Lighthizer begins effort to win over House Dems re: USMCA
— U.S./China trade policy update:
- Trump: In 'no rush' to reach deal on China but things going well in talks. President Donald Trump again on Wednesday indicated talks with China on trade issues are "going well" but also said he was in no rush to get a deal and might walk if the deal is not a good one for the U.S. “I think things are going along very well — we’ll just see what the date is,” Trump said at the White House. “I’m in no rush. I want the deal to be right. ... I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal."
- Bloomberg reports that any Trump-Xi meeting will be pushed back until at least April.
- As for the prospect that Trump could walk away from the deal, the president said, “I think President Xi saw that I’m somebody that believes in walking when the deal is not done and you know there’s always a chance it could happen and he probably wouldn’t want that." Trump said Wednesday that he’s “somebody that believes in walking when a deal is not done and there’s always a chance that could happen” noting that is probably why Xi wants a deal in hand before meeting with the president. “We can do it either way. We can have the deal completed and come and signed or we can get the deal almost completed and negotiate some of the final points,” Trump said. “I would prefer that, but it doesn't matter that much.“
- U.S. Trade Representative Robert Lighthizer was more guarded in remarks to the Senate Finance Committee Tuesday but expressed a hope the two sides may be a "few weeks away" from getting a trade deal.
- Indications are that China would like to see the deal completed before Trump and Chinese leader Xi Jinping meet to finalize it. But Trump said that does not have to be the case. “We could do it either way," he remarked. "We could have the deal completed and come and sign or we could get the deal almost completed and negotiate some of the final points. I would prefer that.”
- Trump is following the ongoing talks closely. He is meeting regularly with his top trade advisers and keeping close tabs on the progress of videoconferences between U.S. Trade Representative Robert Lighthizer and Liu He, China’s vice premier and a close ally of Xi.
- China is unlikely to publicly commit not to retaliate if the U.S. would reinstitute tariffs on China if they were found to be in violation of any accord, though a more informal arrangement might occur, said Hudson Institute China scholar Michael Pillsbury, who consults with the Trump administration. “There is a case to make aspects of the agreement confidential between the US and China,” he told the Wall Street Journal, pointing out that the two nations have signed covert agreements in the past. During the Reagan era, for instance, the U.S. quietly agreed to sell advanced weapons to Beijing so it could become a more powerful counterweight to the Soviet Union.
- President Trump “needs a win” on Chinese trade talks and is desperate for a deal, according to Gary Cohn, the former head of Donald Trump’s National Economic Council, according to remarks Cohn said in an interview with the Freakonomics Radio podcast, according to a transcript released Wednesday. Cohn said he maintains a “very amicable relationship” with Trump and that they’ve talked about the economy and personnel since he left the White House in March 2018. On trade with China, Cohn said the biggest questions are how to stop Chinese theft of intellectual property and copyright infringement. “The only big open issue right now that he could claim as a big win that he’d hope would have a big impact on the stock market would be a Chinese resolution,” Cohn said of a trade agreement. “Getting the trade deficit down I will never say is easy, but of the issues on the table, that’s relatively easier.” Link to CNBC article about Cohn's remarks — he lashed out against former colleagues Peter Navarro and Commerce Secretary Wilbur Ross and said Navarro among economists is the "only one in the world" who thinks tariffs work. Cohn also charged that Navarro and Commerce Sec. Wilbur Ross set up a secret meeting to inform steel and aluminum industry executives of tariffs that were coming their way.
- Treasury Secretary Steven Mnuchin could comment on trade talks with China when he testifies today before the House Ways and Means and Senate Finance committees, answering questions about Trump’s fiscal 2020 budget proposal and likely on more topics like talks with China.
- Always talkative Larry Kudlow, White House assistant to the president for economic policy and director of the National Economic Council, speaks late this afternoon about his advisory role with President Trump and his years working in the Reagan administration. The Ronald Reagan Institute will host the event. Kudlow frequently comments on the ongoing U.S./China trade talks.
