[CTC] U.S. poised to submit NAFTA 2.0 without Canada — U.S.-Japan negotiations get a green light

Thu Sep 27 07:26:15 PDT 2018

POLITICO's Morning Trade: U.S. poised to submit NAFTA 2.0 without Canada — U.S.-Japan negotiations get a green light — Trump's solar, washing machine tariffs head to WTO dispute
By Sabrina Rodriguez | 09/27/2018 10:00 AM EDT

With help from Adam Behsudi 

U.S. POISED TO SUBMIT NAFTA 2.0 WITHOUT CANADA: The Trump administration has three days left before it must submit to Congress the text for a revised North American trade pact — and from the looks of it, that's not going to include Canada. 

U.S. Trade Representative Robert Lighthizer indicated <http://go.politicoemail.com/?qs=683c4d0781fee3105139f06c45f22c1188b3095587e5ee9ae1d54f9c27b79402fb2056f289048d5572ad977e4fb2ecab> on Wednesday that the technical text for the U.S.-Mexico trade deal is "on track" to be submitted before the Sept. 30 deadline under Trade Promotion Authority law. He also acknowledged that "we're running out of time" to get Canada on board. That means there's a heightened possibility that Mexican President Enrique Peña Nieto will be signing a bilateral deal rather than a trilateral one before he leaves office Nov. 30. 

The Trump administration is expected to turn over the text on Friday, but USTR and the White House did not respond to requests for confirmation. 

Canada on the brain: President Donald Trump took sharp aim at Canada on Wednesday afternoon, stating he dislikes Canada's representative — potentially referring to Foreign Minister Chrystia Freeland, who has led the NAFTA negotiations. 

There's "a good chance still" of a deal with Canada, "but I'm not making anything near what they want to do," Trump said in a news conference in New York. He also reiterated his plan to rename NAFTA the "USMC" pact — the three countries' initials and "like the United States Marine Corps, which I love."

Canadian Prime Minister Justin Trudeau earlier in the day said "a broad range of paths <http://go.politicoemail.com/?qs=683c4d0781fee310fafb880e8278e267e3c6bbb4d584b52d82a525e5056def50f09fbf9d55f65c49ce67fc889e87f986> are ahead of" Canada if talks don't wrap by Sunday. "We're going to keep focusing on trying to get the right deal for Canadians," he said. 

Private sector weighs in today: Members of the 28 congressionally mandated private-sector trade advisory committees are expected to notify USTR today of their verdicts on the available details from the preliminary U.S.-Mexico agreement. A congressional aide indicated to Morning Trade last week that committee members were being told to do the best they could with the available information. 

Lighthizer on the Hill today: The top U.S. trade negotiator has meetings scheduled with the House Ways and Means and Senate Finance committees, where he will brief lawmakers on issues including the status of the NAFTA negotiations and the launch of talks with Japan, according to congressional sources.

IT'S THURSDAY, SEPT. 27! Welcome to Morning Trade, where your host is happy that fall TV shows are here because now she has an excuse to be anti-social and stay home with her pup. Any shows I should be watching? Send recommendations and news: srodriguez at politico.com <mailto:srodriguez at politico.com> or @sabrod123 <http://go.politicoemail.com/?qs=683c4d0781fee3105cd8abc88d05cd1290d3ffbfe8969e789f6c9adfb6addcd197ab0257352668fa842a6cc22d6a3f6f>.

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U.S.-JAPAN NEGOTIATIONS GETS A GREEN LIGHT: Against all odds, Japanese Prime Minister Shinzo Abe agreed to enter into formal trade negotiations with Trump, setting the stage for what could be the administration's greatest trade achievement beyond the renegotiation of NAFTA. 

Lighthizer on Wednesday said he'll begin the process of notifying Congress under Trade Promotion Authority and was upfront about the need to get congressional approval for any deal. However, he shut down any speculation that U.S.-Japan talks would be a pathway back to the Trans-Pacific Partnership, which Japan is keen to see happen one day. 

Why now? Abe in recent elections secured another three years as the country's leader, making a negotiation with the U.S. much more tenable. And if Tokyo was aiming to use trade talks to avoid possible new U.S. tariffs on autos — it succeeded. Abe said Wednesday night that Trump promised Japan would be spared from auto tariffs and a further opening of its agricultural markets. More here <http://go.politicoemail.com/?qs=683c4d0781fee3108df56ac8d0cb5d70e4a42a1fa0fa9564d0ff14531922cb20f8d5e5e343abb6aca242d8a0d6dca326>.

U.S. SOLAR, WASHING MACHINE TARIFFS HEAD TO WTO DISPUTE: South Korea made a second and final request to form a dispute panel challenging U.S. tariffs on solar products and washing machines. The tariffs, imposed under Section 201 of the Trade Act of 1974, are being challenged (here <http://go.politicoemail.com/?qs=683c4d0781fee310e78981e873a94ff2b566fbce68ed8cc1ebccc7aa67c93ea68144a00ca7888a1920a3f74c4de97a44> and here <http://go.politicoemail.com/?qs=683c4d0781fee310bd40dd072d01c8cf25c962fc302da99197702633778702a8935c291d65b901595721d9cb8d8660ef>) as violations of rules under the General Agreement on Tariffs and Trade and the WTO Safeguards Agreement.

