28.04.2015
CLIPPING INTERNACIONAL NEGINT Brasília, 28 de abril de 2015
Índice
I. OMC ______2 WTO welcomes Seychelles as its 161st member ______2
Differentiation among developing nations at WTO unacceptable: India ______3
Indonesia mulls dragging Turkey to WTO for unfair levies ______5
II. NEGOCIAÇÕES REGIONAIS E BILATERAIS ______7 Despite Progress, Obama-Abe Summit May Not Be Right Moment For Deal __ 7
Malmstrom To Visit Washington On May 4, Likely To Meet With Froman ____ 11
Brown, Warren Counter Obama's Digs At Trade Critics; Call For Release Of TPP Text ______12
Obama Presses Case for Asia Trade Deal, Warns Failure Would Benefit China 15
Why trade deals don't get more public support ______18
Trans-Pacific Partnership Puts Harvard Law School Rivals on Opposite Sides, Again ______21
Pakistan offers Afghanistan, Iran trade agreements ______26
Paraguay and Uruguay ministers to discuss recovering paralyzed Mercosur _ 26
III. OUTROS ______28 Brazil’s Real Climbs as Higher Rates Seen Attracting Investors ______28
Brazil's Odebrecht ponders sale of renewables stakes - report ______30
Carlyle to pay $600 mln for Brazil's Rede D'Or stake - source ______31
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I. OMC
WTO welcomes Seychelles as its 161st member
The Economic Times (Índia)
The World Trade Organisation (WTO) on Monday welcomed Seychelles as its 161st
member, ending 20 years of negotiating its accession terms.
"I am delighted to welcome the Republic of Seychelles as the 161st member of the
WTO," said WTO director general Roberto Azevedo, Xinhua reported.
"This is great news for Seychelles' economy and, therefore, for the people of Seychelles.
It is also a boost for the WTO and a vote of confidence in the Organization, as we
redouble our efforts to complete the Doha Round of negotiations," Azevedo added.
Seychelles on Sunday officially became a WTO member after the 30-day countdown to its
WTO membership was activated on March 27.
On March 25, President of Seychelles James Michel signed the "instrument of acceptance"
of Seychelles' accession protocol, confirming its membership terms, at a plenary meeting
of the cabinet of ministers in Victoria, Seychelles.
"This is a major step forward in the trade integration of Seychelles into the rules-based
multilateral trading system and the global economy," said Seychelles Minister of Finance,
Trade and the Blue Economy Jean Paul Adam.
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Differentiation among developing nations at WTO unacceptable: India
Live Mint (Índia)
India on Monday warned against continued attempts to force “differentiation” among developing countries at the World Trade Organization (WTO) for securing higher contributions on the pretext of making progress in the stalled Doha trade negotiations.
“Differentiations among developing countries in this manner is unacceptable to India,”
New Delhi’s trade envoy Anjali Prasad told a meeting of the trade negotiations committee.
Over the last 10 days, the US has repeatedly insisted that major developing countries undertake commitments to reduce the support they currently provide to their farmers.
The US, for example, is targeting the input subsidies provided to low and resource-poor farmers as well as market price support to procure produce from farmers for public stockholding programmes.
US trade envoy Michael Punke said large emerging economies have to undertake commitments because of changed realities.
Without mentioning the US by name, India said “such arguments and conditionalities undermine the very basis of the negotiating function of the WTO which is based on certain accepted principles, which do not allow for such differentiation”.
Contributions, said Prasad, “have to be benchmarked to levels of development rather than some vague sense of the world having changed”.
She said any discussion on “doability”, “recalibration” or “simplification” should not result in the dilution of “development quotient” of the Doha Round of trade negotiations.
China also denounced attempts to change goalposts in the negotiations on the pretext of
“recalibration”. China’s trade envoy Yu Jianhua said his country will not accept attempts to undermine the previous mandates such as the Doha declaration of 2001, the 2004 July
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work programme, the 2005 Hong Kong Ministerial declaration, and the 2008 revised draft modalities.
WTO chief Roberto Azevedo, however, presented an upbeat assessment claiming all is well with the ongoing negotiations for drawing-up the post-Bali work programme on how to conclude the Doha trade talks.
But China and India along with several other countries remain concerned at attempts to impose new commitments on developing countries, including moves to undermine what are called the special and differential flexibilities in agriculture.
During a closed-door meeting of trade envoys of six major countries—the US, the
European Union (EU), China, India, Brazil and Australia—last Wednesday, there were sharp differences over issues concerning the flexibilities accorded to developing countries under the WTO rules.
China and India insisted that Azevedo must state unambiguously whether there is an attempt to dilute Article 6.2 of the Agreement on Agriculture (AoA) to deny the special and differential flexibilities that are crucial for poor farmers to continue farming, according to people familiar with the meeting.
Developing countries are currently exempted from reduction commitments from agricultural input subsidies under Article 6.2 of the AoA.
Therefore, when the US says input subsidies and MPS (market price support) are more trade-distorting than area payments and partially decoupled support, clearly it is aimed at undermining Article 6.2.
Despite these halting developments in the negotiations, Azevedo claimed that “we
(members) are getting close to July now”, implying that there is forward movement in cobbling together a work programme that stipulates specific and modalities-like benchmarks to finalize negotiations.
He said: “Whatever the nature of work programme we get by July, clearly I will have to fulfil certain criteria”—that the work programme must be substantive and meaningful;
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that it would provide guidance to conclude the negotiations; and that it must be a springboard for a successful 10th Ministerial Conference in Nairobi in December.
But a large majority of developing countries, including China and India, have sharply differed with Azevedo’s assessment. The countries expressed grave concern over what they see as sustained attempts to undermine the previous mandates of the Doha trade negotiations under the pretext of “recalibration”.
However, the industrialized countries, particularly the US and the EU, are comfortable with “recalibration” as a strategy towards realistic progress by the end of this year.
Indonesia mulls dragging Turkey to WTO for unfair levies
Fibre2Fashion (Índia)
Indonesia may file a complaint with the World Trade Organisation (WTO) over Turkey’s antidumping measures on yarn, which have affected a number of Indonesian textile firms, according to an Indonesian trade official, according to a leading Indonesian daily.
Turkey’s trade authority last week extended higher levies on Indonesian yarn of man- made staple fibers, which are to apply for five years following a recent review.
