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PNWER Blog

News, Updates & Resources for the Region

PNWER Applauds Agreement Reached to Lift Steel and Aluminum Tariffs and Associated Retaliatory Tariffs

5/17/2019

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We applaud the announcement today regarding the agreement reached to lift steel and aluminum tariffs on Canada and Mexico and associated retaliatory tariffs. PNWER has focused on this issue as a top priority for the region for the past year. This important step helps clear a major hurdle in all three countries in finalizing the US-Canada-Mexico Agreement (USMCA).
 
“I applaud the announcement today. When markets are open and goods are transported freely across borders, the result is economic growth, new businesses and more and better job opportunities for individuals.”, said PNWER President Larry Doke, MLA Saskatchewan.
 
Oregon Senator Arnie Roblan, Past President of PNWER said, “Here in the Pacific Northwest, we are stronger by working closely together, and our relationships are intact because of the ongoing partnerships in every major sector of our economy, and in state, provincial, territorial, local, and tribal governments, this announcement helps us to maintain these important relationships.
 
"This is great news, said Matt Morrison, PNWER's Executive Director, " PNWER has worked for the past 12 months to encourage the Administration to remove the Section 232 Tariffs, and Canada and Mexico to agree to the removal of their retaliatory tariffs, all of which have significantly impacted our farmers, ranchers, and manufacturers in both countries in our Pacific Northwest region."
 
The US and Canada’s trading relationship is incredibly important to the Pacific Northwest. The US and Canada have the largest trading relationship in the world, and here in the Pacific Northwest, we benefit from the two-way trade of over USD $541 billion (CAD $630 billion) annually, of which about USD $22.6 billion (CAD $29 billion) is in the Pacific Northwest.
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USMCA: Obstacles to Ratification

4/5/2019

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President Donald Trump of the United States, former President Enrique Peña Nieto of Mexico, and Prime Minister Justin Trudeau of Canada signed the United-States-Mexico-Canada Agreement (USMCA) in November of 2018 to replace NAFTA. The new deal proposes a number of updates to the old agreement which has governed North American trade since 1994.

USMCA includes a number of new provisions intended to benefit North American firms while liberalizing trade between the three partner states. For instance, the USMCA raises wage floors for automotive workers and tightens country-of-origin requirements. The deal addresses restrictions on dairy trade between the United States and Canada, and contains a pledge to refrain from currency manipulation, which were issues unresolved by NAFTA.

The USMCA also includes a sunset clause scheduling legislative reviews and possible modifications for every six years. This stipulation allows for periodic adjustments in the event that portions of the deal are less efficient than projected.

Although the three executives support the agreement, the deal still needs to be ratified by the legislatures of the partner states in order to be enacted. In Washington, D.C., it is unclear about the future of the agreement. Members of Congress have indicated that there are components of the USMCA that should be improved. Like all trade agreements, there is gain for every signatory. Agreements are not designed to prioritize the interests of one country over those of its partners.

It is worth noting the magnitude and importance of trade between the United States and Canada. The U.S.-Canada trade partnership is one of the largest in the world. The total value of trade between the two countries reached $673 billion in 2017 -- Canada’s largest partner is the United States, and is the United States' second largest trading partner. Canada is the largest goods export market for the United States at $282.3 billion in 2017, and 76% of all Canadian exports are to the United States. The U.S. Trade Representative estimates that 1.2 million U.S jobs are supported through this export market alone. Canadian foreign direct investment (FDI) in the United States has also increased substantially in recent years, led by manufacturing, wholesale trade, and finance.

Uncertainty over North American trade against a backdrop of tariffs and tariff retaliations jeopardizes the stability of the U.S.-Canada trading partnership. If action is not taken soon and barriers to trade persist, exports and FDI will suffer. Decreasing international competitiveness among firms means that those exporters will lose their hold on foreign markets as more competitive foreign producers gain access. This was the case of U.S. soybean exports when protectionist policies escalated between the Trump and Xi Jinping administrations. There is a chance that those soybean exporters might never regain the market access they held in China.

The likelihood of the USMCA’s ratification has dominated debates and commentary over the future of the deal. The agreement still faces a series of hurdles in Congress on its path to ratification. U.S. Trade Representative Robert Lighthizer is currently meeting with lawmakers to brief them on the USMCA’s provisions. Members of Congress have expressed concerns with a few components of the agreement. Some are worried about deal’s implications for labor standards. They point to the fact that the Mexican government may not update its organized labor laws according to the deal’s stipulations. In this case, they argue, there is no adequate means of enforcing the agreement and protecting Mexican workers. Speaker of the House Representative Nancy Pelosi (D) has gone as far as to say that there will be no vote on the agreement until Mexico reforms its labor laws. The Mexican government claims that it is in reach of passing these reforms before a congressional recess in late April.

Other dissenting legislators criticize the deal for its intellectual property rights concessions to large pharmaceutical companies. On the other side, pro-business interests attack measures which weigh on free trade, like country-of-origin requirements for automobile parts.

Legislators on both sides of the aisle have called for the removal of steel and aluminum tariffs as a requisite for the deal’s ratification. Recently, Finance Committee Chairman Senator Chuck Grassley (R) echoed this demand. Canadian officials have indicated that the passage of the agreement in Parliament is contingent upon the removal of Section 232 tariffs on steel and aluminum. Critics argue that these tariffs, which the Trump administration implemented on grounds of national security, constrict free trade and cause political friction at odds with the spirit of an international trade agreement. Business leaders across the United States, as well as non-profits like PNWER, have advocated for the removal of the Section 232 tariffs, which hurt firms across borders.

The USMCA enjoys its most robust support from private sector actors. In February, a coalition of firms and organizations including the U.S. Chamber of Commerce, the National Association of Manufacturers, Fiat Chrysler Automobiles, and the American Farm Bureau Federation pledged their support for the deal. A number of other American manufacturing and agriculture-related organizations have also come out in support of the agreement.

The future of the USMCA is uncertain, as the vote which Trump and many Republicans hope to reach this summer is not yet guaranteed. The U.S. International Trade Commission will publish economic projections of the USMCA by April 19, an evaluation which may sway legislators in favor of or against the agreement. However, the political trappings of ratifying the agreement may weigh just as heavy as any economic analysis. Democrats are aware that approving the deal would mean a major policy victory for Trump, prefacing his run for re-election. Partisan calculations will certainly present another obstacle for Trump and Lighthizer as they push the agreement toward Congress this summer.

