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This Week In Trade

U.S.-China, USMCA talks continue, but Global Steel Forum may not

Posted: October 21, 2019

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to speak with Chinese Vice Premier Liu He this week as the two sides push to firm up a “phase one” trade agreement. The clock on the U.S.-Mexico-Canada Agreement, meanwhile, continues to tick -- and the Global Forum on Steel Excess Capacity will hold what could be its final ministerial.

The principal-level call between U.S. and Chinese officials will follow a discussion among deputies last week. The goal is for the two sides to expand on an understanding reached earlier this month when Liu led a delegation of Chinese officials to Washington, DC, for negotiations. The two sides are aiming to have a deal ready to be signed by presidents Trump and Xi on the sidelines of the APEC leaders summit next month. China is hoping to avoid tariffs on $160 billion worth of goods the U.S. has threatened to impose on Dec. 15.

National Economic Council Director Larry Kudlow said on Monday that if U.S.-China talks go well on “phase one,” the U.S. could suspend the Dec. 15 tariffs. “I really like what they're saying on the other side, so my hunch is -- and this is up to the president -- ultimately if the talks go well on phase one, there is a chance that we can get those December tariffs off,” Kudlow said on Fox Business News. “I can't guarantee it. It's completely up to the president.”

Liu, speaking at the opening ceremony of the World Virtual Reality Industry Conference in China on Saturday, emphasized the importance of reaching a détente with the U.S. “Liu He said that the new round of Sino-U.S. economic and trade consultations has made substantial progress and laid an important foundation for signing the phased agreement,” China’s state-run media said in an article posted on the government’s website. “Stopping the escalation of the trade war is beneficial to the Chinese side, beneficial to the U.S. side, and beneficial to the whole world. It is the common expectation of producers and consumers. The two sides should properly resolve their core concerns on the basis of equality and mutual respect, and strive to create a good environment and achieve common goals.”

Lighthizer, Mnuchin and Trump said the deal would address agricultural structural issues and purchases, intellectual property, forced technology transfer, currency and financial services, but officials have yet to offer details.

Commerce Secretary Wilbur Ross on Monday said “the meat” of a deal with China would come in second and third phases.

Ross, on Fox Business News, also downplayed the importance of Trump and Xi signing an agreement deal next month.

“We would like to make a deal. But from our point of view, it has to be the right deal and it doesn't have to be in November,” he said. “It's more critical that it be a proper deal than exactly when it occurs.”

The House Democrats’ working group on USMCA will hold a staff-level meeting on Monday, after which members and Lighthizer will meet mid-week, House Ways & Means Chairman Richard Neal (D-MA) told reporters on Friday. Neal leads the working group, which was tasked by House Speaker Nancy Pelosi (D-CA) to address Democratic concerns with USMCA before an implementing bill is delivered to Congress and put to a vote.

Last week Neal said Democrats and USTR were “firming up” a deal, calling a letter on labor reform commitments from Mexican President Andrés Manuel López Obrador a key development. But Ross claimed Democrats are holding up the deal for strictly political reasons. The Democrats have cited issues with USMCA’s labor, environmental, enforcement and pharmaceutical provisions.

“What's sad is, everybody knows, the Democrats and the Republicans, everybody knows USMCA is a far better deal than NAFTA, including it's a far better deal on labor issues and on environmental issues,” Ross said. “So there's really no substance, reason to not go for USMCA. There are only political reasons. It's just them not being willing, apparently, to give the president yet another victory.”

House Minority Leader Kevin McCarthy (R-CA) on Sunday criticized Pelosi for not bringing USMCA to a vote, contending its passage would strengthen the U.S.’ negotiating stance vis-à-vis China. “We would only be stronger had we ratified this agreement with our top two traders, sitting and negotiating with our number three trader,” he said on Fox News. “But the only person that has the power for that to come up is the speaker of the House and everybody knows if she called it up it would pass. But she cares more about tearing this president down instead of building this country up.”

The administration has not yet sent the implementing bill to Congress because it is waiting for a signal from Pelosi, who has said repeatedly that she wants to ensure a deal that will pass, that the bill would get a vote.

The Global Steel Forum on Excess Capacity is scheduled to hold a ministerial meeting in Tokyo on Saturday, with ministers slated to discuss whether the forum’s mandate will be extended. The mandate expires in December. Members were unable to reach an agreement in June on whether to continue to the forum because some believed it had completed its work.

The U.S. has been represented at previous forum ministerials at the deputy level. Deputy USTR Jeffrey Gerrish attended the 2018 ministerial and USTR Chief of Staff Jamieson Greer attended the 2017 ministerial.

The World Trade Organization’s Committee on Government Procurement will hold a negotiating session on Wednesday, when it could discuss China’s latest bid to join the GPA. According to China’s Finance Ministry, Beijing has submitted its much-anticipated sixth revised GPA offer. China’s last offer came in December 2014.

British Prime Minister Boris Johnson was denied a second vote on his new Brexit deal on Monday by House of Commons Speaker John Bercow, who ruled a vote would be "repetitive and disorderly." Johnson was forced to seek an extension of the Brexit deadline until Jan. 31, 2020, over the weekend after Parliament refused to approve a new deal he struck with the EU on Thursday. Johnson had hoped the deal would be approved in a vote on Saturday, but British lawmakers rebuffed him, instead approving an amendment that requires the deal's implementing legislation to be passed first. The implementing bill is expected to be unveiled on Monday.

Events

  • The Washington International Trade Association on Thursday will host a discussion on how the U.S. trade policy agenda impacts developing countries. Assistant USTR Edward Gresser will deliver off-the-record remarks. A panel discussion will include Orit Frenkel, executive director of the American Leadership Initiative, Dan Anthony, vice president of the Trade Partnership, and Katrin Kuhlmann, president and founder of New Markets Lab.
  • The Meridian Global Leadership Summit on Friday will feature Sen. Joe Manchin, former USTR Michael Froman, New Zealand Ambassador to the U.S. Rosemary Banks and German Ambassador to the U.S. Emily Haber. The discussion will focus on how countries and businesses can move away from multilateral and bilateral trade agreements. -- Brett Fortnam (bfortnam@iwpnews.com)

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