In the many months of negotiations since March 2017, when the UK submitted its formal notice of intent to withdraw from the EU, the EU has steadfastly refused to engage in talks about the post-Brexit period until the terms of the so-called “divorce” were agreed and ratified – a goalpost yet to be reached. The UK and EU did move forward, however, on a plan to divvy up existing preferential tariff rate quotas between the UK and the remaining bloc of 27 EU Member States. Under the proposal agreed in August 2017, the UK would take over a portion of the EU quota commensurate to its average consumption over the most recent three-year period, thereby leaving WTO trading partners “no worse off” than before Brexit. Argentina, Brazil, Canada, New Zealand, Thailand, Uruguay, and the United States (US) immediately complained that split quotas did not provide the same market opportunities as the current single EU market. The countries claimed that such changes constitute more than a technical rectification, thus requiring consultation and consent from trading partners.

At last week’s WTO Goods Council, the number of countries expressing concerns about the proposed reallocation of the EU quotas rose to fifteen. Australia, Canada, the US, and others claim that losses from Brexit uncertainty are already being felt. As recompense for current commercial loss as well as future losses resulting from trade disruption and smaller markets, they seek concessions from the UK and the EU to provide improved access to both post-Brexit markets. Calling the proposal “unjustifiable,” the US asserts that trading partners are at risk of being crowded out and would suffer market access losses in both markets. The worry is that the EU will claim a large portion of the UK quota and vice versa. The proposal could have particularly harsh results for US exports of pork and wine.

How the conflict is resolved in the near term may depend on whether an alternative dispute resolution system comes to fruition when the WTO’s Appellate Body ceases to function on December 10, 2019. On that day, the Appellate Body will no longer have the three members necessary to review a case on appeal. With the US holding fast to its position that blocking Appellate Body nominations is the only way to bring about WTO reform, something will have to give. One alternative under consideration by the EU and Canada is an interim arbitration arrangement based closely on existing WTO rules. Another possibility would entail Members agreeing to accept the Panel’s decision at the outset of a dispute. With uncertainty piled on top of uncertainty, traders’ worries are not likely be lessened this holiday season.

The existing gulf between the U.S. and EU on pesticides regulation underscores a widely disparate policy approach. While the EU espouses the so-called precautionary principle for approving pesticides and setting maximum residue levels (MRLs) - thus taking protective action where scientific evidence is inconclusive but there is a presumption of risk to human or animal health or the environment -, science-based proof of harm has to be demonstrated for regulatory action to be taken in the U.S. Whereas the EU further maintains it is necessary to apply the precautionary principle to protect consumer health and the environment, it has been the object of strong pushback from the U.S., among other countries, for being trade inhibiting.

Accordingly, in a submission to the World Trade Organization (WTO) Council for Trade in Goods on 4 July 2019, the U.S. and 14 other countries (Brazil, Australia, Canada, Malaysia, Costa Rica, Peru, Colombia, Paraguay, Ecuador, Guatemala, Honduras, Dominican Republic, Nicaragua, Panama, and Uruguay) called on the EU to re-evaluate its approach to product approvals which “unnecessarily and inappropriately” restrict trade and to “use internationally accepted methods” of setting pesticide residue tolerances. The precautionary principle also recently has come under fire by Brazil within the context of the EU-Mercosur trade deal, with President of Brazil Jair Bolsonaro threatening to challenge EU at the WTO if the principle is used for “protectionist” purposes. Brazil is the world's largest user of pesticides and Bolsonaro, within the first 100 days of becoming President, authorized the registration of 152 previously banned pesticides, many of which are banned in the EU. In the meantime, Brazil and the U.S. have strengthened trade ties, with a free trade agreement reportedly in the pipeline.

The executive arm of the EU currently is undertaking a fitness check of regulations relating to pesticides approval and maximum allowed levels for pesticide residues which could lead to new or updated legislation. It is expected that the fitness check will reaffirm the EU’s commitment to the precautionary principle, focusing efforts on how to improve implementation of the legislation and addressing any gaps and administrative burdens. The new EU Commissioners, i.e. heads of the EU’s executive arm, taking office before the end of the year also have suggested they will take measures to bolster health and environmental protection measures, including by stimulating the take-up of low-risk and non-chemical alternatives, in particular those of biological origin, and reducing bureaucracy for these to be brought to the market quicker. EU’s trade policy further will be focused on protecting the environment by spreading environmentally friendly goods and incentivizing trade partners to implement measures to protect the environment and combat climate change.