The challenges are the first of a number of disputes aimed at recent U.S. tariff actions. Numerous countries have filed disputes against U.S. steel and aluminum tariffs and China has challenged U.S. penalties imposed as a result of the Trump administration's Section 301 report.

AND THEN THERE WERE THREE ON THE APPELLATE BODY: The U.S. rejected an effort to reappoint Shree Baboo Chekitan Servansing, an Appellate Body member whose term expires on Sept. 30.

"As we have explained in prior meetings, we are not in a position to support the proposed decision," the U.S. said in its statement at the meeting. "The systemic concerns that we have identified remain unaddressed."

The rejection came after Mexico, speaking on behalf of 68 WTO members, called for the creation of a new selection committee for the appointment of new Appellate Body members. The WTO's highest judicial body has seven seats and needs to have three members in order to make decisions. The terms of two other current members expire next year, which would leave just one judge, China's Hong Zhao, on the panel until her term expires in 2020.

Honduras to the rescue? The Central American nation presented a proposal <http://go.politicoemail.com/?qs=683c4d0781fee3100bc3901705954813f1401fd8b95e66938f8cc06a09992f9be246c030a48bf27cf2de43711b8ed4bc> for addressing some of the U.S.'s concerns with the Appellate Body, which includes a rule that allows a member whose term has expired to continue to work on cases.

The U.S. said it appreciated that Honduras' so-called non-paper provided some options and looked forward to hearing other views on how to address U.S. concerns. Twenty-three other WTO members offered some level of support for the proposal, saying it was the basis for starting a discussion on the issue.

INDUSTRY GROUPS PRESS FOR EXCLUSION PROCESS FOR TRUMP'S LATEST TARIFFS: More than 100 trade groups urged Lighthizer on Wednesday to include a process for businesses to apply for their products to be excluded from the administration's latest tariffs on $200 billion worth of Chinese goods.

The Trump administration previously offered an exemption process for the first two sets of tariffs it imposed on China, which targeted a total of $50 billion in goods from Beijing. However, it has not done the same for the third wave of duties, which took effect on Monday. 

Americans for Free Trade, a new coalition made up of trade groups that represent the retail, manufacturing and services sectors, argued in a letter <http://go.politicoemail.com/?qs=683c4d0781fee3107dbfab659ac1eea19771d5a8d51dfc4656ebb03ec66cbb133ef47b76340f54d22a55b2f541db8bd2> to Lighthizer that U.S. companies were given little time to make necessary changes to supply chains because the tariffs went into effect less than a week after the final list was announced. 

The coalition added that many of the products on the third-phase list "have nothing to do with the original [Section] 301 investigation, which focused on China's practices regarding forced technology transfer and unfair trade practices." A USTR spokesman told Morning Trade there were no announcements on that subject as of Wednesday afternoon. More here <http://go.politicoemail.com/?qs=683c4d0781fee310cb8e8c3ee2e81140be2e4fa6e3cf1118dfb356936942184b4df051db1d12bdce43abc2ee19974c9c>. 

TRUMP, MAY DISCUSS POSSIBILITY OF 'WIDE-RANGING' TRADE DEAL: Trump and U.K. Prime Minister Theresa May agreed on Wednesday that Brexit provides a "wonderful opportunity to strike a big and ambitious U.K.-U.S. Free Trade Agreement," a spokesman for May said after a bilateral meeting between the two leaders. 

A White House readout of the meeting, however, did not explicitly mention a potential trade deal — instead saying the leaders "reaffirmed their commitment to closely coordinate on efforts to address" global challenges. More here <http://go.politicoemail.com/?qs=683c4d0781fee310ab5de03f09380247c68b28f9bb3c7ca2b5680ebd51a72ade0d21f9b6c777b061508153a0a06e130f>. 

HOUSE DEMS URGE LIGHTHIZER TO SLOW DOWN ON NAFTA 2.0: Democratic Reps. Ron Kind, Suzan DelBene and Brian Higgins pressed Lighthizer on Wednesday to focus on getting a NAFTA 2.0 that gives the U.S. access to the Canadian dairy market rather than rush ahead on a pact without Canada. 

In a letter <http://go.politicoemail.com/?qs=683c4d0781fee310fc783dd8bb6be3edd117d2a0630b934f8ec3daa882a7a0f472926ab8b7c1211f251688dd92eabe4d>, the lawmakers urged USTR "to take all the time the administration needs to get the NAFTA renegotiation right with both Canada and Mexico rather than rush to meet artificially imposed deadlines at the expense of a good outcome."

The U.S. should not wrap up a new deal without "making measurable and significant gains for U.S. dairy exports to Canada," they added.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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