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This Week In Trade

Time running out for GSP, MTB extensions; USMCA corrections still up in the air

Posted: December 14, 2020

The 116th Congress could convene for the final time this week as lawmakers hope to pass a government spending bill, but the fate of two trade programs set to expire at the end of the year remains uncertain, as does the future of legislation crafted to would fix mistakes in the U.S.-Mexico-Canada Agreement implementing bill.

The Generalized System of Preferences and the Miscellaneous Tariffs Bill expire on Dec. 31, with the former being subject to partisan debate as Democrats demand changes to the program while Republicans fight for a clean extension. But even the MTB, which cuts duties on non-controversial products not produced in the U.S., is facing some partisan speed bumps as Democrats want some products that the U.S. International Trade Commission recommended for inclusion removed from a new bill.

The uncertain future of the trade programs has led business groups to urge Congress to act posthaste. “With end-of-year legislation to fund the government and provide pandemic relief under debate in Congress, it is important that legislation to renew [GSP and MTB] not get lost in the shuffle,” the U.S. Chamber of Commerce said in a statement on Friday. “In both instances, failure to act before these programs expire at the end of the year will result in lost sales and lost jobs for Americans at a time when we can’t afford it.”

Renewing MTB “should not be controversial,” the Chamber said, noting that the program’s 2018 passed through Congress without a single vote in opposition.

GSP’s status is more complicated, as Democrats have proposed a six-month extension as well as a series of sweeping changes to the program’s eligibility criteria. The Chamber’s proposed solution: Extend the program as-is for six months and negotiate reforms during that time.

“But at this late hour, Congress should take a pragmatic approach to GSP renewal. It’s not clear effecting substantial changes to the program’s eligibility criteria makes sense in the context of a proposed extension of just six months,” the Chamber said. “Further, if a short-term extension is agreed, it shouldn’t be too short: The new administration and Congress deserve time to consider next steps, particularly as officials are in the confirmation process.”

The Coalition for GSP, a self-described group of businesses and trade associations organized to “educate policy makers and others” about the program, is making a similar pitch for a clean reauthorization and a punting of discussion on reforms to the next Congress.

At issue is a bill introduced last week by House Ways & Means trade subcommittee Chairman Earl Blumenauer (D-OR) that would extend GSP for six month and incorporate eligibility requirements in areas such as human rights and anticorruption. House Ways & Means ranking member Kevin Brady (R-TX) has called Democrats’ push for GSP reforms an “a surprise, and not a welcome one.”

Senate Finance Committee Chairman Chuck Grassley, meanwhile, has proposed a clean 16-month reauthorization for GSP and, like Brady, complained about Democrats’ reform efforts.

Unlike GSP and MTB, legislation to fix technical errors in the USMCA does not face a deadline, although lawmakers had hoped to resolve the drafting mistakes this year. Some are arguing over whether to add language that would not allow foreign trade zones to receive preferential treatment under USMCA. The North American Free Trade Agreement explicitly banned FTZs from such preferential treatment. The USMCA implementing bill did not carry that provision over, which Grassley called a mistake that should be corrected.

“I am a little bit disgusted that this issue is an issue because it was our intent to make sure that the FTZ [language was] left the same under NAFTA and that was left out of our bill and now people are taking advantage of it,” he said last week.

The National Association of Foreign-Trade Zones had fought for the provision to be removed from USMCA and hopes a technical corrections bill does not restore it. Six senators -- four Republicans and two Democrats -- earlier this month urged U.S. Trade Representative Robert Lighthizer not to change the FTZ language.

Geneva in stasis

The end of the year always includes a flurry of activity at the World Trade Organization, but this year progress is particularly stymied as the organization remains without a leader. and one of its most influential members -- the U.S. -- is in the midst of a transfer of power. The WTO will hold its final General Council meeting of the year on Wednesday, but its most pressing issue -- the selection of a new director-general -- is not even on the agenda. The U.S. has thrown its support behind Korean Trade Minister Yoo Mung-he even though Nigeria’s Ngozi Okonjo-Iweala has been named the “consensus candidate.”

