Posted by Michael Woods on Jun 1, 2018

On May 31, 2018 the U.S. Secretary of Commerce, Wilbur Ross announced that the section 232 tariff on steel and the 10% tariff on aluminum would go into effect June 1st with respect to imports from Canada, the EU, and Mexico. All three had been give exceptions following the March  8th decision by the U.S. president to impose these measures pursuant to section 232 of the Trade Expansion Act 1962 on the basis of national security concerns. For more details regarding the decision and the products covered see our earlier report –  https://www.wl-tradelaw.com/steel-aluminum-and-the-wtos-pandoras-box-part-ii/ and https://www.cbp.gov/trade/programs-administration/entry-summary/232-tariffs-aluminum-and-steel Earlier this month the U.S. Administration announced the initiation of a section 232 investigation into the imports of auto on a global basis (including Canada and Mexico). Canada, the EU. and Mexico reacted quickly with plans to launch trade challenges (WTO, NAFTA) and to retaliate within the next several weeks.   For more details on Canada’s $16.6 Billion list of suggested products to be targeted (to be targeted commencing) July 1st ) see – https://www.fin.gc.ca/activty/consult/cacsap-cmpcaa-eng.asp  Note Canadian individuals and firms are invited to comment within the next 15 days. More to...

Posted by Michael Woods on Mar 12, 2018

On Thursday March 8th, President Trump followed through on his threat to impose tariffs on all of steel (25%) and aluminum (10%) on a global basis. The Proclamations on the two products are notable in that it aims to link the tariffs to the national security of the United States.  “The persistent threat of further closures of domestic steel production facilities and the “shrinking [of our] ability to meet national security production requirements in a national emergency.” This same rationale is used to justify exempting both Canada and Mexico.  As the Proclamation on steel sets out: Given our shared commitment to supporting each other in addressing national security concerns, our shared commitment to addressing global excess capacity for producing steel, the physical proximity of our respective industrial bases, the robust economic integration between our countries, the export of steel articles produced in the United States to Canada and Mexico, and the close relation of the economic welfare of the United States to our national security …  the necessary and appropriate means to address the threat to the national security posed by imports of steel articles from Canada and Mexico is to continue ongoing discussions with these countries and to exempt steel articles imports from these countries from the tariff, at least at this time.  I expect that Canada and Mexico will take action to prevent transshipment of steel articles through Canada and Mexico to the United States. However the President added an important caveat and linked the exemption to the ongoing NAFTA negotiation: Without this tariff and satisfactory outcomes in ongoing negotiations with Canada and Mexico, the  [aluminum and steel] industry will continue to decline, leaving the United States at risk of becoming reliant on foreign producers of steel to meet our national security needs — a situation that is fundamentally inconsistent with the safety and security of the American people …  Note that “steel articles” are defined at the Harmonized Tariff Schedule (HTS) 6‑digit level as:  7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications. “Aluminum articles” are defined in the Harmonized Tariff Schedule (HTS) as:...

Posted by Michael Woods on Mar 9, 2018

President Trump has followed through on his promise to impose significant tariffs on imports of steel (25%) and aluminum (10%).  Canada and Mexico were exempted in the context of the ongoing tri-lateral negotiations.  As the President put it; “… we’re going to hold off to see “see whether or not we’re making a deal on NAFTA.”  The threat of this action and then announcement that the duties will go into force within the next fifteen days has led to swift responses from U.S. trade partners and raises the spectre of a global trade war.  The president appears to welcome a trade war as “good (and) easy to win.” The U.S. Administration is proceeding pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862) which authorizes the U.S. Secretary of Commerce to conduct comprehensive investigations to determine the effects of imports of any article on the national security of the United States.  Although this issue appears to be new, the Department of Commerce initiated the Section 232 investigation in April 2017 in response to an order from the President. It has now completed its work It released its findings last week. Some may find that Section 232 is part of the Trade Expansion of Act of 1962 to somewhat ironic in that  that legislation was passed by Congress in order to give the White House the to negotiate the deep tariff reductions that lead to the successful conclusion of the Kennedy Round of GATT.  Ironic in that some commentators fear that we may now be moving back to the time of high tariffs and other trade barriers which helped contribute to the Great Depression of the 1930’s.  Section 232 was written in the dark days of the Cold War and was included in the Act in order to give the President the ability to protect the national security of United States by reviewing the effects of imports of any articles in that context.  If the Secretary of Commerce finds that imports threatens to impair U.S. national security, the President has broad power to impose trade remedies such as tariffs and quotas.  It was inspired by and...