In light of these developments, the regulatory gap on pesticides is set to widen. As new measures on pesticides can have profound impacts on global agricultural production and trade in key products, companies will have their eyes peeled on the European and American policy spaces. Increased regulatory divergence on pesticides also likely will flare up existing transatlantic trade sensitivities, which have long been strained over dissimilar food standards, and could become a point of tension in any post-Brexit UK-U.S. trade talks.

The SCM Agreement classifies subsidies under two categories: prohibited or actionable. Prohibited subsides include export subsidies—receipt of benefits is contingent, in whole or in part, upon export performance—and local content subsidies—receipt of benefits is contingent, whole or in part, upon the use of domestic over imported goods. In contrast, actionable subsidies are not prohibited but are subject to challenges if they adversely affect a WTO member. In the decision handed down Thursday, each of the subsidies was determined to be a prohibited export subsidy.

Based on its findings over the course of the proceeding, the WTO dispute panel concluded that the withdrawal of the aforementioned subsidies would require amendments to India’s Foreign Trade Policy, central government notifications, and operational procedures, actions that may also necessitate review by the Indian Parliament. As a result of these facts and a review of each level of government associated with the prohibited programs, the WTO dispute panel gave India: 90 days to withdraw DFIS; 120 days to withdraw the EOU and related sector-specific schemes, EPCG scheme, and MEIS; and 180 days to withdraw the SEZ schemes.

The full WTO dispute panel report can be read here.

As retaliation, the U.S. will impose an additional 10 percent duty on airplanes from France, Germany, Spain, and the United Kingdom, as well as an additional 25 percent duty on certain goods including single malt Irish and Scotch whiskies, coffee from Germany, cheeses from several countries, and certain garments from the United Kingdom. The retaliatory tariffs will likely take effect on October 18, 2019 and will be “continually re-evaluate{d}. . . based on {U.S.} discussions with the EU.” In selecting the goods that will be affected by the retaliatory tariffs, the Office of the U.S. Trade Representative explained that the tariffs are intended to most heavily impact imports from France, Germany, Spain, and the United Kingdom, the Member States that provided Airbus with the disputed subsidies.

Meanwhile, tariff threats also loom over the U.S. in a parallel WTO case regarding the illegal subsidization of Boeing in the U.S. The global trade regulator is expected within six-to-eight months to authorize the EU to impose its own retaliatory tariffs on U.S. goods. In April, the EU published a preliminary list of U.S. products to be considered for countermeasures. Ahead of the WTO’s ruling on its case regarding the subsidization of Boeing, the EU might choose to revoke prior settlements with the U.S. in other WTO cases, which would effectively create tariffs on approximately $4 billion worth of U.S. imports into the EU.

Despite this, EU officials publicly claim to have little appetite for the mutual imposition of countermeasures, and emphasize that countermeasures strain transatlantic trade relations and inflict damage on citizens and businesses. The timing of the new tariffs is politically sensitive given the recent global imposition of national security tariffs by the U.S. on steel and aluminum, as well as the potential addition of global national security tariffs on automobiles and parts. Last June, the EU also imposed “rebalancing” tariffs on about $3 billion worth of U.S. steel, agricultural, and other products.

While EU countermeasures remain a possibility, EU Trade Commissioner Cecilia Malmström, accompanied by several other EU leaders, and U.S. Trade Representative Lighthizer have voiced their intent to reach a negotiated settlement in the aircraft cases. Malmström’s soon-to-be successor, Phil Hogan, also stated during his confirmation hearing on Monday at the European Parliament that he is committed to engage politically with the U.S. to resolve trade tensions.

