On February 1, 2019, the American Institute of Steel Construction, LLC (AISC) filed a petition with the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (Commission) seeking antidumping duties (ADD) and countervailing (CVD) duties on imports of fabricated structural steel (FSS) products from Canada, Mexico and the People’s Republic of China. FSS products are steel products that have been fabricated for assembly or installation into a structure and are intended to provide structural support and to ensure that a structure can bear certain loads or weight. According to the AISC, FSS imports from these countries have been dumped and subsidized, capturing U.S. market share directly from the domestic industry, which is represented by the AISC, causing material injury and threatening to cause further material injury to the domestic industry if ADD and CVD are not imposed.

FSS products covered in the petition include angles, columns, beams, plates, hollow structural shapes, channels and other steel products that have been fabricated into articles suitable for erection or assembly into a variety of structures (e.g., buildings, industrial and utility projects, parking decks, arenas and convention centers, medical facilities and ports, transportation and infrastructure facilities). Typical fabrication processes include cutting, drilling, welding, joining, bolting, bending, punching, pressure fitting, molding, adhesion and other finishing processes. The targeted FSS products are imported under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7308.90.9590, 7308.90.3000, 7308.90.6000, 7216.91.0010, 7216.91.0090, 7216.99.0010, 7216.99.0090, 7228.70.6000, 7301.10.0000, 7301.20.1000, 7301.20.5000, 7308.40.0000, 7308.90.9530 and 9406.90.00300.

The AISC is claiming injury from these alleged unfairly priced and subsidized imports, stating that “between 2015 and 2017, and throughout 2018,” FSS imports surged into the United States and captured market share at the direct expense of the domestic industry. These imports from Canada, China and Mexico allegedly entered the U.S. market in such large and increasing quantities by offering prices well below those of domestically produced FSS, forcing domestic producers to lower prices and leaving them in a vulnerable position. The AISC alleges these FSS imports surged into the U.S. market, increasing by more than 20 percent despite an increase in apparent domestic consumption of only 7.9 percent. As a result, the AISC argues in its petition that these FSS imports increased their market share, growing from 18.5 percent in 2015 to 20.4 percent in 2017. The petition also alleges substantial government subsidies, including provision of major inputs for less than adequate remuneration, tax reductions and exemptions, preferential loans, grants, preferential tax rates and export financing.

The petition lists a large number of foreign producers and exporters that shipped FSS products to the United States at allegedly dumped and subsidized prices from these three countries and the U.S. importers of those products.

Commerce will determine by March 1 whether to formally initiate the investigations and, if it does, the Commission will decide within 25 days after that whether there is a reasonable indication of existing material injury or threat of material injury to the FSS domestic industry that will require continuation of the investigation.

Thompson Hine is monitoring this matter closely. For additional information or to obtain a copy of the petition, please contact us.

In his second State of the Union address to Congress, President Donald Trump noted that he campaigned on several core promises, including “to defend American jobs and demand fair trade for American workers.” He argued that his administration has “moved with urgency and historic speed to confront problems neglected by leaders of both parties over many decades” and indicated that “one priority is paramount – reversing decades of calamitous trade policies.”

His prepared speech included comments on the ongoing trade dispute with China and the Section 301 tariffs imposed on $250 billion worth of imported Chinese products. He noted that his administration continues to work on a new trade deal with China, but that any final agreement “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.” On the other major trade issue of 2018, the president called NAFTA an “historic trade blunder” and “catastrophe” that has now been addressed by the new United States-Mexico-Canada Agreement (USMCA). Trump called on Congress to pass the agreement in order to “bring … back our manufacturing jobs, [expand] American agriculture, [protect] intellectual property, and ensur[e] that more cars are proudly stamped with four beautiful words: made in the USA.”

In his only other significant remarks on trade, the president asked Congress to pass the United State Reciprocal Trade Act, arguing that the United States should be able to issue “the exact same tariff on the same product that they sell to us” if another country places an unfair tariff on a U.S. product. See also Trump and Trade Update of January 25 for more details on this act and other recently introduced trade- and tariff-related legislation.

