“Trade officials report that negotiators from 22 nations on Wednesday reached an outline agreement on a new round of concessions under the Global System of Trade Preferences among Developing Countries (GSTP), following days of meetings at the Geneva headquarters of the UN Conference on Trade and Development (UNCTAD).

The draft agreement will be submitted to ministers from participating countries for discussion and approval at a meeting scheduled for 2 December. The ministers will be in Geneva for the WTO’s ministerial conference starting 30 November.”

The countries participating vary from Brazil to Zimbabwe, South Korea, Indonesia, and India, however South Africa and China are not participating.

Under the terms of the tentative accord, participating states would lower tariffs on exports of some 70 percent of each others’ agricultural and manufactured goods. These tariff cuts would not be extended to other countries. Once the deal is adopted, each country will draw up a list of products eligible for tariff cuts, and then submit them to other participants for negotiation and verification. The ‘margin of preference’ appears likely to be at least 20 percent below currently applied MFN tariff levels.

What this would mean in practice is that if India levied a 10 percent duty on car parts imported from the US, identical parts coming from Brazil would face a tariff of 8 percent or lower.

Although it could put US exporters at a disadvantage in these countries, importers who are already operating in any of these countries will see great benefits to the reductions in tariffs.

For example a apparel manufacturer that sources raw material from India for production in Indonesia, will still see the cost savings even though they may export their finished product to the EU or US. The key is intelligent low-cost country sourcing.

Read more at ICTSD:  Developing Countries Close to Deal to Boost South-South Trade

Free Trade Agreement White Paper: Best Practices to Achieve the Next Level of Savings from Free Trade Agreement Management Global Sourcing

Free Trade Agreement White Paper

This white paper addresses five best practices that will allow your company to fully take advantage of FTA opportunities:

• Establish a Supplier Management Program
• Implement Multi-sourcing Data Visibility
• Manage Supplier Communications with an Automated Solicitation Process
• Automate the Qualification Process
• Expand your FTA Portfolio

Learn more by reading the Free Trade Agreement white paper.

From the Journal of Commerce:

A successful trade preference program must be stable and predictable over a long term, the chief supply officer for Levi Strauss & Co. told the House Ways and Means Trade Subcommittee on Tuesday.

It should also have liberal rules of origin for raw materials, and once put in place, be allowed to continue unchanged, said Levi Strauss Senior Vice President David Love.

Love was the only importer among 18 government, trade, labor and humanitarian groups called to testify by Chairman Sander Levin, D-Mich., in the first step of a review of trade preference policy. The Senate Finance Committee will hold its own hearing on the subject on Thursday.

Love said that Levi Strauss had imported some 60 million units from Colombia under the Andean Trade Preference Act. The program was due to expire in 2006, and since then Congress has renewed it for only short intervals. As a result, Colombian imports have dropped to one or two million units.

“We cannot make commercial decisions based on three to six month timeframes,” Love said, “especially when orders are placed a year in advance.”

Read the complete summary of the hearing at the Journal of Commerce: Importer Calls for Stable Trade Preference Policy

“First, the criteria were intended to and have achieved four core goals: (1) strengthened the rule of law in beneficiary countries; (2) provided incentives for sensible policies and policy reforms; (3) promoted development; and (4) improved the operating environment for U.S. exporters in the beneficiary countries…”

- USTR General Counsel Tim Reif

Here’s my question:  In using these criteria, is there an intent to discriminate among countries?  (Putting aside the question of whether intent should matter under the relevant WTO non-discrimination standards, which is a separate issue).

On the one hand, it could be argued that the purpose of the criteria is to have every country satisfy the criteria, and thus meet the policy goals that have been set out.  Thus, the hope is that no one will be discriminated against.

On the other hand, it may not be realistic to expect everyone to comply.  Thus, there is likely to be a disparate impact, and this outcome is known with a reasonable degree of certainty.

To me, it sounds like there is an intent to discriminate, as trade policymakers know that certain countries will not comply with these criteria. Obviously not every country does satisfy the criteria and meet the 4 goals described above.

Most experts agree that this is incorrect and it’s actually too difficult to buy an “American” product as most of the items manufactured here are also created from components from other countries.

And, looking back to the Great Depression, protectionism (exemplified by the Smoot Hawley Act) only worsened the situation.

“Canadian Trade Minister Stockwell Day asked U.S. Trade Representative Ron Kirk today to “explore” such a deal, which would permit Canadian suppliers to continue to bid for U.S. local and municipal governments, despite “Buy American” provisions in the current U.S. economic stimulus plan. The two countries already have an agreement governing reciprocal access to government contracts on a federal level.

Although the idea has been widely discussed, this is the first time that the Canadian government has brought the idea directly to the Obama administration.”

Canada, as one of the largest trading partners with the US, is influencing the policymakers to at least encourage trade with our neighbors up north by including Canadian access to the federal stimulus contracts.

Am I the only one that’s lost here? So, buying from Canada is OK, but when we buy from Mexico, Central America, Europe, or anywhere else it hurts our manufacturers and eliminates jobs… mmmkayyy…

Read more at the Journal of Commerce: Canada Asks for Talks on ‘Buy American’ Issue

The Economic Community of West African States (ECOWAS), and the West African Economic and Monetary Union (UEMOA) encompass the entire West African region, with oil-rich Nigeria contributing to over half of  the $60.5 billion in trade between the region and the EU.

According to the Journal of Commerce,

The agreement between the EU and the entire West African region will cover trade in goods, some trade rules, and development cooperation. “The decision today has set us on the road to concluding a comprehensive trade partnership with the full West African region. … I am confident we can settle the remaining issues and move forward,” Commissioner Ashton said.

Global Trade Management Newsletter

Keep up with new developments in Global Trade, including trade agreements, landed cost updates, HS descriptions, denied parties list changes, import/export controls and more with the GTM Newsletter.