Guajardo: Trump’s plan spells doom

With help from Victoria Guida and Doug Palmer

GUAJARDO: TRUMP’S PLAN SPELLS DOOM: Donald Trump’s plans for getting tough with Mexico on trade and illegal immigration would wreak havoc on U.S. cities along the border and put American jobs at risk, a top Mexican official warns.

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Reversing nearly 25 years of North American integration “would not only hurt Mexico, it would hurt the U.S. economy,” Mexican Economy Minister Ildefonso Guajardo said in an interview with our own Doug Palmer. “At the end of the day, we don’t just have a free trade zone. We are building things together in order to compete with the world.”

The Republican presidential front-runner has proposed forcing Mexico to pay for a border wall by raising tariffs, impounding remittances, cutting aid and hiking fees on border crossing cards and visas. He has also threatened to stop U.S. companies from moving production to Mexico by slapping duties on their exports to the United States.

“I would like to know what places like Laredo, McAllen, Brownsville, El Paso, San Diego would think about this wall,” Guajardo said. “It would have an immediate impact on the trade sector, on the commerce sector, for the cities that depend a lot on Mexican buyers going across the border to buy Mexican goods.”

“It will destroy their economy and their jobs,” he said, when asked what he thought would be the impact. Look for more of Palmer’s interview with Guajardo later today.

IT’S MONDAY, APRIL 4! Welcome to Morning Trade, and welcome to the start of a new week. We’re rooting for the Tar Heels today, what about you? Let me know: or @abehsudi.

TUNA RETALIATION COMING: Meanwhile, Guajardo said he expected to win the World Trade Organization’s approval in the coming months to retaliate against the United States in a long-running dispute over U.S. “dolphin-safe” labels for tuna, which Mexico believes unfairly discriminate against tuna caught by its fishermen in the Eastern Tropical Pacific.

“It has been shown scientifically that our tuna fishing process is even more protective for dolphin than some of the requirements that the U.S. has made for other trading partners,” Guajardo said. “So we have a strong case. Unfortunately, our presence in the U.S. market has diminished so much through time that the amount of retaliation is not extremely significant.”

Mexico has asked to slap duties on close to $475 million worth of U.S. exports in the case. Last month, the United States issued new regulations that it said brought it into compliance with its WTO obligations by raising standards for tuna caught in other fisheries to qualify for the dolphin-safe label, but Mexico remains unconvinced that the move will pass muster at the WTO, Guajardo said.

MEXICO LABOR REFORM TIMETABLE UNCLEAR: On another issue, Guajardo said Mexico was looking to improve its labor regime, but that effort has no connection to helping the Obama administration win support in Congress for the Trans-Pacific Partnership.

Mexican President Enrique Peña Nieto decided more than 18 months ago that it was in Mexico’s own interest “to start an agenda for modernizing regulatory institutions in general,” Guajardo said. “But it was clear, it was nothing related to TPP. It’s at our own speed, at our own timing.”

So, does that mean Mexico won’t announce any new labor reforms before Congress votes on TPP? “Like I was telling you, the time frame for that to happen, it can happen before, it can happen at the same time, it can happen after. But it’s not TPP related,” Guajardo repeated.

A BIT OF DISAPPOINTMENT: It’s official: China did not submit a new market access offer for the bilateral investment treaty during Chinese President Xi Jinping’s visit to Washington last week, a USTR spokeswoman confirmed Friday. Beijing had originally committed to offer a new “negative list” before the end of March.

A White House read-out of Thursday’s meeting between President Barack Obama and Chinese President Xi Jinping did not mention whether the two leaders discussed the BIT, but said Obama “further emphasized the importance of establishing a level playing field for all firms to compete fairly in China.”

U.S. business sources said the BIT did come up frequently in talks between Chinese and U.S. officials in Washington, but it was unclear why Beijing was unable to update its proposal, which lists sectors that would still be closed to foreign investment under the deal.

“We only have limited information at this point about what is behind all of this, so it’s a bit difficult to assess what’s going on,” U.S.-China Business Council Vice President Erin Ennis said in an interview. “The real consequence of all of this is … now the next offer is going to have to be that much better and that much closer to what the U.S. is going to expect because they’re so much closer to the end of the year.”

One business source speculated that the lack of an offer probably had more to do with “internal discussions on where economic reforms are … rather than a lack of commitment to the BIT.” But, “that itself raises some challenges because the Chinese have expressed an interest in using the BIT as part of the way of moving forward with economic reforms,” the source added. “What does it say about the economic reforms if this isn’t moving forward?”

Another business source said the Chinese did not signal ahead of time that an offer wasn’t coming. “It’s not a good sign,” the source said. “The question is, is it a bad sign? If a month from now they come to the table with a really good offer, we’ll all just look back and say, ‘Look they just weren’t ready. They just hadn’t resolved what they needed to resolve internally.’”

But business sources said it wasn’t clear whether the promised offer would come anytime soon.

