Jacob Kopnick

The U.S. and South Korea have “much work to do” in negotiations over an updated U.S.-South Korea Free Trade Agreement, U.S. Trade Representative Robert Lighthizer said in a statement following talks held Jan. 5 in Washington. At the meeting, U.S. and South Korean officials discussed “priority areas of interest and agreed to set the schedule for the next meeting in the near term,” according to a separate statement from the South Korean Ministry of Trade, Industry and Energy. The U.S. “discussed proposals to move towards fair and reciprocal trade in key industrial goods sectors, such as autos and auto parts, as well as to resolve additional cross-cutting and sector-specific barriers impacting U.S. exports,” the USTR statement said. “Both sides agreed to follow-up to discuss timing for the next meeting in the very near term,” USTR said.

Generalized System of Preferences renewal legislation is a priority for early 2018 congressional passage, House Ways and Means Committee Chairman Kevin Brady, R-Texas, told reporters Dec. 21, meaning that the tariff preference coverage will expire Dec. 31. He also suggested Senate Democrats, including Finance Committee ranking member Ron Wyden, D-Ore., haven’t OK’d such legislation to move forward. “We’re really waiting for a green light from Senate Democrats and from ranking member Wyden,” Brady said. “We’re hopeful that he can give us the green light so we can move forward early next year.” He added that he “had hoped” GSP renewal would be enacted prior to expiration, and that Congress “can move this thing fast” with congressional Democrats and Republicans “all on board.”

Mexico and Canada have proposed to expand the benefits of NAFTA tariff preference levels (TPLs) for textiles and apparel, responding to a U.S. proposal to remove TPLs, people familiar with negotiations said in recent interviews. Mexico has “come back with a proposal that is similarly aggressive [to the U.S.’s], but from the other side,” Akin Gump attorney Josh Teitelbaum said. “That’s kind of the tension where we’re at, the stalemate, so to speak,” on textile and apparel negotiations. A Mexican official confirmed in an email that his country proposed to expand the TPLs. Mexicans proposed a multiple of their existing TPLs for some products and an alignment with Canadian TPLs for other products, a cleared adviser said. “For equality’s sake, they looked at the Canadian TPLs and said, ‘OK, we’ll just pick that number so it’s the same across the board,’” the adviser said.

Disagreement on de minimis thresholds is the one obstacle to closing an updated NAFTA customs chapter, an area where talks have progressed significantly during the ongoing renegotiation of the pact, according to three sources with knowledge of discussions. Advancement on the de minimis issue principally depends on Canada’s level of willingness to increase its $15 (USD) threshold, after Canadian negotiators declined to engage on the issue following contentious U.S. proposals pitched during the fourth negotiating round in Arlington, Virginia, two of the sources said.

The U.S. called for "real policy changes" and said “much work remains” for addressing global steel overcapacity, in a pointed Nov. 30 statement at the conclusion of the Global Forum on Steel Excess Capacity in Berlin. “The Forum has not made meaningful progress yet on the root causes of steel excess capacity, and pointing to short-term developments and worn out promises will not cure the fundamental causes of the problem,” the statement from the Office of the U.S. Trade Representative said. “Addressing the ongoing steel excess capacity situation will require immediate and sustained concrete action by all steelmakers, including allowing markets to function, removing market-distorting subsidies and other forms of state support, and treating state-owned enterprises and private steelmakers equally.”

The Office of the U.S. Trade Representative’s updated NAFTA negotiating objectives released Nov. 17 could signal potential U.S. amenability to alternatives to its proposal to make NAFTA's investor-state dispute settlement mechanism optional, but skepticism remains about whether the U.S. envisions NAFTA’s ISDS continuing under the structure it does today, according to analysts. Members of the Trump administration have taken a hawkish tone toward NAFTA’s existing ISDS regime, with U.S. Trade Representative Robert Lighthizer accusing businesses of using the system as a pretext for outsourcing (see 1711060024), and calling it “political risk insurance” after the fourth NAFTA negotiation round last month (see 1710180024).

The Office of the U.S. Trade Representative late on the afternoon of Nov. 17 released an updated list of NAFTA negotiating objectives, including new language on objectives to “increase transparency” in import and export licensing processes among the parties and to reinforce commitments to continue practices to review and correct countries’ final administrative actions, “if warranted.” The updated list continues most of the language of the original negotiating objectives released in July (see 1707180022), including all of the same customs proposals, consisting of positions to raise Canada’s and Mexico’s de minimis thresholds to $800, reduce customs documents and procedural formalities, and provisions to provide for automation for import, export and transit processes.

The International Trade Commission launched an investigation to examine U.S. trade in goods and services and investment in sub-Saharan Africa, the ITC announced Nov. 17. The Office of the U.S. Trade Representative requested the review in a letter ITC received Oct. 23. The report is expected to be delivered to USTR by April 30, 2018. The ITC will host a public hearing to inform the review on Jan. 23, 2018, for which requests to appear should be filed no later than 5:15 p.m. Jan. 9, the ITC said.

The U.S. seeks to reduce its $29.6 billion goods trade deficit with India and to identify and address trade barriers bearing on intellectual property rights, and on goods including manufactured and agricultural products, U.S. Trade Representative Robert Lighthizer said after conclusion of the annual U.S.-India Bilateral Trade Policy Forum on Oct. 27. “I am confident that with continued work, we will be able to accomplish these goals,” Lighthizer said in a statement. The U.S. pressed for strong outcomes in areas including non-science-based agricultural trade barriers, “continuing and new regulatory and technical barriers” impacting sales of “U.S. high technology and other products,” tariffs in several agricultural and industrial sectors, and protection and enforcement of IPR, the Office of the U.S. Trade Representative said. While “both sides had differing views that could not be resolved immediately,” the two sides agreed it is “critical” to continue strong engagement through “the coming months” to achieve concrete outcomes before the next forum in 2018, USTR said.

It’s unclear whether U.S.-Canada Free Trade Agreement (CFTA) provisions related to drawback, certificates of origin and import relief measures would spring back into force if the U.S. withdraws from NAFTA, according to a recent Q&A posted by the National Customs Brokers & Forwarders Association of America. NAFTA Implementation Act Section 107 states that some CFTA provisions will remain suspended until the suspension itself is terminated. This could mean that those suspensions would, by default, remain active in any post-NAFTA world, even though Canada and the U.S. formally agreed through a January 1993 exchange of letters to broadly suspend the operation of CFTA when NAFTA took effect, with the suspension “to remain in effect for such time as the two governments are Parties to NAFTA,” the NCBFAA said.