Washington Trade Daily Volume 19, Number 210 October 22, 2010 Trade Reports International Group

(1)

Washington Trade Daily

Volume 19, Number 210 October 22, 2010

Trade Reports International Group

Development and DDA

Geneva – An informal group of developing countries yesterday insisted that “development” must be at the core of the final outcome in the long-delayed Doha Development Agenda trade negotiations, WTD has learned (WTD, 10/21/10).

Speaking on behalf of the informal group in yesterday’s World Trade Organization General Council meeting, the Dominican Republic called for a “credible” approach to development and underscored the need for fine-tuning in the ongoing small group “brainstorming” meetings toward development. It also said that the multilateral process should remain at the center of the negotiations to arrive at a developmental outcome.

At the General Council meeting, Director General Lamy talked about the need for transparency and inclusiveness in the small group process. Participants in the meetings are “brainstorming and not negotiating,” Mr. Lamy pointed out. The foremost challenge over the next several weeks will be to take engagement to a “higher gear by going deeper and wider in the discussions, as a prelude for the ‘give- and-take’ that will be required to build a final package,” he said.

Members “are all looking to leaders to send a clear political signal that they are ready to enter the end-game of the Doha negotiations, that they are willing to empower you to enter into the final stretch of negotiations,” Mr. Lamy stated.

Mid-November

The Director General said it would make sense to give the various processes in Geneva until mid-November – after which “I think we will need to evaluate again and take stock of where the process has to go.”

On a separate issue concerning accession of least-developed countries to the WTO, LDCs coordinator Darlington Mwape of Zambia cited 2002 special guidelines to ensure that developing countries are not subjected to onerous commitments when joining the world trade body.

Seventeen developing countries are now in line to join – with Yemen, Vanuatu and Samoa all in advanced stages.

Meanwhile, the Director General announced that the WTO Secretariat would hold the Third Global Review of Aid for Trade in July, 2011.

At the General Council, Mr. Lamy made an elaborate statement on how members should use the joint Organization for Economic Cooperation and Development/WTO monitoring and evaluation exercise. Four industrial countries – Japan, France, the Netherlands and the United Kingdom – have all offered pledges of continued financial support for the initiative.

There is a growing awareness among developing countries of the need to mainstream trade into national and regional development policies, Mr. Lamy said. More than half of 88 countries that were sent self-assessment questionnaires under the Aid for Trade initiative reported that they have fully maintstreamed trade into their national development strategy.

Also yesterday, General Council chair John Gero announced that the next WTO ministerial meeting will be held December 15 to 17, 2011 in Geneva.

(2)

Around the Globe

! President Barack Obama said Thursday the United States had been a pushover on trade with developing nations like China and vowed to drive a tougher bargain for American products, Agence France-Presse news service reported (WTD, 10/21/10). Obama, on a four-day swing through western states less than two weeks before congressional elections, argued that the global trading regime needed to be restructured so that it was more fair.

“When a lot of the trade rules were initially set up, I think we neglected to drive as tough of a bargain as we could have,” Obama said, specifically mentioning China amid rising trade and currency tensions with Beijing. Obama said that US trade negotiators had initially allowed China to base its economy on low wage or low skilled assembly line production which at the time was not a huge loss to the US economy.

But, he argued, at the latest of his nationwide series of “backyard” conversations with voters, that inevitably China had wanted to begin making more advanced products like computers and cars.

“They move up the value stream of the economy. If we have the same rules as we had where they are able to keep our products out but we are wide open to anything they want to send in then we are going to be at a huge disadvantage.”

“I want to expand trade ... but I want to do so by driving a better bargain with our trading partners,” Obama said. “The truth of the matter is they probably expect it. They are probably trying to figure out why we have been such pushovers the last couple of decades anyway.”

“So what I've said is I am for trade but it has to be reciprocal,” he said.

Separately, Reuters news service reported from Philadelphia that as Republicans bash President Obama and House of Representatives Speaker Nancy Pelosi ahead of the November congressional elections, many Democratic candidates have found a bogeyman of their own: China. From California to New Hampshire, Democrats are accusing China of draining US jobs and manipulating its currency as they struggle to fend off a Republican surge that is expected to cost them control of the House and possibly the Senate.

