While an Atlantic Council scholar doesn't expect tariffs on Chinese goods to be lifted in the next six months, he said a resolution next year may be coming. "I don't believe there's any incentive for the administration to back down, certainly before the mid-terms," said Bart Oosterveld, the director of the Atlantic Council Global Business and Economics program. But, he added, he doesn't think the administration is interested in waging a trade war with China through the election in 2020. He also said the Chinese are willing to compromise.
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.
Countries from around the world questioned the U.S. at the World Trade Organization about its $12 billion package of support to farmers hurt by retaliatory tariffs on their products by trading partners. "Anxiety was clearly felt over the disruptive effect that the new US bailout package might have on the global market," a Geneva trade official wrote in a summary of the meeting that was held Sept. 25-26. The officials said there were questions like "What safeguards are taken to limit trade distorting impact on global markets?” and “Can the United States confirm that this is a one-off payment and will not extend into future years?” China and New Zealand asked if the U.S. might exceed its total limit of $19 billion in payments to farmers in any one year, which would put it out of compliance with its WTO commitments. The U.S. stressed that it is a one-time policy, covering the fiscal period of September 2018 to January 2019, the trade official said, and said it won't exceed the limit.
A bill that would allow Congress to reject safeguard tariffs and Section 301 tariffs, and that would require congressional approval before Section 232 tariffs could go into effect was introduced in the House of Representatives Sept. 26. The bill, called the Promoting Responsible and Free Trade Act, has co-sponsors Rep. Jim Cooper, D-Tenn., and Rep. Mark Sanford, R-S.C., who was defeated in a primary earlier this year, ostensibly in retaliation for being insufficiently loyal to Donald Trump.
The World Trade Organization will establish panels on the legality of U.S. safeguard tariffs applied to both solar panels and residential washers, at the request of South Korea. The Dispute Resolution Body authorized the panels' formation on Sept. 26. China is also pressing a case on U.S. Section 201 tariffs (see 1805170058 and 1802070022).
The U.S. will be seeking a quite different agreement with Japan than what was garnered through the Trans-Pacific Partnership, U.S. Trade Representative Robert Lighthizer said on a call with reporters Sept. 26. Lighthizer, who called TPP "a very weak agreement," said he didn't want to go into a litany of all of TPP's problems, but he mentioned rules of origin. Democrats criticized the TPP because it only required 45 percent of a car's content to be made in the region (see 1601120051), and given that Mexico and Canada were signatories to the agreement, that could have been a back door way to get cars into the U.S. duty free from its neighbors that had more Chinese or European content than North American content.
Florida's bipartisan Senate delegation -- Republican Marco Rubio and Democrat Bill Nelson -- introduced a bill that would allow trade remedy investigations to be raised for seasonal products. In a press release announcing the bill, S. 3510, Nelson said Florida growers of tomatoes, cucumbers, bell peppers, strawberries and blueberries "have been unable to fight back against Mexican trade abuses because U.S. law requires them to prove the abuse occurs year-round instead of just during the winter season when they make most of their sales." He said that NAFTA didn't make a change to antidumping laws, and so the two introduced the bill. “Enough is enough. Too many growers in Florida have been crippled by Mexican trade abuses,” Nelson said. “If the administration won’t fix this, Congress will.”
President Donald Trump said Canada "doesn't seem to want to move" in NAFTA negotiations, and told reporters, "I must be honest with you, we're not getting along at all with their negotiators. We don't like their representative very much." Bad blood between U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland has long been a source of chatter in the trade world (see 1808020032), though some say it's not personal, it's because Canada is standing firm on its priorities.
Both Democrats and Republicans said auto tariffs aren't going to help add U.S. manufacturing, and numerous members of the Senate Finance Committee questioned the logic of the Trump administration's national security rationale for threatening them. Sen. Rob Portman, R-Ohio, noted that he has a bill that would not allow the president to act unilaterally to raise tariffs on autos or auto parts under Section 232, and that Honda North America has endorsed it. But little of the two-hour hearing focused on how Congress could take back power on trade to constrain the administration. Even committee ranking member Ron Wyden, D-Ore., who criticizes the president's trade policy as chaotic and ineffective, hedged that "perhaps" it is "time for the Congress to think about reclaiming that authority," in his opening statement.
A change in approach that goes beyond the tariffs that have inspired Chinese tariffs in return is coming, said Jeremie Waterman, president of the China Center at the U.S. Chamber of Commerce. "We're now entering into the next phase on export controls; that will be a major issue for the business community, in terms of being able to bring your IP and create value in China." With regard to rolling back the tariffs, he said there's no process for negotiations now, and CEOs are starting to try to figure out if this is going to last long enough that they need to make changes to where they manufacture, including leaving the U.S. because of Chinese retaliatory tariffs. "The supply chain conversations at the C suite level are very hot and heavy right now," he said.
When Mexico was confronted with an administration that doesn't agree that free trade is good for America, it had "no option but to play ball," given the interdependence of the Mexican and U.S. economies, said Karen Antebi, economic counselor for the Trade and NAFTA Office at the Mexican Embassy. Antebi, one of the speakers at the Global Business Dialogue event Sept. 26, said Mexico wanted to reassure foreign investors, preserve economic access to the U.S. market and maintain North American competitiveness in a new NAFTA. "Clearly U.S. demands drove the negotiations," she said. "What can I say? This was a pragmatic, not a principle-driven negotiation."