Progress and New USMCA Proposal as House Dems Signal Possible Vote This Year

Posted on 12/09/2019 4:35 AM

China soybean imports at highest level in three months; China exports to U.S. down 23%


In today's updates:


* Where are the revived metal tariffs on Argentina and Brazil?
* House Dems & USTR Lighthizer are nearing a deal for Congress to vote on this year
* Democrats are reviewing a new USMCA proposal from Lighthizer’s office
* Mexico offers arbitration panels, but not U.S. inspectors, to enforce labor standards
* Possible changes would reduce period for exclusive protections for biologic drugs
* U.S./China Phase 1 talks: Same issues, same words
* VP Pence, China official comments on Phase 1 talks
* Soybean imports by China rose to the highest level in three months
Total Chinese exports in November dropped 1.1% from year ago; down 23% to U.S.
* Beijing orders state offices to replace foreign PCs and software
* Former Iowa Congressman Berkley Bedell dies at 98
* Three U.S House members announced they’re not running for re-election in 2020
* Senate last week confirmed eight nominees to U.S. District Court judgeships
* Dems will hold a presidential primary debate on Dec. 19 in Los Angeles
U.S. consumer credit use expanded more than expected in October
* Stephen Poloz, governor of the Bank of Canada, said he would step down
* Japan’s economy grew much faster than expected in the third quarter



— Heavy metal tariffs or a paper tiger? Remember last Monday when President Trump threatened reviving metal tariffs on Argentina and Brazil? That may be typical Trump jawboning. At this writing, no U.S. department or agency had taken official steps to implement these tariffs. Hmmm.


     Brazil accounts for the largest share of U.S. steel imports at 19%, or 2.8 million metric tons, of the total 11 million metric tons imported this year to date as of June, according to the International Trade Administration. The country is the largest exporter of a key semi-finished steel product, which is converted to finished steel by some U.S. steel companies and sold into the domestic market.


— USMCA update:

  • Members of Mexico’s Senate met key negotiators Sunday afternoon to deliberate on the latest version of the U.S.-Mexico-Canada Agreement (USMCA), said Majority Leader Ricardo Monreal. “I have spoken with Foreign Minister [Marcelo] Ebrard and Deputy Minister [Jesus] Seade about the advances in the U.S. ratification of USMCA,” Monreal said on Twitter.
  • Trump administration sent House Speaker Nancy Pelosi (D-Calif.) a proposal for changes to the deal for review, Bloomberg reported, citing people familiar with the talks.
  • Seade left USTR Bob Lighthizer’s office Saturday about midday and told reporters he plans to return to Mexico before traveling back to Washington for more talks on Monday. On Friday night, Seade told reporters he was optimistic a deal can still be finalized in 2019. “I’m confident this is going to reach home, but we’re working on it,” he said.
  • A last minute hang-up also emerged this past week over rules governing steel and aluminum content requirements in the auto sector, first reported by Politico. Mexican Foreign Minister Marcelo Ebrard said that changes to USMCA must respect his nation’s “red lines” as negotiators push to complete their work. Ebrard told reporters on Sunday he briefed the nation’s Senate on the position of President Andres Manuel Lopez Obrador’s government to reject a U.S. demand for American labor inspectors south of the border. He said a U.S. proposal for steel in cars to originate in North America would only be acceptable if implemented after more than five years, and a demand on aluminum is impossible for Mexico to meet. Seade, Mexico’s top negotiator, will communicate to the U.S. the points that are non-negotiable, and any changes will be addressed in a deal addendum, Ebrard said.
  • Ebrard and Seade briefed senators on other issues, including rules for the environment and biologic medicines. The Mexican Senate, which already ratified the accord in June, will stand ready to approve needed changes in the agreement, majority leader Monreal said after the briefing. “We haven’t brought any other topic into discussion, because 90% of the treaty isn’t subject to discussion or revision,” Ebrard said. “What we’re going to have is an addendum, and that addendum is with these red lines.”
  • House Republicans are sending a letter to House Speaker Nancy Pelosi (D-Calif.), urging her to put the USMCA implementing bill on the House floor before the end of the year. Rep. Mike Conaway (R-Texas), ranking member on the House Ag Committee, signed the letter.

— U.S./China trade policy update:

