When the Ways and Means Trade Subcommittee held a hearing on the U.S.-Japan mini-deal, the Office of the U.S. Trade Representative declined to send anyone to testify. Rep. Ron Kind, D-Wis., one of the biggest boosters of free trade in the Democratic caucus, said that absence represents “the disdain the current administration has" for Congress, and its role in setting trade policy. He predicted that "this will have serious ramifications for the next time" Congress has a vote on fast-track authority.
Export Compliance Daily is providing readers with some of the top stories for Nov. 12-15 in case they were missed.
The trade war that President Donald Trump began with China 16 months ago is creating pain for businesses, but there's a deeper strategic mistake to consider, said Matthew Goodman, senior vice president for Asian economics at the Center for Strategic and International Studies. Goodman, who was speaking during the first session in a Congressional Trade Series on Nov. 19, said, “I still don't know what the basic strategic goal is here." He said he didn't know whether the administration wants to get structural changes to China's economy, as it claims, or whether it wants to reduce the bilateral trade deficit, or to contain China's rise.
Trade experts identified many weaknesses of the World Trade Organization -- the evidentiary standard for countervailing duties: the fact that CVD in one market doesn't help the industry's economics when surplus flows to other countries; the length of time it takes to show adverse effects to domestic firms; the fact that 164 countries can't agree on trade liberalization.
President Donald Trump announced a "very substantial phase 1" deal in the Oval Office Oct. 11, saying the Chinese and American negotiators came to a deal on intellectual property, financial services and agricultural sales. The president said China will buy as much as $40 billion to $50 billion worth of American commodities. He also said good progress had been made on issues around technology transfer from American companies to Chinese partners.
The next few months include a "rapid-fire succession of trade and tech war deadlines" that poses a high level of uncertainty for the fight between the U.S. and China, Bank of America economists Ethan Harris and Alexander Lin said in a Sept. 30 research report. Of those deadlines, what happens with Huawei's temporary general license is likely the most important unknown, they said. Huawei on Nov. 17 will be cut off from all U.S. exports, but "we expect an 'extend and pretend' scenario where Huawei remains on the 'entity list' but is allowed to keep buying US inputs."
Revenue declined 23 percent in Micron Technology’s fiscal year 2019 ended Aug. 29, but senior executives on a fiscal Q4 call Sept. 26 wouldn’t break out how much of the decrease was attributable to the disruption in shipments to Huawei. Revenue in Q4 was down 42 percent from a year earlier, but up 2 percent sequentially, exceeding Micron’s previous guidance on better-than-expected demand in the quarter, the company said. “In recent months, we have seen increased demand from customers headquartered in mainland China,” CEO Sanjay Mehrotra said. Some customers “could be making strategic decisions to build higher levels of inventory in the face of increased trade tensions between the U.S. and China,” he said. The components Micron sells have heavy exposure in the first three rounds of Section 301 tariffs on Chinese goods. President Donald Trump announced in August he would hike those tariffs Oct. 1.
China released its first batch of tariff exemptions for U.S. goods, which include exemptions for 16 items, according to an unofficial translation of a Ministry of Finance press release. The goods will be excluded from China’s first round of retaliatory tariffs in response to U.S. Section 301 tariffs. The exemptions will take effect Sept. 17 and last until Sept. 16, 2020, China said, adding that it plans to publish more exemptions in “due course.”
Wendy Cutler, former acting deputy U.S. trade representative, says that the first bucket of Section 301 tariffs, the ones tailored to Made in China 2025, worked. Even though Cutler is generally not a fan of tariffs, she said, "I think those succeeded … in getting China to negotiate in earnest."
China is not looking to escalate its trade war with the U.S. and wants to focus on removing tariffs, not adding them, a Chinese government spokesman said Aug. 28. “We are resolutely opposed to the escalation of the trade war and are willing to resolve the issue through consultation and cooperation in a calm attitude,” said Gao Feng, a commerce ministry spokesman, according to an unofficial translation of a press conference transcript. “The escalation of the trade war is not conducive to China, not to the United States, and is not conducive to the interests of the people of the world.”