Speaking pragmatically, if the USCMA is not ratified, trade will most likely continue according to NAFTA’s provisions, but it is unlikely that the 232 tariffs will be lifted. Some firms can request waivers for those tariffs, but this complicates business operations and not all companies are even aware of this option. Ideally, legislators and the U.S. Trade Representative will resolve disputes over labor and environmental standards and freedom of trade in a timely manner. However, these demands are, to an extent, antithetical, and a compromise deal which satisfies all parties is unlikely to emerge in the near future. In light of persisting tariffs, it is worth asking ourselves: if the USMCA is not ratified, where do we go from here?
​

By Daniel Green, PNWER Policy Intern. Daniel is a senior undergraduate student at the Jackson School of International Studies at the University of Washington.

Resources:
Pelosi Says the House Won’t Hold USMCA Vote until Mexico Changes Labor Laws 
Market Watch- April 2, 2019  

Trump Trade Deal with Canada, Mexico Still Faces Hurdles 
​
Boston 25 News- April 1, 2019


Guest Opinion: Congress Must Approve Canada/Mexico Trade Agreement
Idaho Politics Weekly- March 31, 2019


Mnuchin: Lifting Tariffs Part of Plan for USMCA Passage
Politico- March 15, 2019


Democrats Cool Toward NAFTA Replacement, Question Labor Standards
Reuters- March 13, 2019


Liberal Wing of Democrats Wants Changes to NAFTA Replacement
Politico- March 12, 2019


US Working on Plan to Lift Tariffs from Canadian Steel and Aluminum: Trade Chief
Global News- March 12, 2019


Mexico’s Government Says Ratification of USMCA Contingent upon End to Section 232 Aluminum and Steel Tariffs
Aluminum Insider- March 6, 2019
​
USMCA Faces an Uncertain Path through Congress
Marketplace- March 5, 2019


US Auto Chief Courts Auto Union to Support North American Trade Pact
Reuters-March 1, 2019


China Trade War Update: A Trickle of Soybean, Oil Exports
Forbes- February 19, 2019

Senate Finance Chair Says Tariffs on Steel, Aluminum Should Go
​
Reuters- January 30, 2019

U.S.-Canada Trade Facts 
​
Office of the Unites States Trade Representative
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Continuing Federal Outreach

3/28/2019

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PNWER CEO, Matt Morrison, recently represented PNWER in Washington, D.C. at the ​111th Annual Winter Meeting of the National Governors Association (NGA) as well as in meetings with Congressional leaders and agencies. Key issues to the PNWER region like USMCA, tariffs, and aquatic invasive species were discussed. Keep reading below for an overview of PNWER’s meetings.
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NGA Chair, Governor Steve Bullock of Montana, at the 111th Annual Meeting in Washington, D.C.

Canadian Premiers for Removal
​of Section 232 Tariffs

PictureL to R: Premier Scott Moe, SK; Premier Blaine Higgs, NB; and Premier Doug Ford, ON
The importance of the U.S.-Canada relationship was a major focus at the ​​National Governors Association's Annual Meeting held in Washington, D.C. in February. Several events were held over the weekend that highlighted the need for and benefits of a strong cross-border relationship.

A breakfast roundtable provided the  Canadian Premiers ​Scott Moe of Saskatchewan,  Blaine Higgs of New Brunswick, and Doug Ford of Ontario the opportunity to offer their perspectives on the ratification of USMCA and the elimination of the Section 232 steel and aluminum tariffs that are currently being imposed.  Most notably, Premier Moe gave a moving testimony of the instability the current tariffs are bringing to the region and how integrated the economies of Canada and the U.S. are, particularly the agriculture economies along the border. He explained that, for these reasons, it is so important that the USMCA be ratified as soon as possible, and that the tariffs be lifted.  Ambassador David Wilkins hosted the roundtable. Ambassador Wilkins will be speaking on the Canada-U.S. relationship at the PNWER Annual Summit in Saskatoon in July. 

PicturePremier Scott Moe (SK) speaks during a roundtable with Premiers and Governors on USMCA
​A second key event was a roundtable organized by Governor Steve Bullock of Montana, the 2018-2019 Chair of the NGA, with the Premiers and ten U.S. Governors. This roundtable allowed the Premiers of Canada to speak directly to their U.S. counterparts on the issues of trade and tariffs and dialogue on the impacts to their constituents. 
​

Lastly, the NGA hosted federal leaders from the U.S. and Canada who spoke about the next steps for ratification of USMCA. One key takeaway from this session was the assertion that the Canadian Parliament has only three months left in its 2019 sitting and is unlikely to take up ratification unless                                                                                                                  Section 232 tariffs are lifted. 

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Ambassador David MacNaughton at the 2019 NGA Annual Meeting
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Washington Governor Jay Inslee at the 2019 NGA Annual Meeting
​The USMCA and tariff discussion will be a featured issue during the 2019 PNWER Annual Summit in Saskatoon, Saskatchewan, this July 21-25. Hear from policy experts, legislators, and others during keynotes, panels, and sessions that highlight this important cross-border issue.  Join us in Saskatoon in July. More details HERE

Congressional Outreach for USMCA & Tariffs

PictureRepresentative Earl Blumenauer (OR) and Representative Richard Neal (MA), Chairman of the House Ways and Means Committee
PNWER prepared and delivered letters to all of the region’s congressional delegation strongly urging them to ratify USMCA and to encourage the Trump administration to remove the steel and aluminum tariffs on Canada and Mexico. These letters reiterated the importance of free, fair, and open trade for the mutual benefit of the three economies. They also mentioned the resolutions that are being introduced in the five Northwest state legislatures calling for the same. Resolutions from the Northwest states are being considered in the legislatures in the coming weeks.

Two of the key congressmen for the USMCA ratification process are in our region. They are Idaho Senator Mike Crapo, who serves as Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and Oregon Representative Earl Blumenauer, Chair of the House Ways and Means Committee’s Subcommittee on Trade. Both have an important role in trade policy for Congress. 
​

PNWER met with key staff in Senator Crapo’s office to discuss the importance of USMCA ratification and the repeal of Section 232 tariffs. Senator Crapo’s staff expressed interest in establishing an ongoing relationship with PNWER. He would like to be kept apprised of the state joint resolutions mentioned above and also any data on impacts in the Pacific Northwest of tariffs, whether from Canada and Mexico or from China.
​

​Oregon Representative Earl Blumenauer's office also met with PNWER to speak about USMCA ratification and Section 232 tariffs. It was a wonderful opportunity for PNWER to provide input to the congressional staff on the Pacific Northwest's regional concerns        with the continued instability on North American trade. PNWER is                                                                                                 looking forward to working with the Representative's office as                                                                                                       USMCA ratification comes up in the coming weeks. ​

Advocacy for Aquatic Invasive Species (AIS) prevention: Invasive Mussel Funding

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Continuing PNWER’s ongoing work on the issue of invasive species, Matt met with PNWER's regional Congressional delegation’s Appropriations committee members to ensure the continued appropriation of federal matching funds to the four Northwest states (ID, MT, OR, and WA) for watercraft inspection stations and monitoring to combat invasive mussels. PNWER has helped to bring $21 million of federal funds to the region since 2015 for invasive mussel prevention in the Columbia River Basin. This year, reauthorization language has expanded to allow for funding in three new river basins and up to a dozen more states. Matt advocated on the behalf of the PNWER region to ensure that the same level of funding would continue for the four Northwest states, and not be diluted by the addition of the new river basins.

