The U.S. Reciprocal Trade Act, a bill that would give the president the ability to raise tariffs above the bound rate to match trading partners' levels, was introduced by Rep. Sean Duffy, R-Wis., on Jan. 24. The bill has 18 co-sponsors, all Republicans.
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.
House Ways and Means Chairman Rep. Richard Neal, D-Mass., told Worcester, Massachusetts, journalists, that there once were more union manufacturing jobs in Worcester, that provided stability and a good standard of living. Now, the rapid advancement of technology and globalization are challenges, he said. But, he added, "I don't think you can tell the young people here in the city of Worcester ... that globalization is going to retreat. So I think protectionism in terms of trade is a mistake, and I think the idea we can't compete in the international trade arena is a mistake."
Reps. Tim Ryan, D-Ohio, and Mike Conaway, R-Texas, reintroduced The Fair Trade with China Enforcement Act, a companion bill to Senate Bill 2, which was reintroduced at the beginning of the month by Sens. Marco Rubio, R-Fla., and Mark Warner, D-Va. Ryan's announcement Jan. 22 said: "This bipartisan legislation works to safeguard American assets from Chinese influence and possession, as well as protect American businesses from China’s tools of economic aggression."
Nearly 50 business groups -- mostly not representing metals importers -- sent a letter to U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross suggesting that the tariffs on aluminum and steel in the NAFTA region must be lifted in order for the groups to lobby Congress to approve the new NAFTA, known as the U.S.-Mexico-Canada Agreement. "For many farmers, ranchers and manufacturers, the damage from the reciprocal trade actions in the steel dispute far outweighs any benefit that may accrue to them from the USMCA," the Jan. 23 letter said. The groups -- including the U.S. Chamber of Commerce, the United States Council for International Business, the National Foreign Trade Council and more than a dozen agriculture advocacy organizations -- said the tariffs are hurting steel- and aluminum-consuming companies. They said they want the matter resolved so "we can turn our attention to working with you to gain prompt Congressional approval of the USMCA."
After the March 1 deadline, President Donald Trump could declare victory in the trade war, or his administration could decide the Chinese have not offered substantial changes in response to America's complaints about industrial policies and discrimination against U.S. firms. "It probably depends on what he's seen on Fox News this morning," Center for Strategic and International Studies' William Reinsch said at a CSIS program on Asia in 2019 on Jan. 23. Still, he said, Trump has a pattern of "lots of bluster, lots of threats, occasional use of a threat, and then at the end of the day, he tends to settle for much less than he asked for."
A reportedly rescinded invitation to Chinese Vice Premier Liu He to come to Washington Jan. 30 could mean "the U.S. and China have not been able to agree on the hard issues, the structural issues," said David Shear, a senior adviser at McLarty Associates. Shear, a former ambassador to Vietnam, also served at the U.S. Embassy in Beijing and was a senior official on the China desk at State in his foreign service career. Shear, who was reacting to a Financial Times report Jan. 22 saying the Chinese delegation was uninvited, said, "Last week appears to be [Treasury Secretary Steven] Mnuchin's week. This week is [U.S. Trade Representative Robert] Lighthizer's week." National Economic Council Director Larry Kudlow told CNBC that the report is not true.
The Council of the European Union passed its negotiating directives for free trade talks with the U.S. on Jan. 18, and as expected, agriculture is not part of the scope. The EU also said it would require the lifting of the Section 232 tariffs on aluminum and steel before any deal is finalized. "These two proposed negotiating directives will enable the Commission to work on removing tariffs and non-tariff barriers to transatlantic trade in industrial goods, key goals of the July Joint Statement," EU Trade Commissioner Cecilia Malmstrom said.
The continuing ability of advanced economies like South Korea and Israel, and export powerhouses like China to call themselves developing countries in the World Trade Organization is hobbling negotiations, the U.S. delegation argued in a 45-page communication it distributed Jan. 16. "The WTO remains stuck in a simplistic and clearly outdated construct of 'North-South' division, developed and developing countries," the U.S. wrote. "The perpetuation of this construct has severely damaged the negotiating arm of the WTO by making every negotiation a negotiation about setting high standards for a few, and allowing vast flexibilities or exemptions for the many."
EBay praised a bipartisan group of Congress members who want the U.S. trade representative to stop talking about "reciprocal" de minimis levels. There is a footnote to that effect in the new NAFTA (see 1810190043) that has drawn opposition from trade groups in the past (see 1811060010). But despite that, the USTR included the same language in negotiating priorities for both Japan and the European Union. The EU is on a path to have no de minimis level at all for tax purposes. EBay is critical of the de minimis increases USTR convinced Mexico and Canada to agree to, because there are lower tax de minimis levels than the duty de minimis of $117. The company called it "unnecessarily complicated."
Regulations.gov, the government website where businesses can see if other companies have objected to their tariff exclusion requests, went down Jan. 16. It's not clear how long it will take workers -- who have been affected by the partial federal government shutdown -- to get the issues resolved and get the site back online. A spokeswoman for the Office of the U.S. Trade Representative said the agency continues to work on exclusion requests on items on the first two tranches of the Section 301 tariffs list, and that "the time period to comment will be extended as applicable" because of the outage.