WASHINGTON — Simmering tensions between the U.S. and China and the Obama administration’s ongoing negotiations on a new regional free trade agreement called the Trans-Pacific Partnership will continue to draw the attention of the trade community this year, industry experts said.
This story first appeared in the January 4, 2011 issue of WWD. Subscribe Today.
Sources said it also will watch for any activity in the stalled Doha Round negotiations aimed at reducing tariffs and other trade barriers among World Trade Organization nations.
Trade was perceived to have a low priority in the early days of the Obama administration as more pressing economic and foreign policy concerns took a front seat. But in recent months, President Obama has made some progress on trade, most significantly concluding negotiations on a free trade agreement with South Korea early last month. Obama’s emphasis previously was mostly on export promotion and enforcement of existing trade laws.
China, the top apparel and textile supplier to the U.S., remains an ongoing quagmire for the administration. Mounting pressure over China’s currency policies continued to escalate in recent months, with the U.S. pressing for China to allow the yuan to appreciate. Critics charge the yuan is undervalued by as much as 40 percent, which puts U.S.-manufactured goods at a disadvantage against cheaper Chinese imports.
Thus far, the Treasury Department has declined to label China a currency manipulator, but it delayed the release of its most recent currency report. China has said it will allow the yuan to gradually appreciate, but critics charge that the appreciation so far has been nominal.
The domestic textile industry cites China as a top priority in 2011, as it has been for many years.
“China remains at the very top of the list in terms of policy issues that need to be addressed and resolved,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
Concerns include currency manipulation, intellectual property rights and the country’s “mercantilist” approach to trade, he said.
The U.S. relationship with China is complicated by pending disagreements at the WTO. Last month, the U.S. Trade Representative’s office requested a dispute settlement panel over alleged subsidies China gave to its domestic wind-power manufacturing sector.
Trans-Pacific Partnership talks are likely to accelerate in 2011 as an informal deadline set by the Obama administration approaches toward the end of the year, said Stephen Lamar, executive vice president of the American Apparel & Footwear Association. Obama has indicated that he would like to have significant progress made on the negotiations prior to the 2011 meeting of the Asia-Pacific Economic Cooperation in Hawaii in November. USTR held the fourth round of talks on the nascent trade pact early last month in New Zealand.
Global trading relationships also will be impacted by the fate of the Doha negotiations. The talks have dragged on for years, but there are rumblings that a “do or die” moment could be looming.
“We continue to hear this is the year when Doha will be completed, but I don’t know if there’s enough momentum or consensus,” Lamar said.
Multilateral rounds of negotiations have a habit of dying many times and being revived, he said, adding: “We’re likely to see some activity, not necessarily movement.”
Reaching an agreement on Doha would require the U.S. to give more than it has in the past on sticky issues such as agriculture, said Gary Hufbauer, senior fellow at the Peter G. Peterson Institute for International Economics. It is possible the U.S. could offer concessions in another area where tariffs are perceived to be high, such as apparel, to grease the skids, he said, but “all of it is tough going.”