Posted by Gordon LaFortune on Feb 16, 2017

The February 13, 2017 Washington meeting between President Trump and Prime Minister Trudeau was a success with respect to trade relations between the two countries. Rather than taking an aggressive anti-NAFTA stance, as some had feared, President Trump noted that the United States has an “outstanding trade relationship with Canada” and stated that his goal was to “tweak” the NAFTA with regard to Canadian trade. The apparent result of the meeting was an implicit agreement to change the NAFTA in a way that increases the benefits for Canada and the United States; the best result that could be expected at this time. While this was a positive outcome, any change to NAFTA will result in winners and losers and more so if the simple tweak is not that simple. President Trump’s positive tone should not have come as a surprise. Although most Canadians tend to see Canada as the weak partner relative to the United States, available data shows that a healthy bilateral trade relationship has developed between Canada and the United States under NAFTA. Canadian officials point out that Canada – U.S. trade is worth approximately $2 billion per day and that Canada is the largest export market for 35 U.S. states. While this is impressive, it is more important to consider the U.S. perspective to gauge its view of the value of Canadian trade. Canada’s value as a trade partner can be gleaned from U.S. – Canada Trade Facts published by the U.S. Trade Representative, which reported that in 2015: Trade in goods between Canada and the U.S. was worth approximately USD $575 billion with Canada enjoying a USD $15 billion trade surplus. Although Canada was the United States’ second largest trade partner, it was the largest export market for U.S. goods with total exports to Canada worth approximately USD $280 billion. Although this was down approximately 10% over 2014 figures, total U.S. exports to Canada since NAFTA have increased 179% and account for approximately 18.5% of total U.S. exports. Trade in services between Canada and the United States was worth approximately USD $87.5 billion with the U.S. enjoying a USD $27.1 billion surplus. The value of...

Posted by Michael Woods on Feb 10, 2017

On the eve of an official visit to Canada almost twenty years ago Canada in one of his weekly radio addresses President Ronald Reagan spoke to the American people about and his broad vision for the future. He began by quoting from President John F. Kennedy’s 1961 speech to a joint session of Parliament in Ottawa; Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder. President Kennedy’s words occurred to me when I reflected on the recent American Conference Institute Forum on U.S. Export and Re-Export Compliance in Toronto where Jean-Marc Clément and I were among the presenters. My panel featured two senior representatives of Canada’s aerospace industry whose experience and expertise allowed them to address the specifics of Canada’s Controlled Goods Program (CGP) and the Enhanced Security Strategy (ESS) with great facility. That freed me up to make a few comments on the “big picture” and so I reminded the conference participants – Canadians and Americans engaged in the aerospace, defence, and high-tech sectors – that their work represented a vital element in the $ 2.4 billion a day bilateral trade relationship between our two countries. I was thinking of President Kennedy’s words in the context of both these key sectors and the Canada-U.S. partnership –  one that is built on much more than economic self-interest. Geography, history and necessity have created a unique and enduing alliance. At this conference we addressed one important product f that alliance. The “Canadian Exemption” allows U.S. suppliers to export certain export controlled goods to Canadian recipients registered in the CGP. At last week’s conference, I referred to the hard work of business people on both sides of the border that makes these special bilateral measures work and the free trade- driven approach that Professor Michael Hart refers to as “embedded in the industrial structure of both countries.” I also pointed to the hard work of government officials in building the regulatory bridge that accounted the need to maintain and grow bilateral trade and economic integration while addressing...

Posted by Jean-Marc Clement on Dec 13, 2016

Free trade is complicated business, as will soon find out US president-elect Donald Trump. NAFTA may very well be up for a major grooming, but CETA (crossing fingers now) will increase US exports to Canada and advance the balance of trade in favor of the Americans. And a healthy trade balance is a principle very dear to Mr. Trump who’s looking to restore fairness in trade deals. On the flip side, are more imports bad for the Canadian economy? Imports typically get a bad rap and are usually seen as the culprit in international trade. Well the answer is no, considering that those imports will create jobs and provide Canadian export opportunities with the EU. And Canada is well positioned to attract those US manufacturers and investors who will be looking north to get their goods into the EU market. One of the least talked about repercussion of CETA is the impact it will have on US manufacturing moving to Canada. Perhaps not the entire US plant will be moving here, but some part of the manufacturing process will certainly migrate north. Most CETA analysis reported in Canadian media focuses on threats to certain Canadian industries; attention hasn’t yet shifted south concerning our trade with the USA. No doubt US manufacturers will have a serious look at Canada to produce goods that are primarily aimed for EU clients, in addition to serving their Canadian market. Some serious planning will be going in meeting rooms across the fifty states: How to manufacture enough in the US to ship NAFTA qualifying inputs/components duty free across the Canadian border, and then sufficiently transform or add value to those inputs/components in Canada to make a qualifying CETA good entering the EU with preferential treatment? That will be the question. Increasingly US exports to the EU will shift to Canada. Semi-manufactured US goods will come to Canada first, where sufficient Canadian content can be added to qualify for CETA. Although not an agreement that should concern American manufacturers at first glance, they will soon be learning CETA rules of origin that matter most to them. Perhaps getting better at it then most Canadian manufacturers...