With help from Victoria Guida and Doug Palmer
AUTO RULES COMPLICATING TPP TALKS: No doubt about it, automotive “rules of origin” are among the most complicated, mind-boggling and politically sensitive issues that Trans-Pacific Partnership negotiators will tackle over the next several weeks as they scramble to wrap up the trade talks, POLITICO Pro’s Doug Palmer reports.
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The rules determine whether imported autos and parts can get tariff cuts or duty-free treatment under the agreement based on how much of their contents come from countries in the pact. They’re meant to ensure that countries involved in the pact are the main beneficiaries and not others, like China, that aren’t included in the talks.
Once negotiations began in Hawaii last month, it quickly became apparent that there was a wide gap between the “liberal” rule of origin sought by Japan and stricter approaches favored by the United States, Canada and Mexico. The United States and Japan eventually struck a deal, but Mexico and Canada objected, saying the agreement favored non-TPP auto parts suppliers too much.
As negotiations continue bilaterally or in small groups on major problem areas, including intellectual property protections for new drugs and dairy market access, the three North American Free Trade Agreement nations and their biggest Asian competitor now have to find a new “landing zone” for auto rules that makes everyone happy — and do so soon, before the timeline for congressional approval of the trade deal slips, turning the talks into 2016 campaign fodder. Read the full story: http://politico.pro/1TT5TIz
IT’S WEDNESDAY, AUG. 19! Welcome to Morning Trade, where we think following our luggage to the airplane looks a lot more fun than waiting at the gate: http://bit.ly/1MBdMDw.
DEBRIEF INTERVIEW WITH FEMA HEAD: As the 10th anniversary of Katrina quickly approaches, current FEMA head Craig Fugate explains how the agency rebuilt after its huge fumble in New Orleans — and reveals the natural disaster he’s most worried about now. Find out on this week’s Debrief video from The Agenda: http://politi.co/1Plxlxg.
CILANTRO IMPORTS CAUSE FOOD SAFETY CONUNDRUM: Americans have been getting sick for years from what appears to be a recurring problem: Mexican cilantro. And food safety experts are now questioning why it’s taken FDA so long to act, POLITICO Pro’s Helena Bottemiller Evich reports.
No fewer than 560 people in the U.S. and Canada have been sickened in cyclospora outbreaks since May. The FDA seemed to be moving toward identifying the source of the troublesome parasite when it issued an import alert in July that blocked all fresh cilantro from Puebla, Mexico. The document revealed objectionable conditions found at eight farms, including human feces and toilet paper in growing fields. The alert went viral in the media, garnering headlines like “There Might Be Poop In Your Cilantro.”
But the cilantro season in Puebla is winding down for the year and U.S. officials have yet to get to the bottom of the latest batch of illnesses. Most frustrating to food safety experts like Michael Osterholm, a leading epidemiologist, is that recurring cyclospora outbreaks dating back to at least 2013 sickened more than 1,400 people before any products were banned. Click here for the story: http://politico.pro/1KvpRUy.
USTR CONSIDERING ENVIRONMENTAL DISPUTE WITH PERU: The Office of U.S. Trade Representative is assessing whether to pursue a dispute with Peru over allegations that it’s violating environmental obligations under the country’s 2009 trade deal with the U.S.
The Environmental Investigation Agency, a nongovernmental organization, says a new law meant to drive investment in Peru is seriously rolling back environmental protections there — a direct violation of the trade deal, which forbids the country from waiving environmental laws to attract trade and investment.
House Democrats who supported the fast-track legislation and other members of Congress urged USTR in late July to enforce rules of trade agreements, highlighting the environmental obligations of the Peru trade pact and EIA’s investigations into the investment law, which was enacted in 2014, as well as failure to curb illegal logging.
USTR General Counsel Tim Reif wrote Jennifer Lonsdale, one of EIA’s founders, in May to say USTR Michael Froman has spoken with Peruvian Minister of Foreign Trade and Tourism Magali Silva and Minister of State for the Environment Manuel Pulgar Vidal about the situation. In May, senior U.S. and Peruvian officials held a meeting of the trade agreement’s Environmental Affairs Council and a related public session to discuss the new law.
“As your letter notes, dispute settlement is an important tool under the [Peruvian Trade Promotion Agreement],” Reif wrote. He added that USTR is working to assess the facts, legal standards and evidence to determine whether dispute settlement is an appropriate tool to address the situation. Read the letter here http://politico.pro/1hLdxsm and more backgrond on the issue here http://1.usa.gov/1LW5Igg.
EIGHT COUNTRIES STEEL FOR COMMERCE PROBE: The Commerce Department on Tuesday announced it is investigating whether China, South Korea, Japan and five other countries are selling cold-rolled steel products in the United States at unfairly low or subsidized prices.
