Published on March 5, 2014
ONGOING TRADE NEGOTIATIONS: STATUS AND ENVIRONMENTAL ISSUES February 18, 2014
PRESENTED BY FRANK SAMOLIS Frank Samolis advises clients on international trade matters, including trade law, trade policy and legislation, and international trade negotiations. Partner and Co-Chair, International Trade | Sovereign Representation | Defense Practice Group, Patton Boggs LLP Patton Boggs LLP 2
TABLE OF CONTENTS 1. Background and Status of Trade Promotion Authority 2. Background and Status of Transatlantic Trade and Investment Partnership 3. Background and Status of Trans-Pacific Partnership 4. Free Trade Agreements: Framework and Environmental Issues 5. Trade Negotiations Today: Environmental Issues
TRADE PROMOTION AUTHORITY
BACKGROUND AND STATUS OF TPA → Trade promotion authority gives the President the ability to negotiate agreements, with Congress agreeing to up-or-down on such agreements, without amendments → Extension of TPA is not required for the TPP and TTIP negotiations. However, extension of TPA will be necessary before Congress votes on either of these important agreements. → The 2002 TPA expired in 2007. On January 9, 2014, the House and Senate introduced the Bipartisan Congressional Trade Priorities Act of 2014 (S. 1900, H.R. 3830). • The bipartisan legislation divides environment and labor standards more clearly, and updates the standards mentioned in the objective itself and in the definitions section. It also includes two new goals on: 1. Ensuring that labor and environment obligations are subject to the same dispute settlement remedies as other obligations, and 2. Ensuring that agreements do not empower foreign countries to enforce labor and environment laws within the U.S. Patton Boggs LLP 5
BACKGROUND AND STATUS OF TPA → House Ways and Means Committee Chairman Camp (R-MI) has called TPA his most urgent priority, and believes that enough hearings last year addressed the topic. → Chairman Camp appears prepared to move directly to markup as his first action on the bill. → The Senate Finance Committee has already held one hearing on TPA (January 16, 2014), with a markup not yet scheduled. → The prospects for the bill will become clearer in the coming weeks as more Members of Congress begin to voice their opinions on the legislation. → Although the bill’s future is uncertain, the momentum provided by the introduction of identical bills in each chamber suggests some progress will be made on the bill this year. Patton Boggs LLP 6
BACKGROUND AND STATUS OF TPA → On February 6, 2014, Senator Max Baucus (D-MT) was confirmed as Ambassador to China. The vacancy for Senate Finance Committee Chair has been filled by Senator Ron Wyden (D-OR). → Senator Wyden recently voted in favor of the Colombia, Panama, and Korea FTAs. → In the past, Senator Wyden also voted in favor of the CAFTA Implementation bill and the Peru FTA. → With regard to TPA, Senator Wyden has indicated that he will need “some time” to re-examine with other Senators how global changes to commerce have affected both the composition of trade treaties and how they should be approved. → Senator Wyden is perceived as a supporter of environmental protection issues (e.g. has voted yes on issues such as protecting ocean, coastal, and Great Lakes ecosystems, appropriating funds for the recycle and save program (CARS Program), and not prohibiting the use of eminent domain for use as parks or grazing land). → Senator Wyden has made various statements for the record during talks regarding the FTAs and TPP, noting the importance of labor and environmental standards in the agreements. Patton Boggs LLP 7
TRANSATLANTIC TRADE & INVESTMENT PARTNERSHIP
BACKGROUND AND STATUS OF TTIP → The trade relationship between the U.S. and EU is the biggest in the world, with more than $2.2 billion of goods and services traded each day. → The EU and U.S. economies comprise half of global GDP and a third of world trade flows – almost $1 trillion annually. → EU companies in the U.S. support over 3 million jobs. → As a result of the 2008 financial crisis, both sides have lost ground to emerging powers in Asia and elsewhere. Patton Boggs LLP 9
U.S. AND E.U. OBJECTIVES U.S. (from USTR fact sheet, publicly available) EU (from leaked EU position paper) Economic growth and job creation by opening markets abroad Elimination of tariff and non-tariff barriers for U.S. exports of goods, services and agricultural products Technical barriers to trade Strong intellectual property protections Regulatory goals for the automotive, chemical and pharmaceutical sectors Cut the cost of differences in regulation and standards by promoting greater compatibility, transparency, and cooperation Regulatory issues Trade and sustainable development Market-based disciplines for SOEs Antitrust and mergers, SOEs, subsidies Trade and investment in raw materials and energy Patton Boggs LLP 10
BACKGROUND AND STATUS OF TTIP → Timeline: Leaders discussed the possibility of a TTIP in November 2011. In March 2013, USTR notified Congress of its intent to negotiate the TTIP. → Next Round: Stocktaking Feb 17-18 (which could include preliminary tariff offers), Round in Brussels March 10-14. President Obama is expected to attend a U.S.-EU Summit on March 26. → Last Round: The December round was scheduled to provide the negotiations’ first formal proposals on cutting duties, opening markets to services, and opening opportunities for government contracts, and included a stakeholder round. • Negotiators covered market access for industrial and agricultural products, ROOs, technical regulations, sanitary and phytosanitary regulations, investment and services, government procurement, intellectual property, labor, environment, state-owned enterprises, small- and medium-size enterprises, localization barriers to trade, competition, raw materials and energy, and legal and institutional issues (dispute settlement). Patton Boggs LLP 11
