On January 17^th, President Trump said in an interview with Reuters that he is considering a big “fine” as part of a probe into China’s alleged theft of intellectual property. Reuters reports:

Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there.

The United States has started a trade investigation into the issue, and Cohn said the United States Trade Representative would be making recommendations about it soon.

“We have a very big intellectual property potential fine going, which is going to come out soon,” Trump said in the interview.

While Trump did not specify what he meant by a “fine” against China, the 1974 trade law that authorized an investigation into China’s alleged theft of U.S. intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

Trump said the damages could be high, without elaborating on how the numbers were reached or how the costs would be imposed.

“We’re talking about big damages. We’re talking about numbers that you haven’t even thought about,” Trump said.

The full report is available on the Reuters website.

Senate Finance Committee Approves McAleenan, Considers USTR Nominees

On January 17^th, the U.S. Senate Finance Committee approved the nomination of Kevin McAleenan as Commissioner of U.S. Customs & Border Protection. He has been serving as Acting Commissioner since January 2017. “Mr. McAleenan is a well-qualified nominee, with the credentials and experience necessary to lead an agency as critical as CBP,” Committee Chairman Orrin Hatch (R-UT) said. “CBP plays an important role in facilitating trade and ensuring the nation’s borders are protected, and it is essential that the agency is led by someone who understands how trade impacts the competitiveness of our economy. Mr. McAleenan is the right man for the job, and I hope he receives swift and fair consideration on the floor.”

The Committee also held a hearing on two Deputy U.S. Trade Representative nominees, Dennis Shea, who would serve as ambassador to the World Trade Organization, and C.J. Mahoney, who would oversee Investment, Services, Labor, Environment, Africa, China, and the Western Hemisphere. Sen. Tim Scott (R-SC) held up the nominees, saying he won’t vote on anyone in the “trade space” until U.S. Trade Representative Robert Lighthizer responds to his call about a trade-related issue in his state.

As you know, the Generalized System of Preferences (GSP) expired on December 31, 2017. USFIA joined a multi-industry coalition letter to the House and Senate leadership urging retroactive renewal as quickly as possible. The letter and more information on the coalition is available here.

Washington Prepares for Government Shutdown

Congress has until January 19^th to either pass a spending bill that funds the government for a few months, or pass a longer-term bill that funds the entire next year. We expect Congress to take action to avoid a shutdown, but what happens if they can’t reach an agreement and the government does shut down? Politico has provided a helpful infographic to explain the impact.

Brady Announces Updated 115th Congress Ways and Means Republican Member Subcommittee Assignments

This week, Ways and Means Committee Chairman Kevin Brady (R-TX) announced Republican Subcommittee assignments. Of particular relevance to our industry:

Tax Policy

Chairman Vern Buchanan (FL)

Rep. Peter Roskam (IL)

Rep. Dave Reichert (WA)

Rep. Jim Renacci (OH)

Rep. Kristi Noem (SD)

Rep. George Holding (NC)

Rep. Pat Meehan (PA)

Rep. Jason Smith (MO)

Rep. Tom Rice (SC)

Trade

Chairman Dave Reichert (WA)

Rep. Devin Nunes (CA)

Rep. Erik Paulsen (MN)

Rep. Mike Kelly (PA)

Rep. Pat Meehan (PA)

Rep. Tom Reed (NY)

Rep. Kristi Noem (SD)

Rep. George Holding (NC)

Rep. Tom Rice (SC)

Rep. Kenny Marchant (TX)

DHS Marks Human Trafficking Awareness Day

Today, the U.S. Department of Homeland Security (DHS) marks Human Trafficking Awareness Day with Blue Campaign, a public awareness campaign to educate the public to recognize human trafficking and report suspected instances, and train law enforcement to increase detection and investigation. Secretary of Homeland Security Kirstjen M. Nielsen released the following statement:

Make no mistake, human trafficking is modern-day slavery. Through use of force, fraud, or coercion, people around the world are robbed of their freedom and forced into labor or commercial sex acts. Human traffickers do not discriminate based on nationality, age, gender, or socioeconomic status. Across the world—in rural towns and urban areas alike—innocent men and women are targeted and exploited.

Human trafficking is the antithesis of everything the free world represents, and the Department of Homeland Security is not standing idly by. In airports, along borders, and in communities across the country, our officers and agents are trained to identify those being victimized by criminals, including transnational criminal organizations.

Through President Trump’s immigration priorities, we will secure our borders, enforce laws within our country, and create an immigration system that protects the American people. By empowering law enforcement officers to do their jobs and providing them with the resources they need, we can more effectively combat human trafficking.

Today, we reaffirm our commitment to eradicate modern slavery and human trafficking. I encourage all Americans to learn how to recognize the signs of trafficking, and join the fight to end these heinous crimes.

In This Memo:

• House Passes MTB
• Commerce Submits Steel Section 232 Report to the President

House Passes MTB

On January 16^th, the U.S. House passed the Miscellaneous Tariff Bill Act of 2018 by 402-0. The legislation would temporarily reduce tariffs on nearly 1,700 different products that are not otherwise available in the United States. The bill will be sent to the U.S. Senate for consideration.

House Ways and Means Committee Chairman Kevin Brady (R-TX), the sponsor of the bill, released the following statement upon passage:

“This bipartisan, bicameral legislation is a win for American manufacturers, their workers, and families across the country. With the temporary tariff relief provided by the bill, our manufacturers will see reduced costs for needed production inputs that are simply not available in the United States. This will help them better compete globally, create more jobs here at home, and make high-quality ‘Made in America’ products more affordable for families.

“Over seven years have gone by since the last time Congress passed MTB legislation. Today’s decisive and overwhelmingly bipartisan vote brings us one crucial step closer to providing much-needed tariff relief for American job creators. I strongly encourage the Senate to pass this legislation as soon as possible and join the House in taking action to help our manufacturers and workers compete and win.”

Commerce Submits Steel Section 232 Report to the President

Last week, U.S. Secretary of Commerce Wilbur Ross formally submitted to President Donald J. Trump the results of the Department’s investigation into the effect of steel mill product imports on U.S. national security. After this submission, by law the President has 90 days to decide on any potential action based on the findings of the investigation. After the President’s decision is announced, the Department will publish a summary of the report in the Federal Register and make the report available to the public after removing any business confidential or classified material. 

On December 22^nd, President Trump issued a presidential proclamation announcing some changes to the Generalized System of Preferences (GSP) and African Growth and Opportunity Act (AGOA).

On GSP, Trump announced he will suspend Ukraine’s eligibility for GSP benefits because they are not “providing adequate and effective protection of intellectual property rights.” He will also restore Argentina’s eligibility for GSP benefits, which had been suspended in 2012 “because it had not acted in good faith in enforcing arbitral awards in favor of United States citizens or a corporation, partnership, or association that is 50 percent or more beneficially owned by United States citizen.” Of course, GSP is set to expire on December 31, 2017, barring any last-minute action by Congress.

On AGOA, Trump announced he will restore The Gambia’s and Swaziland’s eligibility as AGOA beneficiaries; both countries had been suspended in 2014. The proclamation does not include any news about Rwanda, Tanzania, or Uganda, but according to a statement from the Office of the U.S. Trade Representative, “USTR is conducting a separate AGOA out-of-cycle review for Rwanda, Tanzania, and Uganda in response to a petition asserting that their phased ban on imports of used clothing is negatively impacting U.S. jobs. This review is ongoing.” We expect to hear more about these countries’ AGOA eligibility in the first quarter of 2018.

The full proclamation is available on the White House website.