Tobacco and ‘Fast Track’ — Should They be Liked?

Posted on December 15, 2013 by Stuart Malawer
   Flags (World)
      Two recent trade developments are very interesting.
One, congressional negotiators have agreed upon fast track legislation that will be voted upon in January. The adoption of new fast track legislation (Trade Promotion Authority) would enhance the probability of passage of both the TPP and TTIP.
The proposed legislation includes  currency manipulation provisions for the first time. The currency provisions attempt to address a legal lacuna. There is no prohibition in the existing global financial architecture that addresses in a binding fashion currency intervention (currency devaluation) and its trade consequences. That’s why trade activists want to bring into the realm of enforceable trade laws this financial activity of many states. (This could perhaps unintentionally catch the U.S. because of its quantitative easing policies of the Federal Reserve.)   
Two, tobacco companies have expanded their legal actions against restrictive tobacco legislation (concerning the use of trademarks) in foreign countries by denying that the ‘public health exception’ in bilateral investment treaties (BIT) and the TRIPS agreement of the WTO allow for such legislation. These action are in response to the 2005 WHO Convention on Tobacco Control.
 I wonder if the ‘fast track’ negotiators gave any thought to addressing the tobacco issue. 
Here are more details for both of these issues:
 ….. New fast track legislation containing ‘currency provisions’ has been approved by congressional negotiators and will probably be brought up for a vote in January. “Congressional Negotiators Reach Deal.” Wall Street Journal (December 13, 2013). 
 ….. Tobacco firms are using bilateral investment treaties and  WTO litigation to attack the validity of national packaging laws as being in violation of international trade law protection of intellectual property rights (trademarks).  They argue that such restrictions should not be upheld  under the ‘public-health exceptions’ in these agreements. This general issue is now playing out in national litigation (since companies are allowed to sue governments directly  under a BIT), the WTO litigation process, and trade negotiations for the TPP and TTIP. “Tobacco Firms Strategy.” New York Times (December 15, 2013). “Big Tobacco Bullies.” New York Times (December 16, 2013).

 

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Newer Trade Issues — Internet Censorship & State Economic Incentives.

Posted on December 11, 2013 by Stuart Malawer
           Web
     Interesting developments in trade relations recently — success at Bali, more criticism of  U.S. trade negotiations as not being forward-looking enough, renewed debate over use of state trade incentives in the United States, and novel proposals by some to further U.S. trade via the WTO and bilateral / regional treaties to include Internet censorship and censorship generally as trade issues. Arguing here that censorship impedes the flow of ideas that are integral to the global economy and development. (Also arguing that the “National-Treatment Principle and the “National Security Exception” within the WTO disciplines should not apply in these cases.) Here are some addition details: 
    • The successful conclusion of the WTO talks in Bali should breath new life into multilateral negotiations, maybe. The significance of this accomplishment should not be underestimated. “Bali Breathes Life into Global Trade.” Financial Times (12.9.13).
    • Good discussion of Obama’s trade policy as of late 2013. There is a need to advance the 21st-century trade agenda by dismantling America’s 19th century era protections.” “Obama Cannot Lead from Behind on Trade.” Financial Times (12.9.13). 
    • The issue of state economic incentives in promoting the retention and relocation of firms (as well as in promoting exports and inward foreign investment) has arisen again in the emerging bidding war between the states for Boeing’s assembly operation of its new airlines 777X. “Boeing and State Tax Breaks.” Wall Street Journal (December 10, 2013).
    •  Really interesting article suggesting that the WTO and trade agreements adopt the issue of Internet censorship and censorship generally as a trade issue since free exchange of ideas is integral to the global economy. This would add to existing calls for labor, environment, etc. to be included in evolving trade law. “Trade Can Break Down China’s Great Firewall.’ Washington post (December 11, 2013).
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Bali and the WTO — Limited but Significant Success.

Posted on December 7, 2013 by Stuart Malawer

WTO

There was significant success at Bali yesterday. This has resulted in the ‘Bali Package’ of new global trade rules, relating to among other areas, trade facilitation. (But there was only limited success concerning agricultural subsidies because of India’s opposition.) This is the first successful effort of the WTO since its founding in updating provisions of global trade law. Perhaps more important than this limited success is that the WTO avoided outright failure. This achievement now allows the WTO to move forward.  Hopefully allowing it to regain some negotiating momentum and to arrest global drift toward mega-regionals.   “Bali Package.” WTO News (December 7, 2013). “A Wobbling WTO Lurches Forward with Trade Deal.” Washington Post (December 7, 2013.)
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Two Trade Events to Watch — Bali and Russia ……… Portending the Future?

