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What’s Next on the Trade Agenda?

Date: June 22, 2021

As President Biden continues to push his initiatives on his trade agenda, the long shadow of his predecessor is being felt at every turn. Biden has set forward aggressive objectives for trade including many of the shared goals of former President Trump. Biden has made the first move to mend fences in Europe but at the same time has maintained a tough stance against China. And finally, President Biden has made it clear that USMCA must serve workers on both sides of the border.
 

Key Takeaways

  • The Senate has passed the U.S. Innovation and Competition Act - a bill to address the imbalance between the U.S. and China. But it is unclear when or if the House will take up the legislation.

  • The U.S. Trade Representative has committed to working with the EU to eliminate tariffs on imported steel and aluminum by December.

  • The Senate amended the U.S. Innovation and Competition Act to include instructions to the Biden administration to reinstate the exclusion process on Section 301 tariffs for goods coming from China.

  • The administration has been quick to utilize the USMCA Facility Specific Labor Rapid Response Mechanism moving forward on two cases this spring. There will be more cases to come.


What I Am Watching For

  • Re-phrasing the Rolling Stones – Time is Definitely Not on Our Side. If the Biden administration stretches these discussions on too long, the industry will continue to suffer.


EU

President Biden returned from his trip to Europe with a definitive path forward to address 17 years of disputes over subsidies to the aircraft industry. The path forward includes eliminating punitive tariffs.

However, missing from the agreement was any immediate resolution to the steel and aluminum tariffs put in place on imports from the EU. The good news was the announcement of an agreement to work on this issue through 2021. While both parties are giving the negotiations room to succeed, the industry needs a resolution of this portion of the widespread tariffs on critical raw materials.

 

CHINA

The shadow of his predecessor appears most strongly in President Biden’s relationship with China. As the President moved to work with our allies in a multilateral approach to address China’s non-market policies, the Senate pushed through legislation aimed at addressing many of the inequities between the two countries.

Before Biden left for Europe, one of his key Asia advisors was quoted as saying that the era of “engagement has come to an end.” This is a widely different view than other Democratic presidents have operated under and much more closely aligned with the views of President Trump.

But what does this mean for our industry? President Biden’s administration has not moved to alter the Section 301 tariffs on imported Chinese goods and it seems unlikely he will do so in the near term. However, the Senate overwhelmingly passed an amendment to the U.S. Innovation and Competition Act directing the administration to reinstate the exclusion process. This is a sentiment that is shared by many members of the U.S. House of Representatives, and this language will likely remain in any legislation that ultimately makes it to the President for signature.


USMCA


MEMA strongly supported the passage of USMCA. Under the agreement, there is an annex between the U.S. and Mexico that established a facility-specific rapid response labor mechanism. The purpose of which to ensure that workers in both countries are not denied the right of free association and collective bargaining.
 
In the late spring, two petitions were filed under the rapid response mechanism against facilities in Mexico – an automaker and a parts manufacturer. These cases have proceeded through their preliminary phase and it is obvious that labor unions plan to file more cases.
 
The U.S. Trade Representative has made it clear that the Biden administration plans on using this tool to address the concerns of labor unions. While the industry shares the administration’s goals to protect workers, there is a lot of concern about the disruption this may cause to the North American motor vehicle industry.
 
An executive briefing is available to industry members for purchase in our store here (you must log in to your MEMA account to access the webinar). I highly recommend that you take advantage of the opportunity and review the materials.

 

WHAT’S NEXT?

As I have often said, our industry’s competitiveness depends on an effective balance between a global and domestic supply base. Free and open trade is part of this balance. MEMA will continue to fight for the competitiveness of U.S. suppliers while working with the Biden administration and Congress. But let’s keep in mind, that the Stones were not always right and time is not on our side. We must move forward with purpose and conviction to reduce the burden of tariffs on our industry. And we must work with the administration to address labor concerns and challenges but not let actions impede our ability to do business in North America.


 
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