Taiwan excluded from Biden's 13-nation Indo-Pacific trade plan

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May 23, 2022 View in browser   By Doug Palmer Presented by With help from Steven Overly and Sarah Anne Aarup Quick Fix — President Joe Biden formally launched negotiations in Tokyo today to forge the Indo-Pacific Economic Framework with 12 other countries. The proposed pact is Biden's substitute for rejoining the Trans-Pacific Partnership agreement that former President Donald Trump abandoned on his third day in office. — House Ways and Means Chair Richard Neal (D-Mass.) met with British Foreign Secretary Liz Truss over the weekend to stress the importance of the U.K. pursuing "good faith negotiations with the EU" to find durable solutions for post-Brexit trade between Great Britain and Northern Ireland. — WTO members are running out of time to reach a deal to curb harmful subsidies that contribute to the depletion of the world's fish stocks, the head of the two-decade-old negotiations warned on Friday. But he also sounded a note of optimism. It's Monday, May 23. Welcome to Morning Trade. Today's a good day to check out "your ladder situation," according to my 1974 Popular Science Homeowners Almanac. Choices back then included step ladders, straight ladders and extension ladders, both wooden and aluminum. These days, people use ladders in all kinds of scary ways (and probably always have.) Got a news tip or some trade gossip? Send it our way: soverly@politico.com, gbade@politico.com and dpalmer@politico.com.   A message from Save American Solar Jobs: The Biden administration's Commerce Department is threatening to implement meritless tariffs of up to 250% on solar panel components imported by American solar manufacturers for assembly in the U.S. This tariff threat is devastating the American solar industry, costing U.S. jobs, hurting domestic manufacturing, raising inflation and undermining efforts to address climate change. President Biden: Tell Your Commerce Department to Reject Meritless and Damaging Solar Tariffs.   Driving the Day AND SO IT BEGINS: The 12 other IPEF countries are Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. That list differs from the TPP (now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) by excluding Canada, Mexico, Chile and Peru and including India, Indonesia and the Philippines. Trade ministers will meet in coming weeks to begin thrashing over the details of the pact, with a U.S. goal of finishing in 18 to 24 months. That coincides with plans for the United States to host the annual APEC leaders summit in late 2023. Of the IPEF group, only India is not an APEC member. Read my Morning Trade colleague Steven Overly's article for the full lowdown on how the administration got countries onboard and what comes next. Taiwan left out: Despite an appeal last week from 52 senators that Taiwan be allowed to join the talks, it was left out, presumably because that would anger China and discourage other countries from participating. Administration officials said they plan to pursue a bilateral initiative with Taiwan to deepen economic ties, but did not indicate if that would be the free trade agreement that Taipei has long wanted with the United States. Still some questions: The Commerce Department is leading negotiations on three "pillars" of the proposed agreement: supply chain resilience; infrastructure, clean energy, and decarbonization; and tax and anti-corruption. USTR is spearheading the fourth focused on fair and resilient trade, which includes digital trade, labor, environment, agriculture and other areas. It's still not clear which countries are participating in which modules or whether any portion of the deal will be submitted to Congress for a vote, as would occur with a more traditional free trade agreement. "Let's see where these negotiations take us," U.S. Trade Representative Katherine Tai said during a call with reporters on Sunday. No tariffs on the table: Administration officials defended the administration's decision not to include tariff cuts as part of the discussion, noting that the U.S. trade-weighted average tariff is already a low 2.4 percent so it has little more to give in that area. That figure measures the value of tariff revenue divided by total goods imports. It's somewhat skewed because the higher the tariff on a good, the less likely it is to be imported. According to WTO data, 2.7 percent of applied U.S. tariffs are higher than 15 percent and some tariffs on sensitive products are as high as 350 percent. The United States has traditionally used those peak tariffs in areas such as clothing, automotive, ceramics, glass and agriculture as negotiating leverage to get commitments from other countries to open their markets and agree to U.S. rules in areas like labor and intellectual property. Many IPEF countries have much higher tariffs than the United States. According to the WTO, nearly 30 percent of India's applied tariffs are higher than 15 percent. The same is true for 24 percent of Vietnam's applied tariffs, 22 percent of Thailand's applied tariffs, 13 percent of Malaysia's applied tariffs and 10 percent of Indonesia's applied tariffs. Cuz it's not the TPP: Tai doubled down on the argument that IPEF would deliver an economic impact even without lowering tariffs. Plus, the failure of the Obama administration to get the TPP through Congress (as well as Trump's decision to drop it altogether) was a clear sign that trade deals must change, she added. "With respect to TPP, I think that the biggest problem with it was that we did not have the support at home to get it through," Tai said. "I think that there's a very, very strong lesson there that TPP, as it was envisioned, ultimately, was something that was quite fragile, and that the United States was not able to deliver on." More on the trade pillar: Tai's portion of the negotiations will seek to tackle some of the most consequential, and perhaps most divisive, topics on the IPEF agenda. Those include digital regulation, corporate accountability, labor standards and environmental protections. On digital, Tai said, the framework will look to established standards on data privacy and data flows, as well as online discrimination and the unethical use of artificial intelligence. USTR negotiators will also "pursue an accelerated implementation" of the World Trade Organization's trade facilitation agreement, and promote transparent, science-based regulations of agricultural products. "Collectively, the trade pillar will unlock enormous economic value, including for small- and medium-sized businesses that historically have not benefited from trade agreements as much as their large counterparts have," she said.   