EU OFFICIAL: TTIP NOT CLOSE TO ENDGAME: An EU official said Friday that while the European Union and the United States are hoping to start “endgame” negotiations on TTIP in July, right now they’re not anywhere close to being able to focus on only the most politically sensitive issues.

“What is very clear to us is the endgame negotiations need to start at the moment when there is sufficient progress across the board, in all areas of the negotiations, because it would not be very effective or feasible to enter into an endgame negotiation with too many things open,” the official told POLITICO.

European Trade Commissioner Cecilia Malmström has previously said TTIP would enter the “endgame” phase when the two sides have consolidated texts for each chapter, with only a few brackets denoting disagreement.

“That’s a lot of work because it’s very clear that we are still far away from that,” the official said. “There are some areas where we do not yet have a consolidated text, and there are areas where we actually have consolidated texts, but there are still a very substantial number of brackets, so there’s a lot of work required between now and the summer.” Therefore, depending on the substance, “the endgame negotiations can start in July, or not.”

WHAT MANUFACTURERS REALLY WANT: U.S. manufacturers have something to say to Donald Trump, Bernie Sanders and even Hillary Clinton: Please stop trying to “protect” us with simplistic slams on free trade. In that vein, the National Association of Manufacturers has put congressional approval of the TPP and conclusion of the Transatlantic Trade and Investment Partnership with the European Union near the top of its agenda for 2016 and beyond.

“U.S. manufacturers, exporters face higher trade barriers than most other major countries,” Linda Dempsey, NAM’s vice president for international economic affairs, said in an interview. “A lot of that is because most other countries — from China to Mexico to every member state in the European Union — are part of a lot more trade agreements.”

NAM also has a long list of other issues that it thinks would make U.S. manufacturers more competitive in world markets, including tax reform. “It’s becoming more and more apparent that the U.S. tax code is out of whack with the rest of the world and that this is really having a direct impact on our economy and our companies,” Dorothy Coleman, the group’s vice president for tax and domestic economic policy, told POLITICO. To read more, click here.

Here’s more on what economists think about Trump’s trade plans from POLITICO’s Ben White.

NEW TPP LEGAL CHANGES LIMITED TO CUSTOMS FEE ALTERATION: The U.S. Trade Representative’s office published a description of changes to existing U.S. laws required to comply with the rules of the Trans-Pacific Partnership.

The one-page document, which is required by the trade promotion authority law, includes only one entirely new legal change under the trade pact, which will require that a customs fee — the merchandise processing fee — not be levied on an ad valorem basis.

Instead of charging a percentage rate on the individual value of a shipment, there will be a fee schedule that will apply to different value ranges. For example, a $30 fee will be applied to shipments valued from $2,501 to $20,000. The fee would be capped at $500 for shipments greater than $130,000.

The other changes amend sections of the Tariff Act of 1930, formalizing what the U.S. has already done through previous trade deals. One example is exempting importers from an invalid claim that a good qualifies for tariff elimination if they correct their claim and pay any duties prior to the government finding out. All the changes described in the document will be included in TPP implementing legislation. Read the full document here.

HATCH, COONS WANT ACTION ON TRADE SECRETS BILL: Sens. Orrin Hatch and Chris Coons are urging Congress to move a bill to create uniform trade secrets protections that will allow companies to pursue civil remedies for trade secret theft. The Senate is expected to pass the Defend Trade Secrets Act today, the senators write in a POLITICO Agenda op-ed.

“The Senate’s vote is not only a watershed moment for the intellectual property and business communities, but also an example of what Congress can accomplish when we put party politics aside and find common ground. Indeed, enacting good public policy in the midst of a toxic presidential campaign is something to celebrate.”

The law, if passed, would fulfill a TPP provision requiring countries to ensure companies have the “legal means” to prevent trade secret theft. The pact also requires countries to put in place criminal remedies for trade secret theft, which the U.S. already has. The trade deal is the first to include language on trade secrets. Read the full op-ed here.

CIVIL SOCIETY GROUPS ‘AREN’T FOOLED’ ON TPP: Public Citizen, known never to let a holiday go to waste, helped lead a range of civil society and union groups in protesting TPP around the country at congressional offices on Friday, including at House Minority Whip Steny Hoyer’s Maryland office and Rep. Richard Neal’s Massachusetts office. Neither Hoyer nor Neal has taken a position on TPP yet. The group also released a video that echoed sentiments published on large “April Fools’ Day” cards sent to lawmakers and signed by their constituents.


Campaign rhetoric on trade is ignoring the fact that the forces behind globalization are slowing, The Wall Street Journal reports.

TPP will pressure Japanese farmers to grow cheaper rice in order to boost exports, Kyodo News reports.

Chinese farmers are switching to growing soybeans after China ends a long-running corn price support scheme, Reuters reports.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: and @ABehsudi; and @vtg2; and @tradereporter; and @mjkorade; and and @JsonHuffman. You can also follow @POLITICOPro and @Morning_Trade.

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