Trump may end special trade status with Hong Kong

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According to Bloomberg – the U.S-China Economic and Security Review Commission recommended Congress to reassess Hong Kong’s special trading status for sensitive US technology imports. Since 1992, the US-Hong Kong Policy Act of 1992 treats Hong Kong as fully autonomous for trade and economic matters even after Hong Kong was returned to China in 1997. As such, Hong Kong has not been impacted by the current China tariffs and is also supported by the US in the WTO.

The report indicated that Beijing’s actions toward Hong Kong “continue to run counter to China’s promise to uphold Hong Kong’s autonomy”. The report further states that President Trump could issue an executive order suspending these privileges to Hong Kong if he believes Hong Kong is not autonomous from Beijing.

If President Trump were to revoke the special trade status with Hong Kong regarding exports of dual-use technology (technology that can be used by consumers and the military) to Hong Kong.

The Bloomberg article quoted Hong Kong legislature member, Felix Chung: “The Western community would look at Hong Kong with different eyes and may not even trust Hong Kong. The business sector cannot take this kind of risk.”

Will follow up with more updates if and when available.

Democrats demand changes to USMCA.

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According to Bloomberg – several Democrat lawmakers demand changes be made to the USMCA before they will support the new agreement to replace NAFTA. These changes will likely need to be negotiated if approval can occur as Democrats have new clout after seizing control of the House of Representatives following the midterm elections earlier this month.

The new USMCA agreement was reached at the end of September and one part of the agreement strengthens independent unions but some Democrats say the method to enforce the rules is inadequate.

Other terms of the agreement require at least 40% of car production to come from factors paying a way of $16 per hour or higher while also allowing the US greater access to Canada’s dairy market.

Bloomberg cites that Democrats may not want to give Trump a deal leading into the 2020 elections while Trump could withdraw the US from NAFTA if the Democrats do not work with him. Check back for more details as they become available.

Feel free to contact David Hsu to see how the new USMCA may impact your business: (832) 896-6288 or by email at dhsu@givensjohnston.com.

Trans-Pacific Partnership will come into force December 2018

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When the terms of the Trans-Pacific Partnership (TPP) was agreed to in March 2018, the largest free-trade agreement in Asia would become effective upon ratification by six out of the 11 participating countries.

On Tuesday October 30th, Australia became the sixth country to ratify the pact meaning tariff cuts will take place as early as December, almost 2 years after President Trump withdrew the US from talks. Brunei, Chile, Malaysia, Peru and Vietnam have yet to ratify the deal.

It is estimated the new TPP trade deal will remove tariffs on an estimated 95% of goods traded among the 11 member countries and a combined GDP of $10 trillion.

If you have any questions how the new TPP deal may impact your business, feel free to contact experienced trade attorney David Hsu at any time, 832.896.6288 or by email at dhsu@givensjohnston.com.

US and Canada working towards NAFTA agreement.

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According to Bloomberg, the US and Canada are working on keeping Nafta an agreement between the US/Mexico and Canada.

Bloomberg quotes Mexican Economy Minister Ildefonso Guajardo as saying the US and Mexico are postponing publishing the text of their two-way trade deal in the event the US and Canada reach an agreement.

 

US and Japan will negotiate a free trade agreement.

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During the UN meeting this week, the US and Japan agreed on Wednesday to negotiate a separate bilateral trade agreement between the two countries. While Japan is part of the Trans Pacific Partnership, the agreement by Japan to negotiate may be an effort to avoid the risk of tariffs on Japanese goods to the US – especially automobiles. This agreement to negotiate is a shift from Japanese economic policy as in the past Japan has not expressed interest in talking to the US.

 

United States-Mexico Trade Agreement

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The US and Mexico reached a tentative agreement that overhauls the North American Free Trade Agreement.

