TRADE
The USTR announced that the US will begin negotiations for free trade agreements (FTA) with Oman and the United Arab Emirates (UAE). These agreements will add to the FTA's the US already has negotiated with Israel, Jordan, Morocco, and Bahrain to work toward the goal of a US-Middle East Free Trade Area (MEFTA). The countries that would comprise MEFTA account for over $24 billion of US exports and are the 6th largest US export market. The US relationship with the UAE is the third largest in the Middle East, behind only Israel and Saudi Arabia. The US has a combined trading relationship of $5.6 billion and a trade surplus of over $2 billion with Oman and the UAE.
The Bush Administration is getting serious about its threat to exclude the Dominican Republic from the US-Central America Free Trade Agreement (CAFTA) over the country's recent imposition of a new 25% tax on soft drinks and other beverages containing high fructose corn syrup (HFCS). In a letter to House and Senate leaders, USTR Ambassador Zoellick said that he "would not recommend including the Dominican Republic in the legislation to implement CAFTA if the tax remains in place." Combined total goods trade between the US and the original five CAFTA countries was $23.6 billion in 2003. The addition of the Dominican Republic represents an additional $8.7 billion in annual two-way trade, for a combined total trade relationship of approximately $32 billion. USTR is working with the Dominican Republic to fix the tax on HFCS.
Included in the recently-approved Miscellaneous Tariff bill was the repeal of Section 801 of the Revenue Act ("the 1916 Act"). This Act had been ruled inconsistent with WTO obligations several years ago. Repeal had been difficult because several lawsuits were filed under the Act in recent years, including one that resulted in a multimillion dollar jury verdict. The 1916 Act is a little-used provision for addressing underpriced foreign products. Its repeal was necessary to bring the US into compliance by the WTO ruling.
The USTR has rejected a Section 301 petition filed against Chinese currency practices by the Congressional China Currency Action Coalition in September. The group of congressional members called on USTR to file a WTO dispute settlement case. In rejecting the case, USTR cited the progress that is being made through engagement between US Treasury and Chinese officials and stated its belief that a 301 action would be more damaging than helpful. USTR stated that pursuing such a case would undermine diplomatic efforts the Administration is pursuing to get China to changes its currency policies. The Administration has been lobbying China to changes its currency practices, but Chinese officials say they cannot allow the value of China's currency to be set in currency markets until they have made reforms in the country's banking and financial systems. The recently approved fiscal year 2005 Omnibus Appropriations bill, however, included language that instructs the Secretary of the Treasury to report on currency manipulation to the Committee on Appropriations, as well as to utilize the trade data of China's other trading partners in the analysis. This is an important victory for manufacturers. In the past, only the data provided by Chinese officials was used in the Secretary's analysis, and not that of China's other trading partners which will offer a better idea of actual economic statistics to determine how much China is undervaluing its currency. ENVIRONMENT
The Occupational Safety and Health Administration (OSHA) is proposing three standards that cover permissible exposure to hexavalent chromium, which is widely used in the metal plating industry and is produced when welding on stainless steel. In addition to lowering permissible exposure limit of the compound, the proposal includes provisions for worker protection, including preferred methods for controlling exposure, respiratory protection, personal protective equipment, recordkeeping, etc. OSHA wants to lower its PEL for the compound from 52 to 1 microgram per cubic meter of air as an 8-hour time weighted average, and is calling for engineering controls and respiratory protection for industry, construction and shipyard employees. The agency is under court order to solidify a new rule by January 2006, In 1976, the National Institute for Occupational Safety and Health unsuccessfully requested that OSHA create an emergency standard for the chemical.
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