For the upcoming year, PNWER submitted requests to each of the House and Senate appropriators in the region for the continued appropriation of $6 million to the four Northwest states. Meetings with Congressional appropriators included staff from the following offices:
  • Senator Steve Daines, MT
  • Representative Jaime Herrera-Beutler, WA 
  • Representative Derek Kilmer, WA
  • Senator Patty Murray, WA
  • Representative Dan Newhouse, WA
  • Representative Mike Simpson, ID

The issue of invasive mussels is a key topic for PNWER's Invasive Species Working Group. The Invasive Species Working Group will be holding a session at the Annual Summit to discuss this and other topics that are vital to the protection of the region's waterways and industry.  ​

Agency Meetings with Western
​Governors Association

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The Western Governors Association (WGA)) invited Matt Morrison on behalf of PNWER to participate in a series of meetings with administration officials while he was in Washington, D.C. He attended the following meetings with the WGA. 

U.S. Department of the Interior: The WGA and PNWER met with officials from the U.S. Department of the Interior to discuss mandatory watercraft inspections for invasive mussels in Lake Mead and Lake Havasu in Arizona. Matt explained that under the Water Resources Development Act (WRDA) the Army Corps of Engineers program has been expanded to four more river basins. 

U.S. Department of Energy: At the Department of Energy, a number of issues were discussed including Western energy corridors as well as fossil fuels and carbon capture and storage (CCS).  Matt also briefed the DOE on PNWER's Legislative Energy Horizon Institute (LEHI) program, which DOE has funded since 2009.

U.S. Department of Transportation: The WGA and PNWER met with Finch Fulton, the Deputy Assistant Secretary for Transportation Policy. He has a particular interest in Autonomous, Connected, Electric, and Shared (ACES) vehicles which will be a key topic at PNWER’s Economic Leadership Forum in Seattle in November.  Mr. Fulton was also interested in PNWER’s engagement in Section 1441 of the Fixing America's Surface Transportation (FAST Act as the DOT is working on reauthorization of the act for 2020.  

Lastly, Matt and key members of the WGA staff met with the Legislative Director for Senator Chuck Schumer as well as 3 additional staff during which they spoke about how to improve the relationship of the federal government to the state governments. 

Looking Forward

PNWER is committed to continuing federal advocacy for the region on these key issues and many more. Currently, PNWER is focusing particularly on the ratification of USMCA and the removal of Section 232 tariffs and retaliatory tariffs. To see PNWER's work on this issue, visit our ​​​NAFTA Modernization/USMCA Ratification page. 

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Matt Morrison, PNWER CEO, and Premier Scott Moe of Saskatchewan
Join PNWER and Saskatchewan Premier Scott Moe in Saskatoon for the 2019 Annual Summit on July 21-25, 2019!
Summit Website
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Fostering an Innovation Ecosystem

3/8/2019

 
On January 31, Nirav Desai, PNWER Innovation Working Group co-chair, and Steve Myers, PNWER Senior Program Manager, had the opportunity to testify during the Alaska Senate Labor and Commerce Committee hearing in Juneau. During their testimony, Mr. Desai and Mr. Myers highlighted the options in Alaska for economic diversification and development.  Watch the Senate Labor and Commerce Committee hearing HERE.

Alaska has similar challenges as other cities, states, and provinces that are dependent on one sector of the economy. Automation and globalization have increased over time, and jobs in traditional sectors have been eliminated or outsourced.  Economies that are primarily resource-based are particularly impacted by swings in prices because of the cost to commit to development as well as getting products to market.  It is often difficult to justify investment in development and an increase in production if the price of resources is down. Additionally, as calls for new transportation options like pipelines and increased rail capacity are being scrutinized, the cost of getting products to market increases. This has an adverse effect on jobs and revenue for resource-based economies.  
​

Mr. Desai pointed out that some regions have had success attracting technology-based industries in an effort to diversify the local economy and enhance its incumbent industries.  For example, over the past 20+ years, Austin and Houston, traditionally resource-based economies, have encouraged technology firms to open engineering offices in Texas, selling the low cost of living, educated talent, and low taxes. It has taken several years and courting by economic development leaders, but when a community lays out a strategy and sticks to it, there is opportunity for growth. This strategy is opposite to the traditional method of targeting corporations for complete relocation. The traditional relocation process can be challenging and harmful as states and provinces undermine each other to get the best deal by offering the most incentives – essentially a race to the bottom marked by tax breaks and incentives that may surpass the growth in municipal revenue.  

Cities like Austin, Texas; Raleigh, North Carolina; and Pittsburgh, Pennsylvania, have embraced the innovation economy and sought ways to connect their educational institutions with technology platforms to foster the growth of engineering offices and a start-up ecosystem. States and provinces can foster an innovation ecosystem that creates jobs and revenue by enticing firms to work in their community.
States and provinces need to remember to focus on their strengths and get buy-in from stakeholders. States and provinces like Alaska could take on the strategy of attracting satellite offices using its uniqueness to test products and support incumbent industries.

Learn how workforce development and talent can foster an innovation ecosystem in a future post.

Check out our 2019 PNWER Annual Summit in Saskatoon, Saskatchewan, July 21-25, 2019!

Future posts in this blog series will showcase the working groups that will hold sessions at our Annual Summit including workforce, transportation, economic development, and more. Stay tuned!
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Fifth Round of Talks opens on the Columbia River Treaty

2/27/2019

 
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PictureJoDe Goudy, Chairman of the Yakama Nation Tribal Council, speaking during the CRT Symposium in Spokane, WA
Today marks the opening of the fifth round of negotiations between the U.S. and Canada on the Columbia River Treaty (CRT) since talks to modernize the Columbia River Treaty regime began in May 2018. PNWER has taken a keen interest in the Columbia River Treaty negotiations and is looking forward to seeing the Treaty modernized for the mutual benefit of the region.  In fact, PNWER has been working with partner jurisdictions over several years to underscore the importance of the CRT. In 2004, the PNWER Executive Committee affirmed the Columbia River Treaty as one of the most important issues for the region.  Since then, much has been done in the region to provide input to the U.S. and Canadian entities leading up to the renegotiation of the treaty.  This past year marked a major effort by PNWER to bring stakeholders and experts together to learn more about the treaty, the negotiations, and the impact on the region.
 
