Tag Archives: free trade

TRADE POLICY: OBAMA vs ROMNEY

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International trade is vital to our economy, so much of the debate in the upcoming Presidential election has surrounded the candidates’ foreign trade policies. President Barack Obama (D) and his challenger, Governor Mitt Romney (R), have each publicly stated support for free trade; however their trade philosophies are very different.

 

President Obama introduced the National Export Initiative (“NEI”) in 2010 and stated his goal of doubling exports over the following five years.[1]The U.S. is currently on track to not only reach, but also to exceed this goal with a current annual increase in exports of 16%.[2] Although President Obama has not opened any new trade negotiations, he has worked with Congress to pass three free trade agreements that were previously languishing:  Panama, South Korea, and Colombia.[3]  The Obama administration has also participated in negotiating a trade pact with Pacific nations known as the Trans-Pacific Partnership (TPP).[4]  Although he acknowledges and supports the necessity of international free trade, President Obama still endorses the need for Americans to “Buy American”.[5]

 

Governor Mitt Romney has been thorough in outlining his foreign trade policies, a main objective of which is to create a “Reagan Economic Zone”, similar to that which President Reagan attempted during his presidency.[6]  Gov. Romney anticipates that the Zone would standardize practices and create a network of “like-minded” nations that are committed to free enterprise and open markets.[7]    According to Romney, “for every $1 billion in U.S. exports, another 5,000 jobs are created in the U.S.”.[8]  Thus, continued pursuit of current and new trade agreements will help stimulate the economy.

 

China is a hot topic for trade, and it is one of the key points for both Romney and Obama’s campaigns.  Among Romney’s objectives is the decision to take Chinese businesses to court and litigate against unfair trade practices, as well as declaring China a “currency manipulator”.[9]  In contrast to Gov. Romney’s stance, President Obama has never openly reprimanded China for manipulating its currency to fit its needs; however, the President’s administration has litigated unfair trade cases against China.[10]

 

The purpose of this blog post is solely to help inform our readers and not as a means of endorsing either candidate.  We hope that all our readers will be better informed to make the decision on November  6, 2012 that best fits their values and beliefs.

 

For more information on the 2012 Presidential Candidates please visit the links referenced in this post or the nominees’ websites directly at http://www.barackobama.com/ and http://www.mittromney.com/. For more information on the 2012 Presidential Election, how and when to vote visit http://www.presidentialelection.com/.

[1] U.S. Dept of Commerce, International Trade Administration: National Export Initiative http://trade.gov/nei/nei-introduction-state-of-the-union-012710.asp

[4] Executive Office of the President, Office of the U.S. Trade Representative: The U.S. in the Trans-Pacific Partnership http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/united-states-trans-pacific-partnership

[5] Business without Borders: Trade Off, Obama vs Romney on the politics of foreign trade http://www.businesswithoutborders.com/industries/importexport/trade-off/

[6] Mitt Romney’s Campaign Website: Issues, China & East Asia http://www.mittromney.com/issues/china-east-asia

[7] Id.

[8] Business without Borders: Trade Off, Obama vs Romney on the politics of foreign trade http://www.businesswithoutborders.com/industries/importexport/trade-off/

[10] Business without Borders: Trade Off, Obama vs Romney on the politics of foreign trade http://www.businesswithoutborders.com/industries/importexport/trade-off/

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Free Trade Agreement Series: Part 5- Peru and Colombia FTAs

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As the US seeks to reap the benefits of free trade throughout the world, it is imperative that agreements are reached with our regional trading partners. The past two administrations have secured Free Trade Agreements with multiple Central and South American countries. Agreements with both Peru and Colombia were signed in 2006; however, the ratification process was not the same for both agreements. The US-Peru Trade Promotion Act (US-Peru TPA) was ratified on December 14, 2007 and entered into force on February 1, 2009[1]. On the other hand, the US-Colombia Trade Promotion Agreement (US-Colombia TPA) was ratified by Congress on October 12, 2011 and has not yet entered into force.[2]

Both nations previously benefited from the Andean Trade Promotion and Drug Eradication Act (ATPDEA), but in a very unusual twist, even after the US-Peru TPA entered into force, ATPDEA benefits for Peru continued to apply for some time (see our earlier Free Trade Agreement Series Part 3 for details).

As of this writing, Colombia still enjoys preferential treatment from ATPDEA, pending implementation of the US-Colombia agreement.  Like all other Free Trade Agreements other than that with Peru, once the Colombian agreement enters into force, ATPDEA benefits for Colombia will immediately end.  As an example of the effect of this, imagine an importer of suits and garments from Colombia now using Peruvian woolen cloth.   Prior to these FTAs being implemented, cumulation rules allowed them to claim ATPDEA benefits and full duty free treatment when importing to the US, since all of the labor and material was ATPDEA regional. However, a year after the Peruvian FTA entered into force, this importer could no longer use Peruvian wools and still claim ATPDEA preferential treatment since Peruvian fabrics were stripped from all their ATPDEA benefits.  The garments would now have to be duty-paid, even though all of the labor and components come from duty-free origins.

