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.
The New Democrat Coalition, a caucus of generally pro-free-trade Democrats in the House of Representatives, has not coalesced around the NAFTA replacement, according to J.D. Grom, executive director of the group, speaking Jan. 29 on a panel at the Washington International Trade Association annual conference. "Members are still working through where we're at on the agreement," he said, but they are clear that they will be unhappy if President Donald Trump tries to withdraw the U.S. from NAFTA to force a yes vote on its replacement. "We don't want to be in a hostage situation," he said.
Bipartisan bills were introduced in the House and Senate to give Congress a veto over potential Section 232 tariffs on autos and auto parts and the ability to rescind the tariffs and quotas on steel and aluminum. The push in the Senate is led by Sen. Pat Toomey, R-Pa., who also tried to move a similar bill last year, as well as Sen. Mark Warner, D-Va.
In order for importers to be able to create certificates of origin under the U.S.-Mexico-Canada Agreement, U.S. law will have to change. That's one of dozens of changes to statutes that will need to happen to accommodate the changes between NAFTA and USMCA. The U.S. trade representative shared the six-page outline of the needed changes with Congress late on Jan. 29, fulfilling one of the steps under fast-track consideration of the trade pact. The document suggests that USTR is still seeking a lowering of U.S. de minimis levels specifically for Canada and Mexico (see 1810190043), since those countries did not raise their de minimis levels as much as the U.S. negotiators wished.
Panelists at the annual Washington International Trade Association think there will be a U.S. deal with China that will avoid more tariff hikes, but they disagree on when and what it will mean for the relationship going forward. David Dollar, an expert on U.S.-China economic relations at the Brookings Institution, said that "realistically China is not going to change its system overnight." He scoffed at a deal that includes purchases of U.S. commodities in an effort to shrink the trade deficit. "I see that mostly as a shell game and mostly PR."
The perspectives from Congress, Canada and Mexico -- and a former acting U.S. trade representative -- diverge wildly on how much can be changed in the new NAFTA to garner votes for approval and how difficult it will be to get it passed in 2019. Miriam Sapiro, who was acting USTR and is now with SVC Public Affairs, used the term “lovely miracle” to describe how she’d feel if it passed this year. Rep. Kevin Brady, R-Texas, the ranking member on the House Ways and Means Committee, said it's clear that the metals tariffs on Canada and Mexico -- without quotas -- have to have a date certain to come off before Congress members are really about to start “to count the noses.”