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Friday, November 30, 2012

The Trans-Pacific Partnership Negotiations and Issues for Congress



Ian F. Fergusson, Coordinator
Specialist in International Trade and Finance

William H. Cooper
Specialist in International Trade and Finance

Remy Jurenas
Specialist in Agricultural Policy

Brock R. Williams
Analyst in International Trade and Finance


The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) being negotiated among the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. U.S. negotiators and others describe and envision the TPP as a “comprehensive and high-standard” FTA, presumably because they hope it will liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO). The broad outline of an agreement was announced on the sidelines of the Asia-Pacific Economic Cooperation (APEC) ministerial in November 2011 in Honolulu, Hawaii. If implemented, the TPP potentially could eliminate tariff and non-tariff barriers to trade and investment among the parties and could serve as a template for a future trade pact among APEC members and potentially other countries. Congress has a direct interest in the negotiations, both through influencing U.S. negotiating positions with the executive branch, and by passing legislation to implement any resulting agreement. The next round of negotiations will take place in Auckland, New Zealand between December 3-11, 2012.

In Hawaii, the leaders of Canada, Japan, and Mexico also announced that they would seek consultations with partner countries with a view towards joining the negotiations. Canada and Mexico subsequently were welcomed to join the negotiations in June 2012 and became formal members in October 2012. Japan and the TPP partners are conducting bilateral consultations on its possible entrance as well. In addition, Thailand formally expressed its interest in joining the negotiations during President Obama’s trip to the country in November 2012.

The TPP originally grew out of an FTA among Brunei, Chile, New Zealand, and Singapore, which came into force in 2006. Thirteen rounds of negotiations have occurred since the beginning of formal talks in 2010. In addition to negotiations on new trade rules among all the parties, the talks include U.S. market access negotiations—seeking removal of quotas and tariffs on traded products—with New Zealand, Brunei, Malaysia, and Vietnam as well as market access negotiations among other parties. The United States has FTAs in force with Chile, Singapore, Australia, Peru, and with North American Free Trade Agreement (NAFTA) partners Canada and Mexico, although new disciplines may be negotiated in the course of the talks covering issues beyond those in the existing FTAs.

The TPP serves several strategic goals in U.S. trade policy. First, it is the leading trade policy initiative of the Obama Administration, and is a manifestation of the Administration’s “pivot” to Asia. It provides both a new set of trade negotiations following the conclusion of the bilateral FTAs with Columbia, Panama, and South Korea and an alternative venue to the stalled Doha Development Round of multilateral trade negotiations under the WTO. If concluded, it may serve to shape the economic architecture of the Asia-Pacific region by harmonizing existing agreements with U.S. FTA partners, attracting new participants, and establishing regional rules on new policy issues facing the global economy—possibly providing impetus to future multilateral liberalization under the WTO.

The eleven countries that make up the TPP negotiating partners include advanced industrialized, middle income, and developing economies. While new market access opportunities exist among the participants with which the United States presently does not have FTAs, the greater value of the agreement to the United States may be setting a trade policy template covering issues it deems important and which can be adopted throughout the Asia-Pacific region, and possibly beyond.



Date of Report: November 21, 2012
Number of Pages: 59
Order Number: R42694
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Russia’s Accession to the WTO and Its Implications for the United States



William H. Cooper
Specialist in International Trade and Finance

In 1993, Russia formally applied for accession to the General Agreement on Tariffs and Trade (GATT). In 1995, its application was taken up by the World Trade Organization (WTO), the successor organization of the GATT. Russia is the largest economy not in the WTO; after a number of fits and starts during the 18-year process, the then-153 members of the WTO, on December 16, 2011, invited Russia to join the WTO during the Ministerial Conference in Geneva. On July 10 and July 18, 2012, respectively, the lower house of the Russian parliament—the State Duma—and the upper house—the Federal Council—approved the protocol of accession. President Putin signed the measure into law on July 21, allowing Russia to formally join the WTO on August 22.

