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Trade Negotiations: What Was Accomplished This Year
Law360, New York (December 17, 2013, 11:24 PM ET) -- The concurrent December announcements that
the World Trade Organization reached agreement on a package of commitments at its Bali ministerial
conference and that that the parties to the Trans Pacific Partnership negotiations would be unable to
meet their goal set of concluding negotiations could leave the impression that the trade world spent
much of 2013 focused on the multilateral WTO negotiations, while the bilateral and plurilateral efforts
the United States and others languished.
To the contrary, the United States and its trading partners focused significant energy into furthering the
negotiation of regional and plurilateral agreements in 2013. That energy yielded significant forward
progress and leaves a promising outlook for these ambitious initiatives in 2014.
For the United States, much of its negotiating activity centered around two negotiations: the Trans
Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP). In addition, the
United States has played a key role in the launch of negotiation on a multilateral services agreement
(TISA). We review developments from 2013 in these and other trade initiatives below.
TPP
Although Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, the United
States, Singapore and Vietnam fell short of their goal of concluding the TTP by the end of 2013, the
negotiations among the 12 TPP countries have entered the final phase. After some 19 formal
negotiation rounds and numerous intersessional meetings over the past two years, the TPP countries
have narrowed the remaining issues and will have to start the process of making trade-offs on the most
sensitive market access and nontariff commitments.
Key issues that remain to be resolved include provisions on the protection of intellectual property rights,
disciplines on state-owned enterprises, investor-state dispute settlement provisions, and market access
commitments for the most sensitive agricultural products. Some of these discussions have been raised
to the ministerial level. Having missed the self-imposed deadline to conclude in 2013, it is unclear when
the TPP countries will seek to close the agreement. One event in 2014 that may give rise to a new
deadline is President Obama’s planned visit to Asia in April 2014.
The participation of Japan in TPP greatly increased the economic significance of the agreement. Japan is
by far the largest U.S. trading partner participating in the TPP negotiations, and it does not already have
a free trade agreement with the United States. TPP will now create an integrated regional market
accounting for nearly one-third of all global trade and nearly 40 percent of the world’s GDP. The reach of
TPP could expand further once concluded, as other economies seek to join the agreement. Korea and
Thailand are among the countries reportedly interested in joining TPP.
Japan-U.S. Bilaterals
On a separate and parallel track to TPP, the United States is conducting bilateral talks with Japan to
address nontariff measures in the automotive sector and several other sectors. These talks include
discussions on insurance, transparency, investment, intellectual property rights, standards, government
procurement, competition policy, express delivery, and sanitary and phytosanitary measures. The
United States and Japan expect the outcome of the discussions on automotive trade barriers to be
incorporated into TPP agreement itself as part of Japan’s market access commitments. The outcome of
the discussions on nontariff measures will likely take the form of separate commitments to be
implemented before the TPP enters into force.
TTIP
A proposed FTA being negotiated between the United States and the European Union was announced in
February 2013. The United States and the EU envision the TTIP as a “comprehensive” and “highstandard” FTA that seeks, among other things, to increase market access through the elimination of
barriers to trade and investment in goods, services, and agriculture, and to enhance regulatory
cooperation. Similar in scale to the TPP, the TTIP will create an integrated regional market accounting
for 30 percent of global trade and approximately 50 percent of the world’s GDP.
With average U.S. and EU tariffs already being quite low, trade-related rules and regulatory issues are
the key areas where significant improvement of the trade relationship is possible in the TTIP
negotiations.
It is unclear whether some areas, such as financial services, will be covered at all. In other areas, it is too
early to determine what approach will be taken in the agreement. With respect to regulatory
cooperation, for example, the EU appears to be looking for sector-specific regulatory commitments on,
among others, automobiles, pharmaceuticals, medical devices and chemicals,. The EU approach would
likely include mutual recognition agreements whereby the each party accepts the conformity
assessment determinations of the other party’s regulatory bodies. The United States, on the other hand,
can be expected to push for horizontal commitments that might improve transparency and stakeholder
input in the EU rulemaking process.