Part of the agreements reached between the parties include:

  1. Stricter rules for Mexican car exports to the US – including a requirement that 75% of the content be made in North America and 40-45% of the content made with workers earning at least $16/hour (three times more than Mexico’s minimum wage). This has the goal of discouraging companies to relocate to lower wage Mexico.
  2. Mexico has agreed to pass a law giving workers the right to union representation, and to adopt labor laws that meet UN standards.
  3. Certain steel and aluminum must be sourced in North America
  4. New rules to country of origin for textiles, chemicals, industrial goods.
  5. Intellectual property, copyright holders will have copy right protection in markets of all member countries.
  6. Digital trade, tariffs will be prohibited for digital products that are distributed electronically.
  7. Agriculture, the US and Mexico agreed not to impose tariffs on each other’s agricultural goods and not to use export subsidies.

Call David Hsu if you have any further questions on the new U.S.-Mexico Trade Agreement at 832.896.6288 or by email at dhsu@givensjohnston.com.

Japan and Peru seek early implementation of TPP.

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According to Retuers, Japan and Peru’s foreign ministers are working on an early implementation of the Trans-Pacific Partnership to promote free trade between the two countries. Currently there are 11 members to the TPP. While an agreement has been reached between the parties, the implementation is not yet effective until enough countries ratify the agreement.

Japan has already ratified the pact, but 5 more countries need to ratify before the TPP will take effect.

One main reason for the Japan, Peru efforts may be due the year 2019 marking the 120th anniversary of Japanese immigration to Peru.

If you have any TPP questions or other trade, import, or customs questions, contact David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Singapore ratifies trans-pacific trade deal.

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Channel News Asia reported last Thursday that Singapore ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Originally known as the Trans-Pacific Partnership, the name was changed after the Trump Administration withdrew US support for the TPP after some members would not agree to US terms regarding pharmaceuticals and intellectual property protections.

Since the new CPTPP was created, only 3 nations have ratified the agreement (with Mexico and Japan as the only two countries to ratify the agreement. However, last Thursday, Singapore became the third after signing the CPTPP.

Terms of the CPTPP agreement concluded in January 23rd of this year and signed on March 8th. There are still 8 more countries that need to sign in order to ratify the treaty. Once all countries sign, the CPTPP will be in force 60 days later.

Italy will not ratify EU/Canada trade deal.

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The Italian government has threatened not to ratify the EU/Canada trade deal titled: the Comprehensive Economic and Trade Agreement (CETA). CETA would be the largest trade deal since the EU/South Korea trade agreement in 2011.

The main reason for Italy’s opposition to the EU/Canada trade deal is the lack of protection for Italy’s specialty foods. The EU/Canada trade deal featured Protected Designation of Origin (PDO) and Protected Geographical Indication (PGI). Under CETA, Canada has recognized more than 40 Italian PDO and PGI labels out of a total of 292 foods.

Check back as more news becomes available.

Section 301 Duties to be announced by June 15, 2018.

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According to a Whitehouse.gov statement released today (May 29, 2018) titled: “Statement on Steps to Protect Domestic Technology and Intellectual Property from China’s Discriminatory and Burdensome Trade Practices” found here, the US will impose a 25% tariff on $50 billion of goods imported from China “containing industrially significant technology, including those related to the “Made in China 2025” program.  The final list of covered imports will be announced by June 15, 2018, and tariffs will be imposed on those imports shortly thereafter.

What is the “Made in China 2025” Program?
Made in China 2025 (Chinese: 中国制造2025) is a plan issued by Chinese Premier Li Keqiang in May 2015 to make China more self-sufficient and a manufacturing superpower in high-tech industries. An English version of the initiative can be found here.

What is Section 301?
Section 301 of the U.S. Trade Act of 1974, authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.

Section 301 is worded in general terms and allows for broad discretion from the President.

What are other points mentioned in the press release?

  1. There will also be other restrictions and increased export controls for Chinese persons and entities and will be announced on June 30, 2018.
  2. The US will continue litigating in the WTO for violations of intellectual property against China related to licensing of intellectual property. The US filed the case with the TWO on March 23, 2018.

Check back here on June 15, 2018 for the final list and tariff amounts to be imposed on the goods from China. If you have any questions how these Section 301 tariffs will impact your business, contact David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.