Pritzker to China: More reform needed

With help from Doug Palmer, Adam Behsudi and Ellen Mitchell

PRITZKER TO CHINA: MORE REFORM NEEDED: U.S. Commerce Secretary Penny Pritzker will return to a familiar theme this morning at the last high-level U.S.-China meeting of the Obama administration: the need for China to open its economy to more trade and investment.

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“The U.S. private sector has seen strong results from their businesses in China, but significant growing headwinds are hampering continued growth,” Pritzker will say in her opening remarks at the plenary session of the U.S.-China Joint Commission on Commerce and Trade. “Our companies and your companies need to see China further reform, rebalance, and open your economy — including by addressing intellectual property protections, decreasing excess capacity, and advancing policies that promote an open, vibrant digital economy.”

On Tuesday, U.S. and Chinese officials focused on the importance of agricultural trade to the overall U.S.-China relationship, but acknowledged frictions stemming from China’s slow approval of biotechnology crops cleared for use in the United States.

“We have had many discussions on these topics, but we still have unnecessary trade disruptions, because of the asynchronous approval process,” U.S. Trade Representative Michael Froman told U.S. and Chinese business officials. “This not only hurts U.S. farmers, but it hurts China’s livestock industry and China’s own innovation industry. To enhance trade and economic prosperity in both our countries, it’s incumbent on both governments to put in place food safety systems that protect consumers at home, while facilitating trade in safe food.”

Chinese Vice Premier Wang Yang replied that China’s policy toward genetically modified crops is anything but “protectionistic” since it imports 80 million metric tons of GMO soybeans every year. But China is cautious about biotech crops since “they are still relatively new on the plate of mankind and some people are still skeptical of them,” Wang said. “We should respect and understand each other’s laws and regulations and find a win-win solution.”

IT’S WEDNESDAY, NOV. 23! Welcome to Morning Trade and the eve of the very best day of the year, in your host’s opinion. What do you think: restful days ahead for us this week, or will Cabinet announcements and trade news abound? What rumors are you hearing about trade and the transition out there? Let me know: or @mmcassella.

PROGRAMMING NOTE: Due to the Thanksgiving holiday, Morning Trade will not publish on Thursday, Nov. 24, and Friday, Nov. 25. The next Morning Trade will publish on Monday, Nov. 28.

JCCT CHEWS ON MEAT ISSUES: Meanwhile, Wang dangled the prospect of U.S. beef shipments returning to China’s market for the first time in 13 years, although U.S. Agriculture Secretary Tom Vilsack cautioned there is still more work to do on that front. Wang also urged the United States to remove barriers to Chinese poultry imports, but in a reference to Froman’s bluntness about China’s GMO barriers, joked that it is not the Chinese way to be so direct. Instead, he simply prodded U.S. officials to create “a sound environment for the import of poultry meat and other agricultural products from China.”

RYAN WARNS OBAMA ON EASING IRAN SANCTIONS: House Speaker Paul Ryan and other Republican leaders are urging President Barack Obama not to take additional steps to ease sanctions against Iran in the post-election period.

“We respectfully request that your administration take no further actions designed to bolster international investment in Iran, or otherwise change or alter the existing sanctions regime within international organizations through the use of waivers or through administrative actions to include the issuance of new regulations, general licenses, frequently asked questions, or other guidance,” Ryan wrote in a letter also signed by House Majority Leader Kevin McCarthy and House Foreign Affairs Chairman Ed Royce.

They added that President-elect Donald Trump should have an opportunity to “assess United States policy toward Iran without your administration imposing or implementing additional measures that could complicate the incoming administration’s ability to develop its policy.”

TRANSITION RAMPS UP FOR EX-IM, COMMERCE: The Trump transition team kicked its efforts into a higher gear on Tuesday, naming a leader to its so-called landing team for the Export-Import Bank and adding additional names to the team focused on the Commerce Department.

At Ex-Im, Bradley Bondi, a litigation lawyer and former counsel for the SEC, will lead the way to ease the transition from the Obama to the Trump administration. Bondi, the brother of Florida Republican Attorney General Pam Bondi, focuses on securities enforcement and regulatory practices in his role as a partner at the law firm Cahill Gordon & Reindel LLP.