This past July, PNWER organized a Symposium which was held at the PNWER Annual Summit in Spokane, WA. This Symposium was the first joint session to include stakeholders from both sides of the border as well as the chief negotiators from the U.S. and Canada. The Symposium provided the chief negotiators the opportunity to present together and hear testimony from stakeholders. Stakeholders shared the benefits and impacts of the Treaty, focusing on areas including ecosystems, tribal groups, utilities, tourism, agriculture, recreation, and more.  The Symposium also featured legislators of jurisdictions that are in and surrounding the Columbia River Basin who spoke about effects of the CRT on livelihoods in the region. 
Watch TVW's coverage of the CRT Symposium HERE. 
 
Following the Symposium, PNWER and its partners organized two policy tours highlighting aspects of the Columbia River Basin to legislators, policymakers, and stakeholders. The first tour to the Grand Coulee Dam in central Washington showcased hydroelectric power and water storage for irrigation projects in the U.S. and Canada.  Participants heard from several experts including a speaker from the Bonneville Power Administration who illustrated the delivery of power throughout the region. The Chelan County Public Utility District Leadership spoke about operations and the important role the Grand Coulee Dam has in power generation. Tour attendees also heard about the importance of water storage for irrigation to the region’s agricultural community.  

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Sen. Arnie Roblan of Oregon and Sen. Mike Cuffe of Montana at the Grand Coulee Dam in Washington
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Tour of the Grand Coulee Dam
The following day, attendees were invited to a two-day study tour of southeast B.C. During the two-day tour, fifty attendees visited the Hugh Keenleyside Dam as well as the Spicer farm in Nakusp, which is one of the farms inundated when the treaty dams were built.  Columbia River Basin residents and local experts were present during the two days to share their knowledge of how the treaty affects the region’s ecosystems, agriculture, tourism, and community.  ​
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Legislators, policymakers, and stakeholders with local community leaders and environmental specialists in Syringa Provincial Park in Castlegar, British Columbia
The U.S. Chief Negotiator for the Columbia River Treaty, Jill Smail, will lead a town hall in Kalispell, Montana on March 20. The town hall will provide an opportunity for the public to hear about the status of the negotiations as well as to ask questions. For more details on the town hall, visit the U.S. Department of State's website. 

For more information on the Columbia River Treaty, its history, and impact, visit the links below.

Government of British Columbia:
https://engage.gov.bc.ca/columbiarivertreaty/
https://engage.gov.bc.ca/columbiarivertreaty/2018-community-meetings/

February 2019 Columbia River Treaty Newsletter 

U.S. Department of State:
https://www.state.gov/p/wha/ci/ca/topics/c78892.htm
https://www.federalregister.gov/documents/2019/02/27/2019-03353/town-hall-meeting-on-modernizing-the-columbia-river-treaty-regime

PNWER Statement on Tariffs

11/28/2018

 
The following PNWER statement on tariffs was released on November 15, 2018, during the PNWER Economic Leadership Forum in Whitehorse, Yukon.
-------------
UNWARRANTED TARIFFS ARE DISRUPTING TRADE BETWEEN THE WORLD’S CLOSEST ALLIES & LARGEST TRADING PARTNERS AND NEGATIVELY IMPACTING REGIONAL SUPPLY CHAINS
 
WHITEHORSE, YUKON - “We believe that unilateral tariffs between the US and Canada go against the principles of free and fair trade and only harm industries in both countries. When markets are open, and goods are transported freely across borders, the results are economic growth, new businesses and more and better job opportunities for individuals.”, said Pacific NorthWest Economic Region (PNWER) President Larry Doke, MLA Saskatchewan at the PNWER Economic Leadership Forum in Whitehorse, Yukon, on Thursday.
 
Oregon Senator Arnie Roblan, Past President of PNWER said, “Here in the Pacific Northwest, we are stronger by working closely together, and our relationships are intact because of the ongoing partnerships in every major sector of our economy, and in state, provincial, territorial, local, and tribal governments. The US should exempt Canada from any steel and aluminum tariffs, which are causing significant disruption to the largest trading relationship in the world.”
 
The US and Canada’s trading relationship is incredibly important to the Pacific Northwest. The US and Canada have the largest trading relationship in the world, and here in the Pacific Northwest, we benefit from the two-way trade of over USD $541 billion (CAD $630 billion) annually, of which about USD $22.6 billion (CAD $29 billion) is in the Pacific Northwest. Protectionism is seriously damaging the vital economic regional partnership in both of our countries.
 
The steel and aluminum tariffs may cost the US and Canada over USD $11 billion combined, and we could see losses of over 6,000 jobs, according to CD Howe Institute, a Canadian independent not-for-profit research institute fostering economically sound public policies.
As a result of the steel and aluminum tariffs, retaliatory tariffs from Mexico and Canada could cause US Agriculture exports to decline by USD $1.9 billion to these two trading partners.
 
The US tariffs on Canadian steel and aluminum products based on Section 232 US national security investigations are of great concern. As a trusted ally and partner, Canadian steel and aluminum products are used as vital inputs in the Canada-US manufacturing supply chains. Tariffs on these critical inputs are not only making consumer goods expensive in both countries, but also making North American products uncompetitive in international markets.       
 
This cross-border region continues to work closely together every day with our interconnected and interdependent supply chains, and dozens of cross-border cooperative agreements on everything from our shared transboundary watersheds, cross-border airsheds, climate action, cross-border law enforcement, invasive species prevention, forest fire prevention, to defending our shared borders in the 60-year-old NORAD (North American Air Defense) System.
 
PNWER is an example of these interconnections and the ongoing relationships that make our bi-national region stand out in North America as a place where innovation happens, precisely because of the multi-faceted relationships of trust that have been built up for the past 30 years.
 
###

NEW NAFTA & CHINA TARIFFS—Stalled, Standby and Steaming Ahead?

