VI Bi-weekly Legislative Update – Reduced Trade Tensions with China & More Debate Over USMCA Passage

China Trade Negotiations and Tariffs

The U.S. and China have agreed to tamp down trade tensions and resume trade negotiations after President Donald Trump and Chinese President Xi Jinping met at the G20 summit in Japan last week. After the June 29 meeting with President Xi, President Trump announced the U.S. would not impose the planned 25 percent tariffs on more than $300 billion in Chinese goods as the U.S. and China continue trade talks. President Trump said that he had a “very good meeting” with President Xi and the U.S. and China were “right back on track” in its negotiations. While further tariffs are off the table, for now, those already in place on $250 billion in Chinese goods will remain in effect.    The President also agreed to remove some restrictions on Chinese telecom giant Huawei, which the Commerce Department recently added to its entities list. In return, President Trump said that China has committed to buy U.S. agricultural products. Unlike last time the President and Xi met, the White House did not set a formal deadline for the negotiations. A likely next meeting would be at the annual APEC summit in Santiago, Chile, on Nov. 16 to 17.

USMCA

House Speaker Nancy Pelosi (D-CA) said she believes the U.S.-Mexico-Canada Agreement (USMCA) could be re-opened for “surgical” changes to issues like enforcement. The Speaker said she did not want to pass an agreement that was only slightly different from NAFTA, but rather the strongest pact possible from the perspective of her caucus. “What we would propose is that we have to have enforcement, and we don’t have enforcement if it’s in a letter, a side bar, a law in our country, your country, his country, but not in the agreement. So, I could see a scenario where we would just, for the singular purpose of doing enforcement, that we would suggest that they should open,” Pelosi said at her weekly press conference, adding that a re-opening of negotiations wouldn’t be a free-for-all, but “surgical.” Last week, President Trump said that the administration was prepared to make “minor changes” to the agreement to address the issues raised by Democrats but has steadfastly resisted opening up the agreement itself for renegotiation.

Democrats continue to signal that they plan to pass the USMCA this year but Rep. Earl Blumenauer (D-OR), chairman of the House Ways & Means trade subcommittee expressed doubt that the deal could be passed by summer. According to the timeline mandated by the 2015 Trade Promotion Authority law, the earliest the implementing legislation can be sent to Congress is July 9.   Blumenauer said fall was more likely timeframe to progress toward ratification. As one of the nine members on the Democratic Trade Working Group, Blumenauer said he is having “encouraging exchanges” with United States Trade Representative Robert Lighthizer and echoed Pelosi’s comments about the agreement being re-opened narrowly rather than “full scale” to address Democratic concerns. Blumenauer said a congressional delegation would be headed to Mexico this month to observe labor standards and other issues in person.

To see previous legislative updates, click here.