ALSTON&BIRD LLP Trade Update. San Francisco February 16, Copyright 2012 Jonathan M. Fee All Rights Reserved

Transcription

1 ALSTON&BIRD LLP 2012 Trade Update San Francisco February 16, 2012 Copyright 2012 Jonathan M. Fee All Rights Reserved

2 Consolidation of trade agencies On January 13, President Obama asked Congress to reinstate presidential executive reorganization authority (which lapsed in 1984) that would include authority to consolidate six international trade agencies into a single, as-yet-unnamed international trade department The six agencies would be USTR, Commerce, SBA, Ex-Im Bank, Overseas Private Investment Corporation and U.S. Trade and Development Agency

3 The plan Obama said the current trade and business bureaucracy was a mess and that he preferred one department with one website, one phone number and one mission helping American businesses succeed The USTR would still be a cabinet-rank official, but would report to the secretary of the new department

4 Reactions House Ways and Means Committee chair Dave Camp (R- Mich) and Senate Finance Committee chair Max Baucus (D-MT): Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation

5 Skepticism Was this politically motivated, allowing Obama to blame Republicans for failure of a measure that would reduce the budget? Some fear diminishing the USTR s independence; Ways and Means ranking member Sander Levin (D- MI) pointed out that USTR was created as an independent agency precisely because the State Department, which formerly handled USTR s functions, did not adequately advance U.S. trade objectives

6 New FTAs finally passed President Obama signed the Korea, Colombia and Panama FTAs into law on October 21 Congress also passed, and the president signed, legislation extending Trade Adjustment Assistance, the Generalized System of Preferences and the Andean Trade Preference Act, all of which languished from inaction since the last Congress

7 Some observations 78 House Republican freshman voted for all three FTAs, 13 more than signed a letter of support last March Only seven Republican freshman, including Textile Caucus members Jeff Duncan (R-SC), Morgan Griffith (R-VA) and Mick Mulvaney (R- SC) voted against the Korea FTA

8 Some observations All but four members of the 60-member Tea Party Caucus voted for all three FTAs Only 59 of 192 House Democrats voted for the Korea FTA, short of the 70 some had hoped for; but they included Democratic Caucus leaders Nancy Pelosi (D- CA), Steny Hoyer (D- MD), and others

9 Some observations 31 House Democrats voted for the Colombia FTA (compare with 59 for Korea and 66 for Panama), reflecting strong union lobbying against Colombia Republican support in the Senate was overwhelming; only Susan Collins (R-ME) and Olympia Snowe (R-ME) voted against Colombia, and only Snowe voted against Korea; none voted against Panama

10 The three FTAs and their context The Colombia FTA will let Colombia catch up to Peru and will replace APTDEA for apparel from Colombia The Panama FTA will let Panama compete more directly with CAFTA, NAFTA, Peru and Colombia and will replace CBTPA for apparel from Panama The Korea FTA has no predecessor; Korea has enjoyed no preferential status with the United States since it lost GSP status during the Reagan administration

11 Implementation Colombia Everyone hoped for implementation in time for the Summit of the Americas, to be held in Cartegena in April; but that s unlikely The FTA cannot be implemented until several IP treaties are ratified by the Colombian congress and reviewed by the Constitutional Court, which review can take up to 8 months

12 The Action Plan Colombia agreed to an Action Plan in April 2011 to resolve US concerns about violence against unions, inadequate prosecution of violators and protection of workers rights In late January, the Congressional Research Service reported that Colombia had so far met the Action Plan s milestones, including hiring 100 new labor inspectors in 2011 and modifying the criminal code

13 Murders cause AFL-CIO reaction Unfortunately, in January, four union leaders, including a Coca- Cola employee, were murdered in Colombia, one of whom was allegedly tortured and shot by the Army February AFL-CIO letter urges Obama to postpone indefinitely the implementation of the FTA, making it clear to the Colombian government that it will not be implemented until such anti-union violence ceases

