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This Week In Trade

Trump-Xi meeting, USMCA signing set for momentous G20 summit

Posted: November 26, 2018

President Trump and Chinese President Xi Jinping are set to meet on the margins of the G20 meeting in Buenos Aires this week, a day after the U.S., Mexico and Canada sign a renegotiated North American Free Trade Agreement.

The highly anticipated Trump-Xi meeting is not expected to yield a resolution to the trade issues between Washington and Beijing, nor lead the U.S. to lift its tariffs on Chinese goods -- though Trump will be watched closely for any sign he's willing to make a deal or at least claim a win. Some stakeholders are holding hope the two leaders can reach “a deal to get a deal” and a possible détente that could lead to the U.S. backing down from its plan to raise its 10 percent tariffs on $200 billion worth of Chinese goods to 25 percent.

According to the Organization for Economic Cooperation and Development, increased tariffs will have the greatest impact on U.S. consumers, with U.S. prices set to rise by 0.2 percent in 2019 and 2020 based on the tariffs in place. Trump has also repeatedly threatened to impose tariffs on another $267 billion worth of Chinese goods.

Regardless of how the G20 summit is spun, there is little question that broader concerns with China’s trade policies will continue. Last week the Office of the U.S. Trade Representative updated its Section 301 report on Chinese policies it considers illegal and unfair, claiming that China has continued to steal intellectual property, erect unfair trade barriers and acquire sensitive technologies via forced transfer. The Section 301 report is the basis for the tariffs on $250 billion of Chinese goods already in place. USTR is also considering launching another Section 301 investigation into Chinese labor practices.

The U.S.-Mexico-Canada Agreement is expected to be signed on Friday. But the signing of the deal is not expected to bring about the end of the U.S.’ Section 232 tariffs on Mexican and Canadian steel and aluminum, despite calls to do so from North American businesses and Mexico and Canada.

Trump will leave for Buenos Aires on Thursday, the USMCA signing is set for Friday, and Trump and Xi will meet on Saturday. Inside U.S. Trade’s Isabelle Hoagland will be on the ground in Buenos Aires covering all of the G20 happenings.

Friday is the last day Mexico’s outgoing administration can sign USMCA, as Andrés Manuel López Obrador will be sworn in as Mexico’s president on Dec. 1. Quick implementation of the new trade deal is far from assured, as there is speculation that Canada might not implement the deal until the Section 232 tariffs are lifted.

Congressional passage of the new pact in the U.S. is also not certain with Democrats set to take over the House next year. The rocky road to USMCA’s approval led a dozen Republican senators last week to call on the administration to submit a draft statement of administrative action and the final USMCA text to Congress by this week so that a deal could be voted on in Congress’ lame-duck session. Senate Majority Leader Mitch McConnell in October shot down the possibility of a USMCA vote this year. A draft statement of administrative action must be sent to Congress 30 days before an implementing bill can be formally introduced in Congress.

Also at the G20, Trump is expected to support Argentina’s accession to the OECD. Reports of Trump’s support for Argentina’s accession have sparked industry cries for the U.S. to crack down on the country’s IP practices. OECD member countries have been considering Argentina’s accession since 2017. All 23 member countries must independently approve of a country’s accession before the OECD Secretariat endorses it.

Monday marks the deadline for interested parties to submit comments on the negotiation of a U.S.-Japan trade agreement. USTR notified Congress in October that it intended to enter into negotiations with Japan. A hearing is scheduled for next week on the potential economic effects of a U.S.-Japan deal; prehearing briefs are due on Friday.

The earliest the U.S. and Japan can engage in trade negotiations is January, according to Trade Promotion Authority time lines. Pressure points in those talks will include commitments in the autos sectors and currency rules. U.S. ambitions in those areas will have to be balanced with the U.S. agriculture industry’s thirst for a deal as other countries are gaining access to Japan’s agriculture market via trade agreements such as the Trans-Pacific Partnership and Japan’s deal with the European Union.

USMCA will take center stage at two events on Tuesday. Industry representatives will hold a Capitol Hill briefing in the Dirksen building to discuss the effects of Section 232 tariffs on industry and on USMCA. International Dairy Foods Association CEO Michael Dykes, Alliance of Automobile Manufacturers Vice President for Government Affairs Jennifer Thomas, and Constellium Ravenswood CEO Buddy Stemple are slated to appear.

The under secretary of agriculture for trade foreign agricultural affairs, Ted McKinney, will headline a Tuesday event at the Atlantic Council on the implications of the USMCA signing. Other participants include Maria Zieba, director of international affairs at the National Pork Producers Council; Stefanie Holland, international government and regulatory affairs director at CompTIA; and Jason Marczak, director of the Atlantic Council's Latin America Center.

A Senate Foreign Relations subcommittee (multilateral international development, multilateral institutions and international economic, energy and environmental policy) will hold a hearing on Tuesday on multilateral economic institutions and U.S. foreign policy. Treasury Under Secretary for International Affairs David Malpass and Roland de Marcellus, the acting deputy assistant secretary of State for international finance and development, are slated to testify. A second panel will include Center for Global Development fellows Clay Lowery and Scott Morris, Shagrin Associates partner Elizabeth Drake, Economic Policy Institute President Thea Lee, and Center for Strategic and International Studies fellow Stephanie Segal.

On Wednesday, the Americans for Tax-Free Tuna group will sponsor a “Tariff Town Hall” to discuss the impacts of the Section 301 tariffs. Panelists include former Rep. and Tariffs Hurt the Heartland spokesman Charles Boustany (R-LA), former deputy USTR and Crowell & Moring International partner Robert Holleyman, American Headwear Alliance co-founder and spokesman James Day, and David Melbourne, a senior vice president at Bumble Bee Seafoods.

On Thursday, the Peterson Institute for International Economics will host a discussion with Michele Geraci, Italy’s under secretary of State for economic development, who is responsible for international trade and investment.

USTR’s Generalized System of Preferences Subcommittee of the Trade Policy Staff Committee will hold a public hearing on Thursday on the GSP country practice reviews of Bolivia, Ecuador, Georgia, Indonesia, Iraq, Thailand and Uzbekistan and the country designation review of Laos.

France’s ambassador to the U.S., Gerard Araud, will take part in a discussion on Thursday at George Washington University’s Elliott School of International Affairs. -- Brett Fortnam (bfortnam@iwpnews.com)