Sen. Tom Cotton, one of the most prominent China hawks in Congress, thinks that the Bureau of Industry and Security is buried within an organization “hostile to the aggressive use of export controls,” and so it should be moved from the Commerce Department to the State Department, because, he says, that department puts national security first. Cotton, who has published a lengthy report on what he calls the economic long war with China, discussed his views during an online program at the Reagan Presidential Foundation on Feb. 18.
The semiconductor, chemicals, medical devices and aviation industries could be especially hurt by decoupling, according to a new U.S. Chamber of Commerce report attempting to quantify the costs of stopping or slowing sales to China, and in the case of chemicals, high tariffs on Chinese inputs used by U.S. chemical plants. Some of the actions modeled in the report have already happened, such as 25% tariffs on chemicals from China, and China's retaliatory tariffs on chemical exports. But while semiconductor exports to ZTE, Huawei and Fujian Jinhua have been restricted, there has not been a complete ban on the export of chips to China, which is what the report modeled.
Many expect trade policy under the Biden administration to be more worker-focused than consumer-focused, but many specifics remain undecided. “The jury is still out on what that pro-worker trade policy will look like in practice,” said Joshua Boswell, a lawyer at Crowell & Moring. Boswell spoke to a webinar audience Feb. 17 on the 2021 trade outlook and said such predictions don't tell you much about tariffs, free trade negotiations or trade remedies in and of themselves.
Ngozi Okonjo-Iweala was officially confirmed as the next director-general of the World Trade Organization on Feb. 15, and the U.S. charge d'affaires, David Bisbee, in Geneva said she has deep knowledge and experience in “economics, trade, and diplomacy.” He said, “Dr. Okonjo-Iweala has promised that under her leadership it will not be business as usual for the WTO, and we are excited and confident that she has the skills necessary to make good on this promise.” Myron Brilliant, vice president for international affairs at the U.S. Chamber of Commerce, in congratulating Okonjo-Iweala, said that “we need to restore the WTO as a forum for meaningful trade negotiations and the settlement of commercial disputes. We’re committed to doing our part to make that happen.”
Iowa Republican Sen. Chuck Grassley, a member of the Senate Finance Committee, said he doesn't expect U.S. trade representative nominee Katherine Tai to have a hearing before mid-March. Because there's nothing controversial about her, he said, if she does get a hearing before Congress takes its Easter break, he thinks the full vote can also be done within days. Grassley told reporters on a Feb. 16 phone call that when he spoke with Tai recently, he told her that “I appreciated this administration's approach to China, working to get Japan, South Korea, Europe, Canada, and the United States on the same page with China.” He said he also told her the United Kingdom free trade negotiations “ought to have priority.”
The National Association of Beverage Importers praised the Office of the U.S. Trade Representative for not increasing the tariffs on wine and liquor, but in a Feb. 11 news release it also said the new administration should have rolled some tariffs back, at least the ones added in January. NABI called it a “missed opportunity to present a conciliatory signal, particularly in response to the European Commission’s offer of a six-month mutual suspension of the Airbus and Boeing tariffs.” It said 25% tariffs on imported wine and liquor is causing job losses and furloughs at warehouses and ports, as well as among delivery transportation drivers; logistics and marketing staff; and servers and other wait staff, bartenders and other restaurant workers. “The only link between aircraft and beverage alcohol is the fact you can purchase a drink on your flight,” NABI President Robert Tobiassen said.
Board members and people who provide services to foreign-trade zones talked about what the National Association of Foreign-Trade Zones should work on now that it lost the battle on USMCA rules of origin treatment for goods produced in those zones. “Now that provision’s back in the act, it’s going to be a real challenge,” said Melissa Irmen, chair of the NAFTZ board. The group wants to make sure a U.S.-United Kingdom free trade agreement doesn't prohibit goods made in FTZs from qualifying for rules of origin, as USMCA does. “They are concerned that the USMCA approach could be a precedent.”
National Association of Foreign-Trade Zones President Erik Autor told two think tank scholars Feb. 11 that the organization's goal is to get Congress and other policymakers to see how the FTZ program can fit in the broader trade policy agenda. The trade group was disappointed that the USMCA technical fixes returned to the NAFTA rules of origin approach for FTZs, and wants to ensure that language is not repeated in any future free trade agreements, he said during his group's virtual summit. NAFTZ believes that allowing goods constructed in FTZs to receive USMCA benefits, if they meet the rules of origin, supports the new administration's Made in America ethos.
Twenty-two of Florida's 27-member House delegation, led by Democrat Rep. Darren Soto and Republican Rep. Bill Posey, told acting U.S. Trade Representative Maria Pagan that the European Union's 25% tariffs on grapefruit has hurt their constituents. “With the addition of a twenty-five percent retaliatory tariff on top of the existing 1.5 percent tariff, grapefruit exports from Florida have shrunk significantly,” their Feb. 5 letter said. Forty percent of Florida's fresh grapefruit production typically goes to the EU, the representatives said. Soto announced the letter in a news release Feb. 10. “As a result of the COVID-19 pandemic, Florida growers have already been struggling to maintain their livelihoods. If immediate action is not taken and the United States loses the fresh grapefruit market in the EU, they could face even harsher consequences,” the letter said. EU officials have said they would be willing to lift the tariffs in the Boeing dispute for six months while the U.S. and the EU try to reach a settlement on aircraft subsidies.
Sens. Mike Lee, R-Utah, and Angus King, I-Maine, introduced a bill that would create a national standard for Made in USA labeling. Congress has tried previously to supersede state laws, with a 2016 bill (see 1607140068) making it through the House Energy and Commerce Committee but not reaching a vote on the floor. “Unfortunately, some states have made it unnecessarily difficult for businesses to use the ‘Made in USA’ label and empowered trial lawyers to get rich through differing labeling standards,” Lee said in a Feb. 10 news release. “This bill solves that problem by making one national standard for the ‘Made in USA’ label.” The senators say one state has a rigid 100% threshold and a complicated country of origin standard. They did not name the state, but California has its own Made in USA standard.