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1 Washington Trade Daily Volume 26, Number 51 Mo nday, March 13, 2017 Trade Reports International Group NAFTA or Bilaterals? The White House is still mulling over whether the North American Free Trade Agreement should remain a trilateral deal or if it would be better to have parallel and symmetrical bilateral agreements with Canada and Mexico, Commerce Secretary Wilbur Ross said yesterday (WTD, 3/9/17). But the form of the final agreement is less important than the substance of a renegotiated NAFTA, the secretary said in an interview on Fox Sunday Morning Futures. If there is a new trilateral, it will be renamed the North American Free and Fair Trade Agreement because the Administration s goal is to balance trade. Mr. Ross stressed that the White House s desire to revisit NAFTA is not meant to be an attack on Mexico. NAFTA is an old agreement that was written at a time that the digital economy did not exist and the services sector was not as important as it is today. In addition NAFTA s rules of origin for autos do not reflect current automotive technology, he added. Speaking to reporters on Friday, Mr. Ross said the Administration within the next couple of weeks will send formal 90-day notification to Congress of its intention to renegotiate NAFTA. On its part, Mexico will be ready by the end of May to launch the discussions, Mexican Minister of Economy Ildefonso Guardardo Villarreal said in a joint press conference at the Commerce Department. He suggested it would likely be mid- to late-june before all three countries are ready to sit down together. The Mexican official stressed that his government believes NAFTA should remain a plurilateral with all three countries negotiating together. Immediate Neighborhood The White House has decided to deal with the immediate neighborhood first by taking on NAFTA, but it is thinking about new FTAs, Mr. Ross told reporters. A free trade agreement with Japan is a high priority, particularly since Tokyo invested a lot of political capital on the TransPacific Partnership. In January President Trump withdrew the United States from TPP. The United Kingdom also is high on the list, but that could be years away until Britain officially leaves the European Union. Briefing the press on Friday for German Chancellor Angela Merkel s meeting with President Trump tomorrow, senior White House officials said both United States and Germany want to strengthen bilateral ties. On trade the officials pointed out that Germany maintains a continuing trade surplus with the United States which has been one criteria for negotiating free trade agreements. The officials, however, admitted that a bilateral trade accord with Germany is not likely because of its membership in the European Union. The topic of trade is likely to be discussed by the two leaders. The officials also admitted that the new Administration has not yet formulated a position on restarting the stalled TransAtlantic Trade and Investment Partnership talks (WTD, 3/8/17). That decision, one official commented, will await Senate confirmation of Robert Lighthizer as US Trade Representative. Another official suggested that even the EU is not rushing to restart TTIP given a string of upcoming national elections, including in Germany and France. He also admitted that Britain s decision to leave the EU will be a inhibiting factor by Trade Reports International Group, P.O. Box 1802, Wheaton, Maryland address: washingtontradedaily@gmail.com Website: Telephone: (301) , fax: (301) Published 260 times a year. Subscription price: $875/year. Reproduction is prohibited without express permission of TRIG. ISSN: Editors/Publishers: Jim and Mary Berger. Geneva editor: Devarakonda Ravi Kanth.

2 page 2 Washington Trade Daily More Talks on Mexican Sugar US and Mexican officials said Friday they will launch a new effort to resolve a long-standing dispute over Mexican sugar imports, which recently were halted under a suspension agreement (WTD, 1/26/17). Commerce Secretary Wilbur Ross and Mexican Secretary of Economy Ildefonso Guajardo Villarreal told reporters they want to resolve the issue by May 1. The issue goes back to 2014 when Mexico agreed to limit its sugar exports and impose a minimum price on its sugar sold to the United States in order to avoid imposition of antidumping and countervailing duties. Because of the suspension agreements, Mexican producers stopped shipping sugar to the United States after hitting their export limit at the end of February. Since the suspension agreements went into place, US sugar users have complained that the import limits have caused a shortage of needed raw sugar. In response, Commerce initiated an administrative review of the agreements and in June began negotiations with Mexico to reach a long-term solution. The deadline for a decision was April 4; the two officials extended that to May 1. US Energy Subsidies Geneva India will press ahead in the World Trade Organization with a second request for a dispute settlement panel to rule on several subsidy and local content programs implemented by eight US states that New Delhi says violate global trade rules, WTD has learned (WTD, 2/21/17). The second-time request will come up for consideration at the next WTO Dispute Settlement Body meeting set for March 21. India wants the panel to examine different subsidy and local content programs being implemented by Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota. The United States blocked India s first request last month. The United States said India s demand for a panel was a tit-for-tat move following New Delhi s defeat in a dispute launched by the United States against its local content requirements for solar cells and modules. In a separate dispute, Japan will make its first request for a panel against India over safeguard measures imposed on iron and steel products. Japan s Trade Policies Geneva Despite widespread uncertainty and growing mistrust in trade, Japan last week signalled at the World Trade Organization that it will press ahead with trade liberalization and business friendly policies (WTD, 3/3/17). Tokyo remains determined to create the most business-friendly country in the world and continue to pursue economic partnership and investment agreements, Japan s senior trade official Tomochika Uyama told members at the WTO on Friday. During a regular trade policy review of the country that concluded Friday, members praised Japan s role in accelerating multilateral and plurilateral trade negotiations. Several developing and least-developed countries commended Japan for its developmental assistance and preferential schemes, including its duty-free/quota-free scheme and support for the aid for trade program. Nevertheless, Japan was prodded to do more in sectors in which foreign companies face hurdles to market entry. Members urged Japan to reduce its overall level of protection provided by high tariffs, price and import controls and high levels of domestic support. Japan also was asked to bring down its high tariffs on agricultural products and some industrial goods as well as reduce tariff peaks, bind its tariff lines and further simplify its tariff structure, according to the trade policy body review chair Irene Young by Trade Reports International Group, Washington, D.C. March 13, 2017

