Mara Lee

The U.S. agreed on April 19 to enter consultations on its Section 232 tariffs on steel and aluminum with the European Union and India. The action follows its announcement April 17 that it would consult with China on the matter. In all cases, the U.S. says the tariffs are not safeguards, as the countries allege, and that they are not subject to World Trade Organization dispute settlement because they are matters of national security.

U.S. Trade Representative Robert Lighthizer needs to tell his Mexican counterpart that a bill introduced in the Mexican Senate, if passed into law, "will have serious ramifications and negatively impact the effort to renegotiate NAFTA," 94 House Democrats said. The group sent a letter April 18 saying that the bill is implementing legislation for constitutional amendments that would change how labor law is enforced in Mexico. Lighthizer is meeting with Mexico's economy minister and Canada's foreign minister on April 19 and 20, and Mexico's Economy Minister Ildefonso Guajardo said April 18 that four more chapters of NAFTA should be closed shortly -- on energy, telecom, the environment and barriers to commerce. He said he expects NAFTA to be in the landing zone in two to three weeks, according to a Mexican media report. When Lighthizer testified in front of the House Ways and Means Committee last month, he agreed with Democrats that Mexico has not lived up to its labor standards under NAFTA, and that a secret ballot election for union representation is important (see 1803210044).

The way that companies can apply for product exclusions is procedurally unfair, and there are no mechanisms to prevent the product exclusion process from enabling anti-competitive advantages, Sens. Orrin Hatch and Ron Wyden wrote on April 19. Hatch, chairman of the Senate Finance Committee, and Wyden, ranking member, said that the application forms require "a minute level of detail," including the chemical compositions, dimensions, strength, toughness, ductility, magnetic permeability, surface finish and coatings of the products. Domestic manufacturers objecting to a request have to respond in similar detail.

House Ways and Means Committee Democrats sent a letter to the committee chairman April 17 complaining that they are not being kept in the loop about the NAFTA renegotiations by the executive branch, and saying that a public hearing should be held before an agreement in principle is announced. Another letter sent the same day from ranking member Richard Neal, D-Mass., and Subcommittee on Trade ranking member Bill Pascrell, D-N.J. said that "the Administration is currently signaling clear intentions to conclude the NAFTA negotiation in the very near term." The House Advisory Group on Negotiations, which by law should be "fully apprised of the negotiations," needs to meet with U.S. Trade Representative Robert Lighthizer "at this critical phase of the negotiations and before an agreement in principle is reached and announced by the Administration," they said. The advisory group last met in May 2017 with Lighthizer. They also asked Chairman Kevin Brady, R-Texas, to hold a hearing with administration witnesses so they can conduct the necessary oversight of negotiations. Brady's office did not respond to a request for comment.

Larry Kudlow, director of the National Economic Council, on April 17 downplayed the possibility of the U.S. rejoining the Trans-Pacific Partnership, telling reporters it is "more of a thought than a policy" at this point, according to a Bloomberg report (see 1804120027). President Donald Trump previously asked Kudlow to take the lead on re-entering the TPP. Trump later tweeted his dislike of the deal, which he exited on his third day in office in 2017. "While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States. Too many contingencies and no way to get out if it doesn’t work. Bilateral deals are far more efficient, profitable and better for OUR workers. Look how bad WTO is to U.S." South Korea is not one of the 11 countries currently in the TPP.

Former chief trade counsels from both political parties said the administration is mostly ignoring Congress as it reworks trade deals, and partisanship will largely prevent Congress from acting to reclaim some of its power. Viji Rangaswami, a former chief international trade counsel for Democrats on the House Ways and Means Committee, said she hoped such a standoff could be avoided through consultation before an agreement is reached, but she said the Office of the U.S. Trade Representative could also choose to avoid a vote altogether. While some changes -- such as eliminating the antidumping and countervailing duties chapter -- would require amending NAFTA's implementation bill, other major changes -- such as eliminating the investor-state dispute settlement system, or changing auto rules of origin -- would not.

Senate Minority Leader Chuck Schumer, D-N.Y., visited a dairy cooperative in upstate New York to emphasize his desire that Canadians change their dairy supply management system as part of a NAFTA deal. Schumer, who traveled to Cayuga Milk Ingredients on April 16, said the cooperative lost $30 million in skim milk powder sales the day after Canada's Class 7 system was implemented. He also released a copy of a letter to the U.S. trade representative as part of the publicity around the event. In the letter, he said, "As I have expressed to you many times, I strongly believe that we should not miss this opportunity to protect our dairy producers from Canada’s recent predatory trade practices. ... This Class 7 system is likely a violation of Canada’s World Trade Organization (WTO) commitments, but addressing it quickly through NAFTA renegotiation is needed, rather than waiting for years for a WTO determination."

A bill updating export control procedures passed unanimously out of the House Foreign Affairs Committee after a hearing April 17. The last export control legislation expired in 2001, and the current export control regime has since operated under emergency powers.The bill instructs the administration to maintain a control list, to update it as emerging technologies evolve, and to adjust the level of control of items as conditions change. It also says the maximum fine in a civil case can be twice the value of the exports that were sold to a party that was ineligible to import those items, but if the value was less than $150,000, the maximum fine can be $300,000. In criminal cases, the maximum fine could be $1 million.

The Bureau of Industry and Security denied for seven years the export privileges of Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzen, China (ZTE). The companies had previously agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion and a seven-year suspended denial, because of its sales of telecom equipment to Iran and North Korea, and misleading the U.S. government about those sales. The denial, announced April 16, is because ZTE paid bonuses to employees involved in the sales and did not reprimand them, as they had claimed they were doing. The order says that "BIS is left to conclude that if the $892 million monetary penalty paid pursuant to the March 23, 2017 order, criminal plea agreement, and settlement agreement with the Department of the Treasury did not induce ZTE to ensure it was engaging with the U.S. government truthfully, an additional monetary penalty of up to roughly a third that amount ($300 million) is unlikely to lead to the company's reform."

A bipartisan group of 59 House members asked the U.S. trade representative to make raising de minimis levels in NAFTA a chief negotiating priority. In a letter sent April 10, led by Rep. David Schweikert, R-Ariz., and Rep. Ron Kind, D-Wis., they said that "simplifying, modernizing and expediting customs procedures will help facilitate the movements of low-value shipments across borders." The letter notes that the U.S. de minimis threshold is $800, while Mexico's is $50 and Canada's is $16. It's critical that the administration follow through in its efforts to convince Mexico and Canada to raise their thresholds to a comparable amount to the U.S. standard, the lawmakers said.