US, EU Look to Boost Economies with Trade Pact

Posted on December 18, 2012 by Annika Helmrich

After years of trade disputes, US and European Union officials are considering a drastic change in direction: a US-EU trade pact. It would be the world’s largest trade agreement, and could give a significant boost to both struggling economies.

Negotiations are still in the preliminary stages, and both sides will have much to overcome — including differences on agriculture, food safety, and climate change legislation — but top EU and US officials insist they want to see the pact happen. Even America’s main labor group, the AFL-CIO, which usually opposes such trade pacts, said it wouldn’t interfere with this one. Secretary of State Hillary Clinton also appears to be in support of the trade agreement:

If we get this right, an agreement that opens markets and liberalizes trade would shore up our global competitiveness for the next century, creating jobs and generating hundreds of billions of dollars for our economies.

Labor unions in the States have tried to discourage huge trade agreements ever since the politically fraught debate over the passing of NAFTA in 1991, arguing that starkly lower wages and lax environmental regulations in certain countries would place American workers at a competitive disadvantage. Those issues don’t seem as pressing in deals with the EU.

Big business in the US appears to give similar support.

However, negotiators do not have an easy path ahead. The most recent dispute concerns EU’s carbon trading scheme, which could penalize American airlines that don’t meet EU standards. Intellectual property laws and food safety regulations also differ broadly across the Atlantic, as do agricultural restrictions on the use of genetically modified foods in Europe.

Enthusiasm seems to be the most common factor across these economies right now. Where do you think these negotiations will lead?

US-Led Trans-Pacific Partnership May Have Chinese Competition

Posted on December 6, 2012 by Annika Helmrich

The Obama administration is looking to finalize its much-anticipated Trans-Pacific Partnership, an 11-nation regional trade agreement that, if successful, will expand American exports and economic influence in Asia.

As we noted previously, the TPP is still facing many challenges as negotiations draw to a close. The Association of Southeast Asian Nations recently unveiled plans for the Regional Comprehensive Economic Partnership, which would be the world’s largest-ever regional trade agreement.

The partnership includes ASEAN’s 10 member states as well as Australia, China, Japan, India, South Korea and New Zealand. Its creation raises several questions for the future of the TPP – namely, can the US-led agreement thrive alongside Asian-organized, competing trading blocs, especially if those blocs include China and exclude the US?

Some believe that competing pro-China and pro-US treaties may escalate current economic tension in the region, rather than alleviating it. The potential conflict also presents an especially tricky situation for Australia, whom the US sees as playing a key role in nurturing American economic activity in Asia.

The Importance of Global Trade Content for Managing Free Trade Agreements

Posted on June 7, 2012 by Anthony Hardenburgh

Users also need to Understand the Trade Content that Powers their Solutions

On May 14, 2012, President Obama signed the presidential proclamation that put the US-Colombia free trade agreement into force. Designed to promote the flow of certain goods and services between the countries, the free trade agreement was years in the making.

According to the Office of the US Trade Representative (USTR), the tariff reductions in the Agreement will expand exports of US goods alone by more than $1.1 billion, supporting thousands of additional American jobs. The ITC also projected that the Agreement will increase US GDP by $2.5 billion. The Agreement will remove significant barriers to US goods from entering Colombia’s market, as over 80 percent of US exports of consumer and industrial products to Colombia will become duty free immediately, with remaining tariffs phased out over 10 years.

Because the agreement specifies changes in rules of origin and HS codes, it is critical that any organization using global trade management software ensure that its vendor made the appropriate updates to the underlying trade content and put them in place immediately. In fact, the US-Colombia FTA is affecting over 20,000 HS codes and over 800 rules of origin. This is a significant amount of content that required collection, analysis and interpretation so that it could be implemented in conjunction with the president’s signature.

Especially for organizations already doing business with Colombia, the FTA could mean substantial reductions in landed costs due to preferential treatment as of the effective date. Supply chain managers should be able to run scenarios that reflect preferential rates as they make sourcing decisions that may now include items from Colombia.

Don’t be afraid to speak with a representative from your GTM software vendor. Find out whether it anticipated the formalization of the agreement with the necessary updates to its trade content. You may also want to ask about how many trade specialists are on staff to monitor government information feeds from around the world as trade regulations change. Those specialists should have extensive backgrounds in compliance and global trade, as well as speak the languages of their countries of expertise.

Final Thoughts

GTM software users need to understand the importance of the trade content that powers their solutions and the critical role it plays in areas like free trade agreement management. As countries continue to expand the scope of these preferential programs, choosing a GTM vendor that offers both depth and breadth of trade content will become even more critical.