The U.S. -- supported by the European Union, Japan, Mexico and Canada -- asked the World Trade Organization's Committee on Subsidies and Countervailing Measures to examine below-market financing and debt forgiveness as a market distorting practice. The countries, speaking at a meeting in Geneva on April 24, said that counter-cyclical financing during recessions and later debt-to-equity conversions create "distortions in the domestic market that spill over into the international economy and distort international trade patterns." They suggested the WTO rules be amended to consider the subsidy as creating serious prejudice, which would allow other countries to use export displacement as an argument for countervailing duties, according to a paper they presented at the meeting.
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 U.S. asked China to end its import restrictions on scrap and asked it to consider less trade-restrictive measures at the World Trade Organization. The European Union began the discussion about China's actions on recycled materials, and received support from five other countries critical of the practice. Countries that send scrap to China have been complaining at the WTO for months (see 1708220009), and although it did not end up banning waste imports, the restrictions it did impose are having "a huge impact on the global recycling chain," South Korean representatives said at the WTO on April 20. These restrictions are separate from the 25 percent tariff China is levying on U.S. aluminum scrap in retaliation for the Section 232 tariffs. The Institute of Scrap Recycling Industries says that the U.S. exported $2.34 billion in aluminum scrap in 2017, and about half of those exports went to China.
Legislation in Mexico that critics said would undermine Mexico's new labor protections (see 1804190032) failed to pass, and unions are celebrating. AFL-CIO President Richard Trumka said working people stopped "legislation aimed at maintaining a rigged system that benefits corporations and the mega-rich," and said that there's a possibility a renegotiated NAFTA can bolster union organizing rights.
The American Association of Port Authorities urged the U.S. trade representative to consider the economic impact of tariffs before implementing them. "While AAPA does not comment on specific trade sanctions, prior to implementing any trade remedies or sanctions, we urge you to carefully consider the negative impacts these actions would have on port and other trade-related American jobs nationwide, including the effects of likely retaliatory responses from our trading partners," the trade group wrote to Robert Lighthizer on April 19.
Business interests who depend on NAFTA are trying to piece together a strategy for how to handle changes under a new deal, but there are differing opinions on what will happen to car rules of origin. Trade lawyer Daniel Ujczo, who chairs the Canadian-U.S. trade practice at Dickinson Wright, said in an interview that the U.S. trade representative is looking for a 75 percent North American content on high value parts, such as the engine and transmission, but may allow lower percentages for other tiers of parts. But Ujczo said his understanding is that the lower hurdle for parts doesn't eliminate the top-line requirement that 85 percent of cars' value must come from NAFTA partner countries in order to qualify for duty-free status.
The Commerce Department has not been able to keep up with the flood of product exclusion submissions -- the steel exclusion requests numbered 3,979 as of April 19, but just 120 have been posted for comments. For aluminum, there have been 396 exclusion requests, and 26 posted. No new filing has been posted since April 13 for aluminum, but the agency posted 44 steel product exclusion requests just on April 20th.
The U.S. agreed on April 19 to enter consultations on its Section 232 tariffs on steel and aluminum with the European Union and India. The action follows its announcement April 17 that it would consult with China on the matter. In all cases, the U.S. says the tariffs are not safeguards, as the countries allege, and that they are not subject to World Trade Organization dispute settlement because they are matters of national security.
U.S. Trade Representative Robert Lighthizer needs to tell his Mexican counterpart that a bill introduced in the Mexican Senate, if passed into law, "will have serious ramifications and negatively impact the effort to renegotiate NAFTA," 94 House Democrats said. The group sent a letter April 18 saying that the bill is implementing legislation for constitutional amendments that would change how labor law is enforced in Mexico. Lighthizer is meeting with Mexico's economy minister and Canada's foreign minister on April 19 and 20, and Mexico's Economy Minister Ildefonso Guajardo said April 18 that four more chapters of NAFTA should be closed shortly -- on energy, telecom, the environment and barriers to commerce. He said he expects NAFTA to be in the landing zone in two to three weeks, according to a Mexican media report. When Lighthizer testified in front of the House Ways and Means Committee last month, he agreed with Democrats that Mexico has not lived up to its labor standards under NAFTA, and that a secret ballot election for union representation is important (see 1803210044).
The way that companies can apply for product exclusions is procedurally unfair, and there are no mechanisms to prevent the product exclusion process from enabling anti-competitive advantages, Sens. Orrin Hatch and Ron Wyden wrote on April 19. Hatch, chairman of the Senate Finance Committee, and Wyden, ranking member, said that the application forms require "a minute level of detail," including the chemical compositions, dimensions, strength, toughness, ductility, magnetic permeability, surface finish and coatings of the products. Domestic manufacturers objecting to a request have to respond in similar detail.
House Ways and Means Committee Democrats sent a letter to the committee chairman April 17 complaining that they are not being kept in the loop about the NAFTA renegotiations by the executive branch, and saying that a public hearing should be held before an agreement in principle is announced. Another letter sent the same day from ranking member Richard Neal, D-Mass., and Subcommittee on Trade ranking member Bill Pascrell, D-N.J. said that "the Administration is currently signaling clear intentions to conclude the NAFTA negotiation in the very near term." The House Advisory Group on Negotiations, which by law should be "fully apprised of the negotiations," needs to meet with U.S. Trade Representative Robert Lighthizer "at this critical phase of the negotiations and before an agreement in principle is reached and announced by the Administration," they said. The advisory group last met in May 2017 with Lighthizer. They also asked Chairman Kevin Brady, R-Texas, to hold a hearing with administration witnesses so they can conduct the necessary oversight of negotiations. Brady's office did not respond to a request for comment.