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This Week In Trade

KORUS special session set for Seoul; USTR to brief advisers, committees on NAFTA progress

Posted: August 21, 2017

Just days after the conclusion of the inaugural NAFTA round in Washington, DC, U.S. negotiators will head to Seoul on Tuesday for the first special session of the U.S.-Korea Free Trade Agreement's joint committee.

Sources said USTR told Korean officials in preparation for the meeting that the agenda would involve “matters of interest and concern to the U.S.” USTR did not provide further details to its Korean counterparts, but the automotive sector and perceived problems for the U.S. industry in Korea, one source said, are likely to be among the “usual suspects” on that list.

U.S. Trade Representative Robert Lighthizer last month said the joint committee will discuss possible “amendments and modifications” to KORUS – stopping shy of calling for a renegotiation, a description Korea was said to oppose.

The Advisory Committee for Trade Policy and Negotiations (ACTPN) – a group of senior outside advisers to USTR – is urging USTR to consider the security implications of a renegotiation given North Korea's recent aggression. It also suggested that USTR not focus on reducing the U.S. bilateral trade deficit with Korea, as any change to it would “alter only the geographical composition of the [overall U.S. trade] deficit.” Reducing trade deficits has been a top goal of the Trump administration.

Lighthizer kicked off last week's NAFTA negotiating round saying that reducing the deficit would remain a priority in the talks. The inaugural round of negotiations wrapped up Sunday.

Cleared advisers and the congressional committees of jurisdiction will be briefed on what went down at the round early this week. During the round, Inside U.S. Trade learned that USTR floated the idea of an “opt-in” proposal for the investor-state dispute settlement mechanism and tabled a proposal that would eliminate the Chapter 19 dispute settlement proposal for trade remedies, but otherwise avoided the deal's most controversial issues.

Negotiators, advisers and stakeholders will have a quick turnaround to digest the 10 to 14 chapters the U.S. tabled, along with other developments at the round, as the second negotiating round is set for Sept. 1-5 in Mexico City.

China, meanwhile, this week blasted the U.S. announcement of a Section 301 investigation into Chinese technology transfer, intellectual property and innovation practices. USTR made the announcement on Aug. 18, just a few days after President Trump directed USTR to consider launching an investigation.

“The U.S. side ignores the rules of the WTO and is irresponsible to initiate trade investigations against China according to domestic law,” a Ministry of Commerce spokesman said on Aug. 21, according to an informal translation. “The accusations against China are not objective. The Chinese side expressed strong dissatisfaction with the unilateralism and protectionist practices of the U.S. side.”

On Monday, House Speaker Paul Ryan (R-WI) will host a town hall meeting that will be carried by CNN, and could be a forum for trade talk. Dairy pricing policies are a major issue for Wisconsin dairy farmers and the U.S. is expected to raise the issue in the context of NAFTA, though it did not do so during the first round and sources said USTR to date had not prepared text on how to address the issue.

Trade could also be brought up on Tuesday in Arizona, where President Trump – who has not mentioned the NAFTA negotiations since they began, or publicly addressed the KORUS special session or the Section 301 investigation since it was initiated – will hold his latest campaign-style rally.

On Tuesday, U.S. Chamber Senior Vice President for the Americas, Jodi Bond, Kelly Ann Shaw, trade counsel to the House Ways & Means Committee, and Eli Lilly Senior Advisor David Talbot are slated to speak about the implications of a NAFTA renegotiation for the health sector. The event is organized by the Association of Women in International Trade.

Other events this week include Wednesday's meeting of USTR's Implementation subcommittee, which will hear testimony on the eligibility of sub-Saharan African countries to receive benefits under the African Growth and Opportunity Act.

On Friday, World Trade Organization Director-General Roberto Azevêdo will give a speech at the National Confederation of Industry in Brasilia. WTO members are about to return from their August break and will be focused on preparing outcomes for the WTO's December ministerial conference in Buenos Aires. – Brett Fortnam (bfortnam@iwpnews.com)