A proposal to use a carbon border adjustment tax as a pay-for in legislation Congress hopes to pass this fall faces many obstacles, both political and technical. Politically, it must get support from all 50 Democrats in the Senate, including Sen. Joe Manchin, whose home state of West Virginia exports about a third of its coal; in some recent years, coal was about half of all exports from the state.
After Mexico asked it for consultations (see 2108230041), arguing that the NAFTA approach to roll-up should be continued under USCMA, the Office of the U.S. Trade Representative said the request is under review. USTR spokesman Adam Hodge said that U.S. government officials "remain committed to fully implementing the USMCA, including the strong auto regional content requirements to which we all agreed.”
After the sudden death of Richard Trumka, Liz Shuler was elected president of the AFL-CIO, the federation of unions announced Aug. 20. Shuler is the first woman to lead the AFL-CIO. Shuler started as an organizer at Electrical Workers (IBEW), and worked at that union's political/legislative affairs department in Washington, D.C., before becoming secretary-treasurer of the AFL-CIO.
The Mexican government has asked the Office of the U.S. Trade Representative for formal consultations under USMCA's dispute resolution process over a disagreement on how the auto rules of origin should work. Mexico says that when it agreed to a 75% regional value content standard at the end of the phase-in period, its negotiators were assuming that once a part is considered originating, its value should count as North American as you move to assemblies, and ultimately, to the vehicle as a whole. So, Mexico says that in the text on the rules of origin, if a core part is originating, its full value is counted in a super-core part, such as an engine, and if that engine is originating, its value counts in the RVC for the vehicle as a whole.
Customs Inefficiencies, Need for Mexico-Asia Supply Chains Limit Nearshoring's Appeal, Panelists Say
Representatives from manufacturing interests operating in Mexico said the COVID-19 pandemic has presented an opportunity to argue for locating more production in North America, for both reliability and speed, but there are still obstacles to making the argument for nearshoring as an answer to vulnerable supply chains. The president of the National Council of the Maquiladora and Export Manufacturing Industry and the director of global trade compliance for Illinois-headquartered manufacturer Regal Beloit spoke at the Wilson Center's "Building a Competitive U.S.-Mexico Border" conference, which was held Aug. 10 and 11.
The International Dairy Foods Association lauded the delay in new health certificate requirements for dairy and infant formula, and said the extra months give U.S. and European officials more time to discuss how to implement the regulatory change. IDFA had said that the certificates could have disrupted supply chains for nutrition support drinks and infant formula even if European consumers were not the ultimate customers, as long as the exports went through Europe (see 2107260033).
More than a third of Republican senators are telling President Joe Biden that the European Union's plan to apply tariffs to aluminum, cement, fertilizers, iron and steel from countries that are not pricing carbon as the EU does is protectionism in disguise. They noted that U.S. steel is already more carbon efficient than the product is in the EU.
Much work remains to be done to create a concrete proposal on levying tariffs on imports from countries that are not as aggressive as the U.S. is about battling climate change, Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a brief Capitol hallway interview Aug. 10. Such a tariff is planned as a pay-for in the upcoming spending bill for education and daycare, income support, health care, housing and environmental priorities. "People have asked, 'What is this really all about?'” he said. "We have defined this as making sure that, as our workers and our manufacturers push very hard to modernize our infrastructure, make it greener and cleaner, that other countries don't undercut our workers and manufacturers. That is the philosophical foundation."
International coordination on how to account for embedded emissions in traded products is essential, Canada asserted in a recently published white paper about its exploration of a carbon border adjustment tax. "Work on international border carbon adjustments is in progress. An important part of advancing this work is ensuring a common understanding. To this effect, the government will continue its important conversations with Canadians and international partners, including the United States and European Union, in the coming months," the government wrote.
U.S. Trade Representative Katherine Tai told Washington state farmers Aug. 5 that she wants to make sure agricultural exporters "can bring your products to new markets and new customers," and that she is holding trading partners accountable for their commitments, such as improved dairy access in Canada and opening Mexico to American fresh potato exports. Tai was visiting the district of Rep. Suzan DelBene, a Democratic leader for free trade and a House Ways and Means Committee member. This followed a similar visit last month to Rep. Ron Kind's district in Wisconsin, where she had the same message to farmers. Kind, too, is a prominent Democrat supporting free trade and a Ways and Means member. In June, Tai visited Flint, Michigan, home to Rep. Dan Kildee, a Ways and Means Democrat who always talks about how trade devastated manufacturing workers in Flint. She heard from workers who told her how trade had affected them.