House committee talks China in hearing on WTO
China needs to make an “appropriate contribution” to negotiations on the Information Technology Agreement (ITA), according to Deputy US Trade Representative Ambassador Michael Punke at a hearing of the US House Ways & Means Trade Subcommittee on Wednesday. Punke told the subcommittee he’s hopeful that discussions will move forward before the Asia-Pacific Economic Cooperation (APEC) Senior Officials’ meeting in November, and said that incremental progress was made in May at the APEC Trade Ministers’ meeting in Qingdao, China. The ITA negotiations—which would eliminate duties on certain IT goods from participating countries—stalled last year after China’s proposed list of goods was deemed insufficient by negotiating parties.
Punke said that the United States must aim for high-standard trade agreements and continue its leadership in Asia. He noted that without vehicles like the Trans-Pacific Partnership (TPP), the Chinese would be “happy to fill that vacuum” with the Regional Comprehensive Economic Partnership (RCEP) being negotiated by China and 15 other Asian economies. He added that labor and environmental rights would be better served under TPP than RCEP.
On the Trade in Services Agreement (TISA), Punke said that the United States wants to maintain the current level of ambition to achieve a high-standard agreement. China is not party to the TISA negotiations, but has expressed interest in joining. Punke did not directly discuss China’s move to join TISA. The United States has maintained that China should first show a requisite level of ambition in plurilateral trade agreements like the ITA.
Other issues raised at the hearing include China’s adherence to the rules and spirit of the WTO, enforcement against China at the WTO, intellectual property protection, currency manipulation, and renewal of the Export-Import Bank.
Senate holds hearing for USTR nominee
At yesterday’s confirmation hearing for Deputy US Trade Representative, nominee Robert Holleyman called China “priority number one,” and told the Senate Finance Committee he will focus on enforcement to ensure China plays by the rules of global trade. Holleyman said he shares Chairman Ron Wyden’s (D-OR) concern about possible Chinese retaliation against US companies that take action against unfair trade practices. To combat this risk, Holleyman said he would aim for stronger enforcement of current trade agreements, seeking new agreements on issues like trade secrets, and cooperating with like-minded trade partners to ensure China adheres to its commitments under the WTO.
To tackle broader challenges in Asia, Holleyman said he would focus on developing “forward-looking” trade agreements in the region that better reflect US priorities. Holleyman added that he would focus on enforcement and winning market access for US firms in China. Other issues raised at the hearing included digital trade, intellectual property protection, transparency, and biotechnology approvals in China.
If confirmed, Holleyman’s portfolio is expected to include Asia, investment, innovation, intellectual property, and services.
Appeals court rules in favor of Ralls Corp.
On Tuesday, a US federal appeals court ruled in favor of a Chinese-owned company that tried—unsuccessfully—to invest in offshore wind farms in Oregon in 2012. The United States Court of Appeals for the District of Columbia said that the US government denied Ralls Corporation its right to due process after its investment was prohibited on national security grounds. Ralls’ wind farm projects were located in and near airspace restricted by the United States Navy.
After the Committee on Foreign Investment in the United States (CFIUS) ordered Ralls to halt its work on the project in July 2012, it further restricted Ralls’ ability to sell the contested projects in August of that year. In September 2012, President Barack Obama issued an order directing Ralls to divest from the project within 90 days. In response, Ralls sued the government, saying it “unconstitutionally deprived Ralls of its property [without] due process.”
Based on the appellate court’s decision, Ralls has the right to view and respond to the unclassified evidence used as a basis for the president’s decision.
CFIUS is an interagency body chaired by Treasury Secretary Jacob Lew, and comprised of representatives from the US Departments of Commerce, Defense, State, Energy, Homeland Security, Labor, and the Director of National Intelligence. CFIUS’ primary task is to review transactions involving foreign investors to evaluate whether they pose a threat to US national security.