International Trade Agreements

Observations for Procurement Officials

Kay Alison Wilkie Economic Development Program Administrator Empire State Development/ NYS Department of Economic Development Member and former Chair, Intergovernmental Advisory Committee

International Trade Policy Context for States Federalism principles and the federal/state balance of power are involved in: • trade policy negotiations • trade and investment agreement implementation • dispute settlement • trade development for export expansion and • investment promotion programs.

Selected Trade Issues Relevant to States: • Terms and conditions for renewal of Trade Promotion

Authority and Trade Adjustment Assistance, approved this June by the US Congress.

• With TPA, Trans-Pacific Partnership Agreement (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations have intensified.

• Controversy related to TPP and TTIP negotiations: treatment of tobacco regulation, pharmaceuticals (intellectual property rights vs. drug pricing, formularies, regulations), market access for certain sectors, and investor-state provisions, notably related to dispute settlement.

More Selected Trade Issues: • The failure to reauthorize ExIm Bank lending

resulting in the bank’s closure to new business after 6/30/15, hence the expiration of essential financing for SME exports as well as large US corporate deals.

• Potential additional coverage of state/local government procurement in light of EU requests for inclusion in TTIP negotiations – note that 37 states are already covered in the WTO Government Procurement Agreement.

More about the Trade Policy Context • There is growing awareness by US businesses and

communities of intensifying global competition, esp. given manufacturing job losses and import increases.

• US trade policy, since WWII, has been predicated on US economic dominance and focused on import access. US led in decreasing tariffs, thereby granting access to US markets for other countries and advancing US foreign policy objectives.

• As other countries, often with high tariffs and market barriers, have grown in economic power and trade competitiveness (notably China, India, Brazil) and have granted selective market access through bilateral and regional agreements, the US pursues FTA and regional trade negotiations to avoid losing market access. The TPP and TTIP negotiations are indications of this compelling motivation.

States and Trade Policy • The traditional role: economic development agencies

providing trade development assistance to small and mid-sized firms, and working to attract international investment.

• A state focus on trade policy remains comparatively rare (dedicated staffing only in NYS and WA).

• Regarding trade agreements, negotiations or disputes, states’ executive agencies and legislators often advocate for expanded business access to global markets, and in some cases for protection of sensitive industries and interests (e.g. sugar; textiles; tobacco).

• Procurement market access issues may be subject to linkage with political as well as social objectives.

Guess When This Was Said: “The changes that the UR agreements will bring in US trade policy will require that the Federal Government enter a new partnership with state and local governments. This partnership will require establishing and funding adequate organizational capacity within the Federal Government to assist state and local governments in the implementation of the UR and other trade agreements.” 1994 IGPAC Report on “The Uruguay Round of Multilateral Trade Negotiations” submitted by Chair Governor Tommy Thompson

Do You Think That Capacity Was Created? Not so much. What does exist: the Intergovernmental Policy Advisory Committee (IGPAC) IGPAC, and other advisory committees, were created under the 1974 and 2002 Trade Acts to provide the President, USTR and Congress with reports expressing an opinion about whether and how the given agreement promotes US economic interests. Such advisory committee reports are due within 30 days of the President’s notification to Congress of the intent to enter into an agreement. IGPAC and other advisory committee reports are publicly available on the USTR’s website.

Federal-State Trade Policy Interface: • Very limited federal or state resources dedicated to assist state

agencies’ implementation of relevant agreements. • Lack of awareness by state officials existing trade and

investment agreement commitments made under prior administrations, and lack of policies or positions on such matters – due to partisan politics, and the absence of qualified trade policy staffing.

• Problematic gaps between federal agencies’ understanding of states’ concerns and states’ understanding of federal requests -- and between federal agencies’ needs and expectations, and states’ capacity and willingness to engage in trade efforts.

• Situation creates a disincentive for state support of trade liberalization. States participating in trade and investment agreements face legal, political and resource challenges – while states that refrain from participation avoid difficulties while their companies benefit as “free-riders” from international market access gains through such agreements.

IGPAC Recommendations: Improving Federal-State Trade Policy Consultations • Identified need to broaden and deepen an informed,

non-partisan trade policy dialogue beyond the present consultative context, and to improve federal-state cooperation related to trade agreements’ negotiation, implementation and dispute settlement.

• Since August 2004, suggested the USTR consider a comprehensive set of findings and recommendations per 8/5/04 memo, and updated these recommendations in subsequent IGPAC reports (all publicly available).

IGPAC & NASPO over the years • Pre-dating IGPAC representation: review of Uruguay Round

commitments pre-WTO GPA, Paula Moskowitz (NY) • 2004: addition of NASPO representation to provide

comment on procurement chapters in various FTAs and on GPA negotiations.

• Honor Roll: current rep Sherry Neas (ND); Kent Allin (MN); Walt Bikowitz (NY); Ron Bell (VA).

• 2014: NASPO (Sherry Neas) issued updated Int’l Trade Agreement guidebook with former USTR lead negotiator Jean Grier – very useful, detailed resource for procurement officials!

Procurement Market Access and International Trade • Progression of trade liberalization via World Trade

Organization Government Procurement Agreement (WTO GPA) and various procurement chapters in Free Trade Agreements (FTAs)

• Topic in current trade negotiations: TTIP-Trans-Atlantic Trade & Investment Partnership (EU demands); TPP-Trans-Pacific Partnership (federal government only so far)

• Sub-federal under greater scrutiny by trading partners, state legislatures and civil society

States and Procurement Coverage • Some states, including NYS cover their procurement under

the GPA and various FTAs (USTR maintains list, and NASPO Guidebook has link and detailed guidance),

• Objective: to improve their businesses’ access to international procurement markets.

• Given challenging and increasingly partisan trade policy environment, USTR has not reached out to states to request additional coverage of their procurement, despite EU demands for same in TTIP negotiations.

• Anecdotes…

Questions, Comments, Discussion • Resource for NASPO members in addition to IGPAC:

USTR-designated State Point of Contact (SPOC) on trade; economic development agency trade officials

• Other issues? • Many thanks to NASPO for the opportunity to

participate in this panel! • Contact info: Kay.Wilkie@esd.ny.gov; 518-292-5270