My role here is to get a discussion going as soon as possible on Michael Froman's presentation and the prospects for the United States leading in the TPP negotiations. The level of interest and representation here from embassies and international businesses reflects that our trading partners are anxious to take a measure of the bipartisan political commitment to ultimately following through on the TPP negotiations. As the United States discusses in ways the interests of Japan, Mexico and Canada in joining TPP, I think there are many interests in governments and many regions of the world, Latin America, etc., that are looking to size up the United States as a potential trade agreement partner. As in the case of past trade agreements like NAFTA, insight into the level of bipartisan political commitment is gained by assessing the transition process between the vision of an administration that launched the participation in this negotiation and then trying to understand how the next administration takes full stock of what's on the table, determines how to make the negotiations its own and then ultimately digs in and takes the reins internationally for the United States. To reflect on Michael Froman's speech, we've got absolutely perfect individuals to do this. To my right is Ambassador Susan Schwab, who served as U.S. Trade Representative and Deputy U.S. TR and the George W. Bush Administration from 2005 to 2009. And she really needs no introduction to this group, of course, but she led the complicated inter-agency process that culminated in the decision of the United States to join TPP negotiations and to take a formative leadership role in these talks. Currently she's a strategic advisor at Mayor Brown's Government and Global Trade Practice. In addition, she's a professor at the School of Public Policy at the University of Maryland, where she had previously served as dean. She also sits on the U.S. Air Force Academy Board and several other corporate boards. To Susan's right is Matthew Goodman. He's currently Senior Economic Advisor at the U.S. Department of State. His previous position was White House Coordinator for APEC and the East Asian Summit, overseeing policy development in these forums, and supporting the President in his participation in APEC and the EAS summits. Prior to that he served as Director for International Economics on the U.S. National Security Staff responsible for the G20, the G8, and the other international economic forums. It's interesting that both these individuals served early in their careers in Tokyo, should give them a good inside perspective on Japan's prospects for doing what it will need to do to join TPP. And as we move through our program, Ernie is going to do my partner here, Ernie, one of our most innovative leaders here at CSIS, who leads our Southeast Asia program, will do the moderating. And we invite you to come up with some questions, and we should have a good discussion. But I think I'll let both of the speakers speak for eight to ten minutes on their initial reaction to the Froman speech, and then we'll go into a discussion. Thanks. Thank you. I'm going to start up here. I would normally prefer to be at the table, except we lose a third of the room here, and suggest that perhaps after we do our intros, maybe we can move this podium back and get into a real discussion. I'm delighted to be here. Thank you, and delighted at the attention being paid by CSIS and others to the Trans-Pacific Partnership, and would note in starting that when the Bush administration initially launched the TPP in 2008, there were three objectives, two of which Mike Froman commented on earlier today, and I'm going to add the third. The first, obviously, was to prevent the United States from being locked out of a variety of Asian trade blocks that were being negotiated. The second was to lay the groundwork for potentially an eventual APEC-wide free trade area of the Asia-Pacific, and the third was perhaps to set precedents, to lay the groundwork for potentially WTO+, for a plural lateral, not necessarily just in the Asia-Pacific region, to expand to like-minded countries, perhaps beyond the Asia-Pacific region, that could take the WTO beyond where it appeared to be stuck in the Doha round. And I would note that APEC 2011, as Mike Froman indicated, in Honolulu really did feel good, and TPP, the TPP announcements that took place there felt good. TPP was hot. It was the nightclub that everybody wanted to be in. Everyone wanted to get into TPP. Now as the only non-Obama person speaking today, I feel compelled to ask some of the morning after questions. I would note, however, in the interest of full disclosure and continuity, that I would suspect that Mike Froman, that Matthew, and that I were all coached sometime in the last 48 hours by Barbara Weissel, by Wendy Cutler, and or by others at USTR. Certainly I was coached along the way and that TPP would not be where it is today and would not get to where it will go without USTR and without the very able leadership of those and others at the trade rep's office. So I would note that we've all been educated and will continue to be educated by those remarkable negotiators. So my points will be as much questions to be asked, open up for conversation after mat, and then close with some of my own observations. So here are the issues I want to cover, one, timing, two, reality check, three, participants, for a sequencing issue, content, and then finally some implications. Timing, do we really think this is going to happen in 2012? 2012 is, after all, an election year. If it happens in 2012, who will participate? Now it's doable in theory, chorus was in fact negotiated in 11 months, the US-Korea free trade agreement was in fact negotiated in less than a year. Now it took five years to get it through, that's another story for another day, but it is theoretically doable to get it done. Who will ultimately participate, what quality would the agreement look like if it is negotiated in 2012 in an election year in the United States? We shall see. Reality check, do we think this is going to happen? How active and how ambitious will President Obama and his team be? Will they be willing to use political capital to get this done? I would speculate, no pullback on that. There was very limited political capital used by the President to get the three free trade agreements through the United States Congress. That is because the private sector, US private sector worked it very hard, and ultimately they relied on John Boehner and the House and Senate Republicans. For those of you, and this is very inside the beltway, I apologize. If you looked at the votes, the Democrat head count, there were approximately the same Democrats who voted yes on the free trade agreements in 2011 as would have voted yes in 2008 had they been allowed to vote. There is a limit to how much political capital was in fact put out. Big question, how much political capital will the Obama administration be interested, willing able to put into this negotiation? Thrilled to hear Mike Froman talk about consultations with the Congress, Republicans, and Democrats. I think that is extremely important, particularly in advance of trade promotion authority and subsequent to trade promotion authority being part of it. Participants, will Japan or won't Japan be part of TPP? TPP is fundamentally important for geopolitical reasons for the United States and fundamentally important for economic and commercial reasons for the United States. For a whole variety of reasons, I agree with everything that Mike Froman said this morning. I think I should probably reserve some modicum when I was looking at my blackberry, but I mean I agree with what he had to say, agree with the priority. But if you look at the numbers, it is hard to make the economic and commercial case in the absence of larger economies being part of the equation. So is that Japan? Boy, sure hope so, but Japan has to do this because it's in Japan's interest, not because the United States or somebody else begs Japan to be a part of it. If not Japan, who else? Is it Indonesia? Do you have to stay in the region? What about Brazil? What about India? What about the EU? What about other like-minded countries? Could this come out of the region? What about Canada and Mexico? Sequencing, if the deal that is negotiated in 2012 is TPP 1.0 and the deal negotiated with Japan is 1.5, at what point does TPA come into play? What is anticipated down the road for China? And this we start moving into the content question. Don't have to decide now whether China ever is a part of this equation, but you certainly need to be thinking about it as you negotiate content, as you negotiate the question or the process for, as Kevin Brady refers to, plug and play, accession. And again, how you deal with SOEs, state-owned enterprises, state-supported enterprises. And it clearly suggested in Honolulu that there would be no exceptions, no exclusions. Is that the case? That has interesting implications, certainly for some white stuff, like dairy, sugar in agriculture, footwear, textiles, autos, trucks, very interesting implications, content in terms of, again, going back to the balance of economies, GDP participating, U.S. trade interests, but also the 21st century concept that Mike Froman was talking about, absolutely supply chain issues, intellectual property issues, e-commerce, how much are we talking about here in terms of services trade, in terms of that which is moving through the ether rather than that which is moving on vessels. Finally, timing. Again, I'll close with timing. Private sector? Private sector is not going to be waiting around for another five years or 10 years for this deal to get done. It's not going to wait around to decide what to produce where based on when the President of the United States or the Congress of the United States get their act together on a trade agreement, whether it is closing the trade agreement or getting it through the United States Congress. And that is something that this president and presidential aspirants and this Congress and congressional aspirants need to keep in mind. So that's my piece. I look forward to further discussion. Thank you. Thank you, Susan. And Matt, could you do your remarks then? We're going to have the podium removed so we can see the whole audience. Thank you, Ernie. Always good to be at CSIS. I have been in this town long enough to know that there is relatively little upside in following your boss, let alone a former Cabinet official in a matter like this. And the only safe things to do would seem to be to agree with everything that's been said before and or to change the subject. So let me try to do both. Actually I was actually asked to put this topic in a broader context that is appropriate I think for the conversation and for my role at the State Department. I'm not a trade negotiator, so let me put this in a broader context. Mike and Ambassador Schwab have done a good job of talking about the details of TPP and putting that in the context of our overall trade and economic strategy. Let me look at it through a different lens from the perspective of our foreign policy priorities. So TPP lies at the intersection of two of Secretary Clinton's top priorities as Secretary of State, rebalancing our foreign policy toward the Asia-Pacific region and enhancing U.S. economic statecraft. In an address to the Economic Club of New York in October, she described the impetus behind both of these priorities in one, captured it in one sort of turn of phrase, when she said, for the last decade, our foreign policy has, by necessity, focused on the places where we face the greatest dangers. In the decade ahead, our foreign policy must focus just as intensely on the places where we have the greatest opportunities. In other words, it made sense in a post-911 world to focus geographically on the Middle East and Southwest Asia and functionally on terrorism and other security challenges, whereas today there is a similarly compelling logic to shift our