US, Myanmar Sign New Trade, Investment Agreement

Acting US Trade Representative Demetrios Marantis and Deputy Commerce Minister Dr. Pwint San of the Republic of the Union of Myanmar at the signing earlier this week of a new Trade and Investment Framework Agreement between the two countries. Credit: ustr.gov


Acting US Trade Representative Demetrios Marantis and Deputy Commerce Minister Dr. Pwint San of the Republic of the Union of Myanmar at the signing earlier this week of a new trade and investment agreement between the two countries. Credit: ustr.gov

The US and Myanmar have inked a trade and investment framework agreement that will “create a platform for on-going dialogue and cooperation on trade and investment issues between the two governments.”

“The United States supports reforms [in Myanmar] that lay the foundation for a peaceful and prosperous future,” said Acting US Trade Representative (USTR) Demetrios Marantis in a statement.

Economic reforms and trade, he said, “are mutually supportive. Stronger institutions, transparency, and rule of law create stronger foundations for commercial transactions, trade and investment.”

The trade agreement was signed by Marantis and Myanmar’s Deputy Commerce Minister Pwint San on Tuesday just a day after President Barack Obama met with Myanmar President Thein Sein in the White House.

Sein was the first president of Myanmar to visit the White House in 47 years.

Bilateral relations between the US and Myanmar, formerly known as Burma, became strained in the late ‘80s and didn’t improve until March 2011, when a civilian government was formed with Thein Sein taking office as president.

Following the easing of sanctions on the Southeast Asia country in 2012, bilateral trade is increasing but still remains small.

According to the US Department of Commerce, bilateral trade in the first quarter of this year totaled $90 million, including $89 million in US exports to and $1 million in imports from Myanmar.

In 2012, Myanmar’s total two-way goods trade with the world was roughly $20 billion.

 

Transatlantic Trade Pact Touted, But Barriers Remain

Furthermore, it "will be a way for the EU and the US to lead by example, demonstrating the benefits of stronger rules to implement the principle of open markets, rules that will benefit all countries in the ever-more-integrated global economy." Credit: numozaik.hu

A Transatlantic Trade & Investment Partnership “will be a way for the EU and the US to lead by example, demonstrating the benefits of stronger rules to implement the principle of open markets, rules that will benefit all countries in the ever-more-integrated global economy,” says European Union Trade Commissioner Karel De Gucht. Credit: numozaik.hu

European Union Trade Commissioner Karel De Gucht was in New York City yesterday touting the “unique relationship” between the EU and the US, the “largest and most open economies” in the world as he pressed for agreement on the details of the proposed Transatlantic Trade & Investment Partnership (TTIP).

In a speech to the European American Chamber of Commerce, he stressed that removing transatlantic trade barriers “will deliver major benefits to the European Union and the United States, boosting economic growth and stimulating business confidence.”

Noting that uncertainty about the economic future has held companies back from investment decisions, he also pointed out that an agreement would send a powerful signal that open markets are essential for growth.

“A successful Transatlantic Trade & Investment Partnership would remove one source of that uncertainty – the risk that the world’s leading economies would respond to the crisis with protectionism.”

Commissioner De Gucht highlighted that an agreement “would not discriminate against any other trading partners, but rather positively impact” the global trade mechanism.

“At a very simple level, we predict that our trading partners are likely to see direct economic benefits from this deal, probably somewhere in the region of 99 billion euro,” he said.

Furthermore, it “will be a way for the EU and the US to lead by example, demonstrating the benefits of stronger rules to implement the principle of open markets, rules that will benefit all countries in the ever-more-integrated global economy.”

Barriers to Open Trade Remain

But, despite the “unlimited potential” of the trade relationship, ”the reality is that there are many remaining obstacles to transatlantic trade and investment that fall into three groups.”

First on his list were tariffs. Both the US and the EU have low duties on imports – around 4 per cent on average – “but that doesn’t mean they have no impact on the two-way flow of transatlantic trade.”

According to De Gucht, “an average always conceals extremes. And on both sides our highest tariffs are very high indeed – more than 300 percent on the US side and over 200 percent in Europe. For another, the huge volume of transatlantic trade means that the total amount paid into government treasuries is a significant tax on business.”

The second group, he said, is made up of “barriers in the form of different regulations and standards.”

According to estimates, “the differences between our regulatory approaches – and the administrative burden those differences create – are as effective at blocking trade as tariffs of between 10 or 20 per cent per product,” said De Gucht.

“Of course, in the vast majority of cases, regulators on either side of the Atlantic are not aiming to put up trade barriers. In fact they are trying to do the same thing: protect people’s health, safety, environment and economic wellbeing,” he said.

