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Trade Update (September 30)

Sep 30, 2019 | SHARE  

Shutdown Averted…For Now

 On Thursday (Sep. 26), the Senate passed a stopgap bill to fund the federal government through Nov. 21, setting up a holiday spending-showdown similar to last year’s. The FY 2020 Commerce-Justice-Science spending bill includes new funding levels for the Commerce Department, United States Trade Representative (USTR), and other agencies. Commerce will receive additional funding of $3.8 billion, bringing the agency’s total funding to $15.2 billion. The legislation allows more time for both chambers to negotiate a dozen FY 2020 spending bills that would provide funding for 15 federal departments and dozens of smaller federal agencies. However, the central funding issue rests in the Homeland Security bill as it pertains to funding for President Trump’s wall along the southern border. Senate Appropriations Chairman Richard Shelby (R-AL) expressed skepticism as the legislative path moves into the fall months. “If these conditions are not met, I fear we are moving headlong toward a full-year continuing resolution,” Shelby said. His comments came during a full committee markup of the Senate’s Interior-Environment, State-Foreign Operations, Commerce-Justice-Science, Homeland Security, and Legislative Branch spending bills on Thursday (Sep. 26). Shelby is set to meet with Trump on Friday morning to have a “candid“ discussion about the “realities” of the appropriations process and how to avoid additional continuing resolutions over the next year.[1] The bill passed 81-16, with 16 Senate Republicans voting against it. 


 Lighthizer Meets with House Democrats

 The House Democrats working group tasked with negotiating the United States-Mexico-Canada Agreement (USMCA) met with USTR Robert Lighthizer on Friday (Sep. 27) to continue resolving issues with the trade deal. “We’ve reached some agreement on a couple of substantial issues,” said House Ways and Means Chairman Richard Neal (D-MA). Democrats continue to seek prevailing changes on the USMCA’s enforcement, labor and environmental standards, and drug pricing provisions. Lawmakers will recess for the first two weeks of October and upon their return, Neal hopes his group and the administration will be close to finalizing the deal. Rep. Jimmy Gomez (D-CA) referred to deal entering its “sixth inning.” Impeachment has taken the nation’s capital by storm this week but the working group insists it still wants to get the deal done this fall. Senate Majority Leader Mitch McConnell (R-KY) blasted Democrats for their “heel-dragging” and suggested impeachment is the reason they’ve stalled.   McConnell’s comments came after House Democrats pledged on Wednesday that the newly launched impeachment inquiry will not affect their work with the Trump administration to negotiate changes to the deal in four core areas: labor, environment, access to medicines and enforcement. Pelosi reiterated on Thursday that Democrats remain committed to work out a deal with the Trump administration and that her party remains on a “continued path to yes.”[2] Pelosi unpromptedly remarked at her weekly press conference that the deal is moving forward.


 Commerce Announces AD Duty

 Late last Friday (Sep. 20), Commerce announced the affirmative preliminary determinations in the antidumping duty (AD) investigations of imports of carbon and alloy steel threaded rod from China, India, and Taiwan. According to the press release, Commerce found that exporters from China, India, and Taiwan have dumped carbon and alloy steel threaded rod at the following rates:

  • China – 4.81 percent to 59.45 percent
  • India – 2.04 percent
  • Taiwan – 32.26 percent

Commerce is scheduled to announce the final determination with respect to Taiwan on or about December 4, 2019, and with respect to China and India, on or about February 11, 2020, according to the statement.


 EU steel safeguards

 On Friday (Sep. 27), the European Commission published adjustments regarding its safeguard measures on steel imports to protect European producers. The adjustments, effective Oct. 1, include improvements in the functioning of the quota, among others for hot-rolled flat steel and steel intended for the automotive sector, an updated list of exclusions for developing countries based on more recent imports statistics, and a slower progressive increase of the import quotas, according to the press release.  The press release went on to say, “the safeguard measures were provisionally put in place in July 2018 and have been introduced in their definitive form in February 2019. The aim has been to prevent serious injury for the EU steel industry following the increased imports and trade diversions caused by the U.S. unilateral decision to impose tariffs on steel products last year.” The move also sets a cap of 30 percent on any country’s single export share of the EU’s overall imports of hot-rolled steel.


 US, Japan Strike Mini Deal

 On Wednesday (Sep. 25), the U.S. and Japan announced a limited trade deal that will cut tariffs on agricultural and industrial products. The deal also includes rules addressing digital trade. President Trump and Japanese Prime Minister Shinzō Abe announced the agreement at the United Nations General Assembly in a deal the administration hopes will aid U.S. farmers. Trump called it a “huge victory for America’s farmers, ranchers, and growers” as Japan agreed to cut or eliminate tariffs on beef, pork, and other commodities. In return, the U.S. agreed to cut duties on Japanese imports of turbines, machine tools, and other goods. CHCG noted in last week’s Trade Update that farmers were concerned the deal did not do enough to protect dairy producers, but the International Dairy Foods Association hailed the deal as a “step in the right direction.” The deal comes as Japan sought to language to provide a clear exemption from the tariff threat on imports of automobiles and auto parts, which fall under Section 232 of the Trade Expansion Act of 1962 as “national security concerns.” Lighthizer said the administration will not do anything on autos, and since the agreement does not need congressional approval, it will likely go into effect in the coming months. According to the fact sheet, the digital trade provisions will prohibit customs duties on digitally transmitted videos, music, software, and other products. To read the full fact sheet on the deal, click here.


References

[1] Emma, Caitlin. “Senate clears stopgap spending bill, averts shutdown.” Politico Pro. 26 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/senate-clears-stopgap-spending-bill-averts-shutdown-3910745

[2] Cassella, Megan. “McConnell calls out House Democrats for delaying USMCA.” Politico Pro. 26 Sep. 2019. https://subscriber.politicopro.com/article/2019/09/mcconnell-calls-out-house-democrats-for-delaying-usmca-1772478

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