Washington Trade Daily

Transcription

1 Washington Trade Daily Volume 26, Number 46 Monday, March 6, 2017 Trade Reports International Group Buy America But Not for Keystone Buy America requirements will not apply to the purchase of steel for the Keystone XL pipeline, a White House spokeswoman confirmed to reporters on Friday (WTD, 1/23/17). When he signed an executive order giving the go-ahead to resume construction of the delayed Keystone XL and Dakota Access pipelines, President Trump said that only US steel would be used a promise he made again last week during his address to a joint session of Congress. But the executive order actually does not require the use of US steel in the construction of the Keystone XL pipeline, White House Deputy Press Secretary Sarah Sanders said Friday. The Buy America provision in the executive order only applies to new construction or pipeline repair. The Keystone pipeline was already under construction and steel purchases had already been made. The steel is already literally sitting there, it would be hard to go back, she said. Rep. Mark Pocan (D-Wisc) accused the President of reneging on his promises to insist on the use of US steel. Unfortunately, the President s talk about Buy America is proving to be just another broken promise to the American people, he said. Mr. Ross s Views The World Trade Organization is necessary but could use some fine tuning, Commerce Secretary Wilbur Ross said Friday (WTD, 3/2/17). The new secretary s comments came just two days after the White House released a trade policy agenda that criticized the WTO and suggested that the United States might ignore rulings from the trade body that it thinks are not in the national interest. But in an interview on CNBC, Mr. Ross said the WTO is in some ways very necessary. You probably do need an arbiter of some sort if you are going to have international trade. There are legitimate questions about the specifics of how the WTO functions and whether the dispute settlement system is fair to the United States. There s some fine tuning at least that I think should be needed at the WTO. Mr. Ross said his department will be much more aggressive on trade enforcement, although the first emphasis will be on facilitating US exports to other countries. But Commerce also will be more focused on preventing illegally subsidized imports from entering the US market. One of the shocks to me when I got here was to learn that there are billions of dollars of countervailing duties that have been imposed because we won the cases, but never collected, he said. Expect to see Commerce coming out with some new enforcement actions in the next few weeks, he added. Renegotiate NAFTA Commerce s first order of business will be renegotiation of the North American Free Trade Agreement. Mr. Ross suggested he is looking at improving NAFTA in a way that will help raise living standards in Mexico. The rules-of-origin in NAFTA are too lenient and could be tightened up a bit, he continued. There also should be a mechanism for making the peso/dollar exchange rate more stable. Mr. Ross indicated he has some sympathy for House Republicans proposal to create a border adjustable tax system, saying it is similar to the value-added tax systems that most trading partners use. He also suggested that the revenues that would be raised by a BAT system would help to balance the budget and pay for the rest of tax reform. But Mr. Ross expressed some skepticism about the claim that the negative impact of the border adjustable tax on imports would be mitigated by a readjustment of currencies. He emphasized that the 2017 by Trade Reports International Group, P.O. Box 1802, Wheaton, Maryland address: washingtontradedaily@gmail.com Website: Telephone: (301) , fax: (301) Published 260 times a year. Subscription price: $875/year. Reproduction is prohibited without express permission of TRIG. ISSN: Editors/Publishers: Jim and Mary Berger. Geneva editor: Devarakonda Ravi Kanth.

