China and trade war watchers were aflutter after President Donald Trump and Chinese President Xi Jinping had a phone call Nov. 1 and both sides sounded upbeat. Trump tweeted that it was "a long and very good conversation," mostly about trade, and that "those discussions are moving along nicely." In China, the readout from Xinhua emphasized how seriously the U.S. it taking its preparation for the in-person meeting later this month in Argentina, and said that Trump said, "it is very important for the heads of state of the United States and China to keep frequent, direct communication.... Trump also said he attaches importance to a good relationship with Xi and is willing to extend, through Xi, his good wishes to the Chinese people."
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
The Commerce Department's Office of Inspector General announced that it has begun an audit of the Section 232 tariff exclusion process, with the objective of determining whether the Bureau of Industry and Security and International Trade Administration are adhering to the procedures to review those product exclusion requests, and whether "decisions are reached in a consistent and transparent manner."
CBP has identified 14 use cases for blockchain as part of its pilot of the technology, according to Kati Suominen, founder and CEO of Nextrade Group and the lead speaker at a Center for Strategic and International Studies panel discussion on harnessing the technology. But the U.S. is not out front in adopting blockchain technology, either in business or in government, she said. Fifteen countries in Africa are using blockchain in customs, and Mexico, Costa Rica, Peru, South Korea and Singapore are all experimenting with it as well.
The Office of the U.S. Trade Representative has made its way through 7,818 requests for exclusions from the first tranche of Section 301 tariffs, and has asked CBP to determine if it is practical to admit the products at the border that are covered by 238 requests. Many of the requests that are in this provisional status cover the same HTS codes. The agency is tracking where requests are in the process through spreadsheets on its website, and marks those that are worthy of an exclusion as "stage 3." But those exclusions are provisional until the customs authority says they're administrable.
Because less than a quarter of vehicles sold in the U.S. are assembled outside the NAFTA region, if 25 percent tariffs are levied on auto parts, the impact would be uneven across the auto industry. Mexico parts production -- with substantial room to grow -- is shielded from future tariffs as part of a tariff rate quota system outlined in the new NAFTA. Still, the National Automobile Dealers Association believes the hit to auto sales would be swift and severe. Patrick Mazzi, a senior economist for NADA, talked about the impact of the administration's trade policy at the National Economists Club Nov. 1.
No business or labor group came out against the U.S.-Mexico-Canada Agreement, in comments filed to the International Trade Commission, even as some groups expressed concerns about aspects of the deal to replace NAFTA. Comments are due before the ITC holds a hearing on Nov. 15.
The higher quotas for poultry and dairy under the new NAFTA should create $450 million in benefits by the time they phase in 19 years from now, according to a new study by Purdue University economists. That gain is massively overshadowed by the size of $1.8 billion in lost sales now to Mexico and Canada because Mexico placed tariffs on pork, poultry, cheese and apples and both countries levied duties on some retail food products. When you combine the gains in the new NAFTA with the losses from retaliatory tariffs, the net loss is $779 million, according to the study. The biggest bite has been from tariffs on pork and poultry in Mexico -- those exports have fallen by 7 percent.
Australia has become the sixth country to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, so the trade pact will go into effect Dec. 30, 2018. A second round of tariff cuts will follow Jan. 1 for countries party to the agreement that follow a calendar tariff year; Japan's second round will happen April 1. Peru, Malaysia, Vietnam, Chile and Brunei have yet to ratify the trade agreement; Canada, New Zealand, Mexico, Japan, Singapore and now Australia have done so. The U.S. exited the TPP, the agreement's original name, three days after President Donald Trump took office in January 2017 (see 1810290044).
The U.S. blocked requests from China, Canada, Mexico, Norway, Russia, Turkey and the European Union to examine the legality of steel and aluminum tariffs at the World Trade Organization on Oct. 29. Panel requests can only be blocked one time, so at the next meeting, the panels will be formed. The U.S. was also seeking panels on retaliatory tariffs from China, Canada, Mexico and the EU, and those were blocked.
If investments stall because of tariffs between the U.S. and China, the World Bank projects that the rate of growth will fall over all over the world. If the impacts are largely concentrated between the two global giants, China will be hurt worse than the U.S., and other countries will benefit, said Caroline Freund, the director of trade at the World Bank. Freund, a Chinese trade economist and a domestic China expert, spoke about the trade war Oct. 26 at a George Washington University conference on U.S.-China relations.