On The Hill

Trade Update (January 10)

Jan 13, 2021 | SHARE

Biden-Harris Transition

This week, President-elect Joe Biden announced the following nominees and appointees:

Gina Raimondo, Secretary of Commerce

Currently serves as the Governor of Rhode Island

Marty Walsh,Secretary of Labor

Currently serves as the Mayor of Boston, MA

Merrick Garland,Attorney General

Currently serves on the U.S. Court of Appeals for the District of Columbia

Don Graves, Deputy Secretary of Commerce

Isabel Guzman, Small Business Administrator

Gina Raimondo, nominee for Secretary of Commerce, is currently in her second term as Governor of Rhode Island and previously served as the head of the Democratic Governors Association in 2019. She also served as the state’s General Treasurer from 2011- 2015 and founded an investment firm in 2001.

Raimondo will inherit several international trade disputes and will play a role in Biden’s decision on whether to roll back any Trump administration actions. She is seen as a traditional choice for the role and a “moderate” Democrat.

To view a full list of nominees, appointees, and White House staff, click here.

GA Special Election

This week, Georgia held a special election for both of the state’s Senate seats. Reverend Raphael Warnock (D) and Jon Ossoff (D) defeated incumbent Senators Kelly Loeffler (R) and David Perdue (R). The makeup of the Senate will be a 50-50 split, with Vice President-elect Kamala Harris breaking any ties. Democrats will now effectively control all three branches of government. However, Democrats hold slim majorities in the House and Senate.

Democrats will have to rely on moderate Senators Joe Manchin (D-WV), Kyrsten Sinema (D-AZ), and potentially others to approve various legislative priorities.

Digital Services Tax

France

On Thursday (Jan. 7), the Office of the U.S. Trade Representative (USTR) announced it will not impose tariffs on $1.3 billion worth of French goods scheduled to go into effect on Wednesday (Jan. 6). The tariffs were in retaliation for France’s new digital services tax (DST) that will largely impact American digital companies.

USTR said the tariffs were suspended due to similar Section 301 investigations on DSTs in other countries. Additionally, USTR claims the suspension of tariffs on France will allow for a coordinated response to all DST investigations.^[1]

Italy, Turkey, India

On Wednesday (Jan. 6), USTR released reports on Section 301 investigations into DSTs adopted by India, Turkey, and Italy. The reports also found the taxes discriminate against U.S. internet companies. However, USTR did not announce any new tariffs against those countries. The agency expects to complete more DST investigations in the near future.^[2]

China

NYSE

On Wednesday (Jan. 6), the New York Stock Exchange (NYSE) announced it will restart the process of delisting three Chinese telecom companies with ties to the country’s military.

On Monday (Jan. 4), the NYSE announced it would not delist the three Chinese telecom companies. However, Treasury’s Office of Foreign Assets Control provided new guidance on Tuesday (Jan. 5) which clarified the companies were subject to an executive order (EO) signed by President Trump in November that bans U.S. transactions in company stocks tied to the Chinese military.

Trading of the companies will be suspended on Monday (Jan. 11).^[3]

Applications

On Tuesday (Jan. 5), President Trump signed an EO that banned monetary transactions with eight Chinese software applications. The EO instructs the Secretary of Commerce to determine which transactions should be prohibited due to concerns the Chinese government could obtain personal information of U.S. citizens.

Additionally, the EO grants the Commerce Department broader authority to take “appropriate action” against other Chinese applications deemed as a national security risk and requests the agency to recommend export controls for U.S. data transmitted to foreign adversaries.

The Commerce Department has 45 days to implement the EO, which means President-elect Joe Biden’s administration will likely handle implementation.^[4]

Wood Mouldings Case

On Dec. 29, Commerce announced affirmative final determinations in the antidumping duty (AD) investigation of wood mouldings and millwork products from China, as well as the countervailing duty (CVD) investigation of wood mouldings and millwork products from China.