2 page 2 Washington Trade Daily White House has not yet taken a position on the BAT and is looking at other options. Mr. Ross also expressed support for the US Export-Import Bank, saying that I think we need some form of helping finance exports to be competitive. There may be some things at Ex-Im that could be fixed, but export financing is important, especially given the Chinese-led Asian Infrastructure Investment Bank. More emphasis at the Bank on helping small business export would be a good start, he suggested. Two Final Chinese Steel Cases The International Trade Commission on Friday issued two final determinations finding imported steel products from China are being unfairly subsidized and dumped on the US market, threatening domestic producers.! The ITC found that a US industry is materially injured by reason of imports of carbon and alloy steel cut-to-length plate from China that the Commerce Department has determined are subsidized and sold in the United States at less than fair value (WTD, 1/19/17).! A US industry also is being threatened by imports of stainless steel sheet and strip from China that Commerce determined are subsidized and sold in the United States at less than fair value, the ITC ruled (WTD, 2/6/17). China s Ministry of Commerce issued a statement taking issue with both determinations, saying that the ITC failed to consider evidence submitted by Chinese producers. Trade Relief Investigation Bureau Secretary Wang Hejun said that US producers are having difficulties because they are using obsolete equipment, resulting in low yield and lower profits. India s Response to US Poultry Case Geneva India on Friday informed the United States that it has fully complied with World Trade Organization Dispute Settlement Body recommendations against its ban on imports of poultry products from the United States (WTD, 10/27/16). Revised influenza measures issued on February 17 have complied with the recommendations India said. New Delhi said it had made sustained bilateral efforts to resolve the dispute, but to no avail. The United States has rejected India s proposal to enter into a sequencing agreement in the dispute. In fact, India said, resolving consistency with a covered agreement of measures to comply with DSB recommendation has been the position of the United States in other disputes. Washington has indicated that the latest Indian proposal to address the issue may, in fact, be substantially more trade restrictive than the original action. E-Commerce at WTO Geneva Australia along with some other industrialized countries pushed hard last week in Berlin at the sherpas meeting of the Group-of- 20 to incorporate strong language on electronic commerce in the World Trade Organization (WTD, 3/1/17). But India and South Africa rejected the Australian move on grounds that it is inappropriate for the G-20 to suggest language on rules that were never discussed at the WTO, according to people familiar with the development. The two-day officials meeting ended last Thursday. Ahead of the meeting, Australia issued a two-page non-paper in which it suggested that the G-20 provide clear guidance as well as policy options relating to cross-border data flows and associated cyber security, privacy and consumer protection risks, localization barriers, and the threats to a reliable and resilient digital environment. The G-20 should suggest a set of principles that go beyond the Trade Facilitation Agreement to guide members on the application of paperless trading, electronic documentation, e-signatures and authentication, Australia emphasized by Trade Reports International Group, Washington, D.C. March 6, 2017

3 Washington Trade Daily page 3 Several industrialized countries including Canada and Singapore lent support to the proposal. A final compromise agreed by officials in Berlin suggests that G-20 members constructively engage in the discussion on e-commerce at the WTO in view of reaching some accommodation at the upcoming ministerial conference as suggested by Singapore. GATS Standards Geneva Hong Kong and New Zealand have called for negotiating elements related to the development of licensing requirements and procedures, qualification requirements and procedures, and technical standards in the General Agreement on Trade in Services working party on domestic regulation, WTD has learned (WTD, 2/24/17). As outlined in a recent restricted document, Hong Kong and New Zealand said that when a member adopts or maintains measures relating to licensing requirements or procedures, qualification requirements, procedures and technical standards, the member shall ensure that such measures are based on objective and transparent criteria and not just more burdensome than necessary guidelines. Licensing and qualification measures also must be reasonable and impartial. In related news, India has submitted a 13-page draft legal text to the working party to finalize a trade facilitation agreement in services. Preferential Rules-of-Origin Geneva World Trade Organization members last Thursday adopted a template as proposed by least-developed countries for the notification of preferential rules-of-origin in developed countries to enhance transparency and compliance, WTD has learned (WTD, 2/28/17). The template requires the industrialized countries and those developing countries that are in a position to comply with preferential rules-of-origin provide basic information, information on rules of origin including beneficiaries, criteria for determining substantial transformation for assessing the country of origin, documentary requirements and verification and penalties. During a meeting of the committee on rules of origin, several countries including the United States, the European Union and Canada questioned the WTO Secretariat over the calculation of utilization rates in rules-of-origin in regard to preferential imports from developing countries, according to people present at the meeting. Members had been required to implement simplified non-preferential rules of origin by 1998 but opposition from major industrialized countries resulted in an impasse. Around the Globe! China s top economic official trimmed the country s growth target and warned Sunday of dangers from global pressure for trade controls as Beijing tries to build a consumer-driven economy and reduce reliance on exports and investment, the Associated Press news service reported from Beijing (WTD, 3/2/17). In a speech to the national legislature, Premier Li Keqiang promised more steps to cut surplus steel production that is straining trade relations with Washington and Europe. He pledged equal treatment for foreign companies, apparently responding to complaints Beijing is trying to squeeze them out of technology and other promising markets. Li s report set the growth target for the world s second-largest economy at around 6.5 percent or higher, if possible. That is down from last year s 6.7 percent expansion but, if achieved, would be among the world s strongest, reflecting confidence efforts to create new industries are gaining traction. At a time of demands in the United States and Europe for trade controls, Li warned China faces more complicated and graver situations at home and abroad. Both the de-globalization trend and protectionism are growing, Li said. There are many uncertainties about the direction of the major economies policies and their spillover effects, and the factors that could cause instability and uncertainty are visibly increasing. Chinese leaders have publicly defended free trade in response to President March 6, by Trade Reports International Group, Washington, D.C.

