[CTC] US unlikely to reach deal on IPEF trade section before APEC

Mon Nov 13 09:42:20 PST 2023

Two articles below…

US unlikely to reach deal on IPEF trade section before APEC
Politico Pro

BY: GAVIN BADE | 11/12/2023 05:53 PM EST   https://subscriber.politicopro.com/article/2023/11/us-unlikely-to-reach-deal-on-ipef-trade-section-before-apec-00126750 <https://subscriber.politicopro.com/article/2023/11/us-unlikely-to-reach-deal-on-ipef-trade-section-before-apec-00126750>

The U.S. and Indo-Pacific trading partners are unlikely to reach an agreement on any trade provisions of their new regional economic package this week, according to two officials close to the conversations, dealing a blow to Biden’s diplomatic agenda as he prepares to welcome Asian allies — and Chinese leader Xi Jinping — to San Francisco this week.

The impasse on the trade pillar of the Indo-Pacific Economic Framework comes after senior Democrats in the U.S. Senate — including one facing a challenging reelection next year — expressed concerns about the negotiations last week. The U.S. and 13 other member nations have already concluded talks on three other parts of the IPEF agreement — focusing on supply chains, sustainability and anti-corruption — and are still expected to tout those portions this week.

The move highlights the challenge Biden and Democrats face in balancing their desire to take on China and advance U.S. commercial interests abroad with the unpopularity of global trade agreements among segments of their base and swing voters — including those in states critical to the presidential election and control of Congress next year.

Last minute push: U.S. negotiators had been scrambling to conclude negotiations of the IPEF trade pillar before this week’s annual summit for members of the Asia-Pacific Economic Cooperation group, which includes many of the IPEF member nations, plus China. The pact is meant to serve as a symbol to Beijing that its neighbors in the region are aligning with Washington and set a foundation for further trade and development agreements.

Last week, the U.S. announced a last minute round of negotiations in San Francisco in a bid to reach agreement on a majority of the chapters of the IPEF trade pillar before the APEC summit. And they hoped to finalize some legally binding trade rules, unlike the voluntary pacts negotiated in the other IPEF pillars.

Those talks continued on Sunday, according to people familiar with them. Though no final trade pact is likely before the APEC summit starts, member nations will announce this week that there has been “significant progress” on the trade pillar and pledge to continue talks next year, said one person familiar with the conversations, granted anonymity because they were not authorized to speak publicly.

Publicly, the Biden administration stressed that discussions on the trade portion of the IPEF agreement will continue.

“Throughout the IPEF negotiations, we have focused on promoting workers’ rights and raising standards,” said a spokesperson for the White House National Security Council. “We are on track to achieve meaningful progress and lay the foundation for a new framework for regional economic cooperation.”

But behind the scenes U.S. negotiators have already started notifying IPEF member nations that a trade agreement is unlikely this week, though sources close to the talks stressed that they could still move forward when higher-ranking officials arrive in San Francisco later this week.

Senate criticism: The lack of agreement in the trade negotiations comes after the talks drew public criticism from Senate Banking Chair Sherrod Brown (D-Ohio). Brown is facing reelection in an increasingly Republican Ohio next year, where global trade agreements are blamed by many voters for sending manufacturing jobs overseas.

Brown last week told his Senate colleagues that he would publicly oppose the entire IPEF package unless the trade negotiations were dropped. That fueled fears among some Democrats that Biden's new economic package could be painted by Republicans as a job-outsourcing global trade deal — as they did in 2016 with the proposed Trans-Pacific Partnership — even though Biden’s IPEF package is considerably less ambitious and does not reduce tariffs or offer new market access to other countries.

Brown’s opposition stirred anxiety among other Democrats who were already displeased with the U.S. Trade Representative’s level of consultation. The Biden administration has maintained that IPEF is an “executive agreement” that would not require Congressional approval. Soon after Brown issued his critique of IPEF, Senate Finance Chair Ron Wyden, whose panel oversees trade, also urged the administration to drop the trade talks.

Though the White House still maintains it does not need Congress' approval for an eventual IPEF agreement, Brown's concerns still had resonance in the administration.

Brown’s comments “spooked some folks” on the U.S. side of the negotiations, said the source familiar with the talks. “People are taking the time to make sure they do right by him, and he’s up [for reelection] next year.”

The Ohio senator on Sunday welcomed the move from the Biden administration, saying he had "made it very clear” in recent consultations with the administration in recent days “that the trade portion of the Indo-Pacific Economic Framework is unacceptable."

"I’m glad to hear the administration has decided not to move forward on an agreement that lacks enforceable labor standards," he said in a statement to POLITICO. "Instead of negotiating trade deals behind closed doors, we should be working to strengthen enforcement so that American workers can compete on a level playing field."

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https://www.washingtonpost.com/business/2023/11/12/biden-trade-asia-deal-california/ <https://www.washingtonpost.com/business/2023/11/12/biden-trade-asia-deal-california/>

Biden aides scramble on trade pact some Democrats fear could help Trump
By Jeff Stein and Tyler Pager | November 12, 2023
Administration officials are weighing major changes to a global trade pact just days before the president is set to formally introduce it in California <https://www.washingtonpost.com/politics/2023/11/10/biden-xi-meeting/?itid=lk_inline_manual_2>, three people familiar with the matter said, as top Democrats warn against the administration’s current plan.

