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This Week In Trade

Companies line up to contest new tariffs on China; USTR to testify before Congress twice

Posted: June 17, 2019

The Office of the U.S. Trade Representative will hear from more than 300 companies and trade groups this week and next during a lengthy hearing on President Trump’s threat to impose tariffs on roughly $300 billion worth of Chinese goods.

While the marathon hearing is taking place, USTR Robert Lighthizer will appear before the Senate Finance and House Ways & Means committees. The Senate panel will get the first crack at Lighthizer on Tuesday in a hearing on the president’s 2019 trade policy agenda and the U.S.-Mexico-Canada Agreement.

The Ways & Means Committee will get its turn on Wednesday in a hearing that will cover the president’s trade agenda and USMCA as well as negotiations with China, Japan, the European Union and the United Kingdom, U.S. participation at the World Trade Organization, “and other matters.”

Lighthizer likely will be pressed by both on the administration’s efforts to garner support for USMCA and the status of dormant trade talks with China.

But India has fired the most recent volley in Trump’s many-fronted trade war. New Delhi announced on June 15 that it would raise tariffs on 28 U.S. products by 10 to 70 percent. The increased tariffs went into effect on June 16. India had been threatening to retaliate against the U.S. for its Section 232 tariffs on steel and aluminum, but repeatedly delayed taking action. The new tariffs come weeks after the U.S. announced the revocation of India’s benefits under the Generalized System of Preferences.

Chinese Foreign Ministry spokesman Lu Hao suggested that Beijing supports India’s retaliatory measures, telling reporters that “any country has the right to defend its legitimate rights and interests.”

Lu also continued China's silence on whether President Xi Jinping will meet with Trump later this month at the G20 leaders summit in Osaka, Japan. Chinese spokesmen have been asked about a potential Trump-Xi meeting on an almost daily basis over the past few weeks. Each has replied that China “takes note” of comments by the Trump administration, but added that there was no more available information.

Companies testifying during USTR's hearing this week and next will not be as laconic. Most witnesses are expected to oppose the proposed tariffs. More than 300 businesses and groups wrote to Trump last week saying they were against new tariffs on China even though they supported taking a tough stance on predatory Chinese policies.

The Trump administration has already imposed 25 percent tariffs on $250 billion of Chinese goods, which led first-quarter U.S. exports to China to drop by 30 percent and Chinese exports to the U.S. to drop 9 percent compared to 2018, according to a June report by the trade credit insurer Atradius. The report also projects that global trade will slow to 1.3 percent growth in 2019 -- a drop from the modest 2 percent growth prediction under the current economic circumstances -- if the U.S. and China slap 25 tariffs on all of each other’s exports and the U.S. goes through with Section 232 tariffs on autos and auto parts. Trump formally notified Congress of his decision to delay tariffs on auto and auto parts last week.

USMCA watch

Canadian Prime Minister Justin Trudeau will be in Washington, DC, this week to discuss USMCA's ratification. Canada's Parliament held a second reading of a USMCA implementing bill last week. Foreign Affairs Minister Chrystia Freeland has said Canada will ratify USMCA in parallel with Congress. Parliament’s last session before Canadian federal elections is scheduled to conclude at the end of the week, but reports have suggested Trudeau is willing to call lawmakers back for a special session to ratify USMCA.

Time is of the essence if Canada hopes to move forward with ratification before its federal elections. According to Canadian law, elections will have to be called in September, and Parliament would not be able to consider USMCA until after the elections are held six weeks later. Freeland last week left open the chance that Canada might break from its pledge to move in concert with the U.S. for ratification.

The Mexican Senate will consider its USMCA bill on Tuesday.

The U.S. Chamber of Commerce is set to hold a press call on Monday about the urgency the business community feels in urging the ratification of Trump’s signature trade deal.

Meanwhile, AFL-CIO President Richard Trumka is hosting town halls in Pennsylvania, Ohio and Michigan this week to discuss the revamped NAFTA. The AFL-CIO has not endorsed USMCA, echoing calls by congressional Democrats for changes to the deal’s enforcement provisions. Trumka will hold forums with local union representatives in Youngstown, Akron and Toledo as well as larger town halls in Pittsburgh, Cleveland and Detroit this week.

The administration cannot send the USMCA implementing bill to Congress until July 9, which is the first day both chambers are in session after June 30. The draft statement of administrative action was sent to Congress on May 30 and the implementing bill cannot be transmitted until 30 days after that.

Events

  • The Meridian International Center will host Indian Ambassador to the U.S. Harsh Vardhan Shringla on Tuesday for a discussion on U.S.-Indian economic relations.
  • The American Society of International Law on Tuesday will hold a roundtable on the treatment of agriculture in recent and future trade agreements.
  • The House Financial Services national security, international development and monetary policy subcommittee on Wednesday will hold a hearing on the impact of recent trade policies on the U.S. economy. The scheduled witnesses: Laura Baughman, president of The Trade Partnership; Fred Bergsten, director emeritus at the Peterson Institute for International Economics; John Boyd, president of the National Black Farmers Association; Ronnie Russell, a member of the American Soybean Association; and Gordon Gray, the director of fiscal policy at the American Action Forum.
  • The Chartwell Group will hold a discussion on the future of U.S.-China relations on Wednesday. Participants include Dan Blumenthal, director of Asian studies at the American Enterprise Institute; Brian Gardner, director of Washington research at Keefe, Bruyette & Woods; Nancy Fischer, partner at Pillsbury Winthrop Shaw Pittman; David Tamasi, managing director of the Chartwell Strategy Group; and Chartwell’s senior counsel, Chris Smith.
  • The Center for Strategic and International Studies and the Japan External Trade Organization will host a conference on whether the U.S. is decoupling from Asia’s economy. Participants include House Ways & Means member Stephanie Murphy (D-FL), Deputy Assistant Secretary of State for Japan and Korea Marc Knapper, and JETRO Chairman and CEO Nobuhiko Sasaki.
  • The Woodrow Wilson’s Mexico Institute will hold its sixth annual “Building a Competitive U.S.-Mexico Border” conference on Thursday. Mexican Ambassador to the U.S. Martha Bárcena, Deputy USTR C.J. Mahoney, Finance Committee member John Cornyn (R-TX) and Rep. Will Hurd (R-TX) will take part.
  • On Friday, CSIS will preview the G20 leaders summit. Participating in the discussion will be Heather Conley, director of the CSIS Europe Program; Matthew Goodman, chair in political economy at CSIS; and Michael Green, Japan chair at CSIS. -- Brett Fortnam (bfortnam@iwpnews.com)

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