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Author: Subject: Made in USA and Trade Law thread

Maximum Peach



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  posted on 3/5/2018 at 09:31 AM
As the push for higher US content in Mexican and Canadian built autos, the head of the US team has to unexpectedly leave NAFTA talks in Mexico City to meet with the auto companies. Jesus. Don't do what they want, that is how we got these **** ty deals, by doing what the corporations want. You have what Mexico wants, you have what Canada wants, and you have what US and multinational corporations want. How about what the US workers want? That is the whole point of trying to renegotiate in the first place!

quote:
Technical discussions on auto content at the latest round of talks to rework the North American Free Trade Agreement were disrupted this week by the sudden departure of the head of the U.S. team for that issue, Jason Bernstein.

The three sides aimed to hold talks as soon as possible to continue addressing a U.S. proposal to raise the amount of North American content used under NAFTA, Smith said. The U.S. demand has been a major sticking point at the talks.

“It’s going to restart soon, not in this round, but we hope that there is a meeting at technical level next week to continue the talks,” Smith told reporters.

Officials said Bernstein returned to the United States for technical consultations with the auto industry, and Smith told reporters he had not returned to the talks in Mexico City.

https://www.reuters.com/article/us-trade-nafta-autos-meeting/nafta-talks-on -autos-eyed-for-next-week-mexico-negotiator-idUSKCN1GF0SY



This was supposed to be the final meeting with a revised agreement on the table by the end of this month. Seems like negotiations will need to be extended. Read they have only agreed on 5 of 30 "chapters" up for discussion.

The new tariff on steel and aluminum can be a bargaining chip, a concession the US can use in order to get something else in return.

 

Maximum Peach



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  posted on 3/5/2018 at 09:41 AM
Wilbur Ross made some rounds to media outlets last week, where he said:

“There’s about one ton of steel in a car, the price of a ton of steel is $700 or so, so 25 percent on that would be one half of 1 percent price increase on a typical $35,000 car. So it’s no big deal.” = $175 price increase.

And this is causing angst?


 

Maximum Peach



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  posted on 3/6/2018 at 07:46 PM
Oh, everyone is getting fired up on this "trade war". For some 40 years US corporations and foreign corporations alike have benefited from cheaper foreign labor and production costs for their products sold to the American consumer. Why are US wages stagnant? Blame trade agreements that serve the interests of international globalists and their influence in our government.

Cohen is gone. Good. Promote Navarro.

Economists view America simply as a market. We aren't just a market, we are a country who's strength and prosperity has suffered as a result of global economic theory. Time to turn the tables.

 

Maximum Peach



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  posted on 3/6/2018 at 08:27 PM
Assuming Navarro does take on a larger role, here is a good piece recent piece on him:

https://www.washingtonpost.com/news/josh-rogin/wp/2018/02/27/how-peter-nava rro-got-his-groove-back/?utm_term=.8af8cc33b2a4

 

Universal Peach



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  posted on 3/7/2018 at 09:04 AM
quote:
The problem is it also causes issues like this:

Electrolux puts $250 million US investment on hold over Trump's tariff hike

Sweden's Electrolux said it would delay a planned $250 million investment in Tennessee, after President Donald Trump announced tariffs on imported aluminum and steel.

Trump said the duties — 25 percent on steel imports and 10 percent on aluminum — would be formally announced next week.

The company is waiting to see the final details of the U.S. plans before making a final decision.


It will be interesting to see what impact the tariff will have on the legislation to improve the infrastructure. My guess it will make the needed materials more expensive.

 

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Maximum Peach



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  posted on 3/7/2018 at 12:01 PM
quote:
It will be interesting to see what impact the tariff will have on the legislation to improve the infrastructure. My guess it will make the needed materials more expensive.


If we are building the material for the infrastructure we need, it is a win-win. Why give some other country the jobs for the things we need? I'd rather have more people working and making good wages in my state and your state for our country.

GE just released a statement saying the potential input cost for them would be "minimal".

So much fear mongering is out there.

