Oye Como Va?

Let’s say you’re the United States. Things are going really well. The US–Colombia Free Trade Agreement was implemented one year ago today. According to US statistics, it has been somewhat of a success for the United States. US exports are up 20% to $15.9 billion when comparing May 2012 – March 2013 to the same time period a year earlier. It looks like the big transportation equipment companies were able to start getting their goods into the country quickly, increasing exports by 61% during the same period of time. Other big winners include the petroleum and coal products, processed foods and electronics. Meanwhile other ag products increased significantly as well.

If you’re Colombia, you might not be putting on a party hat. The one-year anniversary doesn’t look like so great. Or does it? Overall exports to the US have declined by 7% comparing the year-to-date January – March 2013 to that of 2012. Fuels, coffee, chemicals and plastics declined during this same period, while exports of semi-precious stones, fresh cut flowers and sugar increased. However, it is important to note that Colombia still maintains a trade surplus of over $10 million against the US. So, overall, still not so bad.

Let’s see what the future brings for both countries. Hopefully they will both demonstrate increases soon.

Happy Birthday to the CTPA!

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And the Winner Is…..

Roberto Azevedo of Brazil will serve as the next director-general of the World Trade Organization! The announcement had been expected later in the month but the third round of member polling has evidently yielded results already. A formal acceptance by WTO members is scheduled for May 14.

Some speculators believe that the other candidate, Herminio Blanco of Mexico, may have secured the support of the U.S., the EU and Latin American countries but that the Brazilian likely had a greater diversity of support in terms of geography and economic development levels. It is possible too that Azevedo is perceived as a person willing to buck the developed powers of the U.S. and the EU since Brazil has been one of the countries maligned for the slowness of the WTO’s Doha Round talks. Azevedo is also no stranger to the WTO, having served as Brazil’s ambassador since 2008; thus, it may be interesting to see how he switches roles.

Pascal Lamy is expected to had over the reins on September 1. The transition will occur just months before the next ministerial meeting scheduled for December in Bali, Indonesia. Azevedo will also appoint four deputies; the U.S. is expected to get one of those slots, and the rest will be meted out by Azevedo.

It may be very interesting to see how Azevedo conducts the WTO. Many believe the organization is dead and that the only way forward is through smaller agreements rather than holding out for the whole enchilada. If so, areas that could see progress include trade facilitation and an updated agreement on information technology.

It was a long, four-month competition, but Brazil has won. Parabéns, ou alto assim.

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Brazil and Mexico to Face off in the WTO finals

Brazil and Mexico to Face off In the WTO Finals

No, we’re still not talking about the NCAA tournament, nor the World Cup, but rather the race for a new leader of the World Trade Organization. After a second round of consultations with member states, the troika in charge of the selection process, composed of the presidents of the WTO General Council, the Dispute Resolution Body and the Trade Policy Review Body, announced the final two candidates from five semi-finalists. Herminio Blanco of Mexico and Roberto Carvalho de Azevedo of Brazil are the remaining candidates to succeed Pascal Lamy.

The third and final stage of the selection process to appoint the new director-general of the WTO will be concluded in May. Lamy’s successor will be announced by May 31 and will officially begin on Sept. 2.

The challenge that the next director general will face is to bring an end the ongoing Doha Development Round of multilateral trade negotiations that has been at an impasse since 2008. It is significant that both final candidates are from developing countries and, most of all, that one of them represents a country, Brazil, that has played a pivotal role in the round and been included in the inner circle of negotiations.

Stay tuned as the winner will appear here later this month!

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Final Five (maybe) make it to the WTO Semi-finals…

No, we are not talking about NCAA basketball, but rather the run for the Director General of the World Trade Organization.  The original slate of nine candidates has been reduced (according to the chair of the General Counsel) to five semifinalists including:

— Ms Mari Elka Pangestu (Indonesia)

— Mr Tim Groser (New Zealand)

— Mr Herminio Blanco (Mexico)

— Mr Taeho Bark (Republic of Korea)

— Mr Roberto Carvalho de Azevêdo (Brazil)

The other four candidates, Mr Alan John Kwadwo Kyerematen (Ghana);  Ms Anabel González (Costa Rica);  Ms Amina C. Mohamed (Kenya) and  Mr Ahmad Thougan Hindawi (Jordan) should withdraw their names as a result of the first round of polling in which all 156 members cast votes for their top four candidates.

The semi-final round will begin on Tuesday April 16 through Wednesday April 24 despite reports that the Kenyan candidate does not want to withdraw her name, stating that the process was flawed, she did not agree with the consensus and that she may request a straight vote; which, although it is within the protocol establishing the WTO, has never been requested or taken.

During the semi-final round another three candidates will be eliminated.   Member states then will be asked to cast votes for only two candidates.  The final two nominees will be announced as soon after April 24 as possible.

And then the candidates will head into the championship game, I mean, final vote for DG of the WTO.

Stay tuned!