While both the EU and the U.S. are open to negotiating a settlement of the long-standing aircraft disputes, the devil will likely be in the details. Malmström has voiced concern that the U.S. is unwilling to engage, and has not acted on a settlement proposed by the EU in July. Ambassador Lighthizer, however, is publicly open to “negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”

The EU-Canada interim appeal arbitration arrangement is grounded in Article 25 of the WTO’s Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), which contains rules for resolving disputes arising under WTO agreements. Article 25 DSU provides for “expeditious arbitration within the WTO as an alternative means of dispute settlement […] of certain disputes that concern issues that are clearly defined by both parties.” Under Article 25 DSU, parties agree in advance the procedures to be followed. The EU-Canada interim appeal arbitration arrangement thus provides in disputes between Canada and the EU for either party to appeal WTO panel reports to three arbitrators, which are chosen by the WTO’s Director-General from a pool of available former Appellate Body judges. The arrangement further specifies that the arbitration be governed by the provisions of the DSU and other rules and procedures applicable to WTO Appellate Review, and that a single arbitration panel should be formed to hear appeals filed by other WTO members on the same matter. Finally, the EU-Canada appeal arbitration procedure applies only if, and so long as, the WTO Appellate Body is unable to hear appeals.

The EU and Canada’s preferred course would be to unblock the WTO Appellate Body selection process. Work on WTO reforms to this end is ongoing. Reform leading to the re-establishment of the dispute settlement system remains critical in light of the fact that the U.S. might boycott any Article 25 DSU arbitration procedure. Furthermore, buy-in to the EU-Canada approach by other WTO members is uncertain. By activating the provision in Article 25 DSU, the EU and Canada nevertheless offer a way for WTO members to work around the impasse over WTO Appellate Body nominations. The two countries’ interim appeal arbitration arrangement can serve as template for similar arrangements, including a plurilateral arbitration agreement, should the WTO’s Appellate Body’s seats become vacant later this year.

Ambassador Lighthizer answered questions on a number of topics relating to the WTO and, more generally, current U.S. trade policies:

WTO Reform Is the WTO still relevant? In short, yes. Lighthizer explained that much work is done at the WTO committee level, including interpreting agreements, solving and diffusing disagreements, and helping parties move toward consensus. The problem, according to Lighthizer, is that the dispute settlement system established under the 1994 agreements has morphed the WTO from a negotiating forum to a litigation forum. This results in WTO members disfavoring agreements for concessions and instead litigating at the Appellate Body level to achieve gains they otherwise would not be entitled to. The solution? Lighthizer favors engaging in negotiations with small groups of countries with commonalities who are willing to take on extra obligations – for example, in the digital trade space – and excluding other members from that process. He suggests that such a plurilateral approach will be more fruitful. Lighthizer confirmed he knows of no other way to push for WTO reform than to use the only leverage available to the United States by blocking the appointment of Appellate Body members. Absent new appointments, the Appellate Body will no longer function by the end of 2019 as it will not have enough members to render decisions.

Another widespread complaint about the current functioning of the WTO is the ability of members to self-declare themselves “developing” countries. Developing countries are exempt from certain WTO obligations and receive benefits that are not available to non-developing countries. Lighthizer explained that this is particularly problematic in the case of countries like China, Korea, and Saudi Arabia, that have become increasingly wealthy over the years yet continue to reap the benefits of their self-declared developing country status. USTR has proposed and garnered some support for proposals to address this problem, for example, disallowing a country to be designated as “developing” if it is in the OECD.

In response to a number of questions about the status of Section 232 tariffs on imports of steel and aluminum, Lighthizer stated that the tariffs are working and are necessary. There are no immediate plans to lift those tariffs, but Lighthizer confirmed they are a constant topic of discussion in the ongoing US-China negotiations and US-Canada-Mexico conversations as the push to complete USMCA continues.

China Issues regarding China were a significant focus of the senators’ questions. In response to concerns that China’s growth since 2001 (when it joined the WTO) has come at the expense of the United States and in violation of WTO agreements and rules, Lighthizer explained that the current US-China negotiations address China’s failure to abide by WTO obligations as well as overcapacity, currency manipulation, subsidies (both generally and to state-owned enterprises (SOEs), and more. Lighthizer explained further that the current structure of the agreement, which is 110 to 120 pages long, addresses technology transfer, IP protection, currency, market access, agriculture, non-tariff barriers, and enforcement of the agreement. Without question, he stated the agreement will include a commitment not to competitively devalue currency and will require increased transparency on the part of China. Lighthizer assured the Committee that enforceability is a critical aspect of the negotiations and the President will not OK an agreement absent strict enforcement provisions. Ambassador Lighthizer did not, however, provide an estimated date for when he anticipates negotiations to be completed. He further reported that China is pushing for removal of Section 301 tariffs and wants increased market access in certain sectors.

