Braumiller Law Group attorneys told webinar listeners April 20 that outside of the automotive sector, the U.S.-Mexico-Canada Agreement has more liberal rules of origin than NAFTA. Jim Holbein said that the decision on whether a product qualifies based on tariff shift is a “much simpler rule to apply. I believe that’ll be useful, particularly if your process for obtaining origin is based all on NAFTA.” He gave the example of a flat-screen TV assembled in Mexico, which currently has content percentage rules. Under USMCA, if the manufacturing process qualifies as substantial transformation, that's enough to count as Mexican.
The Council on Foreign Relations said that U.S., European and Japanese pushback over Made in China 2025, at least the part on high performance medical devices, may ebb after the coronavirus pandemic has passed -- because other countries will want to implement their own versions. “If any country knows a little bit about reducing industrial dependence on the rest of the world through conscious industrial choices, that would be China,” said Brad Stetser, a CFR senior fellow for international economics, during a webinar April 16. He said China is displacing imported semiconductors, but has been less successful in displacing imported aircraft.
As a date of entry into force, June 1 “is too aggressive and unrealistic,” said The American Association of Exporters and Importers in a letter sent April 15 to the U.S. trade representative. The organization did not say what day would be late enough for traders, who are affected by the COVID-19 public health emergency. “Many companies have personnel working from home due to COVID-19, which will make responses to queries for data slower, thereby causing delays in the certification process for USMCA,” they said. But they noted that without final regulations, “it is impossible for companies to know if there will be an impact or if supply chains may need to be shifted.” Once the regulations are in place, AAEI said, it will take time to solicit documents from suppliers. The group asked that NAFTA certificates of origin for 2020 continue to be valid during a period of informed compliance until Jan. 1, 2021.
The Office of the U.S Trade Representative intends to apply the safeguard tariffs on imported solar panels to bifacial solar panels, it said in a notice. The USTR said it will ask the U.S. Court of International Trade to lift its injunction against applying the safeguard tariff to this category (see 1912050063), but said regardless of when CIT lifts the injunction, it will apply the tariff no earlier than 30 days after May 18.
Eighteen Republicans and seven Democrats in the House of Representatives are asking for Section 232 tariffs to apply to lamination and cores of electric steel, saying an increase in imports of those kinds from Mexico and Canada are a sign of “blatant circumvention” of the 25% tariffs on electrical steel, as they say neither Canada nor Mexico produces electrical steel. The April 15 letter, sent to President Donald Trump, was led by Rep. Mike Kelly, R-Pa., Rep. Troy Balderson, R-Ohio, and Rep. Marcy Kaptur, D-Ohio. AK Steel, which makes electrical steel in Pennsylvania and finishes it in Ohio, has threatened to close those plants because of the competition (see 2003090038). Balderson and Kelly wrote the president on the same issue in early March. Three of the four senators representing those two states asked for these items to be included in March 2018 (see 1803090038).
Although the shortage of air cargo capacity matters, and the requirements for payment upfront are hurting too, attendees of a Flexport webinar on the challenges of importing personal protective equipment said their No. 1 concern is navigating import and export regulations. It's easy to see why: When Tom Gould, head of global customs for Flexport, described the Food and Drug Administration's ever-changing exceptions to its usual rules about importing medical masks, he said that they’ve “been updated a couple of times; if you looked at them a week or two ago, look again.”
Cato Institute, a libertarian think tank that advocates for free trade, acknowledged that nationalist impulses are understandable in this COVID-19 pandemic, but said that countries should be careful not to make things worse with their reactions. Simon Lester, associate director of trade policy studies at Cato, said on an April 15 webinar that protectionists usually talk about wanting to increase exports while raising barriers to import competition. But now, 79 countries have lowered their tariffs on medical goods, and many of the major economies are restricting exports of personal protective equipment and ventilators.
A lawyer with Crowell & Moring encouraged importers to apply for a Section 301 exclusion, even if their products aren't primarily used inside hospitals, and even if they were rejected in a previous round. Maria Vanikiotis said on a webinar April 15 that reflective triangles used to direct traffic were identified as needed to fight COVID-19 by the Office of the U.S. Trade Representative even before the office opened a docket for more requests. “We feel there’s also quite a bit of room for creativity and what products may be considered relevant,” she said, including products that are used by remote workers, such as computer docks. “Shelf stable food products also could be within scope,” she said. “Essentially, there's no risk for making an argument.”
A recent Congressional Research Service report suggests that the U.S. may want to use safeguards deal with China's export-dominated strategy to rebuild its economy after the shutdowns needed to fight the coronavirus disease COVID-19. “Congress may want to carefully monitor or consider whether to impose requirements about potential predatory commercial activity in the United States,” the report said. “The potential for China to overwhelm global markets as it leans on exports for economic recovery,” the authors said, may mean that safeguards would be better than “waiting until market injury has already occurred to seek damages.”
Sen. Chuck Grassley, R-Iowa, who last week said that U.S. Trade Representative Robert Lighthizer is not sympathetic to auto industry complaints about U.S.-Mexico-Canada Agreement implementation, said that after talking to Lighthizer again, he has a different view. Lawmakers recently asked the USTR to delay the USMCA rules of origin requirements (see 2004130035).