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The Lights Are On But Nobody’s Home

The Obama Administration is well into its second term and yet it still has vacancies at the heads of the Department of Commerce, the U.S. Trade Representative’s office and Customs and Border Protection. As if to underscore the situation, we just received news that Acting Commerce Secretary, Rebecca Blank will be leaving the Administration altogether; she takes a new job in academia in July. There isn’t even an Acting Secretary at this point. Blank was obliged to step down after serving the maximum amount of 210 days – she served as acting when Secretary Locke left and when Secretary Bryson took a medical leave of absence. USTR is faring somewhat better. Deputy USTR Marantis is taking the healm and there are strong whispers about the next agency head. That said, Obama has yet to nominate the heir apparent. Poor Customs hasn’t had a Senate-confirmed Commissioner since the Bush Administration. Alan Bersin served at the pleasure of the President as a recess appointment, but that appointment was cut short when he wasn’t confirmed at the end of 2011. Since then, Deputy Commissioner David Aguilar has been serving as Acting Commissioner. Aguilar retires at the end of this month. Watch this space as news develops…

Edward G. Steiner
Senior Director

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Deadline to File Comments on Canada’s GPT Reform Is February 15; Is Reform in the U.S. Next?

The Canadian government launched consultations in December 2012 as part of a comprehensive review of the General Preferential Tariff, which provides preferential duty treatment to a range of imports from developing countries, including mainland China and Hong Kong. This program is similar in its objective to the U.S. Generalized System of Preferences (GSP). Interested parties may submit input on the proposed reforms to the Department of Finance’s International Trade Policy Division no later than Feb. 15. Any changes stemming from this review will be publicly announced in advance of the proposed implementation date of July 1, 2014.  

 Canada’s GPT was originally established in 1974 and was last reviewed almost 20 years ago. Canadian authorities observe that the global economy has undergone considerable changes since then and a number of developing countries have greatly increased their competitiveness and even joined the ranks of the developed world. Accordingly, Canadian authorities have initiated a review of the GPT program “to better reflect the current global economy and to ensure that the GPT aligns with Canada’s international development objectives.”

 As part of this reform effort the Canadian government is proposing to remove from GPT eligibility countries that (i) are classified for two consecutive years as high income or upper-middle income economies according to the latest World Bank income classifications or (ii) have a share of world exports that is equal to or greater than one percent for two consecutive years according to the latest WTO trade statistics. Based on these criteria, the Canadian government intends to withdraw GPT eligibility from 72 countries or territories effective July 1, 2014. Major suppliers that stand to lose their preferential access to the Canadian market include China, Argentina, Brazil, India, Indonesia, Malaysia, Russia, Thailand and Turkey.  In addition, while the Canadian government indicated that it does not contemplate any changes to its least-developed country tariff, which provides duty-free treatment to imports from LDCs, market access for these countries may be substantially hampered by the GPT reform. Limiting the number of GPT eligible countries will diminish the number of countries from which LDCs may source and still have their products qualify under the GPT rules of origin.

 These changes to Canada’s GPT would be substantial and may have a spillover effect in spurring reform in the U.S. Would there be pressure in the U.S. to limit GSP access to a fewer number of countries based on the changes in Canada? As we commented in a previous post, new House Ways and Means Trade Subcommittee Chair Devin Nunes, R-Calif., introduced a bill last year to add new requirements to GSP. With the program expiring July 31, Nunes and other members of Congress may be eyeing reforms too. The most recent changes to GSP took place in 2006, when Congress added more stringent graduation requirements for countries and products that were deemed to be highly competitive. However, some in Congress think that the 2006 changes did not go deep enough because GSP continues to allow imports from more advanced developing countries (such as Brazil and India) to receive benefits.

 The upcoming July 31 GSP expiration may very well become a force action deadline for GSP reform in the U.S.  Even if reform is not achieved by then, would GSP become a hostage of negotiations and be allowed to expire has happened in years prior? Well, GSP! (Gut Says Probably)

 For questions or comments about this post, contact David Olave at dolave@strtrade.com.

 

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Who Will Be the Next USTR? Winner Gets a Free Copy of the Book “Doing Business Anywhere: The Essential Guide to Going Global”

U.S. Trade Representative Ron Kirk announced Jan. 22 that he intends to step down from that position in late February. There is considerable speculation about who might replace Kirk as USTR. One name mentioned frequently is Michael Froman, who currently is deputy national security advisor for international economic affairs. Froman is noted for his understanding of the details of trade policy but some sources say he might prefer to stay in his current position. Another potential candidate is Treasury Undersecretary for International Affairs Lael Brainard, whom Inside US Trade notes “worked extensively on trade issues as a senior fellow at the Brookings Institution from 2001 to 2009.” Other names that have come up include former Washington state governor Christine Gregoire, Export-Import Bank Chairman Fred Hochberg, Undersecretary of Commerce for International Trade Francisco Sanchez, and deputy USTRs Demetrios Marantis and Michael Punke.

 Whom do you think will be picked to lead USTR during President Obama’s second term? Send us your response at tallison@strtrade.com. The first ten respondents who guess correctly will receive a copy of Tom Travis’ best-selling book “Doing Business Anywhere: The Essential Guide to Going Global.” Entries may be submitted until Feb. 8 or the day before the announcement is made public, whichever is first.  

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