The volume of imports from China fell about 20 percent across the fourth quarter, Flexport executives noted during a webinar Jan. 21 -- which represents both shifting to other categories of goods and re-orienting supply chains. Ryan Petersen, CEO of the freight forwarder, said 64 percent of its clients are paying additional tariffs because of the Trump administration policies.
The ideal of free trade has been imperiled by politicians' inaction in the face of harm by foreign competition, said panelists at a Davos forum on free trade. Roberto Azevedo, director-general of the World Trade Organization, said that free trade is associated with economic growth -- but prosperity also increases the gap between rich and poor. When disparities grow, he said, the answer is not to grow, but to avoid inequality. “The problem is governments are often MIA. They are missing in action. They are seeing inequalities grow, and they do nothing about it,” he said, until there is political upheaval. He said politicians don't consider the economic realities as much as the desire of voters. “An easy answer in the age of disruption is to blame the foreign,” he said. “Imports is an easy target, so why not?”
An effort by U.S. Trade Representative Robert Lighthizer to appease the Florida and Georgia delegations over seasonality not making it into the new NAFTA has angered the Arizona delegation. Arizona's two senators, Martha McSally, a Republican, and Kyrsten Sinema, a Democrat, each sent a letter to U.S. Trade Representative Robert Lighthizer last week, after they heard about his early January letters on a plan (see 2001130035) to see if there are ways to remedy harms from unfair imports of fruits or vegetables. “I am extremely disappointed that you have promised my Colleagues in the Southeast a plan that masquerades as fairness for U.S. farmers but instead raises the specter of future trade conflicts that will harm businesses in my state,” McSally wrote.
President Donald Trump, speaking at a press conference in Davos, Switzerland, Jan. 22, said he'll be talking with World Trade Organization Director-General Roberto Azevedo in Washington on “a whole new structure” for the WTO. “Roberto and I ... are going to do something that I think will be very dramatic,“ he said. Trump said Azevedo and others in his delegation will come to Washington “sometime next week or the week after, and we'll start working on it.”
Congress passed a law in December that gave the Commerce Department a deadline of Jan. 19 to release its report on the national security threat of imported autos and auto parts. On Jan. 21, Commerce told Congress it would not do so. Sen. Pat Toomey, the Pennsylvania Republican who sponsored the provision in the annual spending bill, responded that “the Department of Commerce is willfully violating federal law. This is unacceptable, and my staff and I are evaluating the potential for corrective action to compel the rightful release of this report.”
Tariffs on French champagne, cheeses, handbags and other products (see 2001060040) will not be coming, several news outlets are reporting, since France has agreed not to impose a Digital Services Tax in 2020 as negotiations continue at the Organization for Economic Co-Operation and Development on a fair way to impose income taxes on companies such as Google and Amazon.
An expert panel evaluating the changes associated with the labor chapter under the U.S.-Mexico-Canada Agreement say that there are a lot of unknown details on the rapid response mechanism to enforce complaints about collective bargaining in Mexico. The panel spoke at the Washington International Trade Association on Jan. 16.
The tariffs on billions of dollars worth of European goods because the World Trade Organization found the EU illegally subsidized Airbus puts Europe in a position where it will need to take similar action, assuming the WTO rules that state tax credits for Boeing also distorted trade. “This is where I don't want to be,” European Union Commissioner Phil Hogan said during a press roundtable with reporters late Jan. 16.
Whether the flow of counterfeit goods shipped from China will abate as a result of the phase one U.S.-China trade agreement is yet to be seen, but Craig Allen, president of the U.S.-China Business Council, said the “language was pretty detailed and complete.” Allen, who was responding to a question from International Trade Today during a Jan. 16 conference call, said this represents “a huge shift in the official Chinese attitude. We should be appreciative of the Chinese government commitment here to better police that [counterfeit problem] internally and at their own border.”
The joint statement on how to confront Chinese abuses through the World Trade Organization (see 2001140044) has been the highlight of the first visit to Washington by Phil Hogan, the new European Union Trade Commissioner. Hogan, who spoke to the Center for Strategic and International Studies Jan. 16, acknowledged that the WTO doesn't have the capacity to act on these ideas “quickly enough.”