Just over 4,500 Section 301 exclusion requests have been denied by the Office of the U.S. Trade Representative, according to an update published late Feb. 28. There have been 985 exclusion requests granted, covering 21 tariff lines. The largest number of the granted requests were for plastic injection molds, three types of radial bearings, linear-acting hydraulic motors and water coolers. This is much larger than the last update, published Dec. 21, 2018, when fewer than 25 had been granted (see 1812240010).
Hank Paulson, who served as Treasury secretary during the George W. Bush administration, told an audience of trade advocates that even if a deal is reached with China, "the underlying tensions will persist and will be particularly intense in technology-related trade and investment." Paulson, who was introduced at a Washington think tank event by FedEx CEO Fred Smith on Feb. 27, said he never thought he'd see Democrats and Republicans applauding rising tariffs. "The trade debate in this city has changed markedly from just five years ago," he said.
Americans for Free Trade, a coalition of more than 150 trade associations, sent a letter to the White House Feb. 27 offering praise for the pause in escalations of tariffs on Chinese goods and asking that an agreement be reached that takes all tariffs away. "It is our hope that this momentum will build in the weeks ahead and lead to a final deal that addresses structural issues in China, removes tariffs on both sides, and eliminates trade uncertainty facing American businesses and farmers," they wrote. "Our coalition represents every part of the U.S. economy, including manufacturers, farmers and agribusinesses, retailers, technology companies, service suppliers, natural gas and oil companies, importers, exporters, and other supply chain stakeholders. Collectively, we support tens of millions of American jobs through our vast supply chains." Customs brokers and apparel, travel goods, furniture and jewelry importers were among those who signed the letter.
China's financial support to its wheat, short-grain and long-grain rice farmers is valued at more than 8.5 percent of the value of production, and therefore is more generous than what China said it would do when it joined the World Trade Organization, a WTO dispute panel ruled. The report, which said that China pays a minimum price for these commodities, was circulated at the WTO on Feb. 28. The case was first filed in 2016.
Rep. Alan Lowenthal, D-Calif., and Rep. Steve Chabot, R-Ohio, on Feb. 26 introduced H. 1376, which would require the Office of the U.S. Trade Representative to study whether Cambodia's participation in the Generalized System of Preferences program should be limited, suspended or ended. The bill follows the January introduction in the Senate of S. 34, the Cambodia Trade Act. That bill was introduced by Sen. Ted Cruz, R-Texas, and Sen. Chris Coons, D-Del., and has since been joined by Sen. Robert Menendez, D-N.J. (see 1901100016). Lowenthal said Cambodia's Prime Minister Hun Sen "and his regime must pay a price for their role in destroying the rule of law and violating the basic freedoms of the Cambodian people.” Cambodia's participation in the GSP beneficiary program was re-approved in April 2018.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Sen. Ron Wyden, D-Ore., have said in a letter to the U.S. trade representative that lowering de minimis in the implementing legislation for the new NAFTA is unwelcome. "We strongly oppose any change to existing law that would authorize the Administration to lower the current U.S. de minimis threshold to make it reciprocal with its trading partners," they wrote Feb. 27. "While we are deeply disappointed that both Canada and Mexico were unwilling to raise their de minimis thresholds for express shipments to match the U.S. $800 de minimis level, lowering the U.S. threshold in response is contrary to well-demonstrated Congressional intent."
President Donald Trump, who has been saying China and the U.S. are "very, very close" to an agreement, sounded a different note in Vietnam, where he walked away from negotiations with North Korea when that country's denuclearization offer didn't go far enough. In a press conference in Vietnam, Trump said, "speaking of China, we're very well on our way to doing something special, but we'll see. I mean, I am always prepared to walk. I'm never afraid to walk from a deal. And I would do that with China, too, if it didn’t work out."
The day after U.S. Trade Representative Robert Lighthizer told Rep. Jackie Walorski at a hearing that he still believes there's no need for exclusions from 10 percent tariffs on Chinese imports, she and Rep. Ron Kind have introduced a bill that would force him to put the process in place. Their bill -- which has a Senate companion written by Sen. James Lankford, R-Okla., and Sen. Chris Coons, D-Del. -- is called the Import Tax Relief Act.
Although the main topic of the hearing was China, U.S. Trade Representative Robert Lighthizer told House Ways and Means Committee members repeatedly Feb. 27 that if they don't ratify the U.S.-Mexico-Canada Agreement, there will be no trade agenda for the next several years. "If we don’t pass USMCA, it says we don’t have a consensus," he said. Lighthizer also said: "It’s clearly better than its predecessor, it’s no question. Millions and millions of people are affected [by NAFTA]. You just have to pass it."
U.S. Trade Representative Robert Lighthizer, who is leading the China trade talks, downplayed the possibility that President Donald Trump and Chinese President Xi Jinping will sign a trade agreement a month from now. Lighthizer, who testified before the House Ways and Means Committee Feb. 27, was asked by Chairman Richard Neal, D-Mass., if he sees a package coming in the next few weeks. "I’m not foolish enough to think there’s going to be one negotiation that’s going to change all the practices in China," Lighthizer replied. "At the end of this negotiation, if we’re successful, there'll be a signing." But that's the beginning of a long process to monitor China's compliance with what it promises to do.