Commerce found that exporters from China have dumped wood mouldings and millwork products in the U.S. at margins ranging from 44.60 percent to 230.36 percent. Additionally, the agency determined that exporters from China received countervailable subsidies at rates that range from 20.56 percent to 252.29 percent.

The U.S. International Trade Commission (ITC) is scheduled to make final injury determinations in February 2021.^[5]

USMCA

On Thursday (Jan. 7), Canada asked the U.S. to remove “safeguard” tariffs on solar products and claimed it violated the U.S.-Mexico-Canada (USMCA) Agreement. Canadian Trade Minister Mary Ng said Canada has requested consultations with the U.S. on the tariffs as first steps in the USMCA dispute settlement process.

If discussions do not resolve the issue within the next 30 days, Canada can request a USMCA dispute settlement panel. Ng said that the tariffs have caused a decline in Canada’s exports of solar products to the U.S. by as much as 82 percent.^[6]

Boeing-Airbus

On Dec. 30, USTR announced the U.S. will impose additional tariffs on aircraft parts, wines, and other alcohol from the European Union (EU). The action is in response to the most recent tariffs from the EU over the Boeing-Airbus dispute.

In September 2020, the World Trade Organization (WTO) authorized the EU to impose $4 billion worth of tariffs on U.S. goods to retaliate against American subsidies for Boeing. However, USTR argues that the EU imposed the tariffs unfairly because data was used from a timeframe when COVID-19 reduced trade volumes therefore allowing the EU to impose tariffs on more products.

USTR also claims the EU unfairly increased tariffs by using data that excluded trade from the U.K., even though the country was a part of the EU for 52 days of the time period the tariffs were calculated. The latest move has reduced hope that there will be a settlement for the Boeing-Airbus dispute.^[7]

Vietnam

On Thursday (Jan. 7), USTR Robert Lighthizer met with Vietnam’s Minister of Trade and Industry, Tran Tuan Anh, by phone and discussed the bilateral trade action plan between the two countries. Additionally, both sides expressed willingness to work closely to find positive solutions to address trade issues.
Thursday (Jan. 7) is the end of the formal comment period in two Section 301 USTR investigations on Vietnam’s potential undervaluing of currency and use of illegally harvested lumber in wood product exports to the U.S.

It is unclear what actions Lighthizer will take on the Section 301 investigations of Vietnam before President-elect Biden is inaugurated.^[8]

Tire Tariffs

On Dec. 30, the Department of Commerce announced it will propose tariffs on car and truck tires from four countries. Commerce said it would recommend anti-dumping tariffs of up to 22 percent for Vietnam and Thailand, up to 38 percent for South Korea, and up to 98 percent for Taiwan.

The tariffs have not been imposed yet, and Commerce will finalize a determination in May 2021. Furthermore, the ITC will vote on the issue at a later date. ^[9]

Iranian Steel Sanctions

On Tuesday (Jan. 5), the Department of Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a Chinese supplier of graphite electrodes, 12 Iranian producers of steel and other metal products, three foreign based sales agents of Iranian metals, and a mining holding company. Treasury claimed the metals sector provides revenue for the Iranian government to finance a range of “nefarious” activities.

“The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” Treasury Secretary Steven Mnuchin said in the statement.^[10]
To view Treasury’s press release, click here.

Aluminum Import Monitoring Program

On Monday (Jan. 5), the Commerce Department started a new aluminum importing program. Government and industry officials claim it will allow the U.S. to better detect any suspicious surges in shipments from foreign suppliers.
“This is great news for U.S. aluminum companies and workers,” Tom Dobbins, President & CEO of the Aluminum Association, said in a statement.

“The (monitoring) program will help us to more quickly and fully understand trends in the aluminum market and, as appropriate, push back on countries that fail to follow the rules and laws that govern global trade,” he added.

On Monday (Jan. 5), the new Aluminum Import Monitoring and Analysis system website was released and is now accepting online license applications. The licenses will be required for covered aluminum products starting Jan. 25.^[11]

To view the new website, click here.

