On The Hill

Trade Update (December 20)

Dec 20, 2020 | SHARE  
Biden-Harris Transition
This week, President-elect Joe Biden announced the following nominees and appointees:
Michael Regan, Environmental Protection Agency (EPA) Administrator
  • Currently serves as North Carolina’s Secretary of Department of Environmental Quality  
Jennifer Granholm, Energy Secretary
  • Former two-term Governor of Michigan
Deb Haaland, Interior Secretary
  • Currently serves as the Representative for New Mexico’s 1st Congressional District
Gina McCarthy, National Climate Advisor
  • Served as EPA Administrator under the Obama-Biden administration
Brenda Mallory, White House Council on Environmental Quality (CEQ) Chair
  • Served as CEQ general counsel under the Obama-Biden administration
Pete Buttigieg, Transportation Secretary
  • Former Mayor of South Bend, IN
Ali Zaidi, Deputy National Climate Advisor
  • Former Office of Management and Budget and White House Domestic Policy Council official during the Obama-Biden administration
On Friday (Dec. 18), Biden announced additional members of his White House communications team. To view the list of new staff, click here.
To view a full list of nominees, appointees, and White House staff, click here.
Treasury Currency Investigation
On Wednesday (Dec. 16), the Trump administration labeled Vietnam and Switzerland currency manipulators, and accused the countries of improperly intervening in foreign exchange markets.
The move forces Vietnam and Switzerland to enter negotiations with the U.S. and the International Monetary Fund (IMF). This is the third time the Trump administration has labeled a country a currency manipulator.
“The Treasury Department has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses,” Treasury Secretary Steven Mnuchin said in a statement.[1]
“Treasury will follow up on its findings with respect to Vietnam and Switzerland to work toward eliminating practices that create unfair advantages for foreign competitors,” he added.
The designation does not mean immediate sanctions will be imposed on either government.
To view Treasury’s report to Congress, click here.
On Friday (Dec. 18), U.K. Prime Prime Minister Boris Johnson told reporters that the U.K. wanted to keep working with the European Union (EU) on a trade agreement, but that discussions were “looking difficult.”
Key EU negotiators are warning the countries are running out of time to agree on a post-Brexit trade agreement. A deal would need to ensure tariff-free trade between the U.K. and EU after Dec. 31, but disputes over various issues have hindered discussions in recent weeks.
U.K. businesses are requesting “grace periods,” ranging from six months to a year, to “smooth the cliff edge.” The Confederation of British Industry (CBI) said it was impossible for businesses to be ready if a deal is not reached, and released recommendations to minimize disruption.
“This will ensure both EU and U.K. businesses have sufficient time to prepare their supply chains and learn the new skills required so that they can access zero tariffs,” the CBI document says.
The U.K. will be leaving the EU’s single market and customs union regardless of whether a deal is reached. CBI’s report is being sent to negotiators on both sides.[2]
Medical Product Tariff Exclusions
Last week, a group of bipartisan lawmakers urged the Trump administration to extend exclusions from import tariffs on medical products from China.
In a letter to U.S. Trade Representative (USTR) Robert Lighthizer, 73 members said the failure to extend the exclusions would hurt small businesses. Additionally, they said U.S. companies need more time to diversify their supply chains out of China.
“Extending exclusions before they expire will help with pandemic response, and it will save jobs, businesses and livelihoods. We strongly urge you to extend all active exclusions before they expire at the end of this year,” the lawmakers said in the letter.
“Our economy remains in a fragile state due to the ongoing COVID-19 pandemic, and many of the expiring exclusions are critical to the pandemic response,” they added.[3]
US-UK Trade Negotiations
This week, USTR Lighthizer said the U.S. will work to dial back retaliatory tariffs on goods, including Scotch whisky and cashmere, in a pact with Britain before President Trump leaves office.
However, Lighthizer signaled the move would have to be part of a wider discussion about how both countries handle a range of retaliatory measures tied to the Boeing-Airbus dispute and a separate disagreement over steel and aluminum.