Posted on December 3, 2013 by Stuart Malawer
           Trade.Ships (5.10.11)
     The developments leading up to Bali are really interesting. So is the rise of more regional trade negotiations. This includes the Russian-backed Customs Union. Will Bali succeed? If so will it arrest the trend to mega-regional agreements? The future course in global trade rule-making may be at stake. Here’s some additional information concerning these  developments and questions.
  • The former Director-General of the WTO Pascal Lamy declared that it’s the U.S. Congress and France that oppose the opening of trade. He argued that the WTO needs to address the newer trade issues of competition, investment and regulatory standards. These are newer barriers to trade today, especially regulatory standards). “WTO Ex-Head Hits at Trade.” Financial Times (Nov. 26, 2013).
  • Regional trade blocs seem to be forming more frequently. May not be only a reaction to the current failure of Doha but an aspect of a new cold war. “Russian-Backed Free-Trade Zone.” New York Times (11.29.13).
  • New dynamics are at work in the run up to Bali.  This may lead to a successful conclusion of the trade negotiations. The ‘North-South’ dispute is fracturing as the emerging markets view their interests differently. (India seems to be the holdout over subsidies for agriculture and there seems to be a consensus for developing newer rules promoting trade facilitation.) “Bali Talks Set to Showcase WTO’s Changing Dynamics.” Financial Times (11.29.13).
  • Good discussion of the forthcoming Bali Ministerial as being a test for writing new rules of international commerce in a more inclusive manner and as competition between multilateralism and ‘mega-regionalism.‘ “WTO: Up in the Air.” Financial Times (December 3, 2013).

 

 

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Bad News and Good News — ‘Fast Track,’ Int’l Tax, Bali and Regional Agreements.

Posted on November 23, 2013 by Stuart Malawer
        China and WTO      The bad news is that “fast-track” authority is running into trouble in the Congress. There is considerable hesitation in the Congress to extend it to President Obama. The good news is that the Congress has begun to address issues of international taxation, the Bali Ministerial seems to be on track, and writers are beginning to recognize the downside of more regional agreements at the expense of a multilateral approach via the WTO. There is a growing need for inclusion not exclusion in the global trading system — especially as this relates to developing countries and China. Here are some of the specifics.
  • Obama’s trade agenda is in deep trouble. Seems that a bipartisan coalition is growing against it and against extending “fast track”  (TPA).  This is jeopardizing TPP and TTIP  negotiations. Interesting comments on the role of the Congress and the President in trade relations. “Obama’s  Trade Jeopardy.” Wall Street Journal (Nov. 19 2013).
  •  A new tax has been proposed to impose a one-time 20% tax on foreign earnings accumulated offshore by U.S. multinationals. “Baucus  Tax Proposal on U.S. Companies — U.S. Companies Split on Tax Plan.”   Wall Street Journal (11.20.13). 
  • A  watered down version of the Doha trade agenda may be adopted at the forthcoming Bali ministerial. The three main elements relate to trade facilitation,  agriculture and development. This would actually be a major success in light of the prior ten tears or so of negotiations and fear of  failure. The adoption of these new trade rules would remove the fear  to a certain extent that he WTO was becoming irrelevant.             “WTO on Verge of Global Trade Pact.” Financial Times  (11.22.13).
  • Good  review of the movement away from military issues to trade issues as the principal dimension of power in international relations today. It reviews three ongoing trade negotiations (TPP, TTIP, EU-China),            in light of current failure of Doha, as moving  away from multilateralism. (But pending agreements in the forthcoming Bali Ministerial may lessen this conclusion a bit.) It also discusses services negotiation and investment agreements along with negotiations over climate and  millennium development goals. It highlights that China has been a  big winner from the global economy and is sometimes viewed as a free-rider.   It concludes “Globalization without global rules may work     for a while but it will not last.” “From  Missiles to Trade — From Geopolitics to Geoeconomics.” Financial Times (Nov. 22, 2013).
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Trade Issues Just Keep Expanding — NSA Spying, Regulation, Financial Sanctions, ‘Fast Track’, FOREX, Torture / Corruption, Dodd-Frank …….

