Happy Holidays/Busy Week

Source: Canada US
Link: Happy Holidays/Busy Week

Originally published by the Journal of Commerce in December 2019

While there are those who think the only thing going on in Washington, D.C. these days is the impeachment hearings, activities this week belie that conclusion. In the recent flurry, we saw progress on two key issues – the China 301 tariffs and the USMCA – the U.S.-Mexico-Canada Agreement or (if you prefer) the new NAFTA.

Between Thursday and Friday last week, we saw an indefinite suspension of the List 4B 15% tariff due to take effect on December 15, 2019. The President tweeted about it (see 2012-12-13 Tweets (2) ) and USTR issued a press release (2019-12-13 USTR Press Release). Regretfully, neither is very clear, beyond stating the tariff on goods on List 4B is suspended indefinitely. CBP confirmed the suspension later in the day at CSMS 40984510 (see CSMS 40984510).

The reason there is confusion is because of the dollars being discussed. USTR describes List 4 (A and B combined) on its website as involving $300 billion in goods. USTR’s press release states the 25% will remain on “approximately $250 billion” and the 7.5% will be imposed on about “$120 billion of Chinese goods.” 250 + 120 – 370, so, which goods remain impacted by which tariff? The popular guessing is the tariff on the goods on List 4A will drop from 15% to 7.5%, and the rest remain subject to the current 25% (Lists 1, 2 and 3), but frankly until we see something more precise from USTR, all we can do is guess.

On the positive side, there is finally movement to mitigate the impact of the China tariffs through this new deal. The USTR’s Fact Sheet (see 2019-12-13 USTR Fact Sheet) talks about reforms regarding intellectual property, technology transfer, agriculture, financial services, currency, expanding trade and dispute resolution. While the comments in the summary look promising, as is always the case, the devil is in the details, and those will only be clear once the text of the agreement is released.

As to the USMCA, the fact the agreement is headed towards approval by the House is good sign. Approval in the Senate has always been assumed – and assuming anything in D.C. these days, as we all know, can be dangerous!  The reason movement is seen as a good sign is approval of the USMCA will provide some degree of predictability when it comes to trade between the U.S., Canada and Mexico.

The final text of the agreement was released by USTR – see – https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between.  House Ways and Means issued its own Fact Sheet, see https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/USMCA%20win%20factsheet%20.pdf.  USTR has previously commented here: https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/modernizing.  Commerce/ITA published its own comments at: https://www.trade.gov/usmca/ which might be of particular interest since there are links to State Fact Sheets, as they are called.  Departing from the position papers of government entities, there is the coalition of trade associations which has supported passage of the USMCA. Its materials can be found here: https://www.usmcacoalition.org/get-the-facts/.

Traders are also reminded the filing of exclusion requests for goods on List 4A remains open until January 31, 2020, so be sure to take advantage of that opportunity at https://exclusions.ustr.gov/s/.

It may be the end of the year, but times are anything but quiet, and it looks like the beginning of next year will continue the pace. No telling whether the USMCA will get approved in 2019 or 2020. There is also the U.S.-Japan trade agreement which has been negotiated but is yet to be approved. The text can be found here: US-Japan Trade Agreement. With the result of last week’s election in the U.K., Brexit seems now on the road to the U.K. withdrawing from the EU on or before the January 31, 2020 deadline. As such, a U.S.-U.K. trade agreement is also being discussed.  There are export license reforms regarding artificial intelligence and other cutting edge technologies under discussion. Changes to the Customs-Trade Partnership Against Terrorism are going to be published soon, causing the CTPAT portal to be suspended between January 1, 2020 and June 1, 2020 so it can be reprogrammed to reflect the new program requirements. No doubt more is coming. To rephrase a line from an old movie – strap in, it’s going to continue to be a bumpy ride!