World trade and the Indo-Pacific aside, the Biden administration has problems closer to home. It has taken actions against Canada that hurt both that country and the US, and it is facing damaging actions not of its doing from Mexico’s authoritarian leftist president AMLO.
The November 29th, 2021 trade report with L.C.
On November 26th, the WTO reported that its Ministerial Conference (MC) was postponed indefinitely because of travel restrictions imposed in response to the omicron Covid variant. The cancellation came with just four days’ notice before the event’s expected convening.
The good news is that the conference was not expected to be a success. WTO Director-General Ngozi Okonjo-Iweala said that the three top outcomes a ministerial conference should produce were
- an agreement on disciplining fisheries subsidies,
- a framework for expanding the availability of COVID-19 vaccines, and
- a commitment to cut trade-distorting agricultural subsidies.
None of these had any expectation of being resolved had the MC been held as planned. Perhaps the postponement will allow agreements to be arrived at before the MC is rescheduled.
Meanwhile, trade momentum seems to be shifting to the Pacific. Thailand says it is now serious about seeking to join the CPTPP. If it formally applies, it will join China, Taiwan, and the UK in the lengthening membership queue. Contrary to the wishes of its allies, the US is not seeking CPTPP membership in the near term but is looking instead to form “more flexible partnerships” in the Indo-Pacific that may focus on matters not directly related to free trade.
Biden administration to hike duties on Canadian softwood imports
The Commerce Department on November 24th released the results of its second administrative review concerning the antidumping (AD) and countervailing duties (CVD) imposed on Canadian softwood lumber. The results alarmed and angered Canadians. From the current combined rate of 8.99%, the duties will be hiked to 17.9%. (Commerce assigned different rates to a few companies, ranging from 11.12%–29.66%.)
Last year Ottawa largely won its most recent WTO challenge to the US duties. Many voices have long pressed for a new US-Canada Softwood Lumber Agreement, both in Congress as well as among US home-builders and consumers. US construction companies complain that domestic production isn’t adequate to meet US needs and thus they have to pay the tariffs, hiking prices for homes and infrastructure. Canadian lumber representatives say that US production only satisfies about 70% of US needs, almost all the rest coming from Canada.
The National Review has a biting satire on the contradiction between the Biden administration’s campaign promise to make housing more affordable and the new tariffs it is supporting, which will have the opposite effect.
The Keystone XL pipeline again
The Biden administration’s green energy programs are similarly contradictory. President Biden has been begging OPEC to increase production to bring down recent oil price escalation, while simultaneously shutting down or hobbling US and Canadian sources. Last week TC Energy, the company that was to construct the Keystone XL pipeline cancelled by President Biden when he first took office, has filed a formal request for NAFTA arbitration. This will reinstate a claim filed before the USMCA replaced NAFTA.
TC Energy claims it should be rewarded over $15 billion for the damage it suffered when the permit to construct a US-Canada pipeline was revoked, first by Obama and then by Biden. The filing noted that the “unfair” cancellation and the “regulatory roller coaster” that caused uncertainty and injury to the company had cost it and its shareholders significant losses.
The pipeline, slated to carry tar sands from Alberta to the US Gulf Coast for refining, had been previously cancelled by the Obama administration, but President Trump issued an executive order reinstating the permit. The subsequent Biden revocation greatly angered the Canadians but was hailed by environmental activists.
Mexico
While the Biden administration is the offender against Canada, Mexico under its leftist President Andres Manuel Lopez Obrador (“AMLO”) is the offender against the US. In another dispute that may be brought to USMCA arbitration, over 79 House members of both parties, led by Reps. Jim Costa (D-CA) and Adrian Smith (R-NE), wrote to President Biden asking him to get assurances from President Andres Manuel Lopez Obrador that his government will comply with the biotech (GMO crop) provisions in the USMCA. Under AMLO, Mexico hasn’t approved any new applications for biotech crops, and he has said he intends to phase out some already in use by 2024.
Mexico must, the letter says, be held accountable for its commitments. If it won’t abide by the agreement, the congressmen said, the Biden administration should initiate a USMCA dispute settlement. The congressmen have the backing of US agricultural biotech organizations.
Meanwhile, the Wall Street Journal’s “Americas” correspondent, Mary Anastasia O’Grady, has a scathing op ed on AMLO’s drive to dispense with the Mexican constitution and take over most of the economy.
L.C. reports on trade matters for business as well as Founders Broadsheet.
Leave a Reply