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World Trade Week Event: USTR's TPP Online Chat

Welcome to USTR's first TPP online chat. We'll begin with some questions we've received earlier this week. You can send in questions here.

Alvin: Considering to sign Economic Cooperation Framework Agreement (ECFA) with China, Taiwan also hopes for more economic linkage with international economic regime or partnership to enhance Taiwan's economic edge and competitiveness. I think Taiwan will also share the goals of TPP. I just wonder if Taiwan could join the American-led TPP. For China's sovereign concern, Taiwan could probably take part in a name of separate custom or economy instead of sovereign state.

USTR: The countries currently participating in the TPP negotiation are prepared to engage with any interested APEC countries. To clarify, however, the TPP negotiation is a plurilateral initiative, not a U.S.-led one. Any decisions about admitting new participants in the negotiation will be made by a consensus of all TPP parties.

Jim: You have said that the TPP will be the model US FTA for the 21st Century. What areas outside normal tariff reductions will be included -- competition policy (antitrust), common foreign investment rules?, common regulatory issues; climate change and the environment, such as timber trade?, human rights and labor rights strictures? services rules. Thanks. 

USTR: We are indeed seeking to negotiate a high-standard, 21st century agreement, and we welcome any specific input you may have in this regard.   

As you may be aware, previous U.S. FTAs have covered a wide array of issues relating to all aspects of our commercial relations with our FTA partners. In addition to tariff reductions, our FTAs cover customs, services, financial services, telecommunications, e-commerce, investment, intellectual property rights, government procurement, competition, transparency, labor, environment, and other issues.   

As we consider negotiating objectives for the TPP, we intend to build on the model we have used in previous FTAs to incorporate new elements that reflect our values and priorities and that respond to the 21st century challenges that our businesses, farmers, ranchers, and workers face. We also want to take advantage of the fact that we are negotiating a regional agreement in order to make progress on issues of interest and concern to all the TPP countries. For example, we are considering ways to make the regulatory systems of the TPP countries operate together more effectively to help address regulatory and other non-tariff measures -- so-called “behind-the border” issues -- that increasingly are the main problems that our companies face in foreign markets. Developing common approaches on regulatory issues also will help promote U.S. exports in emerging industries and technologies in which U.S. companies are globally competitive, such as energy and environmental technology, biotech, nanotechnology, health and medical technology, IT, and education. In addition, the development of common regulatory approaches would help us address issues of mutual concern, such as food safety.   

We also are looking at including new elements in the TPP that would support the development of efficient production and supply chains that include U.S. firms in order to encourage companies to invest and produce in the United States. In addition, we are exploring ways to promote exports by small businesses, which are the source of much of the innovation and job creation in the United States and other countries. Other key areas for which we are seeking to incorporate new ideas are transparency, environmental protection and conservation, worker rights, and development.

Bird: I raise soybeans which are one of our main exports to China. They take 23% of all the soybeans grown here. When the soybeans go into China a 3% tariff + 13% value added tax is collected. On my 38 acre field this will be about $650 to the Chinese Government. This is more than my 2009 income tax, so I support the Chinese Government more than my own. The value added tax is 16% on all but commodities. Why don't we put an equivalent tariff and tax on ALL Chinese imports?

USTR: Thank you for your question about soybean exports to China. Farmers like you, exporting American agricultural commodities, are among America’s top exporters – and last year China was the second largest export market for US agricultural products. In 2009, China imported $13.1 billion in U.S. agricultural products, and over $9 billion of that amount was soybeans. So we understand your interest in measures affecting exports of soybeans to China. As you know, the United States does not have a value-added tax system, but many other countries do. Under WTO rules, those countries are entitled to collect the VAT on imported products, just as they collect the VAT from their own domestic farmers that are producing commodities like soybeans or manufactured products like cars or telephones. However, China must apply the same VAT rules and the same VAT rates to domestic and imported products; that is, it cannot discriminate against imports.

Simon: What is the likelihood that an investor-state dispute settlement mechanism will be included in the TPP? Is USTR pushing for it to be included? 

USTR: We are consulting very closely with Congress and other stakeholders to ensure that we have the broadest possible input as we determine our negotiating objectives. In our prior free trade agreement negotiations, the inclusion of an investor-State dispute settlement mechanism has been a priority, consistent with the negotiating objectives in the Bipartisan Trade Promotion Authority Act of 2002. This mechanism provides a critical protection for U.S. investors abroad by establishing a neutral, international forum to challenge arbitrary, unfair, or corrupt foreign government actions. It also provides for transparency and public participation, including participation by non-governmental organizations.

Rebecca: Thank you for this opportunity to ask this question. The United States has generated in the past Free Trade Agreements containing promises for transparency and public participation in their ongoing governance. (see 3 examples from AUSFTA below which are replicated in other US FTAs). Will public participation undertakings be included in the upcoming TPP? and is it still viewed as an important trade policy objective to provide and allow for ongoing public participation in the governance of the upcoming TPP? For example the Australia United States FTA states that: AUSFTA Joint Committee, under Article 21.1.6: Recognizing the importance of transparency and openness, the Parties reaffirm their respective practices of considering the views of members of the public in order to draw upon a broad range of perspectives in the implementation of this Agreement" and also public participation in AUSFTA in 19.5.2: Each formal decision of the Parties concerning the operation of this Chapter shall be made public, unless the Joint Committee decides otherwise. AUSFTA 19.5.3, again creates further presumptions for transparency and accountability: Each Party shall provide an opportunity for its public, which may include national advisory committees, to provide views, recommendations or advice on matters related to the implementation of this Chapter, and shall make available such views, recommendations, or advice to the other Party and, as appropriate, to the public in accordance with its law.

