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IPEF Comments Support Trade Facilitation, Lower Tariffs, EGA Negotiations

April 13, 2022 by Mara Lee|Top News

A wide variety of trade groups told the Commerce Department that while they know the administration doesn't intend to tackle tariffs as part of its negotiations with Asian countries, they think offering to lower tariffs on U.S. goods would be the best way to get ambitious commitments in the region, and many said reconsidering the re-named Trans-Pacific Partnership is better than the conceived Indo-Pacific Economic Framework.

The Commerce Department and the Office of the U.S. Trade Representative both received comments on IPEF negotiating priorities; the Commerce Department received 60, and USTR posted more than 1,000 on April 13. At least 500 were form letters that echo the comments of Rethink Trade, a civil society group.

The IPEF "lacks the precision, specificity, economic impact, and enforceability of" joining the TPP, the U.S. Chamber of Commerce wrote. The National Electrical Manufacturers Association, or NEMA, said that while being in the TPP would best serve America's economic and strategic interests in Asia, the development of an IPEF is also welcome. Still, NEMA noted that if the U.S. had been in the TPP, NEMA exports would have been spared millions of dollars of tariffs. It said that in 2015, the U.S. imported more than $26 billion of electroindustry goods from TPP member countries, and exported more than $23 billion of those goods to them.

Autos Drive America urged the government to negotiate tariff reductions with Asian countries "to promote the export of more U.S.-made automobiles."

The Alliance for Trade Enforcement said its members are discouraged that the administration will not consider market access provisions. "The promise of market access can serve as a significant inducement for countries to participate in the IPEF as well as provide leverage at the negotiating table as the United States seeks commitments from other parties," the AFTE wrote.

The U.S. Fashion Industry Association said tariffs "are the primary obstacle to the creation of fair and resilient supply chains in the region," and noted that apparel from the region is subject to an average tariff of 11.6%.

For trade groups, supply chain resilience was largely linked to trade facilitation, though some groups emphasized transportation system congestion.

The Chamber had numerous requests for trade facilitation, including:

The National Foreign Trade Council also focused on trade facilitation and said that USMCA's trade facilitation should be the floor, not the ceiling. It asked for binding commitments on:

The Consumer Technology Association also talked about data sharing on customs seizures, including PGAs in single window systems, expanding trusted trade programs and having advanced rulings on supply chains and forced labor. It also said countries should create a green lane for de minimis shipments that arrive with more advance data.

Several comments focused on which countries should be invited. SEMI, a group that represents electronics design and manufacturing companies, noted that there was $1.9 trillion in semiconductor trade in 2019, making it the fourth-most-traded good. "Key Asia-Pacific economies, such as South Korea, Japan, Chinese Taipei, Singapore, Malaysia, Vietnam, and the Philippines, are vital links in the global semiconductor supply chain and it is critically important they be part of IPEF at the outset," SEMI said.

The Telecommunications Industry Association suggested that India might not be a good fit for IPEF, "given the range of trade issues where the U.S. and India are not aligned in the context of multilateral trade negotiations."

Rethink Trade, a civil society group that's critical of free trade agreements, said its officials are worried that various agencies in the administration have conflicting goals about who should be in the IPEF, and why. The group also said Asia is not a natural place to start advancing a trade policy that contributes to domestic social welfare and promotes our values abroad.

"The Department of State and National Security Council seem focused on countering China geopolitically and thus want to unite the largest number of countries with a focus on those that are most able or willing to provide a bulwark against China," the group wrote. "The Office of the USTR has a mission to implement the president’s new trade policy, and to do so needs like-minded partners. The Commerce Department seems intent on promoting the interests of U.S. corporations in the Indo-Pacific region, and thus seems keen to have participation by nations most willing to conform to U.S. corporate demands..."

Rethink Trade specifically said Malaysia doesn't belong in the IPEF because it's in the worst classification for trafficking in persons, including debt bondage and forced labor.

A handful of comments addressed a particular industry's needs and how IPEF could play a role. Hitachi Energy, the largest transformer producer in the U.S., said steelmakers are producing less grain-oriented electrical steel (GOES) used in transformers and are producing more electrical steel for vehicle batteries. "Without any U.S. steelmaker capable of producing the most advanced grades of GOES produced in Japan and Korea, U.S. transformer manufacturers should have unfettered access to these materials," Hitachi wrote, asking for a removal of quotas on Korean and Japanese steel exports.

The Southern Shrimp Alliance suggested the U.S. limit access to the U.S. market for seafood for countries that consistently fail to combat illegal fishing, and said that a resilient seafood supply chain must have stronger regulation in home countries so that there aren't unsafe drug residues.

The American Chemistry Council asked negotiators to talk with countries about regulatory provisions that make U.S. chemical and plastic exports less competitive, but expressed doubt much could be achieved without offering Asian exporters lower tariffs in the U.S. market.

The ACC and other groups talked about how advancing trade in environmental goods could be part of the IPEF's goals. It said that countries should pledge to adopt "transparent, predictable, technology- and revenue-neutral, market-based, economy-wide carbon price signals" to advance decarbonization goals, and increase government funding for deploying technology to lower emissions in manufacturing.

"We also hope that the IPEF will explore how trade relates to climate change, circular economy, plastic pollution, biodiversity, fossil fuel subsidies, decarbonizing supply chains, and carbon border adjustment. Plurilateral initiatives, even with a narrow range of IPEF countries, on improving market access for sustainable materials and environmental goods should also be included," ACC wrote.

The Chamber wrote, "While agreement on what constitutes an 'environmental' good may be difficult to achieve, an early harvest approach with a nod to both supply chain resiliency and an appreciation for the importance of rules of origin in this context would be a good step forward. Governments could consider identifying a target list of existing environmental technologies with defined impact (i.e., clean water, waste management, energy storage) and focus on eliminating not only tariffs but non-tariff barriers to deployment and commercialization."

Just as some trade groups wrote wistfully about the missed opportunity of the TPP, the International Association of Machinists said the TPP "would have promoted wage declines and outsourcing of hundreds of thousands of domestic jobs to countries like Vietnam, Malaysia and Brunei," where, the group said, workers are subject to forced labor, and have no rights to join a union.

"The problem this country has faced with supply chains is simply the result of bad trade policies that has allowed American jobs to go overseas and corporations to profit from low wages," the Machinists wrote. "Will IPEF’s proposal seek to address the real problems of our supply chain with remedies that will benefit the American worker?"

Rethink Trade suggested that IPEF impose duties and fines if a participating country doesn't meet labor or environmental standards, and if the countries agree to that, they "could enjoy guarantees against Section 301, Section 232 and other U.S. trade enforcement mechanisms and penalties with respect to covered issues if they meet IPEF terms."

The Alliance for American Manufacturing said IPEF should seek more globally integrated supply chains. "IPEF cooperation that shifts production or sourcing decisions away from China may be a worthwhile endeavor but is nevertheless insufficient without concurrent efforts to domestically produce goods and materials necessary for our economic, health, and national security." It also said, "Under no circumstances should the IPEF undermine or limit U.S. trade enforcement tools, including antidumping, countervailing duty, Section 301, and all other tools available to workers and U.S. manufacturers when confronted with unfair trade and other predatory economic practices."