“As long as China is allowed to manipulate its currency, we will continue to shed jobs in Pennsylvania,” Democratic Senate candidate Joe Sestak said in a recent debate in Pennsylvania, one of about 10 contests that could determine control of the Senate. “If we're going to create jobs here at home, we need to force countries like China to play by the rules.”

The message may be resonating with voters anxious about the economy and an unemployment rate hovering around 9.6 percent. Sestak has closed the gap in opinion polls with his Republican rival Pat Toomey, an advocate of free trade, after trailing him by wide margins for the past several months in this manufacturing state. Toomey “ought to run for Senate in China,” Sestak says in a television ad.

In California, Democratic incumbent Senator Barbara Boxer charges Republican Carly Fiorina with directly shipping jobs to China when she headed technology giant Hewlett-Packard. In Ohio, Democratic Representative Zack Space criticizes Republican Bob Gibbs for his support of free trade.

“Tell him free trade isn't free,” Space's ad says.

! India, Russia and Germany on Thursday rejected a US proposal for numerical targets for

“sustainable” trade surpluses and deficits as a way to help rebalance the global economy, Reuters news service reported from Gyeongju (WTD, 10/21/10). The swift rebuff underscored the difficulties facing Group of 20 finance ministers as they gather in South Korea to try to find ways to defuse tensions in currency markets springing from the fallout of the global financial crisis.

In an interview with the Wall Street Journal, US Treasury Secretary Timothy Geithner called for an agreement on “norms” on exchange rate policy. “Right now, there is no established sense of what's fair,” he told the paper. “We would like countries to move towards a set of norms on exchange rate policy.” Officials have yet to draft the final communique, but media reports said the G20 would probably restate previous commitments to avoiding competitive undervaluations in favor of more market-driven exchange rates that minimize disorderly swings in currencies.

(3)

“Most likely, there will be some general words, along the lines of ‘let's all live in peace’. I do not expect much success in this sphere,” Russian deputy finance minister Dimitry Pankin told reporters.

Washington is floating the idea of specific targets for current account balances. This would build on a G20 pledge a year ago to tilt growth away from exports in fast-growing surplus countries, such as China, and to boost savings in rich deficit economies, including the United States. “We are exploring whether we can agree to commit to keep the external imbalances to levels that are more sustainable, making allowances for different kinds of countries, such as commodity producers,” Geithner said.

Russia's Pankin was sceptical about the initiative. “The United States will try to put the question of exchange rates and current account balances at the top of the agenda, to try to press China to make some commitments on this issue. In my view it is unlikely that they will succeed,” he said. An Indian finance ministry official also gave short shrift to Geithner's idea of numerical goals. “I do believe that this has to be looked at more fundamentally. By artificially linking current account deficit levels to the GDP you are merely skimming the surface. I am not sure that this will be supported by very many emerging economies,”" the official told Reuters.

The value of China's currency yuan, or renminbi, Wednesday weakened to 6.6754 to the US dollar from Tuesday's 6.6553, according to data released by the China Foreign Exchange Trading System. The yuan has picked up strength against the US dollar and seen increased volatility since the People's Bank of China, the central bank, announced on June 19 this year to increase exchange rate flexibility.

! The United States on Thursday said it was talking to India on “adapting and reforming”

its export control laws so that “India can be treated as a partner and not as a target” (WTD, 10/21/10).

This is the first official indication, given by US Under Secretary for Political Affairs William Burns, that Washington is amenable to New Delhi's desire for complete implementation of the India-US agreement that helped end India's isolation from the global civil nuclear mainstream.

Mr. Burns said the US was “committed to working together to realize the full potential of the historic civil nuclear agreement between the two countries. We are determined to work together to make good progress,” said Mr. Burns, while addressing journalists after meeting External Affairs Minister S.M. Krishna, National Security Adviser Shivshankar Menon and Foreign Secretary Nirupama Rao.

Mr. Burns was accompanied by US Assistant Secretary for South Asia Robert Blake. It is billed as a decisive visit to firm up the deliverables that could be announced during President Barack Obama's visit to the country a fortnight later.

! A top US government official prodded Turkey on Thursday to enforce international sanctions against Iran, increasing pressure on Ankara to scale back its flourishing trade ties with its neighbor, Reuters news service reported from Ankara (WTD, 10/20/10). “All we want is the sanctions to be imposed throughout the world,” Stuart Levey, the treasury undersecretary for terrorism and financial intelligence, told Turkish broadcaster NTV after meeting Turkish government and banking officials for two days to discuss U.S. and U.N. sanctions.

