Mara Lee

Half the companies surveyed by the U.S.-China Business Council say that it's too soon to tell if the tariffs in the China trade war were worth it for the gains won at the negotiating table, even as 78 percent of respondents welcome the phase one deal. Companies see the phase one deal -- which takes effect Feb. 14 -- as something that will prevent more tariff hikes. Of those who are directly affected by the commitments in phase one -- 60 percent of the companies -- the purchase promises matter most, with 30 percent saying that's the most relevant plank. Protection of intellectual property was a close second, with 27 percent of companies saying that's most important.

Sen. Rick Scott, R-Fla., introduced a bill that would achieve a result similar to that of a rule Commerce is reportedly considering on Huawei export controls (see 2002130014), he said in a news release. Currently, goods made outside the U.S. with less than 25 percent U.S. content can be sold to Huawei -- or any other company on the entity list -- without a special license (see 1905220027). The Commerce Department has discussed lowering that de minimis threshold to 10 percent, though it has not yet issued a proposed rule.

The U.S.-Japan mini-trade deal covers just 5 percent of trade between the partners, according to Bruce Hirsh, a principal at Tailwind, but he said the likelihood of further progress is small. Hirsh spoke while at the National Association of Foreign-Trade Zones legislative summit on Feb. 11. “Japan wasn’t interested in doing a bilateral deal at all, but they recognized there was only so long they could keep the U.S. at bay,” he said. He said that what Japan gave to the U.S. “fell a little bit short of TPP,” or the Trans-Pacific Partnership. He said beef and pork got TPP parity, but rice got nothing and “dairy got a lot, but not everything.”

Treasury Secretary Steven Mnuchin, testifying on the president's budget at a hearing Feb. 12, was asked repeatedly about what the Organization for Economic Cooperation and Development might do on taxing digital companies, precluding France's digital services tax.

The Office of the U.S. Trade Representative released an extensive critique of the appellate body at the World Trade Organization. But the administration offered no proposals for what other countries could do to satisfy it so that it would allow the appellate body to be rejuvenated. Currently, there is no quorum for the body, so it cannot hear appeals. Many of the complaints are about how the WTO has ruled on antidumping and countervailing duty cases in the U.S. -- the report mentions “zeroing,” a method used in antidumping, nearly 100 times. The report said, “The United States is publishing this Report -- the first comprehensive study of the Appellate Body’s failure to comply with WTO rules and interpret WTO agreements as written -- to examine and explain the problem, not dictate solutions.”

Customs duties are estimated at $72 billion in the current fiscal year, and the White House projects that number will climb to $92 billion in the fiscal year that begins Oct. 1. It projects that duties then will fall to $54 billion the following year.

The United Kingdom's Secretary of State of International Trade, Elizabeth Truss, told Parliament that the price the National Health Service pays for prescription drugs is not up for negotiation in free trade deals, and “we will not compromise on our high environmental protection, animal welfare and food standards.” She also added, according to her written statement, that “The UK will maintain its own autonomous sanitary and phytosanitary (SPS) regime to protect public, animal and plant life and health and the environment, reflecting its existing high standards.”

In a chat with Agriculture Secretary Sonny Perdue, U.S. Trade Representative Robert Lighthizer agreed that it should not be the case that the European Union sells $10 billion to $12 billion more in food products to U.S. consumers than the U.S. sells in food and commodities to the region. “We have to get some more concessions from Europe,” he said. “Their prices are higher, they're less efficient, they don't use the science like we do, and we have a deficit with them? It's crazy.”

In his State of the Union address, President Donald Trump touted a “groundbreaking new agreement with China” without alluding to the work yet to get done in phase two, and said replacing NAFTA was a promise he kept. “Unfair trade is perhaps the single biggest reason that I decided to run for President,” he said, according to a White House transcript. “Six days ago, I replaced NAFTA and signed the brand-new U.S.-Mexico-Canada Agreement into law.” Trump “also promised our citizens that I would impose tariffs to confront China's massive theft of America’s jobs,” he said. “Our strategy has worked. Days ago, we signed the groundbreaking new agreement with China that will defend our workers, protect our intellectual property, bring billions and billions of dollars into our treasury, and open vast new markets for products made and grown right here in the USA.”

Experts disagreed on whether the spread of the coronavirus will make it impossible for China to reach its purchase commitments, or make it more likely that China will wish to please the U.S., as its economy suffers. But one thing most agreed on -- the disease's impact is another reminder, after the tariff war, that companies should diversify instead of being wholly reliant on Chinese factories. The experts were on a panel at the Washington International Trade Association conference Feb. 4 on the future of U.S.-China trade.