geographic focus eastward toward the Pacific Rim while functionally putting more emphasis on international economic issues. In both cases, this is where some of the biggest opportunities as well as challenges for our foreign policy lie. Let me take each of these strands, Asia and economic separately, then talk about how TPP fits into both. First, geography. As Mike said, the Obama administration is committed to rebalancing our foreign policy energies and resources toward the Asia-Pacific, a commitment underscored by the President's extended and action-packed trip to the region in November. In his speech to the Australian Parliament on November 17th, the President summed up our commitment to the region when he said, in the Asia-Pacific in the 21st century, the United States of America is all in. In fact, you know, I think the summary we would give of the trip is we're all in. That's the sort of the soundbite we'd like people to take away from the trip on both sides of the Pacific. In the words of Secretary Clinton, we're a resident power in Asia and we're here to stay. So Mike provided some of the facts and figures that you're all familiar with that underline our conviction that no region of the world will do more to shape U.S. security and prosperity in the coming decades. So I won't go through all that again. But in terms of how we're going about this, Secretary Clinton and her article that I'm sure most of you have read in Foreign Policy Magazine last fall, entitled America's Pacific Century, articulated six key lines of action. First, strengthening our bilateral alliances. Second, deepening our working relationships with emerging powers such as China, India and Indonesia. Third, engaging with regional institutions such as APEC, the East Asia Summit, and ASEAN. Fourth, expanding trade and investment. Fifth, forging a broad-based military presence. And sixth, advancing democracy and human rights. Obviously, the fourth one, trade and investment is the focus today. I will touch on that and the relationship of that and the third one, which is the regional institutions because that's sort of what I know best. And but all six of these points were touched on on the trip. All of these buttons were pushed in one way or another and we can talk about that afterwards if you're interested. So let me say a word about economic statecraft. The other priority I mentioned. The Secretary gave four major speeches on this subject in 2011, most recently the economic club speech that I mentioned in October. And it's been a major focus of the State Department's first quadrennial diplomacy and development review, or QDDR, which I also have had the privilege of working on. The Secretary likes to quote Harry Truman on this subject when she said, all our relations, foreign and economic, are indivisible. As she notes, the Truman administration marshaled U.S. economic strength to rebuild friends and even former enemies, led the charge to create a new international economic order, and made the investments here at home needed to keep our economy strong. This experience inspires the Secretary's efforts today when nations are just as focused on building and projecting economic power as military power. Her economic statecraft initiative has two mutually reinforcing elements. First, putting diplomacy to work to strengthen our economy at home, and second, harnessing economic tools to strengthen American diplomacy. And she sent a major cable that is unclassified to all embassies and consulates in October, laying out the various elements of this, which included updating our foreign policy priorities to include economics every step of the way. Here she mentioned first and foremost the new emphasis on the Asia Pacific region, saying that the rules that will govern global markets in the coming decades will in many respects be written in that region. Second, playing better offense, modernizing our trade investment commercial diplomacy to better address barriers and market distortions and boost U.S. export growth and jobs. Third, using economic tools to solve foreign policy challenges, for example, supporting reform to modernization in the Middle East and North Africa by promoting regional economic integration. And finally, building economic capacity at the State Department, reorganizing the economic bureaus and better deploying the thousand economic officers at post. So this constitutes, as she said, a serious and sustained commitment to put economics at the center of our foreign policy agenda. As I said, TPP, let me just, can I just get some water? Thanks, sorry. As I said, TPP lies at the nexus of the Secretary's two priorities. It highlights and reinforces our increased engagement with the Asia Pacific. And, you know, if the test of our commitment to rebalancing is devoting resources, time and political capital to the region, TPP shows more than any other initiative that we're putting our money where our mouth is. Meanwhile, TPP supports both sides of the economic statecraft coin. It is a diplomatic undertaking designed to boost U.S. exports growth and jobs by lowering barriers and removing market distortions. And it brings economic tools to bear in support of our strategic foreign policy objectives in the Asia Pacific. So, you know, I was on the trip with the President and, you know, if I had one or two key takeaways from that trip, it was that there's a real palpable sense of yearning for U.S. engagement in the region, on the one hand, and for our leadership in championing the rules-based system, which has been alluded to by both Mike and Ambassador Schwab. You felt it in Honolulu, including in the APEC meeting room, but as, again, Ambassador Schwab referred to especially when the nine TPP leaders met, the queue of countries outside the door spoke by was, you know, was, again, palpable and spoke volumes about the interest in this effort and our leadership in it. The dynamic was also President Bali, by the way, admittedly on a different set of policy issues when the President met with other leaders at East Asia Summit, almost all of whom talked about these issues of international rules and norms, in this case, in nonproliferation and maritime security. Now, obviously, not everyone agrees with all the rules we propose. All the specific rules, but I was actually struck in both the preparations for and at the actual APEC and EAS events by how much agreement there is in the region about the broad thrust and even many of the details of what we're trying to accomplish. Mike alluded to the regulatory convergence work, and that's one example in APEC where there was, I think, almost unanimous agreement that this was an important area of focus for APEC and that the kinds of principles that we were trying to instill in regulatory systems across the region were common aspirations for all economies and there was not that much disagreement on the substance, a little bit on the timing and how to go about it, but basically a great agreement. So, tapping into those sentiments, the essence of our economic strategy in Asia is both to lower barriers and also to raise the standards of economic competition in the region, making that platform for competition more open, free, transparent and fair. That's our approach in TPP and in APEC and in other bilateral dialogues. I think I'll probably stop there. I was going to say a little bit and I'm happy to do that in the discussion, but I know I've spoken at length about the relationship between TPP and APEC on the one hand and APEC serving as a kind of incubator for a lot of the issues in TPP and, again, that's been alluded to by both the previous speakers and also the relationship to EAS, which is slightly more controversial and I'm happy to give you a hint of that and then talk about it, whether there's some kind of tension between our focus in EAS on an ASEAN driven forum and set of initiatives on the one hand and in TPP taking a more Pacific Rim approach and whether there's any contradiction there, which the bottom line is, I don't think so. So happy to talk about that more in the discussion. Thanks. Okay, thank you very much. We're going to, we're going to remove the podium here so we can, the panel can see the West half of the audience over there. Thank you both for your great comments. I'd like to, you really built out and asked some important questions, building on Mr. Froman's remarks. I think there's some additional questions, as I filibuster for the podium removal that we'd all like you to address and work into your questions. I'm going to open it up to the audience here, but there's some real questions about what Susan said about political capital. And I think one of the questions that we really have to face as Americans is whether, as we pivot towards Asia, as we make the case that trade is important, is an important part of our recovery and economic growth, are there leaders, are the politicians willing to try to take that case to Americans in a political year? Can you talk to Americans about their bread being brought to the table through trade and the jobs being linked to trade? We've always, it seems like there's a discussion about these issues among foreign policy and trade people, but then you get out into the country and politicians won't talk about it. They don't talk about it. And it seems to me that culturally this country, you wonder whether there's a constituency behind leadership for some of the issues that Mr. Froman talked about and both of you supported. Will America be able to follow through on these ideas? Nobody talked about Korea, which I thought was really interesting. Maybe just, maybe I just missed that. The, oh, you did? Okay. Thank you, Susan. So I didn't hear it. But I wonder, you know, whether Korea having just on the way to just completing its FTA with the United States wouldn't be at the front of the line. I just had a question about that. And then in terms of Asian economic integration, I think Susan was the one who said companies won't wait. You know, they'll move forward. And I think that's true based on my experience. They have to move forward. Economic integration in Asia is good for, for American companies who are invested in Asia. It's, it's less helpful for small, medium-sized companies who don't have a presence in these markets yet. And it seems to me that China really got out of the blocks more quickly on Asian economic integration with the ASEAN plus three model. And now TPP is starting to take some real lift. I think China had sort of undercut its own talking points with its charm offensive that started after the Asian economic crisis in the late nineties with its, with its actions over the last couple of years and sort of asking, asking its neighbors, asking the question, what does China want to be? What does China, where is China headed? And that seems to have opened the door for TPP. And so the question that I had that I'd like you guys to work into your answers, if you could, is what is the linkage of TPP to the security situation in Asia? So having said that, I would like to open the floor. Same rules as before. Just please identify yourself and your affiliation and we'll start up. Let me, I think these guys didn't get enough opportunity last time. Al, you want to start? Apparently with some Chinese instigation, if one believes the media reports, ASEAN has kind of started, or at least some, some countries in ASEAN, including Indonesia and the Philippines have started an examination of the comparabilities among the FTAs that it currently has on deck to either in the interest of harmonization or as an alternative to TPP. I'd like to know what Mr. Goodman's and other views might be. Should we take a couple questions and then let you answer them together? Okay, we'll do that. Gentlemen here in the blue. Thanks, Jamie, Mr. Roberts from inside US trade. A quick question for Mr. Goodman as well. I have to do with Japan and the deliberations on Japan possibly joining the TPP talks. I guess as a observer, I would just, I would imagine that the State Department among all the divisions the US