The United States and the EU held their first round of negotiations in July 2013 in Washington, D.C.
Discussions focused on the possible structure of the negotiations, general architecture of the
agreement, and how specific issues might be addressed. A second round took place on Nov. 11-15,
2013, in Brussels and covered services, investment, energy and raw materials, and regulatory issues.
Negotiations on other areas have been held by digital video-conference throughout November. The
third round of formal negotiations is being held Dec. 16-20, 2013. After the December round, EU Trade
Commissioner Karel De Gucht and U.S. Trade Representative Michael Froman are expected to meet to
take stock of the negotiations and issue guidance to their negotiators on how to proceed.
Non-U.S. FTAs
The United States was not alone in the use of bilateral and regional agreements to liberalize trade.
Among the many FTAs under negotiation in 2013, we note that the EU concluded agreements with
Canada and Singapore. The EU also launched negotiations with Japan in April. China concluded several
agreements including FTAs with Iceland and Switzerland. In addition to its agreement with the EU,
Canada concluded several agreements in Latin America. Australia announced a major agreement with
South Korea.
China-U.S. Bilateral Investment Treaty
At the fifth round of the U.S.-China Strategic and Economic Dialogue in July, the United States obtained
a commitment from China to move forward with the negotiation of a BIT. Importantly, China committed
to negotiations on the basis of a model BIT containing two key elements: “pre-establishment” treatment
and a “negative list” approach.
Pre-establishment treatment refers allowing the investments and investors of one country into the
territory of another country on terms no less favorable than those that apply to domestic investors or
investors from third countries at all stages of investment (rather than after an investment has been
admitted and established in a territory). Under a negative list approach, all sectors and measures
covering investment must be liberalized unless otherwise specified.
TISA
A subset of some 50 WTO members (with the EU representing its 28 member states) — collectively
representing around 70 percent of global trade in services — began formal negotiations of the TISA in
April 2013. The negotiations are aimed at developing a new agreement to liberalize trade in services
outside the WTO framework. The agreement will be designed to complement and expand on existing
disciplines contained in the WTO General Agreement on Trade in Services, which entered into force in
1995 and, consequently, does not fully take into account how more recent developments in technology,
business practices, and global integration. Over 50 countries have held three rounds. As a sign of the
momentum building behind this agreement, several TISA countries, including the United States and
Japan, have already tabled early market access offers.
One development that may hamper TISA’s building momentum was China’s September 2013 expression
of interest in joining the negotiations. In subsequent discussions, China has refused to commit to the
same level of ambition as the other TISA countries or to meet any preconditions prior to joining the
talks. Given that the negotiations are at an early stage, it will be difficult to argue for the exclusion of
China from the negotiations. However, any willingness to have China at the table may be tempered with
caution due to the TISA countries’ experience in the negotiations to expand the WTO Information
Technology Agreement (ITA).
The ITA negotiations collapsed in November of this year after the United States objected to China’s
attempt to scale back the coverage of the new agreement by more than half. The TISA countries are
holding individual consultations with China to assess its and readiness to join the TISA talks. No schedule
has been set for a decision on China’s entry to the talks.
Conclusion
The breakthrough at the WTO with the Bali package is no doubt significant. Without it, the stillunfulfilled Doha Development Agenda could very well have completely collapsed and any future
multilateral agreements on trade might have been deemed impossible. Bali’s success, however, should
not dampen enthusiasm for bilateral and plurilateral efforts such as those mentioned above. The
progress made by the United States and its trading partners on the bilateral and plurilateral front
demonstrate that when negotiations are limited to a committed few, a high level of ambition can be
achieved.
—By Joseph A. Laroski Jr., King & Spalding LLP
Joseph Laroski is a counsel in King & Spalding's international trade practice group in Washington, D.C.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its
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