The duties, ranging from 25 cents to 40 cents for each kilogram of yarn, have affected more than 20 local firms, including major textile manufacturers PT Indorama and PT Sri
Rejeki Isman (Sritex).
The trade ministry’s trade defense director, Oke Nurwan, said that a complaint might be lodged by local producers, who rejected accusations that they were exporting their products at a lower price than usual.
“In addition, our export volume of the concerned product is not significant, so we’re not hurting the Turkish industry,” he said.
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Indonesia’s shipment of that type of yarn to Turkey was valued at $82.01 million in
2011, representing 11.7 per cent of overall Turkish imports. The figure rose to $122.94 million in 2013, but its share fell to 10.2 percent.
Besides Indonesia, the expanded tariffs, particularly at higher levels, are likely to impact other producers, including China and India.
The newspaper said that instead of complaining to the WTO, domestic producers could choose to propose price undertaking to the Turkish authorities.
Indonesian Textile Association (API) chairman Adi Sudrajat confirmed that local business players might bring the case to the Dispute Settlement Body of the WTO, as the duties had effectively curbed their expansion into the market of more than 75 million people.
“The duties have prevented us from growing our share of the Turkish market. We’ve lost our competitive edge against our rivals, such as Vietnam and Bangladesh,” he said.
In terms of trade defense, Turkey has been one of Indonesia’s most aggressive trading partners, applying a number of remedial measures over the past few years.
The measures comprise antidumping tariffs to counter exported products that are sold at prices lower than those in their home market and safeguard duties, which are used to protect a country’s local market whenever there is an irregular surge in imports.
As of April, Turkey has imposed antidumping duties on 10 Indonesian products, including polyester synthetic fiber, zippers and air conditioners, and put safeguard tariffs on matches and polyethylene terephtalate.
In contrast, Indonesia’s only safeguard measure has been an import quota on Turkish wheat flour, imports of which had hurt the domestic industry, the Jakarta Times report said. (SH)
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II. NEGOCIAÇÕES REGIONAIS E BILATERAIS
Despite Progress, Obama-Abe Summit May Not Be Right Moment For Deal
Inside U.S. Trade (EUA)
Despite progress in bilateral talks over the last several months, it looks increasingly
unlikely that President Obama and Japanese Prime Minister Shinzo Abe will be in a
position to strike a deal on automobile and agricultural trade issues in the context of the
Trans-Pacific Partnership (TPP) when they meet at the White House on Tuesday (April
28).
There are a variety of possible reasons for this twist. One is the widely held view among
observers and some officials that the two sides will likely hold off on sealing a bilateral
deal until Congress passes a Trade Promotion Authority (TPA) bill. A former trade official
this week argued Tokyo would be “foolish” to strike a deal now when there is still a
chance Congress might amend the TPA bill to include a stronger negotiating objective
aimed at fighting currency manipulation -- something that would likely prove
unacceptable to Japan.
But a second possible reason is the emerging sense in some quarters that one or both
sides may prefer to wait to strike a bilateral deal until it becomes clearer that the other
participants in the 12-party TPP negotiations are actually ready to make the concessions
required to close a broader agreement.
Put another way, even though the U.S. and Japan appear to be within striking distance of
a bilateral deal, they may be unwilling to take the leap until they have confidence that
the other TPP countries will go along with them.
A third reason cited by several observers is that Abe may not want to seal the bilateral
TPP deal himself because it would be too politically damaging, given that agricultural
producers are a major constituency of his Liberal Democratic Party. Instead, he may
prefer to have Japanese TPP minister Akira Amari conclude the deal and take the political
heat for it, they said.
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Holding off on a bilateral deal until the other TPP countries are ready to move could be politically advantageous, one private-sector source argued. He noted that reaching a bilateral agreement will likely open the U.S. and Japan up to criticism back home, and that making that type of “political sacrifice” may be premature if they do not have confidence that other TPP countries such as Canada are ready to make that level of commitment.
The former trade official said this logic probably makes "a lot of sense” from the
Japanese perspective as a tactic to delay making concessions, but he questioned whether holding off is the best strategy for the U.S. He argued that U.S. negotiators may be to better able to crank up the pressure on Canada to make concessions on agricultural market access if they already have a deal with Japan in hand.
This source also took issue with the notion that an early deal would impose political pain on the U.S., saying the only sector likely to complain about an agreement is the domestic auto industry, which he said is unlikely to support any TPP deal with Japan.
Amid this complicated dynamic, U.S. and Japanese officials have been openly downplaying the prospects for a deal during Abe's visit, which kicked off Monday afternoon when both leaders toured the Lincoln Memorial in Washington, according to a
White House pool report.
U.S. Trade Representative Michael Froman last week delivered the carefully worded message that the U.S. is “not expecting an announcement of a final deal” during Abe's visit despite progress in the bilateral talks, a message echoed in an April 24 press call by
Deputy National Security Adviser for International Economics Caroline Atkinson.
Instead, U.S. and Japanese officials are now framing the meeting as a chance for the two leaders to review progress and next steps in the bilateral talks, and to call for that progress to be translated into momentum in the 12-party negotiations.
“It’s an important meeting for the two leaders to get together and review that [bilateral] progress and to look forward both towards how we are addressing the bilateral issues,
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but also towards how we are working with the other 10 TPP countries,” Deputy National
Security Adviser Ben Rhodes said in the April 24 press call.
A Japanese official separately backed that assessment and indicated that the two leaders are not expected to delve into the details of the outstanding issues in the bilateral talks.
At the same time, the official cautioned it is difficult to predict exactly what the leaders will discuss during their meeting.
Another sign that substantive talks on the outstanding issues may not take place during
Abe's visit is that Amari is not expected to accompany the prime minister. Still, working- level talks have been continuing, the Japanese official said.
Among the outstanding bilateral issues are U.S. demands for more and better rice market access to Japan; the level of U.S. tariffs on auto parts; the special dispute settlement mechanism that will apply to auto disputes; and the rule of origin for autos.
After a two-day meeting last week in Tokyo, Froman and Amari both said the two sides had "substantially narrowed" the gaps, but that more work is required to resolve the outstanding issues.
On auto parts, the talks appear to have advanced to the point where the two sides are discussing specific phaseout lengths for key auto parts. The U.S. had previously been reluctant to do so, as it took the position that its ambition in this area was contingent on
Japan improving its offer on agriculture. Japan has pushed for immediate elimination of
U.S. auto parts tariffs, which are currently 2.5 percent or lower.
