Big nuke summit, maybe with a side of TPP
With help from Doug Palmer and Victoria Guida
BIG NUKE SUMMIT, MAYBE WITH A SIDE OF TPP: President Barack Obama will welcome world leaders to Washington this week when the Nuclear Security Summit kicks off this Thursday, but don’t expect the conversations to be limited to security issues.
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Obama is already confirmed to meet with Chinese President Xi Jinping and the two leaders are expected to cover a range of issues, including economic policies. The meeting could be an opportunity to have a leaders-level discussion on the elusive bilateral investment treaty the two countries are negotiating.
Japanese Prime Minister Shinzo Abe is also likely to sit down with Obama, where TPP’s slow crawl in the U.S. will probably be raised. Abe has already sent legislation required to ratify and implement the TPP to the Japanese Diet, which could give its final approval by June before it adjourns for the summer. Additionally, Obama will reportedly meet with South Korean President Park Geun-hye, bilaterally as well as trilaterally in a meeting with Abe.
U.S. ALUMINUM INDUSTRY GRAPPLES WITH CHINESE ‘FAKE SEMIS’: China’s 15-percent duty on exports of primary aluminum and its 13-percent value-added tax rebate on exports of semi-processed products, like sheet or coil, are creating confusion in the global marketplace and distorting trade, the U.S. aluminum industry says.
“There are some companies that are creatively taking advantage of the tax system in China, the value-added incentives, to send product out labeled as processed product” that is then re-melted by the buyer into primary aluminum, Heidi Brock, president and CEO of the Aluminum Association, told POLITICO. “They are sending it to countries like Indonesia or Vietnam, and it is getting relabeled [as primary aluminum] and sent into other countries.”
As a result, “we don’t really know what the primary aluminum market is today because it’s no longer what the rest of the world is calling primary aluminum,” Brock said. “It’s now primary aluminum and whatever else is coming out [of China] that is not really primary aluminum. It’s this additional fake semi category.”
The industry is pressing U.S. customs official to look at “this minimally processed material that’s being remelted and reclassify it” as primary aluminum, Chuck Johnson, the group’s vice president for policy, said. If that happens, the next step would be to take that to the World Customs Organization and seek the same solution, he said.
The “misclassification” concern is a symptom of excess supply, which has caused eight U.S. aluminum smelters to close or curtail production since early 2015, the industry officials said.
WASHPO ANALYSIS: TRUMP’S TRADE PLAN SPELLS DOOM: Donald Trump’s plan to sock it to China and Mexico with punitive tariffs would cause both of those countries to enter into recessions, but so too would the United States with up to 4 million job losses, according to an analysis commissioned by the Washington Post. From the report:
“The amount of predicted economic damage surprised Mark Zandi, chief economist for Moody’s Analytics, who prepared the model. He said it is magnified by the precarious — and historically unusual — state of the U.S. and global economies right now: Under the Moody’s model, the Federal Reserve has little power to slow the recession, because interest rates remain near zero. Congress refuses to enact any stimulus measures, such as spending increases or tax cuts that might increase the federal budget deficit further.
“What results, in the model, is a downward spiral of reduced economic activity. Prices rise on imported goods from China and Mexico, which has the effect of reducing spending power for American consumers. If China and Mexico retaliate, U.S. exports fall, forcing layoffs at American companies that sell to those foreign customers. The ensuring growth slowdowns spread to other trading partners, particularly in Europe, and cause stock markets to plunge, which in turn slows growth even more.” Read more here.
NOW ENTERING REPORT SEASON: It’s time to start watching for a series of notable administration reports, including the U.S. Trade Representative’s annual National Trade Estimate report, a thorough inventory of policies maintained by U.S. trading partners that USTR considers trade barriers. It’s expected this Thursday. Soon after, USTR will also likely publish its “1377 report” on telecommunications barriers in foreign countries.
Also coming soon: The Treasury Department’s semiannual currency report on the exchange rate practices of major trading partners, due April 15, and USTR’s “Special 301” report on intellectual property protection in foreign countries, due around April 30.
