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Trade Update (September 24)

Sep 24, 2019 | SHARE  

On Thursday (Sep. 19), the House passed its stopgap spending measure to avert a shutdown by month’s end and fund the government just short of Thanksgiving. The funding-bill passed 301-123 but major partisan issues loom on the horizon, including funding for President Trump’s wall along the southern border. The bill now heads to the Senate and is likely to clear legislation before the Sep. 30 deadline. And although the bill will fund the government through Nov. 21, don’t expect a year-long budget to be passed anytime soon afterwards. “That is going to be a big fight, like we saw last time,” Rep. Henry Cuellar (D-Texas) said in an interview. “Nobody wants a shutdown. But what do you do when you’re so far apart?”[1]  The Senate has yet to pass a single spending bill on the floor as a result of funding disputes related to the border wall. With that, let’s turn to the week in trade… 


Whole Deal or No Deal with China

President Trump expressed little interest in a “partial deal” with China as it relates to the ongoing trade war between the two nations. “No, I don’t think I need it before the election,” Trump said on Friday during a joint press conference with Australian Prime Minister Scott Morrison. “I think people know that we’re doing a great job.”[2] In recent weeks, there have been suggestions the White House might seek an interim deal with China to deescalate trade tensions, rather than continue its push for a comprehensive package that addresses longstanding U.S. problems about Chinese trade and intellectual property practices. Deputy-level U.S. and Chinese officials are holding talks in Washington on Friday ahead of an anticipated round of high-level negotiations in early October. In addition, Trump will be in New York next week for the United Nations General Assembly meeting, where administration officials apparently will meet with Chinese counterparts.[3] 


USMCA Talks Ramping Up

The working group assigned by House Democrats to negotiate the United States-Mexico-Canada Agreement (USMCA) plan to formally respond to the administration’s counteroffer next week. House Ways and Means Chairman Richard Neal (D-MA) said Friday (Sep. 20) that he intends to speed up negotiations. The nine-member group met with United States Trade Representative (USTR) Robert Lighthizer on Friday (Sep. 20) for the first time since Lighthizer submitted details of how the Trump administration would consider making changes to Democrat’s concerns. Those concerns continue to center around enforcement, labor and environmental standards, and drug pricing provisions. Although Neal indicated both sides agreed to rev up the process, he said the Democrat’s aforementioned concerns have still not been properly addressed.


US-Japan Mini Deal

Five House Democrats, led by Rep. Ron Kind (D-WI), penned a letter to USTR Lighthizer warning him that a new trade deal with Japan lacks “critical provisions” for American dairy farmers. Kind also said the deal would leave dairy farmers with less market access than competitors, citing “serious concerns” on moving forward without the provisions to protect dairy farmers. The Trump administration announced earlier this week it intends to enter into a small-scale deal with Tokyo limited to Japanese concessions on agricultural goods and U.S. cuts to tariffs on some industrial goods from Japan. The arrangement also includes a separate “executive agreement” on digital trade. Washington and Tokyo are also still working on language surrounding President Donald Trump’s threat of automotive tariffs on Japanese cars ahead of his meeting with Japanese Prime Minister Shinzo Abe, which is set for Wednesday in New York.[4] 


Further Shakeup at Commerce

The Commerce Department’s top trade enforcement official resigned Thursday (Sep. 19) in a move that underscores the department’s current instability. Gilbert Kaplan had held the post since March 2018 and had led the International Trade Administration, which oversees enforcement of U.S. trade laws. He’d also been involved in the administration’s trade talks with China, with the agency taking more aggressive measures under his leadership to counter China. 


French Threaten US over Airbus Duties

France will back the European Union’s (E.U.) retaliation against the U.S. if President Trump imposes tariffs on E.U. exports over subsidies granted to Airbus. Earlier this week, a World Trade Organization (WTO) arbitrator ruled in favor of the U.S. in the long-running transatlantic case between aerospace giant Airbus. The E.U. filed a similar case against the U.S. alleging illegal subsidies for Boeing. The WTO dispute settlement panel sent the confidential ruling to the European Commission and USTR on Sep. 13. The first complaint filed by the U.S. against the E.U. stems from 2006.  Washington has previously announced it would follow through with tariffs if it won the case in Geneva and has prepared a list of E.U. products ranging from cheeses to Airbus planes and parts that it said it would hit with tariffs of up to 100 percent.[5] 


References

[1] Ferris, Sarah. Emma, Caitlin. “House approves bill to avoid shutdown – but wall fight looms.” Politico Pro. 19 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/house-approves-bill-to-avoid-shutdown-but-wall-fight-looms-1754823

[2] Palmer, Doug. “Trump says no rush to reach deal with China before election.” Politico Pro. 20 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/trump-mum-on-raising-china-tariffs-to-50-or-100-percent-3874977

[3] Palmer, Doug. “Trump says no rush to reach deal with China before election.” Politico Pro. 20 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/trump-mum-on-raising-china-tariffs-to-50-or-100-percent-3874977

[4] Cassella, Megan. “Mini Japan deal hurts US dairy farmers, House Democrats say.” Politico Pro. 20 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/5-house-dems-raise-serious-concerns-with-japan-deals-dairy-provisions-1757416

[5] Hanke, Jacob. “France threatens retaliation if U.S. imposes Airbus duties.” Politico Pro. 19 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/france-threatens-retaliation-if-us-imposes-airbus-duties-3859550

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