U.S. Trade Representative Katherine Tai asked Mexico to review whether workers at the Panasonic Automotive Systems de Mexico facility in Reynosa are being denied the rights of free association and collective bargaining. By doing so, USTR is endorsing an April 18 request from Rethink Trade and a Mexican union that was, at the time, trying to win a union vote at the factory (see 2204200029). The two groups' complaint said Panasonic fired more than 60 workers who supported the independent union, and the alternative union, Confederacion de Trabajadores de Mexico (CTM), was offering bribes to workers to get their votes. They also said Panasonic signed a contract with CTM before the vote, and started withholding union dues almost a month before the vote. Tai asked for the review under the USMCA's Rapid Response Mechanism. “Along with Secretary Marty Walsh and his team at the Department of Labor, we have worked closely with the Mexican government to address Rapid Response Labor Mechanism matters quickly, and I look forward to doing the same on this issue as well,” Tai said in a news release May 18. Liquidation will be suspended for imports from the factory until the complaint is resolved. The Mexican Embassy didn't return a request for comment.
A Mexican union and a U.S. nonprofit, Rethink Trade, jointly filed a rapid response complaint Monday with the U.S. Labor Department against Panasonic Automotive's plant in Reynosa, Mexico, alleging workers there are being denied the right of free association and collective bargaining. The complaint was filed under the U.S.-Mexico-Canada agreement on free trade. The plant manufactures automotive audio systems and displays for export to the U.S. and other markets. The union complainant, Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios "Movimiento 20/32" (SNITIS), says more than 600 workers at the plant asked the organization to be their new union, but Panasonic is collaborating with an alternative union, Confederacion de Trabajadores de Mexico (CTM). According to the complaint, the plant has about 2,000 workers. SNITIS and Rethink Trade say Panasonic fired more than 60 workers who support SNITIS, and alleged Panasonic won't sign a contract with the union that receives the majority of the votes in elections scheduled for Thursday and Friday. Panasonic reached a contract with CTM, and the company started withholding union dues for that union March 25, the complaint says. The petition asks that dues deductions end, and that fired workers get reinstated with full back pay and interest. It also says the contract with the CTM union must be terminated, and the Mexican government should order the company to negotiate in good faith with whichever union wins the elections. The last time the U.S. was asked to start a rapid response case against a Mexican factory, it took a month for the Office of the U.S. Trade Representative and the Labor Department to announce they would begin consultations with the Mexican government over the issue. USTR didn't comment, nor did Panasonic Automotive. If the U.S. government brings a case, the Mexican government would have 10 days to declare if it will look into whether the complaint has merit.
The author of the House China package's trade title said a virtual conference committee has begun discussing a compromise between the House and Senate bills, but Russia's invasion of Ukraine makes it harder to find the time to make progress. There has been no public announcement that the chambers weren't going to use a formal conference committee, or that negotiations had begun. House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said during a Tuesday media call: "I think the overall impact of the Russian invasion has set everybody back on their heels and has affected everybody’s work plans." Another competing claim on Congress members' time, Blumenauer said, is the time needed to negotiate an agreement to fund the current fiscal year beyond continuing resolutions. A vote was expected on that bill Wednesday morning so House Democrats could leave at noon for a retreat, but Senate Republicans' insistence that new pandemic spending be paid for led to a revolt among House Democrats who represent states whose previous COVID-19 pandemic funding allocations were taken away to balance the books. Eventually, the vote went forward without the pandemic funding. President Joe Biden said in the State of the Union last week and members of his cabinet have been speaking publicly about how this compromise needs to get done in short order so the funds can flow to boost domestic chipmaking.
The U.S.-European Union Trade and Technology Council shouldn't be seen as a prelude to reentering talks for a comprehensive trade agreement, U.S. Trade Representative Katherine Tai told the Institute of International and European Affairs webinar Wednesday. Though Tai said she would never say never about a new U.S.-EU trade agreement, she thinks the TTC "is quite a comprehensive approach to the most pressing issues," and said she's enthusiastic about its responsiveness to current trade challenges. The TTC held its inaugural meeting Sept. 29 in Pittsburgh, where it agreed to set in motion 10 working groups to address specific tasks before it meets again in the spring (see 2110010037).
House Speaker Nancy Pelosi, D-Calif., said the Inform Act, which requires sellers over a certain threshold to be verified by e-commerce platforms (HR-5502), and the Shop Safe Act, which would ask platforms to make reasonable efforts to screen for sellers that are likely to sell counterfeit goods (HR-3429), both belong in the China package. The Retail Industry Leaders Association asked for legislation that could tackle organized shoplifters selling stolen products online, she told reporters in the Capitol Wednesday. Inform has been accepted by all major stakeholders, but Sen. Bill Cassidy, R-La., told us Shop Safe has some business opposition. The bills (here and here) aren't part of the Senate China package that passed with 68 votes.
