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This Week In Trade

Mexican officials in DC, hoping to stop tariffs; G20 trade ministers to meet in Japan

Posted: June 03, 2019

Mexican officials are in Washington, DC, this week hoping to convince the Trump administration not to impose new tariffs on Mexican goods.

On Monday, Commerce Secretary Wilbur Ross will meet with Economy Minister Márquez Colín and Agriculture Secretary Sonny Perdue will meet with Mexican Agriculture Secretary Victor Manuel Villalobos Arámbula. Mexican Foreign Affairs Minister Marcelo Ebrard will meet with Secretary of State Mike Pompeo on Wednesday. Meetings between U.S. Trade Representative Robert Lighthizer and Mexican officials will also be scheduled on Monday or Tuesday, Ebrard told reporters on Monday.

Lighthizer’s meetings with Mexican officials are part of a busy week for the USTR. Lighthizer is expected to spend the next few days on Capitol Hill working toward getting the U.S.-Mexico-Canada Agreement passed. USTR sent Congress a draft statement of administrative action last week, a development House Speaker Nancy Pelosi (D-CA) said was “not a positive step.” Other top Democrats have also said the statement will not move them to accept the deal as written.

Senate Finance Committee Chairman Chuck Grassley (R-IA), meanwhile, said the potential new tariffs on Mexico -- which President Trump linked to immigration issues -- “would seriously jeopardize passage” of Trump’s signature trade deal.

Lighthizer’s plan to meet with lawmakers this week puts into question whether he will attend the G20 trade ministers meeting in Tsukuba, Japan, this weekend. USTR did not respond to repeated inquiries about whether Lighthizer will make the trip. In a joint statement issued last month with EU Trade Commissioner Cecilia Malmström and Japanese Trade Minister Hiroshige Seko, the trio said they expected to further cooperate on those e-commerce issues in Tsukuba.

This year’s G20 trade ministerial, slated to begin on Saturday, will include a focus on the digital economy. It is set to take place just weeks before the G20 leaders summit in Osaka. But this week’s trade meeting may not be the forum to revive the U.S.-China talks that stalled last month, according to Hosuk Lee-Makiyama, the director of European Centre for International Political Economy.

“China [m]ay reject US attempts to reach out at G20 trade ministers in Tsukuba next [week]: there’s no authorisation to speak at that level,” he tweeted on Friday. Lee-Makiyama said the two sides would more likely hold a “low-key exchange” in Osaka “to restart engagement in return for some U.S. bona fide.” High-level officials from Washington and Beijing have very “few excuses to meet except G20,” he continued.

Relations between Washington and Beijing appear increasingly strained. A Defense Department report on the U.S. Indo-Pacific strategy released on Friday took aim at some of China’s trade policies. “China is using economic inducements and penalties, influence operations, and implied military threats to persuade other states to comply with its agenda,” it said. “Although trade has benefitted both China and its trade partners, Chinese use of espionage and theft for economic advantage, as well as diversion of acquired technology to the military, remains a significant source of economic and national security risk to all of China’s trading partners.”

A Chinese official fired back when asked about the report on Monday, saying the U.S. is ignoring multilateral trading rules in favor of unilateral tariffs. “As an important member of the [World Trade Organization], the U.S. blatantly violated multilateral trading rules and wantonly wields the big stick of tariffs,” Foreign Ministry spokesperson Geng Shuang said at a press conference on Monday. “To the world, it is crystal clear who is choosing only the international rules and institutions that are favorable to them, and abandoning the rest. We advise some U.S. individuals to face facts squarely, stop smearing China's image and instead devote their mind and energy in peace, stability and development of the region and beyond.”

Trump left for British soil on Monday. While in the United Kingdom, he is slated to meet with Queen Elizabeth II and hold a joint press conference with outgoing Prime Minister Theresa May on Tuesday. The visit started off on a characteristically antagonistic note, however, with Trump insulting London Mayor Sadiq Khan -- a vocal critic of the president -- on Twitter. Trump also gave an interview to British press in which he recommended that a new prime minister “walk away” from working on a deal with the European Union. He also suggested far-right Member of European Parliament Nigel Farage, a hardline Brexit supporter and a May critic, should be the next Brexit negotiator. Trump reiterated his admiration for Boris Johnson, another hardline Brexit supporter who is considered the frontrunner to replace May.