INDUSTRY GETS IN FINAL EXPORT CONTROL ASKS: A coalition of business groups is urging the administration to finish what it can of its massive export control reform and pursue some long-term objectives industry has long asked for.
The Coalition for Security and Competitiveness, in the near term, wants the current administration to conclude all category changes and institutionalize periodic review of those categories, complete harmonization of definitions, finish implementing a single form and single IT portal for export licensing, negotiate new multilateral controls on cybersecurity products, and ensure efficient processing times for export licenses. Longer-term, the industry groups may not get what they want unless they ask the future administration. Those include the creation of export licenses that would make it easier to ship goods for weapons development programs and transfers between a company’s overseas branches. Read the full letter here.
INDIA TO APPEAL WTO SOLAR RULING: India says it will appeal a World Trade Organization ruling from earlier this year that sided with the U.S., faulting India’s solar power industry for mandating discriminatory local content requirements for manufacturing. The announcement was made by Piyush Goyal, India’s energy minister, who said the U.S. decision to pursue the case “reflects the hollowness of the U.S.’ commitment to clean energy,” according to a report in The Hindu. Goyal said India is eyeing its own separate case against programs in nine U.S. states that protect domestic manufacturers. Read more here.
CIGARS, MOJITOS AND ORGANIC BANANAS: Everyone seems to want a piece of Cuba, including organic foodmakers. Executives from major food companies, including Honest Tea, Stonyfield Farm and Global Organics, are looking to take advantage of its close proximity and decades of farming without chemicals, and the plan has big supporters in Washington, including Agriculture Secretary Tom Vilsack and Rep. Chellie Pingree, Pro Ag’s Jenny Hopkinson reports this morning.
To be sure, there is a long way to go before organic Cuban oranges start appearing in Whole Foods, but when that does happen, the hope is that consumers will bite.
“I think there will be a certain kind of cachet with not only an organic product but an organic product grown in Cuba,” Pingree says. An organic farmer herself, the Maine Democrat is planning a trip to the island nation in May, following the recent visit made by President Barack Obama, and executives from Honest Tea, Stonyfield and Global Organics are expected to join her. The full story here: http://politico.pro/1LTrySX.
ANOTHER DAY, ANOTHER STEEL CASE: The U.S. International Trade Commission on Friday approved an investigation that could lead to steep anti-dumping and countervailing duties on hundreds of millions of dollars of stainless steel sheet and strip from China because of unfair trade practices.
A coalition of steel producers, including AK Steel Corp., Allegheny Ludlum, North American Stainless and Outokumpu Stainless USA, filed a petition last month asking for the investigation. They have requested anti-dumping duties ranging from about 50 to 75 percent to offset what they say is unfairly low pricing and additional countervailing duties of an unspecified amount to counter alleged government subsidies.
The U.S. International Trade Commission determined there was enough evidence that U.S. producers have been materially injured or threatened with material injury for the case to proceed. The United States imported about $302 million worth of the product from China last year. The Commerce Department will issue its preliminary duty determinations in the case in July. More info here.
FRUIT FLY HOLDS UP AUSTRALIA’S ASIAN EXPORT GAINS: Fruit and vegetable exports, which already account for about 10 percent of Australia’s $30 billion in agriculture exports, are being targeted for rapid growth. And trade agreements signed with China, Japan and Korea just last year should pave the way. But concerns over the Queensland fruit fly, “known scientifically as Bactrocera tryoni and found across Australia’s mainland,” are preventing all but a handful of products from reaching the Asian markets, Reuters reports.
Meanwhile, the southern island of Tasmania is free from the fly and seeing its fruit and vegetable exports soar, jumping as much as 44 percent in 2016 to nearly A$100 million ($75 million USD). Read more here.
Uruguay will promote a trade deal between Mercosur countries and China, Xinhua reports.
The Japanese government will increase efforts to help small businesses export ahead of the TPP going into force, Jiji Press reports.
Brazil, Latin America’s biggest economy, appears headed for one of its worst recessions ever, the Wall Street Journal reports.
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