Although the Obama administration has focused more on enforcement of existing trade agreements than new deals, there’s still been a lot of activity in the nation’s Capitol where trade issues are concerned.
Stephen E. Lamar, executive vice president of the American Apparel & Footwear Association, moderated a roundtable discussion on “Trade Politics and Policies for the Coming Year” that included Erin Ennis, vice president at the U.S.-China Business Council; Linda Menghetti, vice president at the Emergency Committee for American Trade, and Laura M. Baughman, president of The Trade Partnership.
Ennis spoke about issues involving China, noting that while there’s been an ongoing currency debate in political circles, the issue of what is the exchange-value rate is not high on the list of top issues for large multinational firms sourcing globally.
However, she acknowledged, “The reality is there’s a portion of the U.S. economy where companies that are producing products in the U.S. and competing with importing products from China that feels strongly that the exchange rate is the reason why they are having difficulty competing.”
The House in September passed legislation to “allow the imposition of countervailing duties on products imported from China,” Ennis said. “Sen. Charles Schumer (D., N.Y.) has made it the centerpiece of his international trade agenda for many years. Congress is coming back [for a lame-duck session] on Nov. 15….Schumer said he was interested in taking up the bill that passed in the House so the Senate can pass it and then send it to the President.”
Ennis said China has told its companies involved in production to expect the currency to appreciate, and that they should make plans accordingly.
“So far, production has begun shifting from the Guangdong area to inner China, where labor costs are lower,” she said. “There is also [some] movement west [for production] to build out their third- and fourth-tier cities.”
Ennis added that the U.S. and China have an interest in making their relationship work, and there is talk about President Hu Jintao visiting the U.S. in January to meet with President Obama.
Menghetti provided an update on Trans-Pacific Partnership negotiations, which included Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam and the U.S.
“Malaysia is now joining in the negotiations,” she said.
In addition, Japan has expressed interest, but it wasn’t yet clear when they might join the discussions, Menghetti said.
The negotiations are expected to be completed in 2011. While it is unclear how meaningful the talks are for companies, she said an agreement at the very least would simplify and facilitate trade.
“We are working on trying to promote some [supply chain] coherence or harmonization,” such as for customs entry documents, so goods can flow in more seamlessly, she said.
Baughman said her work has been focused on both the renewal and the reform of trade preference programs that provide duty free treatment to imports either from select developing countries or for select products where these developing countries don’t have free trade agreements with the U.S.
She noted that while the generalized system of preferences is the biggest preference program, benefitting 131 countries, most apparel, footwear and leather goods are not eligible for the GSP. However, there are four regional programs that extend duty free treatment to most apparel, footwear and leather imports: the Andean Trade Preference program between the U.S. and Bolivia, Colombia, Ecuador and Peru; the African Growth & Opportunity Act for sub-Saharan African countries; the Caribbean Basin Trade Partnership Act, an expansion of the Caribbean Basin Initiative, and the Haitian Hemispheric Opportunity through Partnership Encouragement Act.
Right now the priority is the renewal of expiring programs for the Andean region and the GSP, which expire at the end of the year and have been left for the lame-duck session.