White House Economic Adviser Says EU, UK, Japan FTAs Will Look Similar to USMCA
The chairman of the White House Council of Economic Advisers says trade negotiators have made "a heck of a lot of progress" with Europe, the United Kingdom and Japan, and "all of those agreements are going to look similar" to the rewritten NAFTA. Kevin Hassett was speaking at the Global Services Summit on Oct. 17, as he was interviewed by Laura Lane, UPS president of global public affairs. Technically, none of those trade negotiations have opened, as they are not allowed to until Congress sets priorities. The day before Hassett spoke, the Office of the U.S. Trade Representative notified Congress of its intention to begin negotiations (see 1810160057). Hassett said President Donald Trump told his staff, "Once I get a deal with one country, I bet they're really going to cascade, the deals."
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Lane said the digital trade chapter in NAFTA's replacement has "really fantastic language." She said people don't realize that an express carrier would care about data localization, but said that countries requiring data localization "really hamstrings all of our operations, including UPS's."
However, Lane told Hassett that American businesses are concerned about how the tariffs on almost $200 billion worth of goods imported from China are slated to increase from 10 to 25 percent at the beginning of next year. Hassett said it's Chinese producers, rather than American importers and consumers, that will bear the brunt of the cost, and pointed to the drop in Chinese equity markets as proof. He said it will have some effect on the American economy, but not much. "People can buy it from the Malaysian producers or the U.S. producers," he said, once a 25 percent tariff makes the Chinese product unattractive. "The second-best price isn't really that different." Still, he noted that President Trump and China's president would meet on the sidelines of the G-20 Summit at the beginning of November, and they could "start to move toward an end game."
Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, challenged Hassett's assertions during the Q&A following the interview. Even at 10 percent, smaller vendors are already seeing impacts on prices, he said. "As far as pushing supply chains out of China, it's a little more complicated than that. It takes months if not years."
Lane also asked Hassett about the World Trade Organization, and he said the administration's hope is that members will move toward more reciprocal behavior. He mused: "If there's a country like China that breaks the rules over and over again, shouldn't it have to leave the WTO?" He also suggested that since there are no teeth in WTO dispute settlement, and the process is so slow that companies have already been damaged by the time they win, maybe the organization could be replaced by a series of high-quality bilateral deals.