On The Hill

US – China

Hong Kong

On Tuesday (Jul. 14), President Trump signed H.R. 7440, the Hong Kong Autonomy Act, to impose sanctions on Chinese officials, businesses, and banks that help China restrict Hong Kong’s autonomy.

“This law gives my administration powerful new tools to hold responsible the individuals and the entities involved in extinguishing Hong Kong’s freedom,” Trump said in a Rose Garden appearance.^[1] 

Trump also signed an executive order ending U.S. preferential treatment of Hong Kong, following an announcement in May that he would take steps to revoke the region’s status as a customs and travel territory separate from the rest of China.

In response, China said it will sanction U.S. institutions and individuals. The Chinese foreign ministry said the move to sign the Hong Kong Autonomy Act into law was a “serious” interference in Chinese internal affairs.^[2] 

On Thursday (Jul. 16), Attorney General William Barr called on U.S. companies to reject doing business with the Chinese Communist Party (CPP). Barr said companies like Google, Microsoft, Yahoo, Apple, and Disney are “all too willing to collaborate with the CPP” in order to access China’s consumer economy.

Additionally, he said the Belt and Road Initiative, a foreign investment program the Chinese government implemented to finance infrastructure projects in developing countries, was “little more than a form of modern day colonialism.”

The White House is also reportedly considering a blanket ban on CPP members traveling to or living in the U.S. The declaration, likely only in draft stages, would target 92 million people.^[3] 

Tariff Exclusions

House Agriculture Committee Chairman Collin Peterson (D-MN) and Rep. Jackie Walorski (R-IN) introduced legislation on Thursday (Jul. 16) to extend tariff exclusions on Chinese goods.

The bill would extend any exclusions to tariffs imposed on Chinese goods under Section 301 for one year, “unless the U.S. Trade Representative (USTR) finds the product is strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs and extending the exclusion would cause severe harm to the United States.”

To view Peterson and Walorski’s statement, click here.

232

Last week, the comment period ended for Commerce’s Section 232 investigation into mobile crane imports in response to a petition the Manitowoc Company filed in December. Manitowoc argued that imports have forced the company to cut jobs and jeopardize its ability to continue supplying U.S. military and critical infrastructure projects.

However, the mobile crane industry in the U.S. is at odds over the request. Many of Manitowoc’s customers, as well as industry groups such as the Texas Crane Owners Association and the Specialized Carriers and Rigging Association, oppose 232 tariffs.

The case, initiated on May 6, 2020, has “taken the U.S. crane industry by storm,” said President and CEO of Tadano America Corporation, Ingo Schiller.

The European Union (EU) warned the Trump administration “against pursuing a process which could result in yet another instance of disregard of international law coming from one of the key actors in the multilateral trading system.” Canada and Japan also dispute the claim that their mobile crane exports threaten U.S. national security.^[4] 

The issue will likely reach the president’s desk next year.

Steel & Aluminum

Turkish Steel Imports

On Tuesday (Jul. 14), the Court of International Trade (CIT) ruled President Trump’s 2018 decision to expand national security-based tariffs on Turkish steel imports was “arbitrary and irrational.” This is the first time the administration’s Section 232 tariffs have been restricted by a federal court.

CIT Judges Jane Restani, Claire Kelly, and Garry Katzmann said Trump did not follow the procedures outlined under the Trade Expansion Act of 1962.

In 2019, Trump urged the CIT to dismiss the challenge, and argued the president did not have to order a new Commerce investigation before increasing the tariffs.

This week’s opinion contends that the “temporal restrictions on the President’s power to take action pursuant to a (Commerce) report and recommendation by the Secretary is not a mere directory guideline, but a restriction that requires strict adherence.”

“To require adherence to the statutory scheme does not amount to a sanction, but simply ensures that the deadlines are given meaning and that the President is acting on up-to-date national security guidance,” the three-judge panel stated.^[5] 

The respondents have 60 days to file an appeal with the U.S. Court of Appeals for the Federal Circuit.

