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— Sen. Rob Portman is one of the first Republicans to publicly endorse the nomination of Katherine Tai to be USTR, calling her experience as the top House Ways and Means trade lawyer good background for the Cabinet post.
— Portman and three other senators urged outgoing U.S. Trade Representative Robert Lighthizer not to include “Section 230”-type internet liability protections in the proposed trade deal with the United Kingdom.
— The U.S. Export-Import Bank board of directors has approved changes to their financing programs to help American advanced technology companies compete with China.
It’s Monday, Dec. 21! Welcome to Weekly Trade. Here’s another non-traditional holiday favorite nominated by a loyal reader, “Merry Christmas from the Family.” Warning: this video contains dirty dishes, excessive alcohol consumption, cigarette smoking and folks have a good time. Hope your own holidays are just as merry and bright. [email protected] and [email protected].
PORTMAN SAYS TAI GOOD CHOICE FOR USTR: As more Republicans publicly acknowledge Joe Biden’s election as president, Portman said he is looking forward to working with Tai on a broad trade agenda.
“I’m glad that Katherine Tai is the likely nominee,” the Ohio Republican said during a discussion with other former USTRs hosted by the Center for Strategic and International Studies. “I think that will help in terms of moving a trade agenda forward vis-à-vis Congress because she, obviously, knows how we operate, understands [trade promotion authority] well.”
Outgoing Senate Finance Chair Chuck Grassley (R-Iowa) also commented on Tai last week for the first time during his weekly call with home state reporters, saying he expected her to be tough on China because of her previous experience in USTR’s enforcement office.
Portman’s dream trade agenda: Portman, who served as USTR from 2005 to 2006 in the George W. Bush administration, urged Biden and Tai to push for renewal of TPA, which expires on July 1, so the U.S. can finish negotiations with the United Kingdom on a free trade agreement and pursue talks with other nations.
Biden has said that he does not plan to enter into any new trade agreements before making investments at home to strengthen the U.S. economy. But that statement seems to include enough wiggle room for him to pursue trade negotiations with the expectation of submitting them to Congress when the time is right.
Japan and Vietnam: Portman urged the Biden administration to pursue new free trade deals with Japan and Vietnam, as well as others. The Obama administration concluded agreements with both Asian countries as part of the Trans-Pacific Partnership, but outgoing President Donald Trump pulled out of that pact on his third day in office.
Kirk says be realistic: Ron Kirk, who served as USTR during the first half of the Obama administration, cast doubt on Biden seeking immediate renewal of TPA, an issue that has long divided Democrats.
“I just think we can’t run the risk because we all believe in trade that we somehow think that’s going to force its way onto the agenda. I mean, this is going to be Covid job one, Covid job two, Covid job three, trying to get the economy going,” he said.
Schwab offers TPP re-entry option: Several of the USTRs said Biden would likely face pressure from Asian allies to rejoin the TPP, a trade deal that Republicans pressured Obama to negotiate and then watched Trump use to attack Hillary Clinton during the 2016 campaign.
Susan Schwab, who succeeded Portman as USTR in the second Bush administration, offered an alternative that could prevent Trump from using the Asian-Pacific trade agreement as a political weapon a second time should he seek another term as president in 2024.
“Instead of TPP, think about an expansion of USMCA that includes Japan, that includes Vietnam, that includes Malaysia, you know,” Schwab said, referring to Trump’s signature trade deal with Canada and Mexico.
FORMER USTRS OFFER FREE ADVICE FOR TAI: No discussion among eight former USTRs would be complete without advice for the next one.
Bill Brock, Republican (1981-85): “Create as much of a sense of optimism and purpose as you possibly can, as quickly as you possibly can. That’s one of the reasons TPP is important.”
Carla Hills, Republican (1989-93): Form an advisory group of about a dozen business, labor and other leaders to help rebuild support in the public for trade.
Mickey Kantor, Democrat (1993-96): “Build a real consensus in the Congress … in a common agenda. But most importantly, build a common agenda among our allies.”
Charlene Barshefsky, Democrat (1996-2001): “She needs to know what she thinks, because she’ll do more negotiating within the administration than she ever will with a foreign party.”
Schwab agreed on that point, and added: “There’s some very fine people being nominated for positions who really don’t know a whole lot about trade. And she is in a position to explain and to articulate how her portfolio fits into a much broader agenda”
Michael Froman, Democrat (2013-2017): “Learn from and avoid all of our mistakes and make your own mistakes instead.”
SENATORS URGE NO INTERNET LIABILITY PROTECTION IN U.K. TRADE DEAL: A bipartisan group of four senators have asked Lighthizer not to include increasingly controversial liability protection for online companies in a proposed trade deal with the United Kingdom. The influential group includes Portman, Grassley, Mark Warner (D-Va.) and Richard Blumenthal (D-Conn.)
Both Trump and Biden have called for repeal of Section 230 of the Communications Decency Act of 1996. That law is widely credited with spurring the modern internet economy, but many members of Congress believe its time has passed.
“The blanket immunity provided by measures like Section 230 allows platforms to escape liability for directly enabling heinous conduct such as online frauds, cyber-stalking, terrorism and child abuse,” the senators said in a letter to Lighthizer. “Not surprisingly, neither the U.S. Congress nor the U.K. Parliament are seeking to export this type of immunity. Instead, they are undertaking vigorous debates regarding the proper oversight, transparency, and effective management of digital communications technologies.”
Lighthizer — who like Trump, will be out of office in less than a month — has been reluctant to weigh into the matter. He told the House Ways and Means Committee this summer that his job is to make sure trade agreements reflect current law, without precluding Congress from making changes in any area that it sees fit. Consequently, the new U.S.-Mexico-Canada Agreement includes online liability protections modeled on Section 230.