The Trump administration's Section 301 tariffs on Chinese imports caused "a lot of damage to American consumers and business," and "we are no better off" after the phase one trade deal with China, House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., told reporters during a roundtable discussion Thursday. Though stopping short of arguing the tariffs should be rolled back en masse, he did say there should be an effort to "take them one by one and make some adjustments." Some Section 301 tariffs could be changed in a process that need not be "politically toxic," he said. "The mess that Biden inherited takes some time to sort out," said Blumenauer. Customs and Border Protection collected more than $113.55 billion in Section 301 tariffs on Chinese goods from U.S. importers through Nov. 17 since the first of the tariffs took effect in July 2018.
Reps. Adam Kinzinger, R-Ill., and Jason Crow, D-Colo., introduced the Manufacturing Abilities Determine Economies (Made) in the Americas Act that would incentivize moving supply chains that are concentrated in Asia to either the U.S. or some allies. The bill would prioritize free trade agreements beneficial to the U.S. "Given the complexity of market forces, we are likely unable to bring all these manufacturing operations to the U.S., which is why this legislation would incentivize moving operations to our allies in the Western Hemisphere as a secondary priority," Kinzinger said Wednesday.
Trade groups whose members would pay foreign digital services taxes and those whose members would have to pay if tariffs are hiked up to 25% on products from the countries imposing DSTs agree the levies are wrong and government should use full persuasive power to convince countries like India, the U.K. and Spain not to impose these taxes. Tech groups split on whether tariffs are the right tool to convince countries to roll back or never pass DSTs. The Computer & Communications Industry Association gave the most direct support of levying tariffs on DST countries. In testimony at a virtual Office of the U.S. Trade Representative hearing Monday, CCIA Policy Counsel Rachael Stelly said USTR should work for a global international taxes solution and impose tariffs “to deter countries and send a strong message. CCIA "takes seriously the impact that tariffs can have," she said. "Tariffs should only be used in limited circumstances, in a targeted manner, and where there is a clear strategy in place designed to change the behavior of a trading partner. USTR’s proposed action appears to meet this standard.” Internet Association Director-Trade Policy Jordan Haas said IA has no position on the proposed retaliatory tariffs and hopes duties will never be levied because ideally, countries will roll back DST laws. He's concerned more countries are thinking of imposing such taxes. The App Association opposed tariffs, concerned targeted countries could retaliate and its small company members would be hurt. Representatives from the Retail Industry Leaders Association, National Retail Federation and others spoke against the tariffs.
Digital services taxes drove countries back to the negotiating table on international tax harmonization, and now it may be hard to roll back such DSTs, experts said. Many tech and other stakeholders oppose other countries' digital taxes. The U.S. was driven to talks again because so many countries were considering taxing revenue, rather than profit, of digital giants like Facebook and Google, Deloitte Managing Partner Bob Stack told a Washington International Trade Association webinar Thursday. "Countries need to commit to get rid of these DSTs. That's the deal to be had." Noting a U.S. proposal for Organization of Economic Coordination and Development member-countries to drop such levies, Miller & Chevalier's Loren Ponds said "it’s a matter of everybody dropping their weapons at the same time" and "nobody wants to go first." Georgetown Law professor Lilian Faulhaber reminded that most DSTs haven't actually been imposed. "Part of that is probably because USTR pushed back so hard," she said of the Office of U.S. Trade Representative. USTR didn't comment Friday.
Sens. Chris Van Hollen, D-Md., and Roy Blunt, R-Mo., are promoting their bill to guide government investments in advanced manufacturing or industrial research. Their new National Strategy to Ensure American Leadership Act would ask the National Academies to identify which technologies will be the critical ones in five to 10 years. Van Hollen discussed with reporters Monday U.S. export restrictions to hinder Huawei, which is a 5G infrastructure leader, while the U.S. doesn't make much 5G equipment. “Everything we can do to prevent the existing cutting-edge technologies being used by Chinese military or others” should be done, and for Huawei and ZTE, the U.S. is also justified because they stole U.S. companies' designs years ago, Van Hollen said. Blunt asked, “Why weren't we ahead of Huawei, competing at the same time that they were?” Of technologies that will be as important in 10 years as 5G is currently, he said, “How do we prevent from this happening again?”