9/18/2018

 
The following post was written by Daniel D. Ujczo, Practice Group Chair - Intl & Regional Practices, Dickinson Wright
​---------------
The last week of Summer 2018 will jumble a number of trade actions—starting with today’s announcement of 10% duties on $200 billion of China-sourced goods, the ongoing renovation of the North American Free Trade Agreement (NAFTA), and potential relief from the Section 232 steel and aluminum tariffs—into a goulash that will leave companies wondering what is stalled, in standby mode, or steaming ahead.  To summarize all of these expected developments, Dickinson Wright will hold two free, interactive webinars on Monday, September 24, 2018:
 
  • Know the New NAFTA, will commence at 2:00 PM ET and feature Sergio Gomez Lora, CEO of IQOM, and Dickinson Wright discussing aspects of the US-Mexico Agreement (USM) and potentially the US-Canada Agreement (resulting in the USMC Agreement).  IQOM coordinates Mexico’s private sector “next door room” during the NAFTA negotiations. https://www.dickinson-wright.com/events/know-the-new-nafta-webinar-dan-ujczo
 
  • Untying the Trying Time of Tariffs—The Product Exclusion Process--will commence at 3:30 PM ET and feature Dickinson Wright regarding the updated Section 232 (steel and aluminum) and China-Section 301 product exclusion processes.
https://www.dickinson-wright.com/events/untying-the-trying-times-of-tariffs-webinar-ujczo
   
Please register directly to the listed websites.  Once registered, the webinars will be available “on-demand” post-September 24. 
 
            Several potential developments nevertheless warrant attention throughout the week:
 
  1. Section 301 China Tariffs   USTR issued two announcements on Monday, September 17 relating to the Section 301 tariffs. 
 
Steaming Ahead--USTR announced 10% tariffs on approximately $200 billion of China-sourced goods.  The full list of goods subject to tariffs is available at
https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List_09.17.18.pdf
 
The 10% tariffs will commence on September 24, 2018.  The tariffs will increase in 2019 to 25%.  More than 5,000 products are on the final list.  USTR removed approximately 300 product lines from the proposed list including consumer electronics (smart watches/Bluetooth), chemicals used in manufacturing, textiles, agriculture products, health and safety products (bike helmets, car seats, sanitary gloves), and several other areas.  Unfortunately, most manufacturing equipment (e.g., tools and dies) as well as a number of goods already subject to significant anti-dumping/countervailing duties remain on the final list.
 
  • Will China retaliate as planned against $60 billion in US goods?  President Trump has planned to respond with tariffs against an additional $267 billion in China-sourced goods if China retaliates.  And then the ball will keep on bouncing.  Companies must remain on alert.
 
On a more positive note, USTR announced on Monday a process for product exclusions relating to the second round of Section 301 tariffs (25%) that were finalized on August 16, 2018 (aka “List II”) that will be due on or before December 18, 2018.  Companies should standby to see if USTR announces a similar product exclusion process for today’s tariffs (aka “List III”) in the near term.
 
  • While this may be premature, it is likely that the proposed US-China talks that were scheduled to happen in two phases by the end of September are stalled.  China warned that it would not negotiate with a “gun to its head.”  Today’s actions brandished the weapon.  In any event, our perspective on the ground is that we do not see any resolution to the China tariffs prior to the November 2018 midterm elections in the US.  Companies meanwhile must engage on the product exclusion processes.             
 
  1. NAFTA to USM/USMC?  As the US moves to “all-in” on China, the need to resolve issues in the North American “backyard” becomes paramount.        
 
Steaming Ahead—The US and Mexico have continued their work toward finalizing the first text of the US-Mexico agreement and the parties reaffirmed their commitment to publically provide the USM text by the October 1st deadline.  The parties intend to sign the USM 90 days later—i.e., prior to the December 1, 2018 transition to the new President of Mexico, Andrés Manuel López Obrador (AMLO).  The US thereafter will prepare the deal for ratification by the next (2019) Congress.
 
  • The US and Canada will continue discussions regarding the “C” component of the USMC.  USTR purportedly cautioned Canada that a handshake agreement must be worked out by the close of this week in order to have 7-10 days for preparing the text (prior to the October 1 deadline).  Technical work between the US and Canada continues.  There are reports that Canada’s Minister Freeland will be in Washington, D.C. on Wednesday and Thursday of this week.  Additionally, the new Premier of Ontario, Doug Ford, and his team will be in Washington, D.C. on Wednesday to receive full briefings from their federal Government of Canada counterparts.
 
Key issues between Canada and the US include dairy (although there are reports that a “landing zone” has been reached), Chapter 19 dispute resolution, Canada’s cultural “exemption”, intellectual property rights, de minimis thresholds, and government procurement/Buy America.  USTR purportedly advised that it would not hold another Ministerial meeting with Canada until there was a closing phase/final deal on the table.  Companies should standby to see what happens midweek.  Should Minister Freeland arrive in Washington, D.C., there likely will be results.     
 
  • There has been some speculation that Canada may attempt to extend the talks beyond the October 1 Quebec elections, which adds procedural and political uncertainty into the timing and tempo of the negotiations.  Notionally, the bet is that Congress will hold open the deal for Canada’s re-entry.  However, any timeline past October 1 runs the risk of missing the signing of the deal prior to AMLO taking office in Mexico.  Dickinson Wright previously has advised that Congress’ willingness to wait for Canada is not limitless; particularly given the need to finalize the deal with Mexico for US agricultural interests.  Indeed, when one considers that almost two-thirds of the Senate Finance committee has encouraged the US’ positions on Chapter 19 (softwood lumber) and dairy, testing the deadlines adds increased risk that Canada may be left behind.         
 
  1. Section 232 Steel and Aluminum Tariffs
 
  • Additionally, the immediate consequence of any USM/USMC delay is the inability of the original NAFTA parties to reach resolution of the Section 232 steel and aluminum tariffs.  It is anticipated that should the parties reach agreement by October 1, the US will lift the Section 232 tariffs on Mexico and Canada; consequently, Canada and Mexico will terminate their retaliation/countermeasures.  This is a critical ask of the North American manufacturing and agricultural communities as the US enters a more protracted conflict with China.  Any delay will threaten the North American economy in terms of capacity to continue existing and planned projects.
 
  • As will be further explored during the webinar, the US has made changes to the Section 232 product exclusion process that, among other issues, allows for rebuttal/sur-rebuttal to objections made by companies regarding the proposed exclusions.  While the hope is that the Section 232 tariffs on North American goods will be resolved in short order, companies should standby to ensure that progress is made.
https://www.gpo.gov/fdsys/pkg/FR-2018-09-11/pdf/2018-19662.pdf
 
Steaming Ahead-- Companies importing steel and aluminum from other jurisdictions, as well as subject to retaliatory tariffs from those countries, should be aware of these new Section 232 processes.  We do not anticipate the Section 232 tariffs being lifted on any jurisdiction outside of North America, including EU and Japan, before the close of October.     

