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This Week In Trade

Trump administration to ink another limited deal in waning days

Posted: December 07, 2020

U.S. Trade Representative Robert Lighthizer will be in Ecuador this week to sign another limited trade deal -- what Quito is calling a phase-one trade agreement that is expected to include provisions on good regulatory practices, trade facilitation, anticorruption and cooperation on small and medium-sized enterprises.

USTR has not notified Congress of negotiations with Ecuador under the 2015 Trade Promotion Authority law -- an indication the deal will not change any U.S. laws or have to be ratified by Congress. The signing ceremony will be held on Tuesday in Quito, the capital.

The two countries indicated a deal of sorts was in the offing last month following a Nov. 10 U.S.-Ecuador Trade and Investment Council meeting. A joint statement issued on Nov. 19 outlined the contours of a “Protocol on Trade Rules and Transparency.”

The deal continues the Trump administration’s penchant for limited deals that do not require congressional approval -- a proclivity that has offended many Democrats, in particular. In the last four years, USTR has also completed limited deals with Japan, China and Brazil, though only the agreement with Tokyo included significant market access provisions. It has also come close to an initial agreement with India, though that remains on hold.

President-elect Joe Biden has said no new trade deals will be signed until his administration deals with a bevy of domestic issues first and that he will not immediately lift tariffs imposed by President Trump on China. The president-elect has thus far said little else about his administration’s approach to trade policy.

Biden has also not yet named his trade team, further muddying the trade outlook for the next four years. Key positions include U.S. Trade Representative and deputies, as well the Commerce secretary, Agriculture secretary and select ambassadorships.

Meanwhile, Congress is facing several deadlines this month. First up: Government funding is set to expire on Friday. A one-week continuing resolution is seen as one route lawmakers could take to avoid a shutdown in the near term. A 35-day government shutdown from December 2018-January 2019 led USTR to furlough most of its staff and other trade agencies to take similar measures.

More specific to trade, the Generalized System of Preferences and the latest Miscellaneous Tariff Bill are set to expire at the end of the year. The GSP program, which provides duty-free treatment for goods from qualifying developing countries, generally enjoys strong, bipartisan support in both chambers, but faces a challenging reauthorization path as Republicans are looking for a clean extension while Democrats are demanding changes.

Senate Finance Committee Chairman Chuck Grassley (R-IA) blames Democrats for holding GSP renewal “hostage” for demands he does not deem “very appropriate.” Grassley’s committee counterpart, ranking member Ron Wyden (D-OR), told Inside U.S. Trade last week that GSP should “raise the bar” for U.S. trading partners by “adding criteria on issues like human rights, anti-corruption and the environment.”

Congress also must act to extend benefits provided under the 2018 MTB or they will expire at the end of the year. MTBs temporarily suspend or reduce tariffs for non-controversial and revenue-neutral products. Some business groups are pushing for an MTB to be included in an omnibus spending package.

Finally, Congress could vote this week on the fiscal year 2021 National Defense Authorization Act. The bill includes provisions crafted to make some U.S. technology sectors more competitive with China’s. For instance, the bill would create a “Multilateral Semiconductors Security Fund” that requires participants to treat semiconductor exports to China the same as the U.S. does under its export control regime. The Commerce Department has imposed a slew of controls aimed at limiting China’s access to U.S. semiconductor technology.

Eyes on Europe

The pending collapse of the Brexit negotiations is a threat to U.S. investors, according to the U.S. Chamber of Commerce, which is calling for European Union and United Kingdom negotiators to finalize talks on a trade deal that will minimize trade barriers between the EU and the UK. “The UK-EU negotiations have reached an absolute crunch point,” Chamber Executive Vice President and Head of International Affairs Myron Brilliant said in a statement on Friday. “The UK’s departure from the EU Single Market and Customs Union will create significant disruptions for American investors and exporters, but the magnitude of disruption will be far greater if no deal is in place before January 1. We strongly urge negotiators on both sides to make the tough choices and find the pragmatic solutions to unlock a mutually acceptable agreement as soon as possible.”

EU Commission President Ursula von der Leyen and British Prime Minister Boris Johnson will speak for the second time in three days on Monday in hopes of salvaging a deal. The two sides have an end-of-the-year deadline before the UK will fall out of the EU’s single market. According to Brilliant, a Brexit deal would aid U.S. and British efforts to reach their own bilateral agreement.

“A successful outcome here is essential,” Brilliant said. “We all have a stake in minimizing frictions in the flows of goods, services, data, people, and capital between the U.S., UK and EU. A robust UK-EU deal can also help facilitate timely conclusion of a U.S.-UK trade agreement, which we hope can be accomplished early next spring.”

