U.S., JAPAN TALK DEEPENING ECONOMIC TIES: The Biden administration sees Japan as a key ally for selling its to-be-developed Indo-Pacific Economic Framework throughout the rest of Asia.
The framework was one of several topics President Joe Biden and Japanese Prime Minister Kishida Fumio discussed during a 90-minute virtual meeting on Friday, with topics ranging from China's trade and military aggression to the threat of conflict with Russia over Ukraine. The U.S. readout of the meeting said that Kishida "expressed strong support" for Biden's proposed Indo-Pacific framework and pledged "to build support for the initiative in the region." Meanwhile, the Japanese readout said Kishida "welcomed" the U.S. commitment to the Indo-Pacific, including its pursuit of the economic framework. The Biden administration has insisted the economic framework will not take the form of a typical free trade agreement, which would require congressional approval and deal with issues like tariffs and market access. Instead, it will focus on topics like supply chains, semiconductor manufacturing, infrastructure investments and export controls. Cabinet-level calculations: The leaders announced a newly formed economic policy dialogue, known as the Economic "2+2," that will also delve into those topics. That "consultative committee" will consist of cabinet-level officials and be led on the U.S. side by Secretary of State Antony Blinken and Commerce Secretary Gina Raimondo. "The expectation is that they will work in a number of areas including export controls, but most directly in the current environment: supply chains, technology investments, and standard setting," a senior administration official told reporters. "We think those are areas that the United States and Japan can step up their game and take a much more active role in such a critical period." Passport to Tokyo: Kishida also invited Biden to travel to Japan this spring for an official state visit and a meeting with the leaders of the Quad, which also includes India and Australia. The administration official said that Biden accepted the invitation with exact details still to come. Tariff truce : Perhaps by the time Biden arrives, the U.S. and Japan will have resolved their dispute over steel and aluminum tariffs, a trade irritant held over from the Trump administration. The White House has not given an exact timeline for reaching an agreement, but Biden wants to see them "conclude rapidly." Those negotiations formally started in November when Raimondo and U.S. Trade Representative Katherine Tai made separate trips to Japan for discussions with their counterparts. Both sides will need to sell the final deal to their domestic steel producers, which are not only sensitive to foreign competition and market access but politically influential. "I think the intention, given Secretary Raimondo's ambitions to talk about so many other issues, is to make sure that this issue is dealt with in a way that can be explained and understood on both sides of the Pacific," the senior administration official said. A date to remember: Sunday marked 5 years since former President Donald Trump signed an executive order withdrawing the U.S. from the Trans-Pacific Partnership, a trade pact that the Obama administration spent years negotiating and that trading partners like China, South Korea and Taiwan are now eager to join. There have been bipartisan calls for Biden to reenter that agreement, even if it means renegotiating parts of the deal, rather than pursue a less-comprehensive economic framework. But Biden has no plans to join the current iteration of TPP and, even if he did, such a move would face fierce opposition on Capitol Hill. EU PUSHES FOR DISPUTE SETTLEMENT AGREEMENT DEADLINE: European Union Trade Commissioner Valdis Dombrovskis urged top trade officials from the United States, China and 25 other WTO members on Friday to support setting a firm deadline for restoring a "fully functioning" dispute settlement system and making other WTO reforms. At a mini-ministerial meeting hosted by the Swiss government, Dombrovskis said members should commit to reaching such an agreement by the 13th Ministerial Conference, which is the one that would be held after the postponed 12th Ministerial Conference takes place. Dombrovskis said WTO members agreed generally on the need for WTO reform and that it is particularly "crucial to have a functioning dispute settlement system." That sentiment was already reflected in the draft MC12 declaration, he said. However, the membership should go a step further and agree to begin "an inclusive process of deliberation on WTO reform with the target of reaching agreed outcomes by MC 13, in particular to ensure a fully functioning dispute settlement system." The United States is the biggest obstacle to restoring the WTO Appellate Body to operation, since it has blocked the appointment of new members. U.S. Trade Representative Katherine Tai says the United States has begun talking with other WTO about how to reform the dispute settlement system. But it's not clear if the Biden administration favors restoring the Appellate Body under any circumstances, even though U.S. business groups have urged that. USTR did not release Tai's opening statement at the meeting, but said in a readout that she "reiterated the United States' deep commitment to the WTO and the urgent need to begin innovative discussions about reforming the institution." Three other things: Dombrovskis said he believed the discussion on WTO reform and the WTO's response to the pandemic were the most "mature" of the four big topics left unresolved by postponed MC12 meeting. The other two are resolving the long-running talks to curb harmful fishing subsidies and agreeing to parameters for future negotiations on agriculture, he said. WTO Director General Ngozi Okonjo-Iweala, who also attended the mini-ministerial, has been holding small group discussions on the sensitive issue of whether members should agree to waive intellectual property rights protections on Covid-19 vaccines, diagnostics and therapeutics. The EU opposes a broad waiver, but has been part of the talks to reach a compromise. CARIBBEAN TRADE DECLINES AMID PANDEMIC: Countries throughout the Caribbean have never been a major factor in U.S. trade, but a new reportfrom the Office of the U.S. Trade Representative shows imports and exports declined during the Covid-19 pandemic. The 17 countries that benefit from trade preference programs known as the Caribbean Basin Initiative provided $5.1 billion worth of imports to the U.S. in 2020. That figure was $6.1 billion in 2018 and $5.6 billion in 2019. Meanwhile, the value of U.S. exports to those countries totaled $11.1 billion in 2020, a 20 percent decrease from the $13.9 billion worth of exports the year prior. USTR blamed the Covid-19 pandemic for the declines, which occurred during the initial stages of the now two-year-old pandemic. Overall U.S. imports have soared during the pandemic as Americans spent more money on goods, and some exports have also seen record highs despite an uneven global economic recovery. USTR provides an account of the economic impact of the Caribbean Basin Initiative to Congress every two years. The biggest beneficiaries from reduced tariffs and other perks under the program include Trinidad and Tobago, Haiti and Guyana. | 
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