HAPPENING WEDNESDAY—A WOMEN RULE TALK ON THE MIDTERMS : Join POLITICO'S Women Rule for a conversation with the women running the midterm campaigns and how they are shaping messaging and strategy for their candidates. The program will look into what a win for either party could mean for access to reproductive health care, economic advancement of women, and how the final stages of the Covid-19 pandemic are managed. REGISTER HERE.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. NEAL'S TRANSATLANTIC FORAY: Like the Biden administration and House Speaker Nancy Pelosi, Neal is concerned that U.K. could jeopardize the 1998 Good Friday peace accord by reimposing a hard border to control trade between Ireland, which is part of the EU, and Northern Ireland, which is part of the U.K.. Neal has been leading a bipartisan House delegation that also includes Ways and Means Ranking Member Kevin Brady (R-Texas). They arrived in London after a stop in Brussels, where they met with the EU's top trade official, Valdis Dombrovskis. The lawmakers are wrapping up their tour in Ireland before returning to the U.S. Neal is an advocate of closer trade ties between the U.S. and the EU, going so far in December 2020 to call for a fresh attempt at a bilateral agreement. He also has urged the Biden administration to finish free trade talks with the U.K. started by the Trump administration. BIS WANTS TO CONTROL MARINE TOXIN EXPORTS: The Commerce Department's Bureau of Industry and Security on Friday issued a proposed rule to impose unilateral export controls on four naturally occurring marine toxins that could be used to harm humans and animals, degrade equipment and damage crops or the environment. It is now possible to more easily isolate and purify the four toxins — brevetoxin, gonyautoxin, nodularin and palytoxin — using novel synthesis methods and equipment, increasing their potential use in biological weapons, BIS said in a news release.   DON'T MISS DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.     'FISH DECISION WEEK' APPROACHES AT THE WTO: It's now or never to reach a deal amongst the World Trade Organization's 164 members on how to curb subsidies that contribute to overfishing in the world's oceans. That was the core message from negotiations' chair Ambassador Santiago Wills of Colombia to countries on Friday, who wants countries to wrap everything up by the week of May 30. "The week of the 30th of May is when we need to make the final decisions, Wills told our European Morning Trade colleague Sarah Anne Aarup. That "is why that week is fish decision week, … with 'decision' being key in the phrase." Why this deal matters: First, the negotiations have become a totem to symbolize the trade body's ability to strike deals amongst all members. That's because the WTO fisheries talks have been dragging on over the past two decades within the organization, and countries have already overshot the UN's aim of having a deal by 2020. Second, a fisheries deal also matters for the world's fish stocks and their ability to be a reliable source of nutrition for future generations (more background here.) Tangled talks: During a separate briefing on Friday, Wills told reporters there were still unresolved issues in a number of areas, including special and differential treatment for developing countries, the extent of new disciplines on distant water fishing subsidies and on non-specific fuel subsidies and on transparency notifications on the use of forced labor. One "important conclusion from this week is that we have reached the point where it is difficult to make progress when the issues are discussed one by one," Wills said. "A horizontal discussion across provisions is needed to find the internal balance within the text that can bring us to a conclusion." Tired & excited: "I can't say I'm not tired, but I'm also excited because I generally think that we're close to getting a deal done," Wills said in the interview with POLITICO, putting the chances of success at close to 100 percent. "It will entail a lot of work," but almost all countries have reaffirmed that they're committed to wrapping up the talks before the June 12-15 WTO conference, Wills said.   A message from Save American Solar Jobs:   International Overnight — U.S., others walk out of APEC meeting over Russia's invasion of Ukraine, Reuters reports. — APEC trade meeting ends without joint statement, The Bangkok Post reports. — United States, Australia, Canada, Chile, Japan, South Korea and New Zealand issue "a joint media release" after APEC meeting condemning Russia's invasion of Ukraine — Thailand Deputy Prime Minister and Commerce Minister Jurin Laksanawit called upon APEC member economies to step up efforts to respond to future crises and achieve better and more inclusive economic growth in the future. — Biden pushes economic and security interests as he wraps up South Korea visit, The Associated Press reports.  — South Korea's president Yoon Suk-yeol is gearing up to reorganize his country's trade relations by reducing dependence on China and building "supply chain alliances,"The South China Morning Post reports.  —  Biden arrives in Tokyo seeking to shore up support for economic plan, The New York Times reports.  — Scott Morrison concedes defeat as Anthony Albanese elected Australian Prime Minister, The New York Times reports.  — Canada has submitted a formal request to launch negotiations to join the Digital Economy Partnership Agreement — Britain launches talks on a trade deal with Mexico, Reuters reports. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and soverly@politico.com. Follow us @POLITICOPro and @Morning_Trade.   A message from Save American Solar Jobs: The Biden administration's Commerce Department is threatening to implement meritless tariffs of up to 250% on solar panel components imported by American solar manufacturers for assembly in the U.S. This tariff threat is devastating the American solar industry, costing U.S. jobs, hurting domestic manufacturing, raising inflation and undermining efforts to address climate change. There is a better solution already on the table. Congress should pass the clean energy tax credits and incentives that have been stalled since last year. These policies will drive the expansion of domestic solar panel component manufacturing and ensure we have the infrastructure needed to fight climate change and create jobs. President Biden: Tell Your Commerce Department to Reject Meritless and Damaging Solar Tariffs.     Follow us on Twitter John Yearwood @john_yearwood Doug Palmer @tradereporter Gavin Bade @GavinBade Steven Overly @StevenOverly   Follow us

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