Posted on November 18, 2013 by Stuart Malawer

Global Trade (April 1, 2013)

    The last two weeks have seen increased opposition to ‘fast-track authority, increase growing concern over implications of NSA spying on trade negotiations, financial sanctions, and application of Dodd-Frank to foreign firms as well as concern of liability for foreign corruption and violation of human rights (torture) by U.S. corporations abroad. Here are some more details:
  • ‘Fast Track Authority’ is running into trouble in the Congress over proposed currency provisions and trade adjustment provisions. “Unholy Alliance.” Financial Times (11.5.13).
  • Good statement that U.S. national security interests (NSA spying) needs to be balanced by global commercial interests of the U.S. especially the freedom of the Internet and competitiveness of U.S. Internet firms. “The NSA and the Internet.” Financial Times (Nov. 6, 2013). 
  • There is growing and significant opposition in the Congress to giving the Obama administration ‘fast-track authority‘ that threatens TTP and TTIP. “House Stalls Trade Pact Momentum.” New York Times (11.13.13).
  • Global banks are now being investigated by the U.S. Dept. of Justice for foreign-currency exchange manipulation  (Forex). “U.S. Investigates Currency Trades of Major Banks.” New York Times (11.15.13).
  • There has been a growing recognition in the U.S. – EU TTIP negotiations that national (domestic) regulations need to be addressed as potential barriers to international trade. Those involve regulations especially concerning finance. In particular, this raises the issue of the application of Dodd-Frank to foreign financial institutions. These issues include among others those relating to capital requirements, derivatives and proprietary trading, and hedging. “Finance Discussion in Trade Talks with Europe.” New York Times (Nov. 16, 2013). 
  • It is interesting to note there seems to a contradiction in holding foreign corruption by U.S. firms abroad as illegal and subject to litigation in the U.S. while those same corporations accused of participating in torture abroad are not subject to U.S. legislation or jurisdiction. [Kiobel Case (S.Ct. 2013) as to torture overseas.] “Former Abu Ghraib Detainees File Appeal in Lawsuit Against CACI International.” Washington Post (Nov. 18, 2013).  
  • Good discussion of U.S. financial sanctions and Iran. New book discusses use of ‘smart sanctions’ and asset freezes as tools of counter-terrorism and essential national security policies. However, they are not a game-changer, diplomacy and politics are still essential. “Treasury’s War.” Financial Times (11.18.13).
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Trade and Foreign Policy — Digital Protection, Trade Negotiations and Foreign Investment.

Posted on November 4, 2013 by Stuart Malawer
         Data Protection (FT 11.4..13)
 Very significant developments have occurred within U.S. trade policy and trade relations the last few weeks. They include a renewed push by the Obama administration to attract foreign investment into the U.S., the launching of renewed attacks by the U.S. on foreign firms engaged in global rate-fixing of LIBOR, and reactions against the U.S. concerning NSA spying in ongoing trade negotiations (TTIP). In addition the U.S. has won (at least unofficially so far) its WTO case against China involving its export restrictions on rare earths.
  • President Obama is about to mount a big push to bolster foreign investment in the U.S. “Obama to Bolster FDI in U.S.” Financial Times (Oct. 28, 2013). 
  • Global banks are increasingly being held liable for both foreign-currency exchange manipulation  (Forex) and illegal LIBOR rate-setting. The U.S. Justice Dept. and antitrust authorities and others have been extremely active. (This is in addition to liability and criminal responsibility for domestic mortgage wrongdoing within the U.S. for U.S. banks.) “Days of Reckoning for Misconduct Mounts.” Financial Times (Oct. 30, 2013). “Forex Probe Moves Across the Globe.” Financial Times (Nov. 3, 2013).
  • Eric Holder describes the importance of corruption investigations and asset recovery to new governments in the Middle East and Arab states. “Arab Forum and Asset Recovery.” USDOJ News (Oct. 28, 2013). 
  • It has been unofficially reported that a panel has decided against China in the Rare Earths case. “WTO Rules against China on Rear Earths Export Quotas.” Financial Times (Oct. 30, 2013).
  • New Dept. of Commerce first-ever conference on foreign investment in the U.S. (Obama Presentation Video 10.31.13). FDI or inward investment in the U.S. has been halved since 2008. In 2000 the U.S. received 37% of worldwide inward investment by 2012 the U.S. received only 17%. “U.S. Courts Foreign Investment for Economic Development.” Financial Times (Oct. 31, 2013). “Obama’s Bid to Investors Overseas.” Washington Post (11.1.13). 
  • NSA spying is threatening trade negotiations with the EU over negotiating the TTIP agreement. This evidences in part the inter-relationship of national security policy, foreign affairs, and trade policies. The Germans (contrary to the EU Commission) want to introduce data protection provisions. Actually U.S. high-tech firms are in favor of more lenient “interoperability” approach as being less stringent than the EU Commission’s proposals generally. “Data Protection Rules Could Favor US Tech Giants.” Financial Times (11.4.13).
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Global Trends, Transnational Coalitions, Global Institutions — Better Multilateral Architecture Needed.