The White House put out a release on Monday touting the two countries’ close ties and noting that the president wants an “ambitious new trade agreement” with the United Kingdom. The U.S. has cleared its bureaucratic hurdles to begin negotiations with the UK, but the scope of any deal will depend on the post-Brexit relationship between the UK and the European Union. The extended Brexit deadline is Oct. 31, although the Conservative Party leadership situation could push that back further. Last month May announced a fourth vote on her Brexit withdrawal deal in Parliament this week, but with her resignation due to take effect on June 7, the vote does not appear on the parliamentary calendar.

Events this week

George Washington University’s business school will host two panels to discuss the Section 232 tariffs Trump has imposed on the basis of national security. Georgetown professor Marc Busch; Halie Craig, a legislative assistant to Sen. Pat Toomey (R-PA); GW professor Alan Morrison; the National Foreign Affairs Council's vice president for legal affairs and trade and investment policy, Vanessa Sciarra; and Evelyn Suarez, principal at The Suarez firm, will discuss the Section 232 statute and its limitations. A second panel on the collateral damage and consequences of the tariffs will feature Motor & Equipment Manufacturers Association Vice President of Legislative Affairs Catherine Boland; Mike Dankler, the chief of staff for Rep. Jackie Walorski (R-IN); George Mason University Mercatus Center fellow Christine McDaniel; and Bracewell senior principal Paul Nathanson.

The House Financial Services Committee will hold a hearing on the reauthorization of the Export-Import Bank on Tuesday. The committee will hear testimony from Linda Menghetti Dempsey, vice president for international economic affairs at the National Association of Manufacturers; Owen Herrnstadt, chief of staff to the international president of the International Association of Machinists & Aerospace Workers; and Roy Kamphausen, senior vice president for research at the National Bureau of Asian Research.

The bank held its first board meeting since 2015 last week after the Senate confirmed three board members last month. The bank’s charter expires at the end of September, and its immediate renewal is not a given. The bank’s charter last expired in 2015 and was not renewed until five months later due in part to then-House Financial Services Committee Chairman Jeb Hensarling’s (R-TX) refusal to act on a reauthorization bill. Hensarling retired in 2018. Committee Chairwoman Maxine Waters (D-CA) is an ardent supporter of Ex-Im.

The Senate Banking Committee on Tuesday will hold a hearing on “Confronting threats from China: Assessing controls on technology and investment, and measures to combat opioid trafficking.” Former Assistant Secretary of Commerce for Export Administration Kevin Wolf, Center for Strategic & International Studies Freeman Chair in China Studies Director Scott Kennedy, and former Principal Deputy Coordinator for Sanctions Policy at the State Department Richard Nephew will testify.

The Cato Institute on Tuesday will host an event focused on legislation proposed to repeal the Jones Act. The Cato Institute's Jeff Vanderslice will moderate a discussion between Cato trade policy director Daniel Ikenson and Cato policy analyst Colin Grabow.

The American Enterprise Institute will host International Monetary Fund Managing Director Christine Lagarde on Wednesday to discuss the G20 and global economy.

The Hudson Institute will explore the future of U.S.-Africa Relations on Thursday, one week after the African Continental Free Trade Area entered into force. Participating in the discussion will be Assistant Secretary of State Tibor Nagy; Mvemba Dizolele, senior adviser at the International Republican Institute; Joshua Meservey, senior policy analyst for Africa and the Middle East at the Heritage Foundation; Blaise Misztal, a fellow at Hudson; and Ken Weinstein, the institute's president and CEO.

The Atlantic Council will address Chinese investment in North America and Europe at an event on Thursday. Participants are set to include former National Security Council International Economics Senior Director Rod Hunter, now a partner at Baker McKenzie; Thilo Hanemann, partner at the Rhodium Group; Bart Oosterveld, director of the Atlantic Council's Global Business and Economics Program; and Jason Marczak, director of the Atlantic Council's Latin America Center.

The U.S.-China Economic and Security Review Commission will hold a hearing on Friday on technology, trade, and military-civil fusion. The hearing will feature panels on U.S.-China competition in artificial intelligence, maintaining commercial and technical leadership in new materials, and China’s capabilities and export ambitions in new energy, nuclear power and energy storage. -- Brett Fortnam (bfortnam@iwpnews.com)