According to the Office of the U.S. Trade Representative (USTR), the trade policy agenda underscores three main points. First, the agenda notes that this Administration inherited a “deeply flawed global trading system” that it is striving to improve. The agenda calls out the primary targets of the Administration’s trade efforts to date: overhauling the North American Free Trade Agreement (NAFTA) into the United States-Mexico-Canada Agreement (USMCA), the overreach of the World Trade Organization’s (WTO) Appellate Body, and unfair trade practices from U.S. trading partners, such as China’s non-market policies.

Second, the Administration continues efforts to improve domestic trade policies to better serve U.S. workers. While the agenda reviews a number of the Administration’s recent achievements, it highlights that a primary goal of 2019 is to obtain Congressional approval of the USMCA, which the President has touted as better serving the interests of U.S. workers, farmers, and businesses than NAFTA. Trade issues with China are unsurprisingly a significant focus, with USTR highlighting its negotiations with China to eliminate a range of unfair trade policies and practices. The Administration’s concern that the WTO Appellate Body’s decisions are overreaching is well-known, and the agenda promises a commitment to WTO reform efforts.

Third, the Administration intends to pursue new trade deals and to continue its enforcement of current trade laws. Here, the Administration highlights its focus on efforts to preserve U.S. national security and national defense, a nod to its current use of Sections 232 and 301 to impose tariffs on a broad range of global imports. The agenda also notes USTR’s intent to pursue new trade deals with Japan, the European Union, and the United Kingdom, as well as to concentrate on trade and investment with Kenya.

In sum, the 2019 agenda focuses on the ongoing goals of the Administration to improve conditions for American workers, to strictly enforce U.S. trade laws, and to encourage U.S. economic growth. We continue to monitor the Administration’s efforts and initiatives as they unfold in 2019. Please contact the international trade group with any questions.

On Friday April 13th, however, President Trump repeated his previous stipulation that the United States would “only join {the TPP} if the deal were substantially better than the deal offered to {President} Obama.” He explained that, “{the United States} already {has} BILATERAL deals with six of the eleven nations” in the TPP, and we “are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”

On Friday officials from Japan, New Zealand, and Australia reacted to President Trump’s remarks, stating that while they support the U.S. rejoining the agreement, intense negotiations and American concessions would be required. Japan’s Chief Cabinet Secretary, Yoshihide Suga, stated that while “Japan would like to listen to the U.S.’s view”, the current agreement is a “well-balanced pact” that judiciously addresses the needs of the current 11 member nations. Secretary Suga noted that that it would be “difficult to bring part of the pact and renegotiate it.”

New Zealand Prime Minister Jacinda Arden did not reject the idea of the U.S. rejoining the TPP, but also expressed concerns regarding the process of re-negotiation. She indicated that “{i}f the United States genuinely wished to reenter, that would trigger another process of engagement and negotiation. It’s not simply a matter of slotting into an existing deal.”

Australia’s Trade Minister, Steven Ciobo, echoed that sentiment, remarking that adding the U.S. to the TPP would “be a step in the right direction” but that “we’ve got a deal . . . I can’t see that all being thrown open to appease the United States.”

The final version of the TPP was signed on March 8, 2018 and its 11 member countries are currently in the process of ratifying the agreement.

The proposed tariffs will be an across the board 25 percent ad valorem duty on covered products. Following the release of the proposed list, the public will have thirty days to comment. Importing and exporting companies should file comments to ensure that certain products either remain on or are removed from the proposed list. Unlike the steel and aluminum tariffs recently imposed under Section 232, there is not a process, other than the filing of comments, to get specific products excluded. The notice will also announce the date for a public hearing. USTR, with the assistance of the interagency Section 301 Committee, will review all comments and then publish the final determination in the Federal Register and implement the new tariffs.

Experts, however, are cautiously optimistic about the news and what it could mean for 2018. Last year, significant uncertainties about critical aspects of the global economy made it difficult to predict the track of trade growth. The WTO cited unpredictability with respect to government action on monetary, fiscal, and trade policy, and whether trade would be restricted in favor of attempts to address domestic wage stagnation and unemployment. Moreover, the process of establishing global value chains – spreading production processes around the world – is stabilizing. That process had been a key driver in boosting global trade flows out of economic crisis, but is naturally beginning to slow.

In the United States, political and economic analysts struggled early in 2017 to estimate the impact of President Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) negotiations and to renegotiate NAFTA. On one hand, those trade policy “shocks” have been countered by trade-promoting policies in other regions, including the recently finalized Comprehensive and Progressive Agreement for Trans-Pacific Partnership among the 11 remaining parties to the original TPP. Trade among the NAFTA countries continues to dominate regional trade arrangements in the world, second only to intra-European Union trade flows. And President Trump has started this year with strong messaging on the importance of international trade – downplaying the fear of trade wars and signaling an interest in rejoining the TPP. On the other hand, the world is watching as President Trump considers whether to impose what may be broad trade restrictions on imports of steel and aluminum products under Section 232 of the Trade Expansion Act of 1962.

Notwithstanding these developments, the better-than-expected growth in 2017 have given economists a reason to expect a high rate of growth to continue at least through 2018, spurred by strong investment spending, growing demand in the EU, and new trade agreements. The WTO had forecasted global trade expansion for 2017 of only 2.4%, with the actual results being far better. For 2018, the WTO predicts trade growth to “pick up slightly.” Although much depends on the impact of political decision-making, the trend suggests that trade flows will continue to be strong this year.