For more information on what to expect in 2019 on trade issues, check out our post reviewing the Administration’s 2019 trade policy agenda.

According to the Office of the U.S. Trade Representative (USTR), the trade policy agenda underscores three main points. First, the agenda notes that this Administration inherited a “deeply flawed global trading system” that it is striving to improve. The agenda calls out the primary targets of the Administration’s trade efforts to date: overhauling the North American Free Trade Agreement (NAFTA) into the United States-Mexico-Canada Agreement (USMCA), the overreach of the World Trade Organization’s (WTO) Appellate Body, and unfair trade practices from U.S. trading partners, such as China’s non-market policies.

Second, the Administration continues efforts to improve domestic trade policies to better serve U.S. workers. While the agenda reviews a number of the Administration’s recent achievements, it highlights that a primary goal of 2019 is to obtain Congressional approval of the USMCA, which the President has touted as better serving the interests of U.S. workers, farmers, and businesses than NAFTA. Trade issues with China are unsurprisingly a significant focus, with USTR highlighting its negotiations with China to eliminate a range of unfair trade policies and practices. The Administration’s concern that the WTO Appellate Body’s decisions are overreaching is well-known, and the agenda promises a commitment to WTO reform efforts.

Third, the Administration intends to pursue new trade deals and to continue its enforcement of current trade laws. Here, the Administration highlights its focus on efforts to preserve U.S. national security and national defense, a nod to its current use of Sections 232 and 301 to impose tariffs on a broad range of global imports. The agenda also notes USTR’s intent to pursue new trade deals with Japan, the European Union, and the United Kingdom, as well as to concentrate on trade and investment with Kenya.

In sum, the 2019 agenda focuses on the ongoing goals of the Administration to improve conditions for American workers, to strictly enforce U.S. trade laws, and to encourage U.S. economic growth. We continue to monitor the Administration’s efforts and initiatives as they unfold in 2019. Please contact the international trade group with any questions.

Experts, however, are cautiously optimistic about the news and what it could mean for 2018. Last year, significant uncertainties about critical aspects of the global economy made it difficult to predict the track of trade growth. The WTO cited unpredictability with respect to government action on monetary, fiscal, and trade policy, and whether trade would be restricted in favor of attempts to address domestic wage stagnation and unemployment. Moreover, the process of establishing global value chains – spreading production processes around the world – is stabilizing. That process had been a key driver in boosting global trade flows out of economic crisis, but is naturally beginning to slow.

In the United States, political and economic analysts struggled early in 2017 to estimate the impact of President Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) negotiations and to renegotiate NAFTA. On one hand, those trade policy “shocks” have been countered by trade-promoting policies in other regions, including the recently finalized Comprehensive and Progressive Agreement for Trans-Pacific Partnership among the 11 remaining parties to the original TPP. Trade among the NAFTA countries continues to dominate regional trade arrangements in the world, second only to intra-European Union trade flows. And President Trump has started this year with strong messaging on the importance of international trade – downplaying the fear of trade wars and signaling an interest in rejoining the TPP. On the other hand, the world is watching as President Trump considers whether to impose what may be broad trade restrictions on imports of steel and aluminum products under Section 232 of the Trade Expansion Act of 1962.

Notwithstanding these developments, the better-than-expected growth in 2017 have given economists a reason to expect a high rate of growth to continue at least through 2018, spurred by strong investment spending, growing demand in the EU, and new trade agreements. The WTO had forecasted global trade expansion for 2017 of only 2.4%, with the actual results being far better. For 2018, the WTO predicts trade growth to “pick up slightly.” Although much depends on the impact of political decision-making, the trend suggests that trade flows will continue to be strong this year.

In particular, Canada challenges:

1. the way in which the U.S. Department of Commerce refunds cash deposits after adverse WTO determinations;
2. the United States’ suspension of liquidation of cash deposit requirements when the U.S. Department of Commerce preliminarily determines critical circumstances exist;
3. the U.S. Department of Commerce’s treatment of certain export measures by foreign governments in the agency’s countervailing duty proceedings;
4. the U.S. Department of Commerce’s calculation of benefits involving the provision of goods for less than adequate remuneration in the agency’s countervailing duty proceedings; and
5. the U.S. Department of Commerce’s procedures for collecting evidence in antidumping and countervailing duty investigations.

