Section 232 steel and aluminum tariffs on Canada and Mexico are going away, the U.S. said May 17. They will be lifted from Canadian imports within 48 hours, but the Mexican government has not indicated timing for the relief there, and the Commerce Department did not respond to an inquiry by press time. Canada and Mexico will lift their retaliatory tariffs, which hit U.S. prepared food, agriculture and metals, at the same time the U.S. tariffs end.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
House members that are leaders on trade, in the center and on the left, say that U.S. Trade Representative Robert Lighthizer is recognizing the ways he's going to need to change the new NAFTA to get Democratic votes, but it's not yet clear how far he'll be willing or able to go. Wisconsin's Rep. Ron Kind, a New Democrat and free trader, said in a hallway interview with International Trade Today May 10, "We're kind of at an impasse. They keep telling us there's no way they can open this up and tweak it, and make this minor adjustment and we're saying ... we haven't met a trade agreement yet where members of Congress weren't allowed to get our fingerprints on it a little bit, massage it here and there for it to get to 218 [votes]. So, until somewhat blinks on that front ... ."
CBP's proposal for how to classify garments with 50/50 fiber blends would add a "significant amount of additional burden on importers of apparel and made-up textile articles," HanesBrands said in comments filed May 2 with the agency. The filing was in response to CBP's proposed ruling revocation that seems to change how goods of 50/50 blends are classified (see 1905020044). Under the proposal, the tariff classification of the fibers in the 50/50 blend are first considered (e.g., cotton of chapter 52 versus man-made filaments of chapter 54), then the entire garment is classified according to whichever of those constituent fibers in the 50/50 blend is classified last in numerical order.
A vote on the U.S.-Mexico-Canada Agreement will “hopefully” be soon, House Speaker Nancy Pelosi said, but stressed that the deal needs strong enforcement provisions before any progress will be made. During a Washington Post Live interview on May 8, Pelosi said an enforcement agreement is a prerequisite to any vote. “Unless you have it built into the agreement … it’s not binding on the other country. It’s us talking to ourselves,” she said. In a recent conversation with U.S. Trade Representative Robert Lighthizer, Pelosi said, she urged him to include enforcement in the agreement, or else the agreement is “not a serious thing.” Pelosi said the Trump administration has expressed a desire to work on enforcement and said Trump has told her “we want to get to a yes” on the deal. “So hopefully that will be soon,” she said.
Even as it described the cloudy outlook for the new NAFTA's ratification, a new report from the American Council for Capital Formation's Center for Policy Research says policy makers should ratify the agreement, and not move toward a withdrawal from NAFTA.
International Trade Today is providing readers with some of the top stories for April 29 - May 3 in case they were missed.
The chairman of the House Ways and Means Committee, its Trade Subcommittee chairman and all but four of the Democrats on the panel told U.S. Trade Representative Robert Lighthizer that biologics provisions in the new NAFTA concern them, because they could hamper Congress' ability to address the rising cost of health care. "Our concern is not that the new Agreement will change U.S. law. But at the same time, we do not want to be limited in addressing the current health care landscape, which is not working for many Americans," they wrote in a letter released the evening of May 3. "Our laws and regulations provide incentives and safeguards that encourage and allow generic competitors to enter the market when appropriate, lowering costs over time. As the health care industry evolves, Congress develops and sometimes revisits key legislation that sets out these rules, addressing the balance between innovation and access."
CBP's proposed ruling revocation on garments with 50/50 blends of fiber (see 1904050037) seems to indicate a big shift in the way the agency classifies garments and other finished textile goods, according to industry experts. The proposal is a "significant change in policy," Sandler Travis lawyer Elise Shibles said in a May 2 email. The proposal "could significantly impact a wide range of imported goods, including their duty rates, qualification for free trade agreements, and sourcing supply chains," she and trade consultant Tom Gould said in a post on the firm's website.
AFL-CIO President Richard Trumka tweeted earlier this week that workers "want to get to yes" on the NAFTA rewrite, and House Speaker Nancy Pelosi said May 2 that Democrats in the House do, too.
House Majority Leader Steny Hoyer, speaking about the meeting of top Democrats at the White House April 30, said that they told the president "we're not there yet" on the new NAFTA, and added " that enforcement will be an important part of the consideration."