Concerning economic sanctions and relations with certain “rogue” countries, the president announced that he will meet again with Kim Jong-un, Supreme Leader of North Korea, on February 26-27, 2019, in Vietnam, acknowledging that “much work remains to be done.” Trump highlighted his administration’s recent decision to officially recognized the legitimate government of Venezuela and its new interim president, Juan Guaidó. President Trump noted that he has “acted decisively to confront the world’s leading state sponsor of terror: the radical regime in Iran” and “put in place the toughest sanctions ever imposed on a country” after withdrawing from the “disastrous Iran nuclear deal.”

Shortly after the president’s address, the White House released a series of fact sheets on the various topics covered in his message, including “President Donald J. Trump Has Forged New Trade Agreements to Revitalize American Industry and Agriculture.”

The White House has released a fact sheet listing the “historic results” of President Donald Trump’s first two years in office. For international trade, these results are listed:

”NEGOTIATING BETTER DEALS FOR THE AMERICAN PEOPLE: President Trump is negotiating fair and balanced trade deals that protect American industries and workers.

  • President Trump negotiated a new trade agreement between the United States, Canada and Mexico to replace the disastrous and outdated North American Free Trade Agreement.
    • Once enacted by Congress, the United States-Mexico-Canada Agreement (USMCA) will better serve the interests of American workers and businesses.
    • USMCA will incentivize billions of dollars in auto and auto parts production in the United States and create a freer and fairer market for American agriculture.
    • USMCA also includes the strongest-ever provisions on labor, environmental, digital, and intellectual property protections to reflect the realities of the 21st century economy.
  • The President renegotiated the United States-Korea Free Trade Agreement to preserve and grow jobs in the American auto industry and increase American exports.
  • The United States and Japan are set to begin negotiations on a United States-Japan Trade Agreement.
  • President Trump is establishing a new trade relationship with the European Union (EU), working toward the elimination of tariff and non-tariff barriers to transatlantic trade.
  • President Trump has established a Trade and Investment Working Group to lay the groundwork for post-Brexit trade with the United Kingdom (UK) and has notified Congress of his intent to negotiate a free trade agreement with the UK.
  • Under President Trump, the United States will no longer accept bad trade deals and unfair trade practices that harm American workers and industries.
    • One of the President’s first actions after taking office was withdrawing the United States from the terrible Trans-Pacific Partnership, which incentivized outsourcing.
    • In 2017, the Administration oversaw 82 antidumping and countervailing duty investigations.
  • President Trump is holding China accountable for its unfair trade practices, such as the theft of intellectual property, by imposing tariffs on $250 billion in Chinese goods.
    • Following President Trump’s successful meeting with President Xi in Buenos Aires, both agreed to conduct negotiations over 90 days to address the United States concerns.
  • American steel and aluminum jobs are coming back following President Trump’s tariffs to protect domestic industries that are vital to national security.
  • President Trump imposed tariffs to protect American-made washing machines and solar products that were hurt by import surges.
  • President Trump has expanded market access for American agricultural producers.
    • Argentina has opened to American pork and beef, Brazil to American beef, Japan to lamb and Idaho chipping potatoes, South Korea to American poultry, and more.
    • The Administration authorized $12 billion to aid farmers affected by unfair retaliatory tariffs.”

On December 1, 2018, President Donald Trump announced his intention to formally terminate the North American Free Trade Agreement (NAFTA) in 2019. Addressing the press aboard Air Force One, Trump stated that he will terminate the agreement within six months in an effort to get the U.S. Congress to move on implementing the United States-Mexico-Canada Agreement (USMCA): “And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well.” In accordance with NAFTA Article 2205, “A party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties.” While the president can announce his intention to withdraw from the agreement and even deliver written notice of termination, it remains open for debate if congressional approval is required for complete termination to take effect.

These comments set the stage for a showdown with congressional leaders on the passage of the USMCA and whether it can be done within the president’s desired timeline. Senator Ron Wyden, the ranking member of the Senate Finance Committee, issued a statement shortly after the USMCA was signed on November 30, 2019 indicating that he still has some concerns about the negotiated USMCA: “Over the coming months I will push to see that these concerns are addressed before Congress considers this proposal.” To implement the USMCA, a majority in each chamber of Congress is required to pass the law; as a result of the mid-term congressional elections in November, Trump will need bipartisan support to obtain that majority.