The exact phaseout lengths being proposed by the U.S. are unclear. In the U.S.-Korea free trade agreement, one of the longest U.S. phaseouts for industrial products was 10 years for the truck tariff.
On the sticky issue of rice, the two sides appear to have been discussing proposals to further open up Japan's rice market to U.S. producers by between 50,000 and 175,000 metric tons a year – numbers which have been reported in the Japanese press. Japan currently limits imports of rice through an annual tariff-rate quota of 682,000 metric tons on a milled rice basis.
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In addition to fighting for more access, U.S. rice producers have been pushing for better quality of access, meaning the ability to sell to Japanese end users directly instead of the current requirement that they sell to a Japanese government agency. Many of those imports are used for foreign aid and animal feed, according to one private-sector source.
The possibility that the U.S. and Japan could wait to strike a bilateral deal until the end of the broader negotiation flies in the face of conventional wisdom, which has long held that the two major players must strike a bilateral deal in order to pave the way for the conclusion of the talks.
Many agricultural industry representatives from TPP countries other than the U.S. have believed that a U.S.-Japan deal would be followed by some sort of “transparency period” during which the two major players would disclose the agreements they have reached.
The notion has been that this would serve as a basis for other TPP agricultural exporting countries to negotiate with Japan for the same treatment, and unlock other parts of the talks.
But the reality is that Japan has already taken a more incremental approach. For instance, Japan in October of last year began making improved market access offers to
TPP agricultural exporting countries on key products like beef that seemed to reflect the concessions it had agreed to with the United States.
Shelia Smith, a Japan expert at the Council on Foreign Relations, told reporters in an
April 27 conference call that she still expected the U.S. and Japan to reach a bilateral deal first, rather than holding off until the other 10 TPP countries are ready. But she said the bilateral deal would not likely be struck until Congress passes TPA, signaling that the
U.S. will not be ready to make its final concessions until that happens.
That echoes a view put forward by Japanese officials that the contentious debate over trade in Congress may be causing U.S. negotiators to hold back in the bilateral negotiations until they can ensure a critical mass of support for TPP in the legislature.
In conjunction with the Abe visit, the two sides are negotiating a broad "joint vision statement" that will likely include a section on TPP, and a key challenge will
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be how to frame this language in a way that goes beyond thestatement issued last
April when Obama visited Japan.
In that statement, the two sides said they had identified a "path forward on important bilateral TPP issues," which they characterized as a "key milestone" that would inject fresh momentum into the broader talks. The statement then called on all TPP countries
"to move as soon as possible to take the necessary steps to conclude the agreement."
Although it was not reflected in that statement, the key outcome of Obama's trip to
Tokyo consisted of the United States dropping its demand that Japan eliminate all tariffs on beef and pork under a TPP deal.
In addition to trade, Abe's visit this week will focus on bilateral defense cooperation as well as regional and global issues where the two sides are working together. Following his meeting with Obama at the White House on Tuesday, Abe will give a speech to a joint session of Congress the following day.
Malmstrom To Visit Washington On May 4, Likely To Meet With Froman
Inside U.S. Trade (EUA)
EU Trade Commissioner Cecilia Malmstrom is slated to be in Washington on May 4, in a visit that comes on the heels of the United States and the European Union finishing the ninth round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) in New York City.
Malmstrom's trip was made known in an event announcement released by the Center for
Strategic and International Studies (CSIS), where she will deliver remarks.
The trade commissioner is likely to meet with her counterpart, U.S. Trade Representative
Michael Froman, during her trip to the U.S. capital. The two ministers committed to communicate with each other after each round of the TTIP negotiations in an effort to increase the political oversight of the trade talks. They last met in Brussels in March.
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Officials at USTR and the European Commission did not immediately respond to requests for comment on the trip.
Malmstrom is slated to speak at CSIS about the “strategic goals Europe hopes to achieve through its trade policy during” the tenure of EU Commission President Jean-Claude
Juncker, according to an announcement from the think tank. She will also share “her thoughts on the way ahead for the TTIP negotiations.”
U.S. and EU negotiators at the close of TTIP's ninth round said they had made progress on the regulatory aspect of the initiative in two key areas, with both sides creating a "consolidated text" on horizontal regulatory cooperation and the U.S. tabling a new proposal on technical barriers to trade
Brown, Warren Counter Obama's Digs At Trade Critics; Call For Release Of TPP Text
Inside U.S. Trade (EUA)
Progressive lawmakers critical of the Obama administration's trade agenda are parrying remarks by the president last week suggesting that detractors of the the Trans-Pacific
Partnership (TPP) are employing fictitious claims to try and tank the trade agreement and are pushing Obama again to publicly release the draft text of the deal.
“In recent remarks, you suggested that critics of the TPP are 'dishonest' when we claim that the TPP is a 'secret deal,'” Sens. Sherrod Brown (D-OH) and Elizabeth Warren (D-
MA) wrote in an April 25 letter to the president. “Even though negotiations over the TPP are largely complete, your Administration has deemed the draft text of the agreement classified and kept it hidden from public view, thereby making it a secret deal.”
The senators noted that, even though members of Congress are able to see the text of a proposed trade agreement, its classification “muzzles” lawmakers from discussing it with trade experts, journalists and the public. At the same time, they said the vast majority of the administration's trade advisory committees are “senior corporate executives or industry lobbyists,” specifically citing a Washington Post report.
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Obama shot back at trade critics twice last week, first at an April 23 speech in
Washington hosted by Organizing for Action (OFA) -- a non-profit organization with strong ties to the president -- and again on an April 24 press conference call with Labor
Secretary Tom Perez.
In his speech before OFA members, Obama compared critics of trade agreements to opponents who erroneously claimed that the Affordable Care Act would set up so-called
“death panels” that would decide which Americans would receive health care.
“But in the same way that when I was arguing for health care reform I asked people to look at the facts -- somebody comes up with a slogan like 'death panel,' doesn’t mean it’s true. Look at the facts. The same thing is true on this. Look at the facts. Don’t just throw a bunch of stuff out there and see if it sticks,” Obama said.
The “death panel” comparison drew a sharp rebuke from Democracy for America, a progressive political action committee, which also called for the TPP text to be publicly available.
