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Following President Trump’s announcement of his decision to delay the March 1, 2019 deadline to increase tariffs from 10% to 25% on $200 billion of Chinese goods (i.e., List 3 items), Ambassador Lighthizer testified before the House Ways and Means Committee about the progress that has been made on concluding a binding executive agreement with

Introduction

On 11 January 2019 and 18 January 2019, the United States Trade Representative (“USTR”) and the European Commission (“Commission”) released their respective negotiating objectives for a U.S.-EU trade agreement, potentially marking a new phase in the transatlantic trade relationship.  The release follows from the joint agenda agreed to in July 2018 by European Commission President Jean-Claude Juncker and U.S. President Donald Trump to work together toward “zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” increased cooperation on regulatory issues and standards, and protecting European and U.S. companies from unfair global trade practices.  The release could also signify an important expansion of market opportunities for EU and U.S. companies.

The road ahead is fraught with obstacles, however, as the EU and U.S. negotiating positions differentiate substantially.  The USTR’s summary of specific negotiating objectives seeks a broad free trade agreement with the EU, including on sticky issues such as agriculture, while the Commission aims to limit trade negotiations to reciprocal commitments on conformity assessment and industrial goods. This makes any future transatlantic trade negotiations challenging at best and raises the question of whether the two sides will be able to arrive at an agreement at all. The situation is further complicated by the Trump administration’s ongoing 232 investigations on imports of certain automobiles and parts, as the EU stands ready to suspend any trade talks and retaliate with duties on U.S. exports should the investigation lead to the imposition of tariffs on certain EU automotive products.

EU Perspective

EU Commissioner for Trade, Cecilia Malmström, has clearly stated that the EU is “not proposing to restart a broad free trade agreement negotiation with the US,” referring to the breakdown of negotiations, five years ago, of the Transatlantic Trade and Investment Partnership (TTIP).  On 30 January 2019, the Commission published a progress report concerning the joint agenda agreed to in July 2018.  The report indicates that talks between the parties have so far focused on potential regulatory cooperation initiatives.  The EU has also taken some measures to avoid the escalation of trade tensions with the United States.  
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As we previously reported, the United States, Canada, and Mexico have reached agreement on the United States-Mexico-Canada Agreement (“USMCA”) to replace the North American Free Trade Agreement (“NAFTA”), which has governed trade between the three countries since 1994.  Article 32.10 of the agreement requires each country to notify the others of any intention to negotiate a free trade agreement with a “non-market country.”  The provision defines a “non-market country,” as any country that: (1) one or more USMCA member countries has determined to be a non-market economy for purposes of the USMCA member country’s trade remedy laws; and (2) none of the USMCA member countries has a free trade agreement with.

Last year, as a result of the expiration of certain language in China’s World Trade Organization (“WTO”) Protocol, the U.S. Department of Commerce conducted a review of its designation of China as a non-market economy country for purposes of the U.S. antidumping laws.  The Department announced the results of its review of China’s status on October 26, 2017, concluding that China continued to be a non-market economy country.  Further, none of the USMCA member countries have a free trade agreement with China.  As a result, China would be considered a “non-market country” for purposes of the USMCA.

Article 32.10 requires a USMCA member country seeking to negotiate a free trade agreement with China, or any other “non-market country” to:
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On May 23, 2018, Commerce Secretary Ross initiated an investigation into whether imports into the United States of automobiles and auto parts threaten to impair the national security.  A link to the press release announcing the initiation of the investigation is available here.

As it did during its recent 232 investigations concerning U.S. imports

On Friday, February 16, 2018, Secretary Ross released public versions of the U.S. Department of Commerce’s reports concerning the agency’s section 232 investigations into the impact on national security of steel and aluminum imports. As a result of its investigations, the Department of Commerce has determined that imports of steel and aluminum “threaten to impair the national security.”

The Secretary’s press release presents the agency’s key findings and lists the agency’s various recommended remedies.  With respect to steel imports, the Department of Commerce recommends three alternative options to the President:

  1. A global tariff of at least 24% on all steel imports from all countries, or
  2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
  3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

With respect to aluminum imports, the Department of Commerce recommends three alternative options to the President:
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On January 10, 2018, Canada circulated to WTO members a request for consultations challenging several aspects of the United States antidumping and countervailing proceedings. The request for consultation is available on the WTO’s website and can be found here.

In particular, Canada challenges:

  1. the way in which the U.S. Department of Commerce refunds cash deposits after adverse WTO determinations;
  2. the United States’ suspension of liquidation of cash deposit requirements when the U.S. Department of Commerce preliminarily determines critical circumstances exist;
  3. the U.S. Department of Commerce’s treatment of certain export measures by foreign governments in the agency’s countervailing duty proceedings;
  4. the U.S. Department of Commerce’s calculation of benefits involving the provision of goods for less than adequate remuneration in the agency’s countervailing duty proceedings; and
  5. the U.S. Department of Commerce’s procedures for collecting evidence in antidumping and countervailing duty investigations.


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On Friday, October 27, 2017, the Department of Commerce announced its affirmative preliminary determination in the antidumping duty investigation on aluminum foil from China.  The Department calculated preliminary dumping margins of 96.81 and 162.24 percent for the two mandatory respondents under investigation.  Additionally, the Department set the rate for the PRC-wide entity at 162.24 percent and the rate all other companies found to be separate from the PRC-wide entity at 138.16 percent.
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On Friday, September 22, 2017, the U.S. International Trade Commission (“USITC”) unanimously determined that crystalline silicon photovoltaic (CSPV) cells and modules are being “imported into the United States in such increased quantities as to be a substantial cause of serious injury” to the domestic industry.

The petition was filed in late May 2017 on behalf of Suniva, Inc., (“Suniva”) and was later joined by a second U.S. producer, SolarWorld Americas Inc., (“SolarWorld”).
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Four days after President Trump signed a memorandum directing the U.S. Trade Representative (“USTR”) to determine whether to initiate a Section 301 investigation of Chinese laws, policies, practices, or actions that may be harming the intellectual property rights of U.S. persons, USTR Lighthizer formally announced the initiation of an investigation on August 18, 2017.

The public is encouraged to participate in the investigation by submitting comments and appearing at a public hearing in Washington, DC.  Comments and requests to appear at the hearing must be submitted by Thursday, September 28, 2017. The public hearing will be held in the main hearing room of the U.S. International Trade Commission (“USITC”) on Tuesday, October 10, 2017.
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