The Senate overwhelmingly passed the new NAFTA, though it wasn't by quite as wide a margin as in the House, where more than 95 percent of votes were for the trade pact. The vote, which happened just before the reading of the impeachment articles against President Donald Trump on Jan. 16, was 89-10, with only one Republican voting no. Most of the Democrats who voted no did so because the U.S.-Canada-Mexico Agreement doesn't address climate change.
Four Senate committees reported the U.S.-Mexico-Canada Agreement out, clearing the way for a floor vote Jan. 16. The Foreign Relations Committee and Commerce Committee had voice votes. The Health, Education, Labor and Pensions Committee voted 22-1 in favor, with Sen. Bernie Sanders, independent senator from Vermont, the only no vote, though Sen. Bill Cassidy, R-La., who previously voted no in the Finance Committee, was not present and did not vote by proxy. In the Appropriations Committee, 29 senators voted for the implementing bill, and two voted no -- Sen. Jack Reed, D-R.I., and Sen. Brian Schatz, D-Hawaii.
The U.S. will reduce tariffs on about 3,800 8-digit tariff lines from 15 percent to 7.5 percent in 30 days, a senior administration official said. That's the day the phase one agreement with China will go into force, he said on a conference call with reporters. Aside from that issue, most of the agreement affects exporters and companies that invest in China more than it does importers.
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.