IPEF: A BUSINESS VIEW: The first face-to-face ministerial meeting to discuss goals for the proposed Indo-Pacific Economic Framework for Prosperity starts on Thursday in Los Angeles, which is home to both Hollywood and America's biggest port. There's still a number of questions about what to expect, including whether we'll know by the end of week which of the 13 other countries are participating in the talks on each of the four pillars. Morning Trade asked Jake Colvin, president of the National Foreign Trade Council, to share some of his thoughts on the meeting. Some answers have been trimmed slightly for space considerations. MT: What are you hoping to see from this week's ministerial? Could we actually see detailed negotiating texts at this early stage? Colvin: "The business community will be looking for a roadmap that suggests prospects for commercially-meaningful commitments on trade and supply chain issues as well as a roster of countries that will participate across the initiatives. "I would be surprised to see detailed negotiating texts to emerge from this particular set of conversations." MT: Since tariff cuts are off the table — for now anyway — what's the most commercially meaningful aspect of the IPEF? Colvin: "A commercially meaningful agreement ought to feature gold-standard language on digital trade and trade facilitation, including a permanent ban on customs duties on intangible goods, as table stakes (meaning, at a minimum). "There are several other areas that could be of particular interest, including strengthening regional supply chain coordination, developing shared approaches to address the root causes of forced labor, and collaborating on standards and good regulatory practices. "A standstill agreement to avoid new trade barriers would be an important and commercially-meaningful short term signal that countries could send about their intentions." MT: How seriously do you think other countries are viewing the initiative, given that the United States seems to be willing to offer very little in exchange for whatever it asks other countries to do? Colvin: "There is no doubt that other countries are taking IPEF seriously, though I don't see every single country on the initial roster anteing up for something like a high standard digital trade agreement. "There's frankly a gap in policy ambition between a country that is already part of a trade pact like CPTTP (see footnote 1) and another that declined to join the less ambitious Regional Comprehensive Economic Partnership (see footnote 2). "It's going to be incumbent upon the United States to help resolve that tension between breadth of participation and policy depth." 1 - Australia, Brunei, Japan, Malaysia, Singapore and Vietnam
2 - India MT: What do you think are the administration's goals for the agreement? Colvin: "You'll have to ask the administration that. But to say it a different way: This is an opportunity for the Biden Administration to begin to translate the new energy on trade that Ambassador Tai talks about into concrete deliverables that enable more inclusive access to the global marketplace for American businesses and workers." CIVIL SOCIETY GROUPS CALL FOR MORE TRANSPARENCY: Heading into the meeting, groups such as Public Citizen, Rethink Trade and Trade Justice want more detail about what's being negotiated, especially in key areas like labor, digital trade and climate concerns. The groups are planning a rally Thursday outside the Los Angeles hotel where the talks are being held to drive home that point. More than a hundred similarly-minded organizations signed a letter this summer calling on the administration to drop the usual veil of secrecy surrounding most trade negotiations by publishing all proposals made by countries, as well as any consolidated draft texts as they emerge. Morning Trade has asked both the Commerce Department and USTR for any draft texts that ministers will be considering this week, but has not received any documents. Earlier this summer, the Bilaterals.org website published what appeared to be a draft text for the USTR portion of the agreement, known as Pillar 1. "The Biden Administration is engaging a wide range of stakeholders as we develop the Framework, and their feedback will continue to inform our process," a Commerce Department spokesperson said. "We remain fully committed to providing information to stakeholders as discussions progress." THE IPEF DIGITAL DIVIDE: As Colvin indicated, the business community sees the digital trade negotiations as one of the most important areas of the negotiations. The Coalition of Services Industries, whose diverse membership includes Amazon, Google and Facebook, devoted nearly all of the comments it submitted to USTR to the need for the agreement to fashion strong and enforceable digital economy rules. "The IPEF should include commitments to remove discriminatory and protectionist barriers to data flows, which is crucial for building global value chains and to allow companies, large and small, to access the global market and increase efficiency," CSI said. A high-standard digital agreement would preserve and increase American jobs "not just in the services sectors, but across the economic spectrum," CSI said. "Other governments, including China, are actively working to shape the rules of the road for digital trade, often at odds with democratic values and the principles of openness and transparency." Lori Wallach and Daniel Rangel at Rethink Trade cast the digital trade talks in a more sinister light in the comments they filed with USTR. They accused Big Tech companies of trying to use the IPEF negotiations "to lock in binding international rules that limit governments from regulating digital firms' behavior in the public interest and from fighting corporate concentration and monopoly power." "If this 'digital trade' ploy succeeds, Big Tech interests could weaken existing policies worldwide and stop U.S. policies that constrain digital entities' monopolistic abuses and anticompetitive power, that protect privacy and individual rights over personal and non-personal data, that fight algorithm discrimination, that hold platforms liable for dangerous products and violent incitement and that protect gig workers' labor rights," they wrote. 180 degree turn sought: "USTR's objectives for IPEF negotiations must be the opposite of past 'digital trade talks'" by allowing countries to maintain "full policy space for digital standards that protect workers, consumers, small businesses and civil rights," the Rethink team wrote. USTR SORT OF BEGINS NEXT PHASE OF TARIFF REVIEW: USTR on Friday formally acknowledged it has received hundreds of requests to maintain the tariffs that Trump imposed on more than $300 billion worth of Chinese goods. That signals the start of a formal review, but the agency still hasn't said how long it will take to conduct that assessment and whether it will hold any public hearings as part of the process. TTC THREE: AUSTIN VERSUS MIAMI: That's the rumor out of Brussels, anyway. It's the United States' turn to host the semi-annual U.S.-EU Trade and Technology Council meeting and the two sides are said to be considering either Miami or Austin for the location of the third meeting, sometime in December or January. (Although one U.S. industry official said they thought Washington was also a possible venue.) Six officials involved in the upcoming meeting told our Brussels colleague Mark Scott that so-called "deliverables" were expected to be finished by late October. European policymakers visited Washington in July with the aim of laying out goals for both the U.S.-based get-together and the subsequent meeting in mid-2023 somewhere in Europe. "We have to start showing results," said one of those officials, who — like the others — spoke on the condition of anonymity to discuss internal transatlantic deliberations. "The first two meetings have shown what we can accomplish. Just look at how we came together on Russian sanctions over Ukraine." Another highlighted how some of the working groups, or regular meetings of mid-tier officials, were working out better than others. He cited those on investment screening and data governance as successes, while working groups focused on climate change and small businesses had proved less fruitful. Concern about the EU's 'cybersecurity scheme': The EU, along with Japan and South Korea, have raised concern about the United States' revised tax credit for electric vehicles, which is available only for cars that have final assembly in North America. So, it wasn't surprising to see that issue mentioned in USTR's readout of Tai's virtual meeting last week with European Commission trade chief Valdis Dombrovskis. However, USTR paired those concerns with "issues related to the EU cybersecurity scheme" — the first time Morning Trade recalls seeing the matter included in a USTR statement. USTR did not respond to a request for further information. But earlier this summer, the American Chamber of Commerce in the EU and several other business groups issued a joint statement to express concerns over several procedural and substantial elements in the EU's proposed Cybersecurity Certification Scheme for Cloud Services.
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