IPEF MEMBERS ASSEMBLE: U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo will co-host the event, which is the first ministerial level meeting since President Joe Biden formally launched the initiative during a visit to Tokyo in May. It comes as the Biden administration continues to deliberate over the fate of duties that former President Donald Trump imposed on about $370 billion worth of Chinese goods, and Biden himself is expected to talk with Chinese President Xi Jinping in the coming days. Although China is not a part of the IPEF negotiations, its economic importance in the region hovers over the negotiation. WTO trade data for 2019 shows China was the top trading partner of at least seven of the IPEF countries – Australia, Indonesia, Japan, South Korea, Malaysia, New Zealand and Singapore. China also held a larger share than the United States of the import market in all 13 of the other IPEF countries, in most cases a considerably larger share. For example, China supplied 28.8 percent of Australia's imports in 2019, compared to 11.9 percent from the United States. The spread was even greater in Vietnam, where China accounted for 29.8 percent of imports and the United States only 5.7 percent. The meeting is expected to wrap up with a joint statement providing additional details on goals for the IPEF agreement. However, it would be a surprise if there is an announcement clearing the mystery of which countries are participating in each of the four IPEF pillars . That might not happen until late September, when Tai is expected to be in the region for the G-20 trade ministers meeting in Indonesia. Increased transparency sought: Ahead of the ministerial meeting, a coalition of more than 100 civil society groups called for reform of the decades-old consultation process that Congress created for the negotiation of trade agreements. The current system consists of various private sector specialists, including some from the labor and environmental community, who sit on 26 advisory committees. "Any successful IPEF negotiation must replace the corporate advisory system with an on-the-record public process, including public hearings, to formulate U.S. positions and obtain comment on draft and final U.S. text proposals.,as well as robust consultation and engagement with Congress throughout the process," the groups said in a letter to President Joe Biden. In another demand for unprecedented transparency, the groups asked that the U.S. publish draft versions of its proposals so that interested parties can comment on them before they are tabled in the negotiations. They also requested that all proposals, whether from the U.S. or another country, "be quickly published after each negotiating round so that the public can review and comment … while there is still opportunity to make real changes." THE ECONOMIC POTENTIAL OF TRADE FACILITATION: An aggressive agenda to reduce red tape and other barriers that slow down the shipment of goods across borders could save American exporters as much as $88 billion, or more than double what would come from eliminating all overseas tariffs on U.S. goods. It would also create nearly 1 million new jobs across the United States, most of them in small businesses in the services sector and slightly more than half of them filled by women. That's the conclusion of a new report from Third Way, a center-left think tank, and Trade Partnership Worldwide, a trade analysis firm, shared first with Morning Trade. It supports the Biden administration's contention that it can improve export opportunities for American companies without pursuing new tariff-cutting agreements. Zooming in on IPEF: The report sees the biggest savings in the fast growing Asia region where the United States is pursuing the proposed Indo-Pacific Economic Framework for Prosperity with 13 other countries. Of those participants, it estimated that reducing red tape and other customs barriers could reduce costs in India by $4.5 billion, Japan by $2.1 billion, Vietnam by $1 billion and Australia by $500 million, based on 2019 trade data. Remarkably, the researchers did not project any savings from improving trade facilitation in South Korea, reflecting the already-high quality of that country's customs clearing procedures. The report did not calculate individual savings for the 8 other IPEF members: Brunei, Fiji, Indonesia, New Zealand, Malaysia, Philippines, Singapore and Thailand. However, it did estimate $12.3 billion in potential savings from improved trade facilitation in the East Asia and Pacific region, excluding China, where savings were projected at $11.8 billion by itself. The amount of potential savings calculated for each country reflects both the volume of U.S. exports they receive and the level of their customs-related barriers. For many developing countries, the quality of their infrastructure is also a factor, report co-authors Laura Baughman and Joseph Francis said in an email. Other regions: The researchers also found potential savings from improved trade facilitation of $18.9 billion in Latin America and the Caribbean, $16.0 billion in North America, $10.9 billion in the Middle East and North Africa and $9.0 billion in Europe and Central Asia. So what is trade facilitation?: Well, it's a somewhat jargony term not "really well understood by many outside the halls of USTR and the congressional trade subcommittees," said Gabe Horowitz, senior vice president in charge of Third Way's economics program. But it involves countries making three essential reforms: posting easily understood customs procedures on the internet so exporters know what to expect; allowing companies to fill out forms online and to make payments digitally; and adopting practices that allow goods to move more quickly across borders without jeopardizing security, he said. On