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This Week In Trade

Trudeau not coming to ‘USMCA summit’; Kenya talks set to begin

Posted: July 06, 2020

The White House’s hopes for a trilateral summit to celebrate the U.S.-Mexico-Canada Agreement were quashed on Monday as Canadian Prime Minister Justin Trudeau announced he would not attend a Wednesday event featuring Mexican President Andrés Manuel López Obrador.

“While there were recent discussions about the possible participation of Canada, the prime minister will be in Ottawa this week for scheduled cabinet meetings and the long-planned sitting of Parliament,” a spokeswoman for Trudeau’s office told CBC.

When asked about a possible USMCA summit at a press conference last week, Trudeau said a meeting might not make sense and cited both the pandemic and potential U.S. tariffs on Canadian aluminum as factors in his decision about whether to travel to the U.S.

López Obrador is set to meet President Trump on Wednesday for what the White House has dubbed a “USMCA celebration.” The deal took effect on July 1. U.S. stakeholders and lawmakers already are raising concerns about Mexico’s potential compliance with stricter labor provisions. The arrest of a Mexican labor leader has raised the ire of Congress’ progressive wing, with some lawmakers and labor groups calling it a bad omen for Mexico’s implementation of labor reforms. Mexico’s Supreme Court is also reviewing a newly implemented labor reform law that contained provisions required by USMCA.

While the administration considers hitting its USMCA partners again with duties on aluminum, Trump on Saturday touted the “power of tariffs.”

“Jobs and companies are coming back to our country like never before,” Trump said in remarks outside the White House. “The power of tariffs being imposed on foreign lands that took advantage of the United States for decades and decades have enabled us to make great trade deals where there were none. Tens of billions of dollars are now paid to the United States Treasury by the same countries.”

Canadian Ambassador to the U.S. Kirsten Hillman said last month she was in constant contact with U.S. officials over North American aluminum trade. Canada had demanded the U.S. lift its Section 232 tariffs on steel and aluminum before Canadian Parliament ratified USMCA; the U.S. tariffs were lifted in May 2019. Canada ratified the trade agreement in March.

Kenya talks, China criticism

Trade negotiations between the U.S. and Kenya are set to launch this week. Kenyan President Uhuru Kenyatta said last week that discussions would commence on Tuesday. U.S. Trade Representative Robert Lighthizer last month told the Senate Finance Committee the negotiations were scheduled to start this week.

The U.S. International Trade Commission will hold a virtual hearing on Tuesday to solicit advice on the probable economic effect of removing tariffs on Kenyan imports. The charge d’affaires of the Kenyan Embassy in Washington, DC, David Gacheru, will testify as will representatives from the African Coalition for Trade, Corporate Council on Africa, American Apparel & Footwear Association, U.S. Fashion Industry Association, and the American Chemistry Council.

The Trump administration hopes a trade deal with Kenya can serve as a template for future trade agreements with African partners and replace the African Growth Opportunity Act, which expires in 2025.

Trump, meanwhile, on Monday lobbed a familiar criticism at China. “China has caused great damage to the United States and the rest of the World!” he tweeted, without elaborating.

The president’s repeated knocks on China come after the release of May trade data showing Beijing is still well behind the pace needed to hit the purchasing targets outlined in its phase-one deal with the U.S. Lighthizer last month told Congress import and export data were not the best indicators of whether China will meet its purchasing commitments.

According to the Peterson Institute for International Economics U.S.-China phase-one tracker -- which Lighthizer criticized by name during testimony in June -- official U.S. and Chinese trade data show China has so far bought $32.7 billion worth of products through May that are covered in the phase-one deal. However, for China to be on pace to meet its purchasing targets, it should have purchased about $71.9 billion worth of U.S. products through the first five months of the year, according to the PIIE tracker.

China is particularly behind on its energy imports, according to the tracker. The U.S. has exported only about $2 billion worth of energy products to China despite Beijing’s agreement to purchase $26.1 billion worth of energy products in 2020, according to U.S. export data.

WTO chief search

Time is running out for countries to submit their nominations for the next World Trade Organization director-general. The nomination window closes on July 8. So far five countries have submitted nominees: Mexico, Nigeria, Egypt, Moldova and South Korea. Inside U.S. Trade is following the process closely.

The European Union has not yet submitted a candidate for the WTO’s top job despite showing early interest in having an EU member state citizen in the role. EU Trade Commissioner Phil Hogan took himself out of consideration last week, citing his belief the selection process will not be concluded by Aug. 31 and would take him away from his trade commissioner duties for too long. Spanish Foreign Minister Arancha González Laya is rumored to be interested in the spot.

Mexico’s director-general candidate, Undersecretary for North America Jesús Seade, will participate in a Washington International Trade Association webinar on Tuesday alongside National Foreign Trade Council President Rufus Yerxa and Asia Society Policy Institute Vice President Wendy Cutler.

Events

  • WITA will host Rep. Rick Larsen (D-WA) for a webinar on Tuesday for a discussion on U.S.-China relations.
  • British Secretary of State for International Trade Elizabeth Truss on Wednesday will join the Peterson Institute’s Anabel González and Adam Posen for a discussion on the role the United Kingdom will play in the global trading system.
  • Reps. Rick Larsen (D-WA) and Darrin LaHood (R-IL) on Wednesday will offer their perspectives on the U.S.-China relationship during a U.S. Institute of Peace webinar.
  • WITA on Thursday will hold a webinar on digital services taxes and trade with former Under Secretary of Commerce for International Trade Grant Aldonas, former Assistant Treasury Secretary for Tax Policy Pamela Olson, and former ITC Chairman Meredith Broadbent.
  • The Cato Institute on Thursday will hold a discussion on potential congressional action to reform Section 232 of the Trade Expansion Act of 1962. Cato Trade Policy Studies Center Director Daniel Ikenson will lead the discussion with Gary Horlick, the founder of the Law Office of Gary Horlick and Donald Cameron Jr., a partner at Morris, Manning & Martin.
  • The Peterson Institute on Friday will host a webinar on the potential for a multilateral medical supplies trade deal. Peterson senior fellows Anabel González and Chad Bown will be joined by Simon Evenett, an international trade and economic development professor at the University of St. Gallen, and L. Alan Winters, the director of the UK Trade Policy Observatory. -- Brett Fortnam (bfortnam@iwpnews.com)

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