Will President Trump Clash with India’s Prime Minister on Trade?

June 26, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Today, President Donald Trump will meet with India Prime Minister Narendra Modi. Leading up to the meeting, U.S. lawmakers on either side of the aisle have urged the President to press Modi on the removal of barriers to U.S. trade and investment in India (The New York Times). According to these lawmakers, despite the high-level engagement with India, the country has not eliminated major barriers to trade and investment and has not been prevented from imposing new barriers. These barriers include high tariffs, poor protection of intellectual property rights, and inconsistent and non-transparent licensing and regulatory practices.

In a letter to the President, lawmakers claimed that a wide range of sectors from India’s economy remain “highly and unjustifiably” protected, making India a very difficult place for U.S. companies to do business (Reuters). their opinion, the bilateral economic relationship does not perform efficiently due to India’s hesitance in enacting vital market-based reforms.

Major sectors affected are solar and information technology products, telecommunications equipment and biotech products. Further, there are limitations on foreign participation professional services, in addition to numerous restrictive foreign equity caps. The lawmakers’ list of grievances is long and growing.

Currently, Prime Minister Modi is running a “Make in India” campaign as an attempt to boost domestic manufacturing and create jobs (Bloomberg). This may make it difficult for he and the President to reach an agreement, as President Trump’s “America First” agenda creates a clash of economic nationalisms. However, President Trump has called Modi a “true friend” on Twitter, and Modi has expressed excitement in anticipation of the meeting.

For updates on the meeting and information on other relevant trade issues, follow Mercatura Global on Twitter.

U.S. and Mexico Reach Agreement on Sugar Dispute

June 5, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

U.S. and Mexico have reached an agreement in the dispute over sugar trade today, according to sources (Reuters). The agreement will prevent a trade war in which the U.S. would have imposed steep tariffs on Mexican sugar imports and Mexico would have responded with equal tariffs on U.S. high-fructose corn syrup.

Details of the agreement are not yet public, but sources indicate the deal was made to benefit both countries. According to the Juan Cortina Gallardo, the president of Mexico’s sugar chamber, the managing of the sugar agreement will set a precedent for how further negotiations will play out (The New York Times). Since NAFTA was first negotiated in the early 1990s, the sugar industry has been the most contentious issue in U.S.-Mexico trade relations.

The current agreement will modify a 2014 agreement in which quotas and a price floor on Mexican sugar acted as an alternative solution to antidumping and antisubsidy duties. U.S. sugar companies had argued that the agreement was not doing enough to counter “unfairly subsidized” Mexican sugar companies, who could sell sugar in the U.S. at a price domestic companies could not compete with.

Stay up to date with the details of the agreement and other international trade news by following Mercatura Global on Twitter.

Commerce Secretary Ross Wants NAFTA Renegotiation by January

June 1, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

U.S. Secretary of Commerce Wilbur Ross indicated Wednesday that the best time period to complete the North American Free Trade Agreement’s negotiation is by early January. By setting this window, the Trump Administration hopes to have the renegotiation done before both Mexico’s general elections and the 2018 U.S. Congressional elections (Reuters).

According to Ross, Mexico’s elections will make the approval of NAFTA more complicated because it needs Mexican congressional approval. Mexican Economy Minister Ildefonso Guajardo also urged for a final deal by the end of this year (Bloomberg). In the U.S., presidential powers to negotiate trade deals that can accepted or rejected by Congress without amendments expires in July 2018, justifying the urgency of the Trump Administration

Ross also said Wednesday that the Commerce Department would impose anti-dumping and anti-subsidy duties on Mexican sugar and Canadian softwood lumber as part of the renegotiations if settlements over the disputes are not achieved. The Mexican government subsidies sugar companies and Canadian lumber producers utilize government-owned land to produce, making it difficult for U.S. competitors to compete in both industries. Ross hopes to resolve both of these issues before the official modernization of NAFTA.

NAFTA negotiations will formally begin around August 16, following a 90-day period of domestic consultations with U.S. lawmakers, industry, and the public.

Stay up to date with all trade news, including updates on NAFTA, by following Mercatura Global on Twitter. As an advocate of free trade, Mercatura Global can counsel your company on how best to enter international markets and increase your export revenue. To develop your market entry strategy and identify strategic partners, contact Mercatura Global today.

Robert Lighthizer to be Sworn in as U.S. Trade Representative Today

May 15, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Robert Lighthizer will be sworn in at U.S. Trade Representative at 3pm today. The occasion comes after a months-long confirmation process, in which he was finally confirmed by an 82-14 Senate vote last Thursday.

