Withdrawing from NAFTA to secure approval of its replacement will backfire, warned the chairman of the New Democrats, a group of 68 House of Representatives members generally seen as pro-free trade, in a statement issued Dec. 10. One of the New Democrats who serves on the House Ways and Means Trade Subcommittee, Rep. Ron Kind, D-Wis., is interested in leading that subcommittee next year (see 1811140049). New Dems Chairman Rep. Jim Himes, D-Conn., said withdrawal "will create economic chaos and not build the trust necessary for bipartisan progress." Himes said he met with U.S. Trade Representative Robert Lighthizer on Dec. 7, and had a constructive conversation in which Himes said Lighthizer expressed his desire to work closely with members of Congress. "I agreed that such engagement would be essential to consideration of the revised NAFTA," Himes said. In his statement, he noted that his caucus was integral to getting fast-track legislation passed, as well as "every trade agreement in recent decades.... This administration will need bipartisan support to successfully push trade agreements through Congress and we urge the Administration to engage with us on this and other agreements moving forward."
Automakers, titanium producers and drug industry players shared diverging views inside their respective sectors of how Office of the U.S. Trade Representative negotiators should approach a U.S.-Japan free trade agreement. The department invited the public to share opinions Dec. 10 on what priorities negotiators should pursue, and how the new deal should be similar or diverge from the path forged for the U.S.-Mexico-Canada Agreement and the Trans-Pacific Partnership. Autos are the single biggest import from Japan, making up $51 billion of the $136 billion in goods imports in 2017, according to USTR.
Importers paid more than $6 billion total in tariffs in October, the first full month that there were additional tariffs on $200 billion in Chinese goods, according to an analysis from Tariffs Hurt the Heartland. The group said that amount -- which is $3.1 billion more than was paid in October 2017 -- has not slowed imports on the tariffed goods, but has drastically cut exports that are subject to retaliatory tariffs. The group is funded in part by farm interests, who have been particularly hard-hit by retaliation. Their Dec. 7 release said that imports subject to new tariffs declined 0.6 percent in October, while exports targeted for retaliation fell 37 percent. About two-thirds of the increase is for Section 301 tariffs, while steel and aluminum tariffs cost an additional $446 million. The goods on the Section 301 list would have cost $394 million in tariffs before the action; in October, tariffs on those imports were $2.6 billion. CBP recently said it has assessed more than $10 billion under the recent Trump administration Section 201, 232 and 301 trade remedies (see 1811260010).
Increased material costs was the top cost pressure for 20 percent of CEOs surveyed by the Business Roundtable, and that group's leader said tariffs are the reason why. Only labor costs was mentioned by more CEOs. Business Roundtable CEO Josh Bolten said that while the survey, released Dec. 7, didn't ask which set of tariffs is the problem, he's hearing from companies that metals tariffs are a bigger burden than the Section 301 tariffs. That's because a relatively small amount of production uses inputs from lists one and two of Chinese imports, and steel is used in many sectors. "The ones that have gotten the biggest public attention are the auto manufacturers," he said, "but really it's across the membership."
U.S. Trade Representative Robert Lighthizer and U.S. Secretary of Agriculture Sonny Perdue announced Dec. 6 that the government of Morocco will allow U.S. beef imports. Morocco opened its market to U.S. poultry in August. USTR estimated Morocco could buy $80 million a year in beef from the U.S. Details on the beef export requirements are on the FDA website.
The National Council of Textile Organizations announced Dec. 6 that it endorses the U.S.-Mexico-Canada Agreement, and will lobby for it. The organization said the U.S. exported $11.8 billion in textiles within the NAFTA region in 2017. The trade group views USMCA as an improvement on NAFTA because the rewrite has stronger rules of origin for sewing thread, pocketing, narrow elastics and some coated fabrics; it has stronger customs enforcement rules; and it closes what NCTO calls the Kissell Amendment loophole. The Kissell Amendment, which covers Department of Homeland Security uniform and body armor purchases, allows sourcing from NAFTA partners, not just American producers. According to a 2017 GAO report, 58 percent of DHS spending on uniform body armor procurement is for imported items. If USMCA becomes law, apparel purchased for the agency will have to be sewn in the U.S., an NCTO spokesman said. He said the change affects "more than $30 million worth of contracts on an annual basis."
The United Automobile Workers union would like to see vehicles left out of trade negotiations entirely when Japan and the U.S. sit down to craft a free-trade deal. Josh Nassar, UAW legislative director, told the International Trade Commission that Japan has no tariffs on imported cars, yet its imports are just 7 percent of sales. From all countries, Japan imported 11.1 billion in vehicles in 2017, according to World's Top Exports. In 2017, the Commerce Department said the U.S. imported $51 billion in Japanese-built vehicles. The ITC also heard from the milk lobby, the American Chemistry Council and the American Apparel and Footwear Association during its hearing Dec. 6.
A withdrawal of the U.S. from NAFTA by President Donald Trump could help push the new NAFTA through Congress, according to Sen. Chuck Grassley, the Iowa Republican who will take over the Senate Finance Committee next year. Grassley, who was speaking on an agriculture radio program on Dec. 3, also praised the president's approach to trade more broadly.
President Donald Trump sounded more positive about the possibilities of ending the trade war with China after his morning tweets on Dec. 4 may have fueled a stock market sell-off. Trump, who had boasted about tariffs making America rich (see 1812040015), tweeted later that night: "Ultimately, I believe, we will be making a deal -- either now or into the future.... China does not want Tariffs!"
The World Trade Organization's dispute settlement body agreed to set up two more panels to judge whether the U.S. was justified in levying aluminum and steel tariffs on trading partners under a national security rationale. The decision, made Dec. 4, added Switzerland and India to the list of eight countries and the European Union that will have panels challenge the tariffs (see 1811210029).