Biden administration is divided over how to represent the interests of big tech firms in global trade negotiations.
Last month, the U.S. Trade Representative Katherine Tai withdrew U.S. support for three e-commerce proposals at the World Trade Organization. The policies, first endorsed by the Trump administration, sought to set up global trade rules on data flows and source code amenable to American big tech companies like Alphabet and Meta.
The White House National Security Council took issue with the decision in recent weeks, worried it will cede ground to China. On Thursday, NSC spokesperson John Kirby acknowledged disagreement over the issue.
“The whole purpose of an interagency discussion is to gather and listen to multiple perspectives, and not all of them are going to be the same,” he said. “So we're working this through the interagency process and we think that we're gonna be able to continue to do that going forward.”
USTR’s action represents a dramatic trade policy shift for the United States, which has consistently pushed policies to help American tech companies operate in foreign markets. That pro-business position, which predates the Trump administration, has come under scrutiny among progressives who see efforts to help tech giants abroad as contradictory to the Biden administration’s aggressive anti-monopoly agenda aimed partly at big tech.
USTR’s move all but ensures that those proposals won’t be adopted by the WTO in the near term, and has been roundly criticized by moderate Democrats and Republicans on Capitol Hill, as well as tech industry groups in Washington. Labor unions and progressive lawmakers, meanwhile, have lined up in support of the move, saying they don’t want tech “monopolists” writing global rules for data flows. Insiders say that conflict is being replicated inside the administration.
There’s been an “ongoing meltdown” at the NSC over USTR’s decision, said one administration official familiar with the discussions. USTR did not comment.
The national security agency pushed against the move during interagency discussions in recent months, arguing it would not only provide an opening for China to push its influence in foreign digital markets but further damage U.S. credibility in Geneva where USTR is refusing to reverse a Trump-era blockade of the WTO’s highest dispute settlement panel, the official said.
The issue has driven a wedge between two agencies that have previously been aligned on some major aspects of Biden’s trade policy. Last year, both USTR and NSC were in agreement against removing tariffs on China, facing off against officials at the Treasury and Commerce Departments, who wanted the duties lifted. USTR and NSC prevailed, and the tariffs remain in place pending the completion of a review from the trade office expected to conclude by year’s end.
But the digital trade issue has tested that alliance. In internal discussions, USTR has argued that removing U.S. support from the WTO proposals is necessary to align the U.S. position in Geneva with the position that USTR has taken in negotiating the Indo-Pacific Economic Framework, Biden’s new-look trade deal for Asia.
In IPEF talks, U.S. negotiators have paused discussions around digital trade, arguing they must give time for domestic policymaking to run its course. Congress is considering antitrust legislation regarding tech firms, they point out, and the Justice Department is pursuing antitrust action against Google, so trade officials don’t want to agree to new rules in IPEF — or at the WTO — that could tie their hands at home.
As a result of the pause, U.S. negotiators do not expect to finalize a digital trade agreement as part of the IPEF agreement, set to be unveiled next week at the Asia-Pacific Economic Cooperation summit. While USTR expects to reach agreement on some IPEF subjects <https://subscriber.politicopro.com/article/2023/10/u-s-to-host-last-minute-ipef-talks-ahead-of-apec-summit-00124528> like agriculture and trade facilitation provisions, digital trade negotiations will likely continue into next year. The NSC insists they will continue to engage on the topic at the World Trade Organization as well.
“In the coming weeks and months, you're gonna see us step up our engagement with stakeholders that includes tech companies, large and small and as well as advocates in the privacy, safety, labor and human rights realm,” Kirby said. “We're gonna work with all those partners to move forward in a way that appropriately balances all those objectives, [and] we’re also gonna continue to engage vigorously on the WTO’s Joint Statement Initiative on e-commerce.”





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