Perhaps most concerning to U.S. industries is Canada’s challenge to the United States’ tiebreaker rule. The U.S. International Trade Commission determines whether a domestic industry on whose behalf an antidumping or countervailing duty investigation has been initiated is injured, threatened with injury, or whether material retardation of the establishment of an industry in the United States has occurred. The Commission, which is typically comprised of six Commissioners, can contain no more than three Commissioners from any one political party. When a Commission vote results in a tie, however, 19 U.S.C. § 1677(11) provides that the determination shall be deemed affirmative.

The next step in the process is for the United States and Canada to consult on the request, and those engagements will be closely watched by the trade community.

As of January 4, 2018, there are 416 antidumping and countervailing duty orders in place, only four of which involve Canada. A list of the orders currently in place is available on the U.S. International Trade Commission’s website.

Low-priced Chinese steel has long been the target of antidumping and countervailing duty trade actions in numerous countries that have seen their domestic steel industries hammered by surging imports, including the United States, the European Union, Canada, Mexico, Australia, and several of China’s neighboring Asian countries. According to the OECD, global steel capacity reached 2.38 billion metric tons in 2016, with China alone accounting for more than half of that capacity. Another nearly 40 million metric tons of worldwide capacity additions are under way and expected to come online by 2019. An estimated 53 million metric tons of capacity expansions are also in the planning stages over the next few years. The modest improvements in global steel demand in 2017 and 2018 are insufficient to combat the overcapacity crisis. As the Chairman of the OECD Steel Committee stated in September 2017, “Forecasts by external experts suggest that steel demand could reach only 1.87 billion metric tonnes in 2035, which would be 0.49 billion metric tonnes or 20.1% below the latest steelmaking capacity level expected for 2017.”

In the past year or so, a groundswell for collective, international action in response to the glut of Chinese steel has resulted in important statements made at the G-20 (establishing a Global Forum on Steel Excess Capacity), the OECD, and the WTO, but with little more than non-binding commitments from China. Ironically, China announced that it was relieving taxes on Chinese steel exporters just days after the United States, the European Union, and Japan issued a statement on global trade crises in the wings of the WTO’s ministerial summit in Buenos Aires. The members agreed to “enhance trilateral cooperation in the WTO and other forums” to address, among other things, “severe excess capacity in key sectors exacerbated by government-financed and supported capacity expansion, {and} unfair competitive conditions caused by large market-distorting subsidies and state owned enterprises.” The mention of “excess capacity in key sectors” did not need to directly mention China or steel to reach the right audience, but will likely continue to fall on deaf ears.

As we have reported here and here, the question of whether the United States would continue to treat China as an non-market economy (“NME”) for purposes of the Department of Commerce’s antidumping duty analysis was recently decided by the Administration. In a 200-page memorandum issued at the end of October, Commerce announced that it would continue to apply alternative dumping methodologies with respect to China given the substantial evidence that China continues to be an NME.

That has not stopped China from initiating dispute settlement proceedings at the World Trade Organization (“WTO”) against the European Union (DS516) and the United States (DS515). In each dispute, China is challenging the WTO member’s applied antidumping duty methodology with respect to imports from China, which China believes are prohibited under a provision of its 2001 Protocol of Accession to the WTO and inconsistent with provisions of the WTO Antidumping Duty Agreement and the General Agreement on Trade and Tariffs (“GATT 1994”).

In the United States dispute, China requested additional consultations with the United States in early November in light of the October memo announcing the United States’ ongoing treatment of China as an NME.

In the EU dispute, a dispute settlement panel was composed in July 2017, and the parties have been filing legal briefs. The United States, as a third party to the EU proceeding, filed its brief last week that presents the United States first legal analysis of this issue with respect to WTO law.

The United States’ argument rests on the interpretation of the GATT 1994 and WTO Antidumping Duty Agreement as recognizing that NME prices are distorted and unreliable, and, thus, unsuitable for the price comparability determination required in an antidumping price comparison. According to the United States, this basic principle – and the authority to reject and replace NME prices for purposes of antidumping comparisons – predates and is not extinguished by China’s Protocol of Accession. In support of this argument, the United States cites to the WTO accession documents of Poland, Romania, and Hungary (NMEs at the time of their accession in the 1960s and 1970s) that affirmed WTO members’ ability to adopt alternative antidumping methodologies unless market economy conditions prevail.