government might be more enthusiastic about Japan joining. Obviously state covers economic and geopolitical diplomatic concerns, but it seems like with Japan coming in, that would be such a huge diplomatic coup for the United States. I was hoping you could kind of enlighten us a little bit on how state is figuring into this deliberation within the Obama administration on whether to bring Japan in or not. Does the State Department have, for instance, an opinion yet on whether Japan should come in? Are you meeting with Japanese officials weighing in, interagency, that kind of stuff? Thanks. Ambassador Chan, you'll be the third question here. First of all, I'd like to thank Susan and Matt for your comments and the stimulating sort of introduction and Mike from and to when he came and gave the initial remarks, I think laid out in a more strategic way this whole discussion. I have a question about the game changer or to what extent a game changer TPP is. There is this TPP, which is a growing grouping that others seek to enter. But we know, too, that there is talk of a Japan, Korea and China free trade agreement. If the terms for entry for the Japanese proved to be too tough and if Korea is not really signaling very much that it wants to come into TPP, it really has to sort out what it needs to do in compliance for chorus. And if China is not coming in, would that be a competing trade grouping to the TPP? And how would you balance that out? So the three Northeast Asians would be in pull off to one grouping. But of course, Singapore's attitude always is everything can exist side by side. But that's a thought for you. OK, let's take those three together and then we'll read. I definitely don't want to monopolize the answers here. I'm very interested in what investor Schwab has to say about all those questions. But taking those in order. So, you know, I mean, actually, I don't know the right person to answer whether the Aseans are should be looking at the compatibility of these various approaches. I mean, maybe investor Chan can answer that or or, you know, others who have more of a sense of what what they're, you know, how you make those those assessments. But I think that certainly we think that that there are a number of and it gets to the third question as well. I mean, there are a number of different approaches, a number of different paths to achieving trade liberalization and ultimately, you know, a region wide trade agreement. We don't think that there is necessarily one perfect path. We think that TPP is the one that makes most sense in terms of advancing the kinds of issues that have been discussed by both Mike and Ambassador Schwab in advancing U.S. interests, meaning our, you know, our growth and our jobs and promoting our engagement more broadly in the region. And we think that that is an attractive model, not just to us, but should be to others in the region. As it has demonstrated, it is and, you know, I think that it's natural that people should look at, you know, these different these different approaches as we did and determine that that, you know, which which way works for them. We hope that people will continue to express interest in TPP as a path. But we think it's, you know, as Ambassador Chan said, possible for these things to coexist. And, you know, we have 175 agreements in place in the region already, and there may be room for a few more. But ultimately, I think we all want to aspire to a, you know, a long-term vision, which at least certainly everyone in APEC is aspiring to of a region-wide agreement. On Japan, I mean, we're certainly we have responded positively as a government, not just as a State Department, as a government to Japan's expression of interest and consulting about joining TPP, and we're, you know, we're doing the things necessary to respond on that. I think certainly it would be a big opportunity for both of us and for the region on a lot of levels if they were able ultimately to join and to participate. But we also think it's important for this to be done the right way, and not to be done, and this is something the State Department shares with USTR, the other parts of the US government, that it's very important that the Japan be, that Japan's possible entry into TPP be done on the best possible terms for Japan, for the United States, for the rest of the members of TPP and for the broader region. And so we need to have the full extensive set of consultations that Mike described in parallel to continuing the negotiations, and then determine when all these things will come together. But there's unanimity in the US government about that. But certainly recognize that this is a big opportunity. Japan's an important partner of ours. It is still the third largest economy in the world, and that matters in this particular field of play. And so we get all that, but it is important that we do this right and not do it just fast in order to satisfy some other need. Ambassador Schwab. Yeah, I would echo Matt's point about the commitment to quality. Any good trade agreement is gonna be difficult. It's worth doing well. It doesn't have to be perfect, but it better be damn good. And the interesting thing, I mean, the point about the quote diplomatic coup is I would raise serious questions about bilateral and regional deals generating diplomatic coups.  They might have been diplomatic coups when the agreements were signed. By the time the deals were submitted to the Congress and Congress passed them, I would question whether they would be considered diplomatic coups and they haven't been implemented yet. In the case of Japan, it is only a diplomatic coup if the Japanese decide this is in Japan's interest. Good trade agreements are hard to negotiate and they're hard to implement and then once they're working, they're diplomatic coups because you have economic prosperity that is delivered on both sides of or all sides of the trade agreement. That is the diplomatic coup because it brings countries closer together, brings people closer together, brings commercial interests closer together and workers and consumers all benefit. And so that's your diplomatic coup. It is a long-term thing. It's not a flash in the pan. So I think that that's the basis for your foreign policy, your foreign policy victory. It's not your press release at the front end or at certain milestones along the way. It is easy to negotiate a trade agreement these days that is just market access and industry and gets rid of tariffs. It's easy to negotiate a trade agreement that leaves out agriculture. And one of the things that I think USTR ought to be looking at and other countries ought to be looking at is at what point do some of the lesser quality trade agreements stop meeting the WTO's standard of substantially all? And that's something that ought to be looked at because there are countries negotiating lesser quality trade agreements that leave out a lot, particularly agriculture. And that's one of the questions that ought to be raised as Japan, China, India, perhaps Korea start talking to each other about the potential for an agreement. That said, I am firmly committed, if my comments earlier didn't signal that, over time, all of these agreements, the value of these agreements, is ultimately reverse engineering to a more liberal multilateral trading system through the WTO. And to the extent that these bilateral, this plethora of bilateral and regional and plural lateral deals and sectoral deals ultimately play back into that. They're not competing with each other. They really are ultimately making it easier for countries to come together. The question about taking existing agreements and trying to merge them into a broader agreement, in my experience, when we looked at this at USTR, for example, looking at the free trade area of the Americas, I think it is easier to start with a blank sheet of paper than it is to take existing bilateral agreements and trying to take rules of origin and rework them and try to merge existing bilats. But that may just be the FTAs that we negotiate. It's easier to take a blank sheet of paper and start over, but that's sort of my own take on it. Thank you very much. Let me look for some people over here on this side. Tom. Thank you. I'm Tom Rekford with the Malaysia America Society. Several years ago, negotiations between the US and Malaysia over a free trade agreement fell apart in part because of disagreements over issues like government procurement. What has changed now that makes an agreement that includes Malaysia possible? Is it just the fact that Prime Minister Najib wants better relations with the US? Okay, we're gonna take several, the gentleman in the back with his hand up. Thank you. I'm Ed Barber from Good Works International, Andy Young's consulting firm, and I've spent the last several years working on Africa, so I wanted to broaden the discussion a bit. Mike Froman referred to the need to maybe rethink the path we're on with respect to Doha. There are several many aspects of this TPP that could be generalized to other regions, other agreements, although there are several important ones that are unique to the East Asia and the Pacific. I was wondering to what extent you or the administration might be thinking of TPP as a prototype for a broader approach, as this sort of son of Doha. Thanks, I'm Steve Hirsch. I'm a freelance journalist. Going back to inside the Beltway, I wanna know if it is reasonable to suppose that an administration could push through a trade agreement like this in an election year and whether this administration is likely to be able to push through this agreement in this election year. Thanks. Okay, let's take those three. I'm not sure I can answer the Malaysia question because it was on my watch that we failed to do the bilat. Minister Rafita and I tried mightily, we came very close. I don't know what changed except that there are points, it's like any negotiation, any commercial negotiation, I suspect an arms control negotiation, there is a point where it comes together and there are points where it just doesn't come together and you have to, trade agreements are tough and both sides have to want it to work at the same time and it didn't come together then and it came together now and I think it's terrific. Doha, I think in a way I answered that question when we envisioned TPP, it was one of the paths was as a WTO plus to set precedents that you could ultimately migrate into the WTO to raise the bar for the global trading system, whether or not the Doha round succeeded and Steve, I would say that no matter how good the team is negotiating TPP, they won't have to deal with the issue of moving this agreement through the Congress in 2012 even if they close it, even if they had trade promotion authority today, if you look at the timelines, there's zero chance they would have to move it through the Congress in 2012, so they won't have to deal with that issue. The question is can you actually close the deal in 2012? I would say though in terms of my admonition about timing in the private sector and going to Ernie's point about small, medium-sized companies, it really is the small, medium-sized companies that are most hurt by tariff barriers, by trade barriers, non-tariff barriers. The large multinationals, they can invest behind the barriers. The SMEs, they can, they're the ones really are screwed by the tariff and non-tariff barriers. So private sector, my guess is if you don't have results by 2013 and the real prospect of something enacted into law and getting implemented, a real path to implementation in 2013, private sector moves on. Well, I don't have much to add to that, I think. That covers most of the ground. I would have covered Malaysia. Again, I was not there at the sort of pivot in terms of the decision-making about, sorry, decision-making about the original bilateral FTA and then the decision about Malaysia's joining TPP, but I would just echo what Ambassador Schwab said that these things are based on a sort of calculation of interest and willingness to address the