U.S. Trade Representative (USTR)

Mexico and Canada are resisting a U.S. push to raise their de minimis levels to the U.S.’s $800 threshold, and the U.S. faces time pressures on other NAFTA issues, including dispute settlement and rules of origin, unofficial advisers involved in NAFTA negotiations said in recent interviews. The U.S. and Mexico, in particular, are hoping to conclude NAFTA renegotiations by the end of 2017, with three weeks between rounds, a comparatively short timeline for trade agreement talks that also demands negotiators act more quickly than in past U.S. negotiations, the advisers said. The three NAFTA parties are undertaking the second round of renegotiations in Mexico City Sept. 1-5.

The Office of the U.S. Trade Representative’s initiation of a Section 301 investigation into reportedly unfair Chinese forced technology transfers and intellectual property policies could “severely” undermine the U.S.-China bilateral relationship, Chinese government media reported on Aug. 28. “Until recently, it had been hard to see where the next financial crisis could come from,” says an article published by China’s Global Times. “But imposing trade sanctions could trigger the pricking of China's credit bubble, engendering social and political unrest, exacerbating China's economic woes and thwarting its economic advance.”

President Donald Trump thinks NAFTA can’t be renegotiated, and will eventually be terminated, he said Aug. 22 during a rally in Phoenix. “Personally, I don't think we can make a deal, because we have been so badly taken advantage of,” Trump said. “They have made such great deals, both of the countries, but in particular, Mexico, that I don't think we can make a deal. So I think we'll end up probably terminating NAFTA at some point, OK? Probably.” Trump reminded the audience of repeated pledges to either renegotiate NAFTA or terminate it if renegotiation fails. He said in April he was considering issuing an executive order to remove the U.S. from the deal (see 1704260049). “I personally don't think you can make a deal without a termination, but we're going to see what happens, OK? You're in good hands, I can tell you,” he said in Phoenix.

U.S. and South Korean officials failed to reach agreement on how to move forward with the countries’ free trade agreement during a meeting Aug. 22, Reuters reported, after U.S. Trade Representative Robert Lighthizer in July said the U.S. wants to resolve several market access issues facing U.S. exports (see 1708180017). Discussions during the meeting revealed “different views on the free trade agreement” and lack of concurrence on a path forward between the two countries, according to Reuters. South Korea also asserted the U.S. trade deficit with the country, which totaled $27.6 billion in goods in 2016, hasn’t been the result of the trade deal, and South Korean Trade Minister Kim Hyun-chong proposed a joint study on the “effects” of the Korea-U.S. Free Trade Agreement, according to the Reuters story.

The Office of the U.S. Trade Representative and the International Trade Administration are seeking comments on the costs and benefits to U.S. industry of U.S. and other countries’ government procurement obligations, the agencies said. The government seeks comments by Sept. 18, regarding how U.S. government procurement obligations under all U.S. free trade agreements and the World Trade Organization Government Procurement Agreement affect U.S. manufacturers’ and suppliers’ access to and participation in the U.S. government procurement process. “In addition, because reciprocal access to trading partners’ markets is an important motivation for including government procurement obligations in U.S. free trade agreements and for the United States’ membership in the GPA, the Department and the USTR are also seeking information about the costs and benefits of these obligations to U.S. manufacturers and suppliers competing in U.S. trading partners’ government procurement markets,” the agencies said.

U.S. Trade Representative Robert Lighthizer on Aug. 17 met with and expressed concerns to Japanese Foreign Minister Taro Kono regarding Japanese safeguard duties on U.S. beef exports assessed last month (see 1707280033), the Office of the U.S. Trade Representative announced. They also discussed combating unfair trade practices by third countries, a “priority work area” under the U.S.-Japan Economic Dialogue, as well as other “topics of common concern,” during their meeting in Washington, USTR said. Lighthizer and Kono also agreed to “accelerating discussions” on “specific bilateral trade issues.”

The U.S. and Colombia reached an agreement for the South American nation to accept more exports of U.S. paddy rice, U.S. Trade Representative Robert Lighthizer and Agriculture Secretary Sonny Perdue announced Aug. 17. The agreement lifts “costly and unnecessary fumigation and processing requirements” set in a 2012 deal that enabled U.S. exports of paddy rice to Colombia, the Office of the U.S. Trade Representative said. The updated agreement also expands access beyond the single Colombian port of Barranquilla. USTR noted Colombia has moved from the 26th to 12th largest importer of U.S. food and agricultural products between 2011 and 2016, after the U.S.-Colombia Trade Promotion Agreement entered into force in 2012, as exports totaled more than $2.4 billion in 2016. U.S. paddy rice exports to Colombia totaled $15 million last year.

Subsidies and “persistent trade imbalances” in North America will be among the issues addressed during the first round of NAFTA renegotiations set for Aug. 16-20, but the working text will remain classified, an Office of the U.S. Trade Representative official told reporters Aug. 15. “The text itself that will be exchanged among the governments is classified text, so that is not released,” the official said during a briefing that generally summarized the areas USTR plans to cover throughout negotiations. “But we do conduct an extremely transparent and collaborative effort … in developing our objectives, and then consulting with Congress and our stakeholders in this ninety-day period and beyond.” Trade Promotion Authority legislation of 2015 requires a 90-day consultation period between the executive and legislative branches before any administration can start formally negotiating a trade deal.

The Canadian government is approaching the first round of NAFTA renegotiation Aug. 16-20 with the intent of maintaining the Chapter 19 binational antidumping and countervailing duty dispute settlement process, Canadian Foreign Affairs Minister Chrystia Freeland said on Aug. 14, teeing up a potential clash with U.S. negotiators as talks start. During a speech in Ottawa, Freeland reminisced on when Canada’s chief negotiator of the U.S.-Canada Free Trade Agreement “walked out” over the binational AD/CV duty panel process in 1987. “Our government will be equally resolute,” Freeland said. “Just as good fences make good neighbors, strong dispute settlement systems make good trading partners.” The Office of the U.S. Trade Representative didn’t comment.

U.S. and Cambodian officials met Aug. 8 under the bilateral Trade and Investment Framework Agreement to discuss ways to expand trade and investment, the Office of the U.S. Trade Representative announced Aug. 9. Trump administration officials updated Cambodia on U.S. trade priorities related to enforcement, lowering the trade deficit and opening new markets, USTR said. The U.S. had a $2.5 billion trade in goods deficit with Cambodia in 2016, and two-way trade totaled $3.2 billion. The U.S. and Cambodia “agreed to work together to address outstanding bilateral trade issues,” including on labor, intellectual property protection, and financial services, USTR said. The two nations agreed to establish working groups on labor, IP, digital and services trade, and trade facilitation, USTR said. They also discussed sanitary/phytosanitary standards and reviewed Cambodia’s implementation of the World Trade Organization Trade Facilitation Agreement and its participation in the WTO Information Technology Agreement.