Sen. Portman, EU Ambassador to US Condemn Section 232 Tariffs
Sen Rob Portman, R-Ohio, predicted on Nov. 28 that a plan toward ending the steel and aluminum tariffs on products from Canada and Mexico will come before Nov. 30. "My sense is Mexico might not sign [the new NAFTA] at the end of this week unless there's some sort of resolution," he said to a group of about 35 at the Hudson Institute. The Mexican ambassador has said his country would sign without a resolution on the tariffs, as long as there is a clear path to reach one (see 1811200036). But as far as preventing Section 232 tariffs on autos -- a matter of great concern for the EU and Japan -- Portman suggested he is powerless to even get a hearing on his related bill. "If you have any influence with the Ways and Means Committee and Senate Finance Committee," he told the audience, he would like them to use it. "We need a hearing."
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Portman's bill would give Congress the opportunity to undo a White House decision to levy Section 232 tariffs. Dan Price, a former deputy national security adviser for economics in the George W. Bush White House, asked Portman if it wouldn't be better for Congress to have to agree to the action before it's taken, rather than need to take a vote to stop the action after it's taken. Portman said the way he wrote it made it more likely to get votes from Democrats and Republicans. "I think Congress ought to have the ability to review these decisions," he said, and by making that opportunity come after a decision, it gives the administration the chance to make its case.
Portman was asked whether he is concerned about how investor-state disputes were scaled back in the new NAFTA, and he answered that it is "workable." "It's so much better than the original U.S. position [of abolition] that I'm a little bit biased by the progress we've made," he said.
European Union Ambassador to the U.S. David O'Sullivan spoke after Portman, and said he hopes the U.S. can be convinced to drop its steel and aluminum tariffs on EU member countries before the World Trade Organization rules on the action's legality. "Generals are always fighting the last war," he said, as he put forth his view that it's not imported steel, aluminum or cars that are a potential threat to America's national security. Rather, it's cyber crime, 5G cellular technology, artificial intelligence and other technologies of the future that are threats, he said.
President Donald Trump has promised not to levy Section 232 tariffs on European cars as long as the EU and U.S. are engaging in talks to lower non-tariff barriers posed by regulations and are moving toward a free-trade agreement for all non-auto industrial goods. O'Sullivan acknowledged the EU countries have not agreed on the scope of the talks, but expressed optimism about the progress made on regulatory harmonization. He said EU officials don't believe they will be hit with auto tariffs, even though there have been rumblings from Washington that things are going too slowly.
"We could go to zero [tariffs] on all industrial products very quickly," Sullivan said, and it was agreed by the European Commission president and Trump that it was best to choose things that could be resolved in the fairly short term.
Portman said Congress does not agree that EU-U.S. talks should be limited to industrial products. It doesn't make sense that the U.S. has a trade deficit with the EU in agriculture, "given our comparative advantage in commodities, in beef, in pork." He said EU sanitary and phytosanitary rules are designed to protect EU producers. O'Sullivan said "agriculture is much more contentious and much more difficult" than industrial tariffs, and is politically sensitive for European countries. If agriculture were to be in the talks, then the EU would insist on making changes to Buy American rules in government purchasing, and would bring up geographic indications, which reserve names like "Asiago," "feta," and "gorgonzola" for European cheese processors.
He said it's not that the two sides couldn't agree on all these issues, but it could take a long time, and the U.S. didn't want talks that would take three or four years. Stormy-Annika Mildner, from the Federation of German Industries, told O'Sullivan her members are very nervous about Section 232 tariffs, and asked if the commission would agree to quotas to avoid them. He did not answer that question, but did respond to her question on why autos aren't in the scope of the talks. He said the U.S. didn't want to reduce its vehicle tariffs to zero. Europe has 10 percent tariffs on cars and trucks; the U.S. has 2.5 percent tariffs on cars and 25 percent on trucks. "We actually thought reducing car tariffs were one of the issues, but OK," he said.
Mildner also questioned whether a limited agreement would meet the World Trade Organization standard for preferential tariffs. Countries can't offer lower tariffs to trading partners unless they have a free trade agreement that covers "substantially all trade." O'Sullivan said he thought the deal would pass that bar.