Industry Leaders Push TTIP Tariff Elimination, De Minimis Hike, TPA at Senate Hearing
The incipient Transatlantic Trade and Investment Partnership (TTIP) negotiations must secure all inclusive tariff elimination between the U.S. and European Union (EU) in a final pact, while making inroads towards regulatory harmonization, Senate and industry leaders on Oct. 30 told a Senate Finance Committee hearing on the trade pact (here). Should the U.S. and EU broker comprehensive tariff elimination, the deal could boost U.S. exports to the EU by a third, adding $100 billion annually in U.S. Gross Domestic Product and creating hundreds of thousands of domestic jobs, said Finance Committee Chairman Max Baucus, D-Mont., in opening remarks.
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“Tariffs are already relatively low between the U.S. and EU so it shouldn’t be difficult to gain an agreement to get rid of those tariffs that remain,” testified Michael Ducker, Executive Vice President and Chief Operating Officer for FedEx Express. “Nonetheless the importance of eliminating those tariffs is very significant because the enormous volume of trade across the Atlantic, even the generally single digit tariffs that force [costs] of about $6.4 billion a year.” The other witnesses included Ryan McCormick, President of Montana Grain Growers Association, William Roenigk, Senior Vice President at the National Chicken Council, and Dave Ricks, Senior Vice-President and President at Lilly Biomedicines.
The U.S. Congress and trade negotiators must push to break down trade barriers for U.S. poultry, said Roenigk. The EU implemented a ban in 1997 on U.S. poultry imports processed with pathogen reduction treatments, a process routinely used by the U.S. poultry industry (see 09012630). The EU ranked in the top 10 U.S. poultry export markets prior to the ban, according to Roenigk. “U.S. poultry exports to the EU, we believe with the successful conclusion of TTIP could be over $600 million, which would make the EU the largest market behind Mexico and Hong Kong-China,” he added.
The EU temporarily removed tariffs on low and medium quality wheat in 2011 (here), a suspension that McCormick said persists today. The U.S. should build off that progress to secure comprehensive tariff for all wheat products, he said, adding that the Canadian-EU free trade agreement negotiations that came to a preliminary conclusion this month will threaten U.S. wheat exports (see 13101819). “The outcome of the Canada-EU agreement will result in permanent, zero wheat duty for Canadian producers to be phased in over seven years,” said McCormick. “This will lead to a future tariff differential and a preference toward Canadian wheat. This increases the urgency to finalize this trade agreement,” he added in reference to TTIP.
The de minimis levels between the U.S. and EU need to be raised across the board, potentially through regulatory harmonization language in a final TTIP pact, said Ducker. The U.S. legislative efforts to hike the de minimis level to $800, from its current $200 level, represents progress in easing regulatory barriers, he added. Ducker was referring to the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013, S. 662 (here), a Baucus and Hatch-sponsored bill introduced in March (see 13052302). The House also introduced in March a bill, H.R. 1020 (here) that raises the de minimis, called the Low Value Shipment Regulatory Modernization Act of 2013 (see 13030805).
The EU, however, should follow suit in elevating the levels, said Ducker. “It’s not only the de minimis value, but on the value added tax (VAT), so some of those numbers are as low as $30, and it can even go lower in some of the newer entrants into the EU, which means that any good that is shipped into Europe that is above the VAT of $30 has to file unnecessary forms for a low value added good,” said Ducker. “In many cases, the value in the transaction cost to ship a good into the EU, with these low de minimis standards can exceed the cost of the good itself.”
The industry leaders and some Finance members also pressed the need for expeditious passage of Trade Promotion Authority (TPA). The negotiating authority should be passed by the end of 2013, said Baucus. “Congress needs to be a full partner in the development and execution of this agenda. The best way to do that is to pass Trade Promotion Authority and to do it soon. The United States has numerous other trade opportunities. The Trans-Pacific Partnership, the TPP, is near conclusion,” said Baucus. There remains only 18 legislative days left on the 2013 legislative calendar. But Congressman Dave Reichert, D-Wash., has started to whip votes in the House for TPA, a spokeswoman for Reichert confirmed on Oct. 30. Reichert launched on Oct. 29 and co-chairs the Friends of TPP Caucus along with Congressmen Charles Boustany, R-La., Ron Kind, D-Wis., and Gregory Meeks, D-N.Y. (see 13103004).
The sluggish global economic recovery and poor World Trade Organization (WTO) progress on trade facilitation make TTIP more attractive for both the U.S. and EU, said Ducker. “I think the economic conditions have certainly given us greater leverage. Whether it’s a consequence of the Doha Round stalling or not, I think people are taking opportunity like this,” said Ducker, referring to the WTO talks that will formally resume in December (see 13100314) “Only a few times in the last 25 years has global trade grown slower than global GDP. And usually it’s about two and a half times the pace, but we’re significantly below that today.”-- Brian Dabbs