“The purpose of this visit is to maximize our chances that the sanctions imposed on Iran are successful,” Levey was quoted by the Hurriyet Daily News as telling a group of journalists. “Turkey of course plays an important role given its proximity to Iran as a neighbor. Implementation of the sanctions here is as important as it is everywhere.”

Turkey, a NATO member that aspires to join the European Union as well as a secular Muslim nation straddling Europe and Asia, has deepened economic and financial ties with Iran despite Western efforts to put the squeeze on the Islamic Republic. On Wednesday, Deputy Prime Minister Ali Babacan said in Washington that Turkish banks had become hesitant about dealing with Iran, but Turkey had left decisions on whether to pull back following US and European sanctions up to them.

! The United States and Uruguay held the fourth meeting of the Trade and Investment Council in Montevideo earlier in the week, according to the US Trade Representative’s office. Both governments made progress in formalizing the Memorandum of Intent on Education and Workforce Development, that the United States and Uruguay will sign at the Americas Competitiveness Forum, as

(4)

another important step in the continued strengthening of the bilateral relationship.

Additionally, the delegations agreed to work together to promote the export capacity of small- and medium-sized enterprises in both countries.

— —

* WTD is intended for readers within the office that subscribes. PLEASE do not redistribute. *

WTD now has available for sale compact disks for all of 1988 through 2009 – for $35 each.

To order call 301-946-0817, fax us at 301-946-2631 or e-mail us at trigtrig@aol.com

Join us on twitter at http://twitter.com/washtradedaily

Sign up for WTD’s special email alert system which keeps you informed of major trade-related news throughout the day. Simply email WTD your email address and we will add you to the list.

Email: trigtrig@aol.com

(5)

On the Web...

Developing Countries Aid for Trade. Remarks by World Trade Organization Director General Lamy on Aid for Trade. (available at:

http://www.wto.org/english/news_e/news10 _e/tnc_chair_report_21oct10_e.htm ) issued:

10/21/10.

Export-Import Bank

India. US Export-Import Bank statement on US power plant equipment to India. (available at: http://www.exim.gov ) issued: 10/21/10.

India

Ex-Im Bank. US Export-Import Bank statement on US power plant equipment to India. (available at: http://www.exim.gov ) issued: 10/21/10.

Intellectual Property Rights Internet. US Chamber of Commerce statement on rogue websites. (available at:

http://www.uschamber.com ) issued:

10/21/10.

Japan. Motion Picture Association of

America statement on on-line infringements in Japan. (available at: http://www.mpaa.org ) issued: 10/21/10.

Turkey. Japan Ministry of Trade and Economics on intellectual property rights violations by Turkey. (available at:

http://www.meti.go.jp/english/press/data/20 101020_03.html ) issued: 10/21/10.

Israel

US Relations. Treasury Department statement on US-Israel economic meeting.

(available at:

http://www.treasury.gov/press/releases/tg91 7.htm ) issued: 10/21/10.

Japan

IPR. Motion Picture Association of America statement on on-line infringements in Japan.

(available at: http://www.mpaa.org ) issued:

10/21/10.

IPR. Japan Ministry of Trade and Economics on intellectual property rights violations by Turkey. (available at:

Trade Policy

Obama Remarks. Remarks by President Obama in Seattle on trade. (available at:

http://www.whitehouse.gov/the-press-office /2010/10/21/remarks-president-a-discussion- women-and-economy-seattle-washington ) issued: 10/21/10.

Turkey

IPR. Japan Ministry of Trade and Economics on intellectual property rights violations by Turkey. (available at:

Ukraine

US Relations. Remarks by Deputy US Trade

(6)

Representative Sapiro at the US-Ukraine Business Council meeting in Kiev. (available at:

http://www.ustr.gov/about-us/press-office/sp eeches/transcripts/2010/october/remarks-amb assador-miriam-sapiro-us-ukraine ) issued:

10/13/10.

Uruguay

US Relations. US Trade Representative’s office statement on the US-Uruguay trade and investment framework agreement meeting.

(available at:

http://www.ustr.gov/about-us/press-office/pr ess-releases/2010/october/office-united-states- trade-representative-particip ) issued:

10/21/10.

Washington Trade Daily Volume 19, Number 210 October 22, 2010 Trade Reports International Group