Trade Cases

Tuesday Trade Update
Written by Sandy Williams
February 27, 2018
There was a lot of buzz on the trade front today, from posturing over the next round of NAFTA negotiations to commentary on the 2018 “Economic Report of the President”:
• Senate Finance Chairman Orrin Hatch (R-UT) told reporters that Congress will take “veto-proof” action if President Trump attempts to terminate NAFTA, adding that “we can’t afford to pull out of NAFTA.”
Said Hatch, “I have urged the president to seek new FTA partners; to update NAFTA to protect U.S. intellectual property rights; to increase trade and investment in North America; and to address the concerns of U.S. businesses exporting to Korea while continuing a close economic relationship with this important ally.”
Hatch expressed concern that tariffs from Section 232 and Section 301 investigations could undo the economic growth from tax reform. “It is equally important for us to combat trade practices by foreign nations that harm American businesses and undermine the world trade system,” he added. “But the tactics we choose must be targeted directly at specific countries and specific practices.”
• A GOP trade meeting at the White House today hosted several free trade advocates including House Ways & Means Committee Chairman Kevin Brady (R-TX) and trade subcommittee Chairman Dave Reichert (R-WA). Discussions were expected to include NAFTA and Section 232.
• U.S. NAFTA negotiators will not share their proposal on labor at the upcoming Mexico talks until getting more input from stakeholders, said a source reported by Inside U.S. Trade. Democrats are still stinging from a labor dispute loss with Guatemala last year and are insisting on “strong, enforceable labor language that would address what they consider loopholes.”
• Mexico’s chief negotiator Kenneth Smith Ramos tweeted on Monday that “Mexico comes to Round 7 with constructive proposals on the toughest issues, including dispute settlement, investment and the sunset review, among others.” The trucking industry received a nod from Ramos in tweets regarding opposition to a U.S. proposal that could lead to future restrictions on the operation of Mexican-domiciled long-haul trucks in the United States. Ramos tweeted that “71 percent of the total value of MX-US trade is transported by #truck,” and added that a renegotiated agreement should “expand and facilitate cross-border trucking.”
• The U.S. Trade Representative released a video on Monday discussing the progress so far in NAFTA negotiations. “With six completed rounds, the United States is continuing to push its objectives and is renegotiating NAFTA to be an agreement that benefits all Americans,” the video said. “Nearly 30 technical groups will meet in Mexico City for the seventh round of negotiations from Feb. 25-March 5. The U.S. will look to build upon the progress made thus far to modernize the 24-year-old agreement and address the staggering trade deficit that has resulted in thousands of lost manufacturing jobs.”
• Canada, much maligned by President Trump as a source of trade deficit for the U.S., was vindicated by the newly released 2018 White House “Economic Report of the President.” The Canadian Press pounced on three sections of the report in which it clearly states that the U.S. has a trade surplus with Canada:
1) “All countries show a (U.S.) services surplus offsetting a goods deficit, with the U.S. running a net bilateral surplus only with Canada and the United Kingdom.
2) “The United States ran a trade surplus of $2.6 billion with Canada on a balance-of-payments basis.”
3) “The United States has free trade agreements … with a number of countries—some of which represent net trade surpluses for the United States (Canada and Singapore), and some of which represent deficits (Mexico and South Korea).”
The report, says the Canadian Press, “contradicts the president by saying trade has helped the U.S. economy grow, that economies are shifting away from manufacturing, that foreign trade is increasingly important, that America has a good record of success in international dispute panels at the WTO, and that reworking trade agreements is no way to address a trade deficit.”
“The Trade Chapter of the 2018 Economic Report of the President is a stunning rebuke of… the president and his trade team,” tweeted Scott Lincicome, a trade lawyer at the Cato Institute, after the report was released last week.

Sandy Williams
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