Free Trade Agreements and Trade Barriers Skip Jones Deputy Assistant Secretary Trade Agreements and Compliance

1. Free Trade Agreements and Trade BarriersSkip JonesDeputy Assistant SecretaryTrade Agreements and Compliance December 7, 2011

2. Today’s Agenda • Free Trade Agreements: Trends and Benefits • New Trade Agreements: Korea, Colombia and Panama and Next Steps • FTA Benefits, Strategies and Requirements • Trade Agreements Compliance Program • Case Success: Kentucky Manufacturer of Speakers • FTA Resources on the Web • Resources and Contacts L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

3. Trends in Trade Agreements • The number of trade agreements worldwide is growing rapidly. • Most U.S. trading partners are engaged in free trade agreement (FTA) negotiations with partners around the world. • The WTO reports that as of 15 November 2011, some 390 FTAs have been notified, of which 211 are in force. • The WTO reports that all of its Members, with the exception of Mongolia, belong to at least one FTA. • Not all FTAs are created equal. L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

4. Why Trade Agreements with Korea, Colombia, and Panama? • Grow U.S. economy; support jobs. • Improve U.S. firms’ competitiveness. • Provide clear rules for doing business. • Make open trade a two-way street. • Overcome country-specific challenges. • Strengthen U.S. national security L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

5. Status of New Agreements • Agreements approved by respective legislatures • President Obama signed into law October 26, 2011 • Consultations to demonstrate legal/regulatory steps taken • President certifies foreign government compliance • Exchange of diplomatic notes/ Entry into force as soon as possible. L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

6. Trans Pacific Partnership (TPP) Negotiations • Broad-based, regional pact is in negotiation • Current negotiating partners: • Australia, Chile, Peru, Singapore (bilateral FTAs already) • Brunei, Malaysia, New Zealand, Vietnam (new) • Others expressing interest : • Japan, Canada, Mexico • Broad framework of agreement reached in November L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

7. Highlights : Korea Agreement Eliminates Tariffs and Improves Market Access • Address tariff and non-tariff barriers • Harmonizes tariff rates in trade with Korea • Increased access for U.S. autos • Further opens Korean market for U.S. service providers Codifies Rules for U.S. Exporters • New protections for U.S. investors • State-of-the-art protections for intellectual property • Expands access to Korean government procurement contracts • Improves transparency for all U.S. exporters, but especially for pharmaceutical and medical device industry L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

8. Highlights: Colombia Agreement • Harmonizes bilateral tariffs for consumer and industrial products • Improved market access for key U.S. farm products • Major market opening for U.S. services • Colombia will join the WTO Information Technology Agreement (ITA) • Puts U.S. exporters on equal footing with competitors L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

9. Highlights: Panama FTA • Levels playing field for manufactures • Greatly expand access to a highly protected agricultural market • Substantial commitments to liberalize services trade • Panama Canal Expansion • Improves U.S. competitiveness vs third country exporters L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

10. The New Agreements and U.S. Jobs • Increased goods trade alone means tens of thousands of high-paying American jobs. • U.S. services suppliers/workers will also benefit greatly. -- Panama as regional services hub • Significant infrastructure projects • Benefits to SME exporters • Better business climate, rules-based trade -- more stable and predictable -- positive U.S. employment effects L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

11. How will Kentucky Benefit? New Markets for Key Kentucky Exports , supporting KY Jobs Korea Chemicals, Machinery, Computers and Electronic Products Poultry/Eggs, Beef, Feed Grains, Soybeans and Products Significant new market access for services suppliers Colombia Chemicals, Computers/Electronics, Machinery, Plastics/Rubber Products Poultry/Eggs, Beef, Corn, Soybeans and Products, Tobacco Significant new access to a $134 billion services market Panama Machinery, Chemicals, Transportation Equipment, Computer/Electronic Products Poultry/Eggs, Beef, Corn, Soybeans and Products, Tobacco, Distilled Spirits Construction, engineering, logistics, transportation and other services

12. FTA Preferential treatment is not automatic. Be proactive! Know the Rules! Not taking advantage of preferential treatment can put you at a disadvantage compared to competitors & inaccurate claims of origin could result in penalties and fines. Determine the benefits of preferential treatment for your company - Determine product’s classification - Determine the product’s current tariff rate under the FTA Determine if your good qualifies – identify rules for the specific FTA Make a claim - Know what documents are required at time of importation - Ensure claims are accurate and you have appropriate supporting documentation - Know whether you will need a certificate of origin in a prescribed format or not, or if a certification is acceptable.

13. Be Prepared Customs officials can request additional information or conduct a verification after importation. Importers claiming preference must be prepared to submit, upon request by Customs authorities, additional documentation supporting their claim, or risk losing the preferential treatment Exporter/producer/importers must maintain all records necessary to demonstrate the good is originating for at least five years, such as: Records concerning the purchase, cost, value, and payment for the good; Records concerning the purchase, cost, value and payment of any materials used in production of the good; and Production and inventory records for good and materials.

14. Ensuring Compliance by Foreign GovernmentsTrade Agreements Compliance Program • Free Resources at the TCC Website: • Open to all U.S. exporters, particularly designed for SMEs • Exporters and investors can use the Online Trade Complaint Hotline at www.export.gov/tcc to report and obtain assistance with foreign market access barriers • Free online tools, agreement texts, IPR training modules • Standards Early Warning • A checklist of trade barriers • Overseas Compliance Officers (China, El Salvador, India, EU) L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

15. Trade Agreements Monitoring: What kinds of foreign government trade barriers do firms face? • Excessive tariff and customs barriers • Discriminatory rules of origin, certificates of origin, or import licensing requirements • Burdensome standards, testing, labeling, or certification requirements • Lack of Intellectual Property Rights protection • Non-transparent government procurement procedures L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.

16. Kentucky Manufacturer of Speakers Overcomes Trade Barrier in Kenya Problem: counterfeit and pirated goods from China have a detrimental impact on U.S. companies in East Africa Solution: formation of Kenya’s Anti-Counterfeit Agency (ACA) in 2010 to combat counterfeit and pirated goods U.S. and Kenya collaborate on regional IPR workshop in 2011 Kenyan distributor for Eminence among key presenters at IPR workshop which establishes more effective interagency approach to IPR protection and enforcement in Kenya ACA, partner enforcement agencies, and private sector establish greater cooperation, collaboration, and communication

17. FTA Resources on the Web Export.Gov Site on FTAs http://export.gov/fta/ International Trade Administration Site on FTAs http://trade.gov/fta/index.asp Sector & State Reports: FTA Benefits Fact Sheets on Korea, Colombia, and Panama http://trade.gov/fta/korea/kentucky.pdf http://trade.gov/fta/colombia/kentucky.pdf http://trade.gov/fta/panama/kentucky.pdf FTA Tariff Tool http://export.gov/FTA/FTATariffTool/

18. Resources and Contacts • Use our Hotline to Report a Barrier: http://tcc.export.gov/Report_a_Barrier/index.asp or • Tel: 1-800-USA-TRADE , ask for Trade Barrier Assistance • IPR Resources: www.stopfakes.gov or call 1-866-999-HALT • E-mail: tcc@trade.gov and Fax: 202-482-6097 ITA’s Trade Agreements And Compliance Unit: • Skip Jones, Deputy Assistant Secretary For Trade Agreements And Compliance • Email: Skip.Jones@trade.gov L:\Outreach\Outreach Events\FY2012\KY DEC Event\DAS Jones @ KY DEC Event 2Dec2011 LEAN V.6.fs rev.