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This Week In Trade

Biden’s trade team gearing up while Lighthizer focuses on legacy

Posted: January 11, 2021

Katherine Tai will give a keynote address on Tuesday, her second appearance since President-elect Joe Biden’s picked her to succeed Robert Lighthizer as U.S. Trade Representative. Lighthizer, meanwhile, is continuing to hit the interview circuit to tout his and the president’s record over the past four years.

Tai will speak at the National Foreign Trade Council’s annual awards ceremony, happening virtually this year. She could offer insights into her priorities once she takes office. In remarks in December, she emphasized trade policy’s role in creating “more hope and opportunity for people and it only succeeds when the humanity and dignity of every American -- and of all people -- lie at the heart of our approach.”

Biden last month said he had received “more calls” than he could imagine complimenting his decision to pick Tai for the USTR post. Tai was received praise from lawmakers on both sides of the aisle -- most notably from senators, who will have to confirm her once she is formally nominated. The Office of Government Ethics released Tai’s public financial disclosure report last week.

Tai will be faced with a slew of decisions on whether to keep in place her predecessor’s policies, including tariffs on $370 billion worth of Chinese goods, or negotiate away or remove some or all of the duties, which are often criticized as a tax on U.S. consumers.

Lighthizer, in an interview with The Wall Street Journal, offered his take on the situation: Leave the tariffs (something he has recommended to Biden before). The tariffs have helped to transform how people think about China, Lighthizer claimed, and saved the automobile and auto parts industry by stopping China from selling millions of vehicles in the U.S.

The outgoing USTR also had some kind words for his successor, whom he credited with helping to garner the Democratic support needed to pass the U.S.-Mexico-Canada Agreement. “She learned good skills on the Hill,” he said, including “how to manage different people who have different objectives and still get things done.”

Lighthizer last week also made the rare move of issuing a signed tweet, responding to violence at the U.S. Capitol on Wednesday. “All patriotic Americans should condemn the violence we saw at our Capitol today,” he said. “This is inconsistent with our democracy and our most cherished values. -ARL” The Journal reported that Lighthizer did not criticize the president in the interview this week but did address the riots in saying that “For the rest of his administration and for the many months after that [Mr. Trump] has to be an agent of healing.”

Digital tax talks move forward

The Organization for Economic Cooperation and Development this week will hold a public consultation as more than 130 countries try to reach an agreement on a new international tax framework that will supersede the need for digital services taxes. The public consultation document published by the OECD asks stakeholders to offer insights on questions that have vexed negotiators to date, including what the scope of the tax should be.

The negotiators are looking to fundamentally shift how taxes are calculated, allowing countries to tax companies that do business in their jurisdictions even if they don’t have a physical presence there. But a key contention in the talks is whether a deal should focus on only automated digital services, or if consumer-facing businesses will also be included in the scope.

The U.S is pushing for any deal to include consumer-facing businesses, as it views a pact that applies only to digital companies to be unfairly focused on large U.S. companies. Many other countries, including France, are pushing for a deal that first addresses digital companies, leaving negotiations on other issues for a later stage.

Digital services taxes are going to be among the most pressing issues facing Biden’s trade team when it takes over. USTR last week issued reports as part of its Section 301 investigations into the digital services taxes of India, Italy and Turkey and found the policies discriminated against U.S. companies. But the agency did not make any recommendations for action the executive branch should take to address that discrimination.

USTR also opted against planned retaliatory tariffs against French products for Paris’ digital services tax. USTR in July said it would hit $1.3 billion worth of French goods with tariffs that would take effect in 180 days -- or Jan. 6. But USTR last week suspended the probe into France’s digital services tax rather than impose the duties, despite the French government’s move to start collecting the tax from U.S. companies.

USTR said it suspended the investigation to better coordinate a response with the 10 other ongoing investigations into digital services taxes being imposed or considered by U.S. trading partners. USTR said it expects to “announce the progress or completion of additional DST investigations in the near future.”

Events

  • Lawyers from Bracewell LLP and Hogan Lovells on Monday will discuss what trade policy will look like during the Biden administration.
  • The U.S. International Trade Commission on Tuesday will hold a hearing by teleconference on whether imported fresh, chilled or frozen blueberries are injuring the domestic industry. The hearing is in connection with a Section 201 investigation USTR requested last September.
  • The Global Business Dialogue on Tuesday will host a webinar on “China, the World, and the World Trade Organization” with Nick Giordano, global government affairs vice president and counsel at the National Pork Producers Council; John Miller, chief economic analyst at Trade Data Monitor LLC; Tomas Baert, head of the Delegation of the European Union's trade and agriculture section; Andrew Jory, a counselor at the embassy of Australia; and John Magnus, president of TradeWins LLC.
  • The permanent representatives of France and Barbados to the WTO on Tuesday will participate in a roundtable discussion on “The start of a new era for sustainable development at the WTO.”
  • U.S. Chamber of Commerce CEO Tom Donohue gives his annual “state of American business” address on Tuesday.
  • The Chamber will also hold a policy “power hour” on America’s global competitiveness on Wednesday, where executives will address U.S.-China economic relations and broader trade issues.
  • Sen. Cory Gardner (R-CO) on Wednesday will discuss Asia-Pacific issues during a conversation with Center for Strategic and International Studies Senior Vice President for Asia and Japan Chair Michael Green.
  • The Export-Import Bank on Thursday will hold a teleconference with its board of directors to discuss State Department vetting of Ex-Im transactions.
  • The Meridian International Center on Thursday will hold a briefing on the 2021 trade outlook for the U.S.-Canada relationship with Thomas Mulcair, former leader of the Canadian New Democratic Party; former Canadian Foreign Affairs Minister John Baird; and former U.S. Ambassador to Canada Jim Blanchard.
  • The American Society of International Law will host a virtual discussion on Thursday examining the potential trade implications of the European Court of Justice ruling invalidating the U.S.-EU Privacy Shield agreements. Participants include Dylan Cors, the international director at the Justice Department's National Security Division; Rosalba Striani, a senior legal officer at the European Commission; Estelle Masse, a senior policy analyst and global data protection lead at Access Now; and Alex Joel, a scholar-in-residence and adjunct professor at the American University Washington College of Law.
  • EU Director General for Trade Sabine Weyand on Friday will discuss the prospects of a new trans-Atlantic agenda during a webinar hosted by CSIS.
  • The George Washington Elliott School of International Affairs on Friday will hold a webinar on U.S.-China relations during the Biden administration with David Michael Lampton, director of China studies at the Johns Hopkins School of Advanced International Studies; Barbara Stallings, research professor at the Watson Institute for International and Public Affairs; William Rhodes, research professor at Brown University's Institute for International and Public Affairs; and Deborah Lehr, vice chairman and executive director of the Paulson Institute. -- Brett Fortnam (bfortnam@iwpnews.com)

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