On The Hill

Trade Update (December 13)

Dec 13, 2020 | SHARE  
Biden-Harris Transition
This week, President-elect Biden announced the following nominees, appointees, and advisers:
General Lloyd Austin, Secretary of Defense
  • Retired four-star General with more than 40 years of military service
Xavier Becerra, Secretary of Health and Human Services
  • Current Attorney General of California
Tom Vilsack, Secretary of Agriculture
  • Confirmed by unanimous consent in the Senate in 2009 to serve as Secretary of Agriculture – served from 2009-2017
Marcia Fudge, Secretary of Housing and Urban Development
  • Current representative for the 11th Congressional District of Ohio
Denis McDonough, Secretary of Veterans Affairs
  • Served as White House Chief of Staff, Deputy National Security Advisor, and Chief of Staff of the National Security Council during the Obama-Biden administration
Katherine Tai, United States Trade Representative
  • Served as the chief lawyer for the House Ways and Means Committee
Susan Rice, Director of the Domestic Policy Council
  • Served as National Security Advisor from 2013-2017
  • Served as U.S. Ambassador to the United Nations from 2009-2013
Dr. Rochelle Walensky, Director of the Centers for Disease Control and Prevention (CDC)
  • Chief of the Division of Infectious Diseases at Massachusetts General Hospital and Professor of Medicine at Harvard Medical School
Dr. Vivek Murthy, Surgeon General
Dr. Marcella Nunez-Smith, COVID-19 Equity Task Force Chair
Dr. Anthony Fauci, Chief Medical Adviser to the President on COVID-19 and Director of the National Institute of Allergy and Infectious Diseases
Jeff Zients, Coordinator of the COVID-19 Response and Counselor to the President
Natalie Quillian, Deputy Coordinator of the COVID-19 Response
Katherine Tai, nominee for U.S. Trade Representative (USTR), is the senior trade lawyer for the House Ways and Means Committee. The Biden team’s selection of Tai signals an intent to return to a more multilateral trade approach to advance U.S. interests.
Senate Finance Ranking Member Ron Wyden (D-OR) labeled Tai as an “inspired choice,” and various other Democratic lawmakers and even some Trump White House veterans praised the decision.
“I’ve worked with Katherine for years, she’s a superstar,” said Kelly Ann Shaw, former deputy director of the National Economic Council in the Trump administration.
“She’s smart, tough and an exceptional negotiator. She’s also incredibly well-respected on both sides of the aisle — no small feat in the current political climate,” she added.
Tai is also a longtime critic of China, and her leadership at USTR would not necessarily signal a change from the current administration’s tough stance on the country. Previously, she led U.S. trade enforcement on China during her time with USTR.
Tom Vilsack, nominee for Secretary of Agriculture, served in the role for eight years under the Obama-Biden administration, and served two terms as the Governor of Iowa. While secretary Vilsack oversaw increased investments in rural communities, new policies for the nation’s school meal system, and increased food safety standards.
Under the Biden-Harris administration, the Department of Agriculture is expected to play a key role in various climate priorities. Additionally, Vilsack will have to decide whether to continue paying farmers to make up for losses from the current administration’s trade dispute with China.
To view a full list of the Biden-Harris nominees, appointees, and White House staff, click here.
Boeing-Airbus Dispute
This week, the U.K. announced it will suspend retaliatory tariffs against the U.S. in the ongoing Boeing-Airbus dispute. The move comes as the country looks for a path forward on a trade deal with the U.S.[1]
“Ultimately, we want to de-escalate the conflict and come to a negotiated settlement so we can deepen our trading relationship with the U.S. and draw a line under all this,” U.K. Trade Secretary Liz Truss said.
However, the U.K. does plan to roll over the EU’s retaliatory tariffs on steel and aluminum on U.S. imports. Truss said this shows Britain is protecting its domestic “steel industry against illegal and unfair tariffs.”
On Wednesday (Dec. 9), USTR welcomed the U.K.’s decision not to impose the retaliatory tariffs and said the U.S. hopes to reach a negotiated settlement on the matter.
“The United States does not agree, however, that the U.K. would have any authority to impose tariffs,” USTR said.
“Only the EU sued the United States at the WTO; the U.K. did not bring a case in its individual capacity. Therefore, the U.K. has no authority from the WTO to participate in any such action after it no longer is part of the EU,” USTR added.
On Wednesday (Dec. 9), U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen set a new deadline for a Brexit deal. Trade negotiations have been deadlocked, but both leaders agreed negotiations would continue and that a “firm decision” about the future of the talks should be taken by Sunday (Dec. 13).
There are only three weeks until the Brexit transition period ends. The U.K. and the European Union (EU) will trade under World Trade Organization (WTO) rules if no deal is reached.
“Very large gaps remain between the two sides and it is still unclear whether these can be bridged,” a U.K. official said.
