The U.S. International Trade Commission (ITC) is seeking public comment concerning the probable economic impact of duty-free treatment for currently dutiable imports from Japan. The investigation, U.S.-Japan Trade Agreement: Advice on the Probable Economic Effect of Providing Duty-free Treatment for Currently Dutiable Imports, was requested by the U.S. Trade Representative (USTR) Robert Lighthizer in a letter received October 26, 2018. For additional background on this trade agreement and USTR’s separate request for public comments, see Trump and Trade Updates of October 17, 2018 and October 26, 2018.

The ITC will provide a report advising the USTR on the probable economic effect of providing duty-free treatment for imports of currently dutiable products from Japan on U.S. industries producing like or directly competitive products and on consumers. The USTR asked that the ITC’s analysis consider each article in chapters 1 through 97 of the Harmonized Tariff Schedule of the United States (HTS) for which U.S. tariffs will remain, taking into account implementation of U.S. commitments in the World Trade Organization. The advice will be based on the HTS in effect during 2018 and trade data for the year 2017. In addition, the ITC report will assess the probable economic effects of eliminating tariffs on imports from Japan of certain agricultural products on U.S. industries producing the products concerned and on the U.S. economy as a whole. The ITC expects to submit its report, which will be confidential, to the USTR by January 24, 2019.

The ITC is seeking input for the investigation from all interested parties under Investigation Nos. TA-131-043 and TPA-105-004. The key deadlines for the investigation are:

  • November 26, 2018: Deadline for filing requests to appear at the public hearing
  • November 30, 2018: Deadline for filing prehearing briefs and statements
  • December 6, 2018: Public hearing – Main ITC Hearing Room, 500 E Street S.W., Washington, D.C. 20436
  • December 13, 2018: Deadline for filing post-hearing briefs and submissions
  • December 13, 2018: Deadline for filing all other written statements
  • January 24, 2019: Transmittal of report to the USTR

Further information on the scope of the investigation and appropriate submissions is available in the ITC’s notice of investigation, dated November 7, 2018.

On October 16, 2018, the United States Trade Representative (USTR) notified Congress of the Trump administration’s intention to enter into negotiations with Japan for a U.S.-Japan Trade Agreement. (See Trump and Trade Update dated October 17, 2018.) USTR has stated that its aim in the negotiations is to address both tariff and non-tariff barriers and to achieve fairer, more balanced trade. As a result, and in order to develop negotiating objectives, USTR is seeking public comments on such a proposed agreement, including U.S. interests and priorities.

In particular, USTR is seeking comments on the following issues:

  • General and product-specific negotiating objectives for the proposed agreement.
  • Relevant barriers to trade in goods and services between the United States and Japan that should be addressed in the negotiations.
  • Economic costs and benefits to U.S. producers and consumers of removal or reduction of tariffs and removal or reduction of non-tariff barriers on articles traded with Japan.
  • Treatment of specific goods (described by HTSUS numbers) under the proposed agreement, including comments on: (i) product-specific import or export interests or barriers; (ii) experience with particular measures that should be addressed in the negotiations; and (iii) ways to address export priorities and import sensitivities in the context of the proposed agreement.
  • Customs and trade facilitation issues that should be addressed in the negotiations.
  • Sanitary and phytosanitary measures and technical barriers to trade that should be addressed in the negotiations.
  • Other measures or practices that undermine fair market opportunities for U.S. businesses, workers, farmers and ranchers that should be addressed in the negotiations.

Written comments addressing USTR’s negotiating objectives must be submitted no later than November 26, 2018. USTR’s Trade Policy Staff Committee will hold a public hearing on these negotiating objective on December 10, 2018; any request to appear and testify must also be submitted by November 26. Requests to testify and written comments must be filed through the Federal eRulemaking Portal at https://www.regulations.gov on Docket No. USTR-2018-0034.

