While the next chairman of the House Ways and Means Committee is clear -- Rep. Richard Neal, D-Mass. -- the leadership of the Senate Finance Committee and the Ways and Means Trade Subcommittee is up in the air. Neal, who represents a slice of Western Massachusetts that has suffered from deindustrialization, voted against NAFTA, but for giving China permanent most favored nation status. He also voted no on the most recent fast-track renewal in 2015.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
The de minimis footnote within the U.S.-Mexico-Canada Agreement is cause for "serious concerns" for the Customs Matters and Trade Facilitation Industry Trade Advisory Committee (ITAC 12), the committee said in an addendum to its report on the trade deal. The addendum, which is dated Oct. 24 but was released by the Office of the U.S. Trade Representative this week, is among multiple reports updated after Canada agreed to join the deal between the U.S. and Mexico. While the main advisory committee offered some light criticism in its support of the deal (see 1811060023), individual ITACs included some more pointed concerns.
Fourteen trade groups wrote to the U.S. trade representative asking him to strip language in the U.S.-Mexico-Canada Agreement that suggests the de minimis level could be lowered to be closer to the NAFTA region trading partners' levels. The letter, sent Nov. 6, was initiated by the National Foreign Trade Council, and notes that Congress unilaterally raised the de minimis level in 2016 because "reduced logistics costs improve the bottom line of American small businesses across industries who import low value components for assembly and value-added manufacturing operations." It helps firms that import samples, the letter said, and benefits "importers and logistics firms by reducing the time and cost to process millions of shipments and shaving a half-a-day or more from clearing each shipment."
The aluminum producers of Canada, Mexico and the U.S. have written their leaders -- as well as Mexico's president-elect -- asking that tariffs on aluminum be lifted, without quotas, before Nov. 30. "The USMCA cannot work for the aluminum industry or our many downstream customers without exempting Canada and Mexico from the [Section] 232 tariffs or quotas," the three trade groups wrote in a Nov. 5 letter. They suggested that unnaturally cheap Chinese aluminum cannot come into the U.S. through a free-trade backdoor. "Canada recently moved to align its country of origin marking regime for steel and aluminum products to prevent transshipment and diversion of aluminum and steel. Mexico has initiated an anti-dumping case on aluminum foil imports from China," the letter said, so the tariffs in the region are no longer needed. The U.S. aluminum trade group never supported aluminum tariffs on allies.
International Trade Today is providing readers with some of the top stories for Oct. 29 - Nov. 2 in case they were missed.
The main advisory committee for the Office of the U.S. Trade Representative unanimously supports the U.S.-Mexico-Canada Agreement as "far better than the existing NAFTA," and encouraged Congress to enact it as quickly as possible. The committee includes three union leaders, and the rest of its 21 members are either from right of center think tanks or business interests.
No business or labor group came out against the U.S.-Mexico-Canada Agreement, in comments filed to the International Trade Commission, even as some groups expressed concerns about aspects of the deal to replace NAFTA. Comments are due before the ITC holds a hearing on Nov. 15.
The higher quotas for poultry and dairy under the new NAFTA should create $450 million in benefits by the time they phase in 19 years from now, according to a new study by Purdue University economists. That gain is massively overshadowed by the size of $1.8 billion in lost sales now to Mexico and Canada because Mexico placed tariffs on pork, poultry, cheese and apples and both countries levied duties on some retail food products. When you combine the gains in the new NAFTA with the losses from retaliatory tariffs, the net loss is $779 million, according to the study. The biggest bite has been from tariffs on pork and poultry in Mexico -- those exports have fallen by 7 percent.
International Trade Today is providing readers with some of the top stories for Oct. 22-26 in case they were missed.
Trade promotion authority puts obligations on the administration to consult, and follow congressional objectives, but the provisions that constrain Congress have no teeth, former trade staffers from both sides of the aisle agreed. Stephen Claeys, a partner at Wiley Rein and former Republican House Ways and Means Trade Subcommittee counsel, said the rules about how long Congress can delay a vote on a trade agreement, and the fact that they have to vote on it with no amendments, are wholly voluntary. "There is no TPA jail. There's no TPA judge," he said during a panel discussion hosted by The Federalist Society.