Mara Lee

On the second day of a World Trade Organization review of U.S. trade policy, U.S. Ambassador Dennis Shea said it's wrong to blame America for the crisis of the multilateral trading system, as he responded to European and Chinese comments from the first day of the hearing (see 1812170007). Shea said China is arguing that it will subsidize, dump products, force technology transfer and steal business information, and claim it is all OK because American consumers pay less for Chinese imports. Any U.S. response is then decried as an abuse of power and irrational, Shea said, according to a summary of the hearing provided by a Geneva trade official. "This is not acceptable," Shea said.

Trade officials from the Australian, Japanese and New Zealand embassies told a Washington trade audience that tariffs on Chinese goods are hurting their economies too. Phil Houlding, a trade counselor for the New Zealand embassy, said he doesn't like to hear leaders from either China or the U.S. "celebrating the other facing economic hardship." He noted the market turmoil of late, and said, "You've got to be a little careful what you wish for. These things rebound through a globalized world."

All of the Democrats on the House Ways and Means Committee, from the left and center wings of the party, sent a letter to U.S. Trade Representative Robert Lighthizer on Dec. 19, saying Peru has made "a flagrant attack on the heart of the [U.S.-Peru Trade Promotion Agreement (Peru Trade Agreement)'s] Forestry Annex that cannot go unchallenged." They asked the administration to take enforcement measures if Peru does not reverse course by the end of this week.

The retiring chairman of the Senate Finance Committee and ranking member Ron Wyden, D-Ore., sent a letter to Commerce Secretary Wilbur Ross complaining that businesses can't get answers from the department, the exclusion process is too slow and staff provide ambiguous guidance when requests are rejected on technical grounds. Chairman Orrin Hatch and Wyden asked the department to get requests adjudicated in no more than 106 days, to clearly identify technical defects, and to improve its responses to questions. In their letter, they thanked Ross for adding a rebuttal and surrebuttal process, and for expanding exclusion eligibility to quota countries.

A half-dozen members of the House Ways and Means Committee -- including the outgoing Trade Subcommittee chairman -- sent a letter to U.S. Trade Representative Robert Lighthizer saying the steel and aluminum tariffs on Mexico and Canada need to go. Five Republicans, led by Rep. Jackie Walorski of Indiana, signed the letter, as did Rep. Ron Kind, D-Wis. Kind, whose dairy farming constituents are among those hurt by Mexican retaliation for the tariffs, is interested in leading the Trade Subcommittee next year. They wrote that "we urge you to put the highest priority on lifting the steel and aluminum tariffs and retaliation entirely as soon as possible, and certainly before congressional consideration." The USTR has said he is working on finding a solution to the tariffs on Mexico and Canada, but has not offered a timeline for when agreement might be reached. Only Australia has been given an exemption without a quota so far.

Apparel trade groups testifying at the Dec. 18 International Trade Commission hearing on a potential EU-U.S. trade deal said they see room for departures from past trade deal approaches. Steve Lamar, executive vice president of the American Apparel and Footwear Association, and Julie Hughes, president of the U.S. Fashion Industry Association, received many questions about how they'd like the deal to be shaped. Both said they want immediate and reciprocal elimination of high duties on textiles, footwear and apparel, though Lamar noted there are some domestic sensitivities. The ITC asked him to elaborate and Lamar said there are some domestic producers of protective boots and of athletic shoes, and those producers would like their Harmonized Tariff Schedule codes to have gradual phase-outs of tariffs or keep their tariffs. Lamar said the exact number of lines has shifted over the years, from 17, to 19, to 23, but it's a small proportion of all footwear -- he said about 120 lines can have immediate tariff removal.

A routine biennial review of U.S. trade policy included sharp criticisms from longtime allies, as 19 countries took the floor at the World Trade Organization, with another 35 expected to do so before the two-day review was finished. The U.S. ambassador to the WTO, Dennis Shea, said the organization is not well equipped to handle the fundamental challenge posed by China, which continues to embrace a state-led, mercantilist approach to the economy and trade. Anticipating criticisms over America's refusal to allow any appointments to the appellate body, he said: "In our assessment, members are in the early stages of grappling with our collective failure to confront problems that have been growing for years."

World Trade Organization Deputy Director-General Alan Wolff hailed countries' willingness to say reform is needed at the WTO as "a sea change," but said he's not sure when things will be resolved to the satisfaction of the U.S. "The U.S. has not said what it takes to resolve the appellate body impasse," he said. The U.S. refuses to allow any appointments to the appellate panels in the dispute settlement system, and if that continues, the possibility of appeal will end in December 2019, maybe sooner, if a panelist has a conflict of interest on a particular case. "It will be solved," he said. "Will we go over a cliff first?"

After 10 years of argument at the World Trade Organization, the U.S. dolphin-safe tuna labeling requirements are deemed to be justified for legitimate conservation goals, and not discriminatory toward Mexican fishing fleets. The appellate body report, issued Dec. 14, puts to rest Mexico's arguments that the measures were unnecessary and were discriminatory. At issue is the fact that in the part of the Pacific Ocean where Mexico catches tuna, boats commonly drag a dolphin in a net, because that attracts schools of tuna. Environmentalists say that puts stress on the dolphins. In order to qualify for dolphin-safe labeling, both a captain and an independent observer must certify this dolphin-as-bait method was not used.

China will lower tariffs on U.S. cars to 15 percent from Jan. 1 to March 31, 2019, and will drop additional 5 percent tariffs on auto parts, as well.The Chinese government said on Dec. 14 it had been forced to raise tariffs on American cars to 40 percent in response to "U.S. trade protectionism," and that it hopes the rollback will give the two countries space to intensify negotiations in the direction of "eliminating all tariff increases." The reductions will last through March 31. China called the rollback on 211 tariff lines "a concrete measure to implement the consensus of the two heads of state," according to an informal translation of a news release from the State Council Customs Tariff Commission.