Small and Medium-Sized Exporters | Politico

— G-7 trade ministers repeatedly took aim at China in their virtual meeting last week in a preview of what to expect when Japan hosts the leaders summit next month in Hiroshima.

— The ministers also reaffirmed the goal of having a “fully and well-functioning” WTO dispute settlement system by 2024, but were silent on developing country demands for a waiver of intellectual property rights for Covid-19 therapeutics and diagnostics.

It’s Monday, April 10. Welcome to Morning Trade. Today could be a good day to divide your perennial flowers, according to my 1974 Popular Science Homeowners Almanac. In fact, clumps of perennial flowers should never go three years without dividing, otherwise they will grow poorly and produce few blooms, the book says.

The exact time for dividing depends on the flower and the region. So egads, I give up. But I hope you figure it out and then send us your trade news: gbade@politico.com, dpalmer@politico.com and soverly@politico.com. You can also follow us on Twitter: @gavinbade, @tradereporter and @stevenoverly.

A national group that helps small and medium-sized companies export goods is sounding the alarm over what they see as an unacceptable drop in government personnel assigned to the same task.

Their goal is to significantly increase the number of SMEs that the Commerce Department’s Commercial Service is able to help annually. But increasing that figure from the current level of about 30,000 companies would require much more than the Biden administration has asked Congress to approve in next year’s budget, they say.

“Right now, we’re looking at about 250 [Commercial Service officers] in 100 U.S. cities,” Jonathan Szucs, chair of the National Association of District Export Councils, said. “That’s two and a half people per city, and most of those are in your larger metropolitan area.”

Things have gotten so bad, “I’m the first NADEC chair to not have a Commercial Service officer assigned to me or my company,” said Szucs, who is president of Advanced Superabrasives, a machine tool company based in Mars Hill, N.C.. The region’s Commercial Service officer position has been vacant for about a year, he said.

Overseas, it’s common for a U.S. company to go into a business meeting without any Commercial Service officer, or possibly just one, to help things along while “the Chinese come with an entire delegation,” Szucs said. “It’s very disheartening for small businesses that want to export to walk into a room and the EU may have a delegation, China may have a delegation, and for the U.S., it’s you and one other person.”

A recent report prepared for the Small Business Administration

estimated there are around 1.8 million to about 2.3 million small U.S. businesses that could potentially export. Of those, only about 240,000 actually exported in 2020, according to Census Bureau data.

The Commercial Service consists of the domestic division in Washington and more than 100 U.S. Export Assistance Centers scattered around the country; the foreign side in embassies around the world includes American commercial attaches and locally-hired staff. Both parts of the Commercial Service have experienced what NADEC describes as a “chronic decrease” in personnel in recent years, as funding priorities have shifted elsewhere.

For example, there now is a much greater focus on restricting exports for national security purposes or to maintain a competitive lead over China. That has led to a big increase in funding for Commerce’s Bureau of Industry and Security in recent years.

Digging into the numbers: The Commerce Department’s Global Markets business unit, which includes the Commercial Service, currently has 1,470 positions, an agency spokesperson said.

The Biden administration has requested $420 million for the Global Markets division in fiscal 2024, an increase of $17 million to help fund 58 new positions spread across Washington, the United States and embassies around the world, the spokesperson said.

But that’s far less than what NADEC has recommended: 100 additional personnel in the United States, 30 additional officers in embassies and 100 more locally-hired staff.

Still, the agency spokesperson put the best face on the situation. The International Trade Administration, which houses the Global Markets business unit, “is uniquely leveraging its network of industry, regional, and issue experts and its global footprint to help American companies competing in the global marketplace,” he said.

WHILE WE’RE TALKING EXPORTS: On a related note, the Center for Strategic and International Studies is co-hosting an event Tuesday where participants are expected to complain that the Biden administration has failed to fully implement the “Championing American Business Through Diplomacy Act,” which Congress passed in late 2019 as part of an omnibus spending package. The law is aimed at countering China by requiring the State Department to devote more resources to promoting American business interests.

G-7 MINISTERS EYE COOPERATION ON CRITICAL MINERALS, ECON COERCION: It’s still more than a month before President Joe Biden will travel to Hiroshima, Japan, for this year’s G-7 summit, but a virtual trade ministers meeting last week previewed some of the economic issues leaders are expected to discuss.

That includes boosting cooperation on critical minerals needed for electric vehicles and other clean technology products, according to a joint statement the ministers released. China dominates the production of many critical minerals, and the United States in particular is eager to loosen Beijing’s grip on the sector. The U.S. recently signed a critical minerals pact with Japan and is negotiating another one with the European Union.

The G-7 trade ministers also promised to work together “to deter and counter the use of economic coercive measures.” That’s another jab at Beijing, which has used its economic might to punish countries or companies that criticize its actions, signal too much support for Taiwan or Hong Kong to control their own destinies or adopt other positions that China opposes.

