Lawmakers, Witnesses Urge US-Asia Trade Barrier Elimination at Senate Hearing

The TPP pact presents an avenue to address both barriers and human rights issues in the region, said Cardin. “We need to have a level playing field for American companies to compete. And the currency issue is a huge matter,” said Cardin. “There are other countries in Asia that are also involved in currency manipulation, other than China. And it needs to be on the radar of everyone engaged in regional economic discussions.” These trade barriers, among an array of others “both at and behind the border in these countries,” are fueling persistent trade imbalances with several major Asian economies, said witness Matthew Goodman William E. Simon Chair in Political Economy at the Center for Strategic & International Studies.

The 2012 U.S. trade imbalance with China topped a $315 billion deficit, said Goodman. “TPP is designed to address this gap by establishing ‘21st-century’ rules governing not only tariffs and other border measures but also behind-the-border issues such as intellectual property protection, regulatory transparency, labor and environmental standards, and the investment climate,” said Goodman.

Despite the impediments, U.S. trade with the Asia-Pacific region grew by 22 percent between 2008 and 2012, exceeding the 13 percent growth in U.S. trade during that time period throughout the globe, said witness Scot Marciel, Principal Deputy Assistant Secretary at the State Department Bureau of East Asian and Pacific Affairs. “Our economic relationship with Singapore is flourishing, with bilateral trade having increased almost 60 percent and U.S. exports by 85 percent since the United States-Singapore FTA entered into force in 2004,” said Marciel.

“By January 1, 2016, Korean tariffs on over 95 percent of exports of U.S. industrial and consumer goods to Korea will have been eliminated,” Marciel added. Moreover, U.S. exports to Myanmar reached $124 million through October of this year, surpassing the combined annual U.S. exports to that nation in 2011 and 2012, according to Marciel. The leading U.S. merchandise exports to the region include electrical machinery, machinery, and aircraft, said John Andersen Principal Deputy Assistant Secretary for global markets at the International Trade Administration, adding that the region held seven of the top 21 markets for the U.S. globally in 2013.

U.S. negotiators, however, resisted sealing a TPP deal this year in order to ensure U.S. objectives were met, said Anderson. “Part of why we weren’t able to conclude is there are still some areas where we were not achieving what we had hoped for, particularly in some of the market access areas,” said Anderson. “We’re not just going to negotiate to negotiate. We’re going to negotiate to get a high-quality, high-standard agreement. That’s what we’re still after and that’s what we hope to achieve sometime early next year.”

The U.S. will also have to make concessions in the coming months, however, in order to placate regional concerns over export access to U.S. markets, said lawmakers and witnesses. Senator John McCain, R-Ariz., cited Government Accountability Office reports that describe a Department of Agriculture program, introduced in the 2008 Farm Bill, as duplicative and wasteful. The program threatens to jeopardize TPP consensus, said McCain.

“The president’s FY 14 budget proposed to eliminate it,” said McCain. “And I’ve read reports that the catfish office will be a violation of our WTO obligations because it places trade barriers on catfish imports from Southeast Asia, particularly Vietnam. … It’s clearly a blatantly protectionist measure.” Some lawmakers, trade experts and industry officials are urging repeal in the pending Farm Bill conference report (see 13121124). The program is taking on disproportionate influence but other market access issues in a final TPP pact will prove more critical to TPP participant nations, such as Vietnam, said witness Derek Scissors, Resident Scholar at the American Enterprise Institute.

“Through its negotiations in the TPP, Vietnam is attempting first and foremost to win market access to the U.S. and follow the path of its neighbors,” said Scissors. “I would say that textiles are similar in some ways to the catfish issue but multiplied by a thousand. When we are asking for human rights reform in Vietnam, which the Communist party is very reluctant to give us, textiles are a lever which we can make progress on that issue because it is so important for the Vietnamese to get better access to the U.S. market.” Potential TPP Rules of origin for Vietnamese manufacturing have generated inter-sector conflict over recent months (see 13082011).

The U.S. must pass Trade Promotion Authority (TPA) in order to secure TPP and stay competitive in the region, said lawmakers and witnesses. Hundreds of countries worldwide have entered into trade agreements since the TPA expired in 2002, said Anderson. “While these agreements are not the high-standard, comprehensive trade agreements the United States negotiates, they do offer foreign companies better and cheaper access to these markets,” said Anderson. “This places U.S. workers, businesses, and farmers at a comparative disadvantage.” Lawmakers struck a TPA deal in recent days, but do not plan on introducing legislation until 2014 (see 13121717).

“In fact, China is currently negotiating agreements with other Asia-Pacific partners that could displace U.S. goods, services, and agriculture products and set standards that exclude U.S. exports from these countries’ markets,” Anderson added. “We need TPA to stay competitive.” The Regional Comprehensive Economic Partnership is the flagship regional pact spearheaded by the Chinese, lawmakers and witnesses noted. -- Brian Dabbs