“It’s shameful to see President Obama compare Democrats who oppose fast tracking the
TPP through Congress to Sarah Palin and the delusional ‘death panels’ rhetoric. Frankly, it’s beneath this president to resort to such name-calling," Charles Chamberlain, executive director of the group, said in a statement.
Obama during the press call with Perez described opponents who are critical of the secrecy surrounding TPP and trade agreements as being “dishonest,” a point White
House Press Secretary Josh Earnest addressed on Monday (April 27) during a press briefing.
Earnest highlighted the fact that members of Congress are able to view the “current draft” of TPP “at a moment's notice.” Pressed on why Obama does not declassify the TPP text now, the White House spokesman underlined the fact that the agreement is still not completed.
“[T]here is no final agreement. Right now, all you have essentially is the negotiating position of the United States and the negotiating position of folks who are -- of other
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countries who are seeking to be a party to this deal," Earnest said. "And the fact is, as we say in all of these sorts of international negotiations and even some of the domestic ones, nothing is agreed to until everything is agreed to.”
Although Obama is characterizing his trade agenda as reflective of progressive values, the administration is defending on two fronts. On the other end of the political spectrum, the conservative group Americans for Limited Government (ALG) is buying radio advertisements in New Hampshire urging three Republican presidential contenders
-- all of whom are senators -- to vote against Trade Promotion Authority (TPA).
Specifically, the ad urges Sens. Ted Cruz (R-TX), Rand Paul (R-KY) and Marco Rubio (R-
FL) to vote against TPA, describing it as “Obama's next power grab” and a “giveaway to
Wall Street and the Hollywood elite.” In an interview, ALG President Rick Manning noted that Cruz joined House Ways & Means Committee Chairman Paul Ryan (R-WI) in expressing support for TPA in an April 21 Wall Street Journal op-ed.
Manning said the ads are targeting Republican primary voters in New Hampshire. New
Hampshire is typically the second U.S. state to host presidential nominating contests in an election year. According to the New Hampshire secretary of state's website, a primary date has not been set for 2016; in 2012, it was Jan. 10. State law allows the New
Hampshire secretary of state to pick a primary date at least seven days before the next earliest primary.
ALG has been vocal in its criticism of TPA; Manning in February wrote to a House
Republican freshman urging him to abandon his effort to rally support for TPA amongst his new colleagues.
But Ways & Means Republicans have been working since the introduction of TPA earlier this month to highlight the support it has received from other conservative groups. On
Monday, they circulated an April 21 letter from 20 conservative groups, including
Americans for Tax Reform, that called for TPA legislation to be passed as soon as possible.
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“We believe that tariffs are taxes on trade, and ultimately would like to see a world free of government interference in international commerce. Passing TPA is a necessary step toward getting the ball rolling on that long term policy goal, and we therefore urge you to pass Trade Promotion Authority,” the groups wrote.
Obama Presses Case for Asia Trade Deal, Warns Failure Would Benefit China
The Wall Street Journal (EUA)
President Barack Obama, facing a bitter struggle within his own party on trade policy, warned that China would step into the economic vacuum the U.S. would create if it fails to complete and enact a free-trade deal with Asia. “If we don’t write the rules, China will write the rules out in that region,” Mr. Obama said in an interview Monday with The Wall
Street Journal. “We will be shut out—American businesses and American agriculture.
That will mean a loss of U.S. jobs.”
Mr. Obama also warned of rising anti-globalization sentiment in Washington, reflected in
Democratic opposition to the trade agreement, Republican efforts to kill the Export-
Import Bank and congressional unwillingness to approve new rules for operation of the
International Monetary Fund.
“What we can’t do, though, is withdraw,” Mr. Obama said, adding: “There has been a confluence of anti-global engagement from both elements of the right and elements of the left that I think [is] a big mistake.”
Mr. Obama and his negotiators are working to finish the Trans-Pacific Partnership, a trade deal among 12 Pacific nations that has come to be known as TPP, while also fighting to win “fast track” negotiating authority from Congress to expedite approval of the deal later this year. The trade agreement will be a topic of conversation between Mr.
Obama and Japanese Prime Minister Shinzo Abe, who is scheduled to visit the White
House this week.
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The Senate Finance Committee easily passed the fast-track bill last week with strong bipartisan support. But in the House, the Ways and Means Committee passed the measure with the support of only two Democrats.
That House vote underscored the depth ofopposition among Democrats, particularly on the party’s left, where both Massachusetts Sen.Elizabeth Warren and Richard
Trumka,president of the AFL-CIO, have been beating the drum against the deal.
Critics on the left, particularly those in the labor movement, are opposing TPP because they believe free-trade agreements have caused an outflow of manufacturing jobs from the U.S. to other nations, and say competition from lower-wage countries produced by such agreements has contributed to stagnant wages and higher income inequality in the
U.S.
Former Secretary of State Hillary Clinton also has declined to endorse the TPP, even though work on the agreement started while she was still in office.
Mr. Obama declined to criticize Mrs. Clinton for failing to take a public stand in favor of the pact in recent days. “I think she said what she should be saying, which is that she is going to want to see a trade agreement that is strong on labor, strong on the environment, helps U.S. workers, helps the U.S. economy. That’s my standard as well, and I’m confident that standard can be met,” he said.
Mr. Obama has expressed annoyance and, on occasion, flashes of anger over the sometimes harsh criticism of the Asian trade agreement from his usual allies on his party’s left wing. In the interview, though, he said he understands their concerns.
“Over the course of 20, 25 years, what you saw was trade benefit the U.S. economy in the aggregate with cheaper prices, inflation low, the creation of a global supply chain that was good for U.S. companies,” he said. “But what is true—and the best economic data seems to show—is that there was some erosion of our manufacturing base at the time… Some people have been suspicious and feel burned from some of those experiences.”
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But he said the TPP would be different because it would have more enforceable provisions on labor and environmental standards that are written into the pact, not contained in side agreements that critics say were difficult to enforce in the case of the
North American Free Trade Agreement of the 1990s.
When that agreement was approved by Congress in 1993, 27 Democratic senators and
102 Democratic House members voted for it. Most analysts think the number of
Democrats now in favor of TPP is much lower, though Mr. Obama said it is too early to forecast how many Democrats would back it. It is almost certain, though, that the president would have to rely more on Republican support than backing from fellow
Democrats.