Asked about transition efforts, an Ex-Im spokeswoman said the bank’s senior leadership had reached out to Trump’s transition representative and would work with him on the transition. “Once those briefings begin, there will be communication between the two teams on an ongoing basis, and we will not be in a position to confirm each interaction,” she added in an email.

For the Commerce Department, Trump added government relations adviser William Gaynor and former Dallas Mayor Tom Leppert to the landing team. Gaynor is a Commerce veteran, having served in the business liaison office under former President George W. Bush, focusing on corporate and grass-roots outreach as well as economic, tax and trade policy, according to his LinkedIn profile. Now he heads his own government relations firm Rock Creek Advisors.

Leppert, an early supporter of Trump, most recently served as the CEO of Kaplan Inc., the test-prep and for-profit education provider. He also launched a failed bid for the U.S. Senate in 2012.

MEANWHILE AT TREASURY: Mauricio Claver-Carone, a member of Trump’s Treasury transition team, terminated his official lobbying status advocating against the Castro regime Friday. He was named to the landing team on Monday. Congressional lobbying disclosures show that Claver-Carone had registered to lobby on behalf of Cuba Democracy Advocates as far back as 2005. The former Treasury official’s lobbyist termination likely came as a result of Vice President-elect Mike Pence’s recent shakeup that removed all lobbyists from the transition teams.

Claver-Carone has criticized the Obama administration’s policies of easing trade and travel restrictions with Cuba as “pure sycophancy.” His selection sends a signal that Trump won’t be following in Obama’s footsteps.

“In my opinion, not many other people know as much about Obama’s mistakes on Cuba policy, and how to change them, as Mauricio,” former U.S. Ambassador to Venezuela Otto Reich recently told the Miami Herald.

Advocates of opening trade with Cuba and repealing a long-standing embargo with the island nation have been critical of the selection.

“There are forces at work that are much larger than any individual who has dedicated his life to preserving the failed status quo,” Engage Cuba Coalition spokeswoman Madeleine Russak said in a statement. “Given that President-elect Trump has been on both sides of this issue, we’re hopeful he’ll have an open mind in deciding what’s in the best interest of the Cuban and the American people.”

OBAMA’S QUANDARY: TO SEND OR NOT TO SEND TPP? Trump has said he’ll withdraw from the TPP in the first 100 days of his presidency, and Republican congressional leaders have said they won’t hold a vote on the pact before the end of the year, but Obama has one more card left to play: He could still send the legislation to Congress for consideration.

Asked about whether Obama would make such a move, White House spokesman Josh Earnest declined on Tuesday to say whether Obama would submit the TPP, but he did acknowledge that chances were slim that the pact would become law in the next two months.

“I don’t have any future steps to preview for you, but I would acknowledge the prospects of TPP being ratified by Congress before President Obama leaves are not very good,” Earnest said at the daily briefing, when asked if Obama would still submit the pact for a vote. “If Congress does not move forward with the Trans-Pacific Partnership, it is a significant missed opportunity for the American people.”

Sending the legislation would be a symbolic gesture more than anything else, given Congress’ assurances that there is not enough support there to pass the deal. But nothing is stopping Obama from doing so if he wishes, and it could send a signal of his dedication to free trade to the other 11 TPP members, whom he urged at a meeting this past weekend to continue working together to advance the agreement.

HATCH, BRADY PLEDGE TO CONTINUE PUSHING FOR FREE TRADE: Two of the TPP’s most prominent supporters in Congress, Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Chairman Kevin Brady, both responded to Trump’s pledge to withdraw from the TPP with reluctant acceptance of the president-elect’s wishes — and pledges of their own to continue enforcing existing trade agreements and pushing for new trade deals.

“I respect President-elect Trump for fulfilling his campaign promise to withdraw from TPP, but I am convinced that we have to reach these customers if we want to get America’s economy moving again,” Brady said in a statement, adding that he looks forward to working with Trump on making sure “that we have in place strong, beneficial and strictly enforced trade deals.”

“Our new president has exceptional negotiating skills,” Brady said. “As he examines new and old trade agreements, my advice is simple: Keep what works for America, fix what doesn’t, but keep us in those regions fighting for new sales and new U.S. jobs.

Hatch added that while there appears not to be a path forward for TPP this year, he would continue to work with other lawmakers and the incoming Trump administration “to advance strong trade policies … and ensure we secure the best possible trade deals for American workers and entrepreneurs.”

