Mexico and Canada emphasized how the COVID-19 pandemic has proven the need for interlinked supply chains, but U.S. Trade Representative Katherine Tai emphasized supply chains' downside as she, Mexico's economy minister and Canada's trade minister sat down to the first Free Trade Commission meeting of the USMCA. Tai said, "Not only have we discovered the fragility of our supply chains, but we have just begun to appreciate the degree to which they run counter to our collective goals of ensuring that workers within North America, and outside it, are paid a fair wage, in a safe workplace."
Sen. Ron Wyden, D-Ore., the chairman of the Senate Finance Committee, announced that he's introducing a bill that would renew the Generalized System of Preferences benefits program through Jan. 1, 2027, and renew the Miscellaneous Tariff Bill through the end of 2023.
Former Trans-Pacific Partnership negotiator Wendy Cutler told an audience for an Atlantic Council webinar that the U.S. cannot rejoin even a renegotiated TPP in the next two years, and maybe not during the next four. Cutler, a vice president of the Asia Society Policy Institute, said that the administration should try to ink mini-deals with TPP countries on digital trade, like it did with Japan, and said that maybe there can be coordination on supply chains or climate and trade. Cutler was also chief negotiator on the Korea free trade agreement.
Rep. Brian Higgins, D-N.Y., and Rep. Kevin Hern, R-Okla., are asking the U.S. Trade Representative to negotiate an agreement with Canada on softwood lumber so countervailing duties can be dropped against Canadian imports. The U.S. and Canada used to have an agreement that limited Canadian exports when prices were low, and opened access to avoid price spikes like the one currently underway. In their letter, sent May 17 with 96 signatories, they said the countervailing duties on Canadian lumber have caused "unnecessary cost increases to industries that use softwood lumber, such as residential home construction. We now call upon you to represent American interests on this critical issue by pursuing a balanced agreement with Canada. We, as Members of Congress, stand ready to discuss this issue and potential solutions with you. We consider such a balanced agreement to be in the interest of the United States because it would provide predictability for lumber producers and homebuilders so they can continue to help the economy recover from the events of the past year."
House Appropriations Committee Chair Rosa DeLauro, D-Conn., is questioning whether FDA's Office of Regulatory Affairs is using its funding effectively and fulfilling its duty of preventing the spread of food-borne illnesses. A May 13 letter notes that in fiscal year 2019, ORA's food funding was $732 million, about the same as the previous fiscal year, but visual exams of imported food products declined 25%, domestic inspections decreased 18% and the sampling of imported products fell 21%.
After the European Union announced May 17 that it will not double retaliatory tariffs on U.S. exports on June 1, exporters expressed relief. More significantly, the joint statement between the EU and Office of the U.S Trade Representative said the two sides are aiming for a united approach to global overcapacity distortions that would allow the 25% and 10% tariffs under Section 232 to be removed at the end of the year. Domestic metal producers welcomed that news, but the union that represents steelworkers reacted with some alarm.
The Mexican ambassador to the U.S. publicized a letter he sent to Labor Secretary Marty Walsh asking for consultations under the Labor Chapter of USMCA over the treatment of agricultural and meatpacking workers. "Although at the federal level labor rights in the United States protect all workers, regardless of their immigration status, in practice, factors such as ignorance, fear and abuse by some employers prevent migrant workers from exercising fully their labor rights in some industries and states," Esteban Moctezuma wrote May 12. He complained that there is no federal regulation for heat stress, and that employers do not comply with rest and bathroom protocols for agriculture workers. He said that agriculture workers are excluded from general wage and hour laws that provide for overtime pay and the right to organize and bargain collectively. Specifically, he said, undocumented workers don't have access to ask for reinstatement to jobs or payment of lost wages under the U.S. labor laws. And he said that officials overlook sexual harassment and violence in both sectors. "For the aforementioned reasons, the Government of Mexico considered it necessary to point out the importance of adequately enforcing its federal regulations to guarantee the labor rights of workers in the agricultural and meat processing and packaging industries in the United States," he wrote.
While the timing of the announcement of the first rapid response mechanism complaint was clearly political, according to the CEO of the Business Coordinating Council of Mexico, that doesn't mean that businesses shouldn't expect a stream of complaints to follow. Sergio Gómez Lora, who was speaking on a Thompson Hine webinar May 12, said that's challenging for companies, because it is the union, not their own actions, that could be the problem, even though it is the company that could face the penalty of a tariff on its exports to the U.S.
Sens. Jerry Moran, R-Kan., and Jeanne Shaheen, D-N.H., asked the U.S. trade representative to lift trade remedies on Canadian softwood lumber, because the cost of framing lumber has quintupled and lumber prices overall are up 300%. "In December of 2020, the average tariff was reduced to 9%. While a reduction in tariffs for some Canadian producers is a step in the right direction, the complete elimination of these tariffs is necessary to provide relief for rising lumber prices. American home buyers, not Canadian lumber producers, are the ones who end up paying the cost of these trade restrictions," they wrote May 12. The USTR told Senate Finance Committee members on May 12 that there are good reasons for the countervailing duties, and an agreement that would allow for more Canadian imports to avoid these kinds of price surges is not one the Canadians have expressed interest in so far.
U.S. Trade Representative Katherine Tai, in her second day of testimony on Capitol Hill, heard again and again from members of Congress who are hearing from companies in their districts that they want Section 301 tariff exclusions back. She heard repeatedly that the 9% countervailing duties on Canadian lumber are making a bad situation worse. And she heard that the Miscellaneous Tariff Bill and Generalized System of Preferences benefits program should be renewed. On each topic, both Democrats and Republicans shared concerns, though on GSP, Republicans only spoke of the cost to importers, while Democrats worried about the effects of GSP on the eligible countries. Tai testified for more than four hours in front of the House Ways and Means Committee on May 13.