Under Section 201 of the Trade Act of 1974, President Donald Trump has imposed new tariffs on imported large residential washing machines and imported solar cells and modules, marking the first time the United States has imposed global safeguard restrictions since 2002. These new tariffs were based on recommendations by the U.S. International Trade Commission.

In the Section 201 washing machines case that domestic producer Whirlpool requested last summer, the president instituted a 20 percent tariff rate on the first 1.2 million imports, which will decrease by 2 percent annually the next two years. For imports beyond the first 1.2 million units, the president imposed a 50 percent tariff rate, which will decrease by 5 percent annually the next two years. For additional information on this tariff, the covered washers, and other adjustments, please see the Presidential Proclamation to Facilitate Positive Adjustment to Competition from Imports of Large Residential Washers. The U.S. Trade Representative has also released a Fact Sheet that sets forth details on the Tariff-Rate Quotas being applied.

In the Section 201 solar cell and module case that domestic producers Suniva and SolarWorld requested last year, the president imposed a 30 percent tariff rate the first year, which will decrease by 5 percent annually the next three years. Under this plan, the first 2.5 gigawatts of imported cells will be excluded from the additional tariff. For additional information on this tariff, the covered crystalline silicon photovoltaic (CSPV) cells, and other adjustments, please see the Presidential Proclamation to Facilitate Positive Adjustment to Competition from Imports of Certain Crystalline Silicon Photovoltaic Cells. The U.S. Trade Representative has also released a Fact Sheet that sets forth details on the additional duties being applied.

In announcing these Section 201 actions, President Trump stated that his administration “is committed to defending American companies, and they’ve been very badly hurt from harmful import surges that threaten the livelihood of their workers, of jobs, actually, all over this country — many different industries.” With regard to washing machines and solar cells, he stated that these trade actions “uphold the principle of fair trade and demonstrate to the world that the United States will not be taken advantage of anymore.”

Energy Fuels Inc. and Ur-Energy Inc. (the petitioners) have jointly submitted a petition to the U.S. Department of Commerce for relief under Section 232 of the Trade Expansion Act of 1962 from imports of uranium products from state-owned and state-subsidized enterprises in Russia, Kazakhstan and Uzbekistan. According to the petition, such imports now supply nearly 40 percent of U.S. demand and threaten U.S. national security. Despite uranium’s critical role in the United States supporting clean electricity and the national defense, “imports of cheap, foreign state-subsidized uranium have swelled in recent years to the point that domestic suppliers currently provide less than 5% of our nation’s demand.” As recently as 1980, the petitioners argue, “U.S. producers supplied nearly 100% of our domestic uranium needs, and in 1989 the DOC initiated a Section 232 investigation at the request of the U.S. Department of Energy (“DOE”) because of concerns that uranium imports exceeded 37.5% at that time. The problem is far worse now.” The petition also notes that China is significantly growing its state-owned nuclear enterprises and intends to penetrate the U.S. market with nuclear fuel that will directly compete with U.S. uranium miners. Under U.S. law, the petitioners argue that the warheads in U.S. nuclear weapons must be manufactured from uranium sourced from U.S. mines; tritium (an essential component of nuclear weapons) must be produced in a U.S. reactor using domestic uranium; and highly-enriched and fabricated uranium fuel for the U.S. Navy must be U.S. in origin. If this import trend continues and the condition of the U.S. uranium mining industry continues to worsen, the petitioners contend that the United States will lose the ability to supply these essential national security requirements with domestic sources. The petition seeks remedies that will set a quota to limit U.S. uranium imports, effectively reserving 25 percent of the U.S. nuclear market for U.S. uranium production. It also seeks implementation of a requirement for U.S. federal utilities and agencies to buy U.S. uranium in accordance with President Trump’s Buy American policy.

