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This Week In Trade

COVID-19 disruptions continue, with trade questions in the mix

Posted: March 30, 2020

The Trump administration on Sunday announced it would leave in place social-distancing guidelines that that have helped send the U.S. economy and global trade flows into a nosedive, setting up a series of trade policy questions as it considers how best to respond to the health and economic crisis.

The longer the U.S. economy suffers from a shutdown that medical officials say is necessary to contain the contagion, the more severe its impact will be on global trade flows, Inside U.S. Trade reported last week. The head of the World Trade Organization said he expects global trade to decline at a steeper rate than it did during the 2008 financial crisis.

Whether the Office of the U.S. Trade Representative will be able to march ahead with its trade agenda remains an open question. One USTR adviser has said he expects USTR to continue forward at full speed, but former officials have stressed the importance of face-to-face negotiations that are not possible under the current restrictions.

USTR has said its staff is following Office of Management and Budget guidelines for how to operate during the pandemic but it has not provided any additional details on how those measures are affecting its operations. OMB last week issued a memo instructing government agencies to “use the breadth of available technology capabilities to fulfill service gaps and deliver mission outcomes.”

The administration has decisions to make on trade policy as it considers how best to respond to the COVID-19 pandemic. Trump’s Section 301 tariffs on Chinese goods have taken flack for allegedly hindering the U.S.’ ability to procure much-needed personal protective equipment, a claim vociferously denied by administration officials. USTR on Monday issued more Section 301 tariff exclusions on medical products after earlier this month launching an exclusion process for goods related to combatting the virus.

Some lawmakers and groups are calling for Section 301 and Section 232 tariffs to be at least temporarily lifted to ease financial burdens on small businesses. U.S. Customs and Border Protection said it would accept applications for delayed payments before reversing that decision last week. A bipartisan group of senators along with House minority leader Kevin McCarthy last week urged Treasury Secretary Steven Mnuchin to instruct CBP to forgo tariff collections for 90 days or when the pandemic ends.

The Wall Street Journal reported last week that CBP would suspend duty collections for three months. But when asked about the report, President Trump said it was “fake news.”

Mexican officials have said the implementation of the U.S.-Mexico-Canada Agreement will be part of its response to mitigate the impacts coronavirus has had on its economy. But auto groups are urging the administration to consider delaying the envisioned June 1 USMCA implementation date as the industry grapples with its response to the pandemic, which it argues takes away from its ability to meet onerous USMCA rule-of-origin requirements.

G20 finance ministers on Monday discussed how best to curb the economic harm caused by the coronavirus outbreak. Industry groups have called on the G20 to oppose export restraints, which they claim will hinder global supply chains and efforts to stem the spread of COVID-19. Senate Finance Republicans have also said the administration should limit any import or export restraints.

The lawmakers also advised the administration against moving forward with a “Buy American” executive order touted by White House trade adviser Peter Navarro, which he says is aimed at reshoring U.S. pharmaceutical production. President Trump has not signed the order, which Navarro said he hoped to have ready about two weeks ago.

On China, Agriculture Secretary Sonny Perdue said on Sunday that farmers will struggle to withstand the blow from the coronavirus pandemic despite China’s increased purchases of U.S. agricultural goods and its resolution of longstanding regulatory issues as part of the phase-one deal it signed with the U.S. earlier this year. “Well, it's very challenging, obviously, even with phase one,” he said in an interview on Fox News. “And we see China beginning to buy, thanks to President Trump's leadership and using the leverage of his office. And we see good news coming out of there, even the under-the-radar regulatory issues are being resolved.”

USDA and USTR have thrice highlighted how China has met deadlines in the phase-one deal on agricultural non-tariff barriers.

In Geneva, the World Trade Organization announced its facility will remain closed through April, but some negotiators are still trying to move talks on agriculture and fisheries forward via written comments. The WTO’s day-to-day activities have been greatly curbed due to restrictions the Swiss government has imposed limiting gatherings of more than five people. This has made any meeting of the 164-member consensus-driven body logistically impossible.

The WTO’s ministerial conference has also been delayed from June until likely next year.

The Washington International Trade Association on Thursday will host a webinar in partnership with the Asia Society Policy Institute to discuss the removal of trade restrictions on essential medical goods. ASPI Vice President Wendy Cutler will be joined by Ken Ash, the director of the Organization for Economic Development and Cooperation’s trade and agriculture directorate; and Brody Sinclair, a trade and economic counsellor at the New Zealand embassy.

One bit of normalcy this week, perhaps: USTR is due to release its annual National Trade Estimate on Foreign Trade Barriers. The report, a comprehensive look at trade barriers the U.S. faces abroad, is due to Congress at the end of every March. -- Brett Fortnam (bfortnam@iwpnews.com)