Mr. Obama did acknowledge that he is annoyed by the criticism of both him and the trade negotiations: “What I take personally is this notion somehow that after 6½ years of working to yank this economy out of a ditch, strengthening middle-class homeownership, making sure that their 401(k)s have recovered, making sure that we’ve got much better education systems and job-training systems, fighting for the minimum wage, fighting for a vibrant auto industry, that after all the work that I have done and we have done together to make sure that middle-class families have greater stability, that to believe some of the rhetoric that has been coming out of opponents—that I’m trying to just destroy the middle class or destroy our democracy—is a little unrealistic. And they know it.”
At several points in the conversation, Mr. Obama raised the danger of losing ground in economic competition with China if the trade deal isn’t completed: “We want China to be successful. We want China to continue to embark on its peaceful rise,” he said. “I think that’s good for the world.…We just want to make sure that the rules of the road allow us to compete and everybody else to compete. We don’t want China to use its size to muscle other countries in the region around rules that disadvantage us.”
Mr. Obama said U.S. and Japanese negotiators have come close to completing a bilateral agreement on trade issues—an agreement that would help pave the way for completion of the broader 12-nation TPP.
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But he said some sticking points remain. And while praising Mr. Abe for being “bold and aggressive” in reforming Japan’s economy, he added: “Negotiations are tough on both sides because he’s got his own politics and interests. Japanese farmers are tough,
Japanese auto makers want certain things. I don’t expect that we will complete all negotiations” while he is in Washington this week. “I will say that the engagement has brought the parties much closer together,” Mr. Obama said.
On the broader U.S. economy, Mr. Obama acknowledged that the employment picture hasn’t improved as much in recent months as it had previously, but he attributed any current weaknesses to problems in Europe and China.
Europe he said, “has been soft for a long time now, and China, which is trying to transition away from solely relying on exports to a more domestic consumption model— that’s actually a good thing over the long term, but short term it means that demand globally is a little bit soft.”
He also argued that the U.S. economy, while better than in other advanced economies, would benefit from congressional passage of “a strong infrastructure bill” to improve roads, ports, bridges and broadband lines. “If we did that, we’d put people back to work right now, it would be a huge boost to the economy, and it would pay off for decades to come,” he said. “That’s what we need to compete.”
The president argued for such a measure earlier in this year, without success; his remarks Monday suggested he will renew his push.
Why trade deals don't get more public support
CBS (EUA)
Although President Obama supports the Trans-Pacific Partnership (TPP) trade agreement, he's running into resistance from many progressives. Why are they opposed to a deal that negotiators have worked on for years, includes the U.S. and 11 Pacific Rim nations
(but not yet China) and accounts for 40 percent of the global economy?
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One reason for their opposition is that the deal is more about protecting patents and copyrights than about opening up markets for trade. Patents and copyrights create monopolies for a fixed period of time to encourage innovation and creativity. The idea is to protect some firms from both domestic and international competition, the opposite of free trade.
How could this protection be beneficial for those holding copyrights and patents in the
U.S.? If the people who invent and create cannot make a profit from their work because others can use their ideas freely, then the incentive to spend time creating new products and services is diminished. Thus, copyrights and patents encourage innovative activity that benefits everyone.
But a cost is also associated with this benefit. Monopoly prices are generally higher and production lower than in competitive markets, so the cost of the monopoly must be balanced against the benefit or against how much it encourages more innovation.
The progressive opposition to the TPP asks a simple question: Do we really think that inadequate incentive to create new drugs or new movies is a major problem right now?
Stated another way, opponents believe the costs of increasing monopoly power are higher than the benefit of increased innovation, so it's a bad deal for U.S. citizens.
That's not the only objection to the TPP. Others worry that it's likely to increase wage inequality, it won't live up to supporters' job creation claims and that itdoesn't include provisions to stop countries from manipulating their currency to obtain favorable trade terms that result in lost jobs for U.S. workers.
But even if the TPP were primarily a deal about free trade and included provisions on currency manipulation and so on, support for it still wouldn't necessarily be a slam dunk.
Economists generally agree on the benefits of free trade with other nations. In the long- run, everyone is better off with specialization and trade. To see why, imagine a painter and a plumber who live next door to each other. The painter needs to have some plumbing done, and the plumber needs to have her house painted.
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If they do the jobs themselves, i.e. the plumber paints and the painter plumbs, it will take each of them, say, four days to complete the job. But if they specialize in what they do best and trade the work -- if the plumber does the plumbing on the painter's house and vice-versa -- each job can be completed in, say, two days. Thus, specialization and trade can make both households better off.
It's no different when trade is between countries rather than households.
Interestingly, this still works when one of the two people is better at both jobs. Imagine a lawyer who's also an excellent typist. The lawyer can make $400 per hour as an attorney and can type 4,000 words an hour. The law office typist, however, who is paid
$15 per hour, can type only 2,000 words per hour. Should the lawyer do his own typing?
No. Although it takes the typist two hours to produce the same amount of output as the lawyer can produce in one hour, the lawyer can make $400 if that hour is used on legal work for clients, and he has to pay only $30 for the typing services. Thus, the lawyer is better off by a considerable margin, and the typist has an income-producing job.
Again, everyone is better off under this arrangement where people specialize in what they do best and then trade.
The exact same principles apply to international trade. As each nation specializes in what it does relatively best and then trades, the residents of both nations are made better off.
That's why there' such strong support for free trade among economists.
Why, then, is support among the general public so much weaker? For example,according to a recent Gallup poll, 33 percent of Americans see trade as a threat. One reason may be that we left an important element out of the two stories above. While it's true that trade generally makes us all better off in the long run, other important short-run impacts can make some households worse off.
If a U.S.-based industry suddenly moves to another nation, the workers in that industry are left without a job. They are not better off, at least not initially. In theory, they may find better jobs later on, and hence be better off in the long run, but in reality they may end up in worse jobs.
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In this case, it's a matter of how the gains from trade are redistributed. Trade increases the total income available to U.S. citizens, and it's theoretically possible to make everyone better off through tax and transfer programs that distribute the gains from trade to displaced workers. But this doesn't happen, and many households are made worse off from opening our borders to trade with other nations.
That's why it's not surprising so many households are worried that international trade might hurt them economically.
To obtain broader public support for trade agreements with other nations, the country must do a much better job of providing social insurance for households that are hurt when production and jobs move from the U.S. to other nations. Unfortunately, political opposition to redistribution makes broad-based public support unlikely. That's true even when redistribution takes some -- but far from all -- of the gains from trade away from those who benefited and passes them to those who are hurt by increased globalization.