PNWER NAFTA Renegotiation Task Force - Update on the changing landscape of the NAFTA Negotiations

8/31/2018

 
Following a flurry of activity this week, NAFTA talks between the US and Canada have concluded for the week. This follows off-the-record comments made by Trump, and made public by the Toronto Star on Friday that Trump does not want to compromise with Canada. 

Minister Chrystia Freeland spoke following the conclusion of talks today.

"The United States and Canada have now agreed to negotiate beyond the Friday deadline. While members of Congress could theoretically object, they are unlikely to do so, since most are eager for Canada to remain part of the pact." Talks between the US and Canada are expected to resume again next week. This latest news has created more uncertainty in an already uncertain future for an agreement. But there is still hope that a new free trade deal will include Canada. 
​
On late Friday, the Trump Administration sent Congress a letter formally notifying of their intention to sign a trade deal with Mexico. While the letter only signaled a deal with Mexico, there is still time for Canada to be included. This letter is required for the administration to sign a trade deal under "fast-track" authority, which requires a straight up or down vote by Congress for approval. This letter starts the 90-day clock before the earliest date that a deal can be signed. 

Earlier this week, the US reached a bi-lateral trade deal with Mexico, and Trump announced his intention to rename the agreement from NAFTA. Canada rejoined NAFTA talks after sitting out while the US and Mexico worked on negotiating a trade deal. Canada resumed talks to negotiate bi-lateral and tri-lateral issues and look at creating a tri-lateral deal between the three countries. However, following an eventful Friday, talks have concluded. They are expected to resume again next week. 

Other Links and Resources:
NAFTA 2.0 End Game Briefer - Canada Institute - Aug. 30

What to watch as Canada looks for a breakthrough in NAFTA talks - Financial Post - Aug. 31

Friday isn’t the real deadline for ‘NAFTA 2.0’ - The Washington Post - Aug. 30


COLIN ROBERTSON THE GLOBE AND MAIL AUGUST 28, 2018:  A little more than a year after negotiations began on a revised North American free-trade agreement, a deal looks possible, although big questions remain.
For much of the past two months, Mexican and American negotiators have wrestled with the U.S. demand around the content rules for our most-traded commodity, the automobile. North Americans produce 17.5 million cars or trucks annually. The original U.S. demand of 85 per cent North American content with 50 per cent of that “Made in the USA” has apparently morphed into 75 per cent North American content with 40 per cent to 45 per cent made by workers making US$16 or more a hour.

The devil is always in the details, but Canadian industry and its workers can live with this and, if this gives U.S. President Donald Trump his “win,” then we are on our way to a deal.So, too, with the “sunset” clause. Originally, the United States wanted the new agreement to lapse after five years – something investors said would freeze investment, especially into Canada and Mexico. U.S. Trade Representative Robert Lighthizer reportedly says it will now be 16 years with a review after six years. We can live with that.

On dispute settlement, or Chapter 19, the picture is murky and we will need clarification. The Trump team originally wanted to jettison the binational mechanism, and it appears there will be investor-state provisions, something U.S. industry lobbied hard to retain, and some form of recourse, beyond the U.S. system, for energy and infrastructure. Canada and Mexico need to stand firm. We need recourse from U.S. trade-remedy legislation – countervail, anti-dump and, as the Trump administration misapplies it, national security.
If reports are accurate, there appears to be near-agreement on agriculture (good for Canadian farmers) and on intellectual property (unchanged) but again, the devil will be in the details.

The negotiators were originally aiming for 30-plus chapters of NAFTA but until now only nine had been closed and, of course, nothing is truly closed until it is all done.

So what remains and how might they be resolved? From Canada’s perspective, assuming we can work out dispute settlement, we need to see action on three more items.
  • Government procurement: Canada wants to retain open access, but the United States is offering a derisory dollar-for-dollar deal. If we cannot work this out, we should leave it to governors and premiers to work out the kind of reciprocal procurement deal that they achieved in 2010. This could be regional or national; the incentive for both sides is that an outside bidder curbs local price-fixing. This will be important especially if Mr. Trump proceeds with his trillion-dollar “Big Build” infrastructure initiative.
  • Labour mobility: We want to update for the digital age the ease of passage for designated occupations. Businesses, especially those with North American supply chains, need this to maintain competitiveness. In the current U.S. environment, this is probably a stretch. We would do well if we can maintain the current list and punt this over to a separate negotiation.
  • Dairy access: Mr. Trump continues to single this out. It is time to reform supply management just as we did with our wine industry through the original Canada-U.S. free-trade agreement in 1987 and then our managed trade in grain. Provide adjustment assistance but open up our dairy and poultry industries, which make good products and, like our beef and pork sectors, and now our grains and pulse production, they can be world-beaters.
While Mr. Trump thinks negotiations can wrap up this week, we will likely see fall leaves and probably snow before the deal is done. Legislative ratification, especially in the United States, is an even bigger question mark. It will likely be the next Congress, chosen in November and taking office in January, that will give “up or down” approval to the new accord. It won’t be easy.
​
The coming days – more likely weeks – will be a test of Canadian negotiators. They are a very experienced team and they are up to the task as long as the government has their backs.
This is the bigger question: Can the Trudeau government take the political flak that will inevitably come its way? It won’t be sunny ways. If it can stick it out, the Trudeau government will make as big a contribution to Canadian well being and competitiveness as Brian Mulroney and his Progressive Conservative government did with the original Canada-U.S. FTA and then the NAFTA. It would be no small legacy.
___________________________________________________________________________________________________________
PNWER will continue to monitor events next week as this process unfolds.  Thank you for your interest and support of the greatest trading relationship in the world.  We remain committed to seeing a renegotiated NAFTA that will be a win-win for all three countries, and that will reinforce the strength of the North American integrated economy, and enhance our competitiveness in global markets.

NAFTA Update

6/19/2018

 
On Monday, June 4th, US and Canadian officials signed a memorandum of understanding promoting the Regulatory Cooperation Council (RCC). The RCC was established in 2011 to streamline regulation between the US and Canada in order to encourage economic competitiveness as well as high health, safety, and environmental standards. This MOU reaffirms the mission of the RCC and lays a foundation for its future growth. The RCC is an excellent example of US-Canadian economic cooperation, which is crucial for two nations who trade CAD $2.5 billion in goods and services over their border every day. 
​

In NAFTA news, all parties have agreed to continue negotiations, despite slow progress and little hope of a deal before 2019. No date has been set for the next round of talks, but they will likely resume after the Mexican presidential election on July 1st.   

