Until Jan. 14, the Office of the U.S. Trade Representative was able to use funding that had already been appropriated to keep all of its 265 staff paid, but the agency now has gone into furlough mode. Just 74 of the staff will continue working without pay, as excepted workers, the new way to refer to what used to be called essential workers. USTR said in a brief notice that those staffers will continue to conduct trade negotiations and enforcement. There has been no announcement of when negotiations with Japan on a new trade agreement might begin.
U.S. Trade Representative Robert Lighthizer issued a joint communique after a Jan. 9 trilateral meeting in Washington with EU Trade Commissioner Cecilia Malmstrom and Japan's Minister of Economy, Trade and Industry, Hiroshige Seko, to address non-market policies through the World Trade Organization (see 1901090023). They talked about finalizing text for the WTO on industrial subsidies by spring, and identified additional criteria that indicate market-oriented conditions. They are working on new rules on forced technology transfers, and coordinating on investment review and export controls. In Geneva in November 2018, they submitted a joint transparency and notification proposal to the Council for Trade in Goods and agreed during the meeting in Washington to work together to convince other countries to accept that notification proposal. They also are renewing their call for advanced WTO member countries that claim developing country status to stop using that status as an excuse to not undertake full commitments on trade within the organization.
Mid-level trade talks in Beijing discussed "ways to achieve fairness, reciprocity, and balance in trade relations between our two countries," according to a summary of the three days of talks released Jan. 9 by the U.S. Trade Representative. They also focused on China's pledge to buy more agricultural products, energy, and other goods and services, in order to address the persistent trade deficit. The summary said they discussed how there could be effective verification and enforcement of any deal. The US-China Business Council reacted to the round by saying "progress should include a mechanism for the removal of tariffs and measurable, commercially meaningful outcomes."
Ambassadors from the Office of the U.S. Trade Representative, along with officials from the Agriculture, Energy, Commerce and Treasury departments, will conduct trade negotiations in China starting Jan. 7.
Despite partial government shutdown, the Office of the U.S. Trade Representative continues “to conduct all operations,” including trade negotiations and enforcement activities, “using existing funds,” the agency said on Dec. 28.
Even though only 21 percent of the nearly 10,800 Section 301 exclusion requests have been adjudicated, Miller & Chevalier is drawing some qualified conclusions about what worked. The Office of the U.S. Trade Representative approved exclusions to the 25 percent tariff on 984 products from the initial $34 billion in Chinese imports targeted (see 1812240010). The two most important factors, the law firm said in an analysis published Jan. 2, are specificity around why the import could not be sourced outside China and concrete explanations on how the additional duties would hurt the requester.
Producers who have complaints about countries' protection of intellectual property rights, or have complaints about market access based on IP protection, should, by Feb. 7, submit written comments and/or their intent to appear at a public hearing on the matter, the Office of the U.S. Trade Representative said in a notice. The hearing by the Special 301 Subcommittee will be held Feb. 27 at the USTR's office building. The Special 301 Report, informed by testimony and submissions, will be published at the end of April, the agency said.
The first set of products excluded from the initial tranche of Section 301 tariffs (see 1812240010) is hoped to be the beginning of good news from the Office of the U.S. Trade Representative, said David Cohen, a customs lawyer with Sandler Travis. "We hope that this is the first notification of many exclusions to be granted," Cohen said in an email. "Many of the articles subject to the tariff are those which are not related to the stated intent of the Section 301 action which is safeguarding technology and apply, in some cases, to products that utilize decades old commonly available technology. Moreover, the breadth of the coverage unfortunately sweeps in many products that in no way help China achieve her 2025 goals; for example a hand wrench is included. We hope the Administration continues to review the pending petitions and permit many other products to enter the US commerce free from the Section 301 duties."
On the second day of a World Trade Organization review of U.S. trade policy, U.S. Ambassador Dennis Shea said it's wrong to blame America for the crisis of the multilateral trading system, as he responded to European and Chinese comments from the first day of the hearing (see 1812170007). Shea said China is arguing that it will subsidize, dump products, force technology transfer and steal business information, and claim it is all OK because American consumers pay less for Chinese imports. Any U.S. response is then decried as an abuse of power and irrational, Shea said, according to a summary of the hearing provided by a Geneva trade official. "This is not acceptable," Shea said.
The Office of the U.S. Trade Representative's notice officially delaying a planned tariff increase on goods from China is set for publication in the Federal Register on Dec. 19. Publication is a necessary step for CBP to implement the delay in ACE (see 1812140046). The third tranche of Section 301 tariffs will now go up to 25 percent from 10 percent on March 2, 2019, unless further progress is made in talks with China (see 1812010001).