Trump sends chill through WTO
With help from Adam Behsudi, Jason Huffman and Megan Cassella
TRUMP SENDS CHILLS THROUGH WTO: Between his promises to slap hefty tariffs on allies and threats to withdraw from the World Trade Organization, Donald Trump has officials in Geneva running scared. Faced with the prospect of a U.S. president who stands against the open-market philosophies they have spent their careers promoting, top trade officials are in various states of denial about the election, Pro Trade’s Megan Cassella reports from WTO headquarters.
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Some officials who talked to Cassella expressed doubt that the populist billionaire could really win. Others felt there was no way a President Trump would keep the same promises he has made as a boisterous candidate. Still more held onto the hope that even if he tried, the United States’ separation of powers and rules set by organizations like the WTO would keep him from making too much progress.
“Policy has to be built on reality, and if you are elected, you cannot disregard reality — not even Trump,” one official told Cassella this week in Geneva, where the WTO just wrapped up its annual public forum.
The reactions offer a snapshot of the message Trump’s campaign has sent to trade officials around the world. In the short term, a Trump presidency would likely mean weaker U.S. leadership in Geneva, officials said, which could slow the organization’s ability to get things done. But more broadly, the popularity of his candidacy alone illustrates how far the sentiment has spread among voters that trade might not, in fact, benefit them. Pros can read the full story here.
IT’S FRIDAY, SEPT. 30! Welcome to Morning Trade. Lately I’ve been enjoying a book of quotations. There’s not much of the subject of trade, except this one from King George V in 1901: “I venture to allude to the impression which seemed generally to prevail among their brethren across the seas, that the Old Country must wake up if she intends to maintain her old position of pre-eminence in her colonial trade against foreign competitors.” My, how pithy his majesty was! Still, there is kind of a timeless element to it. Any toppers out there? Let know me at firstname.lastname@example.org or @tradereporter.
TPP IN THE LAME DUCK? ‘IN HILLARY WE TRUST, IN MITCH WE DON’T’: That was the message from one of Hillary Clinton’s strongest supporters in the Senate on whether the Democratic nominee would backtrack on her opposition to the TPP if elected president. “I trust Hillary on this,” Sen. Sherrod Brown said Thursday. “She will oppose it just as strongly on Nov. 9 as she does today. I trust her because, one, she understands the agreement.”
The Ohio lawmaker said Clinton crystallized her opposition by raising specific problems over what she views as overly permissive rules of origin for automobiles, non-binding currency provisions and the deal’s investor-state dispute settlement mechanism.
At a separate press conference, Senate Majority Leader Mitch McConnell said the lame-duck session will likely only last three weeks and his priorities would be passing another government spending bill and legislation to increase funding for medical research.
“If we are going to have another discussion about trade, it would have to be led by whoever the next president is,” the Kentucky Republican said, adding that subject is currently “politically toxic, and I don’t think the Congress is ready to tackle it in any positive way.”
Brown expressed skepticism about the Republican leader’s statement, which didn’t outright reject a lame-duck vote — unless “you’re convinced Mitch McConnell never tells a lie,” he said.
NAVARRO: TRUMP WILL END THE ‘UNDECLARED TRADE WAR’: Peter Navarro, one of Donald Trump’s economic policy advisors, continued to beat the drum for the Republican candidate’s tough trade stance in an appearance on Sirrius XM’s POTUS station Thursday morning. When asked by Tim Farley, host of the station’s Morning Briefing show, if he was concerned that Trump could set off a trade war that might result in U.S. consumers paying more for goods, Navarro shot back:
“No, not at all. If you just simply look at the strategic chessboard, the first thing you have to recognize is that our trade deficit is really with a small handful of countries that we can negotiate well with. It’s Germany, Japan, South Korea, Taiwan, Mexico, China. Each one of those negotiations will be different because with each of those countries there are different reasons for the deficits that we run. But these countries run big surpluses and they depend on our economy far more than we depend on them. And that gives us, for Donald Trump, negotiating leverage. So the idea is not to start a trade war, as the alarmists would say, but really to end the undeclared trade war that countries like China, where they’re cheating, have been waging on America for 15 years.”