issues at hand and obviously Malaysia reached a point at which it was able to do that. Yes, on Doha, I think Mike indicated that we are looking, think we need to look at fresh approaches. I wouldn't use any particular turn of phrase or to describe how TPP fits into that, but I would say TPP is a potential new approach that we are looking at and we're pursuing and that fits into that sort of broader question of what to do about multilateral trade, echoing again Mike's point that we're still committed to the objectives of the Doha development agenda. And we're not focused on this being election year, we're focused on getting an agreement and the TPP leaders instructed negotiators to try to get an agreement within 2012 and that's what the negotiators are trying to do, whether or not they'll succeed has yet to be determined. Okay, I hope enough, Jenny. All right, the lady. Thank you, I'm Jenny Nguyen, good voice of Vietnamese Americans. I would like to take Ambassador Schwab point about the morning after, before the morning is over. So let's come back to our American workers. The whole idea of the TPP is to protect our security, our trade and increase jobs. So with the TPP, when you do the negotiations, do you also put the first priority to ensure the level playing field for the American workers, including union and human rights? Thank you. Couple more in the back there. I'm Stephanie Lester with the Retail Industry Leaders Association and we all talk about having a high standard TPP. You mentioned no exclusions or exceptions, Ambassador Schwab. You mentioned the list of domestic sensitivities that we have here, sugar, dairy, apparel. I'm curious to get your take on how you see our domestic sensitivities playing out, particularly with something like apparel where it's 70% of the duties that the TPP countries pay on their imports into the US is on apparel. Dan Gibbons, Georgetown University. I'd like to follow up a little bit on the moderator's question vis-a-vis the security elements of this, not necessarily the formal, but certainly with formation of the European Union, it was a very catalytic kind of a thing when the World War II, drawing from World War II to bring these disparate countries together. So what I would ask you is, what is the catalytic kind of event that is going to persuade, well, not just the small countries, but all of the countries, as well as the United States Congress, that this is a kind of a thing. And I'm not really necessarily referring to World War or anything like this, but just the general kind of security that a country or various countries might experience. Okay, we'll just, if there's any more questions, we'll take them now. Gentlemen here. Bernie? Bernard Gordon, University of New Hampshire. Principally to Mr. Goodman, or maybe to Susan, because she dealt with this so much earlier. The 10 rounds that have been going on now have been, so far as we all understand it, I think they've been multilateral. But there's recent talk that there will be much more emphasis on the US dealing bilaterally with one or more of the present participants in TPP. Now, this raises the issue and the reason I'm raising the point is this. In connection with the South China Sea issue, we have stressed that that is to be dealt with as a multilateral rather than as China has wanted to see those issues dealt with on a bilateral basis. So my question is, if it is true, and I don't know if it is, that we are going to be moving into a bilateral mode with TPP partners, is there a possibility that we're going to be bit from behind in terms of inconsistency or is there a problem in that regard? Thanks for the clever use of a euphemism. And last question here. Hi, this is Jamie, Strawberry Jan. This is a question for Ambassador Schwalhub. Ambassador, you gave a really useful foreign policy article way back last year on the Doha round and also, and they gave a speech, I think, at another think tank, a Nazi essay has, on that kind of giving your advice on how to handle Doha and attempts at an early harvest and that kind of thing. I was actually hoping you might be tempted to do something similar with TPP in Japan. I was curious actually on your views on how to handle this. It's a tricky situation. Clearly, the administration we've heard today is opting to be quite cautious on Japan. Say, there are two tracks, we have to see how they end up melding together down the road, who knows at this point. But in your view, would you prioritize at this point closing a deal or really trying to get Japan in since they'd prefer to join the ongoing negotiations? First question, and secondly, how would you play that? I mean, would you say, look, you really have to give us some sort of down payment on autos, good faith move on autos, something outside of beef, which they're already doing, before you could come in, or do you think that's unfair? They should just come in saying they can put everything on the table, that kind of thing. Thank you. Okay, thank you for the questions. Let me ask each of our discussants to try to answer the questions that you can. And also, if you wouldn't mind just making sort of a final summary of some of your points, and then I'll wrap up, and I know Susan and Matt have to leave by 11 a.m. sharp, so we have about 10 minutes. Okay, all right, well, in some sort of order, I mean, I think Mike addressed the labor question. He said we're not gonna put forward an agreement, or agree to an agreement that doesn't have strong labor standards, and address other issues of concern, so we're gonna agree to an agreement that we're comfortable with, I think is the way he put it, and that would include strong labor provisions and other issues of interest. On exclusions, I'm not gonna go into that in detail other than to say that we are seeking a comprehensive agreement. We recognize there are sensitivities in all countries, and in a negotiation there are ways to address sensitivities, but at the moment we're aiming for, not at the moment, we threw out, we're aiming for a comprehensive agreement, and that's the approach we're taking. On the security, there's two questions that are sort of related to security. I don't think that's the right sort of frame for these discussions. I mean, I think there is such a thing as economic strategy, and I think the sorts of things we've been talking about are a part of an economic strategy that will shape U.S. engagement in this critically important part of the world to the benefit of the United States, the region, and the world, and the specific things that we're pursuing will not only have sort of direct, measurable economic benefit for us, but will also have broader strategic benefit, which ultimately include broader issues and political and other issues, but as a sort of an endpoint of that strategic consideration, but security considerations are not driving what we're doing here, per se, in that sort of traditional framework. And I'm not in the negotiations themselves, so I don't know about how we're handling this multilateral or bilateral, but it's a multilateral negotiation, and that's the approach we're taking in TPP. Doha was addressed to Susan. And I really don't think I need to sum up because I laid out in my introduction that how to look at TPP in a broader foreign policy framework, and I think that this is something that is really going to be a key element of our foreign policy generally, and our foreign policy in, obviously, in the Asia Pacific region for some time to come, not only through the negotiations, but even after an agreement has been reached, and so it is something worthy of conversation here and continued discussion, and I appreciate the opportunity. Thank you. I defer to Matt's response on the foreign policy question. I would note in a trade negotiating context, it is very common whether you're negotiating pluralateral, regional, multilateral deals to have variable architecture, to negotiate bilaterally, to negotiate pluralaterally small groups of countries. It's just very common. It's how you work through issues. Whether you're high foreign policy or low foreign policy, that's how it gets done. On the question whether it's the human rights, labor issues, the exclusion, retail issues, and I would draw your attention, for those of you not familiar with Ed Gresser's book, I would recommend you take a look at that because I think that's a very interesting commentary about sort of a third way look at trade policy and trade politics. I'm a very firm believer that trade agreements, the smartest countries negotiate trade agreements to self-impose economic reforms that they should be doing unilaterally, but politically they're really hard to do. And so whether that is labor reforms, whether it's safety net issues, whether it is attention to your consumers, it is just something that good trade negotiators, good administrations, interagency processes need to keep in mind as they're negotiating trade agreements. And that is true of the United States, it's true of Vietnam, and it should be true of Japan if Japan decides to come into this negotiation. And Jamie, flattery will get you everywhere except there's not enough time to answer your question. I wanna think about it, but it is a very good question. And I'm gonna be going to Japan in the spring I think and I wanna think about it some more because the bottom line for Japan is this will work if this is what Japan wants to do for itself, not because the US or somebody else tells Japan this is what Japan ought to do. There's some promising signs that Japan's new leadership wants to do these things for itself. I mean Japan's move on beef for example is not because the US has been jumping up and down yelling and screaming, it's because Japan has figured out that this is in Japan's interest. We'll see how it plays out. I happen to think it would be in Japan's interest to do it but they shouldn't do it because I say so. Just a closing thought and this is what happens when Route 50 is a mess and you're driving in from Annapolis during rush hour and it takes you almost two hours. Acronym, MSRP, we've talked about autos a little bit today. Math, sequencing, remember who your friends are and precedents. Math, this region is fundamentally important to the United States whether you look at trade data, whether you look at GDP growth, whether you look at GDP. The participants in this TPP are fundamentally important and we get to sequencing in a minute. The content of this deal is also important and here you get to the question of exclusions. We start taking stuff off the table, other countries will start taking stuff off the table that we care about. We need to be thinking about that. Sequencing, sequencing and timing. Is it 2012? Is it 2013? If it drifts much beyond that, what is the implication of that? Sequencing in terms of countries, is there a TPP 1.0? Who comes in at 1.5? What's the difference between 1.0 and 1.5? Is there a 2.0? What does it look like? The living agreement, living for how long? What's the implication in terms of other countries coming in? What does that mean in terms of a Japan, for example? Remember who your friends are. Whether it's trade promotion authority or simply getting this through the Congress and oh, by the way, if we're looking at a campaign with a president who is running against the United States Congress, note to self, check out Article 1, Section 8. This can't be done without the United States Congress. Remember who your friends are and who you need to get a trade agreement through the United States Congress with or without TPA. Who's gonna be there for you to get this through? Republicans and Democrats. Which Republicans, which Democrats? And finally, precedents. What kind of precedents will we be setting in this agreement for the future? Whether it's future bilaterals, future regional, plural lateral agreements, sectoral agreements for the WTO, for WTO Plus, for the multilateral trading system. So a lot to think about here and that's it. Thank you very much to CSIS for making this possible. Thank you.


