Japan and Peru seek early implementation of TPP.

ancient architecture city clouds

Photo by Pixabay on Pexels.com

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.

architecture building buildings business

Photo by Pixabay on Pexels.com

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.

italian italy t shirts

Photo by Skitterphoto on Pexels.com

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.

white house

Photo by Aaron Kittredge on Pexels.com

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.

US-Rwanda trade war?

1024px-Flag_of_Rwanda.svg

Flag of Rwanda via Wikipedia

Unexpected title I know, usually we associate “trade war” with “China”, however, the Trump administration has given Rwanda until May 28th to reduce the tax on imported clothes (the US is a major exporter of second hand clothes to Rwanda – ever wonder what happens to those “clothes and shoes” that are donated to the parking lot donation boxes?)

Background:
In 2016, the East African Community (EAC) composed of Kenya, Tanzania, Rwanda and Uganda increased tariffs on used clothing. Specifically, Rwanda increased the duties by 20 cents to $2.50 per kilogram. This 20 cent increase is at risk of hurting Rwanda’s export benefits under the US African Growth and Opportunity Act (AGOA). The AGOA allows certain African countries (like Rwanda) duty-free access to the US market for 6,500 exported products. Since AGOA was passed, duty-free exports to the US from AGOA qualified countries have increased 400% to over 1.0 billion since the law was passed.

AGOA Products:
A full list of those products can be found here.

The Trump administration is threatening Rwanda with losing certain benefits under the AGOA after a compliant was filed last year from the Secondary Materials and Recycled Textiles Association (SMART), a US-based organization which represents companies that collect and resell Americans’ used clothing. SMART claims the Rwanda tariffs have a big impact on the $1 billion dollar used clothing export industry.

Arguments from both sides:
SMART claims the Rwandan tariffs hurt their business while poor Rwandans also claim the increased prices of second hand clothes in Rwanda impact their ability to buy clothes at affordable prices. However, Rwanda’s government claims an increase in second-hand clothing prices will make locally made Rwanda clothes more price competitive. If the tariffs increase second-hand clothing prices and move people towards purchasing new Rwandan made clothes, the Rwandan government claims more factories will be built, more jobs will be created and the economy will improve.

What will happen?
Check back on May 28th, I will update as soon as I find anything. If anything, I’m expecting China to fill the void. A cursory search on Alibaba for “used clothes in bales” shows lots of offerings targeted for export to East Africa and the general African market.

US and China agree to end trade war.

night skyline skyscrapers shanghai

Photo by Manuel Joseph on Pexels.com

According to aMay 19th article from the Agence France-Presse (AFP), China’s Vice-Premier Liu He announced the US and China “reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other”. The AFP article cited Chinese state media for their article and here is the Cliffs Notes version:

1. Both the US and China will stop increasing tariffs against each other.
2. China agreed to increase purchases of US goods and services.
3. Joint statement did not address reducing the trade deficit with China.
4. New trade cooperation to medical care, high tech products and finance.
5. Each part will cooperate on protecting intellectual property rights

Will update as more news becomes available.

Harley Davidson claims new factory in Thailand a result of US withdrawal from the TPP.

pexels-photo-674048.jpeg

Credit: Pexels (free stock photos)

According to a Bloomberg article published April 24, 2018, Harley Davidson motorcycle maker opted in on building a factory in Thailand after the Trump administration withdrew US participation in the Trans-Pacific Partnership (TPP). In the first publicized impact of the US withdrawal from TPP, Harley Davidson CEO Matt Levatich indicated the factory in Thailand was “necessary to access a very important market”.

Additionally, the impact of leaving the TPP was also felt locally for the 260 US jobs lost due to the closure of the Missouri plant amind slumping sales in the US.

As a counterpoint to the article – the article does specify that Harley Davidson has seen sales decreasing in 13 of the last 14 quarters. If accurate, the sales declines started long before the TPP was even discussed and long before the US withdrew from participating in the TPP.

It is further important to note that correlation does not mean causality as Harley Davidson sales in the Asia Pacific region were 32,258 in 2015; 32,889 in 2016 and decreased to 30,348 in 2017. Sales decline of Harley Davidson in Asia occurred well before the US withdrew from the TPP.

I believe the US withdraw from participation in the TPP was used by the CEO to justify two unpopular moves – the building of a factory in Thailand and a closure of the Missouri plant.

Does President Trump want the US to become the 12th TPP member?

pexels-photo-906982.jpeg

According to a Daily Caller website article published today, President Trump asked Ambassador Robert Lighthizer and National Economic Council director Larry Kudlow to look into rejoining the trans-pacific partnership. The Daily Caller cites Senators Ben Sasse and Pat Roberts as the source of the news.

Sasse noted that Trump “deputized” Kudlow to “go get it done” and explore the possibility of rejoining TPP as the 12th party now that the other 11 nations have struck a deal. “It might be easier for us to join now, as opposed to long process,” he elaborated.

No other details are mentioned in the article but updates will be posted they are available.

US-Bahrain Sign Memorandum of Understanding on Trade in Food and Agriculture Products.

Flag_of_Bahrain_(3-2).svg

Flag of Bahrain (credit Wikipedia)

According to a press release posted on Monday, April 9th – the Office of the U.S. Trade Representative announced that the United States and Bahrain have signed a Memorandum of Understanding (MOU) on Trade in Food and Agriculture Products. One highlight of the MOU is the increase in certainty and enhanced cooperation on requirements for U.S. exports of food and agriculture products to Bahrain, and enables more opportunities for the United States and Bahrain to continue joint efforts to facilitate bilateral trade in food and agriculture products.

The MOU also says indicated that Bahrain will continue to accept existing U.S. export certifications for food and agricultural products. Accepting current export certifications will save U.S. exporters the cost of new certifications. The MOU also discussed increasing the export of food and agricultural products from the United States to Bahrain.

A full copy of the US-Bahrain MOU can be found here.

Renegotiated KORUS FTA results in changes more favorable to US companies.

pexels-photo-373290.jpeg

According to the Office of the United States Trade Representative website, the Trump administration has negotiated additional favorable terms of the United States – Korea Free Trade Agreement (KORUS) that went into effect in 2012.

Fulfilling part of his campaign promises, President Trump has re-negotiated the KORUS with these (and many more) favorable changes to US companies:

1. Korea will double the number of US automobile exports to 50,000 cars per manufacturer per year.

2. US automobile exports to Korea that meet US safety standards can enter the Korean market without further modification. This lowers the cost of US cars being sold in Korea as additional testing and modifications are not needed before the US cars are sold in the marketplace.

3. Korea will recognize US standards for auto parts to service US vehicles in Korea, this reduces the labeling burden for US parts manufacturers.

4. Korea will amend their Premium Pricing Policy for Global Innovative Drugs to ensure non-discriminatory and fair treatment for US pharamceutical exports.

5. Korea imports of steel products into the US will be subject to a product-specific quota equal to 70% for the average annual import volume of such products during the years 2015-2017, resulting in reduction of Korean steel shipments to the US.

If you have any questions regarding the KORUS or other trade and customs law issues, feel free to contact David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.