U.S. Ambassador to Japan Rahm Emanuel recently said he expects Japanese Prime Minister Fumio Kishida to make countering economic coercion “a centerpiece of the G-7 [summit] that will be held here in May.”

Surprisingly, a CSIS report released last month concluded that China’s use of economic coercion has not been that successful and urged caution in how the U.S. and allies respond. It recommended countries develop a strategy aimed more at providing relief to affected countries, than retaliating against Beijing.

In another hot area, the G-7 trade ministers pledged to further strengthen cooperation on export controls — a key tool used by the United States and its allies to deny China and Russia access to technology that could be used for military purposes or commercial advantage.

REAFFIRMING THE WTO: One of World Trade Organization Director General Ngozi Okonjo-Iweala’s biggest challenges over the next year is to cajole countries into reaching agreement on reforming the World Trade Organization’s dispute settlement system.

The current goal, set at last year’s WTO ministerial conference, is to have a fully and well-functioning dispute settlement system accessible to all members by 2024.

The G-7 trade ministers reaffirmed that target at their virtual meeting last week, and also set other goals for the next 13th Ministerial Conference, which will be held in the United Arab Emirates the last week of February 2024.

Those include:

— Entry into force of the partial fishing subsidies deal reached at MC12

— Conclusion of a more comprehensive fishing subsidies pact

— Permanent extension of the moratorium on e-commerce duties

— Advancement of several plurilateral initiatives, although they did not mention any by name.

Plurilateral is the term used for negotiations and agreements that do not include all 164 WTO members. Some WTO members, such as India, question their legitimacy.

There are currently plurilateral talks, also known as “joint statement initiatives,” underway on e-commerce and investment facilitation. The WTO reported last week that there had been progress in the talks on investment facilitation.

China (again): In another reference to China, the G-7 trade ministers said they will work together to address “non-market policies and practices.” That includes “more effective use of existing tools, as well as developing appropriate new tools and stronger international rules and norms,” the trade ministers said.

They also pledged to “deepen” their collaboration to address pervasive and harmful industrial subsidies, market-distortive practices of state-owned enterprises and all forms of forced technology transfer.

Suspicious minds: “We will also discuss overarching issues, including our serious concern with comprehensive strategies to use these and other practices to create vulnerabilities and strategic dependence,” they added.

What the G-7 didn’t mention: There was no reference to reaching an agreement to waive IPR protections on Covid-19 therapeutics and diagnostics, despite demands from India, South Africa and other developing countries for that action.

Speech, speech: Okonjo-Iweala, who is in Washington this week for the spring meetings of the World Bank and the International Monetary Fund, will engage in an armchair discussion Wednesday with former Deputy USTR Demetrios Marantis at an event hosted by the Washington International Trade Association.

It’s one of those sessions where anything could come up.

USTR DEPUTIES HUDDLE WITH MOLDOVA, NEW ZEALAND:Deputy USTRs Jayme White and Sarah Bianchi were on the road last week for dialogues with two strategically-placed trading partners: Moldova and New Zealand.

White visited the Moldovan capital of Chisinau — which is about an hour’s drive from the country’s border with Ukraine — for a meeting of the bilateral Joint Commercial Commission. Market access for U.S. beef and Moldova’s desire to see renewal of the U.S. Generalized System of Preferences program were two of the items on the agenda.

Bianchi held talks in Wellington with New Zealand officials under the bilateral Trade and Investment Framework. Topics included the ongoing negotiation of the Indo-Pacific Economic Framework, this year’s APEC meetings hosted by the U.S. and “the strong and growing trade relationship between the two countries,” USTR said.

MEXICO BIOTECH DISPUTE PASSES MILESTONE: The United States and Mexico passed the 30-day mark Friday of their technical consultations on Mexico’s biotech corn proposal, which threatens U.S. exports to a key market. USTR can now request a dispute settlement panel if it feels the 180-day talks have already reached a dead end.

In an interview last week with Agri-Pulse, USDA Undersecretary Alexis Taylor said Biden administration officials are discussing “what our next steps and what our path forward will be.” A USTR spokesperson gave no indication that a decision to request a dispute settlement panel was imminent, saying the talks so far have been “productive.”

— Poland will temporarily stop all imports of grain from Ukraine, in response to farmer protests, POLITICO reports.

— Russia threatens West as Turkey seeks grain deal extension, Reuters reports.

— Indian Commerce Minister Piyush Goyal will meet with French and Italian officials and business leaders when he visits this week, The Economic Times reports.

— South Korea to strengthen supply chain cooperation with India,Bloomberg reports.

— Malaysia is determined to work with both the U.S. and China, amid ongoing tensions between the two economic giants, CNBC reports.

— Lack of dock workers shutters two major California ports,POLITICO reports.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and soverly@politico.com. Follow us @POLITICOPro and @Morning_Trade.