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ABOUT THE AUTHOR : DOUG PALMER

Doug Palmer has been a reporter in Washington for more than three decades and
has been covering trade for more than 20 years. He has been senior trade
reporter at POLITICO since 2013. He helps produce the Morning Trade newsletter
each morning, and has covered trade negotiations and disputes with China, the EU
and all regions of the world.


WEEKLY TRADE - POLITICO ARCHIVE


 * MONDAY, 4/11/22


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 * View the Full Weekly Trade Archives »


 * MOST READ


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 5. 5 CRUCIAL DECISIONS AS JAN. 6 INVESTIGATION REACHES FINAL STAGE




BIDEN TO DISCUSS UKRAINE WAR, IPEF WITH MODI

By DOUG PALMER 

04/11/2022 10:00 AM EDT

With help from Graham Lanktree, Emilio Casalicchio and Laurens Cerulus



QUICK FIX

— The leaders of the world’s two largest democracies — Indian Prime Minister
Narendra Modi and U.S. President Joe Biden — will hold a virtual meeting today
to talk about the war in Ukraine and other issues including the Biden
administration’s proposed Indo-Pacific Economic Framework, White House
spokesperson Jen Psaki said in a statement.

— Biden spoke Friday with South African President Cyril Ramaphosa, whose country
— like India — has tried to avoid punishing Russia for its brutal war. At the
same time, both South Africa and India want the U.S. to agree to waive patent
rights for Covid-19 vaccines as part of deal currently being negotiated at the
World Trade Organization.

— USTR’s readout of a meeting Friday morning between U.S. Trade Representative
Katherine Tai and the EU’s digital affairs chief Margrethe Vestager gave little
indication of any trade frictions between the two sides, despite American
business community concern that the EU’s Digital Markets Act unfairly targets
big U.S. tech companies.

It’s Monday, April 11. Welcome to Morning Trade. According to my 1974 Popular
Science Homeowners Guide, today is a good day to think about mowing your lawn
for the first time this spring. Right on time, my yard looks like it needs it.
And I definitely did think about it.

Send us your news: soverly@politico.com, gbade@politico.com and
dpalmer@politico.com.


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DRIVING THE DAY

BIDEN, MODI TO DISCUSS UKRAINE, IPEF: India, which is heavily reliant on Russia
for energy and military equipment, has not joined the United States and other
Western economies in imposing sanctions on Moscow and has tried to remain
somewhat neutral in the conflict. However, U.S. officials have been courting
India’s cooperation in recent weeks.

The leaders’ meeting coincides with the fourth U.S.-India 2+2 Ministerial
Dialogue, also being held today. That will be led by U.S. Secretary of Defense
Lloyd Austin and Secretary of State Antony Blinken and their Indian
counterparts, Defense Minister Rajnath Singh and External Affairs Minister
Subrahmanyam Jaishankar.

The China card: The hardest issue India now faces is how quickly it “can be
helped by the rest of us to get out of these legacy relationships,” whether it's
their dependency on certain kinds of oil and other energy products from Russia
or military equipment, Victoria Nuland, under secretary of state for political
affairs, told NPR.

Nuland said one point she stressed to Indian officials on a recent trip to New
Delhi is “Russia is increasingly aligned with China. So should India come into
conflict with China, it can't count on Russia being in its corner.”

Deputy National Security Advisor for International Economics Daleep Singh also
visited New Delhi in late March to discuss the U.S. sanctions on Russia and how
the two countries could cooperate on addressing global food insecurity and
global energy prices.

More importantly perhaps for Morning Trade readers, “Singh and his counterparts
also advanced ongoing discussions about the development of an Indo-Pacific
Economic Framework,” the White House said in a readout.

Will India be in the IPEF?: The Biden administration still has not identified
which countries will participate in the IPEF, although talks could potentially
begin next month.

The proposed deal is not like a traditional free trade agreement since the Biden
administration has ruled out offering any U.S. tariff cuts to entice other
countries to make meaningful commitments in areas including labor; environment
and climate; digital economy; agriculture; transparency and good regulatory
practices; competition policy; and trade facilitation.

It also will be jointly negotiated by USTR and the Commerce Department, and
countries can choose which of four modules to join. The three spearheaded by
Commerce Secretary Gina Raimondo are clean energy, supply chains, and tax and
anti-corruption, with everything else jammed in USTR Tai’s module on “fair and
resilient” trade.

