June 22, 2024

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Business chief sees good chance for U.S.-ASEAN digital trade talks

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The new head of the U.S.-ASEAN Business Council said he’s optimistic the Biden administration could soon announce plans for talks on a digital trade agreement with members of the Association of Southeast Asian Nations.

The U.S. steel industry wants to make sure that President Joe Biden does not remove tariffs on steel imports from the European Union without putting in place a new trade remedy to stop a potential surge in imports.

A promise by Vietnam to cut tariffs on U.S. wheat, corn and pork is not quite a done deal, despite a White House fact sheet touting the development.

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BUSINESS CHIEF SEES GOOD CHANCE FOR U.S.-ASEAN DIGITAL TRADE TALKS: Ted Osius, the new president and CEO of the U.S.-ASEAN Business Council, has deep roots in Asia from his years of experience in U.S. government service. The former ambassador to Vietnam worked for then-Sen. Al Gore (D-Tenn.) in the mid-1980s before joining the State Department, where his first overseas assignment was in the U.S. Embassy in the Philippines.

Over the next three decades, Osius served in Vietnam, Thailand, Indonesia and India. He also worked in Gore’s vice presidential office in the late 1990s as an adviser on Asian issues and at the State Department in the mid-2000s as deputy director of the South Korean office. Former President Barack Obama picked him to be ambassador to Vietnam in 2014.

In an interview with Morning Trade, Osius said he was optimistic, based on conversations with officials on both sides, that the Biden administration would soon launch talks with members of ASEAN on a digital trade agreement.

“There are some really amazing opportunities in the digital space,” Osius said. “ASEAN is young. It’s tech-savvy. It’s online. There are over 380 million people in ASEAN that are younger than 35 years old. That’s more than the entire U.S. population. And it’s the fastest-growing internet economy in the world.”

Fourth-largest U.S. export market: The 10 nations in ASEAN have a combined population of 662 million people and a gross domestic product of $3.2 trillion. Last year, the U.S. exported $122 billion worth of goods to the region, making it the fourth-largest U.S. export market.

All 10 ASEAN countries are members of a trade pact with China called the Regional Comprehensive Economic Partnership, and several — Vietnam, Singapore, Malaysia and Brunei — are members of the Trans-Pacific Partnership that the U.S.negotiated and then abandoned after Donald Trump became president.

The Biden administration has no interest right now in rejoining the TPP, to the frustration of many in the business community and in the region.

Still, “I think the administration recognizes that in Asia, trade is strategy,” Osius said “And I think there’s a general awareness that ASEAN wants a trade deal and that having a forward-looking trade policy will be very important to revitalizing U.S. influence in Asia.”

Osius also said he believed negotiating a digital trade deal “would not be as heavy a lift as a much broader agreement because much of the content is already there” in other digital agreements in the region.

However, the Biden administration’s “strategic-level understanding of how important this is doesn’t wipe away the politics. So I wouldn’t raise expectations too high,” he said.

USTR-ASEAN meeting next week: Brunei is hosting the annual ASEAN Economic Ministers meeting beginning today, and the group’s consultations with various trading partners will continue for 10 days. U.S. Trade Representative Katherine Tai and her ASEAN counterparts are expected to discuss prospects for a digital trade agreement and how to strengthen supply chains and sustainability efforts when they meet next week, Osius said.

BIDEN’S STEEL TARIFF ALBATROSS: A large cross-section of American business opposed the tariffs that Trump imposed on steel and aluminum imports and never bought the national security rationale used to justify them. Major trading partners such as the EU hate them as well.

But as our Morning Trade colleague Steven Overly reports, they remain popular with the steel industry workers in the upper Midwest and a few other places that could help decide control of Congress and the White House in 2022 and 2024.

“The Biden administration understands that simply lifting steel tariffs without any solution in place … could well mean layoffs and plant closures in Pennsylvania and in Ohio and other states where obviously the impact would be felt not only economically but politically,” said Scott Paul, president of the Alliance for American Manufacturing.

Against that backdrop, the United Steelworkers union and two steel industry groups sent a letter to Biden late last week urging him not to lift tariffs on the EU without putting in place some other mechanism to prevent a market-destabilizing surge in imports.

“These measures must be implemented on a product- and country-specific basis and ensure that stringent, effective tariffs will be automatically imposed if steel imports from the EU surge above a non-injurious level,” leaders of the steelworkers union, the Steel Manufacturers Association and the American Iron and Steel Institute said.

TECH GROUPS PROD INDIA ON TELECOM STANDARDS: A coalition of U.S. and U.K. business groups is urging India to use telecom standards developed by the international organization known as the 3rd Generation Partnership Project, rather than develop its own.

