EU, U.S. to Commit to Remove All Duties on Transatlantic Trade

U.S. President Barack Obama and European Union leaders will promise to remove all tariffs on bilateral trade at a summit on March 26, an ambitious step towards the world’s largest free-trade deal, according to a draft statement seen by Reuters.

The joint declaration, if delivered as laid out in the draft, seeks to overcome tensions following Washington’s offer to cut its duties by less than the Europeans had hoped for and after Brussels pledged to remove almost all of its own tariffs.

“The EU and the United States are firmly committed to concluding a comprehensive and ambitious Transatlantic Trade and Investment Partnership,” the draft statement reads, referring to U.S.-EU free-trade talks by their official name.

“Those goals include eliminating all duties on bilateral goods trade,” says the statement, which will be delivered at the end of the day-long summit in Brussels.

By Barbara Lewis and Robin Emmott, Reuters

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What Would Obama Do?

As mentioned in What Democrats and Republicans are Forgetting in 2012, there is a key issue that seems to be on the back burner in the current presidential election.

President Obama’s initiative to reorganize the government’s trade functions seems like a good first step. The Objective is to “streamline” government services by merging several agencies under a new department charged with overseeing trade and investment, and economic development.

Three of the agencies targeted were created a half century ago with distinct mandates.
1. The Export-Import Bank –
2. The Overseas Private Investment Corporation (OPIC)
3. U.S. Trade and Development Administration (TDA)
The Export-Import Bank was established in 1952 to help Russia enter U.S. markets, has evolved as a mmajor provider of financial assistance (mostly loan guarantees) to American companies exporting goods and services.Both the OPIC and TDA were set up withing the State Department to leverage U.S. investments to help the economies of developing countries.

For U. S. exporters, these are the critical agencies.  They provide the financial assistance, loan guarantees, risk insurance, feasibility studies and other services that are essential. Other countries are far more generous in supporting their industries in pursuit of foreign markets, often placing U. S. companies at a disadvantage.

The two other agencies to be merged are:
1. The Small Business Administration (SBA)
2. U. S. Trade Representative (USTR).
The SBA brings value in that it has regional offices that could more readily make available export services to U. S. companies. Yet, the idea of merging USTR with other agencies has already drawn heavy criticism from the trade community and Capitol Hill, and for good reason.  USTRs activity is international in its outlook and mission.  Its mandate is to conduct trade negotiations and convince trading partners to comply with laws and preferences, and represent the U. S. at the World Trade Organization.  This relatively small office should not be bureaucratized if it is to maintain its independence and credibility, domestically and internationally.

From “Don’t Kill Commerce”
By Don Bonker and Michael Czinkota