Mara Lee

Chinese pledges to buy more U.S. agricultural products and natural gas (see 1805200002) are still on the table, but China said that if Section 301 tariffs are levied, these purchases will not happen. On June 4, the White House issued a summary of the talks between the Chinese and a delegation led by Commerce Secretary Wilbur Ross that happened in Beijing the previous two days. "The meetings focused on reducing the United States’ trade deficit by facilitating the supply of agricultural and energy products to meet China’s growing consumption needs, which will help support growth and employment in the United States," the statement said.

A Republican senator who opposed Donald Trump during the primary campaign and the Senate minority leader both reacted to New York Times reporting that the administration will roll back the seven-year export ban on Chinese telecommunications equipment giant ZTE. Sen. Marco Rubio, R-Fla., tweeted a link to the story, and said it is a great deal for China. China "crushes U.S. companies with no mercy & they use these telecomm companies to spy & steal from us. Many hoped this time would be different. Now Congress will need to act," he said.

House Ways and Means Committee ranking member Rep. Richard Neal, D-Mass., along with all the committee's other Democrats, asked committee Chairman Kevin Brady, R-Texas, to hold hearings on U.S.-China trade, calling administration officials as witnesses. The letter, sent May 24, says the administration is holding high-level meetings on trade with China, and members of Congress only know what's going on during those talks by following press reports. They said this is unacceptable, and said "press reports indicate an increasingly baffling set of circumstances and developments." They said that the messages from different officials conflict, including what Treasury Secretary Steven Mnuchin says and what President Donald Trump says about Chinese telecommunications equipment company ZTE and how the talks are going.

Consultations at the World Trade Organization have failed to resolve trade barriers to U.S. wine in British Columbia grocery stores, so the U.S. has asked for a dispute settlement panel to take up the issue, the U.S. announced on May 25. Consultations started last October. The issue is the stores require that imported wine be stocked in a separate building from the main store (see 1701180083). The news release announcing the panel request said that as far as the U.S. has been able to learn, no stores have made the investment to sell imported wines. American wines are still sold at liquor stores, which used to be the only place to buy wine in the province.

Appropriations bills for fiscal year 2019 that are moving through both chambers of Congress ignored the president's suggestion to cut the Harbor Maintenance Tax (see 1802150028), and aim to dedicate more funding for dredging, locks maintenance and jetty maintenance. The tax is currently $0.125 per $100 of cargo value. In the current fiscal year, the government is spending $1.4 billion out of the Harbor Maintenance Trust Fund. The House appropriations bill recommends increasing that to $1.6 billion; the Senate version recommends $1.53 billion. Steve Fisher, executive director of the American Great Lakes Ports Association, said, "$130 million more, that's quite a bit."

The Commerce Department has launched an investigation into the need for tariffs on cars and auto parts in a move widely seen as an attempt to pressure Mexico to accept a NAFTA rewrite. Commerce Secretary Wilbur Ross said on May 24 that "there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” and the department will explore whether by damaging the U.S. economy and reducing research in auto-related technology, the decline of domestic auto and auto part manufacturing therefore is a national security issue. Currently, SUVs and trucks face a 25 percent tariff, while cars and auto parts face a 2.5 percent tariff outside the NAFTA region, or if a Canadian or Mexican vehicle fails to meet a 62.5 percent rules of origin quota.

Sen. Joe Manchin, D-W.Va. largely agrees with President Donald Trump that the U.S. has been on the losing end of most trade agreements, Manchin said while speaking at an event on trade May 23 at the Heritage Foundation. Manchin said he's happy with the trade relationships the U.S. has with Canada and Europe, but, "other than that, we're very skeptical." He said he likes where adviser Peter Navarro is going and how U.S. Trade Representative Robert Lighthizer, approaches trade, but he doesn't like other views in the administration. "I think [Trump] has had a lot of infighting, which is to be expected, but it's the undecidedness right now that is causing a lot of inaction."

A bipartisan group of senators, led by the No. 2 man in Republican leadership, asked the treasury secretary, commerce secretary and U.S. trade representative not to loosen export controls for China as they consider how to narrow the bilateral trade deficit. The letter, sent May 22, said loosening export controls on sensitive technology "would bolster China’s aggressive military modernization and significantly undermine long-term U.S. national security interests." Including Sen. John Cornyn, R-Texas, Sen. John Thune, R-S.D., and Minority Leader Chuck Schumer, D-N.Y., 14 Republicans, 12 Democrats and Independent Sen. Angus King of Maine signed the letter. The missive also brings up the possible softening of sanctions on Chinese telecom giant ZTE: "In addition, we urge you not to compromise lawful U.S. enforcement actions against serial and pre-meditated violators of U.S. law, such as ZTE. Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the U.S. from a country like China that is ruled by a Communist dictatorship."

The Senate Banking Committee approved by a 23-2 vote on May 22 an amendment that would prohibit President Donald Trump from changing the seven-year export ban for ZTE -- or any other Chinese telecom company penalties -- until the administration tells Congress the company is no longer violating the law, and has not done so for a year, and is fully cooperating with investigators. Sen. Chris Van Hollen, D-Md., who introduced the amendment to the Foreign Investment Risk Review Modernization Act, said after the vote: "We know ZTE is a repeated and flagrant violator of U.S. laws -- there’s absolutely no question of their culpability. Yet the President of the United States is fighting to protect jobs in China at a company that may be spying on Americans and has been sanctioned by our government. This is deeply troubling, regardless of your political party."

More than 60 percent of the Senate's 51 Republicans sent a letter to U.S. Trade Representative Robert Lighthizer telling him a "take-it or leave-it strategy" of presenting a NAFTA rewrite at the same time as a withdrawal announcement would not be successful. "In the past, you have suggested that your goal is to achieve overwhelming bipartisan support for a modernized NAFTA. We believe this goal is only achievable through a strategy to constructively engage Members of Congress as required by TPA [Trade Promotion Authority] and without attempting to force a choice between negative outcomes," the letter says.