“The PM and VDL agreed to further discussions over the next few days between their negotiating teams. The PM does not want to leave any route to a possible deal untested. The PM and VDL agreed that by Sunday a firm decision should be taken about the future of the talks,” they added.
“We had a lively and interesting discussion on the state of play across the list of outstanding issues. We gained a clear understanding of each other’s positions. They remain far apart. We agreed that the teams should immediately reconvene to try to resolve these essential issues. We will come to a decision by the end of the weekend,” von der Leyen said in a separate statement.[2]
On Thursday (Dec. 10), Johnson said there is a “strong possibility” that the U.K. and the EU will not reach a Brexit trade deal.
Two senior EU diplomats told reporters on Wednesday (Dec. 9) that the European Commission is set to present contingency legislation imminently to prevent a “cliff-edge scenario” in case no deal is agreed upon.
On Tuesday (Dec. 8), the U.S. signed a mini trade deal with Ecuador, the only Latin American country along the Pacific shore that does not have a free trade agreement with the U.S.
“Ecuador has demonstrated that it plays an important role in the region in promoting democracy, good governance and market-based economic growth,” USTR Robert Lighthizer said.
“I look forward to stronger and more integrated relationships between our two countries,” he added.
The new trade pact includes three chapters on trade facilitation, good regulatory practices, and anti-corruption, as well as a fourth chapter on small and medium size enterprises. It is similar to the mini deal signed with Brazil earlier this year.[3]
House Ways and Means Democrats criticized the deal and said they were not fully informed of the talks.
To view the agreement, click here.
In an interview with POLITICO this week, Canadian ambassador to the U.S. Kirsten Hillman said that Ottawa emissaries are in frequent contact with the Biden-Harris transition team, and that there are “plenty” of issues that the two governments can work closely together on.
“We are aligned in a very significant way, from a policy perspective, with the incoming administration,” she said.
Hillman noted that “Buy American” policies should encompass North American partners and said economic partnership and supply chain integration is crucial, especially during the COVID-19 pandemic.
Collaboration with President-elect Biden on energy issues, travel restrictions, and dairy tariff-rate quotas was also highlighted in Hillman’s interview.
Deputy Director for Taxes at the Organization for Economic Cooperation and Development (OECD) Grace Perez-Navarro signaled confidence this week that a global agreement on digital services taxes (DST) can be reached in 2021.
The OECD has been trying to reach a deal for years on where multinational companies get taxed, what they get taxed on, and a minimum level of tax.
G-20 leaders told the OECD to conclude negotiations by the middle of next year, which Perez-Navarro called “realistic,” however she also acknowledged the challenges the group would face in reaching a deal.
Perez-Navarro also said the OECD predicts more multilateral engagement with the U.S. under President-elect Joe Biden’s administration.[4] However, while the Biden team may be less reliant on tariffs, no real shift in the U.S. position is expected – there is bipartisan opposition in Congress to DSTs.
On Friday (Dec. 11), Chairman of the House Ways and Means Committee Richard Neal (D-MA) urged President-elect Biden to pursue a trade deal with the EU.
“Our partners across the Atlantic have shown a willingness to embark on a new, substantial trade relationship with the United States, and we should embrace this opportunity,” Neal said.
“A new U.S.-European trade arrangement will only enhance our ability to moderate China’s intensifying pursuit of growth and prosperity, which threatens to subject the rest of the world to its economic and political dominance,” he added.
Neal’s committee, along with the Senate Finance Committee, has jurisdiction over trade in Congress. However, Biden has said he does not plan to sign any new trade agreement until the U.S. has made investments domestically.[5]
[1] Isaac, Anna & Lanktree, Graham. “UK to ditch US Airbus-Boeing tariffs as it eyes trade deal.” Politico, 8 Dec. 2020. https://link.edgepilot.com/s/2a4bc3b8/ST_5MetqL0GrlxOXTOjILA?u=https://www.politico.eu/article/uk-ditch-us-airbus-boeing-tariffs-it-eyes-trade-deal/
[2] Casalicchio, Emilio. “(Another) Brexit deadline as Boris Johnson and Ursula von der Leyen fail to break impasse.” Politico Pro, 9 Dec. 2020. https://link.edgepilot.com/s/a846c41e/M2Oaaq47ZkeMamXcaoPL1g?u=https://subscriber.politicopro.com/article/2020/12/another-brexit-deadline-as-boris-johnson-and-ursula-von-der-leyen-fail-to-break-impasse-2023895
[5] Cochrane, Emily & Swanson, Ana. “A Top House Democrat Prods Biden to Reopen E.U. Trade Talks.” The New York Times, 11 Dec. 2020. https://link.edgepilot.com/s/7940085c/il-xYTfHSUKb4p0fVoSIQw?u=https://www.nytimes.com/2020/12/11/business/economy/neal-biden-europe-trade.html

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