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This Week In Trade

Trump in NYC looking to strike limited trade deals with Japan, India

Posted: September 23, 2019

President Trump could announce partial trade deals with Japan and India this week when he meets with Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi on the sidelines of the United Nations General Assembly in New York City.

Last month Trump announced the U.S. had reached an agreement in principle with Japan, but significant details have not been released. At the time, U.S. Trade Representative Robert Lighthizer said the deal would focus on agricultural and industrial tariffs, as well as digital trade. Abe said Japan needed more U.S. corn.

But House Democrats last week claimed the market access the Trump administration secured for U.S. dairy products was “inferior” to the market access Japan provides to the European Union and to Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries. Republicans are also skeptical the deal will be enough of a boon to struggling U.S. farmers, with Sen. John Thune (R-SD) saying a deal with Japan is only a “tiny fraction” of what the Trump administration must do to help the U.S. agriculture sector.

Details on the industrial goods element of the deal are also foggy. Japanese media reports say the U.S. could drop its 2.5 percent tariff on autos, but Lighthizer said in announcing the deal in principle that the U.S. would not remove its auto tariffs. Inside U.S. Trade reported last month that the U.S. did show last-minute flexibility to lower some industrial tariffs, but the scope of products to be subject to lower tariffs had not yet been determined.

Trump and Abe are scheduled to meet on Wednesday. Japanese media is reporting that the U.S. and Japan will not sign a deal. A White House spokeswoman on Monday said the U.S. and Japan would likely sign “something … over agriculture and produce.”

Japan’s Foreign Minister Toshimitsu Motegi, who until recently served as Tokyo’s top trade negotiator, reportedly has said Japan would not sign a deal unless the Trump administration agreed not to impose new tariffs on Japanese autos. The U.S. is considering imposing tariffs on autos from several countries, including Japan, via Section 232 of the Trade Expansion Act of 1962.

A deal with India could touch on several contentious issues, including the Trump administration’s decision to revoke India’s benefits under the Generalized System of Preferences, India’s agricultural policies and ongoing World Trade Organization disputes. Modi and Trump met over the weekend in Houston, on the sidelines of the “Howdy Modi” event at NRG Stadium.

Late last week several major business and technology groups urged Lighthizer to press India on digital issues. “We strongly support USTR’s efforts to work productively with India through bilateral dialogue as many of our companies that do business in India rely on a stable trade relationship,” they said in a Sept. 20 letter. “However, we remain concerned with the approach India has taken towards U.S. companies and their ability to fully participate in the Indian economy, including the introduction of a number of harmful digital trade policies. We urge you to keep digital issues at the fore of your discussions and to include them in any trade-related agreement between the United States and India.”

The letter was signed by the Coalition of Services Industries, the Information Technology Industry Council, the Internet Association, the National Foreign Trade Council and others.

USMCA update

Members of the House Democrats’ USMCA working group are expected to respond to counterproposals they received from USTR last week that were geared toward addressing Democrats’ concerns on USMCA’s labor, environment, pharmaceutical and enforcement provisions.

“We’ve agreed once again today to intensify the discussions; we intend to meet again next week,” Neal told reporters on Friday after meeting with Lighthizer. “We will have a response and hopefully the ambassador will have a response for us.”

China update

Deputy-level negotiations between the U.S. and China took place in Washington, DC, last week. According to a statement from USTR, the talks “were productive, and the United States looks forward to welcoming a delegation from China for principal-level meetings in October.”

The next important date to watch for is Oct. 15, when Trump has said he would ratchet up tariffs on $250 billion worth of Chinese goods from 25 percent to 30 percent. The increase was initially set for Oct. 1, but earlier this month Trump pushed the date back two weeks at the request of Chinese President Xi Jinping because of a Chinese national holiday.

Events

  • The Center for Strategic & International Studies will hold two events on Wednesday on the U.S.-China trade relationship. One, on the release of the 2019 “China Business Report,” will feature AmCham Shanghai President Kerr Gibbs; Pilar Dieter, a senior partner at YCP Solidiance; Don Williams, a managing partner at Sheppard, Mullin, Richter & Hampton; Qiang Lyu, a divisional vice president at Abbott Laboratories; and Scott Kennedy, CSIS trustee chair in Chinese business and economics.
  • CSIS also will issue a report on the U.S.-China trade conflict on Wednesday. Matthew Goodman, CSIS’ Simon Chair in political economy, will discuss the report’s findings. A panel discussion will feature Kennedy; CSIS Scholl Chair in international business William Reinsch; Arnold Porter senior counsel Claire Reade; and CSIS senior fellow and Simon Chair in political economy Stephanie Segal.
  • The National Press Club on Wednesday will host Corteva Agriscience CEO Jim Collins for a discussion on how trade, regulatory and environmental issues are affecting farmers.
  • The Global Business Dialogue on Thursday will welcome Rep. Adrian Smith (R-NE) to discuss the next steps in the U.S.-Japan relationship. National Association of Wheat Growers CEO Chandler Goule, National Pork Producers Council International Affairs Director Maria Zieba and Information Technology Industry Council Executive Vice President Josh Kallmer will speak.
  • The National Economists Club will hold a luncheon on Thursday with American Farm Bureau Federation Chief Economist John Newton, who will discuss the U.S. farm economy.
  • The American Security Project on Thursday will discuss the future of the U.S.-Mexico-Canada Agreement with Rep. Henry Cuellar (D-TX), Council of the Americas Vice President Eric Farnsworth and Progressive Policy Institute fellow Ed Gerwin.
  • The Institute for Policy Studies on Thursday will hold a discussion on the disintegrating South Korea-Japan relationship with Foreign Policy in Focus Director John Feffer, 38 North Stimson Center Managing Editor Jenny Town, Asia East CEO Stephen Costello, and The Asia Institute Director Emanuel Pastreich. The U.S. has said it is “actively engaged” in the trade fight despite President Trump’s previously stated desire to stay out of it. U.S. tech groups have said the tit-for-tat trade restrictions imposed by both countries will disrupt global supply chains for high-tech products, and some have called for the U.S. to exert more influence in helping to resolve the issue.
  • On Friday, Liechtenstein acting head of state Prince Alois von und zu Liechtenstein will join Liechtenstein Ambassador to the U.S. Kurt Jaeger, Belgian Ambassador to the U.S. Dirk Wouters and Open Markets Institute fellow Beth Baltzan at CSIS to discuss the European Economic Area and the European Free Trade Association as possible approaches for the United Kingdom post-Brexit. -- Brett Fortnam (bfortnam@iwpnews.com)

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