On the sidelines of the international G-20 (Group of Twenty) forum in Buenos Aires, Argentina, U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed today the new United States-Mexico-Canada Agreement (USMCA), launching the formal process to replace the North American Free Trade Agreement (NAFTA). During the signing ceremony, Trump stated, “This new agreement will ensure a future of prosperity and innovation for Mexico, Canada and the United States.”

Today’s ceremony is a significant milestone for Trump, who focused on the modernization of the NAFTA in his presidential campaign, and follows an intense period of negotiations completed in September 2018 (see Trump and Trade Update, October 2, 2018). The signing ceremony also occurred on Nieto’s final day in office and despite the parties’ continuing disagreement over the Section 232 tariffs the United States has placed on steel and aluminum imports from Canada and Mexico. In brief remarks, Trudeau raised the need to remove these tariffs, stating that “With hard work, good will and determination, I’m confident we will get there,” and adding that “Our shared interests, prosperity and security demand it.”

While the USMCA has now been signed, the trade agreement must still be ratified by Congress. Trump notified Congress on August 31, 2018 of his intent to sign the agreement, and this notification triggered certain procedures under the Trade Promotion Authority (TPA) (formally known as the Trade Preferences Extension Act of 2015). Now that the USMCA is signed, the Trump administration has 60 days under TPA to report to Congress changes to U.S. law that are required to comply with the terms of the agreement. Also, within 105 days of the agreement being signed, the U.S. International Trade Commission (ITC) must complete a study of the agreement’s economic impact (see Trump and Trade Update, October 16, 2018 and ITC Notice of Investigation). Eventually, the Congress will have to pass legislation to implement the USMCA, a final step in the implementation process which may have become more difficult with the Democratic Party assuming control of the House of Representatives in the next session of Congress in January 2019. While Trump expressed confidence today that the USMCA will pass Congress in the new year, bilateral opposition in both houses of Congress is mounting, which may lead to more side letters on certain issues or concessions on other unrelated legislation. The legislatures in Mexico and Canada must also ratify the trade agreement, but approval in both without much pushback is expected. Most trade analysts are predicting that the terms of the agreement may not truly be finalized and implemented until well into 2019.

In wide-ranging remarks during a business session with U.S. governors, President Trump yesterday repeatedly broached the topic of international trade. The president reiterated his commitment to working on fair and reciprocal trade deals and highlighted specific trade issues:

  • Mexico – “You know, with Mexico … we probably lose $130 billion a year…. And, at some point, we have to get stronger and smarter, because we cannot continue to lose that kind of money with one country.”
  • Canada – “We lose a lot with Canada. People don’t know it. Canada is very smooth. They have you believe that it’s wonderful. And it is — for them…. So we have to start showing that we know what we’re doing.”
  • WTO – “World Trade Organization – a catastrophe…. makes it almost impossible for us to do good business. We lose the cases, we don’t have the judges. We have a minority of judges.”
  • China – “[W]e probably lost $504 billion, last year, on trade…. Other Presidents should have solved this problem long before I got here. And they’ve been talking for 25 years. And you know what happened? Nothing.”
  • Steel – “I want to bring the steel industry back into our country. If that takes tariffs, let them take tariffs, okay? Maybe it will cost a little bit more, but we’ll have jobs. Let it take tariffs.”
  • Aluminum – “I want to bring aluminum back into our country. These plants are all closing or closed.”
  • Section 232 Trade Actions – “Recently, we put a tariff on washing machines because we were getting killed ….. That was two months ago. You have to see the activity on new plants being built for washing machines and for solar panels. We had 32 solar-panel plants. Of the 32, 30 were closed, and 2 were on life-to-life resuscitation. They were dead. Now they’re talking about opening up many of them — reopening plants that have been closed for a long time.”

In closing comments on trade, President Trump stated that “we’re going to straighten it out. We’ve already started. I mean, the first year is just — we laid the seeds.”

The Department of Commerce has released its 2017 year-end report on U.S. International Trade in Goods and Services, revealing a sharp increase in the overall trade deficit during President Trump’s first year in office. For 2017, the goods and services deficit increased to $566 billion, a $61.2 billion (12.1 %) increase from 2016. Exports were $2,329.3 billion in 2017, up $121.2 billion (5.5%) from 2016. Imports were $2,895.3 billion in 2017, up $182.5 billion (6.7%) from 2016.

