Trade Update (May 12 )
EU Threatens Retaliation Against U.S. in ‘Large Civil Aircraft’ Case
The European Commission said on Thursday (May 7) that it still has the right to retaliate with tariffs against the U.S. regarding subsidies for Boeing.
The Commission argued the U.S. has not completely removed its subsidies for Boeing. Additionally, it said “the rulings in this dispute cover a number of additional measures where the U.S. remains non-compliant, including NASA and Department of Defense Research measures and certain state and local measures.”
On Wednesday (May 6), U.S Trade Representative (USTR) Robert Lighthizer declared that the U.S. had now “fully complied” with its obligations and that any EU retaliation would have no valid basis. However, a spokesperson for the European Commission said that, “the EU does not agree with the U.S. unilateral assertion that it has fully implemented the (WTO) recommendations and rulings in this dispute.” The U.S. notification follows action by the Washington state legislature in March to eliminate a preferential business and occupation tax rate for aerospace manufacturing.
The Commission said it was “still examining the impact of the legislative action concerning the Washington State B&O tax” but insisted that the rulings in this dispute cover a number of measures.
Last year, the WTO upheld a ruling that Boeing had received illegal subsidies, but it still has to determine the amount on which Europe can retaliate. That ruling is expected in June.
Commerce Announces New 232 Investigations
On Monday (May 4), the Commerce Department launched a new Section 232 investigation into whether or not imports of certain parts used in electrical transformer equipment constitutes a national security risk and should be subject to trade restrictions.
The investigation was launched under the same law used to impose tariffs on steel and aluminum imports. Members of Congress and domestic industry requested Commerce to conduct the review.
“The Department of Commerce will conduct a thorough, fair, and transparent review to determine the effects on the national security from imports of laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators,” Commerce Secretary Wilbur Ross said in a statement.
The investigation will be conducted by Commerce’s Bureau of Industry and Security, and will be open to a public comment process. To view the press release, click here.
On Wednesday (May 6), U.S. Secretary of Commerce Wilbur Ross announced the department would initiate a Section 232 investigation into mobile crane imports.
The Manitowoc Company, based in Manitowoc, WI, filed a petition in December asking for the investigation. It alleges the increased imports of low-priced mobile cranes have harmed the domestic mobile crane industry.
Mobile cranes are considered a critical industry because of their use in national defense applications and critical infrastructure sectors. This investigation will probe whether the current imports “threaten to impair U.S. national security.”
To view the announcement, click here.
Trump Skeptical on U.S. – China Trade Deal
On Friday (May 8), President Trump suggested that he would abandon his trade deal with China that was signed less than four months ago. In an interview with Fox News, he said he was “very torn” about what to do and added that he had “not decided” whether to maintain the deal.
“I made a great trade deal months before this whole thing happened. And it was kicking in a month ago … and starting to produce, and then this happened and it sort of overrides so much,” he added.
These remarks came one day after Lighthizer and Treasury Secretary Steve Mnuchin spoke with Chinese Vice Premier Liu He and released a joint statement saying they were optimistic China would meet its purchase commitments under the deal.
Mnuchin and Lighthizer dismissed any concerns that Beijing’s slow start in making purchases amid the COVID-19 pandemic would force China to pull back on its commitments. “Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success,” Lighthizer and Mnuchin said.
To view the joint statement, click here.
 Vela, Hanke Jacob. “Brussels says U.S. still subsidizing Boeing.” Politico Pro, 7 May 2020. https://link.edgepilot.com/s/78cf426a/2exuWDsYek_XwnqFOyA-Rg?u=https://subscriber.politicopro.com/article/2020/05/brussels-says-us-still-subsidizing-boeing-3980261
 Behsudi, Adam. “Commerce launches new national security trade probe.” Politico Pro, 4 May 2020. https://link.edgepilot.com/s/82308f68/0RuDGBNs_EyPhD00jp6odw?u=https://subscriber.politicopro.com/article/2020/05/commerce-launches-new-national-security-trade-probe-3980104
 Palmer, Doug. “Trump says stay tuned on China purchases.” Morning Trade, 7 May 2020. https://link.edgepilot.com/s/ececa26f/LjD2dclPOEy8mk-PACae6w?u=https://subscriber.politicopro.com/newsletter/2020/05/trump-says-stay-tuned-on-china-purchases-787416
 Palmer, Doug. “Trump casts doubt on U.S.-China trade deal, contradicting his officials.” Politico Pro, 8 May 2020. https://link.edgepilot.com/s/f2d8aade/PBWC_-NUY0iCQXJI_DTVQQ?u=https://subscriber.politicopro.com/article/2020/05/trump-casts-doubt-on-us-china-trade-deal-contradicting-his-officials-1934324