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CRS — Generalized System of Preferences: Background and Renewal Debate

May 27, 2014 Comments off

Generalized System of Preferences: Background and Renewal Debate (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The U.S. Generalized System of Preferences (GSP) program provides non-reciprocal, duty-free tariff treatment to certain products imported from designated beneficiary developing countries (BDCs). The United States, the European Union, and other developed countries have implemented similar programs since the 1970s.The U.S. program was first authorized in Title V of the Trade Act of 1974, and is subject to periodic renewal by Congress. The GSP program was most recently extended until July 31, 2013, in Section 1 of P.L. 112-40, and has not yet been renewed. Imports under the GSP program in 2013 amounted to about $18.5 billion—about 7% of all imports from GSP countries, and about 1% of total U.S. imports.

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CRS — U.S. Foreign Trade in Services: Trends and U.S. Policy Challenges

May 27, 2014 Comments off

U.S. Foreign Trade in Services: Trends and U.S. Policy Challenges (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The term “services” refers to an expanding range of economic activities, such as construction, retail and wholesale sales, e-commerce, financial services, professional services (such as accounting and legal services), transportation, tourism, and telecommunications. They have become an important priority in U.S. foreign trade flows and trade policy and of global trade in general, although their intangibility, the requirement for direct buyer-provider contact, and other characteristics have limited the types and volume of services that can be traded. Congress is expected to consider in the future U.S. trade agreements currently under negotiation that include services as significant components.

New From the GAO

May 15, 2014 Comments off

New GAO Reports and Testimony
Source: Government Accountability Office

Reports

1. Export Controls: NASA Management Action and Improved Oversight Needed to Reduce the Risk of Unauthorized Access to Its Technologies. GAO-14-315, April 15.
http://www.gao.gov/products/GAO-14-315
Highlights – http://www.gao.gov/assets/670/662560.pdf
Podcast – http://www.gao.gov/multimedia/podcasts/662975

2. F-22 Modernization: Cost and Schedule Transparency Is Improved, Further Visibility into Reliability Efforts Is Needed. GAO-14-425, May 15.
http://www.gao.gov/products/GAO-14-425
Highlights – http://www.gao.gov/assets/670/663197.pdf

3. National Nuclear Security Administration: Agency Report to Congress on Potential Efficiencies Does Not Include Key Information. GAO-14-434, May 15.
http://www.gao.gov/products/GAO-14-434
Highlights – http://www.gao.gov/assets/670/663220.pdf

4. Biological Defense: DOD Has Strengthened Coordination on Medical Countermeasures but Can Improve Its Process for Threat Prioritization. GAO-14-442, May 15.
http://www.gao.gov/products/GAO-14-442
Highlights – http://www.gao.gov/assets/670/663213.pdf

5. International Labor Grants: Labor Should Improve Management of Key Award Documentation. GAO-14-493, May 15.
http://www.gao.gov/products/GAO-14-493
Highlights – http://www.gao.gov/assets/670/663202.pdf

6. Financial Audit: Congressional Award Foundation’s Fiscal Years 2013 and 2012 Financial Statements. GAO-14-540, May 15.
http://www.gao.gov/products/GAO-14-540

Testimony

1. VA Health Care: VA Lacks Accurate Information about Outpatient Medical Appointment Wait Times, Including Specialty Care Consults, by Debra A. Draper, director, health care, before the Senate Committee on Veterans’ Affairs. GAO-14-620T, May 15.
http://www.gao.gov/products/GAO-14-620T
Highlights – http://www.gao.gov/assets/670/663194.pdf

EU — Foreign affiliates statistics – employment by business function

May 6, 2014 Comments off

Foreign affiliates statistics – employment by business function
Source: Eurostat

This article investigates the employment record of foreign affiliates, by business function, of enterprises in 14 European Union (EU) Member States and Norway. It shows that employment in foreign affiliates of European enterprises is falling less than in the domestic enterprises.

