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Quick Fix
— Several of the women whom former Vice President Joe Biden is considering as running mates voted against giving President Barack Obama the legislation he needed to complete negotiations on the Trans-Pacific Partnership.
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— USTR is expected to announce this week whether it is changing its retaliation against the European Union in a dispute over government subsidies for Airbus, by removing some products and adding others or by increasing the tariff amounts.
— The annual African Growth and Opportunity Act Forum appears to have fallen victim to the coronavirus, but neither USTR nor the White House has confirmed that.
IT’S MONDAY, AUG. 10! Welcome to Weekly Trade. Hmm. Let’s start the week by going for a “Short Ride in a Fast Machine.” What could go wrong? Just be sure to wear a crash helmet as we zoom toward the election. Got any advice for an exhilarating road trip, or maybe even a news tip to share? Let us know: [email protected] or [email protected].
Driving the Day
VEEPSTAKES: THE TRADE ANGLE: President Barack Obama’s battle to win trade promotion authority from Congress in 2015 was one of the toughest of his administration, with the White House scrambling to round up Democratic votes, especially in the House.
Now, in a sign of the Democratic Party’s further shift to the left on trade, three lawmakers on former Vice President Joe Biden’s short list of potential running mates voted against giving Obama TPA so he could finish talks on the Trans-Pacific Partnership.
They are Rep. Karen Bass (D-Calif.), Sen. Elizabeth Warren (D-Mass.) and Sen. Tammy Duckworth (D-Ill.), who was a House member at the time.
A fourth potential running mate, Sen. Kamala Harris (D-Calif.), was California’s attorney general in 2015. But Harris has said she opposed Obama’s signature Asia-Pacific trade deal because it did not have strong enough protections for labor and the environment.
What it is: TPA, also known as “fast track,” allows the president to submit trade agreements to Congress for a straight up-or-down vote without any amendments. It’s particularly helpful in the Senate, where it thwarts any effort to kill a trade deal by means of filibuster.
Only 28 out of 188 House Democrats and only 13 out of 44 Senate Democrats voted for TPA in 2015, forcing Obama to rely on Republicans for most of the support to pass the bill.
Unavoidable decision: If elected, Biden would have to decide early whether to seek renewal of trade promotion authority since the legislation expires on June 30, 2021. He may choose to forgo that battle in order to focus his efforts on coronavirus recovery. However, that could prevent ongoing negotiations with the U.K. and Kenya from being concluded.
Rice stands out: Another possible running mate, Susan Rice, served in the Obama administration as ambassador to the United Nations and then as national security adviser.
Like Biden himself, she helped Obama push for approval of TPA “so we can finalize the Trans-Pacific Partnership, thus securing a free trade agreement with many of the world’s fastest-growing economies,” Rice said in February 2015.
USTR DECISION ON AIRBUS RETALIATORY TARIFFS EXPECTED THIS WEEK: The Trump administration could change some of the $7.5 billion worth of wine, whiskey, cheese, aircraft and other EU products now hit with 15 and 25 percent retaliatory duties in a dispute over European government support for Airbus.
USTR first imposed the duties last October, after the WTO said the EU had failed to fully comply with rulings against French, German, Spanish and British subsidy programs for the European aerospace giant. An EU countercomplaint against U.S. support for Boeing has not yet reached the retaliation stage, but could in coming months.
U.S. law requires USTR to review and possibly revise any WTO-sanction retaliation after the first 120 days, and then every 180 days afterward. USTR raised its retaliatory tariff on European aircraft to 15 percent, from 10 percent previously, when it announced the results of its first review in February, and made minimal changes to the rest of the list without increasing the 25 percent duty.
U.S.-based wine, whiskey and food importers have lobbied hard to get those products off the list, and got a big assist in late July when over 160 House lawmakers sent a letter to U.S. Trade Representative Robert Lighthizer to press him to shift the duties to other products.
U.S.-CHINA RELATIONS DETERIORATE MORE AHEAD OF TRADE DEAL CHECK-UP: The Trump administration announced sanctions against Hong Kong Chief Executive Carrie Lam and other top Hong Kong officials on Friday. That has ratcheted up tensions with China even further, ahead of expected talks this week between Lighthizer and Chinese Vice Premier Liu He on the phase one trade deal that took effect six month ago on Friday.
Trump also issued an executive order last week prohibiting transactions with ByteDance, the Chinese parent company of the popular video-sharing app TikTok, because of “national security” concerns. He signed another executive order barring transactions with Tencent Holdings, the Chinese owner of WeChat, an app used by over 1 billion people in China to send messages and make payments.
Both moves followed U.S. trade figures on Wednesday that showed Chinese purchases of U.S. farm, energy and manufactured goods badly lagging behind the goals of the phase one deal.
Bad vibes: “Hard to see how this month’s review of the US #China trade deal goes smoothly with the growing list of US actions against China over the past 72 hours,” Wendy Cutler, a former senior U.S. trade official, said on Twitter on Friday. “Can you really have serious talks on soybean and corn purchases when the relationship is in free fall?”
A leading technology think tank criticized Trump’s TikTok two EOs, which it said were based on “unsubstantiated allegations” about security risks. That will encourage other countries to ban U.S. apps on the basis of flimsy evidence, said Daniel Castro, vice president of the Information Technology and Innovation Foundation.