Trans-Pacific Partnership Puts Harvard Law School Rivals on Opposite
Sides, Again
NY Times (EUA)
In the early 2000s, after Michael Froman decamped from the Clinton Treasury
Department for Wall Street, he called his old law school colleague Lori Wallach, now an anti-globalization activist, with an unusual proposal.
Would she fly to Citigroup’s training center in Westchester County, N.Y., to explain to company executives from around the world that liberal activists who had derailed a World
Trade Organization expansion were not all fuzzy-headed anarchists and should be taken seriously?
“Really?” she recalled shouting incredulously to the assistant who took the call, before making an offer she figured he would have to refuse. “Tell them my speaking fee is
$20,000, and I need a private plane right to Westchester.”
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Demands met, her assistant shouted back, “We should’ve asked for $50,000.”
Ms. Wallach, the longtime leader of Public Citizen’s Global Trade Watch and a skeptic on what she calls “job killing” trade agreements, and Mr. Froman, the United States trade representative trying to land the largest trade accord in a generation, have occupied different worlds and economic stratospheres since their days at Harvard Law School.
But their lives keep intersecting in policy imbroglios. Officials in Mr. Froman’s office — who dispute Ms. Wallach’s version of the Citigroup episode — denounce her as an alarmist demagogue whose organization has used distortion and scare tactics to discredit free trade. Ms. Wallach and her liberal allies call Mr. Froman a toady to corporate
America — and arrogant to boot.
As Congress considers giving another Harvard Law colleague from that era,President
Obama, special “fast track” authority to negotiate a 12-nation Pacific trade accord, the two lawyers find themselves on opposing armies in one of the biggest legislative fights of the Obama presidency. Among those nations are Japan, Australia and Chile, and smaller economies like Brunei, Peru and Vietnam.
Loyalties to the two opposing forces are stark.
“I’ve questioned Froman on Brunei. I’ve questioned him on food safety. I’ve questioned him on not doing anything when Peru walked back from environmental regulations.
Nothing,” fumed Representative Rosa DeLauro, Democrat of Connecticut, a fierce foe of the trade promotion authority legislation nearing House consideration and of the 12- nation Trans-Pacific Partnership that such authority would ease to completion.
By contrast, “Lori Wallach? She’s got such granular knowledge,” she said. “She’s my source of information and knowledge.”
Republicans have lauded Mr. Froman for his full-throttle effort to secure the trade accord and his constant availability to them. Likewise, Representative Charles B. Rangel of New
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York, a Democrat more open to the trade bills, shrugged off the hostility expressed by many in his party.
“When I’m asking burning questions about human rights and labor rights and the environment and communist Vietnam, I know I’m dealing with a professional,” he said of
Mr. Froman.
Clearly, though, many lawmakers have lost patience with Mr. Froman. As a result, a hard-fought compromise on the trade promotion bill approved by the Senate Finance and House Ways and Means committees last week practically legislates better relations.
One unusual provision says that if members of Congress request a meeting or ask the trade representative a question, his office has to respond. The bill would also allow congressional aides with the proper security clearance to go into rooms with the Trans-
Pacific Partnership texts and read them without lawmakers or officials from the trade representative’s office present.
“This is not personal,” said Senator Bernard Sanders, independent of Vermont and another opponent of the trade effort. “It’s clearly the rules that have been established in terms of transparency. It’s been a disgrace, frankly.”
Fomenting much of that umbrage is Ms. Wallach, whose tactics, detailed treatises and
Capitol Hill briefings have torn apart the chapters of the Pacific accord that have leaked out. She has castigated Mr. Froman’s tight control over the contents of the agreement and dismissed efforts by Republicans and Democrats to find common ground as smoke screens for a big-business agenda.
In February, using the email address [email protected], Public Citizen emailed a faux Valentine, ostensibly from Mr. Froman, saying: “If I have betrayed your trust, I am sorry that you feel that way. I’ve been so focused on convincing you to take the Fast Track trip with me and buy those trade deals I love, I’ve said some things that, in retrospect, were not true.”
Specifically, Public Citizen accused him of misrepresenting the results of past trade agreements.
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Ms. Wallach’s role as antagonist to Mr. Froman has been decades in the making. At
Harvard, the two ran in very different circles. The closest they came was a small campus building that housed both The Harvard Law Review, where the future president and his future trade negotiator were editors, and the Harvard Legal Aid Bureau, where she was an officer.
As for the future president, Ms. Wallach worked with him during a divisive campaign to bring more diversity to the Harvard Law faculty and again on an effort to save Harvard’s program advising law students on public interest careers, said John Bonifaz, a campaign finance reformer and Wallach ally who was at Harvard at the time.
Mr. Froman was part of neither effort.
“He was more a corporate law type,” Mr. Bonifaz said. “A lot of people at law school were focused on going out and making a ton of money.”
In fact, that was not Mr. Froman’s initial career path. Straight out of law school, he went to Albania to help that tiny impoverished nation’s legal system. He spent most of the
1990s in the Clinton administration, at the White House and at Treasury, finally following
Treasury Secretary Robert E. Rubin to Citigroup in 2001, only to return to Washington in
2009 to join the Obama White House as an emissary to international economic organizations.
Through it all, his path kept crossing Ms. Wallach’s. In 1998, she bedeviled the Clinton administration with her campaign to deny the president new fast-track trade authority, a fight her side won. In 1999, as Mr. Rubin’s chief of staff at Treasury, Mr. Froman clashed with her over international efforts to expand the World Trade Organization, a campaign that died after anti-globalization activists rioted in Seattle.
Recalling her appearance before Citigroup executives at Mr. Froman’s behest, she said that ultimately she did not take the $20,000 speaking fee, settling for her standard, much smaller amount and a commercial flight. She told the executives that trade agreements were protecting corporations at the expense of poor people, keeping pharmaceutical prices high and access to food difficult.
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A spokesman for the trade representative’s office, Matthew McAlvanah, took issue with
Ms. Wallach’s account.
Mr. Froman “doesn’t recall Ms. Wallach from law school,” he said. “He does remember that she attended a Citigroup meeting but that her demands for a private jet and an exorbitant speaker fee were rejected. She participated anyway.”