But, he added, “they go about that objective separately, through processes that have their own quirks and traditions. And in many cases the results are requirements that are different, and sometimes even contradictory, without good reason.”

The final group of transatlantic barriers De Gucht identified focuses on “complex areas” such as the trade in services and public procurement.

“Apart from the regulatory barriers to services that I just spoke about there are also issues like licensing, qualification requirements and investment limits,” he said. “More than half of the value of all EU exports are made up of services, so the effect of these barriers is real.”

Government procurement, the commissioner said, “is also important for Europe since companies whose business depends on sales to government entities account for 25 percent of EU GDP and 31 million jobs. However, a number of US federal and state level laws limit European participation in tenders there, meaning many lost opportunities.”

“Aggresive Pragmatism”

Asked about the chances of crafting a workable TTIP, De Gucht was guardedly optimistic. ‘We know that will not be easy.”

For the regulatory work to succeed, he said, “We will first need to calm people’s fears about cooperating in these new areas. That means being clear that we are not going to lower standards of protection, while still being flexible and creative enough to find valuable solutions.”

It is possible to do this, he said, adding that “we only have to look at the EU’s experience with the Single Market to see that. The challenge is to find the solutions in this new context. So we will need to be aggressively pragmatic.”

 

 

 

Raytheon Fined for Violating Export Control Regulations

Massachusetts-based company following an extensive enforcement review of "hundreds" of alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR),” according to the US State Department. Credit naval.com

The US govrenment has found Massachusetts-based Raytheon guilty of “hundreds” of alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). Credit naval.com

Aerospace and defense giant Raytheon will fork over $8 million in penalties and remedial expenditures to the US government for “alleged civil violations of export controls.”

An administrative agreement was reached with the Massachusetts-based company following an extensive enforcement review of “hundreds” of alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR),” according to the US State Department, the agency that initiated the government investigation and drafted the agreement

The State Department’s Office of Defense Trade Controls Compliance in the Bureau of Political-Military Affairs determined that “Raytheon’s numerous violations demonstrated a recurring, corporate-wide weakness in maintaining effective ITAR controls.”

Over the course of many years, the agency said, “Raytheon business units have disclosed to the department hundreds of ITAR violations, largely consisting of failures to properly manage department-authorized agreements and temporary import and export authorizations.”

The department said violations included inaccurate tracking, valuation and documentation of temporary exports and imports of controlled hardware; manufacture of such hardware by Raytheon’s foreign partners in excess of approved amounts; and failures to timely obtain and submit required export documents.

Raytheon apparently discovered the violations after an internal audit and reported them to the State Department.

The four-year Consent Agreement obligates Raytheon to pay a civil penalty of $8 million. But, the State Department agreed to suspend payment of half that amount if the funds have or will be used for “Department-approved, pre- and post-Consent Agreement remedial compliance measures.”

The company, the fourth largest defense contractor in the country, generated about $25 billion in revenue last year and has around 72,000 employees worldwide.

 

New US IP Theft Report Targets China, Other Countries

Too often, the USTR report concluded, “Chinese authorities view trade secrets cases as routine commercial disputes, rather than as serious violations of law.” Credit: interaxion.com

Chinese authorities view trade secrets cases “as routine commercial disputes, rather than as serious violations of law,” charges the US Trade representative’s recently released annual Special 301 Report on Intellectual Property Rights. Credit: interaxion.com

The US Trade Representative’s office has slammed China for “failing to stop the growing theft of American trade secrets that are the lifeblood of US economic might.”

The charge comes in the USTR’s annual Special 301 Report on Intellectual Property Rights, which identifies countries with the worst records of protecting US intellectual property (IP) rights.

“Not only are repeated thefts occurring inside China, but also outside of China for the benefit of Chinese entities,” the USTR report charged.

The US “strongly urges the Chinese Government take serious steps to put an end to these activities and to deter further activity by rigorously investigating and prosecuting thefts of trade secrets by both cyber and conventional means,” it said.

A company targeted for IP theft “can see the payoff from research investment evaporate as a result of corporate espionage and lose market position, competitive advantage and efficiencies,” the Special 301 report added.

Washington recently rolled out a campaign strategy to address the growing problems, which occur both through cyber-attacks and older methods such as a disloyal employee stealing trade secrets on the job and selling them to a rival company.

The White House said the campaign would include working with like-minded countries, widely disseminating the USTR’s annual intellectual property rights report, and, if need be, new legislation.

