What we’re covering this week –
This week the Senate Finance Committee holds a hearing on the nomination of Robert Lighthizer to be the next US Trade Representative.
● Monday, the American Enterprise Institute sponsors a program on negotiating trade authority. Sen. Mike Lee (R-
● The Representative of German Industry and Trade sponsors a program to launch an updated state-
● Tuesday, the Senate Finance Committee holds a hearing to consider the nomination of Robert Lighthizer to be US Trade Representative.
● Wednesday, the Senate Banking Committee holds a hearing on assessing US sanctions on Russia.
● The Hudson Institute holds a discussion on US-
● Mexican Presidential candidate Lopez Obrador speaks at the National Press Club.
● Thursday, Costa Rican President Luis Guillermo Solis discusses Central America’s challenges at a program sponsored by the Inter-
Volume 26, Number 48 Wednesday, March 8, 2017
Trade Reports International Group
Settlement With ZTE
The Commerce, Justice and Treasury departments yesterday jointly announced that China’s Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Limited – long under surveillance by Commerce for illegally selling dual-
The case also involves illegal sales to North Korea.
As part of the settlement, ZTE has agreed to pay an export controls penalty of $661 million – with $300 million suspended during a seven-
Commerce Secretary Wilbur Ross made the announcement at the department.
“We are putting the world on notice. The games are over,” said Mr. Ross. “Those who flout our economic sanctions and export control laws will not go unpunished – they will suffer the harshest of consequences.”
ZTE also has agreed to audit and compliance requirements designed to prevent and detect future violations.
Starting in January 2010
Starting in January 2010 and continuing through April 2016, ZTE conspired to evade the long-
As a result of the conspiracy ZTE was able to obtain hundreds of millions of dollars in contracts with and sales from such Iranian entities, Commerce stated. Additionally, ZTE undertook other actions involving 283 shipments of controlled items to North Korea with knowledge that the shipments violated US law.
In early March a year ago Commerce sanctioned ZTE by adding it to the department’s “entity list,” which created a license requirement to export, reexport or transfer in-
During the course of the investigation, ZTE made knowingly false and misleading representations and statements to Commerce and other US law enforcement agencies including that the company had previously stopped shipments to Iran as of March 2012 and was no longer violating US control laws, Commerce stated. ZTE also engaged in an elaborate scheme to prevent disclosure to and affirmatively mislead the US government by deleting and concealing documents and information from the outside counsel and forensic accounting firm that ZTE had retained with regard to the investigation.
NAFTA and Mexico
The North American Free Trade Agreement could use some updating, but that does not mean the trade deal needs to be “torn up,” Mexican Presidential candidate Margarita Zavala said yesterday (WTD, 3/7/17).
A complete renegotiation of NAFTA would mean the agreement must be sent back to each country’s legislatures for approval. In the current political climate, it is possible that the US Congress or Mexican Legislature would reject a new NAFTA, she warned at a forum sponsored by the Atlantic Council.
Rejection would effectively paralyze trade relations. But, Ms. Zavala added, goods would continue to flow across the borders because of long-
While she thinks it would be potentially dangerous to reopen NAFTA, Ms. Zavala said she believes the 23-
Timetable for Negotiations?
It is unclear what the timetable would be for NAFTA negotiations, but she predicted talks are not likely to advance as quickly as Mexico would like. The Mexican government has said it would like to conclude any negotiation before its 2018 Presidential elections.
Ms. Zavala, who is running as a candidate for the National Action Party, said she does not believe Mexico should leave NAFTA. But the United States clearly needs to decide whether it wants to continue to be trade partners with Canada and Mexico.
The Mexican politician blasted President Trump for espousing a “rhetoric of hate” against Mexico as symbolized by his plan to build a border wall. She warned that such xenophobia by the United States threatens to undermine bilateral relations. “The US needs to decide how it’s going to treat us,” she said. “Are we partners and allies? Then treat us that way. If you treat us as enemies we are going to lose 25 years of a constructive relationship.”
The Administration needs to understand that having a bad relationship with Mexico will have economic consequences, Ms. Zavala stated. Mexico is the top export destination for many US states and many US jobs depend on those exports.
If the United States chooses to isolate itself, other countries – like China – will step in to fill the vacuum, she stated.
