The Report of the Appellate Body in Indonesia – Safeguard on Certain Iron or Steel Products (DS490)

To be a safuguard measure, a measure "provided for in Article XIX", it must suspend, in whole or in part, a GATT obligation or withdraw or modify a GATT concession. In addition, the suspension, withdrawal, or modification in question must be designed to prevent or remedy serious injury to the Member's domestic industry caused or threatened by increased imports of the subject product.

That is to say, if a Member does not have the right to use safeguard if it is free under GATT. Even though it is not really free under GATT.

China’s cyber security law rattles multinationals

Reported by Yuan Yang for Financial Times

While the new law is causing angst in foreign boardrooms, the personal data privacy provisions are in line with worldwide practice, said Scott Thiel, partner at law firm DLA Piper in Hong Kong. For example, it accords with Europe’s General Data Protection Regulation, he said.

No it is not.

Reasons to keep or eliminate NAFTA

Carlos Alvarado wrote in 200 Billion Reasons for Keeping NAFTA

If President Trump’s administration wants to keep U.S. investors in Mexico happy, he will definitely need to think carefully about NAFTA. Chapter Eleven will be certainly a relevant part of the negotiations between NAFTA’s three signatories, but if President Trump is really ready for leaving NAFTA, he should have a plan B for protecting the more than US $200 billion invested by U.S. investors in Mexico. In the meantime, do not be surprised if notices of intent of arbitration under NAFTA’s Article 1119 from U.S. investors to Mexico increase significantly, in order to gain the benefit of NAFTA’s substantive protections and anticipate establishment of jurisdiction of an investment arbitration panel.

If he hates companies investing in Mexico so much, he would purposefully undermine protection for US FDI there.

The world moves on while the Trump administration stays in the GATT era.

Song Jung-a, reporting for Financial Times

The Trump administration is to review and reform the US trade deal with South Korea, Mike Pence said on Tuesday, citing a widening bilateral trade deficit and obstacles for American businesses in the east Asian nation.

“We have to be honest about where our trade relationship is falling short,” the US vice-president told US and Korean business leaders in Seoul. “Our businesses continue to face too many barriers to entry, which tilts the playing field against American workers.”

The US has to “level that playing field”, he added, saying “we will work with you” as we “reform Korus [the Korea-US trade deal] in the days ahead”.

Push for bilateral with the focus on goods continues. The world moves on while the Trump administration stays in the GATT era.

From ASIL annual meeting: TPP lives on

From TPP, Brexit, and After: The Uneasy Future of Deep Economic Agreements:

Christina Davis remarked that TPP broke the mold of East Asian regional trade agreements (RTAs), largely due to US leadership in pushing for new rules on labor, environment, digital trade, state-owned enterprises and competition -- features that persist past the US exit from TPP. For instance, the new administration’s stated goals for renegotiating NAFTA mention adding TPP disciplines; Vietnam is still moving forward on its TPP-related labor policy reforms.

Japanese Prime Minister Abe pushed Japan to join the TPP negotiations to advance domestic agricultural policy reforms. Moreover, geopolitically TPP signals deepening of the Japan-US relationship; TPP excluding China is part of that message. Japan has become the lead advocate for TPP, after the US election. Japan scores foreign policy gains from continuing to support TPP.

Kathleen Claussen of USTR (speaking in a personal capacity) noted the importance of Congress in determining US trade agreements’ template and agenda. To understand agreements’ impact, she suggested focusing on the process before entry into force when parties evaluate what implementation actions are necessary.

US pushing a bilateral deal with JApan

Shawn Donnan and Demetri Sevastoulo, reporting for Financial Times

The intervention came ahead of a visit to Japan this week by Mr Ross and vice-president Mike Pence for talks aimed partly at convincing Tokyo to open negotiations over a bilateral trade deal following the US withdrawal from the 12-country Trans-Pacific Partnership.

. . .

He said the “exploratory trip” to Japan was intended to see if Prime Minister Shinzo Abe, who visited the US in February, would agree on a “path forward” for a bilateral agreement. “The question will be whether they are ready to consider the concept,” he said.

He acknowledged that Mr Abe had expended significant political capital on the TPP but he derided efforts to revive the agreement. “It doesn’t make that much sense to do a TPP without the US. We’re the biggest market after all,” he said. “And I think you folks are aware there is no political will in the US for a new TPP.”