— Lighthizer tries to win over House Democrats re: USMCA. It what appears to be the need for more than a few meetings ahead, U.S. Trade Representative Robert Lighthizer on Wednesday sought to win over House Democrats on the administration's U.S.-Mexico-Canada Agreement (USMCA) on trade. Lighthizer met privately with the House Democratic Caucus to address any concerns they have with the legislation, which has been criticized by liberal lawmakers over issues like the enforcement of its labor provision.
The labor issue involves whether Mexico can be held to provisions that require it to raise wages for some factory workers up to the equivalent of $16 an hour.
Some Democrats, including House Speaker Nancy Pelosi (D-Calif.), have said they are waiting for Mexico to pass a law that would overhaul the country’s labor structure to ensure workers have collective bargaining rights and secret votes for unionization. The Mexican Senate is expected to pass the necessary legislation next month, but some lawmakers are still concerned Mexico will backpedal on its commitments. The text of USMCA specifies that ratification could be delayed if Mexico doesn’t make the promised changes.
Concerns that Mexico will not adopt more-stringent labor provisions linked to USMCA was evident, with several expressing doubt about Mexico putting in place those reforms. "We’re not there yet," said Rep. Bill Pascrell (D-N.J.). "Mexico has to make some moves beforehand, to show good faith. We need that, first of all. If they don't act, there's no chance of getting the votes."
Demands by progressive Democrats may also become an issue, according to House Ways & Means Committee Ranking Member Kevin Brady (R-Texas), referencing their call for biologic drug provisions to be changed, labor reforms, enforcement of labor provisions and concern over provisions allowing oil and gas companies to use an investor-state dispute settlement process for investments in Mexico. "My worry is that the progressive caucus and others are still so deeply involved in this rush for impeachment that it's distracting them from a lot of the work that needs to be done over here," Brady told reporters. "One of them is modernizing this trade relationship with our two biggest trading partners."
Rep. Ro Khanna (D-Calif.) retweeted a demand that the White House reopen talks on pharmaceutical price regulations in the USMCA bill, adding "Let me be clear: Any Dem that doesn’t sign this letter is selling out to Big Pharma."
Other Democrats hailed the fact Lighthizer was willing to meet with them, labeling him more accessible than his predecessors. Perhaps importantly, Rep. Rosa DeLauro (D-Ct.) said Lighthizer was "listening" to Democrats and said "We want to get there" relative to USMCA.
While several Democratic lawmakers have pressed the administration to reopen talks with Canada and Mexico and used Wednesday's meeting to try again, the Trump administration rejected their requests, saying that neither it nor its trading partners are willing to restart talks, a point Lighthizer reiterated Wednesday.
Another key issue for the White House is that many members want the administration to exempt Canada and Mexico from its steel and aluminum tariffs before they'll back the deal, arguing they're hurting industries back home. "I hope to find a path to get USMCA trade agreement b4 congress but b4 that happens need to remove 232 tariffs I want 2help the president secure Congressional approval of strong USMCA," Sen. Chuck Grassley (R-Iowa) tweeted Wednesday, referring to Section 232 of the Trade Expansion Act. Lighthizer told lawmakers Tuesday during a Senate Finance Committee hearing that the administration is trying to find a way to lift the tariffs but did not indicate that the White House might simply exempt the countries from them. "On steel and aluminum, as you know, we’re in discussions with them and trying to find a way out of that dilemma for them and for us," he said.
Lighthizer said concerns over the enforceability of the pact could be addressed through forthcoming legislation to implement the deal, instead of reopening USMCA. Lighthizer also used the new administration of Mexican President Andrés Manuel López Obrador as part of his reasoning against reopening the pact. Lighthizer said reopening the deal could prompt the new populist Mexican leader, President Andrés Manuel López Obrador, to want big changes to areas that were considered settled.