Their last one-on-one meeting took place three years ago, when he was Mr. Obama’s emissary to the Group of 20 and Group of 8 international economic organizations. The meeting was cordial but unproductive, she said. Late last year, Mr. Froman attended a meeting of liberal and labor groups to pitch fast-track status and the Trans-Pacific
Partnership negotiations, running into Ms. Wallach again.
“He had his head handed to him,” she recalled.
The Trans-Pacific Partnership would be the most significant trade deal since the North
American Free Trade Agreement of 1993, linking nations representing 40 percent of the world’s economic output.
Many of those negotiating partners — especially Japan — have said they cannot agree to enter the partnership unless Congress grants the president trade promotion authority, which would allow Congress an up-or-down vote on the final accord without the right to amend it. Without such authority for the president, negotiators would be afraid to sign off on an agreement, only to see it muddied by Congress.
“If they like the trade agreement, they like Mr. Froman,” said Senator Richard Durbin of
Illinois, the Senate’s No. 2 Democrat and a skeptic on free-trade agreements. “The critics say he is too secretive, and I think the administration is trying to change that now.”
Ms. Wallach said she offered advice to her old adversary a year ago that he should have taken: Publish the text of the trade agreement. If the accord was so great, then everyone should be able see it, she says she told him. Otherwise, people would believe what they wanted to believe. He declined, much to her advantage.
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“If I was the White House, I wouldn’t want him on the Hill anymore,” she said, with some good cheer. “For obvious reasons, I’m for having him there every day.”
Pakistan offers Afghanistan, Iran trade agreements
The Nation (PaquistãoArgentina)
Pakistan has offered Afghanistan and Iran to sign Preferential Trade Agreement (PTA) and Free Trade Agreement (FTA) respectively in a bid to increase the country’s trade volume.
“Pakistan has offered Afghanistan to sign PTA and Iran to FTA. The trade agreements, when signed, would increase the country’s trade volume and put positive impact on the overall economic situation of the country”, said Commerce Minister Khurram Dastgir
Khan in a statement. The Commerce Ministry is taking every step to increase the regional trade as per directives of the Prime Minister Nawaz Sharif, he added.
“Prime Minister had visited different countries of the region with desire of building relations on long-run basis”, the Commerce Minister remarked. He said, “I had visited recently Afghanistan and Iran to discuss the long-lasting trade issues”.
Paraguay and Uruguay ministers to discuss recovering paralyzed Mercosur
Merco Press (Uruguai)
Following on the lead of Uruguay's new government, Paraguay has also demanded
Mercosur returns to its roots and original objective with free circulation of goods and no obstructions of any kind or impediments such as tariff barriers. The five countries group has been paralyzed and negotiations for an encompassing cooperation and trade agreement with the European Union remain stalled. “We must coordinate policies that hopefully return Mercosur to its original objective and the reason for its creation, which was an important geographic space, with free circulation of goods, with no obstructions
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or tariff or semi-tariff barriers, mainly those referred to intra trade”, said Paraguay's foreign minister Eladio Loizaga.
The official statement comes ahead of his Uruguayan peer Rodolfo Nin Novoa, visit to
Paraguay on Tuesday, who since the government of Tabare Vazquez took office last
March in Montevideo has strongly demanded Mercosur gets back on its tracks and admits its mistakes, to ensure it can fully integrate to the world, and not end isolated from the main trade flows.
Uruguay is keen on having Mercosur make more flexible the clause that impedes member countries sign agreements with third parties, unless there is a unanimous support. This means Argentina or Brazil by not supporting can stop such a move.
Apparently Loizaga is of the idea that the World Trade Organization agreement on facilitating trade be incorporated in the framework of Mercosur thus helping to promote trade and competitiveness.
Loizaga mentioned that the European Union also has its problems in reaching an agreement with Mercosur, since the “tariff-reduction proposals” to be exchanged are still pending because Europeans are discussing about some sensitive products.
“We're waiting for their proposals; the EU are holding discussions on their final proposal because of some very sensitive products, but hopefully this can be overcome during the first half of this year”, said the Paraguayan minister.
A former Paraguayan foreign minister and currently advisor on trade issues, said that it is evident Mercosur can't advance when its major partners, “Argentina and Brazil are experiencing great difficulties”, which helps to understand why the trade accord with the
European Union had remained stalled for sixteen years.
“Mercosur is facing great difficulties. If the large partners have difficulties obviously the group can't advance, can't function and we must work to rescue Mercosur so it recovers”, said Jose A Moreno Ruffinelli.
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The former minister also regretted that the block made up of Argentina, Brazil, Paraguay,
Uruguay and Venezuela has been unable to sign the so called macroeconomic
convergence agreement at Central banks' level. “An initiative that will help avoid the
currencies devaluation situation, but we have been talking about the issue since the
foundation of Mercosur back in 1991 to no avail”.
Ruffinelli finally recalled that EU and Mercosur negotiations seem to be in a dead-end
alley, as was described by the European Trade Commissioner Cecilia Malmstrom who
recently visited Paraguay.
“Despite the willingness from both sides to seriously address negotiations, the proposals
on tariff reductions from the two sides regarding services, goods, investments and
government appropriations remain in a limbo, because of strong sector interests”,
concluded Ruffinelli.
III. OUTROS
Brazil’s Real Climbs as Higher Rates Seen Attracting Investors
Bloomberg (Reino Unido)
Brazil’s real rose for a fifth straight day amid speculation the central bank will raise
borrowing costs by another half-percentage point this week, making local assets more
attractive to international investors.
The real gained 1.2 percent to 2.9170 per dollar at the end of trade in Sao Paulo, an
eight-week high. The rally that began April 20 is the longest since June 2014.
Buying the real with borrowed dollars has returned 11 percent this month, the most
among the 31 major currencies tracked by Bloomberg after the ruble. The real climbed
Monday as analysts forecast that Brazil will lift the target lending rate on April 29 by 50
basis points for a fourth straight meeting to curb above-target inflation. The Federal
Reserve, meanwhile, is expected to hold borrowing costs steady that day as U.S.
economic growth shows signs of slowing.
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“While traders anticipate a 0.5 percentage point hike from the Brazilian central bank, weak economic data in the U.S. in past weeks increase the uncertainties on the timing of the first Fed rate hike,” Joao Paulo de Gracia Correa, a trader at Correparti Corretora de
Cambio in Curitiba, Brazil, said in a telephone interview. “This is helping the real as it makes it more appealing to international investors. Carry traders are back in.”
