THE U.S. PAPER INDUSTRY IN AN EVOLVING TRADE AGENDA RISI NORTH AMERICAN CONFERENCE OCTOBER 18, 2017

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1 THE U.S. PAPER INDUSTRY IN AN EVOLVING TRADE AGENDA RISI NORTH AMERICAN CONFERENCE OCTOBER 18, 2017 Jacob Handelsman Senior Director, International Trade American Forest & Paper Association

2 U.S. Exports & Imports Paper, Paperboard & Converted Products 000 metric tons Source: U.S. Bureau of the Census

3 U.S. Exports & Imports Paper, Paperboard & Converted Products metric tons Source: U.S. Bureau of the Census

4 U.S. Exports Paper, Paperboard & Converted Products metric tons Source: U.S. Bureau of the Census

5 U.S. Imports Paper, Paperboard & Converted Products metric tons Source: U.S. Bureau of the Census

6 U.S. Wood Pulp Exports Source: U.S. Bureau of the Census 7.5 million metric tons

7 U.S. Wood Pulp Imports Source: U.S. Bureau of the Census 5.6 million metric tons

8 AF&PA International Trade Policy o Support free trade policy that opens markets o Eliminate foreign tariffs and non-tariff barriers o Oppose subsidies and other measures that distort trade flows o Support U.S. and international efforts to curtail illegal logging and related trade

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10 U.S. International Trade Balance Billion of U.S. Dollars Source: U.S. Bureau of the Census

11 U.S. Trade Balance in Goods Billions of dollars Source: U.S. Bureau of the Census

12 President Trump s Trade Policy Agenda Trade agenda published March 1, 2017: o Defend national sovereignty over trade policy o Strictly enforce U.S. trade laws o Use leverage to open foreign markets o Provide effective protection and enforcement of U.S. intellectual property rights o Negotiate new and better trade deals

13 Who Makes U.S. Trade Policy? Wilbur Ross Commerce Secretary Robert Lighthizer U.S. Trade Representative Peter Navarro Director, White House National Trade Council Gary Cohn Director, White House National Economic Council Congress House of Representatives Senate Steven Mnuchin Treasury Secretary President Trump Sonny Perdue Agriculture Secretary

14 President Trump s Trade Policy The Big Stick: Withdraw from Trans-Pacific Partnership (TPP) o Withdraw from North American Free Trade Agreement (NAFTA) o Impose anti-subsidy duties based on currency undervaluation o Impose import tariff on out-sourcing U.S. companies o Impose across the board tariff hike on U.S. imports o Aggressive use of U.S. trade laws o Ignore adverse World Trade Organization (WTO) rulings Demand renegotiation or exit from existing trade agreements (e.g., Korea FTA)

15 President Trump s Trade Policy Trump-lite Trade Policy: Withdraw from TPP Renegotiate/modernize NAFTA (NAFTA 2.0) Review cost/benefits of U.S. free trade agreements Pressure U.S. multinationals to stop out-sourcing o More aggressive use of U.S. trade remedy laws and WTO trade cases o Oppose China being classified as market economy in WTO o Label China a currency manipulator o Consider currency undervaluation as a subsidy in trade cases o Use U.S. trade laws to counter breaches of intellectual property rights o Use U.S. trade laws to curb imports of selected products

16 North American Free Trade Agreement

17 NAFTA 2.0 Trump Administration Objectives: o Improve U.S. trade balance and reduce the trade deficit with NAFTA countries o Tighten rules of origin raise NAFTA content and add U.S. content requirements, especially for autos and auto parts o Revise trade remedies provisions (e.g., eliminate dispute panels; allow trade remedy relief for seasonal and cyclical agricultural products) o Eliminate investor state dispute settlement (ISDS) o Eliminate red tape and simplify customs procedures o Bring labor and environment rules into core of NAFTA o Introduce rules vs. currency manipulation and state owned enterprises

18 NAFTA 2.0 Top AF&PA Objectives: o Maintain duty-free access to Canada and Mexico o Preserve investor protection in other NAFTA countries o Obtain strong language on combatting illegal logging and associated trade o Ensure that standards and regulations are science-based and developed and implemented in a transparent manner

19 Thank you Any Questions