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This Week In Trade

Lighthizer testifies on Capitol Hill; Commerce holds 232 hearing; Brexit begins

Posted: June 19, 2017

U.S. Trade Representative Robert Lighthizer headlines a busy week, testifying before the Senate Finance and House Ways & Means Committees on the administration's trade agenda on Wednesday and Thursday -- his first time before the panels as USTR.

Also this week, the Commerce Department will hold a hearing on the national security implications of aluminum imports and the United Kingdom and European Union will begin Brexit negotiations.

Lighthizer will appear before the Senate Finance Committee on Wednesday to discuss his agency's proposed FY2018 budget as well as the administration's trade agenda. Members of the Finance panel told Inside U.S. Trade they intend to question Lighthizer on the administration's plan to modernize the North American Free Trade Agreement, among other pressing issues.

If the USTR's FY2018 budget does come up, Lighthizer could face questions about the eight full-time equivalent positions USTR would like to add in the Interagency Center for Trade Implementation, Monitoring and Enforcement. According to USTR's budget justification document, the eight positions would help the agency prepare to self-initiate domestic litigation as a means to protect U.S. interests.

On Thursday, Lighthizer will testify before the House Ways & Means Committee. In announcing the hearing, Chairman Kevin Brady (R-TX) said “There is no question that our trade agreements, including NAFTA, have been tremendously successful for American workers, farmers, and businesses by breaking down barriers and allowing American producers to sell their goods and services to customers around the world. But no matter how successful, our agreements can always be improved and strengthened. I look forward to learning more about the Administration’s plans for seamlessly modernizing and upgrading NAFTA, as well as opening up other markets through the negotiation of strong new agreements.”

Brady also said he wants to discuss “how we can more effectively enforce our existing agreements, including WTO rules, to ensure a level playing field.”

The Commerce Department's Bureau of Industry and Security on Thursday will hold a Section 232 hearing to explore whether imports of aluminum are a threat to national security. According to President Trump, Commerce will issue a report on the aluminum investigation -- as well as a report on another 232 investigation of steel imports -- by the end of the month. Commerce Secretary Wilbur Ross has blamed China for causing several aluminum smelting plants in the U.S. to cut production or close, and has pointed out that only one U.S. aluminum smelter can produce the high-quality aluminum used in U.S. fighter jets and other military equipment.

The deadline for public comments on the investigation is Friday. The deadline was originally set for next week, but was moved up to “enable the Commerce Department to more expeditiously finalize the report, taking account of the time-sensitive nature of the national security implications related to this section 232 investigation of aluminum, and of the President’s direction to move quickly on this important matter,” according to a BIS notice. Trump on April 27 signed a memo instructing Commerce to expedite the investigation.

On Tuesday, the American Institute for International Steel will highlight what it calls the “existential threat” Commerce's 232 steel investigation poses. The event is part of AIIS' effort to publicize its view that additional tariffs on steel would have a negative impact on U.S. supply chains.

The Brexit negotiations between the UK and European Commission launched on Monday, nearly one year after the UK voted to leave the European Union. The final terms of the deal between the UK and EU will be a key factor in shaping the U.S.' future trade relationship with the UK, as U.S. firms operating in the UK do not yet know the market access they will have with the EU once the Brexit process is complete.

The EU's General Affairs Council will meet on Tuesday to discuss Brexit ahead of a June 22-23 meeting of EU27 leaders. On the sidelines of the General Affairs Council meeting, EU27 ministers will also discuss the relocation of two EU agencies based in the UK.

UK Secretary of State for International Trade Liam Fox is in Washington, DC, this week to meet with Ross and Lighthizer to discuss the future trade relationship between the U.S. and UK. The UK cannot formally negotiate trade agreements with other countries until it completes its exit from the EU, but British Prime Minister Theresa May, during her visit to the White House in January, said she would like to begin laying the groundwork for a trade deal.

Fox attended the SelectUSA Investment Summit on Monday to highlight the reasons U.S. businesses would want to invest in the UK and emphasize the importance of the investment relationship between the U.S. and UK.

SelectUSA, an International Trade Administration program that promotes foreign direct investment in the U.S., will welcome Ross, Treasury Secretary Steven Mnuchin, and Labor Secretary Alexander Acosta on Tuesday for public remarks, the final days of the summit.

On the sidelines of the summit on Monday, Ross will meet with Quebec Premier Philippe Couillard. The Canadian official will also meet with USTR General Counsel Stephen Vaughn, according to a USTR spokeswoman. Couillard on Monday said he was visiting Washington to advance Quebec interests in NAFTA, lumber and aluminum, according to an informal translation of his Twitter statement.

Agriculture Secretary Sonny Perdue will meet with his Canadian and Mexican counterparts on Tuesday in his home state of Georgia. Perdue told senators last week that he will raise the concerns of the U.S. dairy and wheat industries involving their access to the Canadian market.