To view the final opinion, click here.

Canada

In an interview this week, Canada’s Ambassador to the U.S. Kirsten Hillman said the global aluminum sector is shifting in response to the COVID-19 pandemic, and that trading partners – including the U.S. – should be focused on fueling trade recovery instead of restrictions.

“It’s really important to be exercising patience at this point in time when everything is so disruptive,” Hillman said.

“I think the last thing we would want is to go down the road of tariffs being imposed and Canada having very few options other than to respond and that’s not what we want,” she added.

Hillman said the U.S. and Canada should take time to let the market settle itself out instead of imposing taxes on imports that could have unintended consequences. She also did not rule out retaliating on agricultural products in the event the U.S. reimposes tariffs on aluminum.^[6] 

EU Privacy Shield Ruling

On Thursday (Jul. 16), the Court of Justice of the EU ruled that Privacy Shield, which replaced an earlier data transfer agreement called Safe Harbor, did not offer adequate protection for EU data when it was transferred overseas because U.S. surveillance laws are “too intrusive.”

The decision to invalidate the EU – U.S. Privacy Shield will likely prompt a host of trans-Atlantic trade disruptions. Commerce Secretary Wilbur Ross said in a statement that the agency was “deeply disappointed” and that Commerce would be “studying the decision to fully understand its practical impacts.”^[7] 

Director General of BusinessEurope said on Thursday (Jul. 16) the court’s ruling cannot be repealed. Additionally, he said that as the governments’ work towards a solution, companies will need guidance as soon as possible.

To view the ruling, click here.

To view Commerce’s statement, click here.

References

^[1] Rodriguez, Sabrina. “Trump signs Hong Kong sanctions bill in blow for China.” Politico Pro, 14 Jul. 2020. https://link.edgepilot.com/s/c7717498/VwDIpXJZEESTIp6gomzeBQ?u=https://subscriber.politicopro.com/article/2020/07/trump-signs-hong-kong-sanctions-bill-in-blow-for-china-1965312

^[2] NG, Teddy. “China promises sanctions for U.S. ending of Hong Kong preferential status.” South China Morning Post, 15 Jul. 2020. https://link.edgepilot.com/s/bb01ae21/JQetA92xlkKNRwsvv8MfWw?u=https://subscriber.politicopro.com/article/2020/07/china-promises-sanctions-for-us-ending-of-hong-kong-preferential-status-1965407

^[3] Bade, Gavin. “Barr slams U.S. companies in China.” Morning Trade, 17. Jul. 2020. https://link.edgepilot.com/s/c779e220/w3pc_1kVf0ySVLss5a1C1w?u=https://subscriber.politicopro.com/newsletter/2020/07/barr-slams-us-companies-in-china-789249

^[4] Palmer, Doug. “Crane firm Manitowoc plea for tariffs draws ire from competitors, customers.” Politico Pro, 16 Jul. 2020. https://link.edgepilot.com/s/f40a48fe/NV5j6OfHeESwmBrte-yrFA?u=https://subscriber.politicopro.com/article/2020/07/crane-firm-manitowoc-plea-for-tariffs-draws-ire-from-competitors-customers-1965546

^[5] “CIT quashes expansion of Section 232 tariffs on Turkish steel.” Inside U.S. Trade, 14 Jul. 2020. https://link.edgepilot.com/s/e08df986/jkD4Ze1rUES9UG97kb7EMQ?u=https://insidetrade.com/daily-news/cit-quashes-expansion-section-232-tariffs-turkish-steel

^[6] “Canada’s ambassador: let aluminum market ‘settle itself out’” Inside U.S. Trade, 15 Jul. 2020. https://link.edgepilot.com/s/8a7b4262/8u5yMwxnA0C1qHJNvtQepw?u=https://insidetrade.com/daily-news/canada%25E2%2580%2599s-ambassador-let-aluminum-market-%25E2%2580%2598settle-itself-out%25E2%2580%2599