Once the Department of Commerce initiates the investigation, it will have 270 days to prepare a report for the president. Following receipt of that report, the president will have 90 days to act on any recommendations and take action if necessary to “adjust the imports of an article and its derivatives” and/or pursue other lawful non-trade related actions necessary to address the threat.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated 14 individuals and entities for sanctions arising from serious human rights abuses and censorship in Iran and support of designated Iranian weapons proliferators. According to Treasury Secretary Steven T. Mnuchin, “The United States will not stand by while the Iranian regime continues to engage in human rights abuses and injustice. We are targeting the Iranian regime, including the head of Iran’s judiciary, for its appalling mistreatment of its citizens, including those imprisoned solely for exercising their right to freedom of peaceful assembly, and for censoring its own people as they stand up in protest against their government. We are also targeting Iran’s ballistic missile program and destabilizing activities, which it continues to prioritize over the economic well-being of the Iranian people.”

While the majority of these persons and entities are Iranian, several are located in Malaysia and China and have been sanctioned for their support of the Iranian regime. The full list is available on Treasury’s website. This decision is not formally related to an expected Trump administration announcement later today regarding an extension of the relaxation of sanctions on Iran under the Joint Comprehensive Plan of Action (i.e., JCPOA or Iran nuclear agreement) but indicates that the United States will continue to sanction Iran in non-nuclear areas outside the scope of the JCPOA.

President Trump has announced that he will continue to waive nuclear-related sanctions toward Iran despite his misgivings about the multi-party agreement with Iran known as the Joint Comprehensive Plan of Action (JCPOA, or commonly known as the Iran nuclear agreement) and Iran’s continued support for international terrorism, its human rights abuses and its continuing censorship at home. In a White House statement, the president indicated that “I have been very clear about my opinion of that deal. It gave Iran far too much in exchange for far too little.” He added, “Despite my strong inclination, I have not yet withdrawn the United States from the Iran nuclear deal.”* He then briefly identified his conditions for either fixing the agreement or ultimately withdrawing from the JCPOA.

While President Trump will continue to work with Congress on legislation regarding Iran, he indicated that it must have four “critical components”: (1) Iran must allow immediate inspections of potential nuclear sites; (2) Iran can never possess a nuclear weapon; (3) there must be no expiration date prohibiting Iran’s efforts to develop or acquire nuclear weapons under any deal; and (4) Iran’s long-range missile capabilities are inseparable from Iran’s nuclear weapons ambitions and will also be subject to severe sanctions. In closing, the president stated:

“Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal. This is a last chance. In the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran nuclear deal. And if at any time I judge that such an agreement is not within reach, I will withdraw from the deal immediately. No one should doubt my word. I said I would not certify the nuclear deal—and I did not. I will also follow through on this pledge. I hereby call on key European countries to join with the United States in fixing significant flaws in the deal, countering Iranian aggression, and supporting the Iranian people. If other nations fail to act during this time, I will terminate our deal with Iran. Those who, for whatever reason, choose not to work with us will be siding with the Iranian regime’s nuclear ambitions, and against the people of Iran and the peaceful nations of the world.”

In a later press briefing, White House officials stated that the administration intends to work with European allies for a follow-on agreement that puts in place certain triggers that Iran could not exceed. They stressed that this “would not entail direct negotiations with the Iranians, [sic] this would be something the United States works out with our European partners only. It would be an agreement amongst the United States and our European partners to re-impose multilateral sanctions should the Iranians surpass the new triggers that we would lay out.”

* Under the Iran Nuclear Agreement Review Act, implemented in 2015 at the time of the JCPOA, the president must certify to Congress every 90 days that the suspension of sanctions under the nuclear agreement is warranted and that Iran remains in compliance with its obligations to terminate its illicit nuclear weapons program. In July 2017, Trump reluctantly certified that Iran was in compliance with the terms of the JCPOA (see Trump and Trade Alert of July 18, 2017); however, in October 2017, the president declined to certify that Iran was in compliance with the agreement (see Trump and Trade Alert of October 13, 2017).

