You are invited: The Trans-Pacific Partnership: New Rules for a New Era

wc_horz_color

The Program on America and the Global Economy, the Asia Program, the Canada Institute, the Kissinger Institute, the Latin American Program and the Mexico Institute with the support of Wilson Center Senior Scholar William Krist Present:

The Trans-Pacific Partnership: New Rules for a New Era 

Wednesday, June 19, 2013

2:00 – 5:00 pm

Flom Auditorium, Woodrow Wilson Center


WELCOME and KEYNOTE:

2:00 pm – 2:40 pm

Robert Zoellick, Harvard Belfer Center and  Peterson Institute for International Economics; former president of the World Bank, former United States Deputy Secretary of State and former U.S. Trade Representative

PANEL 1: How the TPP fits into other regional trade agreements.

2:50 pm – 3:50 pm

NAFTA, FTA between Canada and the EU:

  Ari Van Assche, Professor, International Business, HEC Montreal

TTIP:            Michael Geary, Fellow, Wilson Center and Assistant Professor, Maastricht University, The Netherlands

ASEAN:        Roberto Herrera-Lim, Director, Eurasia Group

PANEL 2: Current countries involved in the TPP and what it will take for a successful negotiation.

4:00 pm – 5:00 pm

Australia: Joshua Meltzer, Fellow, Global Economy and Development, Brookings Institution

Vietnam:  Ambassador Nguyen Quoc Cuong, Ambassador of Vietnam to the United States

Chile:       Marcos Robledo, Professor of International Relations and Foreign Policy, Universidad Diego Portales

Moderator:  Kent Hughes, Director, Program on America and the Global Economy, Wilson Center


 

Please RSVP (acceptances only) to page@wilsoncenter.org

The Wilson Center is located in the Ronald Reagan Building at 1300 Pennsylvania Ave., NW. (Federal Triangle Metro stop on the Blue/ Orange Line) For a map and directions see: http://www.wilsoncenter.org/directions.  Please bring a photo ID and arrive 15 minutes ahead to allow time for the security checkpoint. 

Media guests, including TV crews, are welcome and should RSVP directly to elizabeth.white@wilsoncenter.org

Advertisements

Guest Contributor William Krist with Dani Litovsky: LNG – to export or not to export, that is the question

oil drilling at sunset
The United States is rapidly moving from being dependent on imported fossil fuels to becoming a major world producer.  We’re sitting on vast supplies of natural gas, and recent technological innovations have made it possible to tap previously unattainable resources.  So what should we do with these new-found riches?  Producers of natural gas, by and large, want to be able to sell where they can get the best price, and often that will mean selling overseas.  But consumers oppose exporting our natural gas, arguing that keeping these supplies to ourselves will keep the price here in the U.S. lower than the world price, and that this will give them a competitive advantage.  They believe this will add more value to the economy and trade account than exporting LNG.  And some environmentalists oppose exports because they believe this would raise the price of natural gas and thereby encourage more production.

From an economic perspective, allowing exports would lead to some increase in domestic prices, but the price of natural gas in the U.S. is far lower than in many other markets, for example, $2.66 per thousand cubic feet on average in the U.S. in 2012 compared to some $10 in the U.K. Somewhat higher prices in the U.S. because of exports would encourage greater U.S. production, but prices in the U.S. would still be lower than in most markets because of transportation costs, and this would continue to give manufacturers that use natural gas a cost advantage.  From an environmental perspective, natural gas is less polluting than other fossil fuels.  Until renewable energy such as wind and solar can meet the world’s energy needs – a prospect that is likely to be at least a decade away – encouraging the use of natural gas probably has a positive environmental impact.

From a trade policy perspective, restricting exports would likely run afoul of World Trade Organization (WTO) rules, and it would weaken our complaints about other countries’ export of vital minerals, which many believe is an attempt by China to gain a competitive advantage at its trade partners’ expense.

The economic impact of allowing natural gas exports is likely to be small, as is the environmental impact.  So perhaps this debate is more like “much ado about nothing.”

(Click here for a paper that sets out these issues in more detail.)

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment.

Do traditional measurements misinterpret global trade?

global communicationsAs the world economy becomes more interconnected, it has become clear that import/export trade figures by themselves do not fully capture how much the US contributes to global commerce. Imports and exports merely measure the trade in completed products between nations and present a flawed picture. On the other hand, metrics such as US foreign affiliate sales provide information on longer-term investment and entrenchment in foreign markets, thereby giving a substantially different, and perhaps more accurate, look at what the US provides in goods and services.