U.S. steelmakers AK Steel, ArcelorMittal USA, Nucor Corp., Steel Dynamics Inc. and United States Steel Corp. filed the case and seek anti-dumping duties on imports from Japan, the Netherlands and the United Kingdom and both anti-dumping and countervailing duties on products from China, Russia, Brazil, India and South Korea.
China, Russia, South Korea and South Korea are alleged to have the highest dumping margins, ranging as high as an estimated 266 percent, 228 percent and 178 percent, respectively, followed by the Netherlands (122 percent), Japan (71 percent), United Kingdom (69 percent), India (43 percent) and Brazil (35 percent), according to Commerce’s estimates of their upper dumping limits.
The United States imported more than $1 billion worth of the cold-rolled steel product from the countries in 2014, just over half of it from China, the Commerce Department said.
The U.S. International Trade Commission is scheduled to make its preliminary injury determinations by before Sept. 11. If the ITC determines a reasonable indication that the imports have harmed or threatened to injure the domestic industry, Commerce will be scheduled to make preliminary anti-subsidy determinations in October and its preliminary anti-dumping determinations in January. Read the government’s fact sheet here: http://politico.pro/1HUmFji.
VIETNAM EXPECTS SEPTEMBER RESTART FOR TPP TALKS: Vietnam’s deputy minister of industry and trade, Tran Quoc Khanh, said last week that he expects transpacific trade talks to resume in September, the online Vietnamese news agency VietNamNet reports. The deputy minister made the remarks after returning from a visit to Washington, where he discussed outstanding bilateral issues with USTR officials, the report said.
Khanh confirmed his visit by email but declined to elaborate on the comments he made to the news outlet. A primary focus for Vietnam is obtaining favorable rules and market access to help its growing apparel and textile industry. Washington is also working with Hanoi on a plan to ensure the communist country can comply with the TPP’s labor rules.
Negotiators made “significant progress” on textile issues at a round of TPP negotiations last month in Hawaii, where Vietnam placed more emphasis on getting duties eliminated immediately on nearly 1,600 apparel tariff lines rather than on rules of origin that are meant to deliver the benefits of the trade deal only to countries in the agreement, a U.S. industry source said.
Hanoi appeared to be more accepting of a “yarn-forward” rule of origin, which would allow limited exceptions from the requirement that apparel be made from fabric woven in TPP countries for a product to gain tariff benefits under the deal, the source said.
Read the news story: http://bit.ly/1TT3e1e.
AFL-CIO TELLS CONGRESS: GET SERIOUS ON CURRENCY: The AFL-CIO on Monday asked Congress to push for enforceable currency provisions in both the TPP and domestic law.
Following China’s devaluation of the yuan last week, AFL-CIO Government Affairs Director Bill Samuel warned Congress of the deleterious impact of currency manipulation on U.S. employment, citing statistics from the liberal Economic Policy Institute claiming that ending currency manipulation would create 5.8 million jobs.
China’s currency devaluation also raises the prospect that other Asian countries will follow its lead, Samuel said. “Japan, Singapore, and Malaysia are part of the proposed TPP club and all have a history of egregious currency manipulation,” he said. “China’s devaluation could certainly prompt them to follow suit.” Read his letter here: http://politico.pro/1LhXGLO.
USTR LAUNCHES BROADER GSP REVIEW: The USTR is requesting petitions to add products to the list of goods allowed to enter the U.S. duty-free under the Generalized System of Preferences, a broader review than one it is currently conducting on five cotton products. It will also look at whether to add or remove countries from the program based on whether they meet its eligibility requirements. Petitions must be submitted by Oct. 16, according to a Federal Register notice Tuesday: http://bit.ly/1EAvJd2.
USTR REQUESTS COMMENTS ON FOREIGN TRADE BARRIERS: USTR is also seeking public input for its annual report on barriers to market access around the world and for a separate report on telecommunications barriers, it announced in another Federal Register notice Tuesday.
The USTR’s request covers the “National Trade Estimate,” which details trade barriers, and the more specialized “1377 report” on violations of telecom agreements involving the U.S. Comments are due by Oct. 28: http://bit.ly/1MwRLUG.
The chief executive of New Zealand dairy giant Fonterra hopes dairy prices will soon start to increase after a multi-year global industry downturn, the Financial Times reports: http://on.ft.com/1TRXTwL
In Nevada, labor unions are divided over their support of Sanders or Clinton, The Washington Post reports: http://wapo.st/1E1ZQPY
TPP opponents in New Zealand continue a challenge under the country’s Waitangi Tribunal, Radio New Zealand reports: http://bit.ly/1MxHYO5
An appellate court reaffirms an earlier ruling against a regulation requiring companies to disclose the use of “conflict minerals” in their supply chains, the Wall Street Journal reports: http://on.wsj.com/1Liu9S1
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