Pedaling Forward on Trade
The machinery of trade liberalization came to life again in the past few weeks. After a year-long impasse, the U.S. and China announced at the APEC Summit that they had agreed on a list of products to be added to the WTO Information Technology Agreement (ITA). The ITA will add about 200 new technology products to the existing list of duty- free items.
The goods going to zero duty include next generation semiconductors, MRI machines, GPS devises, video game consoles, medical devises and many others. Current sales in these goods is estimated at $1 trillion. This deal should be a boon to trade in these high-value items and it will accelerate the diffusion of high-technology around the world.
The U.S. also announced the standoff surrounding the WTO Trade Facilitation has been resolved. Once approved and ratified by two thirds of WTO members, the world will have, for the first time, a binding set of customs improvements that all 160 countries will have to implement. The agreement will cut red tape and make international shipping easier, faster and cheaper. This is especially important for SMEs that want to export, and for the continued growth of cross-border e-commerce.
Finally, the U.S. and other members of the Transpacific Partnership (TPP) negotiations announced substantial progress had been made in those negotiations and that the list of outstanding issues continues to narrow. TPP involves 11 Pacific Rim countries, including Japan, Vietnam and Malaysia, and represents 40% of global GDP and about a third of global trade. A high-standard agreement that reduces trade barriers and upgrades the rules for trade will create huge economic benefits for all participants. FedEx is a strong supporter of the TPP and we hope to see its conclusion as soon as possible.
All this is good news for the global trade agenda. Positive developments in the TPP, the ITA and the TFA will provide added momentum to the other agreements the U.S. is working on, including the Trade in International Services Agreement (TISA) and the Transatlantic Trade & Investment Partnership (T-TIP) with Europe. Combined, these negotiations make up one of the most ambitious trade agendas in American history. If we can get them done, the U.S. will have positive growth opportunities for decades to come. The only other piece we need in place is Trade Promotion Authority – and the odds of that happening early next year are looking better.
It has been said that trade policy is like a bicycle – it has to keep moving or it crashes. For the past several years the U.S. has been riding a very heavy bicycle up a steep hill. It has been hard to keep those pedals turning. The good results out of APEC give the trade bike a shot of energy that can help it get over the mountain and then, barring flat tires or crashes, let’s hope it’s full speed towards the finish line.