The Office of the U.S. Trade Representative announced that beginning in February 2020, quotas on imported washing machines will be administered quarterly. President Donald Trump decided to change how the quotas are allocated to “shore up the effectiveness of the relief provided in 2018 to U.S. manufacturers injured by surging imports of large residential washers.” The emailed press release, which came out one minute before the close of business on Dec. 20, said it was based on developments in the domestic washing machine industry since the safeguards went into effect. The International Trade Commission found that there was some improvement in the financial performance of domestic washing machine producers, increased production and employment, and progress in implementing adjustment plans. Imports have declined, but overall, sales have declined (see 1908080054). Foreign companies argue sales declined because of higher prices caused by the tariffs; Whirlpool said it was a consequence of fewer sales 10 years ago, since people tend to replace their washing machines on a 10-year cycle. In-quota tariffs are 18 percent and will drop to 16 percent in February, but out of quota tariffs are 45 percent.
The U.S.-Mexico-Canada Agreement passed the House of Representatives with a vote of 385-41. The implementing legislation will be taken up by the Senate in the new year. If the impeachment trial begins in early January, it is expected to wait until that trial is over.
The U.S.-Mexico-Canada Agreement passed in the House of Representatives with a vote of 385-41, with all but two Republicans and 193 Democrats voting yes. This was the biggest vote for a free trade deal in the House since the Canada Free Trade agreement in 1988, and many of the top Democrats in the House say it will serve as a template for future trade deals. It was a far more resounding “yes” than the original NAFTA vote of 234-200, when just 102 Democrats voted yes.
The World Trade Organization may have its first answer to what happens when a party appeals and there's no appellate body to resolve the dispute. The U.S., which killed the appellate body by not agreeing to appoint any replacements, is appealing a compliance report for a case in which India won the argument that the U.S. antidumping and countervailing case against Indian steel didn't fully follow trade law (see 14081205 and 1706090021).
The enactment of the U.S.-Mexico-Canada Agreement would increase revenues by $230 million a year in 2023 and $360 million a year in 2024, the Congressional Budget Office estimates. CBO projects that “certain imports of motor vehicles and parts” that currently enter the U.S. duty free under NAFTA would not be eligible under the stricter rules of origin in USMCA. It expects that some of those parts or vehicles would be replaced by domestic production, but some would be replaced by imports subject to tariffs, and thus, total customs revenue would rise. While there would be hundreds of millions spent in the first three years, primarily for monitoring environmental and labor compliance in Mexico, by 2024, that spending would be just $21 million, and would be partially offset by lower subsidies to dairy farmers, since CBO assumes they would have higher sales as a result of the deal.
Seven freshmen in the House -- all from traditionally Republican districts -- say that it's wrong for Senate Majority Leader Mitch McConnell to put off a vote on the U.S.-Mexico-Canada Agreement when he's complained for months that House Democrats are delaying a vote. “We are deeply concerned by your statements that the Senate will not take up the USMCA this year and that you refuse to pass any legislative items during January -- including the USMCA,” they wrote. They said the USMCA cannot end up in the Senate's “legislative graveyard,” as hundreds of other House-passed bills have. The letter, sent Dec. 17, was led by Rep. Cindy Axne, D-Iowa, and joined by Reps. Abby Finkenauer, D-Iowa; Joe Cunningham, D-S.C.; Angie Craig, D-Minn.; Anthony Brindisi, D-N.Y.; Kendra Horn, D-Okla.; and Susan Wild, D-Pa.
A bipartisan resolution supporting the administration's desire to get reforms to the World Trade Organization, but also urging that the Geneva delegation work with other countries, passed the House Ways and Means Committee on Dec. 17. Rep. Ron Kind, D-Wis., a leader on free trade in the Democratic caucus, co-authored the bill. He told fellow committee members that he is talking to the Senate to see if they will raise a similar resolution.
The House Ways and Means Committee, with near-unanimity, recommended the U.S.-Mexico-Canada Agreement go to the floor. A vote on the replacement for NAFTA is expected on Dec. 19. For about three hours, Democrats and Republicans praised the rewrite of North America's free trade pact, though many Republicans complained that it took a year to get the opportunity to vote for it.
The Craft Beverage Modernization Act, which covers beer, wine and spirits, will remain in effect through 2020, instead of expiring at the end of this year. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that the CBMA made it into a tax extenders package that was negotiated after midnight on Dec. 17. The provision allows importers and exporters a refund on alcohol excise taxes.
With the announcement of a phase one deal, Flexport chief economist Phil Levy said the promise is for stability in tariff levels -- even if the large majority of goods facing Section 301 tariffs will retain the 25 percent hike. But, he noted in a Dec. 16 webinar, many times over the last eight months, “a deal was announced, and it didn't last. That should sort of serve as a precautionary tale.” Levy, like many observers, doesn't believe that a phase two deal, that could lead to rolling back more tariffs, is likely in the next year.