As former White House aide Michael Froman begins his new job as U.S. trade representative, he faces a full agenda, including two major multilateral trade negotiations that will have an impact on U.S. construction-equipment makers and companies in a wide range of other industries.
Froman, who was sworn in as U.S. trade representative (USTR) on June 21, had been assistant to the president and deputy national security adviser for international economic affairs. The Senate confirmed him two days earlier, by a strong 93-4 vote.
Bill Lane, Caterpillar Inc. senior director for global government affairs, says, “We may be about to embark on the most ambitious trade agenda since the early 1990s, when we did the [General Agreement on Tariffs and Trade] Uruguay Round and the North American Free Trade Agreement.”
Among the priorities facing Froman and his USTR team are trade talks with the European Union that are set to begin on July 8 in Washington, D.C.
Nick Yaksich, Association of Equipment Manufacturers vice president for government and industry relations, says the EU negotiations will be “critical” for U.S. heavy-equipment manufacturers.
Yaksich says technical issues will be particularly important topics, such as the harmonization of equipment standards and the development of common certification benchmarks between the two sides.
Lane says U.S. trade barriers in Europe tend to be low, “but the trade is so large that even removing low trade barriers … will have an important impact on both economies.” Overall U.S. exports to the EU last year totaled $458 billion, making it the country’s largest export market, according to the White House.
Tariffs could be an important topic in trade talks. Lane notes that many European countries’ tariffs on U.S.-made heavy construction equipment are zero, but tariffs are imposed on U.S.-produced engines and other components, such as bearings. Those factors combine to make U.S. heavy-equipment makers’ average tariffs in Europe about 2%, he says.
Though 2% may seem small, Lane says Caterpillar has “a long-standing goal that, worldwide, we would like to be in a situation where none of our customers have to pay an extra tax to buy our products. In this case, an extra tax is tariffs.”
The other important negotiations are the ongoing Trans-Pacific Partnership (TPP) talks among the U.S., other North American countries and Asian nations. The U.S. joined the TPP negotiations in 2009, and, so far, the talks have gone through 17 rounds.