Let's circle back to Electrolux. They closed a plant in Greenville Michigan in 2006 and built a brand new plant in Juarez Mexico. Somebody making $20 an hour in Michigan, something you can support your family on, save and afford the things one needs, poof, gone, lost their job. Why? Did Electrolux want to be closer to the market in Mexico, did it make some logistical sense? No, they sell very few appliances in Mexico and Central America. Electrolux closed the plant and moved production to Mexico because it made financial sense and free trade with Mexico allowed them to do it where they could export appliances into the US for free. Based off of 2017 figures, over 32% of their sales are in the USA. No company can survive with losing 32% of their global sales. So what if we said "the only way you can sell your appliances in the USA is you have to build them here or you will be subject to tariffs on your imports". They would do what is necessary to sell to the American consumer and be competitive with their counterparts in the industry because we are an important market for them. It is our government's role to act in the best interest of our nation, not in what the interest of what Electrolux wants or any other multinational company and their bottom line.

It has taken decades to get where we are now and it isn't going to change in a few months or several years. Everyone is so entrenched with free trade goggles on, it is like sacrilege to do anything contrary. Well I don't like where free trade has taken us. Do you? That was a driving factor in my vote for Bernie Sanders and it was a driving factor in my vote for Donald Trump. Only political outsiders speak loudly on the damage free trade has meant for our country and our workers. I'm not surprised so many controlled by corporate interests and global economic theory act in such a way. But I am surprised that more regular people aren't voicing support. Well, actually they did, in part with their votes for Sanders and Trump in 2016. The message on trade they delivered is what we needed to hear and now we need action. And what do we get instead? Resistance. How can anything change, when everyone fights change.

I didn't vote for status quo, don't give me status quo.

 

Maximum Peach



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  posted on 3/7/2018 at 11:50 PM
Jesus Christ, Don Lemon just literally said "what if a can of coke costs $3 under this plan". An aluminum can costs .10-.11 cents each. If a can was made entirely from imported aluminum it would be 10% higher cost with the tariff. So now it costs 11-12.1 cents each. Well, that's it, we might as well sign our death warrant on that one folks.

So those pennies add up for producers, and the Beer Institute says it will "cost" $347 million. The beer industry is about a $108 billion dollar market, that $347mill makes what, under a half one %. And somehow the beer institute says 20,300 workers would lose their jobs because of this. Who takes these kinds of comments seriously? The price of beer isn't going up 10%. Production costs aren't going up 10%. One input component of the production process is going to be subject to higher prices and it is a minimal amount.

These corporations were just given windfall tax breaks and now they stand to lose some small portion of that gain with potentially higher input costs and we see them act like a spoiled child who throws a temper tantrum when they don't always get their way.

Goldman Sachs....How is GM and Ford going to lose a billion dollars each, when the steel component of a $30,000 car could increase less than $200? Are they eating all of it because they are nice guys and want to make less profit? It gets passed along, GM and Ford don't "lose it" any increase gets rolled into the car loan and $200 on a $30,000 buy ain't **** in the big picture of such an asset purchase. And if GM and Ford increase their purchase of domestic steel as that added capacity comes online they avoid any tax on imported steel. The more steel we produce the more competitively priced it becomes as plants get more efficient.

These assumptions are all wrong. What they are saying isn't just hyperbole, it is outright blatant lies.

 

Maximum Peach



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  posted on 3/27/2018 at 09:27 PM
Good resource for data on tires:

https://www.utires.com/articles/tires-made-usa-american-foreign-brands/

 

Maximum Peach



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  posted on 3/28/2018 at 10:09 PM
Revisions to the US-Korea Free Trade Agreement (KORUS FTA):
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/marc h/new-us-trade-policy-and-national

quote:
New U.S. Trade Policy and National Security Outcomes with the Republic of Korea

“The improved KORUS agreement reflects the President’s leadership in delivering more reciprocal trade outcomes benefiting U.S. workers, exporters, and businesses. The United States and Korea have strengthened an important economic relationship by agreeing to substantial improvements to KORUS that will help rebalance our trade, reduce our trade deficit, and expand U.S. export opportunities.” – U.S. Trade Representative Robert Lighthizer

President Trump continues to fulfill one of his key promises to the American people: to secure free, fair and reciprocal trade deals for the American worker.

The Republic of Korea is an important ally and key trading partner. Improving KORUS by rebalancing our trade and reducing the trade deficit will strengthen our national security relationship.

Since the United States – Korea Free Trade Agreement (KORUS) went into effect in 2012, the U.S. trade deficit in goods with Korea increased by over 73 percent from $13.2 billion to $22.9 billion (2017), while the overall deficit increased by 70 percent from $6.3 billion to $10.7 billion (2017).

Through negotiations to improve KORUS, the U.S. Trade Representative has secured changes that will reduce the trade deficit and ensure that KORUS is a good deal for U.S. workers and businesses.