“By adopting 3GPP standards as Indian national standards, TEC can strengthen India’s status as a manufacturing hub for ICT products and services,” the U.S.-based Telecommunications Industry Association and other business groups said in a letter to India’s Telecommunications Engineering Centre, a standards-setting body.

India, with a population approaching 1.4 billion people, is one of the world’s largest telecoms markets, giving its decision on standards considerable weight.

In their letter, the business groups mostly outlined what they said were the benefits to India of adopting the 3GPP standards. But they also warned that an Indian decision to impose its own standards “could set back vital shared work on supply chain security and vendor diversification, which also rely on common standards.”

VIETNAM AG TARIFF CUTS ARE STILL A WORK IN PROGRESS: Vietnam has not made a final decision to cut tariffs on U.S. wheat, corn and pork products, despite a White House fact sheet during Vice President Kamala Harris’ trip to the country that left the impression it had.

“Vietnam is actively considering reducing tariffs on U.S. wheat, corn, and pork products,” a Vietnamese Embassy official told Morning Trade. “This is an intersectoral process that requires time. Vietnam wishes to promote bilateral trade relations between Vietnam and the U.S., including facilitating U.S. goods in the Vietnamese market.”

Still, Biden administration officials expressed confidence the cuts would be made, even though certain details are up in the air.

“While finalizing its amended tariff Decree, Vietnam announced its intention to reduce or eliminate [most-favored nation] tariffs on corn, wheat, and pork products. The exact tariff rates and [Harmonized System] codes will be available after the final Decree is signed (likely later this year),” one administration official said in an email.

A second one added: “The Vietnamese gave a positive response. They made clear that they will have to work this through their system and we look forward to their announcement once it does.”

USTR STILL HASN’T MET WITH BIO ON COVID-19 VACCINE WAIVER TALKS: Tai still hasn’t responded to a leading biotech industry group’s request for a meeting to discuss the Biden administration’s decision to support a proposed waiver of intellectual property rights protections for Covid-19 vaccines.

“We are frustrated and disappointed that as a key stakeholder in these talks, who has raised a number of important questions and concerns about the U.S. negotiating positions, that we are not being actively consulted, in accordance with USTR’s new Transparency Principles,” Joe Damond, executive vice president for international affairs at the Biotechnology Industry Organization, told Morning Trade.

BIO President & CEO Michelle McMurry-Heath sent Tai a letter on June 30 repeating the group’s opposition to the waiver and urging her “to consult with BIO and industry leaders (as well as other interested stakeholders of course) in advance of presenting U.S. positions in either informal or formal talks.”

Meanwhile, WTO members remain deadlocked on the wavier proposal, due largely to the EU’s opposition, as they head toward the group’s 12th Ministerial Conference from Nov 30 to Dec 3.

CRS REPORT SHOWS U.S. IS THE BIGGEST USER OF CVDS: The United States by far has been the biggest user of countervailing duties over the last 25 years, according to a new report by the Congressional Research Service.

“Between 1995 and 2020 the United States was responsible for approximately half of all CVD measures put in place,” CRS said. “During this time, the United States imposed 173 CVD orders, nearly four times that of the European Union (45), the next largest user of CVDs.”

USTR WEEK AHEAD: Tai’s meetings this week include one with WTO Director General Ngozi Okonjo-Iweala on Wednesday and another with Uzbekistan’s Deputy Prime Minister and Minister of Investment and Foreign Trade Sardor Umurzakov on Thursday.

Tai, Vice President Kamala Harris and Commerce Secretary Gina Raimondo will also attend the U.S.-Mexico High Level Economic Dialogue on Thursday.

— Two Canadians marked 1,000 days behind bars in China over the weekend, a milestone that has pushed their high-profile detentions into Canada’s federal election campaign, POLITICO reports.

— A new book, ‘Red Roulette’, reveals the inside of China’s wealth-making machine, NPR reports.

— Australian Treasurer Josh Frydenberg said the Chinese government has failed to seriously impact the country’s economy through a series of punitive measures on exports, CNN reports.

— Brazil has suspended beef exports to China, its largest market, after confirming two cases of ‘atypical’ mad cow disease in separate meat plants, The Financial Times reports.

— China trade figures out today are expected to show its export growth slowed in August, The Wall Street Journal reports.

— UK extends Brexit grace period for trade into Northern Ireland again, POLITICO reports.

— UK Cabinet split over visas in New Zealand trade deal, POLITICO reports.

— Iranian, French leaders discussed nuclear deal by phone, Bloomberg reports.

— Mexico is refinancing Pemex debt after receiving a IMF transfer, Bloomberg reports.

— India’s gold imports in August nearly doubled from a year earlier to the highest in five months, Reuters reports.

— A new Democratic majority at the National Labor Relations Board is poised to carry out sweeping policy changes that could dramatically shift the balance of power toward workers and away from employers, POLITICO reports.

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