A Few More Steps in the Right Direction for U.S. Exports

By Greg Slater, director of Global Trade and Competition Policy at Intel

Just several weeks after Congress approved the U.S./Korea free trade agreement (FTA), our third FTA with a country in the most dynamic region of the world, the Asia Pacific Economic Cooperation (APEC) announced a number of major market access commitments. As this year’s host to the other 20 APEC member economies, the U.S. Administration spear headed some of the critical 2011 developments. The following are of particular interest to Information and Communications Technology (ICT) companies like Intel:

Innovation Policy:APEC member economies agreed to implement 14 principles to promote effective, non-discriminatory and market driven innovation policy. More than 35 countries have developed national innovation plans, yet many government officials fail to understand that innovation cannot be managed or mandated. The APEC policy principles help ensure innovation is properly incentivized without distorting trade flows. They address critical ICT issues such as (i) promoting voluntary, market led, global standards; (ii) ensuring that governments leave the terms of technology transfer to agreement between private parties; and (iii) avoiding undue limitations on technologies that use spectrum.

Expanded Information Technology Agreement (ITA):APEC committed to “Play a leadership role in launching negotiations to expand the product coverage and membership of the WTO Information Technology Agreement.” Studies indicate that an expanded ITA could remove tariffs on an additional $800 billion in global ICT trade, with over $122 billion in U.S. ICT trade affected.

Cross Border Privacy Rules:The 21 economies endorsed the APEC Cross Border Privacy Rules to reduce barriers to information flows, enhance consumer privacy, and promote interoperability across regional data privacy regimes. My colleague, Brian Huseman, provides more detail in a post below.

Health and Aging Policy:APEC also will “encourage efforts to develop Age Friendly Economies using innovative policy, practices, and technologies to support healthy lives” and reduce tariffs and eliminate non-tariff barriers, including local content requirements, which distort trade on environmental goods and services.

How valuable are these commitments? APEC economies include 2.7 billion consumers, account for 44 percent of world trade, and represent 55 percent of global economic output (more than $35 trillion in 2010). Six of America’s 10 largest trading partners are in APEC.

Although APEC commitments are not binding, they provide the foundation for an eventual Free Trade Area of the Asia-Pacific (FTAA) Agreement. Another precursor to an FTAA is the negotiation of the Trans-Pacific Partnership (TPP) Agreement by nine APEC economies. On the sidelines of the APEC summit last week, those nine economies announced a framework for an ambitious agreement.

The TPP agreement is different from other FTAs. It is unique in that it is designed to be a living or working agreement to allow it to effectively address trade issues that emerge in the future, a critical feature given the rapid pace of globalization and technological developments.

The agreement covers subjects that are not typically addressed in FTAs, such as ensuring internet data flows and a more level playing field related to competition with state-owned enterprises. And, other countries will to be able to sign onto it at a later stage. Japan, the third largest economy, has already indicated an interest in joining the TPP.

These APEC and TPP developments bode well for companies like Intel that depend heavily on revenues generated overseas to maintain a strong manufacturing base and associated jobs here in the United States. Intel is encouraged by our government’s accelerating efforts to ensure and expand market access for American goods and services.

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