Any bilateral agreement with Japan would have to see Tokyo add to the concessions it made in the TPP, which he characterised as “minor gains” for the US in agriculture and intellectual property, and he said the US would not accept anything less.

“A card laid is a card played. And even though that hand [the TPP] is cancelled, somebody has put something on the table in writing that is an agreed thing,” he said. “It will be our intention to make it very hard for them to go back.”

That's why you don't usually like to negotiate with someone who is inclined to withdraw from the deal reached.

Japan launches push to save TPP

From Bangkok Post:

Tokyo had expressed reluctance to have the TPP come into force without Washington amid concern that Japanese exporters, such as automakers, would gain little benefit without the United States, the biggest market in the grouping.

But with free trade perceived to be under threat with the rise of protectionism since the Trump administration took office, calls have been growing in the government for Tokyo's leadership in keeping the momentum for free trade.

On Saturday, Chief Cabinet Secretary Yoshihide Suga indicated Tokyo's readiness to proceed with TPP implementation while ensuring US understanding, saying in an interview with Kyodo News, "We have a feeling that the 11-nation framework should be given weight."

. . .

Under the current rules, TPP implementation requires ratification by nations accounting for 85% of the combined GDP of the 12 member countries. The deal was therefore effectively dead in the wake of the withdrawal of the United States because the country represents over 60% of the trade bloc's GDP.

But Mr Trump, who took office in January pledging to pull the United States out of what he called a "job-killing" free trade pact, has not opposed the remaining 11 nations implementing the TPP.

One proposal to lower the threshold for bringing the pact into force envisions a separate protocol to allow the TPP to be applied to any remaining member that agrees to it, the source said.

U.S. business wary of skin-deep results from Trump-Xi trade talks

Michael Martina for Reuters:

On the market access side, lowering restrictions on foreign investment in Chinese banking, securities, investment management, futures, insurance, credit ratings and accounting sectors, as Beijing has already promised, would help China improve the quality financial of instruments and make their markets more stable and professional, said McGregor.

"If you look at the things that China is talking about opening, it's all areas where China needs help," McGregor said.

That is the offer. And Trump's demand has been redirected to North Korea.

Heavily influenced by the last person to whom he has spoken

Edward Luce, writing for Financial Times:

Then there is Mr Trump’s capricious nature. Friends of the president say he is heavily influenced by the last person to whom he has spoken. In recent days that has included Xi Jinping, China’s president. It has also included a number of Middle Eastern leaders. Each of them is happy with Mr Trump’s abrupt recent policy changes.

Financial Times on The astonishing reinvention of Donald Trump

Ahead of major decision, Trump is struggling to deliver on his trade promises

By Damian Paletta in Ahead of major decision, Trump is struggling to deliver on his trade promises

Despite Trump's promise to challenge Xi on trade during the Mar-a-Lago meeting, they said the gathering was intended to serve as just the beginning of negotiations and allow the leaders to get to know each other.

To known each other better so that Trump could know how unrealistic his position was.

And they are considering more executive orders that could prod China on its trade practices, such as one that would launch an investigation into the use of subsidies to unfairly distort trade practices.

CVD is nothing new.

China knows how to deal with Trump

China knows that Trump wants "tweetable result", and so they gave him the 100-day plan. According to the report of Financial Times,

Some doubt what can realistically be achieved. “Will Trump even have a full team in place to conduct the negotiations effectively within 100 days, since he does not have either a China strategy or a China-Asia team in place?” asks Steve Tsang, director of the SOAS China Institute in London. “This is at best aspirational.”

Phil Levy wrote in Buying A Little Time On China Trade,

One of the headlines that emerged was official impatience – a 100-day deadline to make notable progress. At the senior leadership level, the Trump administration took office so deeply confused about trade deficits that President Trump had to order a 90-day study. As that will run contemporaneously with the China deadline, they seem unlikely to sort out a strategic vision in time. Meanwhile, the norm of summitry is that the leaders agree on a path and instruct their minions to make it so. The problem is that there is a distinct shortage of Senate-confirmed minions. The normal follow-up would involve Deputy U.S. Trade Representatives and Assistant Secretaries of State shuttling from Washington to Beijing and overseeing arduous discussions about details. It is invariably this sort of preparatory work that allows the leaders to later convene and issue proclamations of success. But President Trump has yet to nominate any Assistant Secretaries of State or Deputy U.S. Trade Representatives. Once nominated, they will require Senate confirmation – a lengthy process that has currently entangled the nominee for U.S. Trade Representative, Robert Lighthizer. Given the paucity of vision among senior officials and the outright paucity of junior officials, the one thing the Trump administration seems to need badly is more time. Yet they emerged from the summit trumpeting tight deadlines.