The Office of the U.S. Trade Representative (USTR) announced that the United States is set to launch separate free trade agreement (FTA) negotiations with Japan, the European Union and the United Kingdom. In letters sent to Congress on October 16, 2018, Ambassador Robert Lighthizer wrote: “We are committed to concluding these negotiations with timely and substantive results for U.S. consumers, businesses, farmers, ranchers, and workers, consistent with U.S. priorities and the negotiating objectives established by Congress in statute.”

By issuing these formal letters to Congress, the USTR is following procedures required by the Congressional Trade Priorities and Accountability Act of 2015, commonly referred to as Trade Promotion Authority (TPA). The announcement allows negotiations to formally begin with Japan and the European Union after a 90-day period. The letter announcing the negotiations with the United Kingdom accounts for its upcoming exit from the European Union and signals that talks will begin after that is completed in late March 2019.

The congressional notification letters regarding Japan, the European Union and the United Kingdom are available on USTR’s website.

Following receipt of a request from the U.S. Trade Representative (USTR), the U.S. International Trade Commission (USITC) has initiated investigation No. TPA-105-003 for the purpose of preparing the report required by section 105(c) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. The report will assess the likely impact of the United States-Mexico-Canada Agreement (USMCA) on the U.S. economy as a whole and on selected industry sectors. Transmittal of the final USITC report to the president and Congress must occur no later than 105 days after the president enters into the agreement.

The investigation, United States-Mexico-Canada Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors, was requested by the USTR in a letter received on August 31, 2018. In assessing the likely impact of the USMCA on the U.S. economy, the report will include information and data on the impact the agreement will have on the gross domestic product, exports and imports, aggregate employment and employment opportunities, the production, employment and competitive position of industries likely to be significantly affected by the agreement, and the interests of U.S. consumers.

Key Dates:

  • October 29, 2018: Deadline for filing requests to appear at the public hearing
  • October 30, 2018: Deadline for filing prehearing briefs and statements
  • November 15-16, 2018: Public hearing at USITC
  • December 20, 2018: Deadline for written submissions from the public

Further information on the scope of the investigation and the procedures for written submissions are available in the USITC’s notice of investigation, dated October 12, 2018.

After successful, last-minute negotiations, Canada and the United States agreed on September 30, 2018 to revise and modernize the North American Free Trade Agreement (NAFTA). The United States and Mexico previously announced their intent to proceed with a revised trade agreement (see Trump and Trade Update dated September 4). In remarks to the press, President Trump said, “Throughout the campaign, I promised to renegotiate NAFTA, and today we have kept that promise,” adding, “Once approved by Congress, this new deal will be the most modern, up-to-date, and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed.”

To augment the president’s announcement, the Office of the U.S. Trade Representative (USTR) released a series of fact sheets concerning the renegotiated trade agreement with Mexico and Canada:

According to the USTR, these features are among the highlights of the new agreement:

  • U.S. auto manufacturers and workers will benefit from new rules of origin requiring 75 percent of auto content to be produced in North America, and the new agreement will incentivize billions of dollars in additional U.S. vehicle and auto parts production.
  • New trade rules will increase wages by requiring that 40-45 percent of auto content be performed by workers earning at least $16 per hour.
  • For textiles, the agreement will promote greater use of Made-in-the-USA fibers, yarns and fabrics. It also establishes provisions for textile-specific verification and customs cooperation that provide new tools for strengthening customs enforcement and preventing fraud and circumvention.
  • The new labor chapter is a core part of the agreement and will make the labor provisions fully enforceable.
  • Canada will eliminate its “Class 7” program that allows low-priced dairy ingredients to undersell U.S. dairy products, and will provide new access for U.S. products, including fluid milk, cream, butter, skim milk powder, cheese and other dairy products. Canada will also eliminate its tariffs on whey and margarine.
  • For poultry, Canada will provide new access for U.S. chicken and eggs and increase its access for turkey. Under this agreement, all other tariffs on agricultural products traded between the United States and Mexico will remain at zero.
  • The new agreement includes a modernized, high-standard chapter that provides strong protection and enforcement of intellectual property rights, including 10 years of data protection for biologic drugs and a large scope of products eligible for protection.
  • Strong measures on digital trade have been established, including rules to ensure data can be transferred cross-border and to minimize limits on where data can be stored.
  • An updated financial services chapter includes commitments to liberalize financial services markets and facilitate a level playing field for U.S. financial institutions, investors and investments in financial institutions, and cross-border trade in financial services.
  • The environment chapter includes enforceable environmental obligations, including obligations to combat trafficking in wildlife, timber and fish; strengthen law enforcement networks to stem such trafficking; and address pressing environmental issues such as air quality and marine litter.