The immediate policy issue for Congress will be whether to enact legislation authorizing the President to grant permanent normal trade relations (PNTR) status for Russia, a status that all WTO members are required to provide each other. Some Members of Congress have indicated that they view congressional consideration of PNTR legislation as the opportunity to ensure that the conditions on which Russia is invited to join the WTO address U.S. concerns.

On November 16, 2012, the House passed H.R. 6156. S. 3406 awaits Senate action. The two bills would authorize PNTR for Russia.

In joining the WTO, Russia has committed to bring its trade laws and practices into compliance with WTO rules and other market-opening measures. In doing so, it will take a major step in integrating its trading system with the rest of the world. Those commitments include


  • nondiscriminatory treatment of imports of goods and services; 
  • reducing tariffs and binding tariff levels; 
  • ensuring transparency when implementing trade measures; 
  • limiting agriculture subsidies; 
  • enforcing intellectual property rights (IPR) of foreign holders of such rights; 
  • forgoing the use of local content requirements and other investment measures that limit imports; and 
  • opening government procurement contract opportunities to foreign firms. 

In joining the WTO, Russia commits to accepting WTO dispute settlement procedures.

In return, Russia will have a voice in shaping and implementing the international trade regime. It will be able to hold its WTO partners accountable for adhering to WTO rules in conducting their trade relations with Russia, making those trade relations more predictable and stable. In addition, Russian economic reformers anticipate that WTO membership will make Russia a more attractive location for foreign producers and investors to do business by locking in trade-liberalizing reforms, which could increase Russia’s economic growth.

Concerns among U.S. stakeholders regarding Russia’s WTO accession are not so much over whether Russia should be admitted into the WTO but rather whether the conditions for its accession are adequate to ensure that Russia fulfills its obligations and provides meaningful trade and investment opportunities for U.S. firms. U.S. IPR holders remain cautious that Russia will enforce its commitments on IPR protection. Russia is currently a relatively small U.S. trading partner. However, U.S. manufacturing, agriculture, and service providers view WTO accession as an opportunity to broaden the bilateral trading relationship. In Russia, agriculture interests and some manufacturers, such as auto producers, are concerned that WTO membership will expose them to foreign competition that will adversely affect their interests.



Date of Report: November 20, 2012
Number of Pages: 23
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Wednesday, November 28, 2012

Canada: A Compendium



The United States and Canada have extensive ties that encompass a number of areas, including trade, security, the environment, and international affairs. The two countries cooperate widely in international security and political issues, both bilaterally and through numerous international organizations. Since September 11, 2001, the United States and Canada have cooperated extensively on efforts to combat terrorism Canada’s foreign and defense policies are usually in harmony with those of the United States. Areas of contention are relatively few, but sometimes sharp, as was the case in policy toward Iraq.

  Border security is a major concern in the post-9/11 world. The two countries have launched a number of initiatives that attempt to better secure the common border without unduly disturbing legitimate travel and commerce. Under the Bush Administration, the United States, Canada, and Mexico created the Security and Prosperity Partnership, which was intended to provide security for the continent against criminal activities and external threats, while easing the flow of goods and travelers who cross the borders. It also aimed to boost prosperity through promoting cooperation in a number of areas, such as regulations.

  The United States and Canada maintain the world’s largest trading relationship, one that has been strengthened over the past two decades by the approval of a bilateral U.S.-Canada Free Trade Agreement and the trilateral North American Free Trade Agreement (NAFTA). Aspects of the NAFTA may be reviewed by the Administration and Congress as U.S. trade policy comes under increased scrutiny. Although commercial disputes may not be quite as prominent now as they have been in the past, the two countries in recent years have engaged in difficult negotiations over items in several trade sectors, affecting only a small percentage of the total of goods and services exchanged. The issue that is currently causing the most controversy is the “Buy America” provision that was added to the U.S. economic stimulus package (American Recovery and Reinvestment Act of 2009, PL 111-5). The measure essentially would require that public works projects paid for by stimulus funds be completed with raw and manufactured materials of U.S. content. While the United States maintains that this provision is being implemented consistent with U.S. trade obligations, Canadians object that the provision is protectionist, and is contrary to U.S. obligations under the WTO Agreement on Government Procurement, and the NAFTA. Canada is the United States’ largest supplier of energy—including oil, uranium, natural gas, and electricity—and the energy relationship has been growing.