Most of the foreign affiliates, however, are located within Europe and are found more often in the manufacturing sector than in the services sector. Furthermore there is no evidence of substantial movement of knowledge-intensive business functions to destinations outside Europe. The business function with the highest share of employment in foreign affiliates is marketing and sales, indicating enterprises’ desire to establish a commercial presence in foreign markets.

A new view of international trade

May 2, 2014 Comments off

A new view of international trade
Source: Deloitte

A fresh take on the numbers suggests that the United States’ international trade position is stronger than widely assumed.

Categories: Deloitte, trade

CRS — Trade Promotion Authority (TPA): Frequently Asked Questions

April 29, 2014 Comments off

Trade Promotion Authority (TPA): Frequently Asked Questions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Trade Promotion Authority (TPA), formerly called fast track, is the authority Congress has granted to the President for limited periods of time to negotiate reciprocal trade agreements. The authority lays out U.S. trade negotiating objectives, procedures for congressional-executive notification and consultation, and expedited legislative procedures under which bills implementing trade agreements negotiated by the executive branch are to be considered. The most recent authority was enacted in December 2002 and expired as of July 1, 2007. Legislation to reauthorize TPA has been introduced in the 113th Congress. The United States is engaged in several sets of trade agreement negotiations. The issue of TPA reauthorization has raised a number of questions regarding TPA itself and the pending legislation. This report addresses a number of those questions that are frequently asked, including:

• What is trade promotion authority?
• Is TPA necessary?
• What are trade negotiating objectives and how are they reflected in TPA statutes?
• What requirements does Congress impose on the President under TPA?
• Does TPA affect congressional authority on trade policy?

CRS — Malaysia: Background and U.S. Relations

April 29, 2014 Comments off

Malaysia: Background and U.S. Relations (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

\Malaysia, a majority Muslim nation in Southeast Asia, has long been a partner in U.S. security and economic initiatives in the region, although political sensitivities in Malaysia have constrained both sides from forging deeper ties or even acknowledging how close the relationship is. Bilateral relations have improved over the past decade, especially under Prime Minister Najib Razak, who has made relations with the United States a priority. The Obama Administration has emphasized deeper engagement with Malaysia and other “emerging partners” in Southeast Asia as part of the strategic “rebalancing” of U.S. resources and attention to the Asia-Pacific region. Congress has expressed interest in a variety of issues in U.S.-Malaysia relations over the years, especially regarding trade, security cooperation, human rights, and Malaysia’s diplomacy.

The two nations are major trade and investment partners. In 2013, Malaysia was the 25th largest market for U.S. exports and the 18th largest supplier of U.S. imports. The United States was Malaysia’s 4th largest export market (after Singapore, China, and Japan) and the 4th largest supplier of imports (after China, Singapore, and Japan). Both countries are parties to the Trans- Pacific Partnership (TPP) negotiations, which aim to create a high-standards free trade agreement among 12 countries comprising nearly 40% of the global economy. The United States’ main trade-related concerns are Malaysia’s government procurement policies, protection of intellectual property rights, and market access for key goods and services.

SIGAR — Afghan Customs: U.S. Programs Have Had Some Successes, but Challenges Will Limit Customs Revenue as a Sustainable Source of Income for Afghanistan

April 29, 2014 Comments off

Afghan Customs: U.S. Programs Have Had Some Successes, but Challenges Will Limit Customs Revenue as a Sustainable Source of Income for Afghanistan (PDF)
Source: Special Inspector General for Afghanistan Reconstruction

A nation’s ability to control its borders is essential in controlling the flow of licit and illicit goods and assessing appropriate tariffs and customs duties. Customs revenue is a major component of Afghanistan’s national budget, which is currently funded through a combination of domestic revenue collections and aid from international donors. For Afghanistan’s 3 most recent fiscal years, customs revenue collections produced $698 million-$1.1 billion annually, accounting for 44-48 percent of total domestic revenue collection. However, domestic revenues continue to fall short of expenditures, and international assistance is expected to decline in coming years. As a result, increasing the Afghan government’s collection of domestic revenues is a main objective of both the U.S. and Afghan governments.