WTO APPELLATE BODY CHAIRMAN BREAKS HIS SILENCE: The WTO Appellate Body is preparing for a “tsunami” of more than 20 appeals in 2017 — more than three times the number of appeals the body considered so far in 2016 — and is ill-equipped to handle the forthcoming crush of cases, the body’s chairman, Thomas Graham, said in a speech Tuesday.

“So we have chosen to speak up, to break out of the ‘splendid isolation’ that has enveloped the Appellate Body during most of its first 20 years,” Graham said in remarks to the World Trade Institute in Geneva where he appealed for a comprehensive solution to addressing the body’s inadequacy in the face of increasing and more complex cases.

The seven-body judicial body is already down two members and two more are expected to end their second and final terms next year. The body only has 16 staff lawyers to assist it, compared to the 45 lawyers that work at the panel stage. Appeals now under consideration and those still expected to come also include some of the most complex the body has handled, including the long-running aircraft subsidy fight between the EU and and U.S., China’s recent appeal of a ruling on U.S. anti-dumping methodologies and an expected appeal of a decision on Australia’s plain-packaging law for cigarettes.

“Maybe it is time to see if a common effort might put this fragile enterprise, which started as an afterthought, onto a sounder footing, not only in the area of independence and impartiality but also in areas such as matching resources to the growing demands,” Graham said. “Maybe we should engage with one another more broadly, and more frequently, than merely meeting across the podium in the hearing room.”

AEROSPACE INDUSTRY PUSHES FOR EX-IM FIX: The Aerospace Industries Association urged Congress on Tuesday to approve a full fiscal 2017 spending bill — and along with it, a rider to restore the Export-Import Bank to its full working capacity — instead of passing a short-term funding bill.

In a letter addressed to the top Republican and Democrat in each chamber of Congress, AIA President David Melcher argued a complete appropriations package that adjusts Ex-Im’s quorum rules, which would allow the bank to approve deals worth more than $10 million, would “support U.S. economic stability and national security.”

“Failure to act on a quorum for Ex-Im delays opportunities for hundreds of small and medium-size businesses in the aerospace and defense supply chain as well as the millions of people they employ,” Melcher said in the letter, which was signed by more than 70 CEOs and senior industry representatives of the leading defense industry trade association.

Companies in the aerospace industry are prominent users of the bank, which has been handicapped and unable to approve high-dollar deals for nearly a year and a half. Boeing, for example, is one of the biggest beneficiaries of the bank, and a number of its suppliers are frequent customers. Sen. Lindsey Graham — a Republican from South Carolina, where Boeing is a major employer — has been leading the charge in the Senate to revive the embattled bank.

COMMERCE RULING MARKS WIN FOR STEEL INDUSTRY OVER INDIA: The Commerce Department issued preliminary duties against imports of finished carbon steel flanges from India, notching a win for U.S. industry and petitioners Boltex Manufacturing Co. of Texas and Weldbend Corporation of Illinois. The countervailing duties range from 2.76 percent to 3.66 percent on the steel products, imports of which totaled around $90 million last year. Commerce is scheduled to make its final determination on or around April 11 of next year.

ICYMI: AUSTRALIAN ENVOY PUSHES TRADE AS AN ECONOMIC BOOST: Australian Ambassador to the U.S. Joe Hockey made an emphatic pitch for free trade in a speech at the Detroit Economic Club on Monday, telling attendees that the massive population growth in the Asia-Pacific region today makes it an invaluable market for U.S. companies. In a speech titled “If the United States Doesn’t Stand for Free Trade, Who Does?” Hockey discussed how American brand names have integrity of product as well as “a whole range of advantages which give you the chance to get more money out of these emerging economies than they can get for their own people.”

“Speaking as one mate to another,” Hockey said, “I can say emphatically that free trade is in your best interests.” Read the full speech here.


— Commerce Secretary Penny Pritzker says China has said it will retaliate if the U.S. levies tariffs against the country, the Wall Street Journal reports.

— Agriculture Secretary Tom Vilsack says Democrats need a better message to attract rural voters, including by strongly countering opposition to trade deals that are good for agriculture, the AP reports.

— India could be one of the largest unintended beneficiaries of Trump’s move to pull out of the TPP, Livemint reports.

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

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