With the headlines dominated by news about North Korea, the special counsel’s investigation and Despacito as the summer’s hit song, it’s understandable to think that international trade issues have gone on the back burner. That’s not the case, however. In addition to its massive-in-scope national security investigations of steel and aluminum, the Trump Administration has been busy with trade agreement implementation issues.
First, the Administration released its objectives for the NAFTA renegotiations. The document is an interesting mix of platitudes, aspirations and veiled threats. It proposes few specific changes to the current agreement, which is not surprising since the tripartite discussions are just underway. It does, however, provide numerous clues on the broad outlines the U.S. wants to adopt.
It’s reassuring that the objectives include maintaining existing “reciprocal duty-free market access for industrial goods” and “agricultural goods”. Contrary to the heated campaign rhetoric about terminating NAFTA altogether, there appears to be a commitment to the core principle of duty-free treatment. Another goal is to “strengthen disciplines to address non-tariff barriers that constrain U.S. exports to NAFTA countries”; who can really argue with this?
On the other hand, “[p]romot]ing greater regulatory compatibility with respect to key goods sectors to reduce burdens associated with unnecessary differences in regulation” could be problematic. Does this mean, in practice, that U.S. product safety standards and environmental will be diluted or enhanced to meet those of Canada and Mexico, or vice-versa? This one bears watching.
Same goes for the intent to “[u]pdate and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.” and “[e]nsure the rules of origin incentivize the sourcing of goods and materials from the United States and North America.”
“Strengthen” means make more restrictive. Many NAFTA “tariff shift” rules grant “originating” status to products made entirely with non-North American content. These may be in jeopardy. Likewise, emphasizing use of North American “goods and materials: would be consistent with an across-the-board regional value content requirement; of course, this has not been specifically proposed and I don’t want to give anyone ideas.
The document throughout refers to greater transparency, streamlining and harmonization of administrative procedures, which all seem desirable in theory. In some areas (intellectual property protection, sanitary and phytosanitary measures, trade facilitation and technical barriers to trade), the United States seeks to engraft World Trade Organization requirements onto NAFTA, so there is a common set of principles.
The specific proposed changes include a common $800 de minimis cutoff for entry filings, electronic means for payment of duties, taxes and fees and “commitments not to impose customs duties on digital products.” In the trade remedy area, the United States seeks elimination of the safeguard measures exclusion for Canada and Mexico as well as “the Chapter 19 dispute settlement mechanism” under which certain appeals of administrative decisions are heard by ad hoc arbitration panels rather than the national judicial systems.
There’s something in the renegotiation objectives document to encourage or frighten (or both) any companies involved in trade with Canada and Mexico. We don’t yet know what the nuts and bolts changes will be, but at least we have a statement of the principles the United States hopes they will reflect.
The United States Trade Representative’s office also is preparing its annual reports on Chinese and Russian implementation of their WTO commitments, and is seeking public comments as part of this effort.
For China, USTR is particularly interested in comments on trading rights, import regulation (e.g., tariffs, tariff-rate quotas, quotas, import licenses), export regulation, internal policies affecting trade (e.g., subsidies, standards and technical regulations, sanitary and phytosanitary measures, government procurement, trade-related investment measures, taxes and charges levied on imports and exports), intellectual property rights (including intellectual property rights enforcement), services, rule of law issues (e.g., transparency, judicial review, uniform administration of laws and regulations) and status of legal reform, and other WTO commitments, as well as any “unresolved compliance issues that warrant review and evaluation.”
The Russian issues of particular interest include import regulation (e.g., tariffs, tariff-rate quotas, quotas, import licenses), export regulation, subsidies, standards and technical regulations, sanitary and phytosanitary measures, trade-related investment measures, taxes and charges levied on imports and exports, other internal policies affecting trade, intellectual property rights (including intellectual property rights enforcement), services, rule of law issues (e.g., transparency, judicial review, uniform administration of laws and regulations) and trade-related investment measures.
A hearing regarding China’s compliance will be held on October 4, 2017, with requests to appear, summaries of proposed testimony and public comments due by September 20, 2017. The Russia hearing is scheduled for September 28, 2017; the deadline for requests to appear, testimony summaries and public comments is September 22, 2017.