According to USAID, CBP, and TAFA officials, corruption impacts all levels of the customs process and is the biggest problem affecting Afghan customs processes and revenues. The scale and impact of corruption in Afghanistan’s customs process is difficult to quantify. Nevertheless, USAID and ACD officials hypothesize that eliminating or significantly reducing corruption in the customs process could potentially double the customs revenues remitted to the central government. The BMTF also noted that criminal networks use intimidation to smuggle commodities, resulting in the estimated loss of approximately $25 million annually for wheat and rice imports at a single customs location. In a separate estimate, TAFA officials stated that approximately $60 million is lost annually to commercial smuggling. Further complicating efforts to combat criminal and patronage networks are reports from BMTF advisers that Afghan employees are being kidnapped and intimidated because they are listening to the BMTF advisers and properly collecting customs duties.

To help reduce corruption, the Afghan and U.S. governments proposed streamlining and automating customs processes. Two major innovations in the automation of customs processes—a risk management system and an electronic payment system—were started under TAFA. The risk management system, created to facilitate the targeted inspection of imported cargo, is designed to optimize the use of limited security resources and decrease transit times. While the ACD accepted the risk management system in principle, it reportedly considered it too difficult to operate and chose to adopt a scaled down approach, with the successive implementation of specific parts of the risk management system over a period of years.

Similarly, progress in implementing an electronic payment system for customs duties has been slow. Currently, customs fees in Afghanistan are processed in cash at the inland customs depots where the imported cargo is inspected and assessed customs duties. This system can lead to customs brokers traveling long distances with large quantities of cash to pay customs fees assessed on imported goods. The current cash-based payment system is inefficient, leaves customs brokers vulnerable to theft, and increases the opportunities for corruption. According to USAID and TAFA program officials, at the conclusion of the TAFA programs in August 2013, the ACD had the equipment and technical knowledge needed to launch a pilot system. However, USAID officials stated that the electronic payment system was delayed, due in part, to a proposal by an Afghan official to allow only one Afghan bank to process all of the electronic customs payments. This arrangement would have given the selected bank a significant and improper advantage over its competitors. Although the risk management and the electronic payment systems are highlighted in the TAFA and ATAR contract documents as important anti-corruption measures, SIGAR found that the ATAR contract does not require the implementing partner to meet annual targets for implementing these systems.

CRS — NAFTA at 20: Overview and Trade Effects

April 25, 2014 Comments off

NAFTA at 20: Overview and Trade Effects (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994. The agreement was signed by President George H.W. Bush on December 17, 1992, and approved by Congress on November 20, 1993. The NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 (P.L. 103-182). The overall economic impact of NAFTA is difficult to measure since trade and investment trends are influenced by numerous other economic variables, such as economic growth, inflation, and currency fluctuations. The agreement may have accelerated the trade liberalization that was already taking place, but many of these changes may have taken place with or without an agreement. Nevertheless, NAFTA is significant because it was the most comprehensive free trade agreement (FTA) negotiated at the time and contained several groundbreaking provisions. A legacy of the agreement is that it has served as a template or model for the new generation of FTAs that the United States later negotiated and it also served as a template for certain provisions in multilateral trade negotiations as part of the Uruguay Round.

International VAT/GST Guidelines

April 25, 2014 Comments off

International VAT/GST Guidelines
Source: Organisation for Economic Co-operation and Development

The Guidelines seek to address the problems that arise from national VAT systems being applied in an uncoordinated way. They set standards that should ensure neutrality in cross-border trade and a more coherent taxation of business-to-business (B2B) trade in services.

Contents:
Chapter 1. Core features of VAT
Chapter 2. Neutrality of VAT in the context of cross-border trade
Chapter 3. Place of taxation for B2B cross-border supplies of services and intangibles

Global flows in a digital age

April 24, 2014 Comments off

Global flows in a digital age
Source: McKinsey & Company

Global flows have been a common thread in economic growth for centuries, since the days of the Silk Road, through the mercantilist and colonial periods and the Industrial Revolution. But today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.

