The Congressional Research Service evaluated whether President Donald Trump can unilaterally withdraw from NAFTA, as he has threatened to do to force a vote on its replacement. Their assessment -- a 19-page report -- boils down to probably not. Mexico and Canada could not challenge such a move, the researchers said, because of the text's provisions about withdrawal. But whether U.S. law would allow it is ambiguous, they said, and any such proclamation would end up in court.
Canadian and U.S. auto workers are more favored than any other interest in the new NAFTA, but after a visit from U.S. Trade Representative Robert Lighthizer to the United Auto Workers union in Dearborn, Michigan, March 5, the head of the UAW said the rewrite doesn't do enough. The new rules of origin not only require that more of the car's parts come from the region, but with the $16-an-hour wage provision, it will prevent Mexican-built cars from complying unless they have substantial Canadian or U.S. content.
Canadian farmers have gained an advantage over U.S. competitors in exporting to Japan because of the U.S. decision to leave the Trans-Pacific Partnership, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters on March 6. "It's really going to hurt, " he said. So moving quickly on a U.S.-Japan trade agreement is a necessity, he said, and he thinks there is a chance one could be concluded before the end of the year. "They're willing to sit down and negotiate ... along the lines of what they had agreed with the United States as part of TPP," he said. "If that's the context, except for maybe rice, that might be a fairly easy thing to negotiate."
General Electric, a major U.S. exporter, remains supportive of "the notion of trying to open markets," said Drew Quinn, director of trade policy at GE. But, the tariffs the U.S. is using to try to bludgeon China into a more open stance are worse than the status quo, he said. Quinn, who was speaking at a March 5 Washington International Trade Association program on Asia, said that tariffs are generally pretty low on the aircraft engines, MRI machines and turbines it sells. There aren't a lot of investment barriers, either. "The biggest issue for us is the host country's industrial policies, and how they favor their national champions," he said. But even there, Quinn said, GE has found a way to work with foreign countries where it has facilities, and has been able to participate in subsidies. "We may have a different and less absolutist position than some people."
The tone of both the U.S. and Indian governments on the termination of India from Generalized System of Preferences benefits leaves the door open for at least partial re-entry, said Dan Anthony, who manages the Coalition for GSP, in a March 5 interview. The letter President Donald Trump sent to Congress said, "I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets." The Indian Ministry of Commerce and Industry said, "India was agreeable to a very meaningful mutually acceptable package ... while keeping remaining issues under discussion in the future." The Commerce Ministry said India wanted to take a "suitable trade margin approach" to medical devices, and that it was open to "the requested simplified dairy certification procedure," to deal with the fact that American cows are fed animal-derived blood meal.
India, the biggest recipient of the Generalized System of Preferences, will be terminated from the program after the mandatory 60-day waiting period, because it is not providing "equitable and reasonable access to its markets in numerous sectors," the U.S. Trade Representative announced Monday evening. Turkey, which is the fifth-largest beneficiary of the program, is being terminated because its economy has developed sufficiently that it should no longer benefit from preferential market access, USTR said.
The new NAFTA will reverse outsourcing decisions in the auto industry, the U.S. Trade Representative's annual report on the trade agenda said, and one of the administration's top priorities for 2019 is to get Congress to ratify it. The report, which spends 26 pages on this year's agenda and the rest laying out the status of current free trade agreements, negotiations and enforcement actions during 2018, was released late March 1. Generally, the report defended the administration's actions, arguing they're not protectionist but rather pro-worker, and noting that both imports and exports grew in high single digits during the first 11 months of 2018.
It's not clear yet whether the United Kingdom will be leaving the European Union customs union, but nonetheless, the Office of the U.S. Trade Representative released its negotiating objectives late Feb. 28. Many are similar to what was achieved in the NAFTA rewrite.
Because of the input from industry, the direction of the president, and "progress of the additional rounds of negotiations" with China since December 2018, the Office of the U.S. Trade Representative has announced that the duty for about 5,700 tariff lines will remain at 10 percent "until further notice." List 3 of the Section 301 tariff action was originally due to increase to 25 percent on Jan. 1, 2019, and that increase was delayed until March 2 because of the status of negotiations. This latest announcement was expected, because President Donald Trump tweeted Feb. 24 that the increase would not happen (see 1902240001). The 10 percent rate of additional duty for about $200 billion worth of Chinese products went into effect Sept. 24, 2018. The USTR noted that the Section 301 statute authorizes his office "to modify or terminate any action being taken under Section 301" if the action is no longer appropriate."
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).