Tai Talks WTO Moratorium on Duties on Electronics Sales, Environmental Goods, EU Section 301 Settlements
A week before U.S. Trade Representative Katherine Tai heads to Geneva for the World Trade Organization's ministerial conference, she said she's excited for what the meeting could bring, though she avoided predicting that either an intellectual property waiver for COVID-19 vaccines would be approved, or that the 20-year fisheries negotiations would be closed.
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Tai, who spoke at the Washington International Trade Association in dialogue with former longtime USTR staffer Wendy Cutler, disagreed with those that said the ability to reach agreement on fisheries is a litmus test for the WTO's ability to function.
"I think it will be an important data point," she said June 6, and said that whether or not the WTO member countries can come together to create real disciplines on overfishing will inform the discussion on how to reform the WTO.
She also took questions from the audience, and Ed Brzystwa, vice president for international trade at the Consumer Technology Association, asked her if she's pushing countries at the WTO to maintain the moratorium on customs duties for electronics purchases, as his members fear it could end. He noted that India, Indonesia and South Africa want to start collecting duties on those purchases.
Tai said she is worried that the moratorium might be dropped, and said she just raised the issue with her Indonesian counterpart when she saw him in Bangkok during the Asia-Pacific Economic Cooperation summit, and that as the WTO conference approaches "we will be more and more focused" on the issue.
An audience member from International Paper Company asked her whether there could be any momentum for restarting the Environmental Goods Agreement talks at the WTO, and Tai said, "I have a great interest in reinvigorating the EGA conversation, but bringing a 2022 consciousness to the EGA negotiations."
She said the approach in 2014 through 2016, when talks were last active, was to eliminate tariffs on goods that were considered environmental goods, and the negotiations centered around what was a green good, and how allowing China to export, say, wind turbines or bicycles duty free could affect domestic producers of those goods in Europe or the U.S.
She said EGA should have the aim of helping the planet achieve its goals to reduce carbon emissions. "But we are 85% reliant on China as a producer of solar panels. And the real challenge we have there is the supply chain runs right in the region of China where we know there are significant forced labor problems. We also know that a significant part of the Chinese [solar] production economy is run on coal-fired power." So she said, if your aim is to drop tariffs on solar panels, "but you're not looking at how those goods are produced, and whether or not the production of those goods itself is contributing to sustainability, then I think that you missed a huge part of the picture." She said negotiators need to update their thinking.
Tai also received questions about negotiations on a smaller scale, including with the EU and the 13 countries that have said they want to participate in the Indo-Pacific Economic Framework.
Robert Tobiassen, president of the National Association of Beverage Importers, said his members are worried that the settlements of the Digital Services Tax conflicts with EU countries and the Airbus/Boeing settlement are temporary, and if France, for instance, doesn't agree to the international tax reform that the treasury secretary is pushing, tariffs could be levied on French goods.
Tai said she doesn't think of the settlements as temporary, but more that the deadlines help the Europeans and Americans hold themselves accountable for advancing their goals in policy to protect aviation manufacturers or confront excess steel capacity. "I am very confident that we’re going to deliver in those areas," she said. And, she said, though Treasury is leading the tax negotiations, she said she is confident that the European countries that had planned DSTs will find a way to reach a tax agreement that satisfies the U.S.
Cutler told Tai that many trade pundits did not expect 13 countries to sign on to the IPEF, "given that no tariff liberalization is going to be on offer."
"When the United States shows up and shows leadership, and vision, and a desire to engage, there is interest," Tai said with a smile. She said that while the conversations will "go at their own pace," she and Commerce Secretary Gina Raimondo agree the negotiations need to be holistic, flexible and pragmatic, and deliver along the way.
"But I think that on a broader scale, also what we are looking to do with this next generation of trade arrangements is to look at the incentive structure," she said. "You create incentives through sticks, but also with carrots."