Despite the overwhelming consensus, two notable Republicans, John McCain of Arizona and Ben Sasse of Nebraska, voted against his confirmation due to Lighthizer’s stance on the North American Free Trade Agreement (NAFTA). According to the GOP Senators, they do not believe Lighthizer understands “the North American Free Trade Agreement’s positive economic benefits to our respective states and the nation as a whole” (U.S. News & World Report). They claimed to fear Lighthizer did not appreciate the jobs created by NAFTA and worried he would not be a champion of U.S. agriculture.

The delay on Lighthizer’s confirmation has hindered President Trump’s trade agenda, especially in regard to his goal of renegotiating NAFTA. Before this formal process begins, the Trump administration must send a declaration letter to Congress detailing its intention to initiate negotiations in 90 days (Reuters). Renegotiations would likely focus on Mexico, as the U.S. trade deficit with Mexico has ballooned since the establishment of NAFTA in 1994 and has been largely criticized by the President.

In addition to renegotiating NAFTA, Lighthizer is expected to tackle other trade issues detailed by the Trump administration. This includes establishing bilateral trade deals with allies like the United Kingdom and Japan, and take a tougher stance on China (Politico). Future trade policy will have an “America First” focus, with the goal of bringing back manufacturing and other industrial jobs back to the U.S.

After Lighthizer is sworn in today, the Trump administration will be able to begin acting on measures outlined in President’s campaign. This could mean a lot of changes for trade. To stay up to date with all things related to trade, follow Mercatura Global on Twitter.

What are the Benefits of a 11-Country TPP Deal?

May 8, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Politico recently released new details on a study conducted by the CanadaWest Foundation that is scheduled to be published next month. The study predicts the benefits of a TPP deal without the U.S. and what the other 11 countries should expect if it were to come to fruition.

While the deal would strength intra-regional exports by 2.43%, this increase in only two-fifths of the TPP’s full impact with U.S. involvement. The 11-country deal could raise real GDP by around 0.074%, and the 11 countries involved would gain an additional $16.6 billion in 2017 (compared to $40.7 billion with the U.S.).

Exports from the automotive products and business services sectors would benefit the most from the deal, with Western Hemisphere countries to see the biggest gains. For Canada, the deal would cause a boost in beef, fruits, vegetables, pork, and canola oil exports.

For the U.S., an 11-country TPP deal would transform the country’s projected $12.7 billion gain to TPP countries into a $3 billion loss.

This month, the Asia-Pacific Economic Cooperation (APEC) nations will have a series of meetings in Hanoi beginning on May 9th (Bloomberg). TPP delegates from involved countries are expected to discuss the future of the deal.

To stay up to date with the future of the TPP, follow Mercatura Global on Twitter, and keep an eye out for CanadaWest’s report that is set to come out later this month.

IMF Director Defends Trade as Driver of International Growth

April 10, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

As part of the joint report ‘Making Trade an Engine of Growth for All,’ the International Monetary Fund, World Trade Organization, and World Bank emphasized the role of trade as a driver of global growth (Reuters). During the unveiling of the report in Berlin, all three organizations claimed the current trend toward protectionism since the early 2000s posed a threat to international economic growth.

Christine Lagarde, the director of the IMF, made a statement asserting that “trade integration is a powerful tool to raise growth and improve living standards.” She continued to assert it is an engine for global growth and prosperity.

According to the Financial Times, the joint report is a response to President Trump’s protectionist rhetoric and criticism toward multilateralism. He has also been critical of the role of the WTO, and the reports calls for governments to defend the WTO, its dispute settlement system, and its ability to prevent trade wars.  The report comes a little over a week before finance ministers and central bankers from around the world gather in Washington D.C. for the first biennial meetings of the IMF and World Bank since the U.S. election.

As the U.S. is the biggest shareholder of both institutions, it is likely that the upcoming meetings will be centered on President Trump’s plans for them.

Mercatura Global is a supporter of free trade and its ability to make international trade accessible for everyone. We help facilitate the export process to assure your company maximizes its returns and develops the most profitable export strategy. If you are interested in learning more about expanding your business globally, contact us today.

President Trump and Chinese President Xi Form 100-Day Action Plan on Trade

April 7, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

This Thursday and Friday, President Trump welcomed Chinese President Xi JinPing to Mar-A-Lago for their first face-to-face meeting. On Thursday, Trump administration officials claimed they will be hardening their position on trade with China (The New York Times). China is America’s largest trading partner, and President Trump is expected to sign an executive order directed at countries that dump steel into American markets. This measure would be intended to address China’s huge trade surplus with the U.S., an issue highly publicized during President Trump’s campaign.

