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."
A bill that could undo the steel and aluminum tariffs -- and would prevent any other Section 232 tariffs from taking effect without congressional approval -- needs more support to convince Senate leadership to allow a vote on it, its author acknowledged. Senate Majority Leader Mitch McConnell of Kentucky said repeatedly last year that efforts like this would be vetoed, and therefore are a waste of time. Sen. Pat Toomey, R-Pa., said that having 11 co-sponsors on the day of introduction is strong, but he added: "We obviously need to have much broader support for this in order to persuade Senator McConnell to devote floor time to it."
President Donald Trump said he's seeking a comprehensive deal with China, and he thinks it will happen, but he said he doesn't know "if you can get it down on paper by March 1." After that day, 10 percent tariffs on about 5,700 tariff lines from China are scheduled to increase to 25 percent. Trump, who spoke to reporters at the White House Jan. 31 at a ceremonial signing of an executive order to bolster Buy American rules, said, "This isn’t going to be a small deal with China. This is either going to be a very big deal, or it’s going to be a deal that we’ll just postpone for a little while."
SanMar Corp., which imports T-shirts, sweatshirts and polo shirts that are used for fun runs, corporate logos and the like, hasn't been hit with Section 301 tariffs yet, but its executives are anxiously watching trade policy. Melissa Nelson, general counsel for SanMar, said she used to be able to stay away from Washington, D.C., but with the surge of tariffs in the last year, that's no longer true. Even Section 232 tariffs, which you would not think would affect an apparel importer, are increasing costs for them. Nelson explained that SanMar is buying clothes racks for a Jacksonville, Florida, warehouse; she said they're worried about the cost.