In the solar panel case, the President announced increased tariffs for four years, starting at 30 percent and declining five percent per year over the relief period. These tariffs are lower than those sought by the two domestic petitioners in the case, Solar World and Suniva. The sting of the tariffs is softened further by the exemption from additional duties for the first 2.5 gigawatts of solar panels that are imported each year.

In addition to announcing duties on solar panels and cells, the President’s announcement addressed a long-running dispute involving polysilicon imports into the U.S. and China. Both countries have antidumping and countervailing duties on imports from one another—and the Chinese imposition of tariffs was clearly unjustified retaliation for the U.S. case. The U.S. producers of polysilicon have sought negotiations to eliminate the restraints in both markets, so the inclusion of the commitment by the Administration to seek a solution to this problem was warmly received by the domestic producers.

The washing machine tariffs had a similar structure as the solar tariffs, but relief will only extend for three years. The first 1.2 million imports of finished washers will face 20 percent duties, declining to 16 percent over three years. Imports over 1.2 million units will face 50 percent duties, as will parts. The exemption for parts starts at 50,000 units and increases to 90,000 over three years.

While it appears that the import relief for Whirlpool, the main U.S. company behind the washing machine case, appears more effective than the relief for the solar panel producers, imports and retailers of both products have expressed concern about the prospect of rising prices for their products.

Before the JCPOA, the United States maintained a variety of so-called “secondary” sanctions on Iran, allowing the United States to penalize non-U.S. financial institutions and non-U.S. companies that engaged in certain transactions related to Iran, including those linked to the Iranian energy and petrochemical industry, the banking and finance sector, shipping, the automotive sector, and precious metals, among others. The secondary sanctions were purely extraterritorial in nature – they sought to dissuade non-U.S. companies acting wholly outside the United States from engaging in significant transactions with Iran. Under the JCPOA, the United States committed to lifting most secondary sanctions, which requires the President to issue periodic waivers of the sanctions.

In a strongly-worded statement released on Friday, the President vowed not to issue future waivers unless Europe and the United States can renegotiate certain aspects of the Iran deal and secure a new “supplemental” agreement. Such a renegotiation would be a politically fraught exercise for all sides (European countries have resisted the idea of revisiting the JCPOA) and could result in the United States unilaterally leaving the JCPOA. Given the political uncertainty in Washington DC and resistance among key allies, is not clear whether the administration will actually follow through on the threats made last week or whether secondary or other U.S. sanctions will ultimately be re-imposed on Iran. Given the political uncertainty, non-U.S. companies, including foreign subsidiaries of U.S. companies, should continue to carefully monitor this issue and consider how the re-imposition or “snap back” of secondary or other U.S. sanctions may impact their operations.

The next waiver is due by May 12, 2018, which does not leave much time to conduct the negotiations demanded by the President, even if other JCPOA signatories were willing to start discussions immediately.

The Department’s use of self-initiation authority has been judicious and rare. In an agency-issued press release Secretary Wilbur Ross stated, “{w}e are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.” The Department further noted that it last self-initiated a countervailing duty investigation in 1991 on softwood lumber from Canada, and last self-initiated an antidumping duty investigation in 1985 on semiconductors from Japan.

Use of U.S. AD/CVD laws have increased by 65 percent under the Trump Administration, according to the press release, and appear to be a key instrument of choice to combat unfairly traded exports and protect injured and vulnerable domestic industries. The agency notes, apart from the self-initiated cases, that it has initiated 77 combined AD and CVD cases in response to domestic industry petitions in 2017 – in contrast to 48 combined AD/CVD cases initiated in 2016. In addition to these self-initiated dumping and subsidy cases focusing on aluminum from China, the Commerce Department has also initiated a broader Section 232 investigation to determine whether aluminum imports overall threaten to impair the national security. If the Commerce Department issues an affirmative finding, the President has broad power to impose trade remedies – including tariffs and quotas – to “adjust” the imports so that they will not threaten to impair the national security. The Commerce Department’s Section 232 aluminum determination is due in January 2018.

In terms of next steps for the aluminum sheet AD and CVD cases, International Trade Commission preliminary determinations are due on or before January 16, 2018. If the ITC issues an affirmative preliminarily determination that there is injury or threat of injury, then the Commerce Department investigations will continue with deadlines of February 2018 to issue a preliminary CVD determination, and April 2018 to issues a preliminary AD determination. Affirmative preliminary Commerce determinations would allow Customs and Border Protection to begin collecting cash deposits from all U.S. companies importing the subject aluminum sheet from China. If the investigations proceed without any extensions in the preliminary phase, the Commerce Department’s final determinations would be due in April 2018 and July 2018 for the CVD and AD investigations, respectively.

Several experts have cautioned that the Senator’s ask exceeds the review authority of CFIUS, which reviews transactions that could result in control of a U.S. business by a foreign person to determine the effect of such transactions on the national security of the United States. It remains to be seen whether the President would be willing to stretch the limits of CFIUS for broader foreign policy objectives, such as pressing China to get tougher on North Korea. While Trump may be open to considering an aggressive interpretation of Committee authority – particularly to achieve a desired outcome – the calculation may change under circumstances where the suggestion comes from a leader across the aisle, not to mention an evaluation of the scope of the Committee’s authority. At this point, it is not clear that CFIUS’s approach to Chinese company acquisitions of U.S. businesses will change.