The International Trade Commission is launching an investigation into possible additions and removals of products from the Generalized System of Preferences program, it said in a May 23 press release. Conducted in response to a request from the U.S. trade representative, the investigation will inform USTR’s decisions on product eligibility in the ongoing 2017-18 GSP annual review. ITC and the USTR will also in the review consider whether to grant requests for de minimis and competitive need limitations waivers.
US Trade Representative (USTR)
A U.S. Cabinet level position which serves as the President's primary representative, negotiator, and spokesperson regarding U.S. trade policy. The USTR heads the Office of the United States Trade Representative which develops and coordinates U.S. policy for international trade, commodities, and direct investments, as well as overseeing trade negotiations with other countries.
Now that it is seemingly too late for Congress to ratify a new NAFTA in December (see 1805110025), predictions about what happens next vary widely. Treasury Secretary Stephen Mnuchin said on CNBC that the administration could pursue a "skinny NAFTA," and a Republican senator suggested that would be the best course of action, though a full rewrite is still preferred, Mnuchin said.
On May 17, the supposed deadline for having a NAFTA deal ready so that Congress could vote on it in 2018, the U.S. Trade Representative said ratifying a deal this year is unlikely. Earlier that day Canada's Prime Minister Justin Trudeau, speaking in New York, said, "We're down to a point where there is a good deal on the table. Mexico has put proposals on the table that actually will go a long way towards reducing the trade deficit the U.S. has with Mexico, and indeed, bringing back some auto jobs from Mexico to the United States. It's right down to sort of the last conversations."
A World Trade Organization appellate body recently found the European Union is not complying with some aspects of earlier WTO decisions against subsidies provided to Airbus, setting the stage for U.S. tariff retaliation unless the EU takes steps to come into compliance. Finally bringing to a close a WTO challenge brought by the U.S. in 2004, the WTO appellate body held the EU has continued to provide illegal subsidies during the period after the WTO found them in violation of WTO agreements.
South Dakota-based Daktronics, a manufacturer of LED display systems for large-screen digital signage, wants U.S. Trade Representative Robert Lighthizer to impose 25 percent tariffs on imports of Chinese LED display screens and “the main assemblies” of LED panels and modules, the company said in a March 23 letter to Sen. John Thune, R-S.D., which Thune forwarded to the USTR’s office. The letter posted Friday in docket USTR-2018-0005 predated by about two weeks release of the USTR’s list of products targeted for the tariffs. The list included LEDs and LED-related components, but not LED display screens or modules. In the past decade, “we have seen increasing unfair competition from Chinese imports and a decrease in USA manufacturers,” Daktronics said. U.S.-based manufacturers of “complete video display systems” number only about five companies, but in China, “there are several thousand,” it said. “This seemingly government-backed excess capacity in China drives the product prices down and makes it feasible to import their products into the USA,” but at “artificially low prices,” and of questionable quality, it said. The tariffs would benefit U.S. display makers because “our investments in Development and Capacity stay here in the USA,” it said. “We need to move quickly, there aren't many of us left!” Thune asked USTR to “give careful consideration to the proposed tariffs set out in the company's letter.” Comments on the proposed tariffs are due Friday as a prelude to a May 15 hearing.
The Office of the U.S. Trade Representative's annual review of countries' intellectual property practices added Canada and Colombia to a "priority watch list," as other countries remained on it, including China, for 12 nations total, one more than in 2017 (see 1704280026). Canada remains the only G7 country identified in the "Special 301" report and its "downgrade" is amid "significant concerns" like "poor border and law enforcement with respect to counterfeit or pirated goods" and "deficient copyright protection," USTR reported. "Canada does not provide customs officials with the ability to inspect, detain, seize, and destroy in-transit counterfeit and pirated goods entering Canada destined for the United States." That country's embassy didn't comment to us, nor did that of Colombia or China. China is on the priority watch list for the 14th consecutive year, USTR announced. "Longstanding and new IP concerns merit increased attention, including China’s coercive technology transfer practices, range of impediments to effective IP enforcement, and widespread infringing activity -- including trade secret theft, rampant online piracy, and counterfeit manufacturing."
Element Electronics, which bills itself as the only company assembling LCD TVs in the U.S., wants the Office of the U.S. Trade Representative to stand firm in its proposal to levy 25 percent tariffs on finished flat-panel sets imported from China, the company said in comments. Element’s support for keeping TVs imported from China under the HTS 8528.72.64 subheading on the USTR’s proposed tariffs list puts the company at odds with Best Buy (see 1804240062), the Consumer Technology Association (see 1804260053) and Roku, all of which oppose the tariffs and are asking the office to remove that TV product line item from the list.
The Office of the U.S. Trade Representative accepted the Consumer Technology Association’s request for Sage Chandler, vice president-international trade, to testify at the May 15 public hearing in opposition to the Trump administration’s proposed 25 percent tariffs on certain goods imported from China, a CTA spokeswoman said in an email. Of the 1,300 "product lines" in the USTR's list of proposed tariffs, CTA members have so far identified 190 HTS codes representing goods they import from China, and those goods were worth $25 billion last year, Chandler said in comments posted April 25.
Business interests who depend on NAFTA are trying to piece together a strategy for how to handle changes under a new deal, but there are differing opinions on what will happen to car rules of origin. Trade lawyer Daniel Ujczo, who chairs the Canadian-U.S. trade practice at Dickinson Wright, said in an interview that the U.S. trade representative is looking for a 75 percent North American content on high value parts, such as the engine and transmission, but may allow lower percentages for other tiers of parts. But Ujczo said his understanding is that the lower hurdle for parts doesn't eliminate the top-line requirement that 85 percent of cars' value must come from NAFTA partner countries in order to qualify for duty-free status.
India's eligibility for the Generalized System of Preferences is being evaluated after petitions from American dairy interests and medical device manufacturers who complained about Indian trade policies on those products. The Office of the U.S. Trade Representative, which announced the review of three countries on April 12, had mentioned India's pricing controls on knee replacements and stents as a trade irritant in its annual trade report (see 1803300022). The two interest groups have been asking for India's removal from GSP since October 2017 (see 1710190022). India is the top beneficiary of GSP, accounting for $5.6 billion of the program's $21.1 billion in imports last year, according to USTR.