Tuesday, May 28, 2024

AGOA renewal vibe check

Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy.
May 28, 2024 View in browser
 
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By Ari Hawkins

With help from Doug Palmer 

QUICK FIX

— A Senate Foreign Relations committee member told Morning Trade that Congress should “at the very least” lay the foundation to renew the tariff-cutting African Growth and Opportunity Act before the end of 2024.

— A GAO report determined that a critical minerals agreement between Japan and the United States does not require congressional approval before taking effect.

— Mauritian Ambassador Usha Dwarka-Canabady fleshed out plans to reform the WTO’s ruptured dispute settlement system by the end of the year.

It’s Tuesday, May 28. Welcome to Morning Trade, where your host is secretly impressed by the Taizhou Zoo’s fake-it-till-you-make-it gumption.

Send us your trade news. Reach us at: ahawkins@politico.com, gbade@politico.com and dpalmer@politico.com. You can also follow us on X: @_AriHawkins, @GavinBade and @tradereporter.

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Driving the day

U.S. Sen. Chris Coons (D-Del.) at a press conference.

Sen. Chris Coons said that AGOA’s renewal was a “central part of his communications" last week with members of Congress. | Paul Botes/AFP

EXPIRATION LOOMS: Sen. Chris Coons (D-Del.) said he expects congressional committees responsible for trade to make meaningful progress toward renewing AGOA this year, ahead of its expiration in September 2025.

His comments come as lawmakers push to lower trade barriers with Kenya and other countries in the emerging world.

“I'm hopeful that we can at the very least lay the groundwork with both committees, both chambers, for its reauthorization,” by the end of 2024, Coons told Morning Trade on the sidelines of a U.S. Chamber of Commerce event Friday with Kenyan president William Ruto.

Context needed: Coons said he was "grateful" that Ruto made AGOA’s renewal a “central part" of his dialogues last week with members of Congress, at the tail end of Ruto's week-long visit to Washington. Lawmakers and the Biden administration have been looking to shore up engagement with the sub-Saharan region and the rest of the developing world.

Still, Coons acknowledged there are “very few days left” in the legislative session and that the Senate Finance and House Ways and Means committees have other issues on their agendas that could pull focus.

“If Congress does what Congress always does, which is wait until the last minute and not reauthorize until it expires, we put at risk tens of thousands of jobs in Kenya,” Coons argued.

Reminder: Last month, Coons introduced a bill alongside Sen. Jim Risch (R-Idaho) to reauthorize and update AGOA — which his office says includes provisions to boost the program’s utilization. The AGOA trade preference program provides eligible African countries duty-free access to the U.S. market for more than 1,800 products.

Pile on: The push from Coons reflects a growing pattern in Congress, which is mounting pressure on the Biden administration to break down trade barriers with the wider African region. For instance, Ways and Means Chair Jason Smith (R-Mo.) on Thursday called on the administration to cut a deal with Kenya that would set a “high standard for U.S. engagement in sub-Saharan Africa, including new access for U.S. agriculture.”

Up next: Senior trade officials from both countries are gearing up for the sixth round of Strategic Trade and Investment Partnership negotiations next week in Mombasa, Kenya, USTR said in a statement. The partnership serves as a replacement to free trade talks that had begun under former President Donald Trump.

Kenyan officials primarily view STIP as a stepping stone to an eventual free trade agreement, and top Democrats last week urged the Biden administration to upgrade STIP talks to include market access. STIP talks are expected to wrap up before the end of the year.

MORE ON CLUB AGOA: Three House Democrats joined 24 Republicans in a letter calling on USTR Katherine Tai to raise concerns about South Africa’s “non-scientific” U.S. pork restrictions, as the administration weighs whether to alter countries' beneficiary status.

“We urge USTR to continue to engage counterparts and utilize all tools available to ensure South Africa provides fair market access for U.S. pork, as outlined in AGOA,” the lawmakers said in a letter dated last week, led by GOP Reps. Greg Murphy (N.C.) and Randy Feenstra (Iowa).

REGULATORY REVIEW

GAO GREENLIGHT: A critical minerals agreement that Japan and the United States struck last year does not require House or Senate approval before it takes effect, according to a GAO report last week.

Reminder: Lawmakers from both parties argue that they should have been able to review a deal that enables Japanese automakers to benefit from consumer tax credits on electric vehicles made available by the Inflation Reduction Act.

Backing up: In October, Senate Finance Committee ranking member Mike Crapo urged GAO to decide whether the deal should be considered a rule under the Congressional Review Act. Doing so would pile further pressure on the Biden administration to submit such deals to Congress, as the U.S. pursues similar arrangements with the UK and the EU.

But the GAO contends that the U.S.-Japan deal “simply affirms and confirms obligations and intentions of the United States and Japan under international agreements” and that it does not “interpret, or change any law or regulation, or state how an agency will exercise discretion.”

“The Agreement is not a rule for purposes of CRA and is not subject to CRA’s requirement that it be submitted to Congress and the Comptroller General before it may take effect,” wrote GAO General Counsel Edda Emmanuelli Perez, who authored the report.

MORE, MORE, MORE: Beginning in mid-June, USTR will hike duties on over 200 Chinese goods — including some medical products that were spared during the pandemic — on the heels of the president’s Section 301 announcement.

Doug has the full story here (for Pros!).

Around the World

TACKLING DISPUTE SETTLEMENT REFORM: The new facilitator for the WTO’s high stakes dispute settlement reform talks, Mauritian Ambassador Usha Dwarka-Canabady, fleshed out her plans for reaching an agreement by the end of this year.

At a meeting of the WTO General Council last week, she outlined a hybrid approach that combines elements of the informal method led last year by Guatemala’s former deputy permanent representative, Marco Molina, and a more traditional WTO process.

Monthly meetings: Dwarka-Canabady said she will hold monthly meetings of WTO ambassadors on the following proposed schedule: May 30, June 20, July 18, Sept. 19, Oct. 17 and Nov. 21. Another one is expected in December, although no date has been set for that potential deal-clinching session.

Those “Heads of Delegation” meetings are intended to provide feedback and guidance to technical experts who will focus day-to-day on the details of the negotiations using the same collaborative “interest-based” approach that Molina utilized, she said.

New texts expected: Negotiations will proceed on the basis of the draft text that Molina helped members produce, and incorporate any new submissions from members, Dwarka-Canabady said.

Molina has warned that a traditional “position-based” approach where members submit competing texts could make it impossible to reach a deal. With that in mind, Dwarka-Canabady urged members “to come up with texts that are not only acceptable to all, but that will help fix the problems we currently face.”  

PEC MEETING SET: The President’s Export Council is holding its next meeting on June 11 to discuss a fact-finding trip to Thailand and ways to boost U.S. trade services with the Indo-Pacific, according to a notice.

TRADE OVERNIGHT

— Canada's Steve Verheul tells POLITICO Pro that an upcoming USMCA review is "shaping up to be a potentially critical turning point" in Canada-U.S. trade relations.

— China and India blocking global levy on multinationals, Italy says, per POLITICO Pro.

— China slams G-7 for ‘hyping’ overcapacity as trade tensions soar, Bloomberg reports.

— Kenyan youth want Ruto to negotiate better conditions for digital jobs with U.S., per Nation Africa.

— China has threatened trade with some countries after feuds. They’re calling ‘the firm’ for help, per the Associated Press.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: ahawkins@politico.com, gbade@politico.com and dpalmer@politico.com. Follow us @POLITICOPro and @Morning_Trade.

 

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Ari Hawkins @_AriHawkins

Doug Palmer @tradereporter

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Emily Cadei @emilycadei

 

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