The World Trade Organization’s Council for Trade-Related Aspects of Intellectual Property Rights is scheduled to hold a formal meeting on Thursday. TRIPS Agreement provisions have come into the limelight as the world grapples with the coronavirus pandemic and tries to plan for the distribution of a vaccine. Informal TRIPS meetings -- where negotiations on IP rules take place -- have lately focused on a proposal to waive WTO IP rules on copyright, industrial designs, patents and the protection of undisclosed information if members’ action were taken “in relation to prevention, containment or treatment of COVID-19.”

WTO members are deadlocked on the waiver proposal, making it unlikely to move forward. The formal TRIPS meeting this week is not for negotiating, but IP rules and their impact on the pandemic could still be a focal point.

Events

  • The Financial Times on Tuesday will host a “trade secrets summit.” The conference includes panels on trans-Atlantic trade, U.S.-China decoupling, digital services taxes, the U.S.-Mexico-Canada Agreement and will include a mix of officials, industry executives and academics.
  • The Carnegie Endowment for International Peace will host a virtual discussion on a “new trans-Atlantic deal” on Tuesday with Spanish Foreign Affairs Minister for European Union and Cooperation Arancha Gonzalez Laya, former U.S. Ambassador to NATO Nicholas Burns, and Erik Brattberg, the director of the CEIP Europe Program.
  • The Commerce Department’s Bureau of Industry and Security on Tuesday will hold a teleconference meeting of its Technical Advisory Committee on the implementation of Export Administration Regulations.
  • Former agriculture officials will discuss the next four years of agriculture policy during a discussion hosted by the Farm Foundation on Tuesday. Participants include former Agriculture secretaries Mike Espy, Dan Glickman, Ann Veneman and former USTR agricultural negotiator Darci Vetter.
  • The American Enterprise Institute on Tuesday will host a webinar to discuss trade policy challenges the Biden administration will face. Panelists include Chad Brown, senior fellow at the Peterson Institute for International Economics; Douglas Irwin, professor of economic at Dartmouth College; Anne Krueger, senior research professor of international economics at Johns Hopkins University's School of Advanced International Studies; and AEI’s Claude Barfield and Desmond Lachman.
  • The Senate Commerce, Science and Transportation Committee will hold a hearing on Wednesday on the invalidation of the EU-U.S. Privacy Shield and what the means for the future of trans-Atlantic data flows. Witnesses include Noah Phillips, commissioner of the Federal Trade Commission; Victoria Espinel, president and CEO of BSA - The Software Alliance; James Sullivan, deputy assistant Commerce secretary for services in the International Trade Administration; Peter Swire, chair of law and ethics in the Georgia Tech Scheller College of Business, and research director at the Cross-Border Data Forum.
  • The Atlantic Council on Wednesday will host a webinar on the future of supply chains in the Americas with Jennifer Trock, chair of the Baker & McKenzie LLP global aviation group; Lisa Schroeter, global director of trade and investment policy at the Dow Chemical Company; Omar Vargas, global head of governance at 3M; and Jason Marczak, director of the Atlantic Council's Latin America Center.
  • The Asia Society on Wednesday will host former Treasury Hank Paulson to discuss the effects of Chinese domestic politics and economics on U.S.-China relations.
  • The House Foreign Affairs subcommittee on Asia, the Pacific and Nonproliferation on Thursday will hold a hearing on U.S.-Taiwan relations with testimony from Bonnie S. Glaser, senior advisor for Asia, director of China Power Project at the Center for Strategic and International Studies; Shelley Rigger, professor of political science at Davidson College; and Shirley Kan, specialist in Asian security affairs.
  • BIS will hold a teleconference meeting of its Emerging Technology Technical Advisory Committee on the identification of emerging and foundational technologies with potential dual-use applications on Thursday.
  • The Washington International Trade Association on Friday will host a program on the WTO reform efforts of the Ottawa Group. Participants include Stephen de Boer, Canada's ambassador and permanent representative to the WTO; George Mina, Australia's ambassador and permanent representative to the WTO; Tan Hung Seng, Singapore's ambassador and permanent representative to the WTO; Kazuyuki Yamazaki, Japan's ambassador and permanent representative to the international organizations in Geneva; former U.S. Ambassador to the WTO Rufus Yerxa, president of the National Foreign Trade Council and former WTO deputy director-general. -- Brett Fortnam (bfortnam@iwpnews.com)

 

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