Apparel Sourcing Intelligence - Worldwide

Pacific trade statements need serious decoding

Participants at recent Pacific trade talks issued highly reassuring statements. But their words mask a very different reality – and one attacked by major garment retailers

The 21 member countries of the Asia-Pacific Economic Cooperation (APEC) forum in Indonesia issued on October 8 an statements of support for ongoing trade liberalisation efforts as well as some new commitments. Their statement, among other things:

– extended for another year (until 2016) their “commitment to refrain from imposing new trade restrictive measures”. But an EU report on September 3 into “potentially trade restrictive measures” found that the world’s governments had introduced 154 new trade restrictions, and repealed just 18 between May 1 2012 and May 31 2013. Three of the eight worst offending governments (Indonesia, Russia and China) had signed the original APEC commitment in 2008.

– promised to seek “alternative ways” to insisting on local content “to promote job creation and domestic manufacturing”. No concrete steps were announced.

– pledged to continue to roll back protectionist and trade-distorting measures, establish free and open trade and investment among APEC countries by 2020, strengthen implementation of good regulatory practices, lower tariffs on environmental goods and services to 5% or less by 2015, create ethical business environments, and refrain from export restrictions and WTO-inconsistent trade measures on food. Again: the EU would claim the group has done nothing to “roll back protectionist and trade-distorting measures”, and there were no signs of any concrete steps on the other aspirations.

APEC members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the US, and Vietnam.

Also on October 8, the twelve countries negotiating the Trans Pacific Partnership (TPP)  issued an update on their negotiations,

They repeated their  objective of completing a “comprehensive and balanced” trade liberalization agreement by the end of 2013. The leaders said they are “on track” to complete the TPP negotiations and that ministers and negotiators have made important advances in recent months on legal texts concerning access to their goods, services, investment, government procurement and temporary entry markets. U.S. Trade Representative Mike Froman added that since August “trade ministers have been charting a path forward on outstanding issues, particularly state-owned enterprises, intellectual property rights, environment, and market access,” and that there was “significant progress” during talks among trade ministers in Bali this week. The Heads of Government tasked their TPP negotiators with resolving “all outstanding issues” so that an agreement can be completed this year.

But after 19 rounds of negotiations over nearly four years participants reportedly have completed only six or seven of the 29 chapters of a final agreement, with wide disagreement on investor-state dispute settlement, tobacco control, data flows, intellectual property rights for pharmaceuticals, state-owned enterprises and rules of origin. Now, the US government shutdown could delay additional talks, with 75% of trade negotiators suspended from duty and the US lacking  the resources to take part in additional negotiations in the near future.

There is now some evidence that the US in particular might be more interested in being able to demonstrate an agreement by December 31 than in its content.  US Commerce Secretary Penny Pritzker was quoted in a recent Reuters article as saying that “the president has … pushed us internally … to say that we will move forward and maybe not everyone will be there at the time and you can go in the second round.”

Some US businesses have attacked this approach. “For Walmart, we would like to see a high-quality agreement, which is that no sectors and no products are excluded. That there are no compromises that leak into the process for the purpose of speed,” said Scott Price, Walmart’s chief executive in Asia. “If it takes more time in order to have a high quality agreement, that’s what we should have.”