Chile’s TPP Meeting
The remaining 11 members of the TransPacific Partnership are aiming to reach agreement on whether to move ahead with the trade pact without the United States when they meet next week in Chile, Vietnam Ambassador Pham Quang Vinh said yesterday (WTD, 37/17).
Trade officials from the remaining TPP countries plan to hold a two-
The outcome of those discussions is not clear, Mr. Pham told a program sponsored by the Asia Society’s Policy Institute. But Vietnam believes it would be a mistake to allow the TPP to die – regardless of whether it continues as a regional agreement or becomes a template that is used in future free trade agreements in other parts of the world.
If the decision is to forge ahead with TPP, the next question will be whether to take on new members, the ambassador stated.
South Korea is planning to attend the meeting in Chile although it is not a TPP member. Seoul had intended to join TPP once it was implemented and ready to accept more members, South Korean Ambassador Ahn Ho-
President Trump has said he wants to negotiate bilateral trade agreements with TPP countries that are not already US FTA partners. But Hanoi so far has not received any such overtures from Washington, Mr. Pham remarked. But Vietnam would be open to any proposals from the United States that move in that direction, he added.
Australian Ambassador Joe Hockey decried the rise of anti-
January Deficit At $48.5 Billion
The nation’s goods and services deficit was $48.5 billion in January – up $4.2 billion from $44.3 billion registered in December, according to the Commerce Department (WTD, 2/8/17).
January exports were $192.1 billion, which were $1.1 billion more than December’s. Imports were $240.6 billion – $5.3 billion more than the previous month’s imports.
The January increase in the goods and services deficit reflected an increase in the goods deficit of $4 billion to $69.7 billion and a decrease in the services surplus of $300 million to $21.2 billion.
January 2016. Exports increased $13.3 billion, or 7.4 percent. Imports increased $18.4 billion or 8.3 percent.
The average goods and services deficit increased $2 billion to $46.1 billion for the three
months ending in January. Average exports increased $1.9 billion to $189.7 billion in January; average imports increased $3.9 billion to $235.8 billion.
months ending in January 2016. Average exports of goods and services increased $7.9 billion from January 2016 and imports jumped $12 billion from January 2016.
Exports of goods increased $1.1 billion to $128 billion in January. Goods exports on a Census basis increased $400 million. Imports of goods on a Census basis increased $4.8 billion.
Exports of services decreased less than $1 million to $64.1 billion in January; services imports increased $200 million to $42.9 billion.
The January figures show surpluses with Hong Kong of $3.5 billion; South and
Central America, $3.1 billion; Singapore, $1.2 billion and Brazil, $700 million.
Deficits were recorded with China of $30.2 billion; the European Union, $13.4 billion; Germany, $5.7 billion; Mexico and Japan, $5.5 billion each; Italy and OPEC, $2.4 billion each; South Korea, $2.3; Canada, $2 billion; India, $1.9 billion; France, $1.6 billion and the United Kingdom, Taiwan and Saudi Arabia, $900 million each.
The balance with Saudi Arabia shifted from a surplus of $400 million to a deficit of $900 million in January, according to Commerce. Exports decreased $600 million to $1.2 billion; imports increased $600 million to $2 billion.
The deficit with Mexico increased $1 billion to $5.5 billion in January. Exports decreased $200 million to $20.5 billion and imports increased $800 million to $26.0 billion.
Around the Globe
● Finance chiefs of the Group of 20 economies plan to drop an explicit pledge to resist protectionism, while still promising open trade, a draft of their statement showed according to Bloomberg news service (WTD, 3/7/17). “We will maintain an open and fair international trading system,” according to the preliminary communique seen by Bloomberg News and dated March 1. “We will also strive to reduce excessive global imbalances, promote greater inclusiveness and reduce inequality in our pursuit of economic growth.”
The change in language compares with the wording after July’s meeting in Chengdu, China, when finance ministers and central bankers vowed to “resist all forms of protectionism.” Since then, a new U.S. administration under President Donald Trump has strained the global trade outlook by pledging to prioritize national interests and lashing out against market-
The group also plans to “reaffirm our previous exchange-
● South Korea, Japan, Taiwan and Hong Kong have limited imports of U.S. poultry after the United States detected its first case this year of avian flu on a commercial chicken farm, South Korea’s government and a U.S. trade group said on Monday according to Agence France-
Japan and Taiwan will block poultry from the state, while Hong Kong will restrict imports from the Tennessee county where the infected flock was located, said James Sumner, president of the USA Poultry & Egg Export Council, a trade group. The limits will reduce the potential for major U.S. chicken companies, such as Tyson Foods Inc (TSN.N) and Pilgrim’s Pride (PPC.O), to sell poultry overseas. The Tennessee farm infected with avian flu was contracted to sell birds to Tyson.
