It is true that no new free trade agreements (FTAs) entered into force in the United States in 2014, and that election-year politics stalled passing important trade policy legislation. However, 2014 brought significant international trade policy developments that will ultimately impact US companies of all sizes in the coming years. Below is TradeMoves’ take on the top three cross-border trade developments in 2014.
1 – Breakthrough on the WTO Trade Facilitation Agreement
When the World Trade Organization (WTO) membership concluded negotiations on a number of trade and development issues at the Bali Ministerial Conference in December 2013, not only was the “Bali Package” considered a major success in terms of the Doha Round, the latest round of WTO-wide negotiations ongoing since November 2001, but the agreement has also “been described as the first major agreement among WTO members since [the WTO] was formed in 1995” (Ninth WTO Ministerial Conference, WTO News Item, 7 December 2013). While the Bali Package included a number of decisions and declarations, the Trade Facilitation Agreement (TFA), which intends to make customs clearance processes worldwide quicker and more transparent, is regarded as the most important.
Unfortunately, the WTO missed its mid-2014 deadline, casting doubt on the organization’s effectiveness once again. The stumbling block was India, which refused to approve the agreement over objections to agricultural provisions regarding food security. However, in late November, India and the US reached an agreement to allow the full implementation of the TFA and settle India’s agricultural concerns. As US Trade Representative, Ambassador Michael Froman, stated following this breakthrough, the TFA is “a particularly important win for small- and medium-sized businesses in all countries.” SMEs are at a competitive disadvantage when it comes to time and resources available to navigate burdensome customs clearance procedures, and therefore have the most to gain from trade facilitation measures removing unnecessary barriers to trade. The TFA was adopted at the WTO on 27 November 2014 and will enter into force after two-thirds of the WTO membership have completed their domestic ratification processes.
2 – Progress in US FTA Negotiations that will ultimately mean greater access for US exporters
Cross-border trade, specifically FTAs currently under negotiation, was highlighted as a priority by President Barrack Obama in the 2014 State of the Union Address. He explained that “when ninety-eight percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs.” The trade agreements the President referred to are the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP).
Negotiations between the US and the European Union began in July 2013, and seven rounds of negotiations have taken place to-date, four of which took place in 2014. Since her appointment as the new European Commissioner for Trade this year, Cecilia Malmström has met with Ambassador Froman twice, and stated that both sides are still committed to “an ambitious, comprehensive, high-standard T-TIP.” The next round of negotiations will take place in February 2015.
TPP negotiations have also progressed between the US, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Market access negotiations between the US and Japan, the largest economies of the participating countries, have been the focal point throughout the year and continue to delay the conclusion of the negotiations. However, the member countries’ leaders in November affirmed that remaining gaps have narrowed and the negotiations are close to conclusion.
3 – Promise of cooperation on trade between the President and Congress after 2014 mid-term elections
To get the most out of the trade agreements mentioned above, it is important that Congress passes Trade Promotion Authority legislation, which grants the President authority negotiate trade agreements that will be presented to Congress for a simple up-or-down vote. In January, a TPA bill was introduced in the House of Representatives as the Bipartisan Congressional Trade Priorities Act of 2014. However, due to opposition from Senate Democratic leadership, no progress was made on passing the bill in 2014.
Republicans will take control both of the House and the Senate in the New Year, and trade policy is seen by both politicians and the media as an area where Congress and the President can work together.
For more information on the TPA bill and how it will benefit SMEs, see TradeMoves’ Statement of Support from earlier this year.