Flows of goods, services, and finance reached $26 trillion in 2012, or 36 percent of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple, powered by rising prosperity and participation in the emerging world and by the spread of the Internet and digital technologies. Our scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.

CRS — What Is the Farm Bill? (updated)

April 22, 2014 Comments off

What Is the Farm Bill? (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The farm bill is an omnibus, multi-year piece of authorizing legislation that governs an array of agricultural and food programs. Titles in the most recent farm bill encompassed farm commodity price and income supports, farm credit, trade, agricultural conservation, research, rural development, bioenergy, foreign food aid, and domestic nutrition assistance. Although agricultural policies sometimes are created and changed by freestanding legislation or as part of other major laws, the farm bill provides a predictable opportunity for policy makers to comprehensively and periodically address agricultural and food issues. The farm bill is renewed about every five years.

Fueling a New Order? The New Geopolitical and Security Consequences of Energy

April 21, 2014 Comments off

Fueling a New Order? The New Geopolitical and Security Consequences of Energy
Source: Brookings Institution

The paper Fueling a New Order? The New Geopolitical and Security Consequences of Energy examines impacts of the major transformation in international energy markets that has begun. The United States is poised to overtake Saudi Arabia and Russia as the world’s largest oil producer and, combined with new developments in natural gas, is on track to become the dominant player in global energy markets. Meanwhile, China is in place to surpass the United States in its scale of oil imports, and has already edged out the U.S. in carbon emissions.

CRS — Brazil: Political and Economic Situation and U.S. Relations

April 17, 2014 Comments off

Brazil: Political and Economic Situation and U.S. Relations (PDF)
Source: Congressional Research Service (via National Agricultural Law Center)

The United States has traditionally enjoyed cooperative relations with Brazil, which is the seventh-largest economy in the world and is recognized by the Obama Administration’s National Security Strategy as an emerging center of influence. Administration officials have often highlighted Brazil’s status as a multicultural democracy, referring to the country as a natural partner that shares values and goals with the United States. Bilateral ties have been strained from time to time, however, as the countries’ occasionally divergent national interests and independent foreign policies have led to disagreements. U.S.-Brazilian relations have been particularly strained over the past year as a result of alleged National Security Agency (NSA) activities inside Brazil. Nevertheless, the countries continue to engage on issues such as trade, energy, security, racial equality, and the environment.

CRS — Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade

April 17, 2014 Comments off

Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade (PDF)
Source: Congressional Research Service (via National Agricultural Law Center)

Sanitary and phytosanitary (SPS) measures are the laws, rules, standards, and procedures that governments employ to protect humans, animals, and plants from diseases, pests, toxins, and other contaminants. Examples include meat and poultry processing standards to reduce pathogens, residue limits for pesticides in foods, and regulation of agricultural biotechnology. Technical barriers to trade (TBT) cover technical regulations, product standards, environmental regulations, and voluntary procedures relating to human health and animal welfare. Examples include trademarks and patents, labeling and packaging requirements, certification and inspection procedures, product specifications, and marketing of biotechnology. SPS and TBT measures both comprise a group of widely divergent standards and standards-based measures that countries use to regulate markets, protect their consumers, and preserve natural resources.

According to the World Trade Organization (WTO), SPS and TBT measures have become more prominent concerns for agricultural exporters and policy makers, as tariff-related barriers to trade have been reduced by various multilateral, regional, and bilateral negotiations and trade agreements. The concerns include whether SPS and TBT measures might be used to unfairly discriminate against imported products or create unnecessary obstacles to trade in agricultural, food, and other traded goods. Notable U.S. trade disputes involving SPS and TBT measures have included a European Union (EU) ban on U.S. meats treated with growth-promoting hormones and also certain pathogen reduction treatments, and an EU moratorium on approvals of biotechnology products, among other types of trade concerns with other countries. Foreign countries have also objected to various U.S. trade measures.