South Korea’s import ban took effect on Monday, the agriculture ministry said in a statement. Live poultry and eggs are subject to the ban, while heat-
● New Zealand and the European Union have taken one more step towards a free trade deal, Radio New Zealand reported. The Trade Minister Todd McClay and his EU counterpart Cecelia Malmstrom have agreed to complete joint scoping discussions.
Those discussions look at the broader bilateral and economic relationship, as well as examining the areas that could be covered in a trade deal. This was a significant milestone after nearly two years of negotiating, Mr McClay said. New Zealand and the EU agreed in October 2015 to begin talks on a free trade deal.
The EU is New Zealand’s third largest trading partner, and it is the world’s second-
● Canada posted a third consecutive monthly trade surplus in January, the first such stretch since 2014, in another signal that the economy is gaining momentum after slumping for more than two years due to low oil prices, the Globe and Mail reported. Statistics Canada on Tuesday reported a surplus of $807-
The last time Canada recorded trade surpluses for three months in a row was between July and September 2014. The value of exports rose 0.5 per cent in January while volumes expanded 1.0 per cent. Imports slipped 0.3 per cent but volumes climbed 2.5 per cent. Exports to the United States, which accounted for 74.6 per cent of all Canadian exports in January, grew 2.3 per cent while imports from Canada’s largest trading partner rose 0.3 per cent. As a result, Canada’s trade surplus with the United States grew to $4.52-
● Japan had a current account surplus of 65.5 billion yen in January, the Ministry of Finance said on Wednesday -
***** WTD is intended for readers within the office that subscribes. PLEASE do not redistribute. *****
Take a look at our newly designed homepage at:
We are sure you will see something you like.
Our Blog, Podcast, Facebook, Twitter
Straight Talk, Calendar, Primary Source
Sign up for WTD’s special email alert system which keeps you informed of major trade-
WTD now has available for sale compact disks for all of 1988 through 2015 – for $35 each year.
To order call 301-
On the Web......
Trade. Asia Society publication on trade in the Asia-
Export Controls. Statement by Commerce Secretary Ross on settlement of US export controls case against China’s ZTE company. (available at: https://www.commerce.gov/news/press-
Export Controls. Statement by the Treasury Department on settlement of US export controls case against China’s ZTE company. (available at: https://www.treasury.gov/press-
ROO. World Trade Organization template for rules of origin for least developed countries. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
New Zealand. European Union statement on trade relations with New Zealand. (available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1633 ) issued: 3/7/17.
China. Statement by Commerce Secretary Ross on settlement of US export controls case against China’s ZTE company. (available at: https://www.commerce.gov/news/press-
China. Statement by the Treasury Department on settlement of US export controls case against China’s ZTE company. (available at: https://www.treasury.gov/press-
Intellectual Property Rights
Special 301. Summary of submitted Special 301 petitions to the US Trade Representative. (available at: http://keionline.org/node/2735 ) issued: 3/7/17.
European Union. European Union statement on trade relations with New Zealand. (available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1633 ) issued: 3/7/17.
January. Commerce Department report on the February trade balance. (available at: https://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm?utm_source=CPRE-
January. Statement by Commerce Secretary Ross on the January trade balance. (available at: https://www.commerce.gov/news/press-
January. Coalition for a Prosperous America statement on the February trade balance. (available at: http://prosperousamerica.org ) issued: 3/7/17.
OECD Report. OECD report on the global economy. (available at: http://www.oecd.org/economy/economicoutlook.htm?mc_cid=de420c8ef3&mc_eid=4210b52220 ) issued: 3/7/17.
World Trade Organization
Developing Countries. World Trade Organization template for rules of origin for least developed countries. (available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
DSB. US statement at the World Trade Organization Dispute Settlement Body meeting. (available at: https://geneva.usmission.gov/2017/03/07/statement-
Click the underlined text to hear snippets from WTD’s straight talk. (mp3 files)