Posted on October 25, 2013 by Stuart Malawer

Die Flotte des Unternehmens besteht aus mehr als 140 Containerschiffen, Massengutfrachtern und Tankern. (Quelle: Hanjin Shipping)

     Global trade has slowed. The WTO is struggling with the completion of the Doha Round. Many newer forces are at work as evidenced by the items below.  For example, the role of states and cities in global trade is vastly ignored. The bottom line is that to help deal with these newer forces a more effective global architecture is needed. It is in the interest of the U.S. to help foster global reenergizing and reengineering to meet the challenges of the 21st century.

  •  The National Intelligence Council in a recent report discusses many issues. Of particular interest are two charts that outline issues concerning global governance and the role of U.S. power over the next 15 years.  “Global Trends 2030 — Alternative Worlds.“`(National Intelligence Council, December 2012). 
  • The former Director-General of the WTO Lamy, now Chairman of the Oxford Martin Commission, declared in its recent report that the 20th century multilateral organizations need to be restructured to cope with the 21st century, especially as to  membership and role of newer states. It recommends an inter-organizational  coalition of countries, companies and cities to attack the problems of the 21st century. “Global Institutions Need Revamp.” Financial Times (Oct. 17, 2013). (Oxford Martin Commission Report — Executive Summary.)
  •  The EU and Canada have moved closer to completing a bilateral trade agreement. This would have to be approved by the provinces within Canada and additional internal approvals within the EU. This accord represents further global trade liberalization despite the continuing failure of  Doha. “EU and Canada Move Towards Bilateral Trade Accord.” Financial Times (Oct. 19, 2013).
  • An interesting article notes a parallel between developing global rules and a global architecture governing international trade, on-the-one-hand, and drone warfare and offensive cyber-capabilities, on-the-other. It goes on to argue that there is a need to reengineer and reenergize the existing system and to extend it to newer areas. “America’s Not in Decline.” Washington Post (Oct. 20, 2013).
  • The growth of global trade has declined to less than global growth. There has been a break in the 2:1 historic relationship between global trade and global growth. (From about 7% to 2.5% global trade growth.) Recently more restrictive practices have been adopted and structural changes (such as e-commerce and globalization) seem to have been played out. Regional trade agreements seem to have become more popular. “Trade: Into Uncharted Waters.” Financial Times (Oct. 25, 2013).
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Innovation, 21st Century Trade Rules, Gov’t Shutdown, Trade Deals & Domestic Reform, Corp. Inversions.