With President Biden <https://www.washingtonpost.com/elections/candidates/joe-biden-2024/?itid=lk_inline_manual_4> planning to announce the trade deal with a dozen Asian countries at a summit in San Francisco <https://www.apec.org/> this week, his senior aides are trying to decide whether or how to bend to increasingly urgent warnings from Democrats, some of whom fear it could give Donald Trump <https://www.washingtonpost.com/donald-trump/?itid=lk_inline_manual_4> a potent political attack line in the 2024 election.

The Indo-Pacific Economic Framework for Prosperity, which officials across the administration have worked on for more than a year, aims to bind the United States more closely to allies in the region as a way to counter the growing influence of China. Although hundreds of diplomats have already gathered in California for the announcement and a trade summit, their efforts have been complicated by resistance from Democratic senators and some labor leaders in Washington.

White House officials were warned months ago about Democratic concerns, but they instructed officials to move forward with the agreement until an abrupt reversal in the past several days, the people said, speaking on the condition of anonymity to discuss private conversations.

Sen. Sherrod Brown (D-Ohio), facing a difficult 2024 reelection battle, has said publicly and in private conversations with senior White House officials that the trade deal should leave out its most consequential section because it does not include environmental and labor protections. Administration officials have eyed adding those protections at a later date.

The last-minute scramble reflects the collision of two of Biden’s chief goals: countering China and marching in lockstep with labor unions. Many Democrats are privately worried that Trump may use the new Asia trade deal to reprise his 2016 arguments against an Obama-era Pacific trade deal that infuriated U.S. labor unions and was later scrapped by Trump, even though the current deal does not include the measures in the Obama administration’s proposal that upset labor groups. But it is also difficult to convince poorer Asian countries to agree to the kind of worker standards sought by the U.S. labor movement that Biden has prided himself on championing. The key part of the new agreement would aim to bolster trade by setting common commercial rules across the agreement.

“The trade pillar is challenging because Biden promised the American public he’d only do worker-centered trade deals, and so far some of the other IPEF countries are not on board,” one person briefed on the talks said.

A White House spokesperson declined to comment on potential changes to the deal. A spokesperson for the U.S. Trade Representative also declined to comment.

“Throughout the IPEF negotiations, we have focused on promoting workers’ rights and raising standards,” a spokesperson for the National Security Council said in a statement. “We are on track to achieve meaningful progress and lay the foundation for a new framework for regional economic cooperation.”

With wars raging in the Middle East and Europe, Biden has eyed the broader deal in Asia as a crucial foreign policy victory, bringing rising powers such as Vietnam and Indonesia in closer alignment with the United States at a particularly vulnerable moment for the Chinese economy. Closer trade ties to these nations have a geopolitical and economic purpose, as the United States tries to move supply chains out of China amid rising hostilities with Beijing.

Negotiators have been working to strike a deal that consists of four “pillars.” The second, third and fourth call for the countries to take joint action on supply chains, climate infrastructure and tax evasion, but those are largely aspirational. The agreement’s first pillar, however, includes binding provisions that require participating countries to align trade standards with the goal of increasing business ties between the nations.

Pillar one has provoked most of the agreement’s controversy. That part of the deal would set common rules across a range of industries, including the service sector and agricultural products, to increase trade among the nations involved.

Biden is due to travel Tuesday to California to the Asia-Pacific Economic Cooperation conference to tout the economic benefits of the U.S. partnership in the region. The trade deal is expected to be announced this week, with the president also expected to meet <https://www.washingtonpost.com/politics/2023/11/10/biden-xi-meeting/?itid=lk_inline_manual_24> with his Chinese counterpart, Xi Jinping, on Wednesday.

“Now that the Chinese economy is in growing trouble, it makes sense the U.S. consolidates recent gains and pushes out on trade in the Indo-Pacific,” said Joseph Brusuelas, chief economist at RSM. “This represents a good first step in the right direction.”

And yet the administration faces angst among allies who are worried about the political and economic repercussions of a deal. Even if the administration claims to want to negotiate the rest of the labor and environmental standards, it is unclear how more time would allow them to cement a deal with recalcitrant countries.

Brown, the Senate Banking Committee chair, on Thursday publicly said that any trade deal without enforceable labor standards is “unacceptable” and “goes against everything I stand for.” Senate Finance Committee Chair Ron Wyden (D-Ore.) has also expressed concern about the lack of labor protections in the deal, an aide confirmed.

Democrats still feel burned by Barack Obama’s support for the Trans-Pacific Partnership, which led to a fracture with labor unions that many party officials still believe helped Trump win the White House in 2016.

“The question here, as it was under Obama, is if U.S. foreign policy has meaningful regard for workers rights, or is it just we want to increase cooperation with Vietnam hoping to pull Vietnam further away from China?” said Larry Cohen, former president of the Communications Workers of America. Cohen said there is substantial fear among union leaders about the IPEF deal’s exclusion of labor standards. “The concern here is that there’s no enforcement of real labor rights.”

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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