According to China’s Foreign Ministry website, Xi believes both sides should promote the “healthy development of bilateral trade an advancement” (Reuters). Xi also asserted there is no reason to spoil the China-U.S. relationship.

According to Commerce Secretary Wilbur Ross, during the Summit the two leaders agreed to put into action a 100-day plan to tweak the trade relationship between China and U.S. (US. News & World Report). While there were no major breakthroughs at the meeting, the 100-day plan is intended to address economic differences, included a reduction in the U.S. trade deficit.

To stay up to date on the progress of the 100-day plan and other international trade news, follow Mercatura Global on Twitter.

Trump Administration with Seemingly Softer Stance on NAFTA

April 4, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

A White House draft circulating around Congress reportedly details only minor changes to the North American Free Trade Agreement (NAFTA). According to the Wall Street Journal, the proposed NAFTA alterations as mainly “modest” changes while keeping most of NAFTA’s controversial provisions the same.

There were two specific changes outlined by the draft proposal. The first proposal would allow member nations to levy tariffs on imports they consider to cause “serious injury” or “threat of serious injury” to domestic outfits (US News). This proposal could be potentially leveraged against Mexican imports that contribute to the U.S. deficit in goods trade.

A second proposal refers to a section of NAFTA that requires member governments to consider companies based in their foreign counterparts for “public sector procurement” projects such as infrastructure ventures. Under current NAFTA provisions, foreign suppliers are guaranteed to be treated no less favorably than domestic companies competing for the same procurement opportunities (International Trade Administration). With the new provision, rules would be established that require government procurement to be conducted consistent with U.S. law and the administration’s policy.

The letter also supposedly call for leveling the playing field in tax treatment, expanding opportunities for agriculture, and creating stricter intellectual property enforcement and digital protection.

It is likely that this draft will be altered further before any formal NAFTA negotiations, which would be initiated through a formal 9-day notice of President Trump’s intent to revisit the deal. To stay up to date on the future of NAFTA and U.S. trade policy, follow Mercatura Global on Twitter.

USTR Nominee Robert Lighthizer Takes Strong Stance on China in Senate Hearing

March 15, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

President Trump’s nominee for U.S. Trade Representative, Robert Lighthizer, had his Senate confirmation hearing on Tuesday. At the hearing, Lighthizer pledged an “America first” strategy and vowed an aggressive approach to tackling trade with China. According to Reuters, Lighthizer claimed he will enforce U.S. laws and trade deals that will stop unfair imports and push China into scrapping excess factory capacity.

Lighthizer further targeted China and the World Trade Organization by asserting the WTO isn’t set up to “effectively deal with a country like China and their industrial policy” (Politico). Lighthizer specifically referred to China’s industrial policies that allow for the dumping of steel and aluminum products into U.S. markets.

Lighthizer’s confirmation as U.S. Trade Representative has been delayed due to his representation of Brazil and China in the past. The 1995 amendment to the Trade Act prohibits the president from appointing a trade representative who has directly represented, aided or advised a foreign entity in a trade negotiation or dispute (Bloomberg). As a result, Senate democrats are claiming Lighthizer needs a waiver from both houses of Congress before he is confirmed.

After the hearing on Tuesday, Republican chairman of the committee Orrin Hatch conveyed his belief that Lighthizer is both qualified to serve as the USTR and that he should be confirmed in “short order.”

Negotiators from 16 Asian Countries Meet to Discuss Regional Trade Pact

February 27, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

China is currently championing the Regional Comprehensive Economic Partnership (RCEP), a trade deal between 16 Asian countries. These countries include Japan, China, Australia, Brunei, Cambodia, India, Indonesia, South Korea, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, Thailand, and Vietnam.

In total, the countries account for about half of the world’ population and 1/3 of global trade (Bloomberg). The negotiators are meeting this week in the Japanese port city of Kobe to discuss the trade pact, which is considered a rival to the rejected TPP.

The talks over the RCEP were initiated in 2013, but it has been difficult for the countries to reach a consensus on key issues such as tariffs and trade restrictions. This is a result that the deal includes extremely poor countries as well as some of the largest economies in the world.

The RCEP is a traditional trade deal, and it covers investment, intellectual property, economic/technical cooperation, and dispute-resolution mechanisms. However, unlike the forward-thinking TPP, it does not require members to protect labor rights or improve environmental standards.

There are seven TPP countries that are negotiating the RCEP in Japan. While some of these countries want the TPP to be revived with or without the U.S., if the TPP does not move forward, it is likely some TPP provisions will make their way into the RCEP. Mercatura Global will be following the progression of the talks over the week, and you can stay updated on the negotiations by connecting with us on Twitter and LinkedIn.

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