Trade Update (October 13)
New Trade Data
On Tuesday (Oct. 6), a Commerce Department report showed the U.S. monthly trade deficit hit a record high in August, $67.1 billion. This was a six percent increase, and the third highest level on record.
The report also showed that U.S. exports to China are behind the pace needed to meet goals under the Phase One deal. Exports are about 18 percent lower compared to the last month before the pandemic.
Disruptions in global supply chains and weaker demand overseas have impacted the ability of exporters to recover.
To view the Commerce Department’s report, click here.
However, the World Trade Organization (WTO) said on Tuesday (Oct. 6) that global trade is recovering slightly faster than expected during the pandemic.
The trade forecast said it expects a 9.2 percent decline in the volume of world merchandise trade in 2020, followed by a 7.2 percent rise in 2021. This is less severe than the 13 percent drop the WTO anticipated in its April forecast.
Overall GDP growth is still lagging, and economists are warning a resurgence of COVID-19 could reduce global GDP growth by two to three percentage points and impact merchandise trade growth in 2021.
To view WTO’s trade forecast, click here.
Commitment to American GROWTH Act
On Friday (Oct. 9), House Ways and Means Ranking Member Kevin Brady (R-TX) and Minority Leader Kevin McCarthy (R-CA) released H.R.11, the Commitment to American GROWTH Act. The legislation aims to rebuild the economy and “lock in” key provisions of the Tax Cuts and Jobs Act (TCJA) to boost American jobs, maximize innovation, and secure medical supplies.
“House Republicans are committed to rebuilding the greatest economy our country had experienced in decades. President Trump proved that through low taxes and balanced regulation, we can grow jobs and paychecks. Using those same tools, our bill will grow this economy, boost American innovation, and secure our medical supply chain from China,” Brady said.
McCarthy said the bill would “invest in America’s small businesses and their employees” and strengthen the U.S. supply chain.
Notably, the legislation “encourages investment” in research and development to ensure various materials and products are made in the U.S.
To view a breakdown of the bill, click here.
On Wednesday (Oct. 7), U.S. Secretary of Agriculture Sonny Perdue said “complaining” to the WTO court was “one avenue” the U.S. could take if the EU brings in protectionist measures under its Farm to Fork food strategy.
The EU’s new strategy proposes legislation that would restrict the use of pesticides in farming and includes measures to curb fertilizer use across Europe. Perdue said the policies could be “extremely problematic.”
“It has the possibility of being contagious to other areas outside the food and agricultural sector,” Perdue said. “If the protectionism does come into play in that role, then WTO courts are one avenue,” he added.
On Wednesday (Oct. 7), the vice-presidential debate was held in Salt Lake City, UT. Democratic nominee for president Kamala Harris attacked the administration’s trade policies on China, and said they have failed.
“Because of a so-called ‘trade war’ with China, America lost 300,000 manufacturing jobs. Farmers have experienced bankruptcy because of it. We are in a manufacturing recession because of it,” Harris said.
Current Vice President Mike Pence responded that Biden has been “a cheerleader for communist China over the last several decades.” Pence also argued Biden wants to return to an “economic surrender” to China and repeal the tariffs Trump put into effect to “fight for America jobs and American workers.”
Additionally, Pence criticized Harris for voting against the U.S.-Mexico-Canada Agreement (USMCA). In a statement earlier this year, Harris said she voted against the trade agreement because it did not address climate change. Biden has come out in favor of the USMCA.
Other topics that dominated the debate included COVID-19 response and recovery, climate change, the Supreme Court vacancy, and the economy.
It is unclear if Wednesday’s (Oct. 7) debate will be the last of the 2020 presidential campaign. Trump said this week that he would not participate in the next debate after the independent commission announced it would be virtual.
World Trade Organization
On Thursday (Oct. 8), the WTO announced Yoo Myung-hee from South Korea and Ngozi Okonjo-Iweala from Nigeria will proceed to the final round in the election for a new trade chief.
According to a WTO press release, the candidates secured the “broadest and deepest support from membership.” The next round of consultations will start on Oct. 19 and run until Oct. 27.
 Bartash, Jeffry. “U.S. trade deficit climbs in August to $67.1 billion and hits third highest level on record.” Market Watch, 6 Oct. 2020. https://link.edgepilot.com/s/39bb8c66/FWfa6Flc6E6dXOrk7aP5ag?u=https://www.marketwatch.com/story/us-trade-deficit-climbs-in-august-to-671-billion-and-hits-third-highest-level-on-record-2020-10-06
 Bade, Gavin. “WTO: Global trade rebounding faster than expected.” Politico Pro, 6 Oct. 2020. https://link.edgepilot.com/s/aae9e1d3/0mOyIJYcSk2kPfGlr3YbgA?u=https://subscriber.politicopro.com/article/2020/10/wto-global-trade-rebounding-faster-than-expected-2005390
 Neslen, Arthur. “WTO court an option if EU pursues green food plans, U.S. farm secretary says.” Politico Pro, 7 Oct. 2020. https://link.edgepilot.com/s/70bdb5d1/8cKFkJ3iW02vpV9rXQ5ctw?u=https://subscriber.politicopro.com/article/2020/10/wto-court-an-option-if-eu-pursues-green-food-plans-us-farm-secretary-says-2005954
 Moens, Barbara. “Field for WTO job narrows to 2 candidates.” Politico Pro, 8 Oct. 2020. https://link.edgepilot.com/s/f20c90ea/PblJomqWYUOzwpieTZ_36A?u=https://subscriber.politicopro.com/article/2020/10/field-for-wto-job-narrows-to-2-candidates-3984505