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THE TTALK QUOTES
On Global Trade & Investment
Published Three Times a Week By
The Global Business Dialogue, Inc.
Washington, DC Tel: 202-463-5074
Email: Comments@gbdinc.org
No. 79 of 2014
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FRIDAY, NOVEMBER 14, 2014
Filed from Portland, Oregon
Click here for Tuesday's ITA quote from President Obama.
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TPP - THE PROCUREMENT FILE
"Ministers and the 12 TPP negotiating teams continue to focus on achieving our goal of an ambitious, high-standard market access package that provides comprehensive, commercially meaningful and duty-free access goods markets and simultaneously lifts restrictions on services, investment, financial services, temporary entry of business persons, and government procurement."
The TPP Trade Ministers
November 10, 2014
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CONTEXT
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This past week was a big week for trade. There was a breakthrough on the previously stalled negotiations to expand the Information Technology Agreement (ITA). The U.S. and India took a major step towards moving beyond the WTO impasse over the Bali Trade Facilitation Agreement. And there was the promise of an early conclusion to the Trans-Pacific Partnership negotiations, albeit with the caveat that "substance will drive the precise timing of conclusion." Each generated a flurry of reports, read outs, and fact sheets. Keeping up or even just catching up is going to be a challenge. It is important to try, however, for some of those documents provide the best available clues to what the negotiators will, ultimately, produce.
On Monday, November 10, President Obama hosted a meeting at the U.S. Embassy in Beijing for the leaders of the 12 countries participating in the TPP negotiations: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. Two documents that are closely associated with that meeting are a) the statement the TPP leaders issued at its conclusion, and b) the report to the leaders from their trade ministers, which presumably provided the background if not the agenda for the meeting among the twelve. Today's quote is from the Trade Ministers' Report.
In the nature of government reports everywhere, it covered a lot of ground in a few pages - just over four in this case - but we were struck especially by the three references to government procurement in the first two pages.
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COMMENT I
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So, yes, government procurement is our topic today. In the United States that means the Buy American Act and other expressions of a buy national policy where government funds are concerned. The subject is a little difficult because, while there is certainly plenty of procurement language in trade bills, it is just as likely, if not more likely, to show up in other legislation. And as the world looks at America, that legislation is often seen as protectionist.
This is not a new phenomenon. The Obama administration's first major legislative achievement was the American Recovery and Reinvestment Act of 2009 - the Stimulus Bill - which was signed into law on February 17, 2009. It contained a significant Buy American Section, Section 1605, which more than got the attention of America's trading partners.
The TTALK Quote for July 21, 2009, for example, highlighted a complaint made by Thailand's then-Minister of Commerce, Nakasai Pornthiva. She was in Singapore at the time, attending a meeting of APEC ministers. Commenting on America's Stimulus Bill, she said:
"We are saying, 'please don't impose any more protectionist measures,' as they have been hurting our exports."
Nor is it an old issue. Further restrictions have been imposed, as new Buy American provisions have been added to various appropriations bills. One document on this topic that Google kindly brought to our attention is a memo to Water Management Division Directors from the then-Acting Assistant EPA Administrator Nancy Stoner. The first paragraph of that memo is as clear as government prose gets, and here it is:
"On January 17, 2014, H.R. 3547, 'Consolidated Appropriations Act 2014,' (Appropriations Act) was enacted. This law provides appropriations for both the Clean Water State Revolving Fund (CWSRA) and the Drinking Water State Revolving Fund (DWSRF) for Fiscal Year 2014, while adding a Buy American requirement to these already existing programs. Application of this new requirement is the focus of this memorandum."
We are far from expert in this area, and we are not sure whether these particular programs were ones where the new requirements would hit Canadian exports. We do know, however, that Canadian companies have supplied water management products to local authorities in the United States in the past.
For that reason, we would not be at all surprised to learn that this was one of the issues on the mind of Canada's trade minister, Ed Fast, when he complained recently to The Globe and Mail that, as that paper summed up his remarks, "Buy American purchasing restrictions are disrupting North American supply chains and putting investments and jobs in both countries at risk."
We should add that Mr. Fast's comments were aimed almost at much at bills in the pipeline as they were at policies already in place.
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COMMENT II
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The question now is, What is happening on Buy American and other procurement issues in TPP? We don't know. Clearly it is an important issue for the TPP Ministers or it would not have gotten three mentions in their report. Back in July of this year, Lori Wallach of Public Citizen's Trade Watch claimed that "U.S. trade negotiators are locked behind closed doors at a Trans-Pacific Partnership negotiating round in Ottawa gutting Buy American policies." That was on July 3, 2014, at the GBD debate on TPP between Ms. Wallach and Derek Scissors of the American Enterprise Institute.
Later in July, the U.S. Trade Representative addressed the same issue. In a Law360 article of July 30, Ambassador Froman is quoted as follows:
"There are a lot of myths suggesting that TPP would overturn or undermine our ability to buy American or even prevent states and local governments from implementing their own procurement processes. These assertions are not correct. There is nothing in TPP that will ban federal, state or local governments from buying American. In fact, under TPP we are working to ensure that more countries around the world have the ability to buy American in order to help support jobs here at home."
In trade policy too, beauty is in the eye of the holder, and, in fact, the comments of Ms. Wallach and Ambassador Froman are not as inconsistent as they might at first appear. One could change U.S. Buy American policies without either "gutting" them or "undermining our ability to buy American." In the same vein, we should perhaps note that the concern of many companies, both U.S. and foreign, is not that Federal law might prevent local authorities from buying American but that current law has recently and quite severely restricted their ability to include foreign product in their projects.
All of that said, our concern is not that TPP might open up more procurement to foreign suppliers. After all, as the TPP ministers explained in their report, it is a goal of TPP to "open our markets to each other." No, our concern is that for the past six years America has been moving in the direction of tighter controls on government procurement, and there seems to have been no political preparation for change in a more liberal direction.
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SOURCES & LINKS
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Ministers' Report is a link to the text of this report, which was the source for today's featured quote.
TPP Leaders' Statement takes you to this document issued by these top political officials on November 10.
An Early Complaint is the TTALK Quote from July 21, 2009, with the quote from Thailand's Commerce Minister at the time, Ms. Nakasai Pornthiva.
The Stimulus is a link to the Wikipedia article on the American Recovery and Reinvestment Act of 2009.
A Memo from EPA is a link to this document of January 2014 on implementing the Buy American provisions of the Consolidated Appropriations Act, 2014.
Tough Talk from Ottawa is the story from The Globe and Mail with the comments from Canada's trade minister, Ed Fast.
Wallach on the Gutting of Buy American takes you to the TTALK Quote of July 9, 2014, which highlights remarks made by Ms. Wallach at the GBD debate on TPP.
Lots of Myths is the Law360 with the extended quote above from Ambassador Froman on TPP and Buy American.
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© 2014 The Global Business Dialogue, Inc.
1140 Connecticut Ave., NW, Suite 950
Washington, DC 20036
Tel: (202) 463-5074
R. K. Morris, Editor
www.gbdinc.org
The Global Business Dialogue does not take collective positions. It is an association in which the staff and the members speak for themselves. The text of GBD's TTALK Quotes are the responsibility of the writers and editors as indicated. Remarks in the Comment Sections can be attributed to R.K. Morris, .
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