CRS — Small Business Administration Trade and Export Promotion Programs

April 17, 2014 Comments off

Small Business Administration Trade and Export Promotion Programs (PDF)
Source: Congressional Research Service (via National Agricultural Law Library)

According to Census data, approximately 1% of small businesses in the United States currently export. With roughly three-quarters of world purchasing power and almost 95% of world consumers living outside of U.S. borders, more attention is being paid to the potential of small business export promotion programs to grow small businesses and contribute to the national economic recovery. In addition, some Members of Congress believe that the contributions of small businesses to commercial innovation and economic growth could be enhanced through greater access to growing international markets.

Consistent with these policy goals, the Small Business Administration (SBA) provides export promotion and financing services to small businesses through its loan guarantee programs, management and training programs, and other initiatives. SBA’s Office of International Trade (OIT) coordinates these activities as it assists with four stages of export promotion: (1) identifying small businesses interested in export promotion; (2) preparing small businesses to export; (3) connecting small businesses to export opportunities; and (4) supporting small businesses once they find export opportunities.

CRS — Trade Adjustment Assistance for Farmers

April 17, 2014 Comments off

Trade Adjustment Assistance for Farmers (PDF)
Source: Congressional Research Service (via National Agricultural Law Library)

The Trade Adjustment Assistance for Farmers (TAAF) program provides technical assistance and cash benefits to producers of agricultural commodities and fishermen who experience adverse economic effects caused by increased imports. Congress first authorized this program in 2002, and made significant changes to it in the 2009 economic stimulus package (P.L. 111-5). The 2009 revisions were intended to make it easier for commodity producers and fishermen to qualify for program benefits, and provided over $200 million in funding through December 2010. Subsequently, P.L. 112-40 (enacted in October 2011) authorized $202.5 million through December 2013. No program activity occurred, because Congress did not appropriate funds.

The U.S. Department of Agriculture (USDA) is required to follow a two-step process in administering TAAF program benefits. First, a group of producers must be certified eligible to apply. Second, a producer in a certified group must meet specified requirements to be approved to receive technical assistance and cash payments.

CRS — U.S. Crude Oil Export Policy: Background and Considerations

April 17, 2014 Comments off

U.S. Crude Oil Export Policy: Background and Considerations (PDF)
Source: Congressional Research Service (via National Agricultural Law Center)

During an era of oil price controls and following the 1973 Organization of Arab Petroleum Exporting Countries oil embargo, Congress passed the Energy Policy and Conservation Act of 1975 (EPCA), which directs the President “to promulgate a rule prohibiting the export of crude oil” produced in the United States. Crude oil export restrictions are codified in the Export Administration Regulations administered by the Bureau of Industry and Security (BIS)—a Commerce Department agency. The President has some powers to allow certain crude oil exports if an exemption is determined to be in the national interest.

Ratifying and Implementing Trade and Investment Treaties in Canada

April 15, 2014 Comments off

Ratifying and Implementing Trade and Investment Treaties in Canada
Source: Parliamentary Library of Canada

Under Canada’s constitutional system, the conduct of foreign affairs is a royal prerogative power of the federal Crown.

Consequently, the Executive Branch has the exclusive power to negotiate and conclude international treaties. Parliament has the exclusive power to enact legislation to implement those treaties.

As Canada continues to enter into such treaties, a number of important questions arise:

  • What is the interaction between Canadian and international law in the treaty-making and implementation processes, particularly in relation to trade and investment?
  • What measures must the Executive and Legislative branches take so that these treaties can come into force?
  • What formal role do the provinces and territories play in the negotiation, ratification and implementation of trade and investment treaties?

Tech Trade in the States: A State by State Overview of International Trade in Tech Goods

April 14, 2014 Comments off

Tech Trade in the States: A State by State Overview of International Trade in Tech Goods (PDF)
Source: Tech America Foundation

TechAmerica Foundation proudly presents our 2014 edition of Tech Trade in the States: A State-by-State Overview of International Trade of Tech Goods. It provides 2012 data on tech trade at the national level and export data for all 50 states, the District of Columbia, and Puerto Rico. The report also provides an estimate as to the number of jobs that are supported by export activities.

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