Sen. Rob Portman, R-Ohio, a former U.S. trade representative, reintroduced his bill that would allow Congress to overrule the president on future Section 232 tariff actions, and make changes to the investigations that lead to those tariffs.
In his State of the Union address, President Donald Trump briefly talked about the China deal his administration is negotiating -- he said he's looking for "real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs." But he spent more time talking up the U.S.-Mexico-Canada Agreement, his replacement for NAFTA, which he called a catastrophe. "I have met the men and women of Michigan, Ohio, Pennsylvania, Indiana, New Hampshire, and many other states whose dreams were shattered by the signing of NAFTA," he said. By contrast, he said USMCA will deliver for workers. "I hope you can pass the USMCA into law so that we can bring back our manufacturing jobs in even greater numbers, expand American agriculture, protect intellectual property, and ensure that more cars are proudly stamped with our four beautiful words: 'Made in the USA,'" he said, to applause. He said he's making it a priority to reverse "decades of calamitous trade policies."
Russia's accession to the World Trade Organization in 2012 initially led to greater U.S. exports, but overall, its adherence to WTO rules has been disappointing, the U.S. trade representative said in his annual report to Congress. The report, released late Feb. 4, said non-tariff barriers are a greater problem than tariffs. In 2017, the U.S. exported $7 billion in goods to Russia, with aircraft accounting for one-third of the total. The U.S. imported $17 billion in goods, with oil nearly half of that and steel and aluminum about a quarter of the total.
The Asia-Pacific Economic Cooperation forum won't happen until November, but a panel of a State Department envoy, a former Office of the U.S. Trade Representative negotiator, Singapore's ambassador and Google's head of global trade policy talked about what might be accomplished there during a Feb. 5 panel.
While the U.S. trade representative acknowledged some improvements in stopping counterfeit goods at the port before they leave, the overall conclusion of his 193-page report to Congress is that China's compliance with its World Trade Organization commitments is still poor 17 years after accession. China still embraces "a state-led, mercantilist approach to the economy and trade, despite WTO members’ expectations -- and China’s own representations -- that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO," the report said. Moreover, China is moving away from market-oriented policies in recent years, USTR said.
A free-market think tank based at George Mason University has published a critique of the U.S. Reciprocal Trade Act, an idea that President Donald Trump is expected to feature in the State of the Union address Feb. 5. The bill (see 1901240017) would give the president the ability to raise the tariff on any item to match that of another country's tariff on the same item. As the Mercatus Center's paper notes, doing such hikes would not be legal in the world trading system's rules regarding Most Favored Nation status. The top U.S. trading partners -- outside of Mexico and Canada, since NAFTA means most goods are duty-free -- are Brazil, China, the European Union, India and Japan. If Trump hiked rates with each of them to match those countries' tariffs, it would increase the average U.S. duty from 2.1 percent to 5.4 percent, author Daniel Griswold said. It would raise duties on 45 percent of imports from those countries. In order to make it work, there would need to be almost 10 times as many duty lines, and it would "exponentially complicate the US tariff code."
A group of 48 Congress members, led by Sen. Marco Rubio, R-Fla., and Rep. Ted Yoho, R-Fla., asked Commerce Secretary Wilbur Ross to end a suspension agreement on antidumping with Mexican tomato exporters. They say the agreement is driving Florida tomato growers out of business. More than half the signers are from the Florida delegation, but the bipartisan letter, sent Feb. 1, also drew support from states that are not in direct competition with Mexican tomato imports, such as Michigan, Tennessee and Pennsylvania. The Mexican share of the tomato market has grown from 32 percent to 54 percent since the first suspension agreement in 1996, they said, and since 2002, Mexican tomato exports to the U.S. have more than doubled, while U.S. production has declined 34 percent. "We appreciate your team's efforts to attempt to renegotiate improved terms," they wrote, but added that the agreements have already been renegotiated before, and they have not worked as intended.
The Mercatus Center, a free market-oriented research organization at George Mason University, continues to be critical of the Section 232 steel and aluminum exclusion process. In an update published Jan. 28, Christine McDaniel and Danielle Parks wrote that more than half of requests are still pending, and that 76 percent of requests have taken longer than the expected 90 days to get a decision. The Commerce Department originally projected it could decide on exclusions within 90 days. Overall, of steel requests that have received rulings, just over 75 percent have been approved, according to the Mercatus analysis. The analysis says that for companies requesting exclusions, Japan is the most frequent source of the steel, representing 18 percent of the requests filed before the partial federal government shutdown. Spain was No. 2, with just over 12 percent of requests, and China was third, with 12 percent of requests. For aluminum, Canada represents 13.6 percent of the requests, and India, 12.95 percent of the requests.
The House companion bill to Sen. Pat Toomey's attempt to roll back Section 232 tariffs (see 1901300022) was co-authored by two Democrats and two Republicans, and one of those Republicans, Rep. Mike Gallagher, R-Wis., said his near-term goal is to get 50 co-sponsors. So far, there are 17. One of the lead co-authors, Rep. Ron Kind, D-Wis., has been on the House Ways and Means Trade Subcommittee for years, and Gallagher is hoping he can get some traction in the committee. A spokesman for the new Trade Subcommittee chairman did not respond to a question about the bill by press time.
Sen. Pat Toomey, R-Pa., said the Trump administration will have great difficulty getting the House of Representatives to approve its rewrite of NAFTA. "I'm not aware of a single elected Democratic member of Congress who has endorsed this. I'm aware of many who have panned it. So it's not clear to me what the path forward is. There's a lot of resistance from Democrats. There's a lot of protectionist provisions that were meant to satisfy the protectionist urges of some of my Democratic colleagues, [but] they don't seem to have been sufficient yet," he said Jan. 31 at a reporters roundtable in his office. Toomey suggested that the text is not so protectionist that he's a certain no vote. "With certain changes to the implementing legislation, I could agree to this revised NAFTA. That would require moving in the direction of free traders."