Hi there, this is James Swannick and you're listening to the alcohol-free lifestyle podcast where you learn how to take back control over alcohol and live a life of health wealth love and happiness Angela is 90 days alcohol-free today congratulations Angela and Angela has a More connected relationship with her daughters. She's gonna tell us about yeah, she's a better leader and Guess what? She's socializing with her friends who have always drunk and are still drinking and she's having more fun now Yes, I Have I have videos to prove. Have you? Have you really? Yeah Angela Ponsford, congratulations on 90 days. So good. What was life like? Before you worked with me and my program and my method for quitting drinking for 90 days What was life like around alcohol? So I drank every weekend. I was I didn't drink During the week. I was fine with that. I didn't get the arduous But every single weekend I would get to Friday and I would be thinking about having a beer or a wine So and so pretty much every Sunday. I was feeling a little bit seedy You know, I wasn't like I've gone out and getting outrageously drunk but it was enough for me to Feel it every weekend and then usually on a Sunday afternoon like I live in Australia Sunday sessions are a huge thing in Australia and Yeah, I would have a few beers on a Sunday and then Monday morning. I would you know, just feel the effects of it So and I think that's how I connected with the original it was like it wasn't that I felt that I had an alcohol problem Yeah, I just was over this like just not being at my peak. Yeah I knew that I just wasn't right up there and I wanted to be more Scala 1 to 10 on how you felt and how productive and effective you were being Now looking back probably a six six out of ten. Yeah, and six out of ten You might you probably realize now like costs you money cost you connection with the kids and family. Yep health Clarity focus so six out of ten is kind of just existing in the world really isn't it kind of yeah Yeah, and now that you've been alcohol-free 90 days If you were then a six out of ten, how do you feel? I'm not Nine and a half or nine. I mean like because I'm you know 90 days, and I'm like there's so many more possibilities Opening up for me now. So let's say a nine. Yeah, because I've got plans for bigger things. Yeah, if I'm already at a 10, then yeah, I love it Yeah, tell us a little bit about Your yourself and your friends and your daughters and what you do. Okay, so I work with a US Agency we run Facebook and Instagram ads and I manage the media buying team So there's ten people in the team and we're spread. I live in Australia and we're spread right across Asia Europe and into the US So, you know, I do pretty well. Yeah, my my Roach at Role in the agency fairly high-powered and lots of Calls at different times of the day. So I do that and I have nine and a half year old twin girls and And friends who drink. Yeah Yeah, friends who drink friends who drink. Yeah, and I Drink can drink. You can drink.  I am Scottish lasses can drink All right, they can especially when they live in Australia. It's nice and sunny and a nice cold beer is beautiful So yeah, that's kind of what I do for work and I'm a mum and etc And What's she been you drinking choice before beer and wine beer and wine never really drank many spirits at all But yeah, a cold beer and a glass of wine. Do you remember a feeling of luck your lowest point? I mean, look, you're not enough.  Yeah, and I remember going out a couple of Fridays and then Having just a few glasses of wine but then having to get up at 3 in the morning and then just getting up and thinking what the hell were you thinking and like what were you thinking and and Just suffering through, you know, a few hours of calls and knowing that I wasn't fully Present and fully there and fully able to use this thing which I have been gifted with is fairly smart And just knowing that it wasn't really being utilized. And so I think that last month I got really Clear on that and plus I was also doing a 12-week fitness challenge, which is, you know, four days a week Monday, Tuesday, Thursday, Friday and quite most of the Mondays of that 12-week challenge. I had a few drinks on the Sunday It's ludicrous, you know doing this like real, you know intense fitness Challenge and then knowing that the Mondays I really wasn't given 100% Yeah, it was a it was a combination of those things and particularly in that last month so November last year and then I think I was following you already on Instagram and then you just started seeing the posts About the court chain Yeah, so What do you ended up doing is joining my group which helps entrepreneurs business owners executives professionals quit drinking for at least 90 days get to today which is 90 days and And then from there ultimately choose whether you wish to go continue going alcohol-free, etc But before you did that you had to get on a call with me And you had to speak with me How were you feeling? Well, first of all what inspired you to click the button and Book a call with me and then how were you feeling before and during the call? so I Was terrified of doing the call cuz like I never get on calls for these Like for any kind of coaching like if I know that I have to get on a call I'd usually not not doing it and I remember sitting with it The page open for a bit two days beforehand and I was like no and it was a good batters and forwards And I was on my mobile now I'll just go check out the page on desktop and then we'll go back to my mobile And then I think it was one morning and I was like I picked the last time that was available and it was like This was on the Friday, and I think the call was on the Monday I was like, I'm not doing the call at the weekend. I'll do it on the Monday morning and I think I'd gone out I got I think the Friday night before the show I'd booked the call I went over and met a couple of friends for early just to say hi had a couple of drinks too many again got up for my Saturday morning Meetings and was feeling just like just didn't feel a hundred percent And I think actually on that Saturday then I booked it Maybe it's Friday the Saturday I booked it and then that was the last time I had a drink And then I got on the call with you already so already more than 24 hours into yeah Having had a drink which doesn't sound like much but for I hadn't had a drink on that Sunday Yeah, and I got on the call the Monday morning, and I was I was ready. I was ready to talk to you Yeah, like I didn't I had no idea what to expect. Yes. I was just like shit I'm getting on a call with this Aussie guy that lives in Venice and like I feel like I know him because I've seen him on Instagram But I don't really know him. Yeah, and yeah, and Was the call I mean obviously ultimately you joined and got the benefit of the 90 days of coaching Was the core valuable for you? Yeah, really valuable like Yeah, the calling itself was like we you like delved into just asking some really good questions about how I was feeling that my really current relationships, you know with my kids and my friends and and where I was at in business and yeah It was the calling itself. I got a lot of value out of and Yeah, just when you when you told me what the program was about and you know the benefits that I could get I mean I was terrified. It was the first of December a second of December And I was like well when does it start and you were like well right now? And I'm like I'm going to the UK in Paris for Christmas and New Year, and there's champagne there What's this tip talking about? But I did yeah, because I got so much value at the call. Yeah, like I you know Just go through I've been you know stalking you all weekend. What's he been on? What's this guy all about? So you're Googling my name. Hell yeah Did you find anything incriminating on me? Lots, no Okay, so then you took action and you joined? Yes And were you nervous to join or once you finally made that decision were you excited? What were you feeling when you said yes, okay? Let's do it. Nerves, nerves mainly because it was it was December Yeah, and that's you know drinking season, you know that's drinking season for Scottish people and Australians and party season and I was like Not sure about this it's like still wasn't sure about it Yeah, even though I'd said yes, but was excited about the possibility that Yeah, and I guess it was you know, you're letting go of something that you that's been a familiar Friend for a long time. Yeah, but also an unwanted friend. Mm-hmm. Yeah kind of funny to say that like an unwanted friend, right? Yeah And then that Christmas that December holiday period you actually were over and there was beautiful fires And there was opportunity to drink mulled wine and and what happened? I didn't drink and It was awesome And I didn't feel like I was missing out and I got really present to the amount of time I actually spent thinking about drinking and That was not there and when I say thinking about drinking like one so when I would be having a glass of wine I was thinking about oh when I'm going to be finished it soon And I have to go up and get another glass of wine or where's the waiter is the waiter coming round to offer me another glass of wine And just the amount of time spent thinking about Realizing like the time that was crazy still crazy and Does it feel 90 days later? Does it feel easy to be alcohol-free or does it feel still feel like a challenge? No, it doesn't feel like a challenge So I just had a conference there which you were at and normally that's a super busy time of year for me There's a lot of networking a lot of parties and I went out and probably had more fun Certainly on the after party. It was an eighties party eighties What characters you go as well like Cindy Lauper someone told me I look like Cindy Lauper and nice pink choo-choo on and a pink shell suit and you know rather fetching and And there was a dance dancing dancing all night and then there was a competition on stage Which involved a shake weight and I got up on stage and joined the competition completely sober Amazing. Wow. My mates were like one minute. I was there and then they turn around And then they realized I was up on the stage and they were just laughing their heads off that I was up there stone-cold sober So you can have fun without alcohol. It's so much fun and you can network and do deals and be a great leader in your business While being alcohol-free as well totally because a lot of people think well and network there's open bars as conferences There's all these kind of things like there's the staff drinks on a Friday night But you've been able to navigate all of that alcohol-free while other people are drinking around you While there's an open bar. I don't know about you, but I used to love the open bars It's like open bar. Don't have to pay anything for alcohol. Give it to me The eddies party was an open bar like in a nightclub and in San Diego And it was really cool and they had a really cool bad and open bar all night. What did you drink? I had some sort of water and fresh light. I love it.  Usually Sunday night Not been able to drive anywhere with my kids So if they wanted to go anywhere that wasn't going to happen on a Saturday night or a Sunday night Just feeling sluggish generally at the weekends and just not being fully me and a hundred percent Now that I've been alcohol-free 90 days. I have so much more clarity on what I want to be doing Personally and professionally I definitely am a better leader. I've noticed it myself I've had so many people say ask me what's different about me and that they've just noticed a different energy from me Like like sounds a bit woo-woo, but I'm not that woo-woo Quite a few people have said that to me And then just so much more time. I mean like the time just like for reading for learning Yeah catching up on stuff We're going out with the girls. Yeah, just you know up there like oh, we want to go to this place on a Saturday night Great, let's drive there and yeah, so you don't feel like you're depriving yourself of of anything when you when you're going out Not drinking the absolute opposite because I know like I know I can drive somewhere And I like I can get home or I can drive my mate somewhere else that we can go to a few places Yeah, and I'm not like how we're gonna get there. I'm gonna get home.  