Pressure Points
The global economies of
baseball cards and tariffs…
I remember trading baseball cards with friends as a child, and
everyone was trying to get the latest Frank Thomas, Randy
Johnson or Ken Griffey, Jr. card produced by Topps. I am
not sure if today’s generation of kids collect cards anymore, but
I remember trying to use whatever information I had to get the
best deal possible. Usually, I would try to use my trade partner’s
favorite player to my advantage in the trade, but we all ultimately
wanted to walk away with a good deal—and some great new baseball
cards.
The U.S. has a similar philosophy when making trade agreements
with other countries. Each trading partner tries to get the best deal
they can. However, since trade agreements create opportunities for
both domestic and global economic growth, a compromise is typically
needed for each side to be happy and agree to a plan.
The Office of the U.S. Trade Representative (USTR) is responsible
for administering all U.S. trade agreements by monitoring the
implementation of the agreement, the trading partners’ implementation,
enforcing the U.S.’ rights under those agreements and
negotiating trade agreements that advance our trade policies and
economies. The World Trade Organization (WTO) governs the
rules for international trade—particularly those dealing with the
regulations of trade in goods, services and intellectual property
between participating countries—and resolves trade-related disputes
with independent judges through its dispute resolution process.
Free trade agreements are meant to reduce trade barriers, minimize
import quotas and tariffs and increase the trade of goods and
services between trading partners. However, in 2018 we saw the
Trump Administration impose tariffs of 25% on steel and 10% on
aluminum under Section 232 of the Trade Expansion Act of 1962;
these were imposed on nearly all countries, with a few exceptions.
Section 232 authorizes the President to adjust the import of goods
through tariffs, or other means, from other countries if the goods
are deemed a threat to national security. The Trump Administration
also imposed tariffs against China under Section 301 of the
Trade Act of 1974, one of the principal statutory means by which
the U.S. enforces its trading rights and addresses unfair practices
by trading partners. The tariffs by the Trump Administration were
met with retaliatory tariffs by many of our closest allies and largest
trading partners1.
Last fall, several countries brought disputes to the WTO; however,
the process can take years before the disputes are resolved. Rather
than waiting on the WTO, trading partners can negotiate new trade
agreements directly with our country to resolve differences quickly.
For instance, the U.S. began renegotiating the North American
Free Trade Agreement (NAFTA) shortly after President Trump
took office in 2017. On Sept. 30, 2018, the U.S., Mexico and
Canada announced they had reached a new agreement that would
replace NAFTA. This agreement was the U.S.-Mexico-Canada
Agreement (USMCA). On Nov. 30, 2018, President Trump,
President Enrique Peña Nieto (Mexico) and Prime Minister Justin
Trudeau (Canada) signed USMCA, with the intentions of moving
forward. However, all three countries still need to apply their
domestic procedures before ratification and implementation can
occur. Until then, NAFTA remains in full effect.
USTR has also released U.S. negotiating objectives for proposed
trade agreements with other partners over the last few months.
USTR is required to publish a detailed summary of specific
negotiating objectives at least 30 days before to initiating negotiations
with a trade partner. The aim of each of these negotiations is
to address tariff and non-tariff barriers, so that trade between the
U.S. and various trading partners is both fair and balanced.
The Household & Commercial Products Association (HCPA)
has been proactively working on behalf of our members due to
their significant concerns over the disruption to the supply chain
caused by the imposition of tariffs by the Trump administration
on U.S. trading partners. The Section 232 tariffs on aluminum
and steel impact the cost of the packaging material for a wide
range of products, including the container and valve for aerosol
products and the Section 301 tariffs impact a variety of chemicals
used throughout the industry.
We will continue to build upon these efforts on the tariffs in
2019, our previous efforts including sending letters to President
Trump, the Commerce Secretary and the USTR; working with
allied trade associations through various coalitions; and voicing
our concerns to trade, consumer and inside-the-beltway publications.
With the numerous actions that HCPA is focused on across
multiple fronts, we will continue to ensure that we represent our
members and keep them updated and engaged on the latest activities
regarding USTR’s negotiations with some of the U.S.’ closest
allies and largest trading partners.
Life was much simpler when I was trading baseball cards with
friends. I was simply worried about the cost of a pack of cards
and not about global economics. However, if global economics
are keeping you up at night, feel free to contact me at ngeorges@
thehcpa.org. Spray
10 Spray March 2019
NICHOLAS GEORGES
Director, Scientific Affairs, HCPA
1For U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures: https://www.cmtradelaw.
com/2018/10/latest-u-s-trade-actions-tariffs-and-other-countries-retaliatory-measures/