Brazil's President Jair Bolsonaro said, after a phone call with President Donald Trump Dec. 20, that Brazil will not face tariffs instead of quotas on its steel exports to the United States. Trump had tweeted in early December that the change would come “immediately,” but no Federal Register notice ever put the tweet into action (see 1912020036). He had said at the time that currency devaluation in Brazil and Argentina was “very unfair” to farmers and manufacturers. Argentina and Brazil have taken commodity market share from the U.S. in China, after China imposed tariffs on U.S. products.
The Office of the U.S. Trade Representative will ask for comments on whether the second set of tariff exclusions on Chinese imports on Section 301 List 1, set to expire March 25, should last another year, it said in a pre-publication notice on its website. The agency will start accepting comments on the extensions in docket number USTR-2019-0024 on Jan. 15. The comments are due by Feb. 15, it said. The USTR recently granted extensions to six exclusions, while letting 25 expire, from the first group of exclusions (see 1912190060).
A bipartisan group of 161 House members are asking U.S. Trade Representative Robert Lighthizer to open negotiations for a free trade deal with Taiwan. The letter, sent Dec. 19, was led by Rep. Steve Chabot, R-Ohio, Rep. Albio Sires, D-N.J., Rep. Mario Diaz-Balart, R-Fla., and Rep. Gerry Connolly, D-Va. “Taiwan is a longstanding ally and a like-minded partner in the Indo-Pacific region that upholds and shares our values. Taiwan is our 11th largest trading partner worldwide, the 8th largest export market for U.S. agricultural products, a major purchaser of U.S. LNG exports, and the supplier of a significant amount of the semiconductors used by our manufacturers in their finished goods,” they said. “As the trade and investment relationship with Taiwan already supports an estimated 373,000 U.S. jobs, working toward the negotiation of a high-standard and comprehensive U.S.-Taiwan bilateral trade agreement would further enhance our shared goal of enhancing the global competitiveness of U.S. industries while spurring American job creation.”
Sen. Pat Toomey, R-Pa., the strongest free trade advocate in the Senate, said he doesn't know if Republicans will return to their traditional position as pro-free trade. In response to a question from the audience at the American Enterprise Institute Dec. 19, he said it depends on whether President Donald Trump is re-elected in 2020.
The Office of the U.S. Trade Representative announced that beginning in February 2020, quotas on imported washing machines will be administered quarterly. President Donald Trump decided to change how the quotas are allocated to “shore up the effectiveness of the relief provided in 2018 to U.S. manufacturers injured by surging imports of large residential washers.” The emailed press release, which came out one minute before the close of business on Dec. 20, said it was based on developments in the domestic washing machine industry since the safeguards went into effect. The International Trade Commission found that there was some improvement in the financial performance of domestic washing machine producers, increased production and employment, and progress in implementing adjustment plans. Imports have declined, but overall, sales have declined (see 1908080054). Foreign companies argue sales declined because of higher prices caused by the tariffs; Whirlpool said it was a consequence of fewer sales 10 years ago, since people tend to replace their washing machines on a 10-year cycle. In-quota tariffs are 18 percent and will drop to 16 percent in February, but out of quota tariffs are 45 percent.
The U.S.-Mexico-Canada Agreement passed in the House of Representatives with a vote of 385-41, with all but two Republicans and 193 Democrats voting yes. This was the biggest vote for a free trade deal in the House since the Canada Free Trade agreement in 1988, and many of the top Democrats in the House say it will serve as a template for future trade deals. It was a far more resounding “yes” than the original NAFTA vote of 234-200, when just 102 Democrats voted yes.
The U.S.-Mexico-Canada Agreement passed the House of Representatives with a vote of 385-41. The implementing legislation will be taken up by the Senate in the new year. If the impeachment trial begins in early January, it is expected to wait until that trial is over.
The World Trade Organization may have its first answer to what happens when a party appeals and there's no appellate body to resolve the dispute. The U.S., which killed the appellate body by not agreeing to appoint any replacements, is appealing a compliance report for a case in which India won the argument that the U.S. antidumping and countervailing case against Indian steel didn't fully follow trade law (see 14081205 and 1706090021).
The enactment of the U.S.-Mexico-Canada Agreement would increase revenues by $230 million a year in 2023 and $360 million a year in 2024, the Congressional Budget Office estimates. CBO projects that “certain imports of motor vehicles and parts” that currently enter the U.S. duty free under NAFTA would not be eligible under the stricter rules of origin in USMCA. It expects that some of those parts or vehicles would be replaced by domestic production, but some would be replaced by imports subject to tariffs, and thus, total customs revenue would rise. While there would be hundreds of millions spent in the first three years, primarily for monitoring environmental and labor compliance in Mexico, by 2024, that spending would be just $21 million, and would be partially offset by lower subsidies to dairy farmers, since CBO assumes they would have higher sales as a result of the deal.
Seven freshmen in the House -- all from traditionally Republican districts -- say that it's wrong for Senate Majority Leader Mitch McConnell to put off a vote on the U.S.-Mexico-Canada Agreement when he's complained for months that House Democrats are delaying a vote. “We are deeply concerned by your statements that the Senate will not take up the USMCA this year and that you refuse to pass any legislative items during January -- including the USMCA,” they wrote. They said the USMCA cannot end up in the Senate's “legislative graveyard,” as hundreds of other House-passed bills have. The letter, sent Dec. 17, was led by Rep. Cindy Axne, D-Iowa, and joined by Reps. Abby Finkenauer, D-Iowa; Joe Cunningham, D-S.C.; Angie Craig, D-Minn.; Anthony Brindisi, D-N.Y.; Kendra Horn, D-Okla.; and Susan Wild, D-Pa.