Posted on October 9, 2013 by Stuart Malawer

       Electronic Commerce

     A range of newer issues have appeared recently in global trade discussions concerning innovation. 21st century rules, the U.S. government shutdown, the use of trade deals as leverage for domestic reform, and corporate cross-border mergers (“corporate inversions”). The following is a bit more information on each topic. This just further illustrates to me the very broad scope global trade now encompasses and global public policy challenges they present.
    • The Uruguay Round was concluded, in 1995, prior to the commercial use of the Internet. Many of the WTO disciplines concerning the multilateral system need to be updated. The WTO is adding to the general discussion of global  trade the newer dimension of how domestic innovation can help developing countries promote greater global trade and their own  economic development. This is really important and a very interesting newer topic in global trade relations. “Azevedo Opens Public Forum.” WTO News (Oct. 1, 2013).
    • Good editorial from the Financial Times discussing the TPP and the multilateral system (WTO). Discusses the TPP as setting a “gold” standard for newer trade issues in the 21st Century (compared to the WTO that predates the Internet age and that has been hampered by outdated rules and processes). “Trading Principles.” Financial Times (Oct. 4, 2013). 
    • The impact of the U.S. government shutdown on both the TPP  and TTIP is raising significant questions especially as to the renewal of “fast track authority.” “U.S. Tries to Reassure Asia Allies.” Financial Times (Oct. 7, 2013).
    •  Trade deals are often seen as leverage for domestic reforms. That is the thinking concerning Japan’s role in the TPP and “Abenomics.” The TPP is perhaps the most important part for domestic reform — the removal of Japanese trade restrictions and protectionism. “TPP Negotiations and Japan.” Financial Times (Oct. 8, 2013).
    • “Corporate inversions” are long-standing means of avoiding U.S. taxation on multinational profits. These cross-border mergers have been one step ahead of each new round of tax law changes. Newest rules require that 25% of assets and income need to be in foreign domicile. The Obama administration and the Congress want to review international corporate taxation as part of their review of corporate taxation generally. “New Corporate Tax Shelter: A Merger Abroad.” New York Times (Oct. 9, 2013).
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Doha Lite, Currency Manipulation, Investor Litigation, Corruption, Tobacco Controls, Sovereign Debt, Foreign Taxation.

Posted on September 25, 2013 by Stuart Malawer
     China trade
     A broad range of trade issues have continued to be raised in different international forums including the TPP, TTIP, World Bank and the WTO. They include among others Doha Lite, Currency Manipulation, Investor Litigation, Corruption, Tobacco Controls, Sovereign Debt, Foreign Taxation.  Here is some additional information concerning international activity over the last few weeks ………………
  • The new Director-General of the WTO Roberto Azevedo is renewing the push for the conclusion of the Doha Round at Bali this December. He does not see an increase in regional or inter-regional arrangements as a threat to the multilateral system. “Roberto Azevedo Urges WTO to Reach $1tn global trade Deal in Bali.“Financial Times (Sept. 10, 2013).
  •  France has raised legal issues concerning TTIP negotiations concerning  “Investor-State Dispute Settlement Mechanism” and government  procurement restrictions in the U.S. This reflects the  traditional French positions and is mostly unwarranted. “Trade  Talks Leave States at Risk from U.S. Lawyers.” Financial    Times (Sept. 11, 2013). 
  • World  Bank sanctions are at a seven-year high after efforts by the bank to clamp down on fraud and corruption in the  projects it funds. The World Bank blacklisted 250 entities and individuals in the first       seven months of 2013. “World Bank Sanctions for Corruption.” Financial Times  (9.16.13).
  •  The  issue of precluding tobacco controls from the free-trade provisions  of the TPP is now a contentious issue within the U.S.   Negotiations seem to be moving from a “safe-harbor  exemption” (to allow state controls with no right of challenge)  to only a presumptive or a voidable one (allowing states to contest            controls and requiring consultation prior to litigation). “Snuffing out Tobacco Exemption in the TPP.” Washington Post (Sept. 18, 2013). 
  • The Financial  Times in an editorial declared “It is time (for Argentina) to grow up” concerning its international bond restructurings  and nationalizations. “Argentina Bondage.” Financial Times (Sept. 19, 2013). 
  • Momentous changes are set to start in July concerning U.S. taxation of foreign  income that imposes new requirements on foreign financial institutions. FACTA is the most recent development in the U.S. tax            policy that started in 2009 against UBS of aggressively enforcing  U.S. laws concerning foreign tax havens and bank accounts. “Offshore  Accounts: No Pace to Hide.” Wall Street Journal   (Sept. 21, 2013).
  • Statement   by the new Director-General of the WTO on the Bali Ministerial (as  to the Doha Round) concerning three potential deliverables (“Doha  Lite”). “Statement  by Azevedo as to Bali Ministerial.” WTO News (Sept.  23, 2013). His concern about becoming irrelevant in light of the   WTO’s failure to complete the Doha Round and negotiations of the TPP  and TTIP. “TPP & Ocean’s Twelve (and WTO).” Financial Times (Sept. 24, 2013). 
  • The U.S.  Senate along with the House have been pressuring the Obama administration to include currency manipulation in the TPP talks. This is aimed primarily at Japan (“Abenomics”) but raises  issues of U.S. Quantitative Easing also.  “Currency Manipulation Should be Part of Trade Talks.” Financial Times (Sept. 25, 2013).
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