The American Farm Bureau Federation praised the meeting as a good sign for upcoming NAFTA talks. “It is encouraging that Agriculture Secretary Sonny Perdue is meeting this week with his counterparts from our neighboring nations to build a deeper level of understanding,” Farm Bureau President Zippy Duvall said in a June 19 statement. “This is particularly important as our nations begin to discuss a review of the trade agreement linking our farmers and ranchers. NAFTA has created vast opportunities for agricultural trade for America’s farmers and ranchers with Canada and Mexico, and we encourage Secretary Perdue to use this meeting to identify areas to further improve agricultural trade with our neighbors.”

Public comments on the renegotiated sugar suspension agreements between the U.S. and Mexico are due on Wednesday, with the two sides hoping to sign the deal on June 30. The sugar industry initially refused to support the deal, claiming the agreement contained a loophole that would still allow Mexico to dump sugar in the U.S. market. The American Sugar Alliance backed off that claim in a statement last week, saying it supported the deal after Commerce “tightened” the agreements.

The Commerce Department is expected this week to make preliminary antidumping determinations on Canadian softwood lumber after a 50-day delay. David MacNaughton, Canada's ambassador to the U.S., said on Monday that the U.S. and Canada are “a long way away” from a new deal. In April, Commerce issued preliminary countervailing duties on softwood lumber.

House Speaker Paul Ryan (R-WI) will discuss tax reform at the National Association of Manufacturers 2017 Manufacturing Summit on Tuesday. Ryan has been a key supporter of a border adjustability tax, a critical component of the House GOP's tax blueprint. Ryan will speak after an address by Vice President Mike Pence.

Senate Majority Whip John Cornyn (R-TX) on Thursday will discuss reforms he would like to see made to the Committee on Foreign Investment in the United States in remarks at the Council on Foreign Relations. Cornyn, along with Reps. Jeb Hensarling (R-TX) and Robert Pittenger (R-NC), has been preparing a bill that would lower the bar for when certain countries that present more of a national security threat should undergo a CFIUS review. Ross said last week that the administration is considering how it can bolster CFIUS' scope.

 The U.S.-China Economic and Security Review Commission on Thursday will hold a hearing on U.S. access to China's consumer market. Testifying at the hearing will be Michael Zakkour, vice president of China/Asia Pacific and global e-commerce practices and Tompkins International; Richard Cant, Asia counsel at ADX Net Inc.; Cathy Morrow Roberson, founder and head analyst at Logistics Trends and Insights LLC; Duncan Clark, chairman of BDA China; Michael Hirson, Asia director at the Eurasia Group; Anne Stevenson-Yang, research director at J Capital Research; Zennon Kapron, director of Kapronasia; and Christine Bliss, president of the Coalition of Services Industry.

The commission has a congressional mandate to monitor and investigate the national security implications of trade and the broader U.S.-China economic relationship, and to submit to Congress an annual report on its findings.

The Coalition of Services Industries will hold a briefing on “services and manufacturing” on Thursday. Bliss will be joined at the event by Sahra English, vice president of global public policy at MasterCard; Andy York, executive director of federal affairs at General Motors; Sherry Stephenson, senior fellow at the International Center for Trade and Sustainable Development; Stephen Ezell, vice president of global innovation policy at the Information Technology and Innovation Foundation.

 The Swedish-American Chamber of Commerce and Blue Star Strategies will discuss “International Trade in the Era of Globalization” at an event on Wednesday. The panel will include Damien Levie, head of the trade and agriculture section for the EU Delegation to the United States; Niels Heitberg, minister counselor of economic diplomacy at the Embassy of Denmark; Leif Trana, minister counselor for economic affairs at the Embassy of Norway; Andreas Ershammar, counselor for trade and economic affairs at the Embassy of Sweden; and Karen Tramontano, CEO of Blue Start Strategies.

The Washington International Trade Association on Thursday will explore the future of trade ties between the U.S. and Brazil with Fernando Pimentel, minister counselor and chief of the economics sector at the Brazilian Embassy. Pimentel will be joined on a panel by Monica De Bolle, senior fellow at the Peterson Institute for International Economics; Constanza Negri, manager of trade policy at the Brazilian National Confederation of Industry; Gina Vetere, counsel at Covington and Burling LLP; and Kellie Meiman Hock, managing partner at McLarty Associates.

On Friday, the Global Business Dialogue will discuss EU trade with North America with officials from the EU, Canada, Mexico, as well as representatives from U.S. businesses. The panel will feature EU Ambassador to the United States David O'Sullivan; Colin Bird, minister counselor for trade and economic policy at the Embassy of Canada; Damien Levie, head of trade and agriculture for the European Union Delegation; Kenneth Smith Ramos, director of trade and NAFTA at the Embassy of Mexico; and John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce. -- Brett Fortnam (bfortnam@iwpnews.com)