I'm not drinking anymore and they were like, oh, and I said, you know We're gonna it's I want to do that as partly for you I want to have you know be able to do more things with you and like yeah I think they really understood it and we had some friends over A few weeks ago and they my sister was over and she opened some champagne and she was there with her boyfriend And they were drinking champagne and they're like, oh The girls went to hand me one and I'm like, no, I'm not drinking. Oh, that's right. Yeah, you know And I was like, no, I didn't think I was drinking girls. They're like, no No, we just you know thought me because Arlene was here and I'm like, no amazing amazing What would you say to someone who's watching and who's thinking about getting on a call and maybe going alcohol-free? Because I'm pretty scared to talk to you on the phone Some of my team members are pretty scary as well. I think yeah, it's not so scary after all I just say get on the call like honestly that it's It was a huge step for me that it's not something that I do like I can talk to most people I can get on stage I can talk to people but just talking one-on-one on a call like in that kind of coaching or like that Personal environment like I was terrified but the James was like so nice Welcome in and I got real value at the call Just do it and don't think that it's that you have to have a serious drinking problem to to get on the call with I'm like it if you just feel that you're not operating like you're best at a hundred or at least 90% Honestly get on a call. If I can do it anyone can do it. I love it. Well, congratulations. Thank you I'm super pumped for you and May I give you a hug? Sure. All right Congratulations, I'm so happy for you that it's 90 days. Thank you I was pretty scary 90 days ago, right? It was on the phone call and 90 days later here We are you are in Australia. Yep. I was in I was in Venice Beach in California and now we're in Venice Beach, California at 90 days later Yeah, and for me. I've had a life with alcohol and I've had a life without Out and I can tell you that a life without feels so much better. What do you think? Yep, totally 100% hands down like 90 days in and I can't stop it here Wonderful. Thank you so much Angela I am one year alcohol-free today Amazing. Congratulations. This is Angela Pondsford I am James Swanik from Project 90 and Angela was one of the original gangsters of the 90 day Quit drinking program that we had. What does one year alcohol-free look like? Lots of beautiful Sunday mornings with no hangovers lots of nice Saturday evenings doing what I want Going to anywhere I want to driving what I want to and getting home to my own bed on any evening that I want to as well I love that How does it feel like? How does it feel being alcohol-free for one year? It feels so freeing. My body feels healthy. I have so much more time for my kids And just doing the things that I want to do instead of like thinking about where's my next drink What was your drink of choice or what were your drinking habits when you enrolled in Project 90 a year ago? today wine and beer at the weekend that was it wasn't a huge big heavy spirit drinker, but just like on a Saturday And then I would have And what impact was that having on your life? Sluggish and didn't want to go out and do things with the kids, you know, especially like Saturday nights of sundays. I was just like, I want to lie in bed or I want to lie in the cake. Do not do much. Yeah So none of that anymore And then you were telling me that about a year ago you started seeing my facebook ads for Project 90 And you were like, who is this guy? And you must have looked at my ads about 100 times before you actually booked a call tell that story He stalked me Yeah, I kind of like it started seeing your ads and then I was like, who is this joker? No, I wasn't and then I looked you up and realized you were Aussie living in Venice and I've been In Venice quite a bit. So we spent enough for a minute time there and I was like, oh This guy's okay and looked you up and then I think Saw that saw the ad on the friday Got about it over the weekend filled in an application got on a call with you on the monday and then joined on the tuesday and Had had my last drink on the sunday. Yeah Yeah, it was just time so Yeah, and it was december 2018 When you did that and you were you were about to go over to Scotland I think and you were scared that you were going to be able to If you were going to be able to get through the christmas and holiday period alcohol free But you did because I was in paris for new year and I was already had my site set for champagne in paris for new year and you know drinks in scotland with the family and No, didn't Pretty good And uh, you had to cough up some hard earned cash to do project 90 because you got personalized coaching You get group coaching you go one-on-one calls You've got a methodology for quitting but most importantly staying quit, right, which is what you've done. Yes. It's not just for the 90 days It's giving you tools for life Yeah, so Was the investment that you coughed up your cold hard cash? Was that was it was it worth it? 100 200 yes Like it's so worth it. Like I know it seems if you are thinking about it makes seem like a lot of money Right now, but like a year Boos free I think of the money I would have spent on not, you know, just thinking of that alone just the money I would have spent on booze like Not even, you know, what we're thinking about But like just the changes in the way that I look at things in life now like tools on how to cope with things when you Feel that you want to drink. Yeah And it's not just the money that you save on on alcohol It's the money that you make because you're clear headed And you're focused and you're productive, right? Yes. Yeah, definitely.  And so what if and just finally what if friends and or family Noticed about you in this year of being alcohol-free whether they've known You would you were alcohol-free or not? um, I think in my eyes a lot people have like commented or like how Bright much brighter my eyes are and my skin Yeah, so people commenting on things like that and then just in general and like demeanor like, you know Especially the closer net know how less volatile I don't know if that's the word. Yeah, I don't know. Irritable irritable. That's the word. Yeah less irritable Yeah, I noticed that my kids noticed it for sure Uh, and your twin your twin daughters, they notice it. Yeah. Oh big time. Yeah. What have they said to you? We're and what circumstance what situations have there been where they've said something and you go, oh, that's interesting Like they noticed them on alcohol-free. Um, I think certainly. Yeah, the sunday mornings is the big one because it was like You know, it's usually a bit slow on a sunday morning.  Yeah, amazing Uh, what would you say to someone who's thinking about joining project 90 and doing this but more than just joining project 90 but Taking the leap of quitting alcohol for at least 90 days Possibly more and beyond possibly forever. Yeah, um, just trust just trust that you Have it within you to do it if you're already thinking about it if it's already there If that desire is there, then you actually do have it within you to do it Uh, but just getting that support right at the beginning from james and kevin and the project 90 crew That's that's what makes the difference in that those early stages You believe in it yourself and then then give it reinforcing that belief that you can do it Thank you Angela I'm gonna give you another hug like we did last time. Congratulations. This is what one year alcohol-free looks like Yes Thank you so much for listening I have some free stuff for you if you go to james swanick.com forward slash guide I will send you my formula for reducing or quitting alcohol If you'd like to watch the video versions of these episodes Then you can watch them at my youtube channel, which is at james swanick If you'd like to send me a direct message on instagram, you can do so at james swanick If you would like to try a three day challenge a free three day challenge You can go to james swanick.com forward slash three day challenge If you would like to try the 30 day no alcohol challenge You can go to 30 day no alcohol challenge If you would like to schedule a 15 minute exploratory call with one of my coaches to see how we may be able to help you In your alcohol-free journey, you can go to james swanick.com forward slash schedule And my request is if indeed you enjoyed this episode or you have enjoyed the podcasts Would you please go ahead and rate the show in itunes? And would you please write a review a review might just be a sentence saying great listen? Hey, this was fantastic. Oh, I really enjoyed this whenever you give a rating whenever you write a review It surges our podcast up in the rankings enabling more people to see it and hear it and potentially Inspiring someone out there to reduce or quit alcohol and potentially transform their life So yes while it does help me to get ratings and to get reviews You will actually be directly contributing to helping someone's life by having them discover this podcast So if you are open to inspiring others and to helping me in the process Would you please go ahead and give this episode a ranking and would you please write a review? Thank you so much for listening and I will catch you on the next one


That's what we're going to do now, which is easy to do with a journal entry, but in QuickBooks, we're going to want to do it with an invoice form, which makes it a little bit more tricky. So let's do it here. Revenue, I'm in V8, F2 plus F2. Revenue is going to go up in the credit direction. That brings us back in the green down below. We're out of balance. That's why this one's red. We'll go to the work in process, V5, F2 plus F2, and the work in process now at the 18461 is at 6770. So that's where we stand now. And so when we go into QuickBooks, we would like to use an invoice because that's the form usually used to record revenue. But the other side, we don't want to go into accounts receivable. So if I go back on over and say, well, how are we going to do that? If I go back on over here, this is an internal invoice just for the revenue recognition part of things, invoice. And it's going to pull stuff in. I don't want to pull in from the estimate this time because that's what I'm doing for the external invoices that I'm going to use and actually send to the client. I'm going to pull in the billable items for the internal invoice that I'm going to use, which would then calculate the 18461.30 of revenue. So that looks correct. And so what would this do if I recorded it? It would increase accounts receivable by the total because it's an invoice. And the other side would be going to revenue accounts driven by these line items. I want these going to the revenue accounts, but I don't want this going to accounts receivable. Instead, I wanted to go to work in process account. So what I'm going to do is just make this zero by putting a negative number up here with my journal entry and then say this is just going to go to my work in process account. Work in process. And so I'm just going to put negative 18461.30 class number two. And so now nothing's going to accounts receivable because this is zero. And the revenue is going to be recorded by these line items. And then the part that was going to accounts receivable should now be going to work in process account. All right, let's save it and close it and see if that is indeed what happens. Let's go back to the balance sheet. Back to the balance sheet. We're going to say that that work in process is affected here. And it's nicely classified by class now. So if I had multiple amounts for different jobs in work in process, I can break that out and track it as with the billings using the class tracking tab into the right running the report over here. We've got the revenue now recognized here at that at that 18461. So I've got the revenue matching, you know, the cost to get sold using our kind of completed concept matching concept, which is which is nice. By the way, if I compare this to like the first job at the end of the month that we did at the end of the month, 0701 25 to 1231 25, you can see where the revenue recognition is a mess here because I recognize the revenue over here based on based on just when I build the client and then the expenses when we actually incurred the expenses. So they're not matching, they're not lining up like we would kind of like them to line up from a timing concept on a percentage completion kind of conceptual basis. So I'm going to go<PHONE_NUMBER>25. Let's run this again. Let me do 063025. There's not 31 days in June. You have to stop at 30. Okay, I can do that. Let's go ahead and bill the client now. So now we're going to bill the client based on our billing schedule, not based on the work that was done because we agreed to bill them and we're going to stick to the billing process because we go by our word over here. We told you the billing process, we laid it out. That's what we're going to do no matter what happens in our because that's how we set it up. So accounts receivables are going to go up by what we billed them for month number five now according to just our billing schedule that we agreed on at the beginning of this process. And the other side, I don't want to go to revenue because I'm recording the revenue based on this worksheet over here, not based on the billing schedule because this is just for the billing side. So I want the accounts receivable to go up the other side, go into billings. All right, let's do that. We're going to go up top and say AR. Let's go into AR, something's in it, F2 plus F2, scrolling down 35,000 up to 35,000. Moe B to the N, other side not going to revenue, but rather to billings F2 plus F2, scrolling down to the billings 35,000. And that you'll note is now up to 100,000, meaning we have now billed out or invoiced the invoices that go actually to the client for the whole 100,000. When I enter the invoice in QuickBooks, however, I'm going to have to do a little bit of finagling to get that billing item there. And I'd also like to get the detail on the invoice that I'm going to send to the client, which I'll pull in from the estimate. Let's do it. Go into the first tab, we're going to add another invoice, ultra invoice. I'm going to pull this one in from the estimate. And this time I can choose either here or I can like I can make this 35, but I can just choose the remaining balance now because this is going to be it. I'm going to close this thing out. That's the remaining balance in our progress invoicing. Boom. So now it's closed. We have nothing over here to pull over anymore. And this is going to be as of five, one, five, one. And then down here, it pulls in nicely to what we want to give the client the 35,000 down here because it's an invoice will increase accounts receivable. That's what we want. But the other side is going to go to these revenue accounts. I don't want it to go to revenue. I want it to go to billings. I could replace all of these items with a line item for billings. But I kind of like the detail that's being pulled in from the estimate. And therefore I'm just going to do a little journal entry at the bottom here. And I'm just going to say I'm going to reduce the revenue account that these are going into and just by the whole amount negative 35,000. And this will be class number two. And I'm just going to put it into my billings account.


