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This Week In Trade

Truss makes a trans-Atlantic trip; CFIUS weighing in on TikTok

Posted: August 03, 2020

British Trade Secretary Liz Truss is in Washington, DC, this week to bring U.S. Trade Representative Robert Lighthizer a bottle of gin -- a symbol of the UK’s desire to avoid tariffs on British goods, and a goodwill gesture intended to help the two sides navigate a slew of thorny issues in the U.S.-UK trade negotiations.

Meanwhile, tensions between the U.S. and China continue to rise this week -- this time over Microsoft’s potential acquisition of TikTok, a video-sharing social media service owned by China’s ByteDance -- and candidates for the World Trade Organization’s top spot continue their campaigns.

USTR is in the midst of reviewing tariffs on European goods -- including some British products -- that the WTO authorized it to impose in retaliation for EU member-state subsidies to Airbus. Scottish whisky and gin were among the $3.4 billion worth of products USTR said it would consider hitting with tariffs for the first time. According to British media, the potential for new tariffs on British liquor will be a focus of Truss’ trip to Washington -- hence the Hendrick’s.

Truss’ trip coincides with the third round of negotiations between U.S. and British trade teams as the two sides hope to reach a comprehensive deal as the UK exits the European Union. The teams have been meeting virtually every six weeks for rounds lasting two weeks. This week marks the second week of the third round.

While both sides have claimed moderate progress has been made, Lighthizer acknowledged in June that a deal by year’s end was all but impossible. Familiar thorny issues also continue to crop up in the talks, particularly food standards. UK Parliament members sent Truss a 42-page letter with questions on the talks that sought assurances that British food and safety standards would not be lowered as a result of a U.S.-UK trade deal.

“Has the Government yet ruled out any specific provisions because they would not sufficiently protect UK producers?” the House of Lords International Agreements subcommittee asked Truss in the July 31 missive. “Could you explain in further detail your position of not lowering food standards to help us and those potentially affected understand what it might mean in terms of protecting UK producers? For example, can the use of tariffs adequately protect the UK’s [sanitary and phytosanitary] standards in the longer term?”

The lawmakers cite a variety of common U.S. agricultural practices -- “in particular those that require chlorine-washes for chicken, or involve the battery caging of hens, the use of sow stalls in pig farming, hormone treating beef, or the use of ractopamine in pigs” -- that are unwelcome in the UK.

In addition to the well-documented British defensive interest on agricultural trade barriers, the UK has offensive as well. Truss told The Times last week that the UK wants the U.S. to accept British lamb and haggis, both of which have been banned by the U.S. for decades.

CFIUS and China tangle on TikTok

The Committee on Foreign Investment in the U.S. is overseeing Microsoft’s attempt to acquire TikTok. Treasury Secretary Steven Mnuchin confirmed CFIUS was investigating TikTok last week as President Trump was mulling blocking the Chinese company from the U.S. Trump, via CFIUS, gave Microsoft 45 days to complete its acquisition of the Chinese company, according to Reuters.

CFIUS reviews acquisitions, mergers and investments involving U.S. stakeholders for national security implications. CFIUS’ involvement in the TikTok transaction drew the ire of Chinese officials.

“The U.S. generalizes the concept of national security and makes ‘presumptions of guilt’ and threats related companies without producing any evidence,” a Ministry of Foreign Affairs spokesman said at a press conference on Monday. “This violates the principles of market economy and exposes the hypocrisy and typical characteristics of the U.S. in maintaining fairness and freedom. Double standards also violate the WTO's principles of openness, transparency and non-discrimination. China firmly opposes this.”

“We call on some people in the U.S. to listen carefully to the voice of the international community, provide an open, fair, just, and non-discriminatory business environment for market players from all countries to invest and operate in the U.S., stop politicizing economic and trade issues, and stop abusing national security concepts to promote discrimination and exclusivity,” the official said.

WTO candidates on the trail

Candidates to succeed outgoing WTO Director-General Roberto Azevêdo continue to campaign this week, with two nominees slated to take part in webinars hosted by the Washington International Trade Association. Former Kenyan Foreign Affairs Secretary Amina Mohamed -- one of the frontrunners in the race -- will make her case to WITA watchers on Thursday. Saudi Arabian Minister Mohammed Al Tuwaijri -- seen as a longshot candidate -- will take part in a Wednesday webinar.

Other Events

  • On Wednesday the Center for American Progress will feature Rep. Jimmy Gomez (D-CA) on a panel of “progressive voices for trade.” Other panelists include Freed Hochberg, former president of the Export-Import Bank; Rhonda Schmidtlein, commissioner on the U.S. International Trade Commission; and William Spriggs, professor of economics at Howard University and chief economist for the AFL-CIO.

  • The Center for Strategic and International Studies will host a webcast on “the new China rules” on Wednesday with Michael Auslin, a research fellow in contemporary Asia at the Hoover Institution; Jude Blanchette, chair in China studies at CSIS; and Seth Center, director of the CSIS History and Strategy Project.

  • The Peterson Institute for International Economics on Wednesday will hold a virtual discussion on “African perspectives on the WTO and prospects for regional trade cooperation” with African Union Trade and Industry Commissioner Albert Muchanga. Muchanga will be joined by United Nations Economic Commission for Africa Executive Secretary Vera Songwe, Harvard Kennedy School international trade professor Robert Lawrence and PIIE’s Anabel Gonzalez.

  • Also on Wednesday, the Hoover Institution will host Sen. Marsha Blackburn (R-TN) for a virtual discussion on conflict between the U.S. and China “from Huawei to Hong Kong.” -- Brett Fortnam (bfortnam@iwpnews.com)