3 Washington Trade Daily page 3 In addition, members expressed concerns over continued infringement of intellectual property rights in Japan. It was asked by several members to curb counterfeiting by stepping up enforcement, the chair said. Japan also should address issues such as reforming its regulatory framework to promote foreign direct investment especially for pharmaceuticals and reducing market access barriers in agriculture. Several members pressed Japan to improve bidding procedures for small and medium enterprises in government procurement and reduce protective measures in areas such as automotive, aircraft manufacturing, insurance, air and maritime transport, broadcasting, accounting procedures and visa-related issues for professionals. Around the Globe! China on Saturday warned the U.S. against launching a trade war, saying that both countries would suffer if U.S. President Donald Trump follows through on his threats, Agence France- Press news service reported (WTD, 3/10/17). The billionaire politician has repeatedly accused China of using unfair trade policies to steal jobs from the U.S., threatening to retaliate with massive tariffs unless Beijing changes tack. A trade war is not in the interest of the two countries and the two peoples, Chinese Minister of Commerce Zhong Shan told reporters on the sidelines of the country s annual political gathering in Beijing. It s fair to say trade war will only cause pain without gains. He said that U.S. exports to China have increased by an average of about 11 percent per year over the last decade, while Chinese exports have only increased by 6.6 percent over the same period, noting that the Asian giant is also a major importer of American goods like soybeans, cars and Boeing airplanes. This clearly shows that China and America are very important to each other, he added. On Thursday, Zhong s American counterpart Wilbur Ross said that the trade conflict with China and other countries has already been on for decades, but the U.S. is just now beginning to fight back. China is the world s biggest trader in goods. It accounts for about $350 billion of the U.S. trade deficit, about half the total. The warning was the second time this week that China has railed against a possible trade war, amid growing indications that the Trump administration is serious about pursuing a protectionist agenda.! A number of American lawmakers have backed the idea of implementing the Trans-Pacific Partnership free trade agreement even without the participation of the United States, a veteran Liberal Democratic Party lawmaker has said according to a Kyodo news service report (WTD, 3/10/17). Former Cabinet member Akira Amari, who led the Japanese negotiations on the deal, spoke to reporters following meetings Friday in Washington involving a multiparty delegation of six Diet members and U.S. legislators. Amari did not specify which American lawmakers backed the idea. The meetings included Rep. Joaquin Castro, co-head of the congressional U.S.-Japan Caucus. The U.S. lawmakers backing an 11-member TPP indicated that it would lead U.S. businesses to press the government to rejoin the pact, according to Amari. Amari said the significance of the 12-nation TPP which stipulates trade rules and reforms with the potential to level the playing field for U.S. companies in emerging economies is not widely acknowledged in the United States. Amari spoke as the delegation wrapped up its five-day trip. During the visit, the Diet members met with 12 House members and five senators from both the Republican and Democratic parties, as well as experts from think tanks. On Wednesday, representatives from the 12 TPP countries, including the U.S. and Japan, will meet in Chile to seek a way forward on a possible regional trade deal. It will be the first TPP-related meeting since President Donald Trump s administration withdrew the United States from the pact in late January. Trump said the pact would cost the U.S. jobs and harm American manufacturing. Now Washington is shifting its focus to signing bilateral trade agreements with other nations.! About 250 foreign-car dealers from around the country spread out across Capitol Hill on Thursday to meet with lawmakers and urge them to reject a House Republican plan for a new tax on imports, the Detroit News reported (WTD, 3/6/17). Members of the American International March 13, by Trade Reports International Group, Washington, D.C.