PROCESS FOR KORUS AMENDMENTS AND MODIFICATIONS

As directed by the President and with authority provided under the terms of KORUS, the U.S. Trade Representative has worked to resolve issues through the Joint Committee process under the Agreement.

In July 2017, Ambassador Lighthizer initiated trade discussions with Korea, leading to special sessions of the KORUS Joint Committee in 2017 and further negotiations for KORUS amendments and modifications in 2018.

Once completed, the amendments and modifications to KORUS will undergo the United States’ and Korea’s respective domestic review procedures. For the United States, modifications to the U.S. tariff schedule will undergo consultation and layover procedures provided under the implementing act for the KORUS Agreement, which include a 60-day consultation period with Congress.

2. KEY NEW KORUS FTA OUTCOMES

In these discussions, the United States achieved steps to improve the large trade deficit in industrial goods and to address KORUS implementation concerns that have hindered U.S. export growth.

U.S. Truck Tariffs: Korea will extend the phase out of the 25% U.S. tariff on trucks until 2041, or a total of 30 years following the implementation of the KORUS FTA in 2012. (currently scheduled to phase out by 2021).

Growing U.S. Auto Exports: Exports of U.S. motor vehicles to Korea will be improved through the following steps:

Greater Access for U.S. Exports: Korea will double the number of U.S. automobile exports, to 50,000 cars per manufacturer per year, that can meet U.S. safety standards (in lieu of Korean standards) and enter the Korean market without further modification.

Harmonization of Testing Requirements: U.S. gasoline engine vehicle exports will be able to show compliance with Korea’s emission standards using the same tests they conduct to show compliance with U.S. regulations, without additional or duplicative testing for the Korean market.

Recognition of U.S. Standards for Auto Parts: Korea will recognize U.S. standards for auto parts necessary to service U.S. vehicles, and reduce labeling burdens for parts.

Improvements to CAFE Standards: Korea will expand the amount of “eco-credits” available to help meet fuel economy and greenhouse gas requirements under the regulations currently in force, while also ensuring that fuel economy targets in future regulations will be set taking U.S. regulations into account and will continue to include more lenient targets for small volume manufacturers.

Customs Improvement: Korea will address long-standing concerns with onerous and costly verification procedures through agreement on principles for conducting verification of origin of exports under KORUS and establish a working group to monitor and address future issues that arise.

Pharmaceutical Reimbursements: Within 2018, Korea will amend its Premium Pricing Policy for Global Innovative Drugs to make it consistent with Korea’s commitments under KORUS to ensure non-discriminatory and fair treatment for U.S. pharmaceutical exports.

3. CURRENCY AGREEMENT

The U.S. Department of the Treasury is leading discussions on currency with Korea’s Ministry of Strategy and Finance.

An agreement (memorandum of understanding) is being finalized on robust provisions to prohibit competitive devaluation and exchange rate manipulation in order to promote a level playing field for trade and investment. Strong commitments on transparency and accountability are included in the provisions.

4. OUTCOMES FOR SECTION 232 EXEMPTION FOR KOREA

The President’s action under Section 232 of the Trade Expansion Act of 1962, as amended, is designed to protect U.S. national security given the massive and persistent global excess capacity for steel and aluminum and the threatened impairment of U.S. national security from imports of such products.

As the President’s proclamations state, the United States is willing to work with any country with which we have a security relationship to find alternative ways to address the threatened impairment of the national security caused by imports of steel and aluminum. The United States has a strong and enduring security relationship with Korea.

U.S. negotiations with Korea have resulted in a satisfactory alternative for addressing U.S. national security concerns with respect to steel imports.

Korean imports of steel products into the United States will be subject to a product-specific quota equivalent to 70% of the average annual import volume of such products during the period of 2015-17. This will result in a significant reduction in Korean steel shipments to the United States.




Korean news sources if you feel so inclined:
http://www.koreatimes.co.kr/www/biz/2018/03/367_246213.html
http://www.koreatimes.co.kr/www/biz/2018/03/367_246238.html


 

Maximum Peach



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  posted on 3/28/2018 at 10:24 PM
The key outcomes on autos may not appear to be significant to anyone not familiar with how South Korea discriminates against imported autos (both European and US) through nontariff barriers. Ford VP of International Government Affairs testified before the Senate and detailed the barriers US auto companies faced even after the 2012 KORUS was enacted. Here is the link:
https://www.finance.senate.gov/imo/media/doc/Ford%20Testimony%20for%20U%20S %20%20Senate%20Hearing%20on%20KORUS.pdf

So this revision addresses some of those concerns.