the last point, the report praises Congress' decision in 2015 to raise the amount of low-value shipments that can enter the U.S. without duties or paperwork to $800, from $200 previously. Allowing companies to make digital payments speeds up transactions and reduces the potential for corruption, the report said. The WTO negotiated a Trade Facilitation Agreement in 2013 that was supposed to address many of the issues raised in the report. But developing countries were given a lot of leeway in their implementation of that pact. GOP AMENDMENT ON RESEARCH SECURITY MAY POSE THREAT TO CHIPS — Several Republican senators seen as key to getting the new CHIPS Act across the finish line believed that Portman's Safeguarding American Innovation Act ( S. 1351 ) was part of the package when they voted for it. They were mistaken — and they're now pushing for its inclusion, with an implicit threat that they'll pull their support for the bill if it's not amended. — What's this Portman bill? The legislation would impose tough new security restrictions and oversight on scientists, including those who seek to pursue joint projects with foreign researchers (read: Chinese scientists). Among other things, it would take the power to coordinate federal policies around R&D security from the White House Office of Science and Technology Policy and give it to the Office of Management and Budget. The bill was included in the Senate's U.S. Innovation and Competition Act ( S. 1260 ). But universities, wary of the increased paperwork and onerous oversight such a change might bring, lobbied the House to reject the provision in its own bill, the America COMPETES Act ( H.R. 4521 ). In the conference to reconcile those bills, the two chambers never came to a final agreement on research security. — Slight miscommunication: In a floor speech on Thursday, Portman said he and other Republican senators who voted to advance the CHIPS Act did so on the mistaken assumption that S. 1351 was included. He suggested they'd been misled by emails that claimed the research security bill was part of the package. Copies of two emails sent Tuesday from the office of Sen. Todd Young (R-Ind.) to Republican Senate offices, which were obtained by MT, clearly (but falsely) indicated that the slimmed-down CHIPS bill slated for a vote later that day included Portman's R&D security provision. — We might be out: Portman and other key Republican votes for CHIPS — including Sens. John Cornyn (R-Texas), Roger Wicker (R-Miss), Mitt Romney (R-Utah) and even Young — filed an amendment last Wednesday to restore the provision. And on Thursday, Portman suggested he wouldn't vote for the CHIPS bill unless the amendment is included. "Without such protections, I believe this CHIPS Plus bill, with significantly increased levels of federal funding for research, may well become a giveaway to Beijing," Portman said. — Are they bluffing ? A Portman spokesperson did not respond to multiple inquiries asking whether the senator or his colleagues would pull their support for the bill if it isn't amended to include the R&D security provisions. The bill's centerpiece is around $52 billion in microchip subsidies, and huge chip manufacturing projects that would bring thousands of jobs to both Portman and Cornyn's states would be at risk if it fails to advance. Wicker would also lose out on provisions that would funnel more federal research dollars to his state of Mississippi. — Could Schumer cave? A spokesperson for Senate Majority Leader Chuck Schumer did not respond to multiple inquiries asking whether he'll allow amendments ahead of this evening's scheduled cloture vote on CHIPS, and if Portman's will be one of them. Last week's procedural vote on Tuesday passed 64-34, which means Schumer can only lose a handful of Republicans before falling below the filibuster threshold. But including Portman's bill could cause the legislation to be rejected by the House, where leadership on both sides of the House Science Committee has opposed the tough security restrictions. MISSILE ATTACK THROWS RUSSIA-UKRAINE GRAIN DEAL IN DOUBT: Russia's missile attack on the Ukrainian port of Odessa "casts serious doubt" on a deal reached between the two countries on Friday to move millions of tons of stranded grain, U.S. Secretary of State Antony Blinken said in a statement . But even before the attack, Ukrainian and Western officials were skeptical Moscow would stick to the deal. Read more here . U.S. BACKS WTO AG RETREAT IDEA: The United States, Australia and Japan showed support last week for WTO Director-General Ngozi Okonjo-Iweala's idea of holding a retreat in September to relaunch agricultural negotiations, a Geneva-based trade official said. The suggestion was discussed during a meeting Thursday of the WTO Agriculture Committee, where members reflected on the group's failure to achieve any agricultural trade reforms at the 12th Ministerial Conference in June. Costa Rican Ambassador Gloria Abraham Peralta stepped down as chair of the negotiations at the meeting, but urged members to build on the progress made in talks over the past couple of years. The U.S. said the agriculture negotiations have faltered for years and the WTO cannot afford to continue going down the same path, the Geneva-based official recounted. It called for a pragmatic approach that reflects current challenges, including climate change, sustainable development and food security. USTR AG NOMINEE HEARING SET: The Senate Finance Committee will hold a hearing Thursday on the nomination of Douglas McKalip to be USTR's chief agricultural negotiator. McKalip currently advises U.S. Agriculture Secretary Tom Vilsack on trade and has been working on issues related to the global food security fallout from the war in Ukraine.
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