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This morning, on the sidelines of the G-20 summit in Argentina, the United States, Canada, and Mexico signed the U.S.-Mexico-Canada Agreement (USMCA).  The new trade deal is slated to replace the 24-year old North American Free Trade Agreement (NAFTA).  Today’s signature date was a critical deadline for the parties because it is Mexican President Enrique Peña Nieto’s last day in office before his successor, Andrés Manuel López Obrador, takes office tomorrow.

The three parties have spent the last 15 months negotiating the final text of the USMCA, with a deal reached first between the U.S. and Mexico at the end of August, and Canada signing onto the agreement with additional tweaks a month later.  We have covered the USMCA in previous blog posts (here, here, here, here, and here).

Each country’s legislature must now approve the agreement for it to take effect.  In the United States, the USMCA was negotiated under Trade Promotion Authority, or “fast track” legislation, meaning that the agreement is subject to an up-or-down vote and Congress cannot modify or amend the agreement itself.  Instead, the hurdles involve the implementing legislation that will be required to give effect to the deal under U.S. law.  The Administration has 60 days to submit to Congress a list of changes to U.S. law that will be required to implement the USMCA, and then must prepare a draft implementing bill and “statement of administrative action” at least 30 days before the bill is actually introduced in the House and Senate.  The House must vote first before the bill moves to the Senate for consideration and a vote.      
Continue Reading U.S., Canada, and Mexico Sign New NAFTA

On October 1, 2018, the United States, Canada, and Mexico announced that they had reached an agreement to “modernize” the 24-year old North American Free Trade Agreement (NAFTA). When NAFTA came into effect, it created the largest free trade region in the world. Since then, developments in virtually every sector and the advent of cross-border

The Office of the U.S. Trade Representative (USTR) has opened a public comment period in connection with the proposed U.S.-Japan Trade Agreement negotiations.  On October 16, 2018, USTR notified Congress of its intent to enter into trade talks with Japan.  Those discussions cannot begin until mid-January 2019 at the earliest under the requirements of the Trade Promotion Authority law.

Any member of the public – including individual companies, industry coalitions, and trade associations – may submit written comments to USTR by November 26, 2018.  That is also the deadline to submit written notice of intent to testify, along with a summary of intended testimony, at a public hearing to be held on December 10, 2018 at 9:30 am.  The hearing will be held by the Trade Policy Staff Committee, an interagency committee chaired by USTR and comprised of 20 executive branch agencies that provide input into the Administration’s trade-related decision-making through review of policy papers and negotiating documents, and eliciting public feedback.  Procedures are available for commenters to submit business confidential information. 
Continue Reading Comment Opportunity: U.S.-Japan Trade Agreement

Yesterday, the Office of the U.S. Trade Representative (“USTR”) officially notified Congress that it would be launching separate trade discussions with the European Union, Japan, and the United Kingdom.  The letters sent to Congress provide notice of the Administration’s intent to negotiate trade agreements with each partner as required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, often referred to as Trade Promotion Authority (“TPA”).  USTR must wait at least 90 calendar days from yesterday’s notification to initiate negotiations, and must also publish specific negotiating objectives in the Federal Register at least 30 days before talks begin.

In addition to general negotiating objectives across numerous areas – including trade in goods, services, and agriculture; intellectual property; digital trade and cross-border data flows; labor and the environment; trade remedies; anti-corruption; and dispute settlement – TPA also establishes procedures for consultation with Congress and other stakeholders throughout trade agreement negotiations.  These procedures include required reports on certain aspects of the agreement prior to signing the agreement; Congressional notification 90 days before signature; release of the final agreement text 60 days before signature; and Congressional notification of expected changes to U.S. law 60-180 days before signature.  USTR also engages with public and private sector stakeholders through consultation with various policy- and sector-oriented trade advisory committees and through comment periods and hearings announced in the Federal Register.
Continue Reading U.S. Opens Trade Talks with EU, Japan, and the UK

On Monday, President Trump and President Moon Jae-in of South Korea signed a revised U.S.-Korea (known as “KORUS”) free trade agreement on the sidelines of the United National General Assembly meeting this week in New York.  In April 2017, President Trump indicated that he wanted to either renegotiate or terminate the then-five year old agreement.  Since then, the parties have engaged in trade talks, under the auspices of the existing KORUS review procedures and otherwise, to update key provisions.  Early on, the United States appeared to be primarily focused on changes to help reduce the United States’ bilateral trade deficit.  In March 2018, the Office of the United States Trade Representative issued a summary of the agreed-upon outcomes of the negotiations, and released the draft text earlier this month, with emphasis on how the revisions will “rebalanc{e} our trade” and “reduce the trade deficit.”

The changes to KORUS focus on the auto sector, customs procedures, and pharmaceutical reimbursement.  With respect to autos, the largest change is a 20-year extended phase-out period for the current 25% U.S. tariff on imports of light trucks from Korea.  That tariff will now expire in 2041, instead of 2021, which, according to the U.S. International Trade Commission, will delay the anticipated increase of 59,000 Korean truck imports.  Korea has also agreed to increasing the quota of U.S.-origin autos that meet U.S. safety standards (but not Korean safety standard) from 25,000 to 50,000 per manufacturer, per year.  Korea further agreed to recognizing U.S. standards for auto parts exports necessary to service U.S. vehicles in Korea and a harmonized testing system for emissions standards.  With respect to improving customs procedures, Korea will address onerous and costly customs verification procedures for U.S. exports, which have been
Continue Reading United States and South Korea Sign Updated FTA

On Wednesday, July 18, the Department of Commerce announced that it would begin investigating the effects of uranium imports on the national security interests of the United States.  The investigation will be conducted under Section 232 of the Trade Expansion Act of 1962.  Two U.S. uranium producers – Ur-Energy and Energy Fuels Resources Inc. – petitioned Commerce in January 2018 to open the investigation.