While it is true that the US-Colombia TPA has not yet entered into force, the agreement is expected to do so once the Colombian government meets certain requirements later in 2012.  This could happen very quickly, so those who import from Colombia, especially textiles that will all become duty-free once the agreement is implemented, be forewarned that ATPDEA benefits will end for Colombia when the US-Colombia TPA enters into force.  This means that any other ATPDEA content (Ecuadorian) would be excluded from duty free treatment if imported via Colombia.  Be prepared to claim for preferential treatment under the US-Colombia TPA, which will require different filing procedures than you are now accustomed to.

Here is a link for claiming preferential treatment under US-Peru TPA: http://export.gov/FTA/peru/eg_main_017979.asp

There is currently no similar link to the US-Colombian TPA since the agreement is not yet in force.

Finally, for those of you currently seeking a “short supply” finding for fibers, yarns, and fabrics not available in commercial quantities in a timely manner, note that the review and approval process of Committee for the Implementation of Textile Agreements (CITA) takes several months to complete. The US-Colombia TPA may already be implemented by the time CITA determines whether or not any newly requested fabrics could be added to the ATPDEA short supply list.  If this becomes the case, these fabrics would not qualify for preferential treatment anymore.  A new and different Commercial Availability request process will be required. Since there are yet to be published any CITA procedures for the US-Colombia TPA here is a link to the US-Peru TPA CITA procedures:

http://otexa.ita.doc.gov/fr2008/comavperuip(08-09).htm

We are assuming that the Colombian FTA procedures will be similar to those immediately above applicable to Peru.  We are already prepared to immediately file short supply requests for some clients upon implementation of the agreement.

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Free Trade Agreement Series: Part 2- Importer Requirements Under NAFTA

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Having originated nearly 20 years ago NAFTA, is a well established free trade agreement that continues to have a significant impact on importers and exporters.  In efforts to open global markets to U.S. businesses, the U.S. government has entered or is planning to enter into fourteen other free trade agreements and promotions.   The most recent agreements include the Colombian FTA, the KORUS (Korea) FTA, and the Panama TPA.

With these new FTAs comes the need to revisit basic principles of NAFTA in order to better understand the rules and regulations these new FTAs will impose on exporters and importers.  Throughout the next few weeks, this series on FTAs will delve not only into NAFTA requirements, but will move on to discuss the implications on free trade that other FTAs have had and will have on the U.S. trade community.

In last week’s entry we discussed the requirements for exporting goods to Mexico or Canada (“NAFTA Countries”).  Importing requirements are similar in some ways, but in order to ensure preferential duty, you should be aware of the significant differences.  In the U.S., the rules governing NAFTA importers are set forth in 19 C.F.R. 181 Subpart C* and 19 U.S.C. Chapter 21.

  • Declaration = A declaration must be made seeking duty free treatment for importing goods into the US. The declaration must include as a prefix the symbols “CA” if your product is from Canada, or “MX” if it is for Mexico.  Generally, this declaration will be based on the Certificate of Origin (this is the same document, CBP form 434, as that referenced in the exporter post last week. http://forms.cbp.gov/pdf/CBP_Form_434.pdf
  • Any errors on the declaration and/or Certificateof origin should be corrected in writing within 30 days of the mistake being discovered, and any change in duty must be paid.
  • Records and Submissions = Importers must maintain all importation documents pertaining to their product, including a copy of the Certificate of Origin, for five years after the entry of the goods.  Such documentation must be provided to the port director upon request (within 4 years of the date on the Certificate) and must include:
  1. CBP Form 434 signed by exporter or exporter’s authorized agent
  2. Be completed in English or have an English translation if prepared in the language of the actual Country of Origin
  • The Certificate and Declaration may be applicable to single or multiple importations occurring within a specific period of time set forth by the exporter or producer but not to exceed 12 months.
  • Acceptance = When the Certificate is accepted by the port director as valid, the acceptance will result in the imported goods being granted preferential treatment.
  • Certificate Not Required When=
    1. The port director is satisfied that the product is NAFTA qualified and waives the Certificate requirement
    2. The importation of the product is non-commercial
    3. The total value of the originating goods does not exceed US$ 2,500.  In this instance; however, your invoice must be included with the following signed and dated statement:

“I hereby certify that the good covered by this shipment qualifies as an originating good for purposes of preferential tariff treatment under the NAFTA.”

  1. The statement must indicate whether the signatory is the producer, exporter, importer, or agent.
  • Failure to comply with regulations may result in the cancelation or denial of preferential treatment for your product.

* http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=707af3099083c027393664c26eeb50ca&rgn=div6&view=text&node=19:2.0.1.1.25.3&idno=19

**http://www.law.cornell.edu/uscode/text/19/chapter-21

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