January 10, 2019

This Shutdown Stinks: Trade Impacts in the Shutdown, New Faces on Ways and Means, and the U.S. FART Act

Casie Daugherty

Although the government continues to be shut down, with no end in sight, there have been some important developments in trade this week.

Government Shutdown Impact on Trade Agencies

It is widely believed that USTR will run out of funding on Monday, meaning that all but a few employees deemed “essential” will be furloughed. That could throw a significant wrench into the many ongoing trade actions that USTR is responsible for, including processing exclusion requests for the Section 301 China tariffs and drafting detailed negotiating objectives for potential deals with the United Kingdom and the EU.

Meanwhile, the International Trade Commission is already being impacted by the shutdown, and their limited operations could mean delays or missed deadlines to provide economic impact reports on trade deals with Japan (January 24), USMCA (March 14), and the EU (March 19), among others. Additionally, it is unclear if scheduled hearings, like the one on the economic impact of a US-UK trade deal scheduled for January 31 will be able to go forward. Additionally, the Section 232 exclusion process at the Department of Commerce has ground to a halt because of the shutdown.

Ways and Means Democrats Add to Their Roster

Yesterday, the Democratic Policy and Steering Committee announced their recommendations for whom should join the Ways and Means Committee, which has jurisdiction over trade issues. Republicans have yet to announce who will take the open seats on their side of the dais. The new Democratic Members slated to join the Committee are:

Senate Finance Committee has also announced its new members for the 116th Congress. They are Sens. James Lankford (R-OK), Steve Daines (R-MT), Todd Young (R-IN), Catherine Cortez Masto (D-NV), and Maggie Hassan (D-NH) .

China Negotiations

Negotiators, led by Deputy USTR Jeffrey Gerrish, have concluded their trip to China, where they were tasked with continuing discussions on how to achieve a resolution of the trade dispute between the two countries. The USTR readout does not delve into a great deal of detail or mention whether progress was made. As we have almost reached the halfway point of the 90-day negotiation deadline of March 1, there is still some cautious optimism that a multi-faceted deal could be struck. However, it seems more likely that the Administration may point to progress being made in negotiations and simply push the deadline. Of course, if USTR employees are furloughed for an extended period of time, it could severely impact the plausibility of reaching a deal that would roll back the existing tariffs.

Administration to Push for Increased Power to Levy Tariffs?

Back last summer, there were rumblings of an unfortunately named piece of draft legislation that the Administration was considering – the U.S. Fair and Reciprocal Tariff Act – that would both cripple the WTO and allow the president to unilaterally levy tariffs whenever the whim struck him.

Now, the legislation, which opponents, and the easily-amused internet in general, have taken to calling the U.S. FART Act (seriously, did no one in the White House even look at the initials of those words and anticipate this could be a problem?) seems to have risen from the dead, and there are numerous outlets reporting that President Trump will push for it during his State of the Union address on January 29. Axios has obtained a draft copy of the bill, which I definitely recommend you read.

New Finance Chairman Chuck Grassley threw cold water on the idea yesterday, saying “We ain’t going to give him any greater authority. We already gave him too much.” This backs up Grassley’s early statements on presidential power and tariffs and perhaps even increases the chances that the Finance Committee might make a legislative attempt to reign in the president’s power under Section 232, as Grassley has previously hinted he may be open to doing.


Casie Daugherty

Casie helps to lead the firm’s trade practice, where she covers client needs in relation to Section 301, Section 232, NAFTA/USMCA, CFIUS, and other trade-related actions.