Using RCEP: High-Tech Electronics Manufacturing

Using RCEP: High-Tech Electronics Manufacturing

The electronics industry is one where RCEP stands to make a meaningful impact. In most cases, trade in consumer electronics is already tariff-free thanks to the World Trade Organization’s Information Technology Agreement (ITA), enacted in 1996 and updated in 2015. The ITA and ITA2 has provided duty or tariff-free access to a wide range of listed electronics products. It has helped underpin today’s digital economy as the agreement lowered costs for everything from laptops to mobile devices. While the agreements dropped tariffs on (mostly) final products, the inputs for these goods received fewer benefits. Many tariffs remain in place, adding a substantial burden to the countries and companies that manufacture high-tech consumer electronics. Though pre-existing agreements like the ITA have already eliminated most tariffs on final consumer goods, RCEP still stands to benefit the consumer electronics industry in the region. While consumer electronics are often assembled for the final consumer in factories in China, individual components might come from places like South Korea, Japan and ASEAN. Components themselves may be largely tariff-free, but this is not necessarily true of the hugely expensive inputs necessary for their production. An example can be found in flat display screen manufacturing equipment. Many of the world’s liquid crystal display (LCD) and next-gen organic light emitting diode (OLED) devices are manufactured in East Asian cleanrooms. LCD and OLED devices are semiconductor technologies used in modern display screens everywhere from laptops to smartwatches to fridges.

US Worker Centered Trade Policy Meets Global Competition

US Worker Centered Trade Policy Meets Global Competition

The United States has a new chief trade official. Katherine Tai was unanimously confirmed as the next US Trade Representative (basically trade minister). As USTR, Tai is expected to develop and execute US trade policies. The extent to which American policies on trade are adjusting remain to be seen. Thus far, Tai has been relatively quiet on her objectives, speaking only during her confirmation hearing. She has to hire her three deputies and a chief agriculture negotiator who will help flesh out and deliver policies. The early signs, however, suggest that potentially important changes are on the horizon. The key buzz word is that from now on, the US will pursue “worker centered” policies. It remains unclear what “worker centered” actually means. In practice, the phrase is likely to mean different things to different people. It will take cues from long-standing Democratic party objectives to support organized labor and environmental protection. These concerns have been embedded into a series of trade agreements for the United States, including the renegotiated NAFTA or USMCA. Tai took the lead role of shepherding the final USMCA document through Congress and building support from within Capitol Hill for the agreement. Her personal ability to forge bipartisan consensus on renewal helped with her smooth passage into her new role at USTR. US President Biden has suggested that trade agreements are not going to be part of American trade objectives in the near term. This suggests that worker centered policies will need to be anchored in something other than trade deals. Where might they be found? In large measure, it appears through enforcement. The US is likely to be giving extra scrutiny to US trade partners under various free trade agreements (FTAs) and other preference programs. It will also be looking hard at obligations and commitments made at the World Trade Organization (WTO) which have not been pursued with sufficient vigor by members. The US is also likely to change its position on a number of domestic policies. This includes an increasing use of “Buy American” policies and a probable review of US commitments under the WTO’s government procurement agreement and other similar chapters in existing FTAs.

Repost: Data is NOT Oil

Repost: Data is NOT Oil

Last night, I participated in another webinar on data. Multiple speakers used the term “data is the new oil.” It is not. I thought it might be useful to republish this piece from April 2019 on why data should not be compared to anything, because faulty analogies lead to flawed policy responses. Data is data. Not oil. Not, as the piece states, avocados or pears, not oxygen or fuel.…[Reposted content] He was specifically referring to a saying that “data is the new oil.” Such a description has become commonplace, especially among government officials. There is a reason why this description resonates. Oil helps lubricate the economy. Data, in a digital world, does something similar. Oil needs to be processed. On its own, oil has little utility. Data, in form of raw bits and pieces of information, has limited use. But as Søndergaard suggested, data is not like oil. For one thing, oil doesn’t go anywhere. It sits in the ground until it is brought up and used. It can be used all at once or just some at a time while the rest remains waiting. Oil can be stored forever (or at least for a very long time) without significant problems. Data, by contrast, is like an avocado. It has a clearly defined shelf-life. Data collected and used too early is pointless. Data harvested too late is often of no use at all.

How to Join the CPTPP

How to Join the CPTPP

Assuming the current members have no objection, the applicant country can proceed to file a formal request to join. This letter, as the UK has demonstrated, gets sent to New Zealand, as Wellington serves as the official repository location for the CPTPP. In the absence of a Secretariat, the CPTPP is managed through a rotating appointment of Commission Chairs. Japan is currently holding the post. (Mexico held it last year and Singapore is up for 2022. Both are serving as vice chairs of the Commission for 2021 to support Japan. The rotation is dictated by the order in which members joined the agreement.) A CPTPP Secretariat would make accession talks significantly easier. It would come with a built-in group of officials well versed in CPTPP rules and regulations, familiar with the existing membership and important sensitivities, as well as the current individuals for each member that are actively involved in various chapter activities. Secretariat staff could serve as neutral parties, shepherding new members through accession. Without a Secretariat, CPTPP accession will be started by the current chair. The chair will help members decide on the composition of a “working group” to manage the process. It may be that all aspiring members are grouped together into one working group or that members opt to hold separate working groups for each potential member. The chair of the working group(s) will be decided by members and the group(s) will include representatives from all active members. Accession to the CPTPP is not like launching FTA negotiations. The process is closer to that of joining the World Trade Organization (WTO). It will likely take some time to organize, as there is no sitting working group for members. New members are not negotiating over changes to existing rules. The nearly 600 pages of text need not be adjusted in accession. Instead, work will get underway on crafting new member’s specific schedules which include:

Setting Trade Policies in the Biden Administration

Setting Trade Policies in the Biden Administration

Of course, confirmation is only needed at the top. Restaffing the rest of the vacant posts, however, will also take some time. This includes restarting the pipeline for junior talent in various agencies. At the same time that staff are being rapidly hired or rehired, it will be important to figure out what these people are meant to be doing. Getting alignment on policy is always challenging. The Biden team inherits a disrupted trade and economic policy landscape as well. As Biden’s team members have been saying recently, it will take time to sort out policy priorities and determine next steps. This is particularly true for China policy, where some of the existing policies, like tariffs, are likely to remain in place while others might be adjusted, removed, or even toughened. Incoming staff members will need to spend time taking stock of what policies are in place, which have been partially implemented, which are clearly not working well, what impact any or all of these policies have had, and what opportunities and challenges remain. Biden has already called for a “worker centered” trade and economic policy objective. It remains unclear exactly how this outcome might be best met. Existing policies will need to be recalibrated to better fit revised goals.