According to the petitioners, a domestic supply of uranium is essential to national defense, as uranium is critical to military applications and a significant portion of electricity for the U.S. power grid.  Petitioners assert that they have struggled financially to compete with uranium imports from countries like Russia, Kazakhstan, Uzbekistan, and China that have targeted the U.S. market.  The petition states that imports have grown dramatically to capture almost 80% of domestic uranium demand, while U.S. producers have been forced to idle production and lay off workers.  Petitioners note that six U.S. nuclear reactors – required to enrich uranium for defense purposes – have closed since 2013 and another eight are scheduled to close between 2018 and 2025.  In a statement made regarding initiation of the investigation, Secretary of Commerce Wilbur Ross cited the fact that “U.S. uranium production had been 49 percent of U.S. requirements in 1987.  Today, U.S. uranium production has dropped to only five percent of U.S. requirements.”

Commerce has 270 days to submit a report to President Trump as to whether uranium imports threaten to impair U.S. national security.  If Commerce reaches an affirmative conclusion, the president is authorized to take actions deemed “necessary to adjust the imports of such article” to address the harm, including by imposing tariffs or other import restrictions, or through indirect action such as domestic industry assistance.  The two petitioning companies have called for a quota on uranium imports that would reserve 25% of the U.S. nuclear market for domestic production, and domestic procurement rules that would require the government to purchase U.S.-sourced uranium.
Continue Reading Commerce Initiates National Security Investigation Into Uranium Imports

Last week, a WTO dispute settlement panel ruled that Australia’s plain packaging rules for tobacco products do not violate WTO rules.  In April 2012, Honduras requested consultations with Australia at the WTO over Australia’s 2011 law banning logos, trademarks, and other distinctive packaging for tobacco products in favor of uniform-color packages with health-related warnings and images across the front of the packages and brand names printed in small, standardized fonts.  Honduras challenged the law under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the WTO Technical Barriers to Trade Agreement, and the national treatment provision of GATT 1994.  Similar challenges later brought by the Dominican Republic, Cuba, and Indonesia to Australia’s plain packaging law were consolidated with Honduras’s dispute and ruled upon at the same time.  The WTO dispute settlement panel was composed in May 2014.

In its report, issued on June 28, 2018, the WTO panel concluded that Honduras, the Dominican Republic, Cuba, and Indonesia did not demonstrate that Australia’s plain packaging law and related regulations were inconsistent with the various WTO agreement provisions cited.  Specifically, the plain packaging measures were not shown to be more restrictive than necessary to achieve a legitimate regulatory objective; to impede the registration, use, or enforcement of trademarks; to mislead with respect to or diminish geographical indications; or to devalue the Cuban Government Warranty Seal otherwise provided on Cuban-origin tobacco products.
Continue Reading WTO Declines to Find Australia’s Tobacco Product Packaging Restrictions Inconsistent with Trade Rules

On Wednesday, President Trump issued a statement in support of restrictions on Chinese investment in the United States in firms with critical technologies, and in greater protection of those technologies through enhanced export controls.  In particular, the President has thrown his support behind the Foreign Investment Risk Review Modernization Act (FIRRMA), bipartisan legislation that passed in the House on Tuesday.  FIRRMA intend to strengthen the existing Committee on Foreign Investment in the United States (CFIUS) by expanding the scope of foreign investment restrictions that the Administration could block for national security reasons.

CFIUS is an inter-agency committee that has jurisdiction to review transactions that could result in control of a U.S. business by a foreign person  If CFIUS determines the transaction presents a national security risk, it can take action to mitigate the risk or refer the case to the President for further action.  The reforms under FIRRMA would expand CFIUS’s jurisdiction to review foreign minority investments in start-ups in key sectors, certain sensitive real estate transactions, and joint ventures – all of which are currently not subject to examination.  The FIRRMA bill passed in the House specifically notes that the “national security risks related to foreign investment, particularly those emanating from countries such as China and Russia, warrant an appropriate modernization of the processes and authorities of {CFIUS}.”  FIRRMA would also expand existing export controls that govern trade in sensitive technologies.
Continue Reading President Trump Targets Chinese Investments in the United States

On April 13, 2018, the Treasury Department released its biannual report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, which declined to formally label China a currency manipulator under the Omnibus Trade and Competitiveness Act of 1988 (the “1988 Act”).

This is the third such report issued since President Trump took office.  Like the prior Trump Administration foreign exchange policy reports (April 2017 and October 2017), the latest report also concluded that China’s bilateral trade surplus, material current account surprise, and intervention in the foreign exchange market, together, do not require “enhanced analysis” and “enhanced bilateral engagement” under the Trade Facilitation and Trade Enforcement Act of 2015 (the “2015 Act”).

The latest report, however, continues to place China on Treasury’s foreign exchange “Monitoring List” under the 2015 Act.  The report lists China alongside Japan, Korea, Germany, Switzerland, and India as “major trading partners that merit close attention to their currency practices and macroeconomic policies.”  According to the report,
Continue Reading Treasury Declines to Name China a Currency Manipulator