But the senators expressed concern including such language in international trade deals would make it harder for Congress to reform or repeal the provision.
It’s not likely that U.S. and U.K. negotiators will make a final decision on the issue before Lighthizer leaves office on Jan. 20. It then will be up to the Biden administration, including Tai, assuming she is confirmed by the Senate.
COMPANIES ASK FOR DELAY IN VIETNAM CURRENCY PROBE: Importers worried about getting hit with new tariffs on Trump’s way out the door have asked Lighthizer to slow down an investigation into whether Vietnam has undervalued its currency for an unfair trade advantage.
The plea came after the Treasury Department labeled Vietnam as a “currency manipulator” in a report released last week. That has heightened concerns that USTR could impose tariffs on tens of billions of dollars worth of Vietnamese goods shortly after it concludes its investigation on Jan. 7.
The Treasury finding “could have substantial impact on the ongoing investigation,” the groups, which also included the American Apparel and Footwear Association and the Semiconductor Industry Association, said in a letter on Friday to Lighthizer. “Interested parties should be given an opportunity to comment on this report.”
Hearings next week: USTR is holding a hearing on Tuesday, Dec. 29, but the deadline to request to testify at that hearing has already passed. The groups want USTR to reopen the comment period in the investigation, reschedule the hearing at a later date, and extend its deadline for concluding the probe.
USTR is also holding a hearing next Monday as part of a separate investigation into whether Vietnam companies use illegally logged lumber in wood products that they export to the United States.
COMMERCE ADDS CHINESE CHIPMAKER, DRONE COMPANY TO BLACKLIST: Just when it looked like the lameduck Trump administration was slipping off into a holiday slumber, the Commerce Department announced on Friday it was restricting U.S. companies from doing business with more than 70 Chinese firms, including major chip manufacturer Semiconductor Manufacturing International Corporation of China and drone maker DJI.
The move places the companies on the department’s entity list along with other Chinese firms, such as telecommunications giant Huawei, whose activities have raised national security concerns. The action limits their ability to acquire certain U.S. technology by requiring U.S. exporters to apply for a license to sell to the companies.
The action against SMIC was because of concerns about its links to China’s military industrial complex. The addition of dronemaker DJI to the list seeks to limit the company’s use of U.S. technology to help the Chinese government surveil minority populations in the Northwestern Xinjiang region, Tibet and elsewhere, a senior Commerce Department official said.
“We of course can’t stop them from doing it to their own people but we can make sure U.S. technology is not part of their egregious human rights violations against minorities in their country,” the senior official said.
China blasts the move: “The U.S. side claims that it champions market economy and fair competition,” Chinese Foreign ministry spokesman Wang Wenbin said Friday.
“But its politicization of trade issues goes against its words as well as international trade rules and is detrimental to the interests of both Chinese and American companies, the normal technological exchanges and trade flows between the two countries and even on a global scale, and the stability of global industrial chains, supply chains, and value chains,” he said.
EX-IM APPROVES NEW FINANCING SCHEME TO TAKE ON CHINA: The U.S. Export-Import Bank hopes to boost U.S. exports in high-tech fields like artificial Intelligence, biotechnology and quantum computing using new powers approved by its board last week.
The unanimous vote was “an overwhelming win for American workers, further empowering them to succeed in the face of fierce competition from entities backed by the People’s Republic of China,” Ex-Im President Kimberly Reed said in a statement.
The policy change affects financing for 10 “transformational” export sectors designated by Congress. It allows exports to qualify for 85 percent Ex-Im financing even if the proposed transaction meets just a 51 percent U.S. content threshold. That’s more generous than Ex-Im content requirements for other transactions.
The board also voted to finance those exports even if the U.S. content level is less than 51 percent, if three conditions are met: The transaction gives the U.S. an edge over China in the relevant sector, the exporter provides a plan for expanding U.S. jobs over three-to-five years or if at least one of seven unique factors comes into play.
Congress has set a goal for Ex-Im to use at least 20 percent of its total credit cap of $135 billion to go head to head with China. That’s equal to at least $27 billion.
However, in the fiscal year that ended Sept. 30, Ex-Im authorized just $5.4 billion in loan guarantees, export credit insurance, and direct loans to support U.S. exports.
WTO ENDS 2020 WITHOUT MUCH DONE: The WTO approved its budget for 2021 but accomplished little else during a three-day General Council meeting last week.
“It would be very difficult to deem this General Council as a success,” WTO spokesman Keith Rockwell told reporters. “I think there has been quite a few ill-tempered exchanges over the last couple of days. I think members might be quite tired. It’s been long and grueling. But a lot of engagement. That’s an important element.”
Trump effect: The WTO has been under constant pressure in recent years, especially from Trump who sees it as tilted unfairly against the United States.
The Geneva-based group started 2020 without a functioning Appellate Body because of U.S. action that blocked the appointment of new judges. It was forced to cancel its biennial ministerial conference because of Covid-19. And U.S. officials in October blocked the selection of a new leader for the organization.
“I think what the last few days have shown us very clearly is that we need a director general,” Rockwell said. “I don’t know of anyone out there right now who would raise their hand and say 2020 has been a great year, and I think the WTO probably falls in that group.”
— EU nears investment deal with China despite slave labor fears, POLITICO reports.
— Trump signs bill to ban trading in Chinese bills that thwart U.S. audits, POLITICO reports.
— Biden space advisers urge cooperation with China, POLITICO reports.
— British businesses make a last minute plea for Brexit grace periods, POLITICO reports.
— U.K.-EU trade talks floundering over fish as cutoff day nears, The AP reports.
— The New York Times looks at UK Prime Minister Johnson’s penchant for last-minute decision making.
— More EU nations halt flights from UK, fearing new coronavirus strain, CNBC reports.
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