India’s participation in one or more of the four sections would raise new
questions about what the proposed agreement could achieve and whether New Delhi
would go the distance to become part of any final deal.

Tai, in testimony before the Senate Finance Committee, recently described the
U.S.-India relationship as both “strategically important” and “quite
challenging.” She will meet on Tuesday with Jaishankar, who is in Washington for
the 2+2 ministerial.

India was part of the lengthy talks on the Regional Comprehensive Economic
Partnership, but opted out of signing the final agreement. That pact includes
China, Japan, South Korea, New Zealand, Australia and the 10 members of the
Association of Southeast Asian Nations.

New push with EU: Talks between the EU and India on a free trade agreement
stalled in 2013, after six years of negotiations, although both sides agreed
last year to pick them up again. India also recently signed an interim trade
deal with Australia and is in talks with the U.K.

Still, India’s reluctance to take on binding new multilateral commitments at the
World Trade Organization has long frustrated the United States. New Delhi also
is a leading opponent of “plurilateral” deals being negotiated among subset of
WTO members to get around the ability of a small group of countries to block any
agreement from being reached.

Two-way trade between the United States and India has more than doubled over the
past 10 years, reaching more than $110 billion in 2021. However, the U.S. trade
deficit with India has also more than doubled over the same period to $33
billion last year.

BIDEN TOUCHES BASE WITH SOUTH AFRICAN LEADER: Biden’s virtual meeting with Modi
today will be his second contact in just a few days with the leader of another
country involved in delicate negotiations in Geneva over whether to waive patent
protections for Covid-19 vaccines. The first was with South Africa President
Cyril Ramaphosa on Friday.

The back-to-back calls come as the Biden administration is facing bipartisan
criticism over its handling of the Covid-19 vaccine patent negotiations.
Republicans in particular have raised concern the vaccine blueprints could be
shared with Russia and China since South Africa and India have joined with those
countries to establish the BRICS Vaccine R&D Center.

Both India and South Africa also abstained from last week’s vote to suspend
Russia from the United Nations Human Rights Council. It was the third time since
early March that South Africa had abstained from a U.N. resolution criticizing
Russia.

The view from SA: South Africa believes Russia’s invasion of Ukraine is a
violation of international law and also decries the humanitarian crisis caused
by the war, International Relations and Cooperation Minister Naledi Pandor told
reporters last week. But it does not think criticizing Russia at the UN will
help resolve the situation, she said.

Despite that disagreement, both the White House and Ramaphosa mentioned the
possibility of increased bilateral trade cooperation.

“I had a productive call with US President @JoeBiden earlier this evening,”
Ramaphosa wrote on Twitter. “As part of deepening relations, we agreed to set up
a team to strengthen trade, increase investment in infrastructure and work to
tackle climate change.”

TAI, VESTAGER DISCUSS TTC PREPARATIONS: The next meeting of the U.S.-EU Trade
and Technology Council will be held near Paris on May 15-16, the EU’s chief
digital affairs official, Margrethe Vestager, tweeted on Friday one day after
POLITICO reported the same.

She also told reporters after meetings with Tai and Raimondo that EU’s antitrust
regulators are “actively following up” on a complaint by European cloud players
who feel they are being boxed out by U.S. tech giant Microsoft.

The French company OVHcloud has accused Microsoft of abusive licensing terms,
while the German firm Nextcloud is concerned about the bundling of Microsoft’s
OneDrive products and services with the Windows operating system.

USTR stresses the positive: USTR’s readout of a meeting Friday morning between
Tai and Vestager gave little indication of any trade frictions, despite U.S.
business community concern that the EU’s Digital Markets Act unfairly targets
big U.S. tech companies.

Both Tai and Vestager “agreed that U.S.-EU cooperation in the Trade and
Technology Council has been excellent to date, and that this cooperation has
been instrumental to the strong, united transatlantic response to Russia’s
unjustified and unprovoked attack on Ukraine,” USTR said.

Spanish olive mystery: A readout of the meeting between Tai, Deputy USTR Jayme
White and Spanish Minister of Industry, Commerce and Tourism María Reyes Maroto,
did not mention a hard-fought dispute over U.S. anti-dumping and countervailing
duties on Spanish olives.

