Top 5 Trade Policies to Follow in 2015: An Update

In January, I highlighted five key U.S. trade policies to watch this year. A little more than half way through the year, there have been a number of significant advancements. In other policies mentioned, progress has been slow. These trade policies are important in determining U.S. competitiveness around the globe. Check out how the United States has progressed with particular trade policies.

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1. African Growth and Opportunities Act (AGOA)

AGOA was signed in 2000 by President Bill Clinton to promote trade between the United States and eligible Sub-Saharan African countries. (For details about what AGOA means for U.S. and Sub-Saharan African businesses, check out my earlier posts.) U.S. Congress reauthorized AGOA on June 25th, ahead of its September 30th expiration date.  President Obama signed this unilateral trade deal into law on June 29th. African exporters from eligible countries can continue to enjoy duty-free access to the U.S. market.

2. Dominican Republic-Central American Free Trade Agreement (DR-CAFTA)

DR-CAFTA  took effect in the United States, El Salvador, Guatemala, Honduras, and Nicaragua in 2006; the Dominican Republic, 2007; and Costa Rica, 2009. This year, all duties placed on manufactured goods traded between the seven countries will be completely eliminated, provided that they satisfy certain rules. (See earlier posts on DR-CAFTA rules that producers must follow to enjoy duty-free treatment.)

Additionally, Nicaragua no longer enjoys a special benefit known as Tariff Preference Levels (TPLs), in which apparel made of certain cotton and man-made fiber and assembled in Nicaragua could enter the U.S. market duty-free regardless of where the fabrics were produced. These TPLS were designed to help Nicaragua, since its textile industry is extremely small. All other DR-CAFTA countries can only use fabric that originates in one or more of the DR-CAFTA countries.

Even with the expiration of the TPLs, a June 3rd report shows that the Nicaraguan textile industry has not been negatively impacted in terms of attracting foreign companies and foreign direct investment. For example, Dean Garcia, president of the Nicaraguan Association of Textile and Apparel Industry (ANITEC), said, “All of the Korean textile companies that have a presence in Nicaragua, also have a presence in Haiti, but since we lost the TPL, none have left the country, rather Haitians have come here to train.” (For other posts about DR-CAFTA, see “U.S. labor complaint against Guatemala.”)

3. National Export Initiative (NEI)

President Obama announced the NEI in January 2010. The goal of the NEI was to double U.S. exports by January 1, 2015. According to numbers provided by the U.S. Bureau of Economic Analysis, U.S. exports of goods and services to the world reached $1.6 trillion by the end of 2009. By the start of 2015, the export figure increased to $2.3 trillion, which is a 44 percent increase. Five years into the NEI, the United States has increased its exports but has fallen short of the original goal.

4. Trans-Pacific Partnership Agreement (TPP)

The TPP will be a large trade deal that the United States has signed with multiple countries throughout the Asia-Pacific region. (See earlier posts describing the TPP in detail.) However, negotiations still continue after missing a number of deadlines.

Trade ministers met again on July 28th to discuss the TPP, with today being the last day of meetings, in Maui, Hawaii. Dairy exports and intellectual property rights on medicine remain among the sensitive issues during these talks.

5. Trans-Atlantic Trade and Investment Partnership Agreement (T-TIP)

The T-TIP is another agreement that is still being negotiated. Similar to the TPP, this potential trade deal between the United States and the European Union continues to face an uphill battle on both sides. (For a detailed description of T-TIP, click here.)

The 10th round of negotiations took place this month in Brussels, Belgium from July 13-17, 2015. A key issue that was discussed during this round of negotiations was investor state dispute settlement (ISDS). As defined by Director of the National Economic Council and Assistant to the President for Economic Policy Jeffrey Zients:

The purpose of investment provisions in our trade agreements is to provide American individuals and businesses who do business abroad with the same protections we provide to domestic and foreign investors alike in the United States.

ISDS is an arbitration procedure – similar to procedures used every day by businesses, governments, and private citizens across the globe – that allows for an impartial, law-based approach to resolve conflicts and has been important to encouraging development, rule of law, and good governance around the world. (For more on the ISDS debate, see “What Investor State Dispute Settlement in Canada-EU FTA Could Mean for US-EU T-TIP Deal.”) 

In sum, progress has been made in terms of promoting trade with Sub-Saharan Africa. The United States has increased its exports but has fallen short of the goal of the National Export Initiative. Nicaragua’s textile industry appears to continue to flourish despite the expiration of the special program offered by the United States, according to public reports. Lastly, the trade negotiations with the Asia-Pacific region and the European Union continue moving forward, although a number of contentious issues have hampered the completion of negotiations.

 Outline of key dates related to the policies above:

December 31, 2014 – Expiration of trade preference levels (TPLs) for Nicaragua

January 1, 2015 – Anticipation of U.S. export doubling under the National Export Initiative

June 25, 2015 – AGOA reauthorized by U.S. Congress

June 29, 2015 – President Obama signs AGOA into law

July 13-17, 2015 – T-TIP talks (10th round) in Brussels, Belgium

July 28-31, 2015 – TPP trade ministers meet in Maui, Hawaii

December 31, 2015 – End of tariffs on manufactured goods traded between the United States, Central America (Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica) and the Dominican Republic as a part of DR-CAFTA.

 

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About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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