“We have the advantage in that both the US and the UK – particularly the current government of the UK – are not big subsidisers, where some other countries are more inclined to subsidise. So it would be helpful if we could come to some kind of agreement,” Lighthizer said.[4]
On Wednesday (Dec. 16), U.S. ethanol and corn industry officials said they are preparing for Brazil to impose a 20 percent tariff on ethanol imports. The Trump administration and Brazil failed to reach an agreement to keep the markets open.
“Brazil’s decision to impose a 20 percent tariff on all U.S. ethanol imports is devastating for the U.S. ethanol industry, the future of cooperation and coordination between our nations,” the Renewable Fuels Association, U.S. Grains Council, Growth Energy, and National Corn Growers Association said in a joint statement.
“Not only does this decision risk destroying the great progress our two nations have made as global leaders in ethanol production, it marks a dramatic turn in our bilateral trade relationship,” the groups added.
Industry groups plan to press Biden to take up the cause once he is in office.[5]
On Friday (Dec. 18), the Commerce Department restricted U.S. companies from doing business with the Semiconductor Manufacturing International Corporation (SMIC) of China. Commerce said the move was made to protect U.S. national security.
“We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary,” Commerce Secretary Wilbur Ross said in a statement.
“Between SMIC’s relationships of concern with the military industrial complex, China’s aggressive application of military civil fusion mandates and state-directed subsidies, SMIC perfectly illustrates the risks of China’s leverage of U.S. technology to support its military modernization,” he added.[6]
The update also places the organization on Commerce’s Entity List, along with Chinese telecommunications company Huawei.
To view Commerce’s full statement, click here.
House Bill
This week, Rep. Jim McGovern (D-MA), author of the Uighur Forced Labor Protection Act, said the House will not accept any Senate changes to the bill. The legislation would ban imports from the northwestern Xinjiang region of China, unless companies can prove their products are not made with forced labor. The Chinese government has detained over a million ethnic Uighur Muslims in the region.
The Senate has not taken up the measure due to pressure from corporations, including Apple, Nike, and Coca-Cola. The businesses are concerned they may not be able to separate goods from Xinjiang that are made with forced labor, and which are not.
“We’re not going to let this thing go forward if it’s weakened,” McGovern said on a call.
Earlier this month, the Department of Homeland Security blocked imports of cotton from a major Chinese paramilitary firm.[7]
Power Grid
On Thursday (Dec. 17), the Department of Energy (DOE) announced a new rule that will prevent utilities that serve U.S. military sites from purchasing power grid equipment from companies controlled by the Chinese government.
To view the rule, click here.
A panel of World Trade Organization (WTO) judges announced this week that a decision on whether Trump violated global trade rules by unilaterally imposing tariffs on steel and aluminum imports will be delayed six months.
The delay will prevent President-elect Biden from quickly removing the duties. The EU, China, India, and other countries challenged the duties shortly after Trump imposed them in 2018.
To view the WTO communication, click here.
[1] Rappeport, Alan. “Trump administration says VIetnam and Switzerland Manipulated Currency.” The New York Times, 16 Dec. 2020. https://link.edgepilot.com/s/dde448b1/eWCgepe-OEiT_–toHT1tw?u=https://www.nytimes.com/2020/12/16/us/politics/trump-vietnam-switzerland-currency-trade.html
[2] Cooper, Charlie & Isaac, Anna. “British business’ last minute plea for Brexit ‘grace periods.’” Politico Pro, 17 Dec. 2020. https://link.edgepilot.com/s/b21032cd/TCurgtG4R0_PNIvwLAOWnQ?u=https://subscriber.politicopro.com/article/2020/12/british-business-last-minute-plea-for-brexit-grace-periods-2025501
[3] Shalal, Andrea. “U.S. lawmakers urge Trump administration to extension tariff exclusions for PPE.” Reuters, 14 Dec. 2020. https://link.edgepilot.com/s/c0cb4bb4/648VoVcc8EG5N5v793cjIg?u=https://www.reuters.com/article/usa-trade-congress-idUSKBN28O2IF
[7] Bade, Gavin. “House won’t accept Senate changes to Uighur forced labor bill, key sponsor says.” Politico Pro, 15 Dec. 2020. https://link.edgepilot.com/s/f61644f4/P9t97qw4bEeiIM79XVE11g?u=https://subscriber.politicopro.com/article/2020/12/house-wont-accept-senate-changes-to-uighur-forced-labor-bill-key-sponsor-says-3985899

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