Taking a look at exports trade data, a country like Ireland looks inconsequential to US trade with only $7,276 million (USD) in exported goods. However, Ireland is actually an important hub for transnational companies, and rakes in huge amounts of investment as shown by the foreign affiliate sales which puts Ireland at around $171,895 million, a number that eclipses Mexico at $143,478 million. Using only exports, Mexico is our number two trading partner for exports, but when we use the Sales/Export ratio, Mexico stands at 0.9, whereas Ireland is at 23.6.Without accounting for foreign affiliate sales, policy makers would have no idea of the importance of Ireland to US commerce. In addition, using foreign affiliate sales sheds light on other trade relationships, including Germany a country that many policymakers are worried about due to our supposed trade imbalance. In actuality, while US exports with Germany are only at $48,161 million, the US foreign affiliate sales are at $244,785 million and a ratio of 5.1. This means that the US is very much invested into Germany and the trade imbalance is not as nearly as significant when looking at both sets of metrics. This also presents an interesting note on the relative significance of trading partners. Policy-makers often stress the importance of China to US trade, but when looking at foreign affiliate sales, China is only at $138,991 million compared to Germany’s $244,785 million. This has the implication that the US actually has more trade interests in Germany, which is something that is completely unacknowledged when measuring using only export trade.

Using only export numbers presents an incomplete depiction of US trade. It is very difficult to make smart policy that improves US trade potential if the true trade relationships between the US and foreign countries are not understood. In terms of trade importance to the United States, opportunities lie with the newly proposed Trans-Atlantic Trade Agreement at almost $1,473,483 million in foreign affiliate sales. The United States must begin to rely more on foreign affiliate trade data or at least use it to supplement traditional import/export measurements to get a more accurate representation of US trade interactions.

Posted by: Matthew Goldberg

Sources: U.S. International Trade Commission, Vox, OECD, U.S. Census Bureau

Global Trade and the State of the Union

SOTUUnsurprisingly, the State of the Union address focused primarily on the domestic economy. President Obama emphasized issues such as the looming sequester and the need for immigration, entitlement, and tax reform. In terms of major announcements on the international trade front, the President revealed that the US aims to start talks with the EU towards creating a “comprehensive transatlantic trade and investment partnership.” This is a significant development for a multitude of reasons. A free trade partnership between the US and the EU would streamline trade by reducing regulatory barriers and tariffs, thereby expanding the already huge amounts of exchange. Not only would a transatlantic free trade agreement heighten the interconnectedness of these two massive markets, it would drive growth, deflect increasing competition from China, and would help reestablish the authority of the United States and Europe as leaders of the global economy.

The President also announced that the US is on course to finish negotiations over the Trans-Pacific Partnership, an agreement that will substantially increase US trade presence in the Pacific. There was no date given about when the talks would be complete, but it appears that things are falling into place. In addition, the President outlined some domestic economic policies that were relevant to global trade issues. For instance, President Obama’s unveiling of the “Fix-It-First” program, which intends to put people to work on urgent infrastructure repairs, could improve US trade performance through more efficient and faster travel times. Smart Grid enhancement would make the US a more appealing place to do business and it would protect vital information trade-lanes from cyber disruptions. The energy boom, both through enhanced fossil fuel production and clean energy development, will allow the US to dramatically increase its energy exports and could fundamentally transform the global energy trade. Through the creation of innovation centers, President Obama wants to accelerate the continuing trend of re-shoring in order to increase US export trade.

While domestic issues were clearly the main theme of the address, it is vital that President Obama address the larger context issues of global trade to enact policy that will take advantage of new economic opportunities. It would also be a mistake to underestimate the potential of trade as a key engine of economic growth for the US and the global community. A secure and healthy global economic structure is important in order to maintain further international stability.

Posted by: Matthew Goldberg

Sources: Wilson Center, United States Trade Representative, ABC News, Department of Energy

Photo Credit: Presidential Seal courtesy of flickr user Dave Newman

Guest Contributor William Krist: Negotiations for a Trans-Pacific Partnership Agreement

The only major current trade negotiation that the U.S. is engaged in at this time is the negotiation for a Trans-Pacific Partnership (TPP) Agreement with eight other nations in Asia and the Americas.  And Canada and Mexico are expected to join the negotiations in December.  If successful, the resulting free trade area would include Australia, Brunei Darussalam, Canada, Chile, Mexico, New Zealand, Peru, Singapore, and Vietnam, as well as the U.S.  With multilateral negotiations in the WTO now stalled, the TPP offers the best opportunity for additional trade liberalization.  More importantly, if done right, this agreement could provide a template for future WTO negotiations and for a broad agreement with the 21 member nations in Asia Pacific Economic Cooperation (APEC) forum, a group of 21 Pacific Rim countries that includes China, Indonesia and Russia.