— Other items of note:
Former Rep. Beto O’Rourke (D-Texas) is running for president. He lost a bid last year to unseat Sen. Ted Cruz (R-Texas). O'Rourke confirmed his candidacy in a video posted Thursday morning. In commenting on the new Democratic contender, a New York Times article (link) notes, “His decision jolts an early election season already stuffed with contenders, adding to the mix a relentless campaigner with a small-dollar fund-raising army, the performative instincts of a former punk rocker and a pro-immigrant vision to counteract President Trump's."
Why a long Democratic primary slugfest might help re-elect Trump, is an opinion item in the New York Times by David Wasserman, House editor at The Cook Political Report. Link.
The Senate is likely to vote today to overturn President Trump’s declaration of a national emergency to build a border wall. Four Republicans are set to join 47 Democrats to pass the measure, which would bar president Donald Trump from using a declaration of an emergency at the southern border to secure billions of dollars to build his border wall. The president is expected to veto the bill, which the House has already passed. On Wednesday, lawmakers voted for a second time to end American military assistance for Saudi Arabia’s war in Yemen and to curtail presidential war powers.
Expanding the definition of farm commodities exempt from certain trucking rules was introduced by Rep. Austin Scott (R-Ga.). The bipartisan bill, HR1673, would extend the exemption to drivers hauling aquaculture, floriculture and horticulture.
Some shipowners are betting the maritime world’s next great fortunes will be fueled by natural gas. A series of U.S. natural gas projects coming online in the next few years is being matched by surging orders for the specialized seagoing tankers to carry the energy product, the Wall Street Journal reports (link), as ship operators rush to take advantage of an expected big new stream of business. The marine companies are responding to big shifts in global energy markets, with countries seeking cleaner sources of power. “Shipowners jarred by sharp swings in oil markets in recent years see liquefied natural gas as a potentially steady source of profits, even with a big $175 million per tanker price tag. Many owners are targeting the vessels for spot markets on the belief that demand will keep pace with supply and daily rates will surpass long-term charter prices,” according to the WSJ article.
Former Florida Ag Commissioner Adam Putnam will be the new CEO of Ducks Unlimited, a nonprofit group that works to conserve waterfowl habitats. He starts April 1, the group announced Wednesday.
Walmart, the country's biggest seller of groceries, is facing pressure to push forward in delivery because Amazon is making inroads in grocery sales. Walmart has been mainly relying on a patchwork of independent companies. Link to WSJ article.
— Markets. The Dow on Wednesday rose 148.23 points, 0.58%, at 25,702.89. The Nasdaq advanced 52.37 points, 0.69%, at 7,643.41. The S&P 500 moved up 19.40 points, 0.69%, at 2,810.92.
After voting against a no-deal Brexit last night, Britain’s House of Commons will today call for the government to request an extension of the Brexit deadline, currently set for March 29 in accordance with Article 50 of the European Union treaty. European Council President Donald Tusk said he will push for a "long extension" if Britain needs it to "rethink its Brexit strategy." There's still no consensus about how long an extension should be, with diplomats having discussed periods ranging from three to 21 months.
China's government published its first detailed economic report of 2019. Activity was weak in many areas compared with a year ago. Industrial output growth slowed, new home sales fell and infrastructure investment came in below expectations — China’s industrial output growth for January and February slowed to its lowest level in 17 years. Unemployment in the world’s second-largest economy also edged up to 5.3%, from 4.9% in December. All this comes despite the Chinese stock market up by around 25% this year, making it the world’s top performer. The Shanghai Composite fell 1.2% overnight. Investments picked up pace, however, as the government fast-tracked more road and rail projects, while retail sales rose 8.2%. China generally combines January and February activity data in an attempt to smooth distortions created by the long Lunar New Year holidays.
The U.S. aims to slash Iran's crude exports by about 20% to below 1 million barrels per day from May to choke off Tehran’s main source of revenue, sources told Reuters. Sanctions waivers for most countries purchasing Iranian crude, including the biggest buyers China and India, would be renewed in exchange for pledges to cut combined imports. OPEC is also set to publish its monthly update on demand forecasts and production.