Other Stories
Winning 2026 World Cup bid shows the virtues of NAFTA - USA Today
NAFTA talks to continue in tense atmosphere as US also prepares new tariffs for China - CNBC

​
​​Contributions by Zack Tarhouni, PNWER Intern

Trade Talks, Tariffs and Trouble Part III | Dan Ujczo

6/19/2018

 
Dickinson Wright (@dickinsonwright) advises that we are entering the “Summer of Disruption” to global trade based on five (5) categories of recent US actions and other countries’ responses:

  1. China
  2. Steel and Aluminum Tariffs
  3. NAFTA
  4. Trade Promotion Authority 2015 Extension
  5. Section 232 Auto Tariffs

As a result, when companies return from their Canada Day and Fourth of July parades and picnics, the global trade environment will experience the US imposing nearly $200 billion in tariffs on ferrous metals and China-sourced goods, and US exports subject to nearly $75 billion in retaliatory tariffs ($34 billion from China/$40 billion for Canada, EU, and Mexico).  The overarching question is whether the US will be moving toward its objective of achieving “rebalanced” trade, or whether the global economy will be rapidly moving toward recession. Companies cannot wait for the answer. Contingency planning is a must.
You can find background on these developments, as well as a sampling of Dickinson Wright’s comments in global media, as follows:
https://apnews.com/1ca6036369df43fe868e8edd348eb3c9 (G7 NAFTA)
​https://www.theglobeandmail.com/business/article-nafta-negotiators-aim-to-make-deal-this-summer-foreign-minister/ (NAFTA and tariffs)
https://www.theglobeandmail.com/business/article-nafta-negotiators-aim-to-make-deal-this-summer-foreign-minister/ (NAFTA and steel/aluminum)
https://www.theglobeandmail.com/politics/article-freeland-headed-back-to-washington-in-bid-to-reignite-nafta-talks/ (steel and aluminum)
https://www.theglobeandmail.com/business/article-whats-at-stake-if-the-us-slaps-tariffs-on-canadian-auto-exports/ (auto tariffs)
https://insidetrade.com/daily-news/sources-administration-pushing-finish-auto-investigation-midterms (auto tariffs)

1.   Section 301 Tariffs on Imports from China The Office of the United States Trade Representative (USTR) released on June 15, 2018 a list of products imported from China that will be subject to additional tariffs as part of the US response to China’s purported unfair trade practices.  The action came following after a Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation were unreasonable and discriminatory, and burdened U.S. commerce.

The list of products https://ustr.gov/sites/default/files/2018-0018%20notice%206-15-2018_.pdf covers 1,102 separate US tariff lines valued at approximately $50 billion in 2018 trade values.  This list of products consists of two sets of US tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6.  These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public.  US Customs and Border Protection will begin to collect the additional duties on July 6, 2018.

The second set contains 284 new tariff lines.  These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process with written submissions due July 23, 2018 and a public hearing will be held on July 24, 2018.  Parties desiring to appear at the hearing must submit a request and proposed testimony on or before June 29, 2018. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

USTR also has advised that it will be establishing procedures for product exclusions.  Dickinson Wright will circulate notices regarding that process as they become available.

Unsurprisingly, China immediately announced that it would target $50 billion of US goods in two phases. http://gss.mof.gov.cn/zhengwuxinxi/gongzuodongtai/201806/t20180616_2930323.html  The first phase on $34 billion of goods is slated to take effect on July 6 and targets soy, cars, sorghum, fish, pork, and cotton.  Additional duties on $16 billion worth of US goods, including chemicals, medical equipment and energy products, will be finalized later.

President Trump has threatened additional tariffs against nearly $100 billion of China-sourced goods if Beijing retaliates.  No talks between the US and China are planned before the July 6 deadline. Also factoring into the US-China trade talks is that the US Treasury Department has until July 30 to decide new rules and restrictions on China-sourced investments into the US.  
 
·         What Should We Do?  Do not wait for July 6.  The procedural, policy, and political factors all indicate that the first phase of US tariffs and China’s retaliation will occur.  All companies should review (and review again) the list of products to determine potential exposure to the US Section 301 tariffs and China’s retaliation.  In the event companies are subject to tariffs as of July 6, 2018, please contact Dickinson Wright and we can assist in preparing a product exclusion request once that process if fully established.  In the event that your company may be impacted by one of the 284 product lines, it is imperative to participate in the written submissions and hearings. Notably, USTR removed 515 product lines from the original target list based on submissions received from companies.  Dickinson Wright will monitor all developments and assist upon request.

2.            Section 232 Steel and Aluminum Tariffs—The US has imposed 25% tariff ad valorem on steel and 10% ad valorem on aluminum imports into the United States from all countries previously subject to the tariffas well as the European Union, Canada, and Mexico.

(Steel) https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-4/
(Aluminum) https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states-4/

Korea, Australia, Argentina, and Brazil received long-term exemptions from the tariffs in varying degrees based on commitments to quotas or other measures (if you are importing steel and, or, aluminum from these countries, please review US-CBP guidance on the issue or request assistance from Dickinson Wright).

As further predicted, the EU, Canada, and Mexico announced retaliatory measures.  These retaliation lists include items tied to the steel and aluminum industry as well as products from key congressional districts and other political pressure points.

Mexico imposed retaliatory measures on June 6 ranging from 10%-25% on nearly $3 billion worth of US goods. (See attached report from Dickinson Wright’s Mexico-based ally IQOM.) These included steel, aluminum, bourbon, pork bellies, blueberries, apple, grapes and some cheese.  However, Mexico did not impose retaliatory tariffs on US grains (nearly $4 billion) but is exploring whether or not to do so if the US imposes more tariffs.

The EU approved its 10 page list of retaliation targets zeroing in on $3.3 billion worth of goods on June 14, 2018 and implementation is expected in July (if not before).  http://trade.ec.europa.eu/doclib/docs/2018/march/tradoc_156648.pdf.

Canada released its list of countermeasures against US imports www.fin.gc.ca/activty/consult/cacsap-cmpcaa-eng.asp and the public comment period is now closed.  These measures will be implemented on July 1, 2018.

  • What Should We Do?  As a threshold matter, US companies that rely on steel and aluminum products from these countries (particularly, the EU, Canada, and Mexico) should seek specific product exclusions with DOC from the tariffs.  Dickinson Wright has prepared and filed many product exclusion requests and has provided the following webinar to introduce companies on the process. http://www.dickinson-wright.com/events/a-time-for-tariffs-steel-and-alum-webinar-3-28  The first round of decisions from the DOC regarding product exclusions should be published in the coming days, which likely will provide guidance for the next set of filings.  The time is now.

