Senators Head to China, Korea; Trump Vows Big Korea Trade News

The International Trade Practice Center on Bloomberg Law® provides in one comprehensive, time-saving resource.

Susan McInerney Washington

By Susan McInerney, Brian Flood, and BJ Siekierski

Lawmakers headed home for a two-week break, and they’re likely to get an earful from constituents about trade issues, especially the administration’s tariffs on imported steel and aluminum and duties aimed at curbing intellectual property theft by China.

What’s the problem? Folks from farmers to automakers fear blow-back, especially from China. Those concerns have been raised by farmers, agriculture equipment manufacturers such as Deere & Co., and lawmakers who queried U.S. Trade Representative Robert Lighthizer on the issue during two days of congressional hearings March 21-22.

Expect lobbyists to continue descending on Washington in search of tariff carve-outs, both for countries and for various products affected by the tariffs.

Five senators are on the move this week, winging their way to South Korea and China, where trade, intellectual property, and technology will be high on the agenda. Sen. Steve Daines (R-Mont.) is leading the delegation, which includes Sens. Chuck Grassley (R-Iowa), Ron Johnson (R-Wis.), David Perdue (R-Ga.), and Ben Sasse (R-Neb.).

All members of the delegation are from farm states, and three—Daines, Grassley, and Perdue—are on the Senate Agriculture Committee. Look for agricultural issues to be on the agenda as well, since China is a big buyer of U.S. farm products such as soybeans. As Grassley told Lighthizer March 22, U.S. farmers have a lot to lose if China retaliates by zeroing in on American agricultural products.

Beijing fired its first salvo March 23 against the steel (25 percent) and aluminum (10 percent) tariffs, saying it’s considering hiking duties on $3 billion worth of U.S. goods. China has primarily targeted U.S. agricultural, steel, and aluminum products in a list of 128 U.S. goods that included fruit, nuts, wine, ethanol, ginseng, pipes, and pork.

Good News on Korea?

There could be movement on the Korea-U.S. Free Trade Agreement (KORUS) this week. President Donald Trump March 23 said an amended deal between the U.S. and South Korea “is very close to being finished.”

Commerce Secretary Wilbur Ross followed up by saying the U.S. is close to a “pretty comprehensive resolution” with South Korea. “We hope by some time next week to have a real announcement,” on a trade deal with South Korea, he said, although no date was specified.

South Korea and the U.S. have been in talks to modify the bilateral trade pact, which took effect in 2012, since January.

Automobiles have been a key sticking point for the U.S. in the KORUS talks. Autos formed $18.8 billion of the $28 billion U.S. goods trade deficit with South Korea in 2016, according to USTR data. In addition, Washington wants Korean automakers to use more American-made parts in cars sold in the country.

Agriculture has been the red-line issue for Seoul, with South Korean Trade Minister Kim Hyun-chong at one point telling his negotiating team to walk out of talks if the U.S. presses the issue.

NAFTA Chat

On the North American Free Trade Agreement front, work continues behind the scenes in preparation for the next round of talks to be held in the Washington area. Lighthizer told lawmakers that U.S. officials went to Detroit recently to discuss rules of origin for automobiles.

House members and senators both in writing and at hearings March 21-22 made clear that a strong investor-state dispute settlement mechanism needs to be part of NAFTA, otherwise the trade deal won’t pass muster in Congress.

Canadian Officials Head East

U.S. officials aren’t the only ones traveling to the Far East this week. Canada’s foreign affairs and international trade ministers will be in Japan, South Korea, Singapore, and Hong Kong for meetings on trade and security.

Foreign Affairs Minister Chrystia Freeland is meeting with her Japanese and South Korean counterparts in Tokyo and Seoul from March 27-29. According to a Canadian government source, the impact of the Trump administration’s new tariffs on Chinese imports will be on the agenda.

Earlier in the week, Trade Minister Francois-Phillipe Champagne will head to Hong Kong from Singapore where, among other things, he’s promoting Canadian steel and aluminum exports. While in Hong Kong March 25-26, his office said, he’ll meet Hong Kong’s commerce secretary and participate in a roundtable discussion with Chinese trade experts.

Tire Challenge Rolls to Court

The government of Sri Lanka is taking the U.S. to court over its anti-subsidy duties on pneumatic, off-the-road tires. Counsel for Sri Lanka is set to square off against Justice Department lawyers in oral arguments before Court of International Trade Judge Jane Restani in New York March 28.

The Commerce Department found that Sri Lankan producers benefited from unfair subsidies, including tax concessions and cheap rubber. The government of Sri Lanka is challenging these findings. Commerce assigned a duty rate of 2.18 percent for all Sri Lankan producers and exporters.

The U.S. imported about $66.6 million of these tires from Sri Lanka in 2015, before the duties were put in place, according to Commerce.

The case is Government of Sri Lanka v. United States, Ct. Int’l Trade, No. 17-00059, oral arguments 3/28/18.

Out and About

Developments in trade are on the agenda during a March 27 luncheon sponsored by the Customs and International Trade Bar Association. Everett Eissenstat, deputy director of the National Economic Council and deputy assistant to the president for international economic affairs, will speak.

The State Department’s Advisory Committee on International Economic Policy holds an open meeting March 28. For further information contact KrillA@state.gov.

March 28 is the deadline for nominations to be submitted to USTR for the Intergovernmental Policy Advisory Committee on Trade. For further information contact Cameron.T.Seward@ustr.eop.gov.

Benefits of the Korea-U.S. Free Trade Agreement for U.S. farmers will be the subject of a program sponsored by the Korea Economic Institute of America. The event is called “What’s the Beef with the KORUS FTA? Why the Agreement Works for U.S. Farmers,” and will take place March 28.

Steel and aluminum tariffs—including information on how they apply and how to seek exclusions for various products, among other things—will be the focus of an American Bar Association Section of International Law program March 28.

The future of data protection in the European Union will be discussed at a Brookings Institution program March 29. Birgit Sippel, a member of the European Parliament from Germany, will speak.

With assistance from Cheryl Bolen.

To contact the reporters on this story: Brian Flood in Washington at bflood@bloomberglaw.com; Susan McInerney in Washington at smcinerney@bloomberglaw.com; BJ Siekierski in Ottawa at correspondents@bloomberglaw.com

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

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Trade Practice Center on Bloomberg Law