References

^[1] Palmer, Doug. “USTR holds off on retaliatory tariffs against France.” Politico Pro, 7 Jan. 2021. https://link.edgepilot.com/s/6b0462ee/PUJwL1_rSEmrG9CUx11sKA?u=https://subscriber.politicopro.com/article/2021/01/ustr-holds-off-on-retaliatory-tariffs-against-france-3986200

^[2] Palmer, Doug. “USTR says India, Italy and Turkey digital tax plans hurt U.S. companies.” Politico Pro, 6 Jan. 2021.https://link.edgepilot.com/s/bfde2779/S5R–rQPd0e5yDUTRngRZw?u=https://subscriber.politicopro.com/article/2021/01/ustr-says-india-italy-and-turkey-digital-tax-plans-hurt-us-companies-3986189

^[3] Mejdrich, Kellie. “NYSE restarts delisting of China telecoms on Treasury guidance.” Politico Pro, 6 Jan. 2021.https://link.edgepilot.com/s/bac73720/oazrMraKw0K1yLHDATe5fw?u=https://subscriber.politicopro.com/article/2021/01/nyse-restarts-delisting-of-china-telecoms-on-treasury-guidance-3986172

^[4] Overly, Steven. “Trump moves to ban eight apps with ties to China.” Politico Pro, 5 Jan. 2021. https://link.edgepilot.com/s/4533c840/mkgwlRuoBE6lhxBfV80L8A?u=https://subscriber.politicopro.com/article/2021/01/trump-moves-to-ban-eight-apps-with-ties-to-china-2027198

^[5] Palmer, Doug. “Senators make bipartisan appeal to slow down EU-China deal.” Politico Pro Morning Trade, 5 Jan. 2021https://link.edgepilot.com/s/737bab7e/umNxwXYYxUKRDig9bvWmsA?u=https://subscriber.politicopro.com/newsletter/2021/01/senators-make-bipartisan-appeal-to-slow-down-eu-china-deal-792575

^[6] Palmer, Doug. “Canada uses USMCA to challenge U.S. duties on solar products.” Politico Pro, 7 Jan. 2021.https://link.edgepilot.com/s/58fff6c8/W05GfQdJ7USMgqmoR9lX5A?u=https://subscriber.politicopro.com/article/2021/01/canada-challenges-us-duties-on-solar-products-3986199

^[7] Bade, Gavin. “U.S. to impose additional tariffs on EU aircraft parts, wines in Boeing-Airbus dispute.” Politico Pro, 30 Dec. 2020. https://link.edgepilot.com/s/9d12724b/QeqVBlhrQkeTT7qCoYUbHg?u=https://subscriber.politicopro.com/article/2020/12/us-to-impose-additional-tariffs-on-eu-aircraft-parts-wines-in-boeing-airbus-dispute-3986123

^[8] Palmer, Doug. “Lighthizer discusses ‘positive solutions’ with Vietnam over probes.” Politico Pro, 7 Jan. 2021.https://link.edgepilot.com/s/a0f73278/thenlngpGkWZGuk-8E5lAg?u=https://subscriber.politicopro.com/article/2021/01/lighthizer-to-discuss-vietnam-currency-probe-with-counterpart-tonight-3986197

^[9] Bade, Gavin. “Commerce proposes tariffs on vehicle tires and chassis from Asian nations.” Politico Pro, 30 Dec. 2020.https://link.edgepilot.com/s/91daa13e/ySvLx-AULUiaZ68wT5fDrQ?u=https://subscriber.politicopro.com/article/2020/12/commerce-proposes-tariffs-on-vehicle-tires-and-chassis-from-asian-nations-3986122

^[10] “U.S. hits Iran with fresh sanctions as Trump term nears end.” Reuters, 5 Jan. 2021. https://link.edgepilot.com/s/2fd40f86/9UpnCt7joUKaQulOT2zyyQ?u=https://www.reuters.com/article/us-iran-nuclear-usa-sanctions/u-s-hits-iran-with-fresh-sanctions-as-trump-term-nears-end-idUSKBN29A1R5