Steel/Aluminum Tariffs Suspended til June 1; NAFTA Negotiations

May
01

A Message From NAM

White House Continues Suspension of 232 Tariffs on Steel and Aluminum Imports until June 1 for European Union, Canada and Mexico; Reaches Deals with Argentina, Australia and Brazil

Late on April 30, the President issued new steel and aluminum proclamations to:

• Suspend until June 1, tariffs on steel and aluminum tariffs on imports from the European Union, Canada and Mexico. The extension has been described as a “final” extension as the administration seeks to negotiate outcomes that will impose “quotas that will restrain imports, prevent transshipment, and protect the national security.”
• Suspend indefinitely steel and aluminum tariffs on imports from Argentina, Australia and Brazil, with which the administration indicated it had reached preliminary agreements that will be finalized in 30 days.
• Suspend indefinitely steel tariffs on imports from South Korea in recognition of the final quota agreement with South Korea.

Following the issuance of reports by the U.S. Department of Commerce in January 2018, pursuant to Section 232 of the Trade Expansion Act of 1962, President issued proclamations on March 8, 2018, directing the imposition of a 25 percent tariff on all steel imports (Proclamation 9705) and a 10 percent tariff on all aluminum imports (Proclamation 9704). On March 22, just before tariffs were imposed, President Trump issued new steel and aluminum proclamations that temporarily suspended the tariffs until May 1 for the following countries: Countries of the European Union, Australia, Argentina, Brazil, Canada, Mexico and South Korea.

On March 28, the United States and South Korea agreed to a deal relating to the section 232 steel investigation alongside a deal to update the Korea-U.S. Free Trade Agreement. Under this agreement, Korean steel imports would be exempted from tariffs, but would be subject to a product-specific quota equivalent to 70 percent of the average annual import volume of steel products during the 2015-2017 period. Further details of this arrangement were being discussed in Washington, D.C. by U.S. and Korean negotiators last week and more detail is expected soon.

The process by which businesses can seek or object to exclusions for steel and aluminum products not available in the United States or needed for national security remains ongoing. More than six thousand requests for steel exclusions have been made and more than five hundred aluminum exclusions have been made. Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) sent this letter to express concerns with the exclusion process; Senator Pat Toomey (R-PA) also sent a letter highlighting some of the same concerns.

NAFTA Talks Continue, with Next Ministerial Meetings Reconvening on May 7

U.S., Canadian and Mexican negotiators met over the last two weeks in an attempt to reach the overall outlines of a modernized North American Free Trade Agreement (NAFTA). Several negotiating groups met repeatedly and the U.S. Trade Representative (USTR) Ambassador Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo held several meetings, including multiple bilateral and trilateral meetings. The three countries will reconvene at the ministerial level on May 7, while negotiations continue.

Much of the focus these past several weeks has been on auto rules of origin, with discussions that have appeared to narrow differences (with the United States apparently moving away from both the 50 percent U.S. content and the 85 percent NAFTA content proposals). No deal has, however, been announced on rules of origin and several other issues remain without resolution, including U.S. proposals regarding a mandatory sunset of the agreement, weakening or abandonment of enforcement rules (including state-to-state, investor-state and chapter 19 trade remedy reviews) and changes to government procurement reciprocity. Manufacturers’ offensive interests relating to customs, intellectual property, market access and several other issues remain without apparent resolution. The three parties have reportedly agreed to at least six chapters (good regulatory practices; administration and publication (transparency); sanitary and phytosanitary measures; anti-corruption; SME transparency and competition policy). Technical barriers to trade and digital trade chapters also appear close to completion.

A meeting between Ambassador Lighthizer and the New Democrat Coalition that had taken months to schedule was postponed given NAFTA and China talks, prompting the New Democrat Coalition to criticize the USTR’s failure to consult with Congress and the administration’s “misplaced” trade priorities, issuing this detailed letter.

The NAM continues to engage the administration and the Hill directly at senior levels on the top issues of interest to manufacturers, as well as engage in other activities.