TRUMP’S CUBAN CASINO ADVENTURE: Hillary Clinton’s campaign pounced on a Newsweek report that Trump’s casino violated the U.S. embargo on Cuba in 1998 by funneling at least $68,000 to a consulting firm that traveled to the island in search of business opportunities on Trump’s behalf, but Trump himself denied the charge on Thursday.
“Trump’s business with Cuba appears to have broken the law, flouted U.S. foreign policy, and is in complete contradiction to Trump’s own repeated, public statements that he had been offered opportunities to invest in Cuba but passed them up,” Clinton campaign senior adviser Jake Sullivan said in a statement. “This latest report shows once again that Trump will always put his own business interest ahead of the national interest — and has no trouble lying about it.”
The billionaire businessman denied the charge when asked about it on a NH1 broadcast. “No, I never did anything in Cuba. I never did a deal in Cuba,” Trump said. That prompted Kurt Eichenwald, the reporter who wrote the story, to tweet a copy of a letter detailing expenses incurred for services rendered in Cuba on behalf Trump. To see that, click here.
FEDEX EXECUTIVE TAKES ON TRUMP-O-NOMICS: In a speech on Thursday to the World Affairs Council of Philadelphia, Fedex Freight Chief Executive Mike Ducker thrashed Trump’s trade proposals, without mentioning the Republican candidate by name.
“Ripping up trade deals, or saying you’ll dramatically raise tariffs on imports or abandoning historic opportunities like the TPP [Trans-Pacific Partnership] will not grow our economy or do anything to help those that have been displaced by trade and by technology — which, by the way, has had a far greater impact on jobs than trade,” Ducker said.
“If we were to go down that road, other countries will advance their own economic interests as America sits on the sidelines and watches,” the business executive continued. “We would lose our influence in the world in many ways, along with our influence modernizing the rules governing trade. The risk is that formidable trade barriers and even more tariffs would be in place, and American workers would pay the price.”
Meanwhile, U.S. Treasury Secretary Jack Lew sounded the same theme in a speech in Mexico City on the important benefits of the U.S.-Mexico economic relationship, despite Trump’s charge the southern U.S. neighbor is stealing American jobs. “We must win the argument — one that is supported by the facts — that fair trade will grow both of our economies,” Lew said.
CSI URGES TPP SUPPORT, SAYS IT’S WORKING ON DATA FIX: A leading business association representing U.S. service companies says it’s working with the Obama administration to ensure that a proposal prohibiting data localization in the financial services sector is adopted in “some fashion” by TPP countries through binding and enforceable commitments.
The U.S. Coalition of Services Industries and other business groups had threatened to withhold support for the deal when the final agreement didn’t include financial data in rules mandating that countries allow the free flow of data. The administration, seeking to build support for the deal in Congress, came back in May with a proposal that would not directly change the TPP but would apply to TPP countries in other trade deals and bilateral arrangements.
“The development of this important new data localization approach further strengthens our membership’s position to stand squarely behind the TPP,” CSI President Christine Bliss wrote in a letter to congressional leaders Thursday urging them to support passage of the TPP.
CHINA THRASHED AT ALUMINUM HEARING: U.S. aluminum manufacturers let loose on their Chinese competitors at an U.S. International Trade Commission hearing on Thursday to examine competitive pressures facing the domestic industry. Just 16 years ago, China produced only about 11 percent of the world’s primary aluminum. Today it produces 55 percent.
“Much of this expansion is being driven by misguided government policies such as artificial incentives, subsidies and provincial or local employment programs, all of which encourage the steady build-up in excess capacity and oversupply,” Heidi Brock, president of the Aluminum Association, told the trade panel. “The simple fact is this: Chinese producers are not responding rationally to market signals, and they are not acting fairly or responsibly as members of the global economic community.”
