Issue 96 | August 24, 2018
Three-Way NAFTA Deal Could Be Done Next Week

Key U.S. demands that neither Mexico nor Canada have agreed to yet include the automatic expiration of the deal after five years, known as the sunset clause; rules for government contracting; and methods for resolving investment disputes, reports Bloomberg sources. All three countries are racing against the clock. Under U.S. law, Congress can only vote on a new deal after 90 days, meaning the earliest vote would come in late November, just days before Mexican President Enrique Peña Nieto leaves office on December 1st. 
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U.S. drops agriculture demand from NAFTA talks: Mexico farm lobby

In a statement by Mario Andrade, a senior executive at Mexico's National Agricultural Council (CAN), a proposal by the Trump administration to put seasonal curbs on some agricultural exports to the United States has been withdrawn from the negotiating table. It was thought to benefit only a small fraction of the U.S. agricultural producers while putting many other U.S. farmers at risk from Mexican retaliation. The removal of this controversial measure frees the negotiators to focus on remaining outstanding issues surrounding the automotive industry this week.
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Labor union push Lighthizer on NAFTA enforcement concerns
 
U.S. labor organizations are calling for U.S. trade representative Robert Lighthizer to push for tougher labor obligations and rule enforcement in the revision of NAFTA. In a letter to the USTR signed by AFL-CIO and other major U.S. labor groups, the groups advocated for dispute settlement mechanisms that are accessible to workers, timely, transparent, and binding. They also recommended that labor violations to be subject to trade sanctions. 
 
U.S., China Plot road Map to Resolve Trade Dispute by November
Chinese and U.S. negotiators are mapping out talks in effort to end the trade standoff, resolve trade disputes, contain damages to the global markets, and prevent further deterioration of US-China relations. Scheduled mid-level talks will begin next week with an aim to conclude in November with the second session of the G-20 leaders' summit in Buenos Aires. Attempts on both sides to meet formally and negotiate has been staved off due to a general administration consensus that economic pressure on Beijing would force the U.S. and foreign companies to relocate operations outside of China, weakening Beijing's abilities to develop new technologies. The tit-for-tat tariffs implemented by both sides continue even amidst talks.
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Walmart asks some beauty suppliers to consider sourcing outside of China

Walmart's plan to mitigate the new set of tariffs on Chinese products includes asking beauty suppliers to consider outsourcing products and investing in their facilities outside of China to broaden their sourcing ability. List of goods included in the newly proposed set of duties include shampoos, lipstick, and makeup. Walmart's Chief Financial Officer Brett Biggs remarked that understanding what suppliers' plans and alternatives are for sourcing helps retailers gage what the potential impact of tariffs, which is difficult to quantify.
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U.S. - EU Working Group Discusses Future Trade Talks
The U.S., Japan and the European Union are expected to continue a joint effort to address Chinese trade practices next week. The three countries committed to strengthening the World Trade Organization's rules on industrial subsidies and state-owned enterprises and cooperating on technology transfer. "The endgame is for the Europeans, Japanese, United States to get in a room with China and say, 'Your intellectual property theft, your heavy-handed government subsidies, state-owned enterprises, requiring foreign businesses to give their technology to do business in China, all that's got to change,'" Sen. Lindsey Graham said earlier this month.
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For more information, contact Jasmin Sakai-Gonzalez, 213.580.7569.