House, Senate Work Towards Formal Mark-ups on CFIUS Legislation

Key committees in the House and Senate remain engaged in active negotiations with the Administration and with sponsors on revisions to the Foreign Investment Risk Review Modernization Act (FIRRMA) (H.R. 4311/S. 2098). This engagement follows an active hearing schedule in both the House Financial Services Committee (such as an April 12 hearing) and the Senate Banking Committee, as well as related activity in other House committees (such as the House Energy & Commerce Committee and the House Foreign Affairs Committee). NAM sources indicate that markup hearings are likely to occur in both of the primary committees of jurisdiction during the week of May 7.

Working closely with NAM members to develop consensus approaches to improve current legislative proposals, the NAM has been sharing views regularly with key Senate and House offices and key administration officials. The NAM will continue to engage constructively to share views on the importance of both national security reviews and an open investment environment to support manufacturing growth and modernization. Should you wish to discuss this further, please contact Jessica McBroom ([email protected]) and Ryan Ong ([email protected]).

Top U.S. Economic Team to Beijing for Discussions on Trade Disputes, Section 301 Tariffs

President Donald Trump is sending a team of top economic advisors to Beijing this week for meetings with senior Chinese leadership to discuss ongoing trade disputes, headlined by the tariffs both sides have imposed as a result of USTR’s Section 301 investigation of Chinese intellectual property challenges. The delegation, slated for May 3-4, will be led by Treasury Secretary Steven Mnuchin and will also include U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, National Economic Council Director Larry Kudlow, White House trade advisor Peter Navarro. 

The trip, which appears to be designed to discuss potential deals that could address Administration concerns on intellectual property and trade deficits, follows the release of proposed lists of products – each with an applied tariff of 25 percent on roughly $50 billion in products, but with no specific implementation date – by the United States (roughly 1,300 products tied to Chinese industrial policies) and China (106 products targeted at U.S. export industries), as well as the potential imposition of tariffs on an additional $100 billion worth of products.

The meeting will occur against the backdrop of the U.S. tariff process, with a planned May 15 public hearing and a call forwritten submissions by May 11. NAM President and CEO Jay Timmons has weighed in regularly on these processes, agreeing that the challenges are real but expressing concern about tariffs and the need for “a new, strategic approach that includes negotiating a fair, binding and enforceable rules-based trade agreement with China that requires them to end their unfair trade practices once and for all.” The NAM has submitted a formal request to testify at the public hearing, and is still gathering member inputs for a planned written submission. Please send inputs, comments, and questions from members toLinda Dempsey and Ryan Ong.

USTR Special Report Lists 36 Countries, with Big Focus on China, Canada, Colombia

The Office of the U.S. Trade Representative (USTR) on April 27 released this year’s Special 301 report, its annual report that focuses on the significant challenges facing U.S. businesses and inventors seeking to protect their intellectual property (IP) around the world. This year’s report and accompanying press release include specific designations for 36 countries, including 12 on the priority watch list (including NAM priorities such as China, India, Indonesia and Russia) and an additional 24 countries on the watch list. This year’s report:

• Lists a series of cross-cutting concerns, with a much stronger focus on pharmaceutical and medical device market access issues than in years past.
• Focused heavily on China, with more than three times as much ink than any other country in which USTR discussed challenges such as top-down industrial policy, lack of trade secrets protection, and counterfeiting and piracy.
• Worsened the designations for several countries, including moving Canada and Colombia to the priority watch list and adding countries like Saudi Arabia and the United Arab Emirates to the watch list.

The NAM not only provided a detailed written submission, but also testified at the March 2018 public hearing with the Special 301 Subcommittee.

USTR Seeking Public Comment on Review of GSP Benefits for India, Indonesia, Kazakhstan

On April 27, USTR also announced via a federal register notice the launch of reviews of whether three countries – India, Indonesia, and Kazakhstan – were complying with eligibility criteria to receive benefits under the Generalized System of Preferences (GSP), a program that eliminates tariffs on goods imported from developing countries. The notice follows USTR’s April 12 announcement that it would launch the reviews in response to stakeholder petitioned received in 2017 as well as a new, stricter review process announced by USTR last October that would initially focus on GSP beneficiaries in Asia. That announcement had called out these three countries for various issues: India for discriminatory trade barriers impacting U.S. industries, Indonesia for trade and investment barriers, and Kazakhstan for labor violations. For more information about the GSP petition process, see USTR’s guidebook; comments are due through the federal register notice process no later than June 5. 

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