Dear Members and Friends:
Our inbox has gotten filled with a number of reports, mostly trade, trade policy, and USMCA related—with an update on Brexit activity. We’ll break them down for you. And remember, all of the links contained in past Updates can be found at www.usmcocma.org/resources.
2023 US Trade Policy
Our previous Updates looked at the outlook from independent, non-governmental organizations. The USTR just released its annual review of trade in the previous year and trade policy going forward — “2023 Trade Policy Agenda and 2022 Annual Report of the President of the United States on the Trade Agreements Program.” The 354-page document contains a lot of useful information in addition to trade policy objectives. However, beginning with that, there are five initiatives that we have reported on before:
1. Advancing a Worker-Centered Trade Policy
2. Re-aligning the US-China Trade Relationship
3. Engaging with Key Trading Partners and Multilateral Institutions
4. Promoting Confidence in Trade Policy Through Enforcement
5. Promoting Equitable, Inclusive, and Durable Trade Policy and Expanding Stakeholder Engagement.
Although it is a lengthy report, there are a number of interesting sections:
New initiatives including the Indo-Pacific Economic Framework for Prosperity, the United States–European Union Trade and Technology Council, and the Americas Partnership for Economic Prosperity
Sections 201 and 301 activities
WTO and FTA enforcement
Annex of all of the US trade-related agreements by country
USMCA Disputes
In the previous Update, a yet-to-be-resolved issue involving Mexico’s decree on December 31, 2021, that calls for a phase-out of use of both glyphosate and genetically modified (GM) corn for human consumption in the country by January 31, 2024, was discussed. There are two new documents that indicate the matter may be moving closer to a dispute resolution panel.
In the first report, “Where Could the US-Mexico GM Corn Dispute End Up?”, Ohio State University details the issues and then provides estimates on how Mexico’s decree could affect the corn market in Illinois and Iowa. They find that, if the decree stands, there would likely be a ripple effect as additional supplies are diverted to the domestic market, driving down corn prices. Also, it would introduce considerable regulatory uncertainty. This would also be a major test for the Sanitary and Phytosanitary Measures chapter of USMCA.
The second document is a letter from USTR Katherine Tai to Mexico’s Secretary of Economy on March 6, “USTR Letter to Secretary Raquel Buenrostro.” Tai’s letter documents the inconsistency of the decree to a wide variety of SPM obligations already made by the Mexican government and ends by stating, “We look forward to fixing a mutually convenient date to hold the technical consultations with the appropriate Mexican representatives and authorities within 30 days of Mexico’s receipt of this request, with the aim of resolving the matter cooperatively if possible.”
On the positive side, the USTR and the Department of Labor released a note, “United States Announces Successful Resolution of a Rapid Response Mechanism Petition Regarding a Unique Fabricating Facility in Mexico,” on April 23. The announcement marks the eighth facility in which the United States has successfully used the Rapid Response Mechanism (RRM) to benefit workers in Mexico. The review took place and was completed about ten weeks after the petition of the “Transformation Union” in Queretaro. USTR and the Secretary of Labor co-chair the Interagency Labor Committee for Monitoring and Enforcement (ILC), which is tasked with reviewing RRM petitions within 30 days after they are received.
Section 232 and 301 Tariffs
The US International Trade Commission has released a report, “Economic Impact of Section 232 and 301 Tariffs on US Industries.” It provides a history of the statutory provisions and recent investigations under the two tariff items and also details the products and countries covered by section 232 tariffs imposed on US imports of steel and aluminum articles and section 301 tariffs imposed on US imports of certain products originating in China as well as the applicable duty rates. The report then details the economic effects of Section 232 tariffs on the steel, aluminum, and downstream industries and the effects of Section 301 tariffs on ten separate industries. Many figures and tables are provided.
Near-Shoring Risks
With the recent attention and activity being given to “near-shoring” by companies in the US, the Economics Intelligence Unit (EIU) has issued a report, “Mexico Operational Risk Review,” outlining five scenarios that US organizations should be watching for this year. They are:
Governmental monopolistic practices – high probability, very high impact
Organized crime activities – very high probability, high impact
Energy policy disputes – high probability, high impact
Passage of proposed electoral reforms – moderate probability, high impact
Increased anti-government protests – moderate probability, high impact
Mexico Trade and Investment
Business Development Partners’ “Mexico Monthly Economy and Politics Brief” issues for February, March, and April are available here. The briefs cover economic and political news with details on a wide range of recent industrial investments. In general, the news is fairly upbeat, highlighted by “Mexico closed 2022 as the United States’ second largest trading partner, behind Canada and ahead of third place China. Mexico’s exports to the US exceeded US$454.9 billion last year, representing growth of 18.3% over the 2021 total.”
Brexit Update
For those who have been following the twists and turns of Brexit, the Northern Ireland Protocol has continued the difficulties of the post-Brexit settlement for Northern Ireland. On February 23, UK Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen shook hands on a “political agreement in principle” called the Windsor Framework. The framework establishes unique new arrangements on the movement of goods to protect internal UK trade – removing EU restrictions and oversight on goods bound for Northern Ireland as a final destination. It narrows the amount of EU rules applicable in Northern Ireland to less than 3% overall. The details of the arrangement as presented to Parliament are contained in “The Windsor Framework: A New Way Forward.” On March 24, the EU-UK Joint Committee, which is the forum responsible for consultation on the EU-UK Withdrawal Agreement, adopted a decision laying down the arrangements relating to the Windsor Framework. What follows will be legislation by both the EU and UK to provide a legal basis for the framework.
Mexico in a World of Electric Vehicles
For those of you who did not attend our recent webinar on electric vehicles, the six presentations and the video can be found at www.usmcocma.org/webinars. Stay tuned, we have more webinars in the works.