4 page 4 Washington Trade Daily Donald Trump s promises to raise duties on Chinese goods, though Beijing s trading partners complain China is the most closed major economy. Li promised to eliminate 50 million metric tons of steel production capacity. That would help to reduce the flood of Chinese exports that is depressing global prices and prompting complaints by Washington and Europe that thousands of jobs are in danger. Li also promised to eliminate 150 million tons of coal production capacity. He didn t mention other industries such as aluminum in which China s trading partners complain excess capacity supported by government subsidies is distorting global markets.! Senior officials from 16 Asia-Pacific countries wrapped up their talks on Friday with no major breakthrough on what could be an alternative regional free trade deal to the Trans-Pacific Partnership, Kyodo news service reported (WTD, 2/28/17). The new round of talks in Kobe, western Japan, by members of the Regional Comprehensive Economic Partnership drew international attention as it was the first such meeting held since U.S. President Donald Trump pulled his country out of the TPP in January. The RCEP framework, which accounts for more than 3.5 billion people or half the world s population, with 30 percent of the world s gross domestic product and trade, is now viewed as a crucial regional trade pact and alternative to the pending TPP, which covers about 40 percent of the global economy. While the negotiators failed to bridge their differences over certain issues such as tariff cuts during the five-day meeting, the RCEP members the 10-member Association of Southeast Asian Nations plus Australia, China, India, Japan, New Zealand and South Korea reaffirmed their goal to conclude negotiations as soon as possible. There was no agreement on any field, but vigorous negotiations were carried out, Keiya Iida, deputy director general of the Japanese Foreign Ministry s Economic Affairs Bureau, told reporters following the talks that began Monday. Iida vowed to continue to aim for the early conclusion of a high-quality, well-balanced and inclusive pact. The negotiators also discussed deregulation of investment and service trade, according to officials privy to the meeting. One of the issues has been the extent to which tariffs would be allowed under an RCEP deal between Japan, a leading TPP member, and the emergent economic powers of China and India, which are not included in the TPP pact. While India and China, keen to protect their local industries, are cautious in their approach to tariff cuts, Japan is vying for a high-standard trade liberalization. The RCEP members are scheduled to next meet in the Philippines in May.! Senior officials from the 21 Asia-Pacific Economic Cooperation forum member economies, the world s largest regional economic cooperation group, have commenced work towards freer Asia-Pacific trade that secures the advantages of globalization while safeguarding the welfare of people hurt by it in the past, according to a statement from APEC Friday (WTD, 2/27/17). Convening for the first time in 2017 in Nha Trang and guided by Viet Nam as APEC Chair, senior officials are developing trade and economic policy that all corners of society can embrace and benefit from across APEC. Emphasis is on providing new direction for regional economic integration and promoting sustainability in APEC; greater support for workers and small business participation in trade; and enhanced food security and agricultural sustainability in an era of climate change, it said. Senior officials are detailing measures to make it 10 percent easier to do business in APEC by 2018 enabling greater entrepreneurship and trade among resource-constrained small and medium enterprises that account for over 97 percent of all businesses and half of all jobs across APEC economies but less than 35 percent of their exports. Improving the time it takes to open a business, get permits and trade across borders are some focus areas. Parallel initiatives are being fleshed out to widen access to financing and the internet to spur startup growth, promote digital skills training to meet employer demand and lift employment, and drive regulatory reform to boost trade in services. The aim is to bolster sectors ranging from e-commerce and education, to health, to travel and tourism that support millions of jobs. The development of actions to securely reduce administrative bottlenecks at borders and make it easier and less costly to move goods across borders is a further point of attention. Addressing non-tariff measures, including in the agriculture and food industry, and strengthening technical capacity for new, more equitable trade agreements is another by Trade Reports International Group, Washington, D.C. March 6, 2017

5 Washington Trade Daily page 5 On the Web... Agriculture Special Safeguard. US report to the World Trade Organization on the use of the Special Safeguard provision. h/fe_s_s009-dp.aspx?language=e&catalogue IdList=234852,234868,234848,234830, ,234851,234847,234827,234836,234833& CurrentCatalogueIdIndex=5&FullTextHash= &HasEnglishRecord=True&HasFre nchrecord=false&hasspanishrecord=false ) European Union WTO. World Trade Organization statement on meeting with European Union trade officials. 17_e/dgra_02mar17_e.htm ) Trade Policy US. Outdoor Industry Association letter to Commerce Secretary Ross on US trade policy. oads/2017/03/ross-oia-letter pdf ) World Trade Organization EU. World Trade Organization statement on meeting with European Union trade officials. 17_e/dgra_02mar17_e.htm ) Export Controls Technical Data. Commerce Department final rule on reporting the export of technical data /pdf/ pdf ) issued: 3/6/17. Taxation Reform. House background information on the US border tax adjustment proposal. plainer-border-adjustment-tax and d-across-board-pro-growth-tax-reform/) March 6, by Trade Reports International Group, Washington, D.C.