CAPITOL HILL'S TRADE POLICY CLEANUP OPERATION: The House is back this week, and that means lawmakers can get to work in earnest on trying to tie up some loose ends on trade policy before the midterm elections. Reminder: Just about all of the trade-related items were cut from this summer's CHIPS for America Act as Democrats completed a sleight of hand that saw them pass a slimmed-down semiconductor subsidy bill with GOP support before before sweeping in to ram through their partisan Inflation Reduction Act and its massive green energy and industrial policy investments along party lines. Tariff programs still expired: As a result, some key expired tariff exemption programs — the Generalized System of Preferences and Miscellaneous Tariff Bill — are still not operating. That means higher duties on a number of intermediate goods used in American manufacturing, along with imports from a group of developing nations — neither of which are ideal in a high-inflation election year. Outbound investments in question: A hotly debated measure to increase oversight of American investments in China is also still unresolved, despite multiple drafts and iterations. It now looks like the White House may act on its own to increase investment oversight through an executive order, but lawmakers in both Houses say they still want to follow that up with legislative action, an effort the administration has said it supports. Measured optimism: Trade lawmakers in both chambers are hopeful they can at least renew GSP and MTB, though there are some lingering disagreements over whether finished manufactured goods should be given tariff-free treatment. Some of the other elements that House Democrats pinned on to their version of the CHIPS trade title, like an effort to end tariff-free treatment for small imports from China, will likely need to go back to committee for markups before they're ready for prime time. The big question, as ever, is the vehicle: Finance Ranking Member Mike Crapo told Morning Trade before the August break that he'd like to move a tax extenders package before the end of the year, and that some of the trade provisions could hitch a ride on that. And the drafters of the outbound investment bill will likely try again to pin their provision on to the year-end defense spending bill, though they were rebuffed in that effort just last year. "My goal from the outset, when it became clear we could not reach an agreement on the trade title, was to have a separate track for some kind of action year-end," he said. "Now that hasn't been put into detail yet, but we've got the trade title [as it passed the Senate], so I am going to be trying very hard to make sure there's a year-end trade package." "There are going to be a number of political dynamics swirling," Crapo added, "but there will also be a number of issues that need to be dealt with. One of them, I believe, needs to be a trade title. And frankly I also believe there needs to be a tax title. We have tax extenders and other issues to deal with, and I believe there should be bipartisan support in both of those areas." EU FORCED LABOR PRODUCT BAN UNVEILING THIS WEEK: The European Commission on Tuesday is expected to present its long awaited proposal for an EU-wide ban on products made with forced labor. The move will be the continental bloc's answer to recent U.S. moves to curtail forced labor in China, like the Uyghur Forced Labor Prevention Act. What it won't be — import ban: The Commission made it painstakingly clear from the start that its own ban wouldn't look like the American one, which is an import ban on products made with forced labor from China's Xinjiang region. Instead, expect a market ban: The EU proposal will concentrate on withdrawing products from the EU market that are made under duress, meaning that Brussels will be abiding by the international trade rule of non-discrimination on the basis of the origins of a product. It also opens up the possibility for enforcers to withdraw goods produced within the EU using modern-day slavery. No discrimination whatsoever? Well, EU authorities will keep a list of regions with their general risk of forced labor — this will allow buyers to make more informed decisions about where they choose to purchase their products. In the case of China's Xinjiang region — where Beijing set up mass internment and labor camps for its Muslim population — EU authorities can go by all available information about work conditions if China doesn't allow investigators to inspect factories, according to several people with knowledge of the discussions. Who's the enforcer? The law will leave it up to individual EU countries: They can either use their customs or a separate authority to apply the new rules, but customs will have to be involved because seized goods won't be able to be exported either. Open questions: What remains to be seen is what the exact consequences will be for buyers whose goods are confiscated, as well as how the forced labor ban links up to the future corporate sustainability due diligence rules. TAI'S LATEST TRIP: U.S. Trade Representative Katherine Tai is racking up the airline miles again this week, heading out on Tuesday to lead a presidential delegation to Kenya to attend the inauguration of its new president, William Samoei Arap Ruto. She'll then head to Germany on Wednesday for the 2022 meeting of the G-7 trade ministers, which USTR says will focus on "opportunities for continued multilateral cooperation on advancing fair competition for workers, addressing economic coercion, supply chain resilience and sustainability, and WTO reform." Then on Saturday it's off to Siem Reap, Cambodia, for consultations between USTR and the Association of Southeast Asian Nations Economic Ministers (AEM)-USTR Consultations. Then on Sept. 21, she'll be in Bali, Indonesia, for the G-20 Trade, Investment and Industry Ministerial Meeting. FLORIDA REPUBLICANS RUFFLE MEXICAN AG GROUP: A leading voice in the Mexican agricultural industry fired back at Florida Republicans Marco Rubio and Rick Scott, who led a bipartisan petition requesting an investigation into possible new import restrictions on Mexican agricultural products. The letter, signed by a group of 23 lawmakers, claims that Florida's market share posted consistent declines because Mexico's trade policies undercut American industry. The signatories called on the Office of the United States Trade Representative to consider action under Section 301 of U.S. trade law, the same statute used by former President Donald Trump to impose tariffs on more than $300 billion worth of Chinese goods. "Mexico's scheme to displace Florida's seasonal and perishable agricultural industry from the U.S. market is an unreasonable trade practice that constitutes export targeting," the lawmakers wrote in the petition, which was released last week by Rubio's office. Fresh Produce Association of the Americas, an industry group that coordinates Mexican imports for 125 American companies, responded to the petition and accused the representatives of "repeated attempts to foment political discord, undermine the U.S. Mexico Canada Agreement, and negatively impact consumers." Lance Jungmeyer, president of the FPAA, said Mexico's market growth is thanks to U.S. produce suppliers seeking out fresh and flavorful varieties, and pinned Florida's agricultural shortcomings on poor innovation, destructive weather events and an underused clean energy sector. "American consumers are already struggling with inflationary pressures, and the trade actions sought by the Florida Congressmen will further exacerbate them if tariffs are imposed to increase the cost and reduce the availability of fresh produce," Jungmeyer added. What FPAA calls a 'partisan probe': Rubio is vying for the praises of the agricultural sector amid a Senate campaign that is shaping up to be among the most contentious in the nation. Rubio, who has served in his seat since 2011, faces Val Demings, a current Democratic House member who trails the Florida incumbent by 2 percent, according to recent polls. "Florida and U.S. companies importing from Mexico have competed for generations during the winter and spring months, and that is not going to change. You can count on that," said Jungmeyer. "You can also count on the fact that every election cycle, Florida politicians will dredge up the same tired complaints, which ignore the market dynamics." TRADE AGENCIES PEER OVER THE RIO GRANDE: Commerce Secretary Gina Raimondo, Secretary of State Antony Blinken and U.S. Trade Representative Jayme White are co-chairing a dialogue in Mexico City that will explore economic and social goals shared across North America. The 2022 U.S. Mexico High Level Economic Dialogue provides a diplomatic platform between representatives from the Department of Commerce, the Department of State and the Office of the United States Representative to converse with each other and their Mexican counterparts. The so-called four pillars of the discussion include coordinating the supply chain, promoting sustainable development and telecommunications, and protecting intellectual property, all while rethinking the two countries' position as part of a single entity. Mexico was the United State's second largest trade partner for the first seven months of the year, with two-way trade totaling almost $540 billion, according to data published last week from the United States Census Bureau.
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