South Korea has agreed to restrict its steel exports to the U.S., reducing them by 30 percent from the last three years' average, and in exchange, the U.S. will give it a permanent exemption from the 25 percent tariff on steel that was instituted to protect the U.S. military industrial base. The steel agreement was part of a larger deal that includes changes to KORUS, the six-year-old U.S.-Korea Free Trade Agreement. South Korea's Trade Minister Kim Hyun-chong announced the agreement in principle on March 26. U.S. Treasury Secretary Stephen Mnuchin said on "Fox News Sunday" that the two countries reached an understanding, adding, "We expect to sign that agreement soon."
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
The Chinese government complained that U.S. actions regarding China's intellectual property record are destroying the World Trade Organization -- calling unilateral action "fundamentally incompatible with the WTO, like fire and water." According to a Geneva trade official's summary of the March 26 debate, Japan and the European Union agreed that any trade measures against China should be consistent with WTO agreements, even as they said "they share US' concerns of the need for stronger protection of intellectual property rights and concerns over technology licensing and transfers in China."
President Donald Trump, speaking to the press about signing the omnibus spending package for fiscal year 2018, opened by talking about negotiations with allies about exemptions from Section 232 tariffs on aluminum and steel. "Some tremendous trade deals are being made with various countries. We're negotiating very long very hard, but very quickly," he said. "The deal with South Korea, according to [Commerce] Secretary [Wilbur] Ross and [U.S. Trade Representative] Bob Lighthizer is very close to being finished, and we're going to have a wonderful deal with a wonderful ally." He said the U.S.-Korean Free Trade Agreement, or KORUS, as originally implemented "was a deal that was causing a lot of problems for our country with employment."
American tariffs on aluminum and steel are safeguard measures masquerading as a national security action, and therefore, the Chinese Ministry of Commerce is within its rights to prepare safeguard tariffs in response, the ministry said in a March 23 notice. The country also released a list of products that will be subject to the new tariffs. That list, which is in Chinese, is reportedly divided into two phases. The first phases would include 15% tariffs on products like nuts, wine and seamless steel pipes, while the second phase would add a 25% tariff on pork and aluminum, according to The Wall Street Journal. The notice didn't say when the tariffs would take effect.
Omnibus government spending legislation that includes provisions to renew the Generalized System of Preferences was passed in the House, the House Committee on Appropriations said in a March 22 news release. The GSP tariff reductions will apply to articles entered on and after the 30th day after the omnibus is enacted. The Senate is expected to pass the bill March 23 or 24. However, the Miscellaneous Tariff Bill, which House Ways and Means Committee Chairman Kevin Brady, R-Texas, had said should go on the omnibus, was not included. The MTB expired in 2012, and covers intermediate inputs for manufacturers that are not available domestically. Many in Washington have low expectations for legislative action in the Senate until after the November elections.
The Office of the U.S. Trade Representative will soon release a list of the 1,300 tariff lines from China recommended because of China's forced technology transfer, forced joint ventures, intellectual property theft and technology licensing restrictions (see 1803220030). Within that list, the agency will propose 25 percent tariffs on aerospace, information and communication technology, and certain machinery, the White House said in a fact sheet. The total value of goods subject to levies will be $50 billion, the amount the administration says is the annual cost to American businesses because of China's unfair restrictions.
The U.S. Trade Representative Robert Lighthizer is talking with South Korea, Australia, Argentina and the European Union about exemptions from Section 232 tariffs on aluminum and steel, and is going to begin talking to Brazil soon. He expects all those negotiations to come to a conclusion by the end of April, he told the House Ways and Means Committee. Lighthizer, who testified for more than three hours March 21, said it's ultimately up to the president but he believes it makes sense for tariffs not to apply to countries while they are in negotiations. He acknowledged that Brazil imports U.S. coal to make steel slabs, and then U.S. mills use those slabs and finish the steel. He said the agency will take that into consideration, but added, "That isn't to say, they will be successful in getting an exclusion." He also said Korea is a particular problem in the steel sector.
An array of steel executives and the United Steelworkers' president joined House members whose districts include steel mills in celebrating the Section 232 tariffs that are slated to take effect on March 23. "National security is only as strong as American steel, and the American steel industry is strongest when we have the ability to manufacture steel from start to finish inside our own borders," said Todd Young, US Steel's chief lobbyist. Only one aluminum representative was at the Congressional Steel Caucus hearing March 21. Bauxite, the raw material for aluminum, has no domestic source.
House of Representatives appropriators want to know whether the Commerce Department will be able to make prompt determinations on steel and aluminum tariff product exemptions if the agency receives 4,500 applications, as it projected. The Appropriations subcommittee that handles Commerce's budget heard from Secretary Wilbur Ross on March 20. Ross said that the fiscal year 2019 budget request does ask for more staffing. "We believe we can handle the influx," he said.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, speaking at a conference hosted by free-trade interest groups, said Congress will assert itself when it's time to renew fast-track trade negotiating authority in July -- and that no changes to NAFTA can take effect unless Congress signs off. "Because the Constitution very clearly assigns to Congress the power to lay and collect tariffs and to regulate foreign commerce, Congress must have the final word on the fate of NAFTA," he said March 20, according to prepared remarks. "Congress will use the extension disapproval process under the Trade Promotion Authority law to emphasize that the administration must adhere to the TPA negotiating objectives and to encourage the president to seek new agreements with our trading partners."