President-elect Biden’s team has not commented on whether it will support Okonjo-Iweala, who would be the first African and first woman to lead the embattled WTO. Biden’s public commitment to multilateralism has led analysts to believe he would not block Okonjo-Iweala’s nomination.

Wednesday’s meeting will include reports from WTO Committee chairs, a discussion of the WTO’s next ministerial, and other typical yearend business. Proposals on how members should deal with the pandemic are also on the agenda, including one that would ban agricultural export restrictions relating to the World Food Program and another that would suspend certain intellectual property protections. The Council for Trade-Related Aspects of Intellectual Property was unable to reach a consensus on the IP waiver and will continue to discuss it in the new year.

U.S. Ambassador to the WTO Dennis Shea, in his last General Council, is expected to take the floor and reiterate longstanding U.S. concerns on special and differential treatment and how WTO rules interact with non-market economies. The U.S. has spearheaded controversial proposals on both topics, drawing the ire of China and other developing economies.

Shea previewed his remarks during an address to the WTO’s informal heads of delegation meeting on Monday.

Events

  • The Center for Strategic and International Studies on Monday will host a forum on the implications of the U.S. election on the U.S.-South Korea alliance, including remarks from former trade officials and diplomats and a discussion U.S.-China competition.
  • As part of the China Power Project’s fifth annual conference, CSIS will hold a virtual debate on Tuesday on selective U.S.-China decoupling with Matthew Turpin, a visiting fellow at the Hoover Institution, and Rebecca Fannin, the founder of Silicon Dragon Ventures.
  • The Cato Institute will host a webinar on Tuesday on challenges and progress on digital trade with Christine Bliss, the president of the Coalition of Services Industries; Stephanie Honey, a consultant at Honey Consulting; Hanna Norberg, the founder of Trade Economista; and Cato research associate Huan Zhu.
  • Heads of agricultural associations will discuss a report on Tuesday organized by Farmers for Free Trade on how the Biden administration can address trade challenges.
  • Georgetown University’s Center for Security and Emerging Technology on Tuesday hosts a webinar on U.S.-China decoupling in the semiconductor sector with CSET research fellow Saif Khan.
  • The American Enterprise Institute and Brookings Institution on Wednesday will host a discussion on the future of U.S. trade policy with the Peterson Institute for International Economics’ Chad Bown; New York University law professor Robert Howse; Brookings senior fellow Joshua Meltzer; AEI visiting scholar Neena Shenai; and King & Spalding partner and former USTR general counsel Stephen Vaughn.
  • The Senate Banking, Housing and Urban Affairs subcommittee on economic policy will hold a Wednesday hearing on U.S.-China competition. Witnesses include AEI scholar Derek Scissors, Center for American Progress China policy director Melanie Hart, and United Steelworkers legislative director Roy Houseman.
  • French and German officials will discuss potential trans-Atlantic cooperation during a Brookings webcast on Wednesday. Participants include Sebastian Groth, the director for policy planning at the German Federal Foreign Office; Manuel Lafont Rapnouil, head of policy planning in the French Ministry of Europe and Foreign Affairs; former Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland; and Thomas Wright, director of the Brookings Center on the United States and Europe.
  • CSIS will host a webcast on Wednesday on opportunities for cooperation between the Biden administration and Taiwan with Bi-Khim Hsiao, representative at the Taipei Economic and Cultural Representative Office; Kurt Campbell, chairman, CEO and co-founder of the Asia Group; Bonnie Glaser, director of the CSIS China Power Project; and Michael Green, Japan chair at CSIS.
  • The Export-Import Bank will hold a teleconference on Thursday to discuss proposed changes to the domestic content provisions of its program on China and transformational exports.
  • Eight former USTRs will discuss the Biden administration’s trade agenda on Thursday during a virtual discussion hosted by CSIS. -- Brett Fortnam (bfortnam@iwpnews.com)

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