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This Week In Trade

House Dem delegation heads to Mexico; Macron could sign digital tax

Posted: July 15, 2019

A group of House Democrats will head to Mexico this week to discuss possible changes to the U.S.-Mexico-Canada Agreement with Mexican officials. Meanwhile, French President Emmanuel Macron could sign into law a controversial digital services tax that prompted the U.S. to launch a Section 301 investigation.

House Ways & Means trade subcommittee chairman Earl Blumenauer (D-OR) will lead the delegation, which will include members of a working group appointed by House Speaker Nancy Pelosi (D-CA) to work with U.S. Trade Representative Robert Lighthizer on changes to the pact.

The Trump administration is waiting for a signal from Pelosi before sending Congress the USMCA implementing bill. Last week was the earliest the administration could have sent Congress the bill, according to the 2015 Trade Promotion Authority law. But President Trump is calling on Congress to immediately pass the deal. In a speech on Friday, he warned that the deal becomes more politicized with each passing day as the 2020 election nears.

Vice President Mike Pence in a Sunday Washington Post op-ed echoed Trump’s remarks, saying the deal is bipartisan a win for all parties. “President Trump promised to fight for trade deals that put American jobs and American workers first. And leaders on both sides of the aisle in Congress have long recognized the failures of the trade deal the USMCA will replace: the North American Free Trade Agreement,” Pence wrote.

“The USMCA will fix NAFTA’s problems and accomplish much more,” he continued. “And not only is the agreement a bipartisan win for the United States, it’s a win for all three countries.”

Republican Sen. Todd Young (IN) on Friday said he believed his Democratic colleagues’ noncommittment on USMCA could be construed as a positive sign for the deal’s ratification chances, according to a report in Hoosier Ag Today. “They are at this point noncommittal, which actually could be construed as a positive sign because in the past so many of my democratic colleagues, good people, but they just have not been warm to any trade deals. The fact that they are considering this trade deal suggests to me that they do understand how important NAFTA has been to their own state’s economy, to our country’s economy, and I believe that that gives us more than a fighting chance to implement USMCA in coming weeks. Let’s hope we do it before the August recess.”

The window for USMCA ratification before the August recess has all but closed and advocates of the trade pact have instead set their sights for September or October for a possible congressional vote.

France’s digital tax awaits Macron’s signature

The French Congress passed the digital services tax last week and Macron has roughly two weeks to sign the legislation, which he has expressed support for. USTR last week announced it would launch a Section 301 investigation into whether France’s digital services tax discriminates against U.S. companies. The levy is colloquially known as the “GAFA” tax -- an acronym for “Google, Apple, Facebook and Amazon” -- and U.S. business groups and lawmakers say it was intentionally designed to hit U.S. technology companies. Companies with certain revenue streams over 750 million euro and 25 million euro in France would be subject to a 3 percent tax.

Officials gives G20 debrief

Kelly Ann Shaw, the deputy director of the National Economic Council, will participate in a G20 debrief alongside Japanese Ambassador to the G20 Koji Tomita at the Center for Strategic & International Studies on Wednesday. Trump and Chinese President Xi Jinping met on the sidelines of last month’s G20 summit and agreed to resume trade negotiations and halt the escalation of tariffs. World Trade Organization reform and issues with the digital economy were also discussed at the summit.

CSIS will host a panel on the outcomes of the G20 after keynote remarks by Shaw and Tomita. The panel will feature Jennifer Hillman, a senior fellow at the Council on Foreign Relations; Naomi Wilson, the senior directory of Asia policy at the Information Technology Industry Council; Matthew Goodman, the senior vice president and Simon Chair in political economy at CSIS; Mark Sobel, the U.S. chairman of the Official Monetary and Financial Institutions Forum; and Scott Morris, a senior fellow at the Center for Global Development.

Trade prom

Senate Finance Committee Chairman Chuck Grassley (R-IA) and Reps. Suzan DelBene (D-WA) and Jackie Walorski (R-IN) will be honored at the Washington International Trade Association’s annual awards dinner Wednesday night. As the Finance Committee chairman, Grassley has been an outspoken advocate for the agricultural sector and critic of the president’s aggressive use of tariffs. DelBene and Walorski both sit on the House Ways & Means Committee. Walorski has been critical of Commerce’s Section 232 exclusion process and DelBene pushed USTR to take action on France’s digital services tax proposal and institute an exclusion process for Section 301 tariffs on China. DelBene is a member of the House Ways & Means trade subcommittee as well as co-chair of the Congressional Digital Trade Caucus.

Events this week

  • The Senate Banking Committee on Thursday will hold a hearing to get industry analysts perspective on the implementation of export control reform. Former Commerce Under Secretary for Industry and Security Eric Hirschorn, Wiley Rein senior public policy adviser Nova Daly, and Georgetown University senior faculty fellow Ben Buchanan will testify.
  • Netherlands Prime Minister Mark Rutte will visit Washington, DC, this week and participate in a discussion on “Europe in a Changing Global Context” at the Atlantic Council on Thursday.
  • The Brookings Institution will host a panel on technology’s role in the U.S.-China trade discussions on Thursday. Information Technology and Innovation Foundation President Robert Atkinson, Eurasia Group geotechnology practice head Paul Triolo, American Enterprise Institute China scholar Derek Scissors, AEI visiting scholar Neena Shenai, and Brookings senior fellow Joshua Meltzer will participate in a roundtable discussion.

WTO meetings

  • WTO members will continue to push for an agreement to limit harmful fisheries subsidies with negotiating sessions scheduled for Tuesday and Wednesday.
  • There will be a public hearing in Australia’s challenge of Canadian measures governing the sale of imported wine. The U.S. had also challenged the Canadian measures, but the two sides reached a deal as part of the USMCA negotiations where the U.S. would drop its case if British Columbia removed its restrictions on the sale of imported wine. -- Brett Fortnam (bfortnam@iwpnews.com)