USTR Releases Annual Trade Policy Agenda as China Talks Continue

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Global Trade
U.S. trade
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Trade, trade, trade — that is the order of the day as the Trump administration pursues a trade accord with China and attempts to convince Congress to approve the United States-Mexico-Canada Agreement (USMCA).

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United States Trade Representative (USTR) Robert Lighthizer addressed Congress on Friday on the heels of the submission of the 2019 Trade Policy Agenda and 2018 Annual Report (which must be submitted by March 1 of every year, pursuant to the Trade Act of 1974).

In a statement, Lighthizer touted the administration’s trade actions as “more favorable to American workers.”

“In just two years, we have significantly re-written major trade deals with Korea, Mexico, and Canada,” he said. “We have undertaken dramatic new enforcement efforts to stop unfair trading practices by China and other countries. We are aggressively enforcing U.S. trade laws, including by bringing cases under trade agreements, relevant U.S. laws, and at the WTO. We are ensuring that countries receiving benefits under the GSP program live up to eligibility standards set by Congress. These actions and many others are contributing to a stronger U.S. economy, which has generated more jobs and higher wages for American workers.”

The USTR release also states that the Trump administration is “urging” Congress to approve the USMCA. The agreement, signed during the G20 Summit in Argentina late last year by the leaders of Mexico, Canada and the U.S., still needs to be ratified by the three countries’ legislatures before it can go into effect.

However, the outstanding hangup vis-a-vis ratification remains the U.S.’s Section 232 tariffs on steel and aluminum, which are still in place on U.S. imports of the metals from Canada and Mexico.

As reported previously, U.S. Agriculture Secretary Sonny Perdue has indicated he is attempting to convince President Donald Trump to remove the tariffs to ease passage of the USMCA, meant as the successor to the North American Free Trade Agreement (NAFTA) passed in 1994. Canada and Mexico have also indicated their legislatures may not approve the agreement unless the tariffs are removed.

That dialogue is perhaps complicated by the fact that the U.S. Department of Commerce last week launched anti-dumping and countervailing duty investigations of imports of fabricated structural steel from Canada, Mexico and China. The total value of the imports of the fabricated structural steel from Canada and Mexico in 2017 reached $1.1 billion, according to the Department of Commerce.

Meanwhile, the U.S. and China have continued trade talks this month, with media reports indicating a deal could be reached by the end of this month.

The two countries have traded a total of $360 billion in tariffs on each other’s goods, with the U.S. imposing a total of $250 billion as part of its Section 301 probe of China’s trade practices (including allegations of intellectual property theft, forced technology transfer and more).

The U.S. imposed a tariff package worth $200 billion on a wide range of goods from China in September at a tariff rate of 10%, which was was set to increase to 25% as of Jan. 1 until the two countries agreed to launch a new 90-day negotiating window (prompting Trump to delay the rate increase). More recently, Trump agreed to delay the March 1 deadline as talks continue.

The report also addresses the impact of China’s steel overcapacity.

“The domestic steel industry lost 14,100 American jobs in 2015 and 2016,” the report states. “Capacity utilization of American steel mills was only 69.4 percent in 2016, a level that inhibited efficient operations and discouraged American steel companies from investing in research and development. Meanwhile, China and other steel-producing nations dramatically increased their production capacity – despite growing evidence of global overcapacity. By 2016, China had enough capacity to produce as much steel as the rest of the world combined.”

The report touts the USMCA and the renegotiated trade deal with South Korea, the United States-Korea Free Trade Agreement, and lists negotiations underway for new trade deals with the U.K., E.U. and Japan.

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The full 373-page report is available on the USTR website.

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