May 24, 2021
This Week in Trade for May 21
Last week (May 17 — 21)
U.S., EU Trade Leaders Ease Trade Tensions. U.S. and EU trade officials May 17 announced the start of discussions to address global steel and aluminum excess capacity. Such talks could lead to the rollback of U.S. tariffs on EU steel and aluminum products. As part of this agreement, the EU signaled that it would suspend retaliatory tariff increases on U.S. products such as whiskey and motorcycles which had been scheduled to occur on June 1. The tariff suspension could last up to six months.
Biden Meets with South Korean Leader. President Biden met with South Korean President Moon Jae-in May 21 at the White House for a meeting that was expected to focus heavily on geopolitical and trade issues related to China and semiconductor supply chain issues as well as defusing tensions vis-à-vis North Korea. Moon is the second foreign leader to visit the White House (Japan's PM was the first) — indicative of the Biden administration's diplomatic focus on China.
China Exploring Possibility of Joining CPTPP. Bloomberg News reported this week that China had stepped up efforts to join the Comprehensive and Progressive Trans-Pacific Partnership. The CPTPP is a trade deal comprising 11 Pacific-rim nations and is the successor trade deal to the TPP (originally envisioned as a trade agreement to isolate China) after the U.S. withdrew from the agreement in 2017. Trade officials from a number of CPTPP member nations have held technical discussions with Chinese counterparts on the mechanics of the trade agreement. If it entered the CPTPP, China would be the largest economy in that trade bloc and that move could potentially revive U.S. interest in re-joining the agreement. The timeline for China's entry to the CPTPP is not clear because in part CPTPP nations are currently working on reaching an agreement to permit the United Kingdom to accede to the trade bloc.
Wyden Seeks to Renew Lapsed Trade Programs. Senate Finance Chairman Ron Wyden (D-OR) introduced legislation May 18 to renew the lapsed Generalized System of Preferences (GSP) and Miscellaneous Tariff Bill (MTB). The GSP program provides tariff reductions for certain imports from qualifying developing nations while the MTB provides time-limited tariff reductions for qualifying imports. The Wyden bill, the Trade Preferences and American Manufacturing Competitiveness Act, would extend the trade programs through 2026 and include a number of new requirements for GSP eligibility focused on environmental and human rights. In a related development, Senate Majority Leader Chuck Schumer (D-NY) indicated he planned to conclude Senate consideration of a China-focused trade bill next week, the U.S. Innovation and Competition Act (which incorporates a number of packages including the Endless Frontier Act) but Republican amendments, including one related to the WTO Vaccine IP waiver issue, may push back final consideration of the measure until next month.