On January 5, the United States and South Korea held their first meeting to discuss potential renegotiation of the U.S.- South Korea (KORUS) free trade agreement. In addition to discussing procedural and timetable issues, the United States discussed proposals to move toward fair and reciprocal trade in key industrial goods sectors, such as autos and auto parts, and to resolve cross-cutting and sector-specific barriers affecting U.S. exports. South Korea noted its interest in resolving “sensitive issues,” including the investor-state dispute settlement (ISDS) clause and trade remedies.

At the conclusion of the negotiating session, Ambassador Robert Lighthizer said, “We have much work to do to reach an agreement that serves the economic interests of the American people. Our goals are clear: we must achieve fair and reciprocal trade between our two nations. We will move forward as expeditiously as possible to achieve this goal.”

The United States first announced its intent to seek modifications to KORUS in July 2017. During President Trump’s visit to Seoul in November 2017, the two countries agreed to expedite the talks. The U.S. delegation is led by Michael Beeman, Assistant U.S. Trade Representative for Japan, Korea and APEC. South Korea’s delegation is led by Myung-hee Yoo, Director General from the Ministry of Trade, Industry and Energy (MOTIE).

President Trump has released his first National Security Strategy (NSS), a statutorily mandated document that sets forth how the president intends to put his national security vision into practice on behalf of the United States. The strategy identifies four vital national interests, or “four pillars”: (1) Protect the American people, the homeland, and the American way of life; (2) Promote American prosperity; (3) Preserve peace through strength; and (4) Advance American influence.

To promote American prosperity, the NSS states that a strong economy is necessary to “restore our national power.” The NSS highlights that the United States for 70 years has embraced and advanced an international economic system “rooted in American principles of reciprocity, free markets, and free trade [that] served our economic and security interests.” Today, however, “American prosperity and security are challenged by an economic competition playing out in a broader strategic context” in which other countries do not share our belief in such a system and “espouse free trade rhetoric and exploit its benefits, but only adhere selectively to the rules and agreements.” In response, President Trump “will no longer turn a blind eye to violations, cheating, or economic aggression.”

The NSS sets forth a broad policy to promote free, fair and reciprocal economic relationships. The NSS reiterates the president’s commitment to address continuing trade imbalances, break down trade barriers, pursue enforcement actions and defend against economic aggression. To that end, the NSS sets forth these trade-related “priority actions” that the Trump administration will undertake:

  • Adopt new trade and investment agreements and modernize existing ones: The United States will pursue bilateral trade and investment agreements with countries that commit to fair and reciprocal trade and will modernize existing agreements to ensure that they are consistent with those principles. Agreements must adhere to high standards in intellectual property, digital trade, agriculture, labor and the environment.
  • Counter unfair trade practices: The United States will counter all unfair trade practices that distort markets using all appropriate means, from dialogue to enforcement tools.
  • Counter foreign corruption: Using our economic and diplomatic tools, the United States will continue to target corrupt foreign officials and work with countries to improve their ability to fight corruption so U.S. companies can compete fairly in transparent business climates.
  • Work with like-minded partners: The United States will work with like-minded partners to preserve and modernize the rules of a fair and reciprocal economic order. Together, we will emphasize fair trade enforcement actions when necessary, as well as multinational efforts, to ensure transparency and adherence to international standards within trade and investment projects.
  • Facilitate new market opportunities: The United States will partner with countries as they build their export markets, promote free market competition and incentivize private sector growth. We will expand U.S. trade and investment opportunities and increase the market base for U.S. goods and services.

At the introductory session for the 11th Ministerial Conference of the World Trade Organization (WTO), Ambassador Robert Lighthizer acknowledged that the WTO is an important institution but then proceeded in his opening statement to criticize the organization and its focus. He stated that the WTO is “losing its essential focus on negotiation and becoming a litigation-centered organization,” claiming that member countries “seem to believe they can gain concessions through lawsuits that they could never get at the negotiating table.”

