Washington Insider: Global Trade Negotiations and Fights

Well, it seems that international trade maneuvering is reaching into almost every corner of commerce and politics these days. For example, Bloomberg is reporting this week that Canada is seeking support from House Speaker Nancy Pelosi, D-Calif., against U.S. metal tariffs. Canadian Foreign Minister Chrystia Freeland said she met Pelosi and other Democrats on the sidelines of a global security conference in Munich on Saturday and that they took the opportunity to discuss President Trump’s tariffs on Canadian steel and aluminum imports, Canada’s retaliatory tariffs and the ratification path for the countries’ new trade deal. “I explained why Canada is so strongly opposed to them and why Canada believes they must be lifted,” Freeland told reporters. Canada has said it’ll lift its retaliatory tariffs, affecting about C$16 billion ($12 billion) in U.S. goods ranging from steel to ketchup, when the U.S. cancels its measures. Freeland delivered a similar appeal last week to Senator Chuck Grassley, R-Iowa, who chairs the chamber’s Finance Committee. She said she told him “that now that we have concluded our trade negotiation with the United States, that is all the more reason why those tariffs must be lifted.” Grassley said after meeting Freeland that he believes Canada won’t advance legislation to ratify the successor to the North American Free Trade Agreement if the steel and aluminum tariffs remain in place. Freeland declined to comment, while saying Canada is moving forward and that she’s in touch with cabinet colleagues and lawmakers about ratification. “We are very seized of the issue and we are working on it. In due course, we will present our plan for ratification of the new NAFTA,” she said. “Canada is definitely focused on our domestic ratification process and we feel we have it well in hand.” Canada has an election in October, meaning the current crop of lawmakers will likely adjourn in June. Freeland said she also spoke to Pelosi about two Canadians detained in China, Michael Kovrig and Michael Spavor. She also met with the president of the International Crisis Group, Kovrig’s employer, after he was seized by Chinese authorities on Dec. 10. Kovrig is on leave from a position in Canada’s foreign service. Kovrig and Spavor were detained after Canada, acting on a U.S. request, arrested Huawei Technologies Co.’s Chief Financial Officer Meng Wanzhou on Dec. 1 in Vancouver. Canada has since been trying to rally international support for their release, arguing that China arbitrarily seized Kovrig and Spavor in retaliation. The Canadian commentary was not the only trade-based development this weekend. U.S. markets had reacted favorably to reports of progress in U.S.-China talks late in the week. At that time, the overseas press as well as the U.S. administration reported progress in the negotiations.” For example, Chinese state media expressed cautious optimism a day after President Xi Jinping said a week of discussions in Beijing had produced "step-by-step" progress. Mr Xi made the comments at a meeting on Friday with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The People's Daily, the official paper of the ruling Communist Party, said in a commentary that Mr Xi's meeting with U.S. negotiators had affirmed progress made in previous talks and "injected new impetus into the next stage of the development of Sino-U.S. trade relations." The talks "have made important progress" for the next round of negotiations in Washington next week, the paper said in its domestic edition. "It is hoped the two sides will maintain the good momentum of the current consultations and strive to reach an agreement within the set time limit," it added. U.S. duties on $200 billion in imports from China are set to rise to 25% from 10% if there is no deal by March 1 to address U.S. demands that China curb forced technology transfers and better enforce intellectual property rights. An English-language editorial in the Global Times, which is published by the People's Daily, said news that China had consulted on the text of a memorandum of understanding (MOU) "shows the two sides have made unprecedented progress. The MOU and next week's talks both show that the seemingly endless China-U.S. trade negotiations, like a marathon, are making a final sprint," it said. The newspapers cautioned that any trade agreement reached would have to be in the interests of both countries. "There are still obstacles to be overcome and no one should underestimate how daunting a task the two sides face trying to resolve all the differences that have long existed between them in one clean sweep," the official English-language China Daily said in an editorial. Over all, political tensions over many things including budgeting for border barrier construction are at or near an all-time high, so only the most courageous are willing to forecast agreements in most economic areas. However, the fact that the U.S. and China can agree about even a negotiating process seems like good news, even if it faces future hurdles of many kinds. These are discussions producers should watch closely as they proceed, Washington Insider believes.