The large tariff on Korean light/mid-sized trucks may appear to be a nonissue. The fact that no truck is currently imported from Korea doesn't mean that Korean auto companies were not only considering it, the Hydunai Santa Cruz had been greenlighted for the US market (imported). It is difficult for trucks like the Dodge Dakota, Chevy Colorado and GMC Canyon and the 2019 Ford Ranger to be viable and profitable as evidenced by their discontinuation and in some cases reemergence. Keeping the punitively high tariff in effect until 2041 (instead of 2021 from the prior agreement) gives them more breathing room (as it does for Japanese autos). News reports have Hyundai's Korean labor union is rather upset at this change. Hyundai could build this truck here however with US labor if they so chose.

Additionally, South Korea had not named a currency manipulator, however they have been on the watch-list. Further transparency on this issue will allow the US to file any potential grievances if necessary in the future.

With US beef and pork exporters viewing South Korea as a critical market, no changes were made from prior KORUS FTA. The US is the #1 supplier for beef in S Korea and #2 in pork. S Korean farmers have been known to protest over US beef imports. While no new access or favorable changes were made to US Ag, they did not lose any ground either.

Perhaps most importantly related to recent news is the aluminum and steel tariff issue. South Korean steel will be capped at 70% tons of average and face a tariff schedule after that. The aluminum tariff will remain in effect. This is concerning as Chinese steel has been shipped via S Korea in order to avoid one of the many existing direct tariffs on Chinese steel. While this may limit some of what China can dump in the US via S Korea, it certainly doesn't stop it. A tariff is better than a quota. But a quota/cap is better than nothing and more acceptable to corporations and trading partners - so I suppose it is a compromise. And I'm unsure the US would've gotten the concessions in the auto category without a concession of our own on steel. Interesting that while this idea had been floated last year, the tariffs on aluminum and steel, that the announcement came towards the end of the KORUS renegotiation. A wild card perhaps. Atleast we got something. I just hope it doesn't undermine the what the commerce department was trying to do in curtailing Chinese overcapacity and dumping.


 

Ultimate Peach



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  posted on 4/4/2018 at 04:27 AM
Looks like we have a good old fashioned trade war going on. China hitting back at the US where it will hurt the most, agricultural goods, airplanes, cars. Not sure who is going to win this trade war, but investors don't seem to like it. I'm guessing American workers won't be benefiting as much as the president thinks as well.
 

Maximum Peach



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  posted on 4/4/2018 at 07:11 AM
quote:
Looks like we have a good old fashioned trade war going on. China hitting back at the US where it will hurt the most, agricultural goods, airplanes, cars. Not sure who is going to win this trade war, but investors don't seem to like it. I'm guessing American workers won't be benefiting as much as the president thinks as well.


I laughed a little this morning because China is the bad actor here. They are the one that steals intellectual property. We punish them for it and then they want to punish us back. We are the ones retaliating to their action first.

This seems like it is bound for either a WTO ruling or some new US-China trade negotiations.

Here is something interesting, deficit in traded goods with China since 1985. I know it is goods only, we carry a small surplus in services, about $38 billion in 2016. The deficit in goods by contrast was $347 billion. Take a look: https://www.census.gov/foreign-trade/balance/c5700.html

1985 was a long time ago, but we essentially had balanced trade with China, a mere 6 million dollar deficit. In 1995 the deficit had grown to $33.8 billion with exports only growing by 3x, imports grew by 12x. Ten years later in 2005 the deficit stood at $202 billion, 2015 $367 billion deficit. And you look at the growth rate that our exports from 1985 to current: $3.8 billion to 2017 $130,369 billion exports compared to their imports growing from 1985's $3.8 billion to 2017 $505,597 billion.

Markets do what markets will do. They like free flow of capital, free flow of labor, free flow of goods and services. They do not like disruptions and they do not like the unknown. Certainly we shouldn't have investors set our trade agenda. At the very least, we have an administration who is taking on these trade abuses and theft. Other countries are not playing by the rules on trade and commerce. So what do we do? Just roll over like we have for decades? That only leads to more of the behavior as it essentially condones it. Sure China, violate our patents, we won't do anything about it.

[Edited on 4/4/2018 by nebish]

 
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