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This Week In Trade

Trump’s State of the Union to include update on U.S.-China talks

Posted: February 04, 2019

President Trump will give his second State of the Union address on Tuesday and his administration’s trade policy will be one of the five topics his address will focus on, according to a senior administration official.

“We'll update the Congress on his fight to protect American workers who have been hurt by decades of flawed trade deals,” the official said. “The President will update Congress on our trading relationship with China. He will also call on Congress to replace the NAFTA disaster by approving the United States-Mexico-Canada Agreement. In addition, the President will call on Congress to pass the United States Reciprocal Trade Act.”

Rep. Sean Duffy (R-WI) introduced the Reciprocal Trade Act last month, which would give the president greater authority to raise tariffs on a product-by-product basis if another country has a tariff that is “significantly higher.” The bill has the backing of 18 other House Republicans; Mike Kelly (R-PA) is the only one of the 19 cosponsors that sits on the House Ways and Means Committee. There is no companion bill in the Senate and Senate Finance Committee Chairman Chuck Grassley (R-IA) has poured cold water on the idea of any bill passing the upper chamber that grants the president additional authority to impose tariffs.

Trump will update members of Congress on the state of trade talks with China, one week after a delegation of Chinese officials met with administration officials in Washington, DC, which included a meeting between Trump and Chinese Vice Premier Liu He. Trump said the two sides will not agree on any deal until he meets with Chinese President Xi Jinping. That announcement could come as soon as this week.

When asked about the status of the U.S.-China talks on Monday, White House Council of Economic Advisers Kevin Hassett said the amount of progress officials made in discussions last week is still unclear. “Well the president has made it clear that he’s hoping that we have a deal before the trade deadline kicks in and the tariffs have to double, but exactly how much progress we made last week and how much progress we'll make if [Treasury Secretary Steven] Mnuchin and [U.S. Trade Representative Robert] Lighthizer head off to China is something ... we're still waiting to see," he said in an interview with CNBC.

Tariffs on $200 billion worth of Chinese goods are scheduled to ramp up from 10 percent to 25 percent on March 2 if the U.S. and China cannot reach a deal. Those tariffs would be in addition to the 25 percent tariffs on $50 billion worth of Chinese goods already in place.

According to the U.S. Chamber of Commerce, last week’s talks saw progress on market access reforms and intellectual property enforcement issues, but did not see forward movement on forced technology transfers. Beijing has advanced its own legislative proposal to ban forced technology transfers, but also contends that it does not engage in those actions and that most of what the U.S. deems to be forced tech transfers are part of a mutual business arrangement between U.S. and Chinese companies.

Trump’s call for Congress to ratify the USMCA will be met with a divided response from lawmakers, some of which have called for the negotiations to be reopened and others who have said that ratification of the deal is contingent on the administration lifting Section 232 tariffs it imposed on Canada and Mexico.

Last week, the administration submitted to Congress the necessary legal changes a USMCA implementing bill will have to make. The next step for the administration is to submit a draft Statement of Administrative Action to Congress, which must happen at least 30 days before a final implementing bill is submitted to Congress. The U.S. International Trade Commission also customarily finishes its report on the potential impacts of a trade agreement before Congress considers the implementing legislation. The report was due to be released by March 15, but the government shutdown has delayed that deadline until April 19.

The Senate Finance Committee will hold an organizational meeting on Tuesday to formally authorize the committee rules for the 116th Congress and designate the members of the Finance subcommittees. The international trade, customs, and global competitiveness subcommittee will double in size, going from 10 to 20 members.

The Committee will also designate Sens. Grassley, Mike Crapo (R-ID), ranking member Ron Wyden (D-OR) and Debbie Stabenow (D-MI) as congressional trade advisers on trade policy and negotiations.

At the meeting, the Committee will consider the nomination of Jeffrey Kessler to be the assistant secretary of Commerce for enforcement and compliance. Kessler, a lawyer with Wilmer Hale, has been involved with World Trade Organization dispute settlement cases, cases before Commerce, the ITC, and the U.S. Court of International Trade, according to the firm’s website. China is “a particular area of emphasis” for Kessler, the site says.

European Parliament’s International Trade Committee on Monday will debate a motion for a resolution on the opening of U.S.-EU trade negotiations. The EU Commission has submitted draft mandates to the member states, which must be approved before formal talks can take place. The draft motion calls on the member states to reject the draft mandates because lawmakers believe “that negotiations of a trade agreement with the U.S. under the above mentioned conditions will not be successful in producing an outcome that would be in the interest of European citizens.”

The Center for Strategic and International Studies on Tuesday will host a discussion on the Asia-Pacific Economic Cooperation with U.S. Ambassador for APEC Matthew Matthews, deputy assistant secretary of State for Australia, New Zealand and Pacific Islands; Singapore Ambassador to the United States Ashok Mirpuri; former acting Deputy U.S. Trade Representative Wendy Cutler, vice president and managing director of the Asia Society Policy Institute; David Weller, global trade policy head at Google Inc.; and William Reinsch, senior adviser and international business chair at CSIS.

The U.S.-China Economic and Security Review Commission will hold a hearing on Thursday on “What Keeps Xi Up at Night: Beijing’s Internal and External Challenges.” The hearing will feature three panels that will focus on internal Chinese political and domestic issues.

Former Italian Prime Minister Paolo Gentiloni will discuss the future of trans-Atlantic relations on Thursday at the Brookings Institution. Brookings President John Allen and director of Brookings’ Europe center Thomas Wright will also participate. -- Brett Fortnam (bfortnam@iwpnews.com)