Lobbyists whose sectors could be affected by a renegotiated NAFTA and a political analyst agreed that they don't know where NAFTA talks are going. Some see midterm elections as key to what happens next.
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
The problem with intellectual property theft is not only not going to be solved by tariff threats, experts said, it's likely to get worse in coming years. "I don't believe a set of punitive tariffs will bring about change in China whatsoever," said Mary Lovely, a China scholar at the Peterson Institute for International Economics. She said the pressures to steal intellectual property to support economic growth will increase, but also cautioned that "there are many ways China acquires technology, some of which don't violate international norms, and some of which do."
Passage of the Miscellaneous Tariff Bill in the Senate is blocked because Sen. Roy Blunt, R-Mo., is asking that his OUTDOOR Act move with it, or get a vote on its own. Blunt, in a brief hallway interview on June 19, said he has a hold on the MTB, though he doesn't know if his is the only hold. The OUTDOOR Act would eliminate tariffs on 69 recreational outerwear items (see 1708140031). Although those goods would no longer be subject to tariffs, the importer would pay a 1.5% fee on clothing from most countries, and that money would seed a Sustainable Textile and Apparel Research Fund.
The Commerce Department has made its first determination on steel product exclusions and will release that information shortly, Secretary Wilbur Ross said June 20, with 42 requests granted and 56 denied. He said that more or less every day, the Bureau of Industry and Security will be announcing its determination on batches of exclusions. Although it took from March 29 until June 20 to get the first exclusion determination, Ross, who was testifying in front of the Senate Finance Committee, said, "there is no huge backlog."
President Donald Trump will terminate NAFTA and start over if Mexico and Canada do not agree to change their ways, he said in a June 19 speech. Trump, who was speaking to the small business association National Federation of Independent Business, pivoted to NAFTA after complaining that Mexico does not prevent Central Americans from traveling to the U.S. to seek asylum. "They do nothing for us, and I see it through NAFTA," he said of Mexico. "I see with $100 billion-plus that they make on trade through NAFTA -- one of the worst deals ever made by this country. A disaster." Trump acknowledged that people ask him not to terminate NAFTA, and he said he tells them, "But it's no good." He said they respond: "Yeah, but we know what we have." The audience laughed.
Republicans and Democrats on the Senate Finance Committee criticized Commerce Secretary Wilbur Ross on June 20 over the steel and aluminum tariffs and the implementation of granting exclusions for certain imports subject to those tariffs. Democrat Sen. Claire McCaskill, who described a nail maker in her home state of Missouri who is laying off more than half its 500-person workforce as its inputs' cost increases, told him: "it appears to me a chaotic and, frankly, incompetent manner you're picking winners and losers." Only Sen. Sherrod Brown, D-Ohio, asked supportive questions during the hearing on tariffs.
Nearly 60 trade groups asked Congress to hold hearings on the president's use of tariffs and quotas on allies, and to consider "whether amendments to existing delegations of authority are necessary to clarify Congress’ important role in the execution of the nation’s trade policy." The letter, sent June 18, also praised Senate Finance Committee Chairman Orrin Hatch, R-Utah, for scheduling such a hearing for June 20.
While some think the threat of an additional 10 percent tariff on $200 billion in Chinese goods (see 1806180058) could come to fruition as soon as August, China economic scholars disagree on whether a trade war is really beginning, or whether China will agree to buy more U.S. goods before these tariffs ever bite. Edward Alden, a trade expert at the Council on Foreign Relations, said the fact that the administration set the tariff at 10 percent, not a prohibitive level, means that importers will largely keep their Chinese suppliers. "It's quite clear its purpose is to be imposed rather than being used as market leverage," he said. "At the moment, I don't see any way out of this. Anyone who thinks it stops here isn't paying attention."
Despite repeated lobbying trips from Commerce Secretary Wilbur Ross, the Senate passed a version of the defense authorization bill June 18 that includes an amendment designed to retain the seven-year export ban on Chinese telecommunications equipment manufacturer ZTE. However, the way the amendment is written, the Commerce Department would retain the discretion to allow ZTE to continue importing semiconductors from U.S. sources.
Most of the computer, aviation and automotive, electrical and machinery products that will be hit by tariffs under Section 301 are produced by foreign companies operating in China, according to an updated study from the Peterson Institute for International Economics. The think tank says it aims to do "truth telling about the benefits of globalization" as well as study labor market adjustment due to globalization and how to find a sustainable growth model for mature economies.