For a second time, a World Trade Organization panel rejected the European Union's claim that it has ended launch subsidies for Airbus, and remedied their adverse effects on Boeing. The earlier compliance panel ruling against Airbus led to the largest authorized tariff action ever at the WTO -- the $7.5 billion worth of goods from EU countries facing either 10 percent or 25 percent tariffs (see 1910020044).
After a surprise tweet from President Donald Trump that he would implement tariffs on Brazilian steel and on Argentinian steel and aluminum (see 1912020002), the agency in charge of Section 232 actions declined to say when a Federal Register notice would follow to put the tweet into action. The department also declined to say if importers can bring in products in sectors where the quotas are already full while waiting for the Federal Register notice. Commerce also didn't say if importers can apply for exclusions for the items. Currently, exclusions against quotas are allowed, but they are not allowed to be taken until this quarter, even though the quotas fill up quarter-by-quarter.
When tariffs on their entire product line rose to 25 percent, small bike companies were faced with difficult decisions on raising prices and reducing staff. For Mehdi Farsi, co-founder of State Bicycle Co., a 10-year-old firm in Arizona, the financial burden meant he ended free shipping for online customers, then raised the price of the second-highest seller from $449 to $459. Shipping usually cost the company between $25 and $50, depending on the distance. He also didn't replace one person who left the company, and laid off one worker. Currently, including the owners, there are 15 workers, a couple of whom work only part time.
The Office of the U.S. Trade Representative announced that it will release a report from its Section 301 investigation on France's Digital Services Tax on Dec. 2. The Nov. 27 press release said that its recommendation of how to respond to the DST will be made at that time. Trade groups, companies and think tanks submitted comments and testified last summer about their problems with the DST (see 1908140023), but several said that tariffs on French imports under Section 301 are not the way to fix the problem. Many of France's most identifiable exports to the U.S. are already targets of tariffs because of the Airbus dispute.
Although the U.S. trade representative found a way to avoid a congressional vote on a U.S.-Japan trade deal by limiting the size of the initial U.S. tariff reductions, Democrats on the Ways and Means Committee are questioning whether the deal is allowed under the fast-track law. A letter sent Nov. 26, led by Rep. Bill Pascrell, D-N.J., and signed by every Democrat on the committee except the chairman and Rep. John Lewis, D-Ga., did not explicitly say that Democrats believe the law is not being followed, but repeatedly asked under what authority the agreement was reached. Among the specific issues raised were rules of origin or marking rules and whether there would be changes. The letter also asked if there is such a provision, why wasn't it mentioned in the notification to Congress.
While the National Customs Brokers & Forwarders Association of America is asking for the renewed Craft Beverage Modernization Act to simplify the process of applying for the lower excise taxes on imports, the break for small producers of beer, wine and spirits may be gone entirely in a little more than a month. The CBMA was included in broader tax reform legislation in 2017 (see 1712180033).
House Speaker Nancy Pelosi said the Democrats “are within range” of agreeing on a new NAFTA, adding that “we need to see our progress in writing from the Trade Representative for final review.” Pelosi released the statement in the evening of Nov. 25. She said that the original draft of the U.S.-Mexico-Canada Agreement that USTR reached with Canada and Mexico “still left American workers exposed to losing their jobs to Mexico, included unacceptable provisions to lock in high prescription drug prices, and fell short of key environmental standards,” but most of all, it had no concrete enforcement mechanisms. If Pelosi reaches agreement with USTR, the next step will be a draft implementing bill from USTR, and mock markups in the House Ways and Means Committee and Senate Finance Committee to shape the final bill.
Those who advise NAFTA stakeholders say that it looks like a factory-level inspection regime will be part of what Democrats get in their edits to the U.S.-Mexico-Canada Agreement, but how disruptive that will be for businesses is completely cloudy. Kellie Meiman Hock, a managing partner at McLarty Associates, said she thinks there are ways the inspections could be done that would not make Mexico feel like American government officials are deciding whether Mexican labor laws are being followed. Hock said the two governments could select inspectors who travel together, or it could be a coalition of non-governmental organizations, as was mobilized after more than 1,000 textile workers died in a factory collapse in Bangladesh.
The silence from the White House on auto tariffs and a Court of International Trade ruling on 50 percent tariffs on Turkish steel (see 1911180013) has left some trade lawyers wondering whether the window has closed to levy Section 232 tariffs on European cars. The panel of judges said that the law “cabins the President's power" procedurally, because of its deadlines. The Trump administration missed its deadline of Nov. 14 last week.
When the Ways and Means Trade Subcommittee held a hearing on the U.S.-Japan mini-deal, the Office of the U.S. Trade Representative declined to send anyone to testify. Rep. Ron Kind, D-Wis., one of the biggest boosters of free trade in the Democratic caucus, said that absence represents “the disdain the current administration has" for Congress, and its role in setting trade policy. He predicted that "this will have serious ramifications for the next time" Congress has a vote on fast-track authority.