Still, what the US wants, . . .

According to Andrew Nathan, a Sinologist at Columbia University, plenty of low-hanging fruit is on offer. “US negotiators are pushing on a door that is relatively easy to open when they place a priority on improving the trade balance not by limiting Chinese exports to the US, but by increasing US exports to China,” he said.

China can offer .

China will offer the Trump administration better market access for financial sector investments and US beef exports to help avert a trade war, according to Chinese and US officials involved in talks between the two governments.

Because China knows how to deal with leaders like Trump,

Chinese officials have told visitors to Beijing that they think they can navigate what they expect to be Mr Trump’s transactional approach to the relationship. “They are taking the sort of approach that they take to developing countries: How much will it take to buy you off?” said one person who recently met with policy makers in the Chinese capital.
“It sets up a negotiation process tailor-made for Trump-type announcements about concrete deals for the export of this or the export of that, which make a splash but are too discrete to have a structural effect on the overall US trade deficit,” Prof Nathan said.

On the other hand, Trump Administration is preparing for an executive order focusing on anti-dumping, another short term tool.

The Trump administration is working on an executive order that would initiate investigations into "unfair" product dumping from foreign companies — an action that could lead to tariffs on a wide range of products. These plans are very fluid, and internal disagreements remain about how aggressive this order should be. Here's what I've learned from administration sources:

  • Steel and aluminum will be targeted.
  • Other products, including household appliances, could be targeted as well.
  • If the investigations result in new import duties — as some senior Trump officials believe should happen — it could make some consumer goods more expensive and could hurt the stock prices of American companies that rely on cheap steel imports. A good number of American manufacturing companies, however, could benefit from this hit to their low-cost competitors.

Also by Phil Levy

Former Treasury Secretary Larry Summers argues that many of the Trump administration’s fixations in China trade – such as bilateral trade deficits and currency manipulation – are misguided. There is an opportunity cost to pursuing them. Time spent demonstrating that China is not manipulating its currency is time not spent on more fundamental issues, such as the health of the institutions propping up the global economic system. Summers concludes that the United States and China need a high-level strategic dialogue. This is not a new idea. The Bush administration established a Strategic Economic Dialogue (SED) with China. The Obama administration was inordinately proud of itself for inserting an ampersand and pursuing a Strategic & Economic Dialogue. The reporting did not make clear what the Trump administration’s moniker would be, but there will be high-level dialogues with China. They will be strategic. And economic. The value of such dialogues depends critically on two things – the strategic vision of the lead players, and the ability of more junior officials to lay the groundwork.

As always, battle on trade within the administration continues.

In addition, an official said, the White House is moving out a senior economy policy official, Andrew Quinn, who had helped negotiate the Trans-Pacific Partnership, former President Barack Obama’s signature trade initiative. Mr. Quinn had become the subject of a battle between two camps in the White House: economic nationalists, who wanted him out, and more mainstream backers of free trade, who defended him.

Alas, when China has the upper hand, a trade war is temporarily averted, which would help the US from digging a deeper hole. Who would think of that?

EU considering excluding UK from trade talks before Brexit

Brussels is eyeing the exclusion of Britain from updates on EU trade talks amid concerns that the UK could take advantage of sensitive information [in its own post-> > After a briefing last month by Michel Barnier, the EU’s chief Brexit negotiator, the European Commission warned that there needed to be a “discussion about the treatment of sensitive information in the context of certain trade negotiations, to which the UK would continue to have access to while it remained a full member of the union”.

. . .

The situation is complicated by the fact that the EU has the exclusive right to negotiate trade deals for member states, meaning the UK has no legal right to initiate formal bilateral talks with other countries before Brexit happens in 2019.

Trade experts say one option would be for the UK to opt out of the information loop during the Brexit process in exchange for an agreement with Europe to allow it begin bilateral talks before it leaves the bloc.

Financial Times

This option is not optimal. Does the UK have the resources to initiate formal negotiations before the Breixt? Does anyone have any ideas what to negotiate with the UK Before the deal between the EU and the UK is clear?