14 Implementation Panama Panama must also pass legislation to ratify a number of IP treaties In addition, Panama must pass legislation to revise the manner in which it administers tariff rate quotas to conform to the requirements of the FTA AmCham in Panama predicts 12 to 18 months before the necessary processes are completed

15 Implementation Korea The Korea FTA will probably be implemented soonest But even the Korea FTA is threatened, at least to some extent, by political machinations in the National Assembly

16 Don t hold your breath

17 Expected CAFTA changes Change the sewing thread rule to include single yarn sewing thread (watch out for effective date) Change short supply to allow yarns and fabrics for more than just the outer shell exclusive of collars and cuffs of apparel goods Change short supply to allow designations of fabrics containing foreign elastomeric yarn Increase the cumulation limits (regarding inputs from Mexico) by 25 percent to allow for the Dominican Republic s participation in cumulation

18 Currency manipulation Crouching Dollar, Floating Yuan (Al Jazeera) House Democrats tried and failed on November 4 to bring to a vote their version of the bill passed in the Senate in September House Speaker John Boehner (R-OH) staunchly opposes currency manipulation legislation because he is concerned it will cause China to retaliate

19 Japan targeted U.S. automakers Ford, General Motors and Chrysler argue that Japan should not be permitted to join the TPP because that country has a history of manipulation But the yen has gotten stronger, not weaker, in recent years, despite Japan s intervention in currency markets to lower the yen s value

20 The currency manipulation bad penny Senate Finance Committee ranking member Orrin Hatch (R-UT) wants the administration to consider putting a currency manipulation provision in the TPP Candidate Romney would label China a manipulator on my first day in office, then impose tariffs on China exports that are being subsidized by manipulation

21 GPX decision In December, the U.S. Court of Appeals for the Federal Circuit held that the United States could not maintain countervailing duty cases against nonmarket economies, like China This is significant to the currency manipulation debate because countervailing duties are a principal remedy proposed in currency manipulation initiatives and China is the principal target Ways and Means ranking member Sander Levin (D-MI) and Sen. Debbie Stabenow (D-MI) advocate a legislative fix to the GPX decision

22 Mitt Romney on trade Formed a Trade Policy Advisory Committee in October, chaired by former Commerce Secretary Carlos Gutierrez Free trade is essential to restoring robust economic growth and creating jobs Will reverse the stagnation brought about by the Obama administration s neglect of our trading interests

23 Mitt Romney on trade Obama has been treated as a doormat by China Supported the Korea, Panama and Colombia FTAs and would support FTAs with India and Brazil

24 Rick Santorum on trade Mostly supportive of FTAs Voted against NAFTA; but voted for ATPA, CAFTA, Oman, Singapore, Chile Scores 100 percent by CATO Institute on free trade, supporting free trade and opposing protectionism

25 Ron Paul on trade Generally favors free trade; but opposes trade agreements because they compromise U.S. sovereignty I want us out of the U.N., the IMF, the World Bank, the WTO, NAFTA and CAFTA Voted against CAFTA, Peru, Australia, Singapore and Chile The US government should inhibit neither the exportation of US goods and services worldwide, nor the importation of goods and services The United States should not be answerable to any governing body outside the United States for its trade policy

26 Newt Gingrich on Trade As House Speaker, Gingrich was instrumental in passing NAFTA; it probably would not exist without his efforts More recently, he has said he supports neither free trade nor protectionism; instead he favors mutual trade agreements Those who advocate economic isolationism and protectionism are advocating a policy that could help China and India surpass the US in economic power in our children s or grandchildren s lifetime

27 Obama on trade Opposed CAFTA as an Illinois senator Caused controversy in 2007 when he proposed that NAFTA should be renegotiated to strengthen labor provisions Look, people don t want a cheaper T-shirt if they re losing a job in the process They would rather have the job and pay a little bit more for a T-shirt And I think that s something that all Americans could agree to

28 Jon Fee Alston & Bird LLP 950 F Street, N.W. Washington, D.C jon.fee@alston.com