Volatility Risk
One-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, remained the highest among 16 major tenders, raising the risk of so- called carry trades in which investors buy higher-yielding currencies with money borrowed in countries with low interest rates.
The real climbed 3 percent last week as concern eased that allegations of corruption at
Petroleo Brasileiro SA would lead to a junk credit rating for the South American nation.
The state-controlled oil company avoided an acceleration of its debt payments and paved the way for renewed access to financial markets when it published its first audited results since August.
Nomura Holdings Inc. exited a bet that the Brazilian currency would fall against the
Mexican peso, posting a loss of 2.6 percent, or $133,000.
“The positive market reaction in the last four days -- both before and after the Petrobras statement release -- has strengthened the real in a way we did not expect,” Nomura analysts Joao Pedro Ribeiro and Benito Berber wrote in a research note to clients.
Swap Rates
Swap rates, a gauge of expectations for Brazil’s borrowing costs, declined 0.17 percentage point to 13.25 percent on the contract maturing in January 2017. They increased 0.25 percentage point last week.
Brazil’s benchmark lending rate is at a six-year high of 12.75 percent after the central bank raised it at the past four meetings. Traders project that policy makers will lift the
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so-called Selic by a half-percentage point April 29, matching the three previous increases.
While analysts surveyed by the central bank forecast that gross domestic product will contract 1.1 percent this year, they expect 8.25 percent inflation, exceeding the upper limit of the official target range.
The central bank extended the maturity of currency swap contracts worth $517.8 million
Monday. Brazil halted at the end of March the sale of the swaps, which supported the real and limited import price increases.
Brazil's Odebrecht ponders sale of renewables stakes - report
See News (EUA e Europa)
The energy subsidiary of Brazilian builder Odebrecht SA is considering divesting stakes in certain renewable energy plants to foreign partners in a move that would bring in funds for its expansion in Latin America.
Sao Paulo-based developer Odebrecht Energia is holding talks on the matter with four international pension funds, but has not yet appointed advisors because the plan is still being discussed by the board of directors, chief investment officer (CIO) Felipe Jens told
Bloomberg. Jens was cited as saying that the particular funds are interested in the firm’s wind, biomass and hydroelectric stations.
Odebrecht Energia is seeking a partner in view of the limited financing resources in
Brazil, the CIO explained. He believes that this is the right time to part with some green assets given that most of them have just been completed.
The company currently has 2.4 GW of installed capacity in Brazil. It is developing a 240-
MW wind park in the northeastern part of the country and may expand the existing 108-
MW Corredor do Senandes wind farm in southern Brazil by 70 MW, according to the report. In addition, it plans to expand its of biomass power capacity to 854 MW from the current 738 MW.
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Carlyle to pay $600 mln for Brazil's Rede D'Or stake - source
Reuters (EUA)
Private-equity firm Carlyle Group LP agreed on Monday to pay 1.75 billion reais ($600 million) for a stake in Rede D'Or São Luiz SA, Brazil's largest hospital chain, a source with direct knowledge of the deal said.
Washington, D.C.-based Carlyle acquired the stake through a capital increase, with controlling shareholder and Chairman Jorge Moll and Grupo BTG Pactual SA agreeing to being diluted to welcome their new partner, said the source, who requested anonymity since terms of the deal remain private.
Under the terms, BTG Pactual's stake will be reduced to 23.5 percent from 26.5 percent, with the Molls controlling about 68.5 percent. The Carlyle investment values Rede D'Or, which Moll founded in 1977, at around 19 billion reais, or 10 times the size when BTG
Pactual agreed to become a shareholder late in 2010, the source added.
The source said Carlyle agreed to pay about 11 times estimated annual operational profits for this year, below the 12 times and 17 times average multiple seen in healthcare deals in the Americas, according to Thomson Reuters data. In the first quarter, healthcare industry mergers and acquisitions was the most active sector worldwide, with
609 transactions worth $110 billion, the data showed.
Brazilian hospitals and health clinics are drawing strong interest from global buyout firms like Carlyle in the wake of a January government decision allowing foreign ownership of those facilities. While the hunt for assets is already under way, most funds want to understand the particulars of the market before making a move, bankers, lawyers and investors familiar with those plans told Reuters recently.
The purchase of the Rede D'Or stake gives Carlyle direct exposure to a sector that accounts for 10 percent of Brazil's gross domestic product but is grappling with ageing infrastructure, a dearth of qualified staff and rising costs. Rede D'Or, which operates 27 hospitals in four Brazilian states, last year had revenue of 5.5 billion reais and earnings before interest, tax, depreciation and amortization of about 930 million reais.
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In a statement released shortly after Reuters reported the deal, Carlyle said it used funds from its Carlyle Partners VI, Carlyle South America Buyout Find and a local investment vehicle it raised jointly with state-controlled Banco do Brasil SA. Rede D'Or will use the money to finance expansion.
"This partnership with Carlyle Group is another achievement for Rede D'Or and is aligned with a long-term strategy in the Brazilian hospitals market ... allowing us to accelerate our quality improvement plans and expand geographically," Moll said in the statement.
The transaction is expected to close by the end of the quarter, the source added.
Industry leaders expect private equity involvement in Brazil's hospital industry to help restore profitability. Returns have stayed near record lows for the past two years due to high inflation and strained capacity, which the rapid expansion in health plan membership in the last decade only worsened, according to Anahp, a group representing private hospitals.
To ease the existing mismatch between supply and demand for hospital services, an additional 13,000 hospital beds are needed by 2017, Anahp data showed. Some funding for that increase, which could cost 7 billion reais, could come from private equity money.
Before President Dilma Rousseff's decision to end the ban on foreign ownership in the sector, foreign investors could only gain exposure to Brazilian hospitals and clinics by buying health insurers the way UnitedHealth Group Inc did in 2012, when it paid $4.9 billion for Amil Participações SA.
Carlyle hired Bank of America Merrill Lynch; JPMorgan Chase & Co; Skadden, Arps, Slate,
Meagher & Flom LLP; and Mattos Filho, veiga Filho, Marrey Jr & Queiroga Advogados to advise on the deal. Rede D'Or was advised by BTG Pactual, the largest independent investment bank in the emerging markets, and law firms Barbosa, Mussnich & Aragão and Kirkland & Ellis LLP.
$1 = 2.915 reais (Additional reporting by Stephen Eisenhammer; Editing by Richard
Chang)
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