"Building a Trading Bloc"World Trade 100
Welles Orr commented on Asia becoming a more important world trade factor for the United States, saying that the Trans-Pacific Partnership (TPP) could become a template for an even larger trade pact with more Asian (and non-Asian) countries. Orr said the TPP is the only game in town and is not something the Obama Administration was going to object to, or even redefine. The Administration did, however, change some of the terms on the bilateral free trade agreements (FTAs) with Colombia, Panama and South Korea.
The United States is the driver on the TPP, Orr said, explaining that the provisions that become part of the TPP would apply to all of the nations who are participating. While the U.S. Trade Representative (USTR) addresses "cross-cutting issues" and emerging trade issues from a U.S. perspective, the provisions would apply for all participants. That will make things interesting, according to Orr, especially in the areas of competitiveness and state-owned enterprises that are both addressed in the TPP.
Orr said Vietnam is becoming a major source for apparel and footwear imports to the United States, but it is unknown what will happen with rules of origin that involve third-party countries like China, which are not part of TPP. There are also other issues, such as bringing previous bilateral FTAs into line with the goals of the TPP. He points to the behavior of a state-owned enterprise in New Zealand, which has a monopsony on milk products. Canada, which is a recent addition to the TPP, has issues with dairy as well. In addition, Orr said the U.S.-Australia FTA excluded a provision on investor disputes which should have been in the agreement. The TPP is appealing because it may expand to include other members, possibly South Korea. Orr said the degree of transparency in the negotiations was also interesting.
Although the Trade Promotion Authority (TPA) expired in 2007, Orr said the fact that the group negotiating the TPP for the United States has no specific congressional parameters governing how the final agreement would be considered in Congress is disconcerting for some due to the atypical process involved. Orr said the Obama Administration signaled the process should go on, and the appropriate TPA agreement will be forged when the time is appropriate.