Now that the World Trade Organization has ruled that Russia was justified in blocking transit of Ukrainian goods across its territory under the General Agreement on Tariffs and Trade's national security exception, lawyers are trying to project how a different panel will view the U.S. use of the same rationale for its steel and aluminum tariffs.
A report in the Japanese press says that Japan's Economic and Fiscal Policy Minister Toshimitsu Motegi will meet with U.S. Trade Representative Robert Lighthizer April 15-16 in Washington, but that auto export quotas, something Lighthizer pushed for in the 1980s, are unacceptable. The free-trade agreement talks, first announced in September 2018 (see 1809260049), could address non-tariff barriers. Nikkei Asian Review reporters say that Japan "is willing to discuss the streamlining of customs procedures should Washington demand them. But it does not plan to negotiate issues that will take years to realize because of the legislative revisions required, including the drug-pricing system, financial regulations and food safety standards." American drug makers are frustrated by new price constraints in Japan, and want that addressed (see 1904030043).
The American Apparel and Footwear Association is endorsing the Mongolia Third-Neighbor Trade Act introduced this week in the House (see 1904110041). "Mongolian cashmere is a brand in and of itself. This bill would provide a market for Mongolia’s authentic cashmere, supporting growth and creating jobs throughout the U.S. cashmere value chain,” AAFA CEO Rick Helfenbein said.
Most of the world is shifting more of its imports to relatively nearby countries -- for instance, trade within Asia, or Western European Union countries importing from Poland, Morocco and Turkey -- according to a new report from the McKinsey Global Institute presented April 11 at the Peterson Institute for International Economics. The cost of managing far-flung suppliers across many time zones, combined with rising wages in China, proved "much higher than expected," according to Susan Lund, leader of the project. But the United States is an outlier. The proportion of North American trade that's done within the NAFTA countries is down over the last five years.
The U.S. says the World Trade Organization is hobbled and Roberto Azevedo, the director general of the WTO, said the conversations around reform are gaining momentum. "I think we have a once-in-a-generation opportunity to renew the trading system," he said at a speech April 11 at the Peterson Institute for International Economics. "Inaction would compromise the relevance or even the existence of the system as we know it." Among the U.S. complaints about the international body are that the WTO's rules are inadequate for dealing with China's myriad subsidies and that countries can self-designate as developing countries, thereby avoiding concessions in negotiations.
Mongolian cashmere would enter duty-free if a bipartisan bill led by Reps. Ted Yoho, R-Fla., and Dina Titus, D-Nev., becomes law. The Mongolia Third-Neighbor Trade Act, introduced April 10, is also co-sponsored by three other Democrats and three other Republicans. "The Mongolia Third-Neighbor Trade Act is not just about imports of cashmere; it is smart policy that supports a strong, independent Mongolia that continues to be a beacon of freedom in the region and a strategic partner of the United States," Yoho said in a release announcing the bill. Cashmere wool from most countries faces a tariff of 6.8 cents per kg, plus 5.5 percent. The sponsors of a companion bill that will be introduced in the Senate -- Sens. Dan Sullivan, R-Ala., and Ben Cardin, D-Md. -- also spoke about the bill's benefits. Their bill aims to "help bring stability, employment and economic empowerment to the women of Mongolia who comprise most of the country’s garment industry,” Cardin said.
Pro-trade Democrat Gregory Meeks, who represents Queens, New York, has introduced a bill with four other Democrats and fellow New Yorker Rep. Peter King (R) that would change the treatment of customs brokers when their customers go into bankruptcy. The Customs Business Fairness Act, H.R. 2261, was introduced April 10.
House Ways and Means Committee Chairman Richard Neal, D-Mass., as he promised in his first letter to U.S. Trade Representative Robert Lighthizer earlier this week, is laying out specific criticisms of the NAFTA rewrite that pertain to Mexico's labor standards. The letter, sent April 11, was signed by every Democrat on the committee, from pro-trade leaders to the most NAFTA-skeptical. "[T]here are particular concerns regarding the enforceability of the violence and intimidation provision in the new Agreement," they wrote.
Toyota does support the renegotiated NAFTA, a top executive said at a trade conference in Washington, even though it will require the company to change some of its sourcing to meet the new 75 percent autos rule of origin. Doug Murtha, vice president of corporate strategy and planning for Toyota's North American division, said that the addition of $3 billion in U.S investments were, "to some extent, changes we had to make for USMCA."
Mexican tomato growers, faced with the possibility of renewed antidumping tariffs (see 1902070024), have proposed raising prices on their exports to the U.S. by as much as 34 percent, and eliminating price differentials between tomatoes grown in the winter and the summer.