With the international trade community’s focus on China (tariffs) and Mexico/Canada (NAFTA negotiations), it would be easy to forget another significant trade matter that the Trump administration has been seeking to finalize. According to reports, the revised Korea-U.S. Free Trade Agreement (KORUS) will be signed today after President Trump and South Korean President Moon Jae-in meet in New York City, where both are attending the start of the United Nations’ General Assembly plenary session. Continue Reading Revised Korea-U.S. Free Trade Agreement to Be Signed

On August 31, 2018, President Donald Trump officially notified Congress of his administration’s intent “to enter into a trade agreement with Mexico — and with Canada if it is willing, in a timely manner, to meet the high standards for free, fair, and reciprocal trade contained therein.” Notification was necessary under the provisions of the Trade Promotion Authority (TPA) legislation, which allows “fast track” consideration of trade agreements (i.e., Congress can vote to approve or reject a trade deal but cannot amend the text of the agreement). In the wake of the president’s notification, U.S. Trade Representative Robert Lighthizer indicated that a resulting free trade agreement could either be bilateral (with Mexico) or trilateral (with Canada also), depending upon the final negotiated text of any agreement. It has been questioned, however, whether a bilateral agreement fulfills TPA requirements since Congress had been earlier notified of the Trump administration’s intent to renegotiate a trilateral North American Free Trade Agreement (NAFTA). If Congress believes that a free trade agreement with only Mexico does not qualify for TPA consideration, amendments could be offered by Congress, potentially complicating any final agreement. With Congressional notification under the TPA, the actual text of any agreement must be submitted to Congress within the next 30 days for its consideration. Continue Reading Trump Administration Moves Forward with Proposed Trade Agreement with Mexico, Continues Negotiations with Canada

On August 27, 2018, the United States and Mexico reached a preliminary agreement “in principle, subject to finalization and implementation,” to update the North American Free Trade Agreement (NAFTA). The Office of the U.S. Trade Representative (USTR) stated that the updated agreement will “support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.” In reaching the agreement with Mexico, President Trump stated that, “America has … finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our Nation’s wealth.” Continue Reading United States and Mexico Agree in Principle to New Trade Agreement

Key Notes:

  • On May 23, 2018, the Department of Commerce self initiated a Section 232 national security investigation concerning the imports of automobiles and automotive parts.
  • A formal docket has been opened for the submission of public comments and requests to appear at a public hearing July 19-20, 2018.
  • The Department of Commerce has 270 days to issue its findings and submit a report to the president.

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Top trade officials from the United States, Canada and Mexico will resume negotiations over revisions to NAFTA this week in an effort to finalize an agreement. Reports indicate that while progress has been made, a number of issues remain, including rules of origin pertaining to automobiles, dispute settlement, government procurement and labor.

All parties agree that May will be a critical month in these renegotiations given upcoming events and important time lines. Mexico’s presidential election will occur in July 2018, and U.S. mid-term congressional elections will occur in November 2018. U.S. Trade Representative Robert Lighthizer has indicated a strong desire to conclude negotiations in May in order to seek approval from the current Congress under Trade Promotion Authority.

Trump and Trade has prepared a slide presentation, Summary of NAFTA’s History, Development and Current Status, for our readers as negotiations enter their final phase.