The 2017 figures show surpluses, in billions of dollars, with South and Central America ($34.3), Hong Kong ($32.5), Netherlands ($24.5), Belgium ($14.8) and Australia ($14.6). Deficits were recorded, in billions of dollars, with China ($375.2), the European Union ($151.4), Mexico ($71.1), Japan ($68.8), Germany ($64.3), Ireland ($38.1), Italy ($31.6), Malaysia ($24.6), India ($22.9), South Korea ($22.9), Thailand ($20.4), Canada ($17.6), Taiwan ($16.7), France ($15.3), Switzerland ($14.3), Indonesia ($13.3) and OPEC ($13). Of note, the deficit with China increased $28.2 billion to $375.2 billion in 2017, and the deficit with Mexico increased $6.7 billion to $71.1 billion in 2017.

Upon the conclusion of the fifth round of renegotiations of the North American Free Trade Agreement (NAFTA), U.S. Trade Representative Robert Lighthizer issued the following statement:

“While we have made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway. Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement. Absent rebalancing, we will not reach a satisfactory result. A rebalanced, updated NAFTA will promote greater prosperity for American workers, farmers, ranchers and businesses and strengthen the North American region as a whole. Our teams will be meeting again next month in Washington. I hope our partners will come to the table in a serious way so we can see meaningful progress before the end of the year.”

The parties have agreed to hold the sixth round of negotiations January 23-28, 2018 in Montréal, Canada. In the meantime, negotiators will continue to work in intersessional meetings in Washington, D.C. throughout mid-December and will report back to the chief negotiators on the progress achieved.

The Office of the U.S. Trade Representative (USTR) has released an updated summary of U.S. objectives for the renegotiation of the North American Free Trade Agreement (NAFTA). The new objectives update the previous objectives published in July (see our July 18, 2017 update), and come after four rounds of negotiations among the United States, Mexico and Canada. The updated objectives reflect the goals of text proposals the United States has tabled in the NAFTA negotiations so far. The objectives include increased market access for agriculture, new transparency and administrative measures, expanded investment and intellectual property objectives, and completed negotiations on the chapters of Competition and Small- and Medium-Sized Enterprises. According to the USTR, the objectives for Trade in Goods include the first-ever objective for trade deficit reduction and an improvement in the U.S. trade balance with NAFTA countries.

The updated objectives “represent a serious effort to renegotiate the Agreement to update its provisions to the best 21st century standards and rebalance the benefits of the deal so that each country succeeds. U.S. proposals reflecting these objectives are supported by a diverse group of American interests. If these objectives are achieved, the United States will obtain more open, equitable, secure, and reciprocal market access, and the entire NAFTA region will benefit.”

After four rounds of negotiations, the United States, Canada and Mexico are beginning to express frustration concerning the discussions and proposals to revise and update the North American Free Trade Agreement (NAFTA). In an October 17 joint statement, the parties indicated that they have put forward “substantially all initial text proposals” but that these proposals have “created challenges” and highlighted “significant conceptual gaps” among the three countries.

Acknowledging that one of President Trump’s clear objectives is the reduction of the U.S. trade deficit with its NAFTA partners, U.S. Trade Representative Robert Lighthizer stated that he was “surprised and disappointed by the resistance to change from our negotiating partners.” In his closing remarks, Ambassador Lighthizer said, “As difficult as this has been, we have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits. Now I understand that after many years of one-sided benefits, their companies have become reliant on special preferences and not just comparative advantage. Countries are reluctant to give up unfair advantage. But the President has been clear that if we are going to have an agreement going forward, it must be fair to American workers and businesses that employ our people at home.”

In response, Canadian Foreign Affairs Minister Chrystia Freeland called the U.S. list of proposals “unconventional” and “troubling,” stating that some of them would “turn back the clock on 23 years of predictability, openness and collaboration under NAFTA.”

Mexican Secretary of the Economy Ildefonso Guajardo Villarreal said, “We must ensure that decisions we make today do not come back to haunt us tomorrow,” adding that, in order for the negotiations to be fruitful, “we must understand that we all have limits.”

Mexico will host the fifth round of negotiations November 17-21, 2017, and the parties have agreed that additional rounds will be necessary and scheduled during the first quarter of 2018.