BACKGROUND AND STATUS OF TTIP → The aim is to conclude negotiations by the end of 2014, but signs are already emerging of a slipping timeline. → Elections on both sides of the Atlantic could pose problems. → The EU announced a suspension of the investment portions for three months while the EU considers public input on the issue, specifically regarding rights of multinational corporations to take up disputes with foreign governments. → The negotiations have also faced resistance from French legislators and British activists, and recently, members of the European Parliament have requested access to confidential U.S. documents during the negotiations. Patton Boggs LLP 12
BACKGROUND AND STATUS OF TPP → Countries: Brunei, Chile, New Zealand, Singapore, U.S., Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan. → Next Round: TPP countries did not meet their 2013 deadline. Negotiators began a round of meetings on February 17 and the TPP ministers will be meeting from February 22-25 in Singapore. → Completion: Completion has been hampered by major disagreements over remaining issues, namely, countries like Australia and New Zealand are unwilling to budge on some issues before being granted market access by the U.S. and others are pointing to Japan as being stubborn on a few key commodities. • A Wikileaks release of leaked documents outlining the status of negotiations and the U.S.’s isolated position did not improve negotiations. Patton Boggs LLP 14
BACKGROUND AND STATUS OF TPP → Completion: New Zealand Trade Minister Tim Groser has said that he thinks TPP can be wrapped up in the next 6 months, while others at Business Roundtable think TPP could be wrapped up as early as the President’s trip to Asia in April 2014. Mexico’s Minister of the Economy was also hopeful for an April deadline. • Japan and the U.S. agreed in two separate bilateral talks to pick up their efforts on TPP, and Japan is optimistic about completion this spring. → Adding Countries: South Korea rekindled interest in FTAs with some TPP countries, including New Zealand, Australia, and Canada, and has initiated a schedule of bilateral talks with each of the remaining TPP countries. South Korea already kickstarted talks with the U.S. without much clear progress. Patton Boggs LLP 15
CRITICISM OF TPP INCLUDES: 1. Secrecy of the negotiations 2. Expansive scope of the agreements 3. Controversial clauses leaked to public 4. Provocative spirit in which the agreement is being negotiated (U.S.-China dynamic) Patton Boggs LLP 16
FREE TRADE AGREEMENTS
FREE TRADE AGREEMENTS Framework and Environmental Issues → In 1994, the North American Free Trade Agreement (NAFTA) came into effect. → To secure Congressional support for NAFTA, the Clinton Administration addressed concerns regarding the potential environmental impact of NAFTA. → Mexico, Canada, and the U.S. negotiated a side agreement on the environment called the North American Agreement on Environmental Cooperation (NAAEC). • The NAAEC created the Commission for Environmental Cooperation (CEC). • The CEC was tasked with conducting a post-enactment assessment of the environmental effects of NAFTA Patton Boggs LLP 18
FREE TRADE AGREEMENTS Framework and Environmental Issues → After NAFTA, concerns emerged regarding race to the bottom on environmental regulations by signatories to Free Trade Agreements (FTAs) → Negotiations between Bush Administration and Democrats in Congress led to the May 10, 2007 agreement. • Agreement impacted FTAs with Peru, Colombia, Panama, South Korea • Agreement ensured certain labor and environmental standards. • Required trading partners to enforce their domestic environmental laws. • Ensured that environmental treaties could be incorporated into FTAs, including conventions on endangered species, ozone depletion, wetlands, pollution from ships, whaling, Antarctic marine life, and tuna conservation. Patton Boggs LLP 19
TRADE NEGOTIATIONS TODAY
TRADE NEGOTIATIONS TODAY Environmental Issues → TPP Negotiations: • Environmentalists have raised concerns regarding relaxed environmental provisions in the TPP negotiations, noting the Obama Administration’s retreat on issues such as binding pollution control requirements, logging regulations, and the ban on harvesting sharks’ fins. • Environmental groups have expressed support for U.S. efforts to include conservation measures in TPP. → TTIP negotiations: • E-mobility or lowering tariffs specifically on environmentally-friendly goods, could lead to a wider use of such technologies. • Concerns that the EU would be “harmonizing down” their environmental protections (EU’s bans on genetically modified (GM) goods, hormone-treated beef, and chlorine-washed poultry products; EU regulations on chemical safety issues). • Importance of including flexibility on environmental provisions to maintain and strengthen environmental and climate policies without constraints and without fear of trade litigation. Patton Boggs LLP 21
TRADE NEGOTIATIONS TODAY Environmental Issues → WTO Free Trade in Environmental Goods • In January 2014, President Obama announced his support of free trade in environmental goods (as part of his Climate Action Plan announced last year). • APEC Leaders’ Agreement: the initiative is supported by Australia, Canada, China, Costa Rica, the EU, Hong Kong, China, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and Chinese Taipei. → USTR addresses environmental issues through its Office of Environment and Natural Resources (ENR). • ENR has utilized bilateral trade for a such as various Trade and Investment Framework Agreements (TIFA), Strategic Economic Dialogues, and Bilateral Dialogues to leverage actions on critical global environmental challenges. • USTR has established ongoing “environmental reviews” of several FTAs to monitor their compliance and implementation of environmental protections. Patton Boggs LLP 22
QUESTIONS? Contact Frank Samolis firstname.lastname@example.org or 202-457-5244 ©2014 Patton Boggs LLP. All rights reserved. This presentation was prepared for the use of our clients and friends. Consistent with fair use, this presentation may not be quoted or reproduced in part without the express prior written consent of Patton Boggs LLP.
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