If Europe, Japan and the U.S. are able to convince the World Trade Organization to rewrite the language on subsidies and countervailing measures from the Uruguay Round Agreements, cases against Chinese subsidies -- or antidumping and countervailing cases responding to them -- would be tilted in favor of the market economies. The U.S. trade representative, Europe's new trade minister and the Japanese trade minister issued a joint statement Jan. 14 that the agreement on subsidies needs to have additional language prohibiting all “unlimited guarantees; subsidies to an insolvent or ailing enterprise in the absence of a credible restructuring plan” and subsidies to companies operating in sectors with overcapacity that can't get long-term financing from independent commercial sources. They also agree that “certain direct forgiveness of debt” should be categorically prohibited in international trade law, but they did not specify what forgiveness crosses the line.
The Senate Environmental and Public Works Committee sent the U.S.-Mexico-Canada Agreement out of committee on a 16-4 vote, and the Budget Committee moved the implementing bill with a voice vote, though several senators voted no there, as well.
U.S. Trade Representative Robert Lighthizer told lawmakers from Georgia that he will be looking to see if there are remedies for combating “any trade distorting policies that may be contributing to unfair pricing in the U.S. market” for seasonal and perishable products, examining the Trade Act of 1974 and “other trade laws.” The Trade Act of 1974, which includes the recently used sections 201 and 301, gives the president wide leeway to deny preferential tariff treatment to any product, and to add an additional duty of up to 50 percent on any product for significant drug producing or drug transit countries. It also authorizes safeguards, which can be up to 50 percent duties on a surge of imports that is damaging domestic industry.
Daimler CEO Ola Kallenius told reporters that Mercedes-Benz's transition plan for auto rules of origin under the U.S.-Mexico-Canada Agreement will take three or four years. Kallenius, who was responding to a question from International Trade Today after a Q&A at the Washington Economic Club Jan. 10, did not say explicitly that the carmaker would be applying for the extension, which would require the company to show how Alabama production -- not just Mexican production at its joint venture with Nissan -- will meet the tougher standards. If it will take Mercedes four years to meet the standard, they would need an extension.
Chief White House economic adviser Larry Kudlow, in an interview with Bloomberg TV Jan. 10, responded to a question on where the administration is on tariffs on European autos, by saying: “As you can see, no actions have been taken.” When the interviewer pressed him on whether that means there will be no tariffs on European autos “as far as the eye can see,” he called that characterization fair, but then hedged. “The report was presented and no action was taken. I can't say that's forever. We're in constant bargaining and negotiating.”
The U.S. Chamber of Commerce laid out its priorities for trade in 2020, and most of them were well-known in 2019: getting USMCA passed; ending steel and aluminum tariffs; negotiating comprehensive trade agreements with Japan, the European Union and the United Kingdom. But lesser-known priorities are: ensuring that new regulations on foreign ownership of American firms are focused on national security issues, and arguing for a balanced approach in the regulations from the Export Control Reform Act of 2018 that protect “national security without unduly hindering legitimate commerce.” The Chamber also said Jan. 9 that it wants Congress to approve “permanent normal trade relations with Kazakhstan and its graduation from the Jackson-Vanik amendment to the Trade Act of 1974.”
After the Senate Parliamentarian ruled that six other committees besides Finance need to consider the U.S.-Mexico-Canada Agreement, five of those committees have scheduled hearings or meetings to deal with the implementing bill next week. The Budget and the Environment committees will take it up Jan. 14; the Health, Education, Labor and Pensions and the Commerce committees will take it up Jan. 15; and the Foreign Relations Committee will take it up Jan. 16. If the Appropriations Committee were to also have a hearing next week, a vote could come the following week, but Appropriations has not scheduled a hearing.
Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said Republicans on the committee will be more active in 2020 in backing the administration's call for significant World Trade Organization reforms. When asked by International Trade Today if he thinks the appellate body will be revived this year, he said he didn't know. Brady, who was speaking to reporters Jan. 8, said, “There's got to be some serious changes. That's crucial to the credibility of the WTO for the long term. This has been a long-standing concern, not just in the U.S. Because of that appellate body/dispute resolution system is so long, at times arbitrary, and oftentimes not enforced, it really undermines the rules-based trading system -- which I know we all want.”
The panel deciding which French products should face Section 301 tariffs was intrigued by a point made by the Cheese Importers Association of America -- who could pay more on 21 Harmonized Tariff Schedule headings if all the proposed tariffs are included.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said he's been told it's going to take three or four days for six other Senate committees to clear the U.S.-Mexico-Canada Agreement so that it can go to the floor for a vote. Whether it can come up the week of Jan. 21 will depend on whether the articles of impeachment have arrived by then, he noted.