We anticipate that the retaliatory measures will be fully implemented against the US.  It is imperative that companies monitor the retaliation lists to ensure that their goods will not be impacted by retaliatory tariffs.  Dickinson Wright has produced a webinar to explain the retaliation process and strategies.http://www.dickinsonwright.com/events/canada-to-impose-tariffs-webinar   In the event that retaliatory measures impact a company, Dickinson Wright can assist with working with the foreign government to potentially minimize the consequences.

3.            NAFTA—The NAFTA has been on life support since the start of June.  Beginning with Twitter spats between President Trump and Prime Minister Trudeau; to brief optimism at the G7 that was abruptly darkened by post-summit news conferences, social media, and Sunday new shows; to speeches and meetings in Washington this week to cool the temperature; to strong and credible rumors that the White House was seriously considering withdrawing from NAFTA over the Fathers’ Day weekend—the past week to 10 days has been a roller coaster for North American trade.  The prevailing view at the moment is that the NAFTA will be on hold until after the July 1 Mexican elections. A Ministerial meeting between the three countries likely will be held in mid-July where there may be an opportunity to close the NAFTA auto rules of origin chapter and address the steel and aluminum tariffs. However, it is important to note that while the parties may reach a deal in the Summer of 2018, the procedural and political calendars are closed for ratification by the end of the year.  It will be up to the next US Congress to ratify any deal. And with Canada having a federal election in 2019 and the public rallying around Prime Minister Trudeau’s “get tough on Trump” stance, it will be interesting to see if Canada can make any concessions.

·         What Should We Do?  While there may be noise around the NAFTA over the coming weeks, we do not see any meaningful activity happening until after the July 1, 2018 election in Mexico.  There may be an attempt right after those elections to agree on framework for the automotive rules of origin that will include a steel and aluminum threshold in exchange for lifting the tariffs, and the parties then will agree to continue negotiating on other topics throughout the Fall.  At this time, we do not envision NAFTA being completed and ratified in 2018. We likewise do not view that a US withdrawal will occur. We do believe, however, that the process will be very bumpy over the coming months. The status quo will remain for 2018, but not without a great deal of noise and saber-rattling.     

4.            Trade Promotion Authority 2015 Extension—All of this activity is occurring against the backdrop of the President’s Trade Promotion Authority (TPA aka “fast track”) expiring on June 30, 2018.  While TPA has no role in Section 232 tariffs, it is the primary authority through which the President is negotiating the NAFTA and potentially will deal with UK, Japan and others.  Pursuant to the statute, the President requested an extension of TPA until 2021. While Congress is not required to affirmatively approve the extension, Congress may file a “disapproval resolution” of the request.  A report on the extension was filed by the International Trade Commission https://www.usitc.gov/publications/332/pub4792.pdf and the private sector USTR Advisory Committee on Trade Policy and Negotiations (see attached ACTPN Report) supporting extending TPA until 2021.  We anticipate that TPA will be extended. On the Section 232 front, US Senator Bob Corker (R-TN) and US Senator Pat Toomey (R-PA) each tried to pass legislation this week limiting the President’s ability to impose Section 232 tariffs—to no avail.  It appears that Congress will not take on POTUS in 2018 regarding trade; however, Dickinson Wright sources have advised that NAFTA withdrawal and Section 232 auto tariffs would be red-lines for Congress. Nevertheless, companies should not rely on Congress to stop the Trump trade agenda.

5.       Section 232 Investigation into Auto Imports—As previously indicated, the US Department of Commerce (DOC) published a notice in the May 30, 2018 Federal Register regarding its proposed national security investigation into the imports of automobiles including cars, vans, SUVs, light trucks and automotive parts.  https://www.gpo.gov/fdsys/pkg/FR-2018-05-30/pdf/2018-11708.pdf  The Notice seeks input from companies in the following areas:
  • The quantity and nature of imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts and other circumstances related to the importation of automobiles and automotive parts;
  • Domestic production needed for projected national defense requirements;
  • Domestic production and productive capacity needed for automobiles and automotive parts to meet projected national defense requirements;
  • The existing and anticipated availability of human resources, products, raw materials, production equipment, and facilities to produce automobiles and automotive parts;
  • The growth requirements of the automobiles and automotive parts industry to meet national defense requirements and/or requirements to assure such growth, particularly with respect to investment and research and development;
  • The impact of foreign competition on the economic welfare of the US automobiles and automotive parts industry;
  • The displacement of any domestic automobiles and automotive parts causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;
  • Relevant factors that are causing or will cause a weakening of our national economy;
  • The extent to which innovation in new automotive technologies is necessary to meet projected national defense requirements; and
  • Whether and, if so, how the analysis of the above factors changes when US production by majority US-owned firms is considered separately from US production by majority foreign-owned firms.

Any interested party may file a written submission on or before June 22, 2018.  Rebuttals may be filed on or before July 6, 2018. Procedures are in place to ensure confidentiality of proprietary/sensitive information.  A public hearing will be held on July 19 and 20, 2018. Parties may request to appear at the hearing by June 22, 2018.

The Secretary of Commerce has a total of 270 days to conduct an investigation and present the DOC’s findings and recommendations to the President.  If the Secretary finds that an import threatens to impair US national security, the President shall determine whether he agrees with those findings within 90 days.  If so, he must determine what, if any, action to implement to “adjust” the imports of the article in question so that they will not threaten to impair national security.  Dickinson Wright previously indicated that we not believe that the President will elect to impose tariffs before the close of 2018 and certainly not before the November 2018 midterm elections.  Our new information suggests that the tariffs may be issued in Fall 2018, likely in October.  See full story below from Inside Trade with Dickinson Wright comments.   

  • What Should We Do?  Companies with interest in the outcome of this investigation should consider their strategy as early as possible.  The written submissions and public hearing provide those companies that are facing unfair trade practices from foreign competition with a forum in which to present their views (i.e., “play offense”). Additionally, those companies that rely significantly on foreign operations and suppliers need to assert the importance of these factors to US decision-makers (i.e., “play defense”).  Again, Dickinson Wright emphasizes that the Trump Administration relies heavily on individual company “stories” as opposed to broad pronouncements and policies from trade associations. It is imperative that individual companies get engaged on this issue. Dickinson Wright is available to assist and frequently appears on behalf of clients in these types of proceedings. ​

Dickinson Wright is engaged in all of these activities.  We are happy to discuss and assist at any time.


Best,
Dan

​

Daniel D. Ujczo Practice Group Chair - Intl & Regional Practices
https://www.linkedin.com/in/daniel-ujczo-893b486b
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