While US officials insisted the new IP protection strategy was not aimed at any particular country, a report recently released by the White House catalogs 17 cases of trade-secret theft by Chinese companies or individuals since 2010 – far more than any other country, the report said.

Two senior Democrats recently urged USTR to use the annual intellectual property rights report to designate China as a “priority foreign country” because of trade secret theft.

Such a designation would initiate a process that could lead to sanctions on Chinese goods exported to the US should Washington’s concerns not be addressed – a possibility as the USTR report accuses the Chinese government of “failing to take the issue seriously.”

Conditions, it said, “are likely to deteriorate as long as those committing the thefts and those benefiting continue to operate with relative impunity, frequently entering into unfair competitive relationships with their victims.”

Too often, the USTR report concluded, “Chinese authorities view trade secrets cases as routine commercial disputes, rather than as serious violations of law.”

 

Global Sales of Luxury Goods to Slump in 2013: Report

Sales of luxury apparel, accessories, jewelry, cosmetics and art are expected to grow just 4 percent to 5 percent in 2013, to between $283 billion and $286 billion. They increased 10 percent in 2012 to $272 billion, Credit: bit.ua

Sales of luxury apparel, accessories, jewelry, cosmetics and art are expected to grow just 4 percent to 5 percent in 2013, to between $283 billion and $286 billion compared with an increase of 10 percent in 2012 to $272 billion, according to a new Bain & Co. study. Credit: bit.ua

Global sales of luxury goods are off to a slow start in 2013 and aren’t expected to match the double-digit growth of the last three years, according to the results of a study conducted recently by consultancy Bain & Co.

Sales of luxury apparel, accessories, jewelry, cosmetics and art are expected to grow just 4 percent to 5 percent in 2013, to between $283 billion and $286 billion. They increased 10 percent in 2012 to $272 billion, it said.

Sales will reach about $321 billion by 2015 and $640 billion by 2025, it said, sustained primarily by young people who have high incomes, but are not yet considered ‘wealthy.’ Though they spend less than those with established fortunes,” they are ten times more numerous,” said Bain partner and study author Claudia D’Arpizio.

In China and the US, especially, “young people with greater disposable incomes are showing strong earning prospects and interest in spending on accessible luxury items,” she said.

The story is somewhat different in Europe, where youth unemployment is rampant, and Japan, where “young people are less interested in luxury. They have their own tastes and are very creative,” D’Arpizio said.

Europe, where recession has deepened, is slated to have flat sales this year with tourists who traditionally spend on luxury goods while visiting there becoming more cautious about their spending.

The biggest single luxury market in the world, Europe saw its overall share shrink to 35 percent in 2012 from 27 percent the year before.

In Asia, the Japanese are traveling less due to a sharp drop in their home currency and the Chinese are buying less abroad as brands narrow price gaps, D’Arpizio said.

At the same time, local consumer spending there has not yet recovered and price increases are discouraging shoppers.

China also has backed off from double digit growth and is slowing to a more sustainable 6 percent to 8 percent this year.

The US, the world’s second largest market for luxury items, is enjoying a period of improved consumer confidence and higher tourist traffic, according to the study. The US luxury market is expected to grow by 5 percent to 7 percent this year.

Incoming WTO Chief Vows to ‘Revive’ Global Trade Talks

will taking the helm of the WTO at a particularly tumultuous time as the organization’s extremely complicated trade talks have, over the past several years, been fuelled by clashes between the world’s trade giants, most notably China, the European Union, India and the US. Credit: onu.org.br

Roberto Azevedo of Brazil will taking the helm of the WTO at a particularly tumultuous time as the organization’s extremely complicated trade talks have, over the past several years, been fueled by clashes between the world’s trade giants, most notably China, the European Union, India and the US. Credit: onu.org.br

The incoming head of the World Trade Organization, Roberto Azevedo of Brazil, has vowed to revive the moribund 159-nation trade-promotion group and jump-start the stalled “Doha Round” of international trade negotiations.

“I have been working in and with this organization continuously for the last 15 years,” said Azevedo. “I have seen it in much better days. I pledge to all members that I will work with them, with unwavering and steadfast determination, to restore the WTO to the role and pre-eminence it deserves and must have.”

Azevedo, still officially Brazil’s WTO ambassador, made his comments at a session of the organization’s ruling General Council which approved him as the group’s next leader.

He held off from unveiling any details of his plan of action, given that incumbent Pascal Lamy – wrapping up his second four-year term in the post – is in office until September 1.

The 55-year old Brazilian will taking the helm of the WTO at a particularly tumultuous time as the organization’s extremely complicated trade talks have, over the past several years, been fueled by clashes between the world’s trade giants, most notably China, the European Union, India and the US.