4 page 4 Washington Trade Daily Automobile Dealers Association, which represents 9,500 franchises, told members of Congress that the border-adjustment tax would hurt sales. They point to a study by the Center for Automotive Research that the tax could lead to a 5.6 percent increase in prices in the overall market, or an estimated average of $1,970 per vehicle. Two thousand dollars is a lot of money when it s not related to the value of the car itself, said Steven Germain of the Ohio-based Germain Auto Group, which has four dealerships in Ann Arbor. People would buy fewer cars or put off buying a new car. Germain met Thursday with Ohio lawmakers including Republican Sen. Rob Portman and Rep. Joyce Beatty, a Democrat, and said he d be back again to press the case if need be. Probably over 90 percent of the vehicles we sold are financed, so everybody is payment-conscious and budget-sensitive, said David Conant, a dealer from Newport Beach, California, who called the proposal anti-consumer. The association said other dealers met with members of the Michigan delegation or their staff, including Sens. Debbie Stabenow, D-Lansing, and Gary Peters, D-Bloomfield Township; and Reps. Sandy Levin, D-Royal Oak; Fred Upton, R-St. Joseph; and Paul Mitchell, R-Dryden. The White House has not indicated whether it supports the border-adjusted tax, although Treasury Secretary Steven Mnuchin has said the administration is looking at it seriously. ***** WTD is intended for readers within the office that subscribes. PLEASE do not redistribute. ***** Take a look at our newly designed homepage at: We are sure you will see something you like. Our Blog, Podcast, Facebook, Twitter Straight Talk, Calendar, Primary Source Sign up for WTD s special alert system which keeps you informed of major trade-related news throughout the day. Simply WTD your address and we will add you to the list. washingtontradedaily@gmail.com WTD now has available for sale compact disks for all of 1988 through 2015 for $35 each year. To order call , fax us at or us at washingtontradedaily@gmail.com 2017 by Trade Reports International Group, Washington, D.C. March 13, 2017

5 Washington Trade Daily page 5 On the Web... Agriculture Mexico. Commerce Department statement on resolving the US-Mexico sugar dispute. eases/2017/03/secretary-wilbur-l-ross-jr-an d-secretary-ildefonso-guajardo-villarreal ) US Relations. Speech by European Commission Vice President Ansip at the Atlantic Council EuroGrowth Task Force event. oners/ /ansip/announcements/sp eech-vice-president-ansip-atlantic-council-eu rogrowth-task-force-event_en ) issued: 3/10/17. Asia ASEAN. European Union-Association of Southeast Asian Nations Economic Ministers joint statement. /march/tradoc_ %20aem-eu%2015 %20-%20Draft%20JMS%20-9%20March%2 0-cln.pdf ) Buy America Steel. Public Citizen statement on the Trump Administration s promise on Buy America fo steel projects. ) European Union ASEAN. European Union-Association of Southeast Asian Nations Economic Ministers joint statement. /march/tradoc_ %20aem-eu%2015 %20-%20Draft%20JMS%20-9%20March%2 0-cln.pdf ) Export Controls. European Union CN-DU correlation table. /march/tradoc_ pdf ) issued: 3/10/17. Export Controls European Union. European Union CN-DU correlation table. /march/tradoc_ pdf ) issued: 3/10/17. Germany US Relations. White House background briefing on the visit of German Chancellor Merkel. e/2017/03/10/background-press-briefing-s enior-administration-officials-upcoming-visit ) Imports AD. US report to the World Trade Organization on recent antidumping actions. h/fe_s_s009-dp.aspx?language=e&catalogue IdList=234995,234996,234991,234990, ,234989,234987,234980,234968,234970& CurrentCatalogueIdIndex=7&FullTextHash= &HasEnglishRecord=True&HasFre nchrecord=false&hasspanishrecord=false ) March 13, by Trade Reports International Group, Washington, D.C.

6 page 6 Washington Trade Daily Japan Trade Law. Japanese government statement on proposed revisions to Japanese trade laws _003.html ) Mexico Sugar. Commerce Department statement on resolving the US-Mexico sugar dispute. eases/2017/03/secretary-wilbur-l-ross-jr-an d-secretary-ildefonso-guajardo-villarreal ) Steel Buy America. Public Citizen statement on the Trump Administration s promise on Buy America fo steel projects. ) Imports. American Institute for International Steel statement on steel imports. ) 2017 by Trade Reports International Group, Washington, D.C. March 13, 2017

New Year, New President, New Trade Agenda? John Murphy U.S. Chamber of Commerce

New Year, New President, New Trade Agenda? John Murphy U.S. Chamber of Commerce Who Said It? 2 We are absolutely going to keep trading. I am not an isolationist I want free trade, but it s got to be fair