  • Same issues, same words: Progress is being made. China wants some existing tariffs reduced along with a pullback of threatened new tariffs on Dec. 15. The U.S. wants to keep existing tariffs in place for Phase 2 and Perhaps Phase 3 talks. China is balking at bulking up on U.S. farm product purchases. Sound familiar? It is. And all this come after President Trump eight weeks ago said Phase 1 was agreed to in principle and it just awaited being written. But issues have lingered since.
  • China comments. China’s assistant minister of commerce Ren Hongbin said Beijing is hoping negotiations can conclude on a trade deal soon. Ren advised the media to watch the Ministry of Commerce’s future press statements for more information. Ren said that China would “earnestly implement” the foreign investment law, relax market access for foreign investment, encourage foreign investment into emerging industries and new technologies. He also said that China will “push full liberalization of the services trade in the Greater Bay Area” and “add a batch of new cross-border e-commerce pilot zones.”
  • VP Pence comments. On Sunday, speaking to Fox News, Vice President Mike Pence said that “what China knows and what the world should know, the era of economic surrender is over… We took a strong stand and we’ve imposed tariffs on hundreds of billions of dollars worth of goods, and as the president has made clear, we’ll continue to take that path unless China is willing to step forward,” Pence said. “We’re negotiating a phase one trade deal that would make it possible for us to sell more agricultural goods into China. But the one thing you can know about President Trump is that he is always going to negotiate from a position of strength.”
  • Soybean imports by China rose to the highest level in three months after port congestion eased and more American beans cleared customs. China bought 8.28 million tons in November, the most since August, according to customs data released on Sunday. That is up 34% from October and 54% from a year ago. Imports from January to November fell 4.1% from a year earlier to 78.97 million tons. Edible oil imports in November rose to 1.06 million tons, the highest since 2012. That brings the total so this year to 8.63 million tons, a 56% increase from a year earlier, customs data show.
  • Total Chinese exports in November dropped 1.1% from a year ago, and to the U.S. they were down 23%, the customs administration said Sunday. That was the worst result for exports to the U.S. since February and the 12th straight monthly decline. Overall shipments had been expected to rise 0.8%.
  • Beijing ordered state offices to replace foreign PCs and software in a Buy Chinese move, another signal the two countries are becoming more disengaged for the future. Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years. Earlier this year, Washington banned US companies from doing business with Chinese telecoms equipment maker Huawei.

— Other items of note:

  • Former Iowa Congressman Berkley Bedell dies at 98. Family members say Bedell suffered a stroke on Dec. 4 and passed away at 98 years old on Saturday. Bedell represented Iowa’s 6th district in Congress from 1975 to 1987. He was born in Spirit Lake and launched the fishing tackle business Berkley and Company.

  • Three U.S House members last week announced they’re not running for re-election in 2020. On Dec. 4, Rep. Denny Heck (D-Wash.) announced he would not seek re-election to Congress in 2020. He did not give a reason for his retirement, but in a statement said he planned on writing at least two books. On Dec. 5, Rep. Tom Graves (R-Ga.) announced he would not seek re-election in 2020. In a statement, Graves cited a desire to spend more time with his family as a reason for the retirement. On Dec. 6, Rep. George Holding (R-N.C.) announced he would not seek re-election in 2020. Holding cited the redrawn congressional districts in the state as one of the reasons he was retiring. These retirements bring the total number of U.S. House retirements in the 2020 election cycle to nine Democrats and 22 Republicans.

  • Senate last week confirmed eight nominees to U.S. District Court judgeships. Overall, the Senate has confirmed 172 of President Trump’s Article III judicial nominees — two Supreme Court justices, 48 appellate court judges, 120 district court judges, and two U.S. Court of International Trade judges — since January 2017.

  • Democratic Party will hold a presidential primary debate on Dec. 19 in Los Angeles. It is the sixth of 12 Democratic primary debates scheduled for the 2020 presidential election. Candidates have until Dec. 12, 2019, to qualify by reaching a grassroots fundraising threshold of 200,000 unique contributors and a polling threshold of 4% support in four eligible polls or 6% support in two eligible state-level polls. As of Dec, 3, 2019, six candidates had qualified for the debate: Joe Biden; Pete Buttigieg; Amy Klobuchar; Bernie Sanders; Tom Steyer; Elizabeth Warren.

— Markets. The Dow on Friday rose 337.27 points, 1.22%, at 28,015.06. The Nasdaq gained 85.83 points, 1.00%, at 8,656.53. The S&P 500 moved up 28.48 points, 0.91%, at 3,145.91.


     For the week, Friday’s rally helped the S&P 500 garner a modest gain. The Dow and Nasdaq  were in the red for the week.


     U.S. consumer credit use expanded more than expected in October. U.S. consumer credit expanded $18.9 billion in October, according to the Federal Reserve, ahead of expectations for a rise of around $16.0 billion. Revolving credit expanded by $7.9 billion after contracting by $200 million in September. Nonrevolving credit increased by $11.0 billion after a $9.4-billion increase in September. The combination pushed total consumer credit up 5.5% compared with year ago, as revolving credit rose 8.8% and nonrevolving credit moved up 4.3%. The data comes as the US jobs update showed a bigger-than-expected increase in nonfarm payrolls in November. The willingness of consumers to expand their debt continues to keep them as a solid component for the U.S. economy.


     Stephen Poloz, governor of the Bank of Canada, said he would step down at the end of his first term in June 2020. The central bank has begun searching for a successor to Poloz, who was appointed in 2013. Likely front-runners include his chief deputy, Carolyn Wilkins, who would be the first woman to take the job.​


     The Japanese economy grew much faster than expected in the third quarter of 2019 despite a likely fourth quarter drop after a rise in consumption tax. Publishing its second estimate of gross domestic product based on more complete source data, Japan’s cabinet office revised the annualized growth rate up from 0.2% to 1.8%, largely due to to stronger business investment. The revised figure suggested the economy had gained some growth momentum ahead of an Oct. 1 tax rise.



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