In other news from the G20 Summit, the United States, Mexico, and Canada signed the U.S.-Mexico-Canada Agreement (USMCA), otherwise known as the new North American Free Trade Agreement (NAFTA). Now, the ball is in the U.S. Congress’s court to approve the trade agreement. The positive response to the signing of the new agreement was short-lived because later in the trip President Trump said he will terminate NAFTA “within a relatively short period of time” to pressure the Congress to approve USMCA. This now introduces new uncertainty in the U.S.-Canada-Mexico trading relationship. 

You may remember that the President can terminate NAFTA with a six-month transition.  However, as we previously reported, it’s highly unlikely Congress could act as fast as the President wants. Even if the Administration can get support from a majority in the House and the Senate, there simply is not enough time for the Congress to approve USMCA during the lame-duck session. The current Congress ends on January 2^nd, which allows just 34 days to pass it; under the terms of Trade Promotion Authority, the President must submit the final legal text to Congress after signature and then wait a minimum of 30 days before submitting draft implementing legislation.

House Ways & Means Committee Chairman Kevin Brady (R-TX) said, “There is no doubt that President Trump has delivered on his promise to obtain many provisions that will increase our ability to sell more American goods and services. But as I’ve said throughout the negotiations, for USMCA to gain widespread support, it must increase certainty as to the durability of the agreement, be fully enforceable to hold our trading partners accountable across all sectors, and increase–not diminish–our ability to sell into these markets.”

Meanwhile, a partial government shutdown looms, as funding for several government agencies expires on December 7^th and lawmakers are divided over President Trump’s $5 million request for a border wall; it’s expected that lawmakers will approve a one-week budget to delay until after President George H. W. Bush’s funeral services.  The Department of Homeland Security, and Customs and Border Protection, would be affected if there is a shutdown and we will keep members updated as the talks progress. 

Americans for Free Trade, a multi-industry coalition of companies and trade associations (including the United States Fashion Industry Association) sent a letter to President Trump yesterday urging him to resolve the trade dispute with China during his meeting with President Xi at the G20 Summit in Argentina. “We agree that trading partners should abide by the global trade rules. Accordingly, we believe that targeted trade actions are effective measures for proven trade violations. Broadly applied tariffs, however, are not. At a time when our economy is booming, unemployment is at record lows and consumer confidence is at its highest level in nearly two decades, we are united in our concern over the harmful consequences of tariffs for American businesses, workers, and families,” the letter states. For more information on the coalition and how your company can get involved, contact us or visit www.americansforfreetrade.com.

USITC to Investigate Impact of Trade Agreement with the EU

In October, the Trump Administration announced the intention to begin trade negotiations with the European Union. As requested by the Office of the U.S. Trade Representative, the U.S. International Trade Commission (USITC) is seeking input for an investigation into the probable economic impact of providing duty-free treatment for currently dutiable imports from the European Union. The USITC will hold a hearing on December 18th; UFSIA will be submitting comments and requesting to testify. For more information, visit the USITC website.

As you’ve probably seen, over the weekend, President Trump and President Xi announced a “cease fire” in the trade war following their meeting at the G20 Summit in Argentina. According to the White House, the tariffs on the $200 billion list (List #3) will remain at 10 percent and will not increase to 25 percent on January 1^st. As a reminder, this list included many products of relevance for USFIA members, including some textiles, accessories and handbags, plastic hangers, and other items. The United States and China will “immediately” begin negotiations on structural changes with regard to forced technology transfer, IP protection, non-tariff barriers, cyber intrusions and cyber theft, service, and agriculture, and “agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent.” The full statement is available on the White House website.

This agreement is generally good news and we hope that it is the beginning of serious negotiations on all these issues. On the negative side, however, USFIA had heard from sources in the Administration that the Administration would likely implement a product exclusion process after the tariffs increased to 25% in 2019. The Administration’s decision to delay an increase in the China Section 301 tariffs almost surely means that the Administration will also delay implementation of a product exclusion process

Due to the unpredictability of the trade politics, we encourage companies to continue to prepare for the possibility of increases in the current tariffs as well as the future possibility of additional tariffs on all imports from China. Visit our webinar library to access our webinar series, How to Fight the Trade War, with insights from customs brokers and lawyers. We are waiting for more details about how the Trump Administration will handle these negotiations and will send updates as soon as we have more clarity.

In advance of the G20 Summit this week, President Trump has warned that he’s ready to implement additional tariffs on China if he is unable to make a deal with President Xi in Argentina. In an interview with The Wall Street Journal, he said it’s “highly unlikely” he would accept an offer from China to stop his plan to increase the current tariffs to 25 percent in January. “If we don't make a deal, then I'm going to put the $267 billion additional on,” he said, adding the tariff level could either be 10 percent or 25 percent. The full interview is available at The Wall Street Journal.

USFIA Files Comments on U.S.-Japan Negotiating Objectives

As previously reported, the Trump Administration has announced that it will initiate trade negotiations with Japan. The United States Fashion Industry Association (USFIA) filed comments this week on the negotiating objectives for the U.S.-Japan Trade Agreement. The comments strongly support the negotiation of the agreement, noting the importance of Japan both for fashion retail as well as high-end fabrics, and urges the elimination of the high tariffs and other non-tariff barriers to trade with this critical market. The comments include messaging from earlier Trans-Pacific Partnership (TPP) comments about global value chains and the need for cutting-edge rules of origin. The comments are available here. We will request to testify at the hearing, as well.

USFIA Files Post-Hearing Comments on USMCA

USFIA President Julia K. Hughes testified at the recent U.S. International Trade Commission hearing on the U.S.-Mexico-Canada Agreement (USMCA). Last week, we filed post-hearing comments to answer some of the panel’s questions on topics including the impact of chapter notes on U.S. brands and retailers, rule of origin regional content requirements, and more. The comments are available here.

USFIA Joins Multi-Industry Letter on WCO Electronic Transmissions & WTO Moratorium

This week, the United States Fashion Industry Association (USFIA) joined a multi-industry association letter to the U.S. Department of Homeland Security (DHS), U.S. Customs & Border Protection (CBP), U.S. Treasury, and the Office of the U.S. Trade Representative (USTR) urging the Administration to block the World Customs Organization’s plan to implement a customs duty moratorium on electronic transmissions. Led by the United States Council for International Business, the letter says the action “is contrary to the long-standing agreement by World Trade Organization (WTO) members not to apply customs duties to cross-border electronic transmissions and prejudices ongoing discussions at the WTO and the Organization for Economic Cooperation and Development (OECD). This action will harm U.S. goods and services exporters of all sizes in nearly every sector and threaten American jobs.” The letter is available here.