A WTO panel in November found that the Commerce Department violated global trade
rules in the way it calculated the final subsidy rate for one of the firms
involved in the case and by relying upon a provision of the Tariff Act of 1930
to attribute benefits to downstream agricultural processors. The panel also
found that certain factual findings related to Commerce’s specificity
determination were inconsistent with the SCM Agreement, according to USTR.

The United States agreed in December not to appeal the panel’s report, but it’s
still not clear what steps it is taking to comply with the ruling. A USTR
spokesperson did not respond on Friday to a question on that topic.

FINAL CALL FOR IPEF COMMENTS: The Biden administration’s public comment period
asking for advice on what should – and should not – be included in the proposed
IPEF deal ends today, in another sign that talks could begin soon.

The Regulations.gov website says that USTR had received over 1,000 comments on
its portion of the IPEF negotiations, although none seemed to have been posted
online as of Sunday. A smattering of comments from BSA | The Software Alliance,
the Motion Picture Association, Pharmaceutical Research and Manufacturers of
America and a few other groups have already been received and posted in response
to the Commerce Department’s separate request for input.

NEXT UP IN U.S.-U.K. TALKS: The second trade dialogue between the U.S. and U.K.
has been penciled in for April 25 and 26 in Aberdeen, Scotland, our London
colleague Graham Lanktree says he has been told by folks in the know. Sounds
like the perfect spot for officials to visit a distillery now that tariffs on
whiskey have been lifted on both sides.

U.K. to cut all tariffs on Ukrainian imports: The U.K. has pledged to cut all
tariffs on goods from Ukraine to help it rebuild after the Russian invasion.
British Prime Minister Boris Johnson made the promise during a surprise visit to
Kyiv over the weekend where he held talks with Ukrainian President Volodymyr
Zelenskyy.

The details of the tariff arrangement are still to be worked out, but U.K.
officials expect it to last around 12 months, our London colleague Emilio
Casalicchio reported. The move could put pressure on the EU and other western
nations to follow suit. Last week, a pair of U.S. senators urged Biden to lift
Section 232 tariffs on Ukrainian steel exports to the United States.

MORE COUNTRIES JOIN EXPORT CONTROL ACTION: Four more European nations — Iceland,
Liechtenstein, Norway, and Switzerland — are now part of a multilateral export
control  coalition aimed at denying Russia and Belarus access to cutting-edge
technologies. They join the United States, Australia, Canada, Japan, South
Korea, New Zealand, the U.K. and the 27 nations of the EU, the Commerce
Department said.

BIS publishes final rule: The department’s Bureau of Industry and Security has
issued a final rule making it even harder for Russia and Belarus to obtain
certain U.S. and foreign commodities, software and technologies.

The new regulation imposes “highly restrictive license requirements” on all
categories of items on the Commerce Control List. Those cover “almost any
sensitive dual-use technology, software, or commodities that could be used to
support Russia’s war effort,” BIS said.

The U.S. is effectively cutting off Russia and Belarus’ access to the items by
also applying a policy of denial to license applications, BIS said.


INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER,
RE-IMAGINED: Technology is always evolving, and our new tech-obsessed newsletter
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miss out, subscribe today.


INTERNATIONAL OVERNIGHT

— Texas Gov. Abbott’s plan to increase safety inspections of trucks carrying
goods from Mexico is raising concerns about the economic impact on border
communities, The Texas Tribune reports.

— USTR is seeking nominations to serve on the Intergovernmental Policy Advisory
Committee on Trade.

— The Commerce Department announced final anti-dumping duty rates on raw honey
from Argentina, Brazil, India, and Vietnam.

— South Korean trade minister nominee vows regulatory reforms, The Korea Herald
reports.

— Citigroup claws its way back into Saudi Arabia, The Wall Street Journal
reports.

— The EU is proposing to levy punitive trade tariffs on countries that do not
accept the return of citizens who have illegally entered Europe, as the bloc
steps up efforts to toughen its migration policy, The Financial Times reports.

— New Zealand's Prime Minister Jacinda Ardern will lead a trade mission to
Singapore and Japan later this month, Reuters reports.

— Growth in Australia’s exports to the United States has only partly eased the
pain of lost trade with China, The South China Morning Post reports.

— World food prices hit record highs amid the Ukraine war, POLITICO reports.

— EU bans Russian coal imports, POLITICO reports.


FOLLOW US ON TWITTER

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