Azevedo is seen as an experienced consensus-builder, knowledgeable and skilled in the ways of the WTO, but, observers say, he will have to act quickly as the next round of trade talks is scheduled to begin in Bali, Indonesia, in December.

The trade talks, first launched at a summit in Qatar in 2001, have been aimed at crafting a global accord on opening markets and removing trade barriers such as subsidies, excessive taxes and regulations to harness international commerce and improve the lot of the world’s lesser-developed economies.

A career diplomat, Azevedo has been Brazil’s WTO ambassador since 2008, after several past stints as the group’s chief trade litigator, and, while his victory has underlined Brazil’s new diplomatic and emerging economic clout, he has pledged to be staunchly independent.

“Developed, developing, and least developed countries across the world have extended me their confidence. I intend to do everything in my power to honor their confidence and trust,” said Azevedo.

“Regardless of their size, geographical circumstances, and level of development,” he said, “All members benefit from a predictable, rules-based multilateral trading system, embodied in this organization.”

 

 

 

Congress Urged to Get Tough with India on Trade Policies

According to a paper released this week by the Information Technology & Innovation Foundation (ITIF) in Washington, DC, the US “should not sit idly by as the Indian government enacts regulations that harm American industry and jobs.” Credit: wespeaknews.com

According to a paper released this week by the Washington, DC-based Information Technology & Innovation Foundation (ITIF), the US “should not sit idly by as the Indian government enacts regulations that harm American industry and jobs.” Credit: wespeaknews.com

A US-based think tank is recommending Congress take a hard line on trade benefits for India, accusing the country of implementing policies that block US exports and getting “a free ride on costly US research to develop new medicines and other forms of valuable intellectual property.”

According to a paper released this week by the Information Technology & Innovation Foundation (ITIF) in Washington, DC, the US “should not sit idly by as the Indian government enacts regulations that harm American industry and jobs.”

The ITIF paper listed several actions taken by the Indian government that it said were aimed at “stripping” foreign biopharmaceutical companies of valuable patent protections.

In two high-profile cases, the paper said, India issued a license to allow generic production of Nexavar, a cancer therapy drug researched and developed by Bayer in the US, and denied Novartis’ patent application for the cancer drug Glivec, even though nearly 40 other countries approved it.

In the electronics sector, last year the Indian Ministry of Communications and Information Technology has imposed local content requirements for government and private sector purchases that have “security implications for the country” – a move, the paper said, “potentially blocks foreign equipment manufacturers from a huge section of the Indian market.”

Congress, wrote Stephen Ezell, the think tank’s senior analyst, “Should start by removing India from the US Generalized System of Preferences (GSP) program, which waives duties on most goods from developing countries “and direct the US International Trade Commission to investigate how India’s ‘mercantilist policies’ damage the US economy.”

The GSP program comes up for Congressional renewal annually and is slated to expire at the end of July.

India was the top recipient of GSP benefits in 2012, with some $4.5 billion in imports from that country entering the United States duty-free.

The ITIF paper was released on the heels of a recent US House of Representatives’ Ways and Means Committee hearing where it heard a slew of complaints about India’s industrial policies from businesspeople in several industry sectors.

 

 

New Bills Seek to Improve Export Promotion Efforts

Thre pieces of new legislation has been introduced in Congress aimed at better coordinating the federal government's export promiton programs. Credit. leatherdown.com

Three pieces of new legislation has been introduced in Congress aimed at better coordinating the federal government’s export promition programs. Credit. leatherdown.com

Three bills have been introduced in Congress that would enhance several federal programs aimed at promoting US-based small- and medium -sized businesses (SMEs) abroad.

The legislation – introduced last week by Rep. Sam Graves (R-MO), chair of the House Small Business Committee – seeks to improve “the coordination of federal trade promotion agencies.”

That would include “doing a better job of publishing up-to-date listings of foreign trade missions, tariff laws, and modifications in foreign regulations” and “integrating the states’ efforts at foreign trade promotion” into existing federal programs.

“Although 95 percent of the world’s market for products exists outside the US, many small firms do not have the resources and personnel to take advantage of these opportunities,” Graves said in a statement.

However, despite an improved environment for lending to SMEs, improved access to working capital remains a key factor in the success of small businesses wanting to expand into the global marketplace.

A survey released last month by the US Small Business Administration’s Office of Advocacy found that small business exporters “were especially dependent on working-capital loans because of the longer transportation times required when shipping goods abroad and the risk in foreign sales. “

The US Export-Import Bank (EXIM) manages an initiative to assist SME’s with expedited export financing and loan guarantees, but the agency has come under threat recently as it could be forced to stop operations in two months unless the Senate approves the nomination of Fred Hochberg as president of the government-operated bank for another two years.