Welcome to condo insider. I'm Richard Emory. I've been hosting the show for a couple of years now. We try to talk about condo or association living and, and all the things that are happening and try to educate board members and owners and answer questions we've done shows based on responses from our audience for we just did one recently on the delinquencies because of that inquiry from one of you out there in Hawaii land. But anyway, we've been doing these formats we've been interviewing guests at times and okay times, I've done a show where I talk about particular topic and more technical terms. So today we're going to do that we're going to talk about the infamous or famous reserve study thinking, you know, we all know that condo associations have to by law, do a reserve study. We have homeowner associations and co ops do one because it kind of makes good business sense to prepare to prepare for the future with regard to your future capital needs but technically speaking by condo law so we're going to kind of focus on condos today, and the current thinking of reserve studies because a little bit of history. In 1995, the Hawaii legislature passed the what we call the reserve law, basically requiring all associations to be 50% funded by January one 2000 kind of gave them a five year window to get figured out and fund the reserves. The law was amended in 1997 before the January one 2000 start date, because in the real world out there and and I hate to call it the mainland but the real world reserve studies is there are two funding methods is percent funded and cash flow funding which we've talked about before. And the law didn't provide for the cash flow method of funding in 1995 and in 1997 it was amended to allow for the cash flow ending the funding, because of the fact that's the most dominant method of doing reserve studies throughout the United States. Then in January one 2000, the law took effect. And what I have seen and I'm going to go through this little more detail later on, is that this is the future of lawsuits for condos. They've already started to happen there's been many lawsuits already with regard to reserve studies. And it's fairly simple to insulate yourself from lawsuits. If you do just a few simple things, but we're going to take you through kind of the reserve study. The first part of the show will kind of review the history and kind of what we have. And the second part of the show we'll talk about the modern thinking, because there's so many ways to look at this, you know, that that over the years is 2000 to 20 years later, it is morphed with all these different issues and opportunities and ways to address funding issues so hopefully your association saves for the capital expense but also doesn't break the bank of the homeowners that the plan has got some reasonable basis to it. I'm often like to quote Mark Twain, who actually he popularizes saying of Benjamin Israeli but I what he said was lies damn lies and statistics. So you take data from a reserve study, and depending how you put it in the, in the sausage grinder and how you turn the grinder, what comes out can be vastly different by the ways and assumptions and things you do but I'm going to try to add some clarity to this and give you some food for thought on modern reserve study thinking. And so let's just talk about a few of the very basic things before we begin. When you're done, your condo you don't have a choice. The wall says you will do a reserve study. And when do you do it, you have to do it every single year. Now that doesn't mean you hire a professional, and you pay money to have a reserve study done every year but think of it this way. You do a reserve study this year, and you projected the painting to be done next year for $100,000. And the board says well you know, I don't think we need to paint the building this year I think we can get a couple more years out of this paint the building in 2025. Well the reserve study should be adjusted. The forecast is new assumption. So every year you're kind of updating the reserve study and saying well a that we do we said we're going to do last year yes or no if not recycle when you are going to do it. Maybe if you did do it with the cost you had in the study accurate or what is the current accurate cost. So you'd be plugging in the new numbers based on new actual local current information. And then number three you might say you know there's something we never thought about that we want to do and that we should have included in the reserve study. So conceptually speaking, you have to amend your reserve study every year, you may hire a professional to do the initial base document, but you technically have to do the reserve study every single year as a part of your annual budgeting process. And I have some notes years I want to forget anything. But let me just give you the national definition of a reserve study. It is a budgeting tool, unquote. So what does that mean. It means it's not science. You know I have to predict as a reserve specialist, useful lives remaining life replacement cost inflation interest earnings on your money. If I could do all that like science and accurately, they probably would have made me the head of the Federal Reserve system. I can't do it as a tool, kind of take these assumptions and use them reasonably and forecasts, which are future capital needs are going to be. And what it also is not. It's not a quality inspection of the project.  They acquired you to do it in good faith. So the issue becomes. It's not a quality control inspection so you don't know you can look at all these tables and manuals we use. We don't know if that's going to be the actual circumstance. Whether that front door will last as long as the manual say it'll last or because of use of less less or longer. And you have to put in perspective that this is a budgeting tool designed to make sure that you save money to pay for these components when they come do in the future. And what you need to understand is all came about because there are lots of lawsuits and complaints back to the real estate commission, the Department of Commerce and Consumer Affairs. Back in the in the 80s that people would buy in a unit. All of a sudden get a special assessment for the roof. Well, they wanted to make it that if you bought into a brand new property, and the roof has a useful life of 20 years, and you live there for 10 years. You made your program to share contribution during the time you live there for your use of that roof or depreciation in someone's senses. So the idea behind the law was the force kind of association to look at all these capital components and then start a savings plan to give you the best chance that you have the money when that component needs to be repaired or replaced. There's kind of a concept behind it with regard to how this works. So, putting that into perspective. You have to do a reserve study. Now, if you hire a professional. There are three levels of reserve studies for it's called level one two and three. That's, that's, that's pretty simple. Level one is the highest level reserve study. That's when you usually hired a professional. And what he does is number one he comes out and takes your existing data and and develops his own data with all the components are. And then he applies useful life to it saying it's got a 10 year life 20 or life if you're existing building. What is the remaining life was a 10 year life but they've had it for five years so it's only got a five year remaining life. You've got to do a replacement costs under a level one, the reserve specialist doing the work actually goes and does a physical site inspection, helps develop the components along with your board and our resident manager. And talks to vendors and air conditioning people and painters and roofers to get what they expect the estimated budget cost is to replace those items. So it's the highest levels there's been the most work done with respect to developing the data is that perfect of course not. I mean you can say the rules for the last 20 years we have a lot of hurricanes and wind and rain and it'll last 15 years or 18 years, or there's no wind and rains in the last 25 years. So it's why it's important to update it every single year. Level two study is the same thing as a level one, except we're not contacting the vendors and and we're using our own database so we're not doing any independent verification of the cost. We are coming out to the property and looking at it again to see if we see anything. And we are taking the data to develop the components and information you need to calculate the research study. For me, which is the lowest levels we're just taking the data and regurgitating it. That is at the end of the year to be fixed that last year did we replace it how much of the costs us. We're not doing a site inspection, and we're not doing independent cost verification. Now what are the differences between level one two and three, the price. You know it can be rather expensive depending on the size of the building to do a level one reserve study if you want to do it accurately. Level two is going to be significantly less because the most complex part of it and time consuming part is verification of cost information. Then level three, you're basically taking the basic data and, and updating it for the next year's budget, and that's going to be the least expensive of all. So that's just how level one twos and threes work and I'm always asked how often should you do a level one and I've never seen it writing anywhere but everybody seems to say, well every five years you should do a level one. I don't know if that's true or not, but, but certainly having a level one to start the process would be very telling to a board of directors on what they should include or not include in that. A level one reserve study. Well, you have very basically a few things common elements, normally limited common elements are not included although sometimes you have an open parking lot with asphalt. That might be included. There's nothing to prohibit it from being included. You might have when I is often railings on the nice maybe a limited common element, but they have to be replaced at some point in time as the building ages so you might include that. Number two is going to be if you own a resident management apartment or one exists because it's in your declaration. All the upkeep of that resident management apartment the appliances the carpet the painting have to be in the reserve study. There's going to be what we call fixtures. Well the fixtures are going to be your ceiling fans in the community room. The doorknobs the lights on the wall those types of things that is personal property if you're a big association, you may have pools chairs and furniture, you may have equipment in the gymnasium and if you have a fitness center, or any other type of personal property that you have that the residents enjoy while they live there. And then lastly but not least is some people include loans or in their in their reserve study, in the sense that that's kind of the components so that's what you got to put in the study as I said earlier, you've got to estimate the find the components, estimate their useful life, estimate their remaining life, estimate their replacement costs, and then factor in by inflation and that's just turning on your money. And I'm not making that up that's in the law and administrative rules and support the law so it can be quite a complex project for a bigger association. So something you got to pay attention to. And in that note, I've kind of given you the background. We're going to take a short one minute break then we're going to come back and talk about the modern thinking, and about wall suit so what's happened in the real world will be right back in one minute. So I'm back. Anyway, I talked about the kind of the background and history of reserve studies. I did want to mention that there's certain things you typically don't put reserve study. And that is contingency, for example, you don't want to put another item is like, I don't know what it is, you know, I'm just going to throw in an extra amount of money. And the demand puts a demand on the contribution amounts and is not normally included as well as your insurance deductibles or if you're going to do a future improvement and put something brand new with the project that wasn't a part of the decoration. Normally that stuff's not included.  