The U.S. and Canada work together on environmental matters. The effects of the extraction and processing of Canada’s oil sands are an issue of concern. Among other effects, the U.S. and Canadian environmental and scientific communities are concerned about the potential risk of oil sands development for migratory birds. The two countries also have been discussing restoration of the Great Lakes, as well as the possible impact that climate change might have, including alteration of habitat for marine wildlife. Also, global warming is forecast to open a channel through Canada’s northern archipelago, creating a so called “northwest passage” that Ottawa holds would be a Canadian inland waterway and the U.S. and other nations hold would constitute an international strait, open to international navigation. Canada’s sovereignty claim raises commercial, environmental, and security issues.

Date of Report: November 5, 2012
Number of Pages: 319
Order Number: C-12008
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The Jackson-Vanik Amendment and Candidate Countries for WTO Accession: Issues for Congress



William H. Cooper
Specialist in International Trade and Finance

Unconditional most-favored-nation (MFN) status, or in U.S. statutory parlance, normal trade relations (NTR) status, is a fundamental principle of the World Trade Organization (WTO). Under this principle, WTO members are required unconditionally to treat imports of goods and services from any WTO member no less favorably than they treat the imports of like goods and services from any other WTO member country. Under Title IV of the Trade Act of 1974, as amended, most communist or nonmarket-economy countries were denied MFN status unless they fulfilled freedom-of-emigration conditions as contained in Section 402, the so-called Jackson-Vanik amendment, or were granted a presidential waiver of the conditions, subject to congressional disapproval. The statute still applies to many of these countries, even though most have replaced their communist governments. The majority of these countries have joined the WTO or are candidates for accession. Several countries are close to completing the accession process, and Congress could soon face the issue of what to do about their NTR status to ensure that the United States benefits from those accession agreements.

During the 112th Congress, Members face the issue of whether to extend PNTR to Russia and Moldova. On November 16, 2012, the House passed H.R. 6156. S. 3406 awaits Senate floor action. Both bills would authorize PNTR for Russia and for Moldova.



Date of Report: November 20, 2012
Number of Pages: 8
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Permanent Normal Trade Relations (PNTR) Status for Russia and U.S.-Russian Economic Ties



William H. Cooper
Specialist in International Trade and Finance

U.S.-Russian trade is governed by Title IV of the Trade Act of 1974, which sets conditions on Russia’s normal trade relations (NTR), or nondiscriminatory, status, including the “freedom-ofemigration” requirements of the Jackson-Vanik amendment (section 402). Changing Russia’s trade status to unconditional NTR or “permanent normal trade relations status (PNTR)” requires legislation to lift the restrictions of Title IV as they apply to Russia and authorize the President to grant Russia PNTR by proclamation. On November 16, 2012, the House passed (365-43) H.R. 6156, which would do just that, among other things. A similar bill, S. 3406, awaits action in the Senate. Both bills include contain provisions of proposed legislation—the Magnitsky Rule of Law Accountability Act of 2012—that would impose sanctions on individuals linked to the incarceration and death of Russian lawyer Sergei Magnitsky. Both bills would also authorize PNTR status for Moldova.

PNTR for Russia has become an issue for the 112th Congress because, on August 22, 2012, Russia joined the WTO after having completed a 19-year accession process. The WTO requires each member to accord newly acceding members “immediate and unconditional” most-favored-nation (MFN) status, or PNTR. In order to comply with WTO rules, the United States would have to extend PNTR to Russia, or invoke the non-application provision of the WTO.



Date of Report: November 20, 2012
Number of Pages: 9
Order Number: RS21123
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