“China restricts most U.S. tech companies from its market, so it is getting a taste of its own medicine,” Castro acknowledged. “But two wrongs do not make a right. If the Trump administration wants to ban Chinese apps until U.S. apps get similar access to China’s market, the White House should be transparent and forthright about its goal.”
TikTok could sue: TikTok said it was “shocked” by the order and claimed there had been “no due process or adherence to the law” from the White House. “We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly — if not by the administration, then by the U.S. courts,” the company said.
Taiwan visit, too: Adding fuel to the fire, U.S. Health and Human Services Alex Azar arrived in Taiwan on Sunday to highlight friendly U.S. relations with the island nation that China regards as part of its territory. “China firmly opposes any official interactions between the U.S. and Taiwan,” a Chinese Foreign Ministry spokesperson, Wang Wenbin, said last week. “China will take firm countermeasures in response to the U.S. wrong move.”
Against that backdrop, Taiwan’s president, Tsai Ing-wen, will deliver remarks on Taiwan's diplomatic, security and economic agenda on Wednesday at a video event hosted by Hudson Institute and Center for American Progress.
Still no currency report: Meanwhile, the Treasury Department’s semi-annual report on whether China or any other country is manipulating its currency for an unfair trade advantage will be four months late on Saturday. It was one year ago this month that Treasury Secretary Steven Mnuchin, acting on Trump’s order, designated China as a currency manipulator, only to reverse that decision in January, just before the signing of the phase one trade deal.
CANADA FIRES BACK AT TRUMP’S NEW TARIFFS: Canada is threatening retaliatory tariffs on about $2.7 billion worth of U.S. refrigerators, wheel rims, golf clubs and other goods after Trump announced last week that he is reimposing a 10 percent “national security” tariff on imports of primary aluminum from the U.S. neighbor and ally.
Canada’s deputy prime minister, Chrystia Freeland, said the tariffs would go into force in 30 days, once a final list of goods was identified. She vowed that the final value of the retaliation would match the U.S. action on a dollar-for-dollar basis.
Century Aluminum, the largest U.S. producer of primary aluminum, applauded Trump’s decision. It was just one of two companies urging Trump to take the action. Primary aluminum is the basic metal that is shaped by other companies into aluminum products.
The Aluminum Association, the North American industry’s main group, said it was “incredibly disappointed” by Trump’s move because it will raise costs for U.S. aluminum companies.
CBC News reported that many of the goods on the preliminary retaliation list are made in the presidential swing states, but Canadian officials denied the products were picked with the November election in mind.
AGOA FORUM COULD BE CORONAVIRUS VICTIM: The African Growth and Opportunity Act requires the president to convene a meeting between top U.S. officials and their African counterparts every year. That usually takes place in early August, with the location rotating between the U.S. and an African nation.
So far there’s no word from USTR on whether this year’s event has been scrubbed because of the pandemic or will take place in a virtual format. We also sent emails to the White House, the State Department and the Corporate Council on Africa on Friday, but got no answer. If anyone knows what is up, please drop us a line.
Lighthizer, who rarely travels for international meetings, was expected to host the AGOA Forum this year. He sent his deputy, C.J. Mahoney, to the meeting in Ivory Coast in 2019, during an intense time in U.S.-China trade talks. “He was greatly looking forward to participating in his third AGOA Forum, but unfortunately was not able to make the trip,” Mahoney said.
No leaders meetings: AGOA also urges the president to hold a summit with African leaders at least once every two years. That has not happened yet during the Trump administration.
Propitious timing?: This year’s forum would take place against the backdrop of recently launched trade negotiations between Kenya and the U.S. Fifty-four African countries also hope to implement a continent-wide free trade agreement by the end of the year.
Trade Remedy Corner
TWO HIGH-PROFILE CASES ADVANCE: The U.S. International Trade Commission gave approval for the Commerce Department to continue two high-profile trade remedy investigations, by a vote of 5-0 in each case.
Fertilizer: In a case closely watched by farm groups and their champions in Congress, the ITC said there was a reasonable indication that U.S. phosphate fertilizer producers are materially injured by imports of allegedly subsidized imports from Morocco and Russia. Commerce is expected to announce preliminary duties in the case on or around Sep. 21.
Twist ties: The ITC also approved an investigation of allegedly dumped and subsidized twist ties from China. That case has attracted interest because it is the first to ask Commerce to determine whether China’s currency exchange rate practices effectively subsidize exports. The department opened the door to investigating that possibility in February.
International Overnight
— White House trade adviser Peter Navarro answers five questions for National Review.
— ‘Buy America’ requirements save jobs at a high price, Peterson Institute analysts say.
— Navarro and Mnuchin argued over Trump’s TikTok ban in front of the president, The Washington Post reports.
— The Wall Street Journal editorial board criticizes Trump’s decision to reimpose aluminum tariffs on Canada.
— Japan and U.K. look to reach trade deal within the month, BBC reports.
— A top U.K. official is ‘confident’ of striking a new trade deal with the EU, Reuters reports.
— South Korean exports face increasing trade barriers during pandemic, Yonhap News reports.
— Russia speeds up production and slows testing in effort to win the global vaccine race, NBC News reports.
THAT'S ALL FOR WEEKLY TRADE! See you again soon! In the meantime, drop the team a line: [email protected]; [email protected]; [email protected]; [email protected] and [email protected]. Follow us @POLITICOPro and @Morning_Trade.
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