I don't know the two types of reserve studies. I would have made a fortune by now because nobody ever gets a right. They always say percent funded and cash flow funding on the two types of reserve studies. That's not the right answer. Those are the two types of funding methods, but it's not the right answer on the two types of studies. The two types of studies are the component method, and the pooling method, and the component method does is funding as percent funded, and the pooling method doesn't as cash flow. And it's very, very different what the results can be and I'm going to try to give you a visual example of this and keep it simple. There are two components.  And a roof job you got to do in 10 years for $70,000. In my example, you can see you need 30,000 for the paint job and 70,000 for the roof and the next 10 years or $100,000. So let's look at component versus pooling method calculations. Let's do the component method, percent funded method. What the rules are for a reserve study preparer is you must calculate each component separately. So back to the 30,000 for the paint job I need one third of that that's 10,000, and my roof job of 70,000 10 years I need one tenth of that or 7,000. So I need $17,000 under the component method, and to be 100% funded I need to collect 17,000. That's about 50% funded we collect $8,500. So in three years when the $30,000 paint job is due, you have 25,500 in the bank, and nothing for the roof. And what the administrative rules say is you must immediately assess the owners $4500, and then you must assess the missing amount of money or the 50% of the missing money for the roof. So $7,000 a year so 50% would be $3,500 a year. So you'd assess the owners 10,500 to catch up on the 50% funding for the painting, and you'd have to assess the $4,500 for the, for the, have the money to do the painting. Well, I've said to people, many times, hardly anybody in the United States uses component method percent funding funding. It's a single year number people who project these percentages every year for the evermore are just doing it for their own exercise of utility, because under component method it's a single year study what's your percent funded, and you have to calculate each component separately. Now how does that compare with the pooling method remember I said 30,000 of the paint in three years, 70,000 for the roof in 10 years, and you know $100,000 in 10 years. It's like 10,000 a year, use 100% of it for the paint job, and I use 100% for the roof job for the subsequent seven years. I'm, I did fully I mean I've got all the money I need I've done everything, and under cash flow I only need $10,000 for the reserve study. Now, that being said, everybody uses the pooling method, because if you look at all the studies I've seen I've seen hundreds of thousands of studies. Cash flow gets very erratic results and it's not worth the energy. And think about this way from evaluating your building you better off saying I'm, I'm 50% funded you better off saying I'm funded fully.  So that's kind of the difference between the two. The most reserved study preparers today, because we have very sophisticated software will do the cash flow pooling method, and it'll give you the percentages but I always delete them I can do that by clicking a little box on my software say don't show the creek confuses the heck out of people. You know it doesn't make any sense to do that so you need to know that the component method is not used anymore. The pooling method cash flow is the is the basic standard of the industry today. Now let's talk about what we've seen in litigation on this. Remember you have an obligation to fund this fully litigation has come about from three or four events by associations.  In fact, it was a breach of fiduciary duty. A judge or an arbitrator can make the board of directors personally pay for the costs to do reserve study because you have a statutory obligation to do it. So the number one reserves, number one lawsuit is someone not having done an adequate reserve study. And through that process typically they're not maintaining the common elements and the owners are upset. And common lawsuit is and I had this happen. Well as an expert and a witness I knew a lot of expert witness work on reserves is that the board said you know our reserves are in great shape. If we just pretended the central air conditioning system didn't exist. If we just pretended it doesn't exist. Yeah, can we take out that $3 million component to replace in 20 years. We have more than enough money based on our contributions, and we'll just figure that out 20 years from now. And so the lawsuits we're seeing is where reserve studies, either intentionally or, I'm going to say it should have been obvious, left out major components to intentionally and willfully try to reduce the reserve study and so the law is very clear you can't do that. It's a violation of the statute to manipulate the reserve studies to get around funding your reserves properly. But the number two case I see is the ones that it's intentional because I go to meetings all the time and board site. What if we just did it this way and took this out of the out of the study and I say you can't do that. You know, I noticed recently a board overthrow of our waking key project. And after the new board took over they said well our business judgment is to take $9 million and expenses out of the reserves. I've got this anecdotally so I'm not involved in this but the lawyer was talking to me about it over nice class of red wine and we're saying. Are they nuts. I mean it's obviously fraud, it's willful intent. They're not going to be covered by the director and also liability insurance so you can't try to manipulate the data to say, I don't have a central air conditioning system is my example. You know, so the next one I find really interesting, mostly on new developer projects. They come and they say okay well we are going to put the developers public report out and we're going to put in an estimate of maintenance fees and the fee dispersions they call it. They say well, what we're going to do is say that we're going to use 10% of maintenance fees as the number because allegedly not so not true but allegedly. The FHA says that 10% reserve funding is adequate. The problem with that thinking is Hawaii law doesn't say you can use the FHA 10% underwriting requirement as a measurement standard for reserves. It's not within the law. And frankly if you read the FHA and of course you get into hot FHA Fannie Mae all these other ones have little quirks on this but they're all about the same. And after that, that's not what it says. It says not less than 10%, but otherwise prescribed by a reserve study. So you can't argue that you can just take 10% and use that number, because it's not a legal number to use. So we're seeing lawsuits against developers and managing agents where the reserves are inadequate and what happens is new buyers get in there. And all of a sudden the first one or two years after they bought, they get a 20 or 30, 40 in some cases 50% increase in maintenance fees to properly fund the reserves. And these people who may have been under a reserved housing, their ACDA or something like that, can't afford it. And so what do you mean you, you use the number that you can't validate or document. I mean, it's fairly easy in today's world to look at like size buildings and see what their funding for reserves and the status but I see many lawsuits right now where they're starting to attack developers because they fact they use a number that's not provided for in the statute. And so that's where the lawsuits are coming. Let me see if I missed anything on my list here. The last one is that they'll put in a contribution, let's say 100,000 this year, and 110,000 next year, 120,000 next year and they do in this 20 year forecast. And I'm looking at one working on right now as a consultant where their current contributions are 750,000 a year in 2021. And they're 4 million in 2041. So they go up every year by 3, 5, 10% some number. And so the question is, if you're supposed to be paying for your fair share while you live there, and you're really kicking the can down the road and putting on someone else down the road. And these annual increases, you can't call it inflation because the software itself already considers inflation in the analysis. So, if they put 3% in every year it's not inflation because the software is already got if they put in 3% in the number. I'm going to summarize now and we're going to let you go back to whatever you were doing that the key word and all this right now all the people avoid litigation is disclosure. Whatever you did make sure that your reserve study has adequate disclosures, exactly what your assumptions were, why you made those assumptions, and what you did, and then even if you're wrong you're protected. So the magic word is always disclosure, and people need to put more time in their reserve study and make sure it represents what the building is, what they expect in the future. And at the same time disclose what they did and why, and that way they'll avoid litigation because anybody who buys in there, you told them what your assumptions were and allow the law allows you to be wrong. And on that note, thank you for watching condo insider. It's a complicated to somehow do this over the internet, but I hope you learned something about it. And if you have questions feel free to through think tech a wide send me an email or write me a question. Aloha and have a good day.