Pence, Ross Head to Far East; China in Enforcement Hot Seat

International Trade Daily™ provides rapid, reliable notification of the most significant developments affecting U.S. trade and international business policy, as well as the policies of major U.S....

By Rossella Brevetti and Brian Flood

If it’s Tuesday, it must be Seoul. Or is it Tokyo? Those are two of the stops Vice President Mike Pence will be making this week during his four-nation, 10-day swing through Asia.

Pence is traveling to Korea, Japan, Indonesia and Australia, and he’ll wrap up with a stop in Hawaii. Details on the vice president’s meetings with officials in the four countries is scant, but a statement released by the White House shows that business issues will figure prominently, and senior officials from the four countries have indicated that trade is likely to come up.

Pence’s trip comes nearly three months after President Donald Trump pulled the U.S. out of the 12-nation Trans-Pacific Partnership, a deal that with U.S. participation represented nearly 40 percent of global gross domestic product worth $30 trillion. It also comes at a time when Asian and Pacific nations have flagged concerns about growing protectionism in the U.S., although Trump seems to have changed course on some key trade issues, such as labeling China a currency manipulator.

Pence isn’t the only administration official heading east this week. Commerce Secretary Wilbur Ross will accompany the vice president to Japan, where Pence will participate in an economic dialogue April 18.

Enforcement will also be in the news this week, with the International Trade Commission hearing arguments on a decision to dismiss U.S. Steel Corp.'s antitrust claim against Chinese steel producers. In addition, about $1.15 billion in yearly imports of Chinese hardwood plywood could move closer to anti-subsidy duties when the Commerce Department announces its preliminary determinations in a countervailing duty investigation.

NAFTA Quid Pro Quo?

The Trump administration signalled what changes it might seek in the North American Free Trade Agreement in a draft notice submitted to the trade oversight committees in late March. Work on that draft notice continues as the administration is gearing up for formal submission of the notice sometime after Congress returns.

Meanwhile, a panel of trade analysts, including former government officials, will debate what the quid pro quo might be for achieving some of the administration’s ambitious objectives, which include action to address the goods deficit with Canada and Mexico. The forum, to take place April 19, will include Matt Gold, former deputy assistant U.S. trade representative for North America and Darci Vetter, former chief agricultural negotiator, Office of the U.S. Trade Representative. This forum is part of the Georgetown Center for Business and Public Policy’s Georgetown on the Hill series.

Section 337 Case

Steel trade is attracting attention at the top levels of the Trump administration. The International Trade Commission April 20 will hear oral argument on Administrative Law Judge Dee Lord’s decision to dismiss United States Steel Corp.’s antitrust claim against Chinese steel producers brought under 1930 Tariff Act Section 337.

The case, which is being closely watched by the trade community, has wide-ranging implications since the complaint alleges antitrust as well as duty evasion allegations. Most complaints brought under 1930 Tariff Act Section 337 deal with alleged infringement of intellectual property rights. A number of U.S. manufacturers, including AK Steel Corp., have urged the ITC to reverse the administrative law judge’s decision to dismiss the antitrust claim.

Chinese Plywood

An estimated $1.15 billion in yearly imports of Chinese hardwood plywood could move closer to anti-subsidy duties April 18.

The Coalition for Fair Trade in Hardwood Plywood and its individual members—Columbia Forest Products, Commonwealth Plywood Inc., Murphy Plywood, Roseburg Forest Products Co., States Industries Inc. and Timber Products Co.—are pushing for the countervailing duties, as well as antidumping duties. The Commerce Department is scheduled to announce its preliminary determinations in the CVD investigation.

If it finds signs of unfair subsidies, importers will likely have to post refundable cash deposits on entries until the U.S. makes a final decision on whether to impose duties. This is the coalition’s second crack at getting the duties in place. The Commerce Department found in 2013 that the Chinese plywood was unfairly traded, but the ITC didn’t find that the imports materially threatened or injured U.S. industry.

Duties could drive up prices for the construction industry, where hardwood plywood is used to construct wall panels, kitchen cabinet components, seat backs, table and desk tops and certain types of wood flooring, among other uses.

First Stop: Korea

Pence’s four-nation trip to the Far East will make the first stop in Korea, where officials said they hope talks will include economic and trade issues as well as security. Trade minister Joo Hyung-hwan has said the country wants to further expand and develop the Korea-U.S. Free Trade Agreement.

U.S. companies continue to face numerous regulatory trade barriers from Korea, according to a recent report from the Office of the U.S. Trade Representative that put the U.S. goods trade deficit with South Korea in 2016 at $27.7 billion—a key point of reference for the U.S. administration that is reviewing deficits on a country-by-country basis.

Veep, Ross in Japan

As for another Trump administration trade priority—Japan—Commerce Secretary Wilbur Ross will accompany Vice President Mike Pence on a trip to Japan. Pence will head to Tokyo for the April 18-19 inaugural meeting of the U.S.-Japan Economic Dialogue with Japanese Finance Minister Taro Aso. Ross will not accompany Pence on the other stops on his Asian swing, which include U.S. free trade agreement partner South Korea.

Japan was one of the signatories to the TPP. Ross has said that a bilateral free trade agreement with Japan is a “very high priority” for the U.S. The vice president and Ross are expected to talk about a U.S.-Japan free trade agreement during the visit, an industry source said.

Officials from the Ministry of Finance and Ministry of Economy, Trade and Industry officials said a host of topics will be discussed, including trade frameworks, economic cooperation and foreign exchange. Aso told a parliamentary session April 12 that he would like the two countries to establish rules to promote bilateral free trade and investment based on TPP agreement.

The next stop on Pence’s trip is Jakarta, where officials were left scrambling after Indonesia made it onto a list of nations Trump has ordered probed for potential trade abuse. While Southeast Asia’s largest economy had previously avoided Trump’s cross-hairs, it runs a sizable trade surplus with the U.S.

The vice president will wrap up his four-nation tour in Sydney, Australia, on April 22. Prime Minister Malcolm Turnbull has said the two will discuss Australia’s economic relationship with the U.S. and the country’s commitment to working with the Trump administration.

With assistance from Len Bracken in Washington, Elaine Ramirez in Seoul and Toshio Aritake in Tokyo

To contact the reporters on this story: Rossella Brevetti in Washington at rbrevetti@bna.com; Brian Flood in Washington at bflood@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Try International Trade Daily