Negotiators made progress in the most recent round of negotiations held in San Diego from July 2 to 10, although there are a number of controversial issues that remain.  The next negotiating round is scheduled for September 6 to 15 in Leesburg, Virginia, although it is unlikely that negotiators will resolve the critical issues until after the U.S. presidential election.

Click here to view a background paper on the TPP and key issues.

 

 

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment.  Anthony Gausepohl is his Research Assistant at the Woodrow Wilson Center.

Guest Contributor William Krist- Obama’s Goal to Double Exports: A Midterm Analysis

Today’s report on the U.S. trade performance for May 2012 shows that the Obama Administration is roughly on track to achieve the President’s lofty goal of doubling U.S. exports over the five year period ending in 2014.  President Obama made this commitment, which would mean increasing exports from the 2009 level of $1.56 trillion to over $3 trillion, in his 2010 State of the Union address.  The objective of expanding exports is to promote U.S. employment, particularly in high paying manufacturing jobs.

To put this goal in perspective, exports just barely doubled in the ten years from 1999 to 2008. In fact, exports have not doubled over a five year period since the 1970s, and even then the doubling was mostly due to inflation.

Shortly after his 2010 State of the Union speech, Obama created the National Export Initiative and an Export Promotion Cabinet by executive order, giving them the responsibility of increasing U.S. exports.  While the Administration deserves a lot of credit for progress made to date, it needs to be noted that it is difficult to untangle the effects of U.S. export promotion activities from other uncontrollable effects such as changes in foreign demand and global business cycles, and the import policies of other countries.

Additionally, even as our exports have increased rapidly, U.S. imports have grown at an even faster rate. This means that the overall net effect of trade on our economy continues to be negative.  While doubling U.S. exports is a worthy goal, a better goal would be to achieve a balance of our exports and imports over the course of the business cycle.

For a more in-depth analysis of the Administration’s export initiative click here.

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment. Anthony Gausepohl is a Research Assistant at the Woodrow Wilson Center.

Our New Trade Frontier: The Asian-Pacific Rim

In May the 12th round of talks on the Trans-Pacific Partnership (TPP) took place in Dallas, Texas where officials from the nine countries– United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam– met to discuss what could become the single largest jolt to the American economy since the Recovery and Reinvestment Act in 2008. If agreed upon, the free trade agreement would strengthen economic relations with a region that currently serves as the fourth largest trading market for the United States.  Also, the TPP could significantly widen what is already an emerging market for NAFTA partners. In 2010, trade with the Asia-Pacific region totaled $775 billion, and accounted for 72% of all U.S. agricultural exports to the world marketplace.

The Obama Administration has made the TPP a central item to its trade agenda for the upcoming election, and has marketed its potential impact as being an “economic stimulus package that doesn’t require the federal government to spend more money (or go deeper into debt). The agreement would formalize trade in traditional sectors such as industrial goods, agriculture, and textiles between the United States and its Asian-Pacific partners, as well as develop universal guidelines to defend intellectual property rights, regulate trade barriers, and enforce labor laws and environmental standards. Additionally, the TPP will address trade and compliance issues to better monitor foreign investment in products and services, streamline the exchange of digital technologies, and allow for the competition of state-owned enterprises with the private sector to protect against American economic disenfranchisement.

Since its conception, there have been strong, varying opinions of the TPP. Some contend that the TPP is just an extension of corporate greed and western expansion, like the Citizens Trade Campaign who argued that passage of the TPP will “do everything from hurt public health to accelerate global warming.” While many in Washington on both sides of the isle see the TPP as a catalyst for building and maintaining the types of jobs Americans need most to remain competitive in the technology and manufacturing industries.

Posted By: Jonathan Sherman

Sources: The Washington Times, Forbes Magazine, Office of the U.S. Trade Representative

Photo credit: Jefe de Estado participó hoy en la Reunión de Negociaciones del Acuerdo de Asociación Transpacífico (TPP) courtesy of flickr user Presidencia Perú