This briefing and argument phase, prior to the dispute settlement panel’s final report to the parties, will take at least six months, and likely longer. The panel’s findings will be subject to appeal, and, if appealed, the entire dispute process may take 18 months to two years. In addition to the United States, Australia, Bahrain, Brazil, Canada, Colombia, Ecuador, India, Indonesia, Japan, Kazakhstan, South Korea, Mexico, Norway, Russia, Taiwan, Turkey, and the United Arab Emirates have joined as third parties in the EU dispute.

Commerce was spurred to review its position on China’s NME status, last addressed in 2006, following the December 11, 2016 change in China’s Protocol of Accession to the World Trade Organization (“WTO”). By way of background, the WTO Antidumping Agreement permits WTO member countries to impose duties on dumped imports. Those duties are calculated as either the difference between the imported product’s export price and the comparable home market price, or the difference between the export price and a constructed value based on the product’s cost of production. Sometimes, however, those home market prices or costs of production do not reflect market forces, particularly in NME countries. Accordingly, the WTO Antidumping Agreement allows members to apply alternative dumping methodologies, including, for example, values other than home market prices or costs as comparisons to calculating dumping margins.

When China acceded to the WTO in 2001, a provision in its Protocol of Accession dealt with this very situation, permitting China to be treated as an NME for antidumping purposes. Aspects of that provision expired on December 11, 2016. China claims that as of December 12, 2016, the Protocol requires that China be considered an NME for purposes of the antidumping law. The United States has disagreed with China and maintained that the Protocol simply requires that other countries no longer presume that China was still a nonmarket economy; the issue of China’s NME status needed to be reexamined. While the EU has proposed changes in its rules concerning China, neither the EU nor the U.S. has found China to be a market economy. China has requested dispute settlement consultations with the United States and the EU at the WTO.

In the United States, on April 3, 2017, Commerce announced it was seeking public comment on China’s NME status in the context of its antidumping investigation on aluminum foil from China, the agency’s first antidumping duty investigation since the December 11^th change. Commerce accepted submissions until May 10, 2017, by which time it had received an overwhelming majority of comments from industry associations and coalitions, labor unions, individual companies across a variety of sectors, the legal community, and members of Congress in support of continuing China’s NME status.

In reaching its conclusion, Commerce examined the six factors set forth in the Tariff Act of 1930 for determining whether a country is an NME: (1) the extent to which the currency of the foreign country is convertible into the currency of other countries; (2) the extent to which wage rates in the foreign country are determined by free bargaining between labor and management; (3) the extent to which joint ventures or other investments by firms of other foreign countries are permitted in the foreign country; (4) the extent of government ownership or control of the means of production; (5) the extent of government control over the allocation of resources and over the price and output decisions of enterprises; and (6) any other appropriate considerations. Commerce determined, based on the information provided by the public, that China continues to be a non-market economy:

At its core, the framework of China’s economy is set by the Chinese government and the Chinese Communist Party (CCP), which exercise control directly and indirectly over the allocation of resources through instruments such as government ownership and control of key economic actors and government directives. The stated fundamental objective of the government and the CCP is to uphold the “socialist market economy” in which the Chinese government and the CCP direct and channel economic actors to meet the targets of state planning. The Chinese government does not seek economic outcomes that reflect predominantly market forces outside of a larger institutional framework of government and CCP control. In China’s economic framework, state planning through industrial policies conveys instructions regarding sector-specific economic objectives, particularly for those sectors deemed strategic and fundamental. . . .

This ability to affect these market forces is apparent in crucial facets of the economy, from the formation of exchange rates and input prices to the movement of labor, the use of land, the allocation of domestic and foreign investment, and market entry and exit. Because of the significant distortions arising from China’s institutional structure and the control the government and the CCP exercise through that structure, the Department finds that China remains a NME country for purposes of the U.S. antidumping law.

Commerce’s full 200 page memo, supported by extensive outside legal, economic, and financial research can be found here. The agency’s decision has been widely praised by domestic manufacturers seeking strong enforcement of the U.S. trade remedy laws.

The white paper describes the policy as putting “workers and small businesses first, ahead of corporate special interests.” It aims to “fundamentally transform” American trade policies to “combat those countries that try to cheat on trade,” singling out both China and Russia.