“If we do not again confirm Mr. Hochberg before July 20, we run the risk of leaving the bank without a quorum to act on many of the transactions before it, which will hurt American workers and exporters,” said Senate Banking Committee Chairman Tim Johnson (D-SD).

 

Nintendo Victorious in Motiva Patent Infringement Appeal

The decision affirmed a January 2012 ruling by the US International Trade Commission (ITC) against Dublin, Ohio-based Motiva LLC, which had sued Nintendo in 2008, charging that the Japanese company’s Wii gaming system infringed two patents

The US Federal Circuit Court of Appeals in Washington, DC has ruled in favor of Nintendo Co. in a patent case that will allow it to keep importing its popular Wii system into the US

The decision affirmed a January 2012 ruling by the US International Trade Commission (ITC) against Dublin, Ohio-based Motiva LLC, which had sued Nintendo in 2008, charging that the Japanese company’s Wii gaming system infringed two patents for a system to track a game user’s position and body movement.

In its ruling against Motiva, the three-judge Federal Circuit panel agreed with the ITC that the main impetus behind Motiva’s litigation against Kyoto, Japan-based Nintendo “was to win damages or a settlement, not to license or make products incorporating Motiva’s patents.”

This panel said Motiva’s litigation did not amount to the “significant” or “substantial” investment toward commercializing patented technology that was required under the Tariff Act, a patent protection law that sets limits on imports.

“Motiva’s litigation was targeted at financial gains, not at encouraging adoption of Motiva’s patented technology,” Circuit Judge Sharon Prost wrote in her opinion.

There is, she stated, “Simply no reasonable likelihood that, after successful litigation against Nintendo, Motiva’s patented technology would have been licensed by partners who would have incorporated it.”

 

‘Revenue Generating’ US-Canada Border Fees Proposed

The US department of Agricultre and the Department of Homeland secutirty have recommended that new fees be slapped on land crossings at the US-Canada border. Credit: adslogistics.com

The US Department of Agriculture and the Department of Homeland Security have recommended that new fees be slapped on land crossings at the US-Canada border. Credit: adslogistics.com

The US Department of Agriculture (USDA) is recommending several revenue-generating measures that critics say could result in higher costs for manufacturers on both sides of the US-Canadian border.

Last week, the USDA issued a report recommending that a roster of new border fees be implemented because several US government agencies, including US Customs and Border Protection (CBP), are currently providing free services at the border.

The CPB works in collaboration with the USDA’s agriculture quarantine and inspection program, which provides checks of imported agricultural goods and commercial aircraft, rail cars, ships and even passenger baggage to prevent harmful pests, diseases and materials from entering the US.

“Approximately $191 million in CPB costs are associated with services for which no fee is currently charged,” the department’s presentation stated, adding that the US government “needs to recover all costs associated with fee services and have fee revenue from each fee service cover the associated costs.”

In conclusion, it recommended that the ASDA, “Consider establishing new fees.”

Speaking with the media in Ottawa, Ed Fast, Canada’s international trade minister, said that Canada would vigorously oppose” the measure, adding that, “We don’t know exactly what it’s going to look like, but certainly we’ll be contacting my counterpart in the United States to press upon them that this is not helpful at all.”

Fast chided Washington for “If they want to drive economic growth in the US — we want to do so in Canada — it’s not going to happen by raising new barriers at the border. It’s going to be by opening up trade, freeing up trade, so that we can drive prosperity in both of our countries.”

The border fee recommendation by the USDA comes as the US Senate’s Judiciary Committee has turned thumbs-down on another move to institute a fee that could be collected from everyone entering the US at land border crossings.

The Department of Homeland Security (DHS) had wanted Congress to authorize the study of a fee, but the Senate Committee voted to amend the Immigration Reform Bill to ban the fee altogether.

Vermont Senator Patrick Leahy, who chairs the committee, said a fee would stop Canadians from visiting the US and could threaten trade and the economy.

Leahy said a border crossing fee would make US border patrol agents “toll collectors instead of law enforcement.”

The bill still has go to the Senate floor, but sources on Capitol Hill say that the fee has “virtually no chance” of passing the Senate and making it to the House of Representatives for further action.

Canada’s Fast applauded the move by the Senate committee, saying that, “The committee has recognized that free and open trade, rather than protectionism, is the way forward to create jobs and prosperity for workers in both our countries.”