The ITC is examining the issue at the request of the House Ways and Means Committee and is expected to produce a report by mid-2017. Brock urged the panel to focus on the amount of “needless production” in China, the lack of transparency about Chinese policies that encourage overproduction, the effect of China’s tax policies in distorting trade in primary aluminum, the transhipment of Chinese-made aluminum through other countries to circumvent existing anti-dumping and countervailing duty orders, and the role China’s aluminum industry will play in meeting the country’s commitments to reduce carbon emissions.
EU AGREES CHINA TO BLAME: A European Union official backed up U.S. industry’s complaint that China is primarily to blame for problems affecting the aluminum market.
“The growing overcapacity in China has created substantial imbalances in global demand and supply,” Damien Levie, head of the trade office at the European Union’s delegation in Washington, said at the ITC hearing. “But the rest of the world has responded by closing plants, mostly in the United States, the European Union and Russia.”
So far, the brunt of China’s oversupply has been felt by primary aluminum producers, but companies further up the value chain that make semi-finished and finished products are living in fear of what could happen to them.
“Chinese producers are exporting the problem away to the rest of the world and also across the entire value chain,” Levie said. But any U.S. trade remedies should be structured in a way to get at the “root cause of the problem” without hurting European producers, he added.
CHINA PAINTS A DIFFERENT PICTURE: Finishing off more than eight hours of testimony from witnesses around the world, top officials at China Nonferrous Metals Industry Association said the rapid growth of the Chinese aluminum industry has been mainly driven by a sharp increase in domestic demand. Mo Xinda, division chief of the CNIA, also argued that the development of China’s aluminum sector has “contributed greatly to the growth of the global economy” through imports of bauxite, aluminum scrap and alumina and purchases of more than $70 billion worth of technology and equipment from foreign countries over the past 20 years.
She said both the Chinese government and industry have taken steps to eliminate inefficient capacity, but also argued the global aluminum industry has been periodically afflicted by overcapacity in past decades as production has shifted to more cost-effective regions.
In addition, there is a lot of room for China’s own aluminum consumption to grow, Mo told the panel, noting the country’s per capita consumption was 22 kilograms in 2015 compared to 32 kilograms in the United States and 39 kilograms in Germany. “Finally, we believe we can effectively address the global aluminum industry’s challenges through dialogue and cooperation,” Mo said.
A WTO DEAL ON SERVICES, WITH INDIA AT THE HELM? India may have blocked implementation of the Trade Facilitation Agreement just two years ago over the World Trade Organization’s farm subsidy rules, but now it’s proposing to use that deal as the basis for a new set of negotiations: a Trade Facilitation in Services deal.
Next week, India’s delegation in Geneva will submit for discussion before the WTO’s working party on domestic regulation its proposal for an agreement that would aim to aid the free flow of data, clarify visa and work permit procedures and offer special and differential treatment for developed and least developed countries, according to a copy of the outline obtained by Morning Trade.
“Like the TFA, there is need for a counterpart agreement in services, an Agreement on Trade Facilitation in Services, which can result in reduction of transaction costs associated with unnecessary regulatory and administrative burden on trade in services,” India wrote in the proposal.
The idea of launching an agreement focusing on easing trade in services between WTO members was tossed around this week at the organization’s public forum in Geneva as one of the areas where concrete progress could be made ahead of the next ministerial conference next December. Earlier this week, Director-General Roberto Azevedo listed the idea among several possible goals that could be achieved ahead of that meeting, though he noted that since proposals were not yet on the table it was “difficult to tell what’s going to come.”
Canada and India to seek closer trade ties, Canada’s trade ministry says.
EU proposes more aid, trade pact to support Tunisia, Reuters reports.
Donald Trump’s experts are basing his trade policy on a mistake, Vox writes.
U.S. lawmakers may change September 11 law after rejecting veto, Reuters reports.
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