The plan would greatly increase federal scrutiny of foreign trade and investment by American corporations. Perhaps most significantly, it proposes the creation of an American Jobs Security Council, which would review any potential purchase of an American company by a foreign entity, and would have the authority to stop the deal if it determined that it would have a detrimental economic impact, such as the loss of American jobs.

Also notable is the plan’s contention that the U.S. Trade Representative and the World Trade Organization are ineffective at combatting trade cheating. In response, it proposes the appointment of an Independent Trade Prosecutor, which would evaluate possible trade violations, and impose retaliations without authorization from the WTO.

Other proposals include renegotiating NAFTA to require stronger, enforceable labor standards to drive up global wages and increase market access for American exports, as well as tax policies that would punish outsourcing. In the government contracting space, it proposes requiring government projects only hire U.S. companies using U.S. labor, and requiring federal agencies to consider a company’s record of outsourcing jobs when awarding government contracts.

The platform is seen as a move to recapture some of the voters who were swayed by Trump’s anti-globalization platform in 2016. Overall, it presents a message that is far more populist and protectionist than has been voiced by Democratic candidates and lawmakers in the recent past. Whether the shift succeeds at recapturing votes in the 2018 midterm elections remains to be seen.

At a G20 summit in Hamburg on July 7, 2017, European Commission President Jean-Claude Juncker said that the EU is prepared to “react with counter-measures” within “days” if President Trump imposes steel tariffs. According to the Financial Times, because U.S. does not export much steel to Europe, EU officials are targeting U.S. agriculture products and other “politically sensitive” products with bourbon whiskey, orange juice and dairy at the top of the list.

In April 2017, the U.S. Department of Commerce initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether steel imports are threatening U.S. national security. The investigation is still ongoing and it is possible that the Commerce Department may issue a report before the end of the month with a recommendation to impose tariffs on all steel imports. The EU is concerned that such measures would not only hurt China, but that steel industries in U.S. ally countries, such as Canada, Germany, Japan and South Korea, would likely suffer the biggest impact of any such measure.

The EC is using the threat of retaliation as leverage to convince the Trump Administration to exempt EU steel from the scope of any restrictions on steel. It is not clear what the Administration will do, or whether the EU itself would be violating international trade rules if it retaliates without a finding by the WTO that any steel restrictions by the U.S. were themselves a violation of the United States' WTO obligations. At this point, there is a great deal of political posturing without a timeline for resolution of this potential dispute.

• Peter B. Davidson, Senior Vice President for Congressional Relations at Verizon Communications, was selected by President Trump to be general counsel of Commerce. Prior to Verizon, Mr. Davidson served as General Counsel to the United States Trade Representative (“USTR”). He has also served as Vice President for Congressional Relations at USWEST and Qwest, and General Counsel and Policy Director to the Majority Leader of the House of Representatives. Mr. Davidson earned his bachelor’s degree at Carleton College, and his law degree from the University of Virginia School of Law.

• Jason Kearns was selected to be a Commissioner of the USITC for the remainder of a 9 year term expiring December 16, 2024. Mr. Kearns currently serves as Chief International Trade Counsel (Democratic Staff) to the Committee on Ways and Means in the House of Representatives. In this position, Mr. Kearns advises Members of Congress on legislation concerning trade and oversight issues involving the USTR and other agencies involved in international trade policy and regulation. Before that, he served for three years in the Office of the General Counsel to the USTR. From 2000 through 2003, Mr. Kearns worked in the international trade group of the law firm, WilmerHale. Kearns has a master’s in public policy from Harvard University’s Kennedy School of Government, a law degree from the University of Pennsylvania and a bachelor’s degree from the University of Denver.

In addition, the Director-General of the World Trade Organization (“WTO”) announced a recent appointment of a senior Dentons senior counsel. More specifically, WTO Director-General Robert Azevedo announced on June 27^th that Alan Wolff had been named as deputy director-general at the WTO. Mr. Wolff will serve a four year term, replacing fellow American David Shark, a former U.S. trade official who has served in the secretariat since 2013. Director-General Roberto Azevedo lauded Wolff's qualifications, calling him "a strong supporter of trade as a key driver of growth and development and a strong supporter of the multilateral trading system." Mr. Wolff served in senior trade positions as deputy USTR and as USTR general counsel during the Carter and Ford administrations. He currently works as senior counsel at the law firm Dentons. Wolff earned his law degree from Colombia Law School and his bachelor’s degree at Harvard University.