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This Week In Trade

Reviews of Trump-Xi détente roll in: Business, tech industry praise; lawmakers wary

Posted: July 01, 2019

Business and tech industry groups are applauding the restart of trade talks between the U.S. and China as well as the Trump administration’s commitment to allow U.S. companies to sell some products to Chinese telecom giant Huawei, but China hawks in Congress have major concerns about the truce President Trump and President Xi Jinping struck last weekend.

“This is unacceptable. Why are you backing down again on China?” Senate Majority Leader Chuck Schumer (D-NY) asked in a tweet on Saturday, referring to Trump’s comments that U.S. companies will be able to sell some products to the Chinese telecom company. “Huawei is one of few potent levers we have to make China play fair on trade. This will dramatically undercut our ability to change China’s unfair trade practices.”

Sen. Marco Rubio (R-FL) suggested Congress could pass veto-proof legislation to prevent Trump from following through on his commitment to let U.S. companies sell some goods to Huawei. “If President Trump has in fact bargained away the recent restrictions on #Huawei, then we will have to get those restrictions put back in place through legislation. And it will pass with a large veto proof majority,” Rubio tweeted on Saturday.

But it is unclear what restrictions, if any, Trump agreed to lift on Huawei. In a press conference following his meeting with Xi, Trump said he would have a meeting this week to discuss the company’s status on Commerce’s entities list. Huawei would not be immediately removed from the list, however.

“We're talking about that,” he said when asked if Huawei was being removed from the list. “We have a meeting on that tomorrow or Tuesday.”

White House National Economic Council Director Larry Kudlow sought to clarify Huawei’s status during a Sunday appearance on CBS’ Face the Nation. “There will be sales from American companies, but -- but only in the sense of the general merchandise, things that are available in other places around the world,” he said. “Anything to do with national security concerns will not receive a new license from the Commerce Department.… Stuff that's generally available will be probably getting a temporary license from the Commerce Department. We'll see how far that goes.”

Trump said he and Xi agreed to leave the Huawei issue until the end of the trade talks because he wanted to see how the negotiations progressed.

The Semiconductor Industry Association said it welcomed the agreement to restart trade talks and looked forward to getting clarity on the president’s comments on Huawei. “The progress made today by President Trump and President Xi in Osaka is good news for the semiconductor industry, the overall tech sector, and the world’s two largest economies,” SIA President John Nueffer said in a statement on Saturday. “We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei.”

Business groups were quick to applaud the agreement not to escalate tariffs. “The U.S. Chamber of Commerce is encouraged by today’s announcement by Presidents Donald Trump and Xi Jinping that both governments will return to the negotiating table and refrain from further escalatory actions, including new tariffs that would damage businesses, workers, consumers and the global economy,” Chamber Executive Vice President and Head of International Affairs Myron Brilliant said in a statement.

“We are encouraged that China and the United States have agreed to continue negotiations without further escalation of the mutually damaging trade war,” the Information Technology Industry Council said in a statement on Saturday. “We are also relieved that President Trump has reconsidered his threat to impose additional tariffs, which would have accelerated harm to all American consumers, workers, and businesses of all sizes.”

According to Kudlow, there is no timeline for when the talks will resume.

USMCA pregame clock nears midnight

During his Saturday press conference, Trump incorrectly said his signature trade pact, the U.S.-Mexico-Canada Agreement, was already before Congress. The administration has not yet sent Congress the implementing bill. The 30-day window between the submission of the draft statement of administration action has now elapsed, meaning the administration can send the implementing bill on the next day that both chambers are in session -- July 9.

“I spoke with Nancy Pelosi last night about the USMCA -- that's Mexico and Canada. And it's now before them, and they'll have to make a decision,” Trump said. “But that's one that the farmers love, the manufacturers love, the unions love. It's a great deal for this country. And NAFTA was, I think, one of the worst trade deals ever made.”

Trump’s comments could mean the administration is prepared to send Congress the implementing bill as early as next week. Senate Finance Committee Chairman Chuck Grassley (R-IA) and the U.S. Chamber of Commerce have both expressed optimism that USMCA can be ratified before Congress’ August recess.

The House GOP on Friday similarly tried to blame Speaker Pelosi (D-CA) for holding up USMCA even though the Trump administration is adhering to the Trade Promotion Authority law that was passed by a Republican House and Senate in 2015. The House GOP Twitter account retweeted several op-eds from Republican lawmakers saying Congress needed to “stop stalling” and said it was “past time for Pelosi to allow the USMCA to move forward."

The House and Senate are in recess for the Fourth of July holiday and both will be back in session on July 9.

USTR holds its annual GSP review

The Office of the U.S. Trade Representative on Tuesday will hold its annual product review for the Generalized System of Preferences. So far in 2019 the administration has terminated the GSP benefits for Turkey and India, despite the urgings of business groups. According to regulations.gov, 80 comments were submitted ahead of the hearing.

Colombia meets U.S. deadline to end truck scrapping program

Last week, Colombia issued a decree eliminating a one-for-one trucking policy, which required that old trucks be scrapped before new ones were purchased. The deadline for eliminating the program, which was mentioned prominently in USTR’s 2019 National Trade Estimate, was June 30.

In April 2018, U.S. Trade Representative Robert Lighthizer and Maria Lorena Gutiérrez, then the Colombian trade minister, signed a side agreement saying the U.S. could suspend certain free-trade agreement benefits if the truck-scrapping program was not terminated by the established deadline. The Office of the U.S. Trade Representative could not be reached in time for comment on Colombia’s June 26 decree.

Public comments slowly trickling out on Commerce’s currency plan

Commerce’s deadline for comments on its plan to make currency devaluation a countervailable subsidy passed last week and the department has so far released only six of the 46 comments that were submitted, according to regulations.gov. Some former officials blasted the plan as giving the department too much power. -- Brett Fortnam (bfortnam@iwpnews.com)

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