On The Hill

Trade Update (February 18)

Feb 19, 2019 | SHARE  
US-China Trade Negotiations


US and Chinese officials met in Beijing this week in an attempt to reach a trade deal by the March 1 deadline. Deputy US Trade Representative Jeffrey Gerrish arrived on Monday (Feb 11), while USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived on Thursday (Feb 14). At the conclusion of the meetings, Mnuchin tweeted a photo with the caption, “Productive meetings with China’s Vice Premier Liu He and @USTradeRep Amb. Lighthizer.” He did not give any additional information. However, the South China Morning Post reported the two parties “remain far apart on key issues,” including equal market access and intellectual property protections.[1] Negotiators plan to meet in Washington, DC.


US President Donald Trump and Chinese President Xi Jinping are expected to meet before a deal can be finalized, but it is unclear where or when the summit will take place. Chinese officials unofficially proposed the leaders meet on the Chinese island of Hainan at the end of March. In a Fox News interview, White House adviser Kellyanne Conway said President Trump “wants to meet with President Xi very soon.” US officials have suggested the summit take place at Mar-a-Lago in mid-March.[2]


No matter where the meeting takes place, Trump announced on Friday (Feb 15) that he would invite Senate Minority Leader Chuck Schumer (D-NY) and House Majority Leader Nancy Pelosi (D-CA) to join the final negotiations.[3]



Alabama Electric Arc Furnace Restarts Construction


United States Steel Corporation (USS) announced it will restart construction on a “technologically advanced electric arc furnace (EAF) steelmaking facility” in Fairfield, Alabama. Construction was suspended in 2015 due to “unfavorable market conditions.” USS will invest approximately $215 million to modernize the existing rounds caster and add 150 full-time employees. Once completed the EAF will have an annual capacity of 1.6 million tons. In the press release, President and Chief Executive Officer David Burritt credited the “President’s strong trade actions” as part of the reason the EAF can restart construction.[4]



Government Shutdown Averted


The House and Senate passed H.J. Res. 31 to fund the entire government through the end of the fiscal year (Sept 30). The legislation achieved veto-proof, two-thirds majorities in both chambers. President Trump announced he would sign the bill.[5] However, because the resolution only provided $1.375 billion for the border wall, President Trump declared the crisis at the border a national emergency. With this declaration, the president is able to use his “legal authority to take Executive action to secure additional resources” to build the wall including additional troops and funding for military construction.[6]


The Commerce Department was granted $11.4 billion in overall discretionary funding, which was an increase of $276.6 million compared to fiscal year 2018. The International Trade Administration (ITA) received the same amount as FY2018 ($11.4 billion) and the Bureau of Industry and Security (BIS) received $118.1 million (an increase of $4.6 million from FY2018).[7] According to the explanatory statement, a portion of the ITA funding “shall be for China anti-dumping and countervailing duty enforcement and compliance activities,” and a portion of the BIS funding will be “devoted to an effective Section 232 exclusion process.” There was a lot of confusion and frustration regarding the 232 exclusion processes. The BIS funds will help Commerce and USTR establish more rigid exclusion processes so companies can apply for relief for goods affected by the Section 232 and Section 301 tariffs.[8]





[1] “Wendy Wu & Owen Churchill. “‘Like pulling teeth’: In trade talks, China and US said to be far apart on structural changes by Bejing.” South China MOrning Post, 15 Feb 2019. https://www.scmp.com/news/china/diplomacy/article/2186228/trade-war-talks-china-and-us-said-be-far-apart-framework


[2] Laura Zhou & Zhou Xin. “Where? When? How? China and United States at odds over right place and next time for next Xi-Trump summit.” South China Morning Post, 11 Feb 2019. https://www.scmp.com/economy/china-economy/article/2185723/where-when-how-china-and-united-states-odds-over-right-place


[3] Donna Borak & Daniel Shane. “Trump floats including top Democrats in China trade negotiations.” CNN Politics, 15 Feb 2019. https://www.cnn.com/2019/02/15/politics/us-china-trade-talks-news/index.html


[4] “United States Steel Announces Restart of Construction of Electric Arc Furnace.” United States Steel Corporation, Press Release, 11 Feb 2019. https://www.ussteel.com/newsroom/united-states-steel-announces-restart-construction-electric-arc-furnace


[5] “House Passes Legislation to Keep Government Open, Fund Key Priorities.” Committee on Appropriations, 14 Feb 2019. https://appropriations.house.gov/news/press-releases/house-passes-legislation-to-keep-government-open-fund-key-priorities


[6] “President Donald J. Trump’s Border Security Victory.” WhiteHouse.gov, 15 Feb 2019. https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-border-security-victory/


[7] “Consolidated Appropriations Act Division-By-Division Summary.” Appropriations.House.Gov, 14 Feb 2019. https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/documents/Summary%20of%20Conference%20Report.pdf


[8] “Explanatory Statement Submitted by Mrs. Lowey, Chairwoman of the House Committee on Appropriations Regarding H.J. Res 31.” House.gov, 14 Feb 2019. https://docs.house.gov/billsthisweek/20190211/116hrpt9-JointExplanatoryStatement-u1.pdf


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