Lighthizer argued that the WTO “cannot sustain a situation in which new rules can only apply to the few, and that others will be given a pass in the name of self-proclaimed development status. There is something wrong, in our view, when five of the six richest countries in the world presently claim developing country status.” He opined that “it is impossible to negotiate new rules when many of the current ones are not being followed” and that some members are “intentionally circumventing” their obligations. He indicated that addressing these concerns and the transparency of the WTO will be a top priority for the United States.

The Trade Policy Review Body of the World Trade Organization (WTO) has released its annual report, Overview of Developments in the International Trading Environment, that covers the implementation of trade-related measures across the WTO membership in the last 12 months (from mid-October 2016 to mid-October 2017). WTO Director-General Roberto Azevêdo stated that “the Report aims to offer a horizontal, objective and fact-based view of developments across the trade landscape” and is not intended to be indicative of any WTO member state’s compliance with WTO trade measures.

The report shows that 108 new trade-restrictive measures were established during the past year, while WTO member states implemented 128 new measures that facilitate trade. Import-facilitating measures implemented during the annual review period in the context of the expanded Information Technology Agreement amounted to roughly $385 billion. There was also a slight deceleration both in the initiation of trade remedy investigations and in the termination of measures compared to the previous annual overview. Anti-dumping measures continue to make up the bulk (83 percent) of all trade remedy matters. The main sectors affected by trade remedy investigations during the review period were electrical machinery and related parts, iron and steel, articles of iron and steel, and wood and articles of wood.

The report further indicates that international trade flows rebounded strongly during the 2016-2017 review period after a sharp slowdown in the previous reporting period. World merchandise trade volume growth in the first half of 2017 was 4.2 percent, well above the 1.3 percent increase recorded for the whole of 2016. World real gross domestic product growth at market exchange rates is projected to pick up to 2.8 percent in 2017 from 2.3 percent in 2016. The WTO’s latest trade forecast has world merchandise trade volume increasing by 3.6 percent in 2017, with growth placed within an expected range from 3.2 percent to 3.9 percent, which reflects past forecast performance. The pace of expansion should moderate to 3.2 percent in 2018, set within a wider range from 1.4 percent to 4.4 percent, which reflects the greater uncertainty of longer-term forecasts.

Upon the conclusion of the fifth round of renegotiations of the North American Free Trade Agreement (NAFTA), U.S. Trade Representative Robert Lighthizer issued the following statement:

“While we have made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway. Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement. Absent rebalancing, we will not reach a satisfactory result. A rebalanced, updated NAFTA will promote greater prosperity for American workers, farmers, ranchers and businesses and strengthen the North American region as a whole. Our teams will be meeting again next month in Washington. I hope our partners will come to the table in a serious way so we can see meaningful progress before the end of the year.”

The parties have agreed to hold the sixth round of negotiations January 23-28, 2018 in Montréal, Canada. In the meantime, negotiators will continue to work in intersessional meetings in Washington, D.C. throughout mid-December and will report back to the chief negotiators on the progress achieved.

The Office of the U.S. Trade Representative (USTR) has released an updated summary of U.S. objectives for the renegotiation of the North American Free Trade Agreement (NAFTA). The new objectives update the previous objectives published in July (see our July 18, 2017 update), and come after four rounds of negotiations among the United States, Mexico and Canada. The updated objectives reflect the goals of text proposals the United States has tabled in the NAFTA negotiations so far. The objectives include increased market access for agriculture, new transparency and administrative measures, expanded investment and intellectual property objectives, and completed negotiations on the chapters of Competition and Small- and Medium-Sized Enterprises. According to the USTR, the objectives for Trade in Goods include the first-ever objective for trade deficit reduction and an improvement in the U.S. trade balance with NAFTA countries.

The updated objectives “represent a serious effort to renegotiate the Agreement to update its provisions to the best 21st century standards and rebalance the benefits of the deal so that each country succeeds. U.S. proposals reflecting these objectives are supported by a diverse group of American interests. If these objectives are achieved, the United States will obtain more open, equitable, secure, and reciprocal market access, and the entire NAFTA region will benefit.”