After the March 1 deadline, President Donald Trump could declare victory in the trade war, or his administration could decide the Chinese have not offered substantial changes in response to America's complaints about industrial policies and discrimination against U.S. firms. "It probably depends on what he's seen on Fox News this morning," Center for Strategic and International Studies' William Reinsch said at a CSIS program on Asia in 2019 on Jan. 23. Still, he said, Trump has a pattern of "lots of bluster, lots of threats, occasional use of a threat, and then at the end of the day, he tends to settle for much less than he asked for."
Reps. Tim Ryan, D-Ohio, and Mike Conaway, R-Texas, reintroduced The Fair Trade with China Enforcement Act, a companion bill to Senate Bill 2, which was reintroduced at the beginning of the month by Sens. Marco Rubio, R-Fla., and Mark Warner, D-Va. Ryan's announcement Jan. 22 said: "This bipartisan legislation works to safeguard American assets from Chinese influence and possession, as well as protect American businesses from China’s tools of economic aggression."
A reportedly rescinded invitation to Chinese Vice Premier Liu He to come to Washington Jan. 30 could mean "the U.S. and China have not been able to agree on the hard issues, the structural issues," said David Shear, a senior adviser at McLarty Associates. Shear, a former ambassador to Vietnam, also served at the U.S. Embassy in Beijing and was a senior official on the China desk at State in his foreign service career. Shear, who was reacting to a Financial Times report Jan. 22 saying the Chinese delegation was uninvited, said, "Last week appears to be [Treasury Secretary Steven] Mnuchin's week. This week is [U.S. Trade Representative Robert] Lighthizer's week." National Economic Council Director Larry Kudlow told CNBC that the report is not true.
The continuing ability of advanced economies like South Korea and Israel, and export powerhouses like China to call themselves developing countries in the World Trade Organization is hobbling negotiations, the U.S. delegation argued in a 45-page communication it distributed Jan. 16. "The WTO remains stuck in a simplistic and clearly outdated construct of 'North-South' division, developed and developing countries," the U.S. wrote. "The perpetuation of this construct has severely damaged the negotiating arm of the WTO by making every negotiation a negotiation about setting high standards for a few, and allowing vast flexibilities or exemptions for the many."
The Council of the European Union passed its negotiating directives for free trade talks with the U.S. on Jan. 18, and as expected, agriculture is not part of the scope. The EU also said it would require the lifting of the Section 232 tariffs on aluminum and steel before any deal is finalized. "These two proposed negotiating directives will enable the Commission to work on removing tariffs and non-tariff barriers to transatlantic trade in industrial goods, key goals of the July Joint Statement," EU Trade Commissioner Cecilia Malmstrom said.
Regulations.gov, the government website where businesses can see if other companies have objected to their tariff exclusion requests, went down Jan. 16. It's not clear how long it will take workers -- who have been affected by the partial federal government shutdown -- to get the issues resolved and get the site back online. A spokeswoman for the Office of the U.S. Trade Representative said the agency continues to work on exclusion requests on items on the first two tranches of the Section 301 tariffs list, and that "the time period to comment will be extended as applicable" because of the outage.
EBay praised a bipartisan group of Congress members who want the U.S. trade representative to stop talking about "reciprocal" de minimis levels. There is a footnote to that effect in the new NAFTA (see 1810190043) that has drawn opposition from trade groups in the past (see 1811060010). But despite that, the USTR included the same language in negotiating priorities for both Japan and the European Union. The EU is on a path to have no de minimis level at all for tax purposes. EBay is critical of the de minimis increases USTR convinced Mexico and Canada to agree to, because there are lower tax de minimis levels than the duty de minimis of $117. The company called it "unnecessarily complicated."
A bill that would delay the imposition of Section 232 tariffs on imported autos and auto parts until the International Trade Commission evaluates the industry was reintroduced in the Senate Jan. 15 by its co-sponsors Sen. Lamar Alexander, R-Tenn., and Sen. Doug Jones, D-Ala. Jones and Alexander introduced their first bill in July last year (see 1807250048). The ITC is closed during the partial federal government shutdown, and any such comprehensive study would likely have to wait until after the ITC evaluation of the economic benefits of the new NAFTA. The Commerce Department is supposed to make its recommendation to President Donald Trump in mid-February.
President Donald Trump needs "the tools to make sure we're not robbed any more," said Rep. Sean Duffy, R-Wis., so he told host Lou Dobbs on the Fox Business Network that he'll introduce The Reciprocal Trade Act on Jan. 17. Duffy said the way international trade works now is "absolutely unfair," and the president needs more leeway to raise U.S. tariffs to foreign levels. He gave the example of the 10 percent tariff in Europe on imported cars and a 68 percent tariff there on butter. He said the U.S. has a 3.8 percent tariff on butter. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, has already said that such a bill is dead on arrival in his chamber (see 1901090041). "We ain't going to give him any greater authority," he said a week ago. "We've already delegated too much." Duffy complained to Dobbs that the U.S. Chamber of Commerce is trying "to sandbag this movement."
Rep. Earl Blumenauer, an Oregon progressive who supported fast track authority in 2015, will lead the House Ways and Means Committee's Trade Subcommittee, winning the seat instead of Rep. Bill Pascrell, the New Jersey Democrat who served as ranking member when the Democrats were in the minority. Blumenauer only chose to assert his seniority after his idea of an infrastructure financing committee didn't come to pass (see 1811140049). Blumenauer released a statement after his selection Jan. 16 that said: "We have an outstanding subcommittee primed to make progress and fight for Democratic values like meaningful, effective trade enforcement, access to affordable medicines, and strong environmental protections at home and abroad."