Closing a trade deal with Canada and Mexico with the threat of tariffs on the auto sector has emboldened President Donald Trump for his battle with China, said Edward Alden, a senior fellow at the Council on Foreign Relations. "I think the most interesting thing that Donald Trump said in his press conference yesterday is that he made it very clear that he sees the tariffs he put in place as negotiating leverage," Alden said on a conference call with reporters Oct. 2.
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
The scaling back of the investor-state dispute system, a wage component to rules of origin and a more enforceable labor and environmental standard all address Democrats' complaints that free trade erodes American workers' wages and jobs and privileges corporations over citizens, said Edward Alden, a senior fellow at the Council on Foreign Relations. "The politics of this are sort of fascinating here," he said of the new U.S.-Mexico-Canada Agreement.
The U.S.-Mexico-Canada Agreement is not a rewritten NAFTA, President Donald Trump said Oct. 1. Instead, "This one is a brand new deal," he said during a White House event. Lawyers who have begun reading the text say the treaty builds on the Trans-Pacific Partnership and the original NAFTA, while including some important new provisions. Mark Warner, a Canadian-U.S. trade lawyer, said that while Trump's speech was full of puffery, "the auto stuff is significant. I don’t think anyone should say it’s not significant."
Canada and the U.S. reached a deal on NAFTA 2.0 late Sept. 30, which was announced a half hour before the deadline to release the text.
As effusive as President Donald Trump was about the significance of his NAFTA rewrite, he was cautious about its chances of getting through Congress next year. Polls suggest Democrats could retake the majority in the House of Representatives, and there is a significant number of Democrats voted against the original NAFTA, or who pledged to vote against the Trans-Pacific Partnership. The earliest a vote could come, because of timelines laid out in fast track, would be in February. But it's likely to be later, since that doesn't include the time needed for Congress to draft implementing legislation.
Customs officials in the European Union seized more than 31 million counterfeit products during 2017 with a street value of more than 580 million Euros, the EU said in a Sept. 28 press release. The volume of interdicted goods is down since 2016, but the government noted that "potentially dangerous goods" such as medicines, toys and electrical goods used day-to-day by consumers are now 43 percent of the total, a much higher proportion than in the past.
Democrats will be crucial to ratifying a new NAFTA if House Republicans lose the majority in November, whether the deal includes Canada or not. U.S. Trade Representative Robert Lighthizer has said repeatedly that he expects significant numbers of Democrats to support the new NAFTA. Changes he won from Mexico should be good for domestic manufacturing, he believes, between bringing labor provisions into the body of the agreement and changing auto rules of origin to encourage manufacturing in the U.S. (and Canada, if it decides to join the deal).
The World Trade Organization will establish panels on the legality of U.S. safeguard tariffs applied to both solar panels and residential washers, at the request of South Korea. The Dispute Resolution Body authorized the panels' formation on Sept. 26. China is also pressing a case on U.S. Section 201 tariffs (see 1805170058 and 1802070022).
Countries from around the world questioned the U.S. at the World Trade Organization about its $12 billion package of support to farmers hurt by retaliatory tariffs on their products by trading partners. "Anxiety was clearly felt over the disruptive effect that the new US bailout package might have on the global market," a Geneva trade official wrote in a summary of the meeting that was held Sept. 25-26. The officials said there were questions like "What safeguards are taken to limit trade distorting impact on global markets?” and “Can the United States confirm that this is a one-off payment and will not extend into future years?” China and New Zealand asked if the U.S. might exceed its total limit of $19 billion in payments to farmers in any one year, which would put it out of compliance with its WTO commitments. The U.S. stressed that it is a one-time policy, covering the fiscal period of September 2018 to January 2019, the trade official said, and said it won't exceed the limit.
The U.S. will be seeking a quite different agreement with Japan than what was garnered through the Trans-Pacific Partnership, U.S. Trade Representative Robert Lighthizer said on a call with reporters Sept. 26. Lighthizer, who called TPP "a very weak agreement," said he didn't want to go into a litany of all of TPP's problems, but he mentioned rules of origin. Democrats criticized the TPP because it only required 45 percent of a car's content to be made in the region (see 1601120051), and given that Mexico and Canada were signatories to the agreement, that could have been a back door way to get cars into the U.S. duty free from its neighbors that had more Chinese or European content than North American content.