USTR: Thank you for your question. As you note in your comments, transparency and public participation have been features of the Australia-U.S. FTA and other U.S. FTAs. While your question refers specifically to the institutional and environmental chapters of the Australia-U.S. FTA, transparency and public participation are important aspects of many other chapters of U.S. FTAs, as well. For example, our FTAs typically include a Transparency chapter that ensures a public right to participate in rulemaking by signatory countries. The dispute settlement chapters of our FTAs also typically require that government submissions to dispute settlement tribunals be made public, that tribunal hearings be open to the public, and that tribunals have the authority to solicit views from non-governmental entities. Thus, although we are still developing our objectives for the TPP, transparency and public participation will remain priorities that we certainly will seek to reflect in the TPP.

Christina: Please consider as you gauge public sentiment about TPP that with the BP oil disaster the environmental community's resources to organize for this chat likely are limited. I wish that I had the expertise to make more substantive comments, since those knowledgeable may not have the time to do so. Could USTR hold a second chat later when at least there is no major domestic environmental crisis and/or do outreach with the environmental community through the TPP process?

USTR: We appreciate your interest in providing input and that of the environmental community, which already has provided some useful input to us on the TPP. As the negotiations proceed, we plan to hold additional webchats and also would welcome your input through our website:

Arthur: Given that the United States already has Free Trade Agreements with most of the countries participating in the TPP negotiations, clearly the primary purpose of this agreement isn't opening new markets. The Oregon Fair Trade Campaign sees the TPP as an opportunity to initiate the trade reforms promised by President Obama on the campaign trail. In what ways will the USTR seek to amend things like the investment, services and procurement provisions found in some of the current FTAs among TPP partners?

USTR: The United States decided to participate in the negotiation because the TPP is the best vehicle for advancing U.S. economic interests in the critical Asia-Pacific region. Expanding U.S. exports is critical to our economic recovery and to the creation and retention of high-quality jobs in the United States. With its rapid growth and large markets, there is no region with which expanding our trade is more vital than the Asia-Pacific. The current group of TPP participants provides additional meaningful market access. However, our engagement is premised on the objective we share with other TPP partners of expanding the initiative to include other countries throughout the Asia-Pacific region. Indeed, several other countries already have expressed interest in joining a TPP agreement.

We are still developing our negotiating objectives for each chapter and reviewing the input we have received from stakeholders. We do not expect to draft proposed text until after the upcoming round and would welcome your further input.

Trung: We wish to see labor rights promoted and protected in TPP.

USTR: USTR is committed to negotiating a TPP agreement that ensures respect for labor rights. We are seeking a 21st Century agreement in which all TPP countries are obligated to provide protection for fundamental labor rights in their laws and practices. We welcome any further specific input you have on this issue.

David: As you know, the existing FTA's while not without flaws as regards the rules of origin for textiles and textile products, have shown some success in creating export opportunities for U.S. textile manufacturers due to rules of origin that assure that most of the vital textile components be sourced from among the partner countries to the agreements. The current TPP in effect operates on a very different, value-added rule. If the U.S. were to enter TPP under the current value-added rule it would be devastating for the U.S. textile industry. In such a scenario TPP would not result in any increase in U.S. textile exports to that region and would, in fact, reduce our exports to TPP nations with whom we have existing FTAs. Further, it would be extremely damaging to the efforts of this Administration as well as the Bush and Clinton Administrations, to promote regional trade in our hemisphere. A TPP with a value-added rule for textile would be a disaster for U.S. textile.

USTR: Thank you for your input. We recognize the sensitivity of this issue and are consulting closely with stakeholders to assess the impact that any changes in our current rules of origin would have on our industry and our FTA partners.

Masakuni: In Asia-Pacific, Japan and China are key countries. Do you expect that Japanese government would join the TPP negotiation within 2-3 years? How about China? Have you, or will you urge them to join the negotiation?

USTR: The United States and its TPP partners ultimately are seeking to include countries across the Asia-Pacific region. Future membership in the TPP Agreement by Japan, China or any other country in the region will depend on whether the country in question in ready and willing to meet the standards of the agreement.

Trinh: For America’s IP-intensive industries, it is important that the Trans-Pacific Strategic Economic Partnership Agreement (TPP) elevate the level of IP protection and enforcement among the parties of the agreement to the highest standards that exist among these countries. How will you ensure that U.S. innovations and creations will be afforded effective protection in the markets of the participants in this agreement and that strong IP provisions, such as those found in the pending U.S.-Korea Free Trade Agreement, will be part of this agreement?

USTR: Strong protection and enforcement of intellectual property rights is an important part of U.S. trade policy and a key priority for future trade agreements, including the TPP. As we work to develop a TPP with IP protection and enforcement standards worthy of a 21st-century trade agreement, we will carefully consider the IPR provisions of the KORUS FTA and other past U.S. trade agreements, as well as the public comments we have received on prospective TPP provisions. We welcome your further detailed input on this question.

Jay: Given the range of existing free trade arrangements among TPP members, do you envision negotiating new common rules of origin under the TPP or will there be a variety of country dependent rules at the end of the day?

USTR: We are still developing our position on rules of origin, but our objective for the TPP is regional integration, which ideally would entail common rules of origin.

Amy: Is there any timeline to establish a process for allowing new members? Have some countries already been "invited"?

USTR: There is no set timeline for new members to join and TPP members are not “inviting” specific countries to join. Any APEC member is welcome to join if they are ready and willing to meet the standards of the agreement. Any additional countries that are interested in joining in this first group, however, would have to do so before the negotiations were so far along that their participation would unduly complicate conclusion of the agreement.

This chat has now ended. To provide input for the USTR TPP Team, you can submit questions and comments here.