Changes In Administrations Bring Changes In Agency, Trade Priorities

With changes in administrations come changes in priorities. The incoming Biden/Harris administration will take office and have a number of trade issues on their hands to deal with from day one. The trade issues and relationships that are priority focus items within the first 100 days are the issues of COVID, vaccine distribution, adequate PPE supplies for frontline healthcare workers and economic relief for individuals and businesses. These are likely to consume the entirety of their focus at the outset.

Governing is about being able to walk and chew gum at the same time, so with that in mind, here are three issues they’re going to have to confront to plot a course forward.

China 301 duties

The additional Section 301 duties being paid on Chinese exports are due to an investigation and findings by the US Trade Representative. Section 301 refers to Section 301 of the Trade Act of 1974. A great explanation of this can be found on Wikipedia.

President Drumpf’s claims of who paid these duties aside, TOC saw the duties that our importer clients paid in increasingly larger amounts and the additional underwriting and collateral demands made by the companies holding their surety bonds. The original reasons behind the investigations—IPR theft and counterfeiting—remain with us today, especially as we read stories about nation states like China attempting to hack companies researching a COVID vaccine.

China’s complicated trading relationship with the world includes not just how they conduct business but the murky network of state-owned companies, antidumping and countervailing duty cases, treatment of Muslin Uighurs, and their increasingly iron-fisted grip on Hong Kong.

Reuters is reporting that the duties will likely stay in place at the beginning of a Biden administration to be used as a negotiating tool to bring China to the table on all the issues we mentioned above.

The people named to the posts of US Trade Representative and Ambassador to China will be critical.

The EU and the WTO

The World Trade Organization is where the US and China and the US and European Union have been sparring for the past four years. Most notably under the current administration are the retaliatory duties imposed by the US and EU upon one another in the issues of aircraft manufacturer subsidies—Boeing in the United States, Airbus in the European Union.

Contributing to the inability to bring closure was the conscious decision to hobble WTO’s appellate body, meaning decisions reached by the group stood without the opportunity for further adjudication. Here, the restoration of the WTO’s dispute mechanism will be key to remove duties on consumer and commercial products loved by citizens in both places.

RCEP and the missed opportunity of TPP

Over the weekend, fifteen countries—including China—ratified the Regional Comprehensive Economic Partnership at the annual ASEAN summit. The United States is not a signatory to this agreement, which covers 30% of the world’s GDP.

Quoting Wikipedia: “The trade pact, which includes a mix of high-income, middle-income, and low-income countries,^[5] was conceived at the 2011 ASEAN Summit in Bali, Indonesia,^[6] while its negotiations were formally launched during the 2012 ASEAN Summit in Cambodia.^[7] It will eliminate about 90% of the tariffs on imports between its signatories within 20 years of coming into force, and establish common rules for e-commerce, trade, and intellectual property.^[8]”

Flashback to four years ago when the two biggest decisions American voters and politicians were facing were their choice for President and whether or not the US should be in or out of the TPP. Americans chose a president, and the president chose to withdraw from the TPP.

The TPP, among other things, would have given the US an advantage to negotiate trade concessions from China. Instead of having the TPP as the vehicle, the administration instead wrung them out through punitive means at additional cost to American consumers and businesses, especially exporters.

Does TPP still have legs or life? As part of a wider focus on restoring American manufacturing through clean energy and a planned commitment by the government to buy domestically through its contracting process, new types of manufacturing will emerge, and the country will have a chance to export those products and services to a receptive global audience.

TOC Logistics monitors these changes for our customers

Among everything else we’ve seen this year was the implementation of the USMCA—proving that regardless of what is happening in the world, government, regulation and policy marches on. We will continue to watch the incoming administration and how they tackle domestic issues like hours of service for truckers, environmental mandates for commercial vehicles and dealing with expensive and time-consuming demurrage, detention and congestion issues in Southern California.

We strongly encourage our customers to follow us on social and watch for our frequent Market Advisories, where we tackle these important topics and provide guidance on how to prepare for the ever-changing supply chain landscape.