Mara Lee

The extended period of exclusivity for biologic drugs contained in the new NAFTA language continues to draw fire from Democrats in the House of Representatives, including from the new Trade Subcommittee chairman, Rep. Earl Blumenauer, D-Ore. Although advocates believe Mexico and Canada would welcome a change to this provision (see 1811210021), Canada's foreign minister threw cold water on that idea on Feb. 6.

Four trade lawyers from White & Case say that 2019 could have even more trade tumult than did 2018, especially if the Trump administration levies tariffs on auto imports from Europe or Japan. Their alert, published Feb. 6 and with Scott Lincicome as the lead author, talks about prospects for a China trade deal, ratification of the new NAFTA, a continuing truce with Japan and Europe, and other trade developments expected this year.

In his State of the Union address, President Donald Trump briefly talked about the China deal his administration is negotiating -- he said he's looking for "real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs." But he spent more time talking up the U.S.-Mexico-Canada Agreement, his replacement for NAFTA, which he called a catastrophe. "I have met the men and women of Michigan, Ohio, Pennsylvania, Indiana, New Hampshire, and many other states whose dreams were shattered by the signing of NAFTA," he said. By contrast, he said USMCA will deliver for workers. "I hope you can pass the USMCA into law so that we can bring back our manufacturing jobs in even greater numbers, expand American agriculture, protect intellectual property, and ensure that more cars are proudly stamped with our four beautiful words: 'Made in the USA,'" he said, to applause. He said he's making it a priority to reverse "decades of calamitous trade policies."

Sen. Rob Portman, R-Ohio, a former U.S. trade representative, reintroduced his bill that would allow Congress to overrule the president on future Section 232 tariff actions, and make changes to the investigations that lead to those tariffs.

Tariffs on allies make it harder to convince China to change its abuses, senators said, as members from both parties held a press conference to criticize Trump administration tariff policies. They were kicking off a lobbying effort from business owners and farmers around the country called Tariffs Hurt the Heartland, which began Feb. 6.

While the U.S. trade representative acknowledged some improvements in stopping counterfeit goods at the port before they leave, the overall conclusion of his 193-page report to Congress is that China's compliance with its World Trade Organization commitments is still poor 17 years after accession. China still embraces "a state-led, mercantilist approach to the economy and trade, despite WTO members’ expectations -- and China’s own representations -- that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO," the report said. Moreover, China is moving away from market-oriented policies in recent years, USTR said.

Russia's accession to the World Trade Organization in 2012 initially led to greater U.S. exports, but overall, its adherence to WTO rules has been disappointing, the U.S. trade representative said in his annual report to Congress. The report, released late Feb. 4, said non-tariff barriers are a greater problem than tariffs. In 2017, the U.S. exported $7 billion in goods to Russia, with aircraft accounting for one-third of the total. The U.S. imported $17 billion in goods, with oil nearly half of that and steel and aluminum about a quarter of the total.

The Asia-Pacific Economic Cooperation forum won't happen until November, but a panel of a State Department envoy, a former Office of the U.S. Trade Representative negotiator, Singapore's ambassador and Google's head of global trade policy talked about what might be accomplished there during a Feb. 5 panel.

A group of 48 Congress members, led by Sen. Marco Rubio, R-Fla., and Rep. Ted Yoho, R-Fla., asked Commerce Secretary Wilbur Ross to end a suspension agreement on antidumping with Mexican tomato exporters. They say the agreement is driving Florida tomato growers out of business. More than half the signers are from the Florida delegation, but the bipartisan letter, sent Feb. 1, also drew support from states that are not in direct competition with Mexican tomato imports, such as Michigan, Tennessee and Pennsylvania. The Mexican share of the tomato market has grown from 32 percent to 54 percent since the first suspension agreement in 1996, they said, and since 2002, Mexican tomato exports to the U.S. have more than doubled, while U.S. production has declined 34 percent. "We appreciate your team's efforts to attempt to renegotiate improved terms," they wrote, but added that the agreements have already been renegotiated before, and they have not worked as intended.

A free-market think tank based at George Mason University has published a critique of the U.S. Reciprocal Trade Act, an idea that President Donald Trump is expected to feature in the State of the Union address Feb. 5. The bill (see 1901240017) would give the president the ability to raise the tariff on any item to match that of another country's tariff on the same item. As the Mercatus Center's paper notes, doing such hikes would not be legal in the world trading system's rules regarding Most Favored Nation status. The top U.S. trading partners -- outside of Mexico and Canada, since NAFTA means most goods are duty-free -- are Brazil, China, the European Union, India and Japan. If Trump hiked rates with each of them to match those countries' tariffs, it would increase the average U.S. duty from 2.1 percent to 5.4 percent, author Daniel Griswold said. It would raise duties on 45 percent of imports from those countries. In order to make it work, there would need to be almost 10 times as many duty lines, and it would "exponentially complicate the US tariff code."