Tag: trump

  • The Trump Presidency – Implications and Opportunities for Caribbean IFCs

    The Trump Presidency – Implications and Opportunities for Caribbean IFCs

    Alicia Nicholls

    On March 31, 2017 I was a panellist representing FRANHENDY ATTORNEYS at the Barbados International Business Association (BIBA) Barbados International Business Forum 2017 entitled “Is the Barbados International Business Sector Under Attack?” held at the Lloyd Erskine Sandiford Centre in Barbados.

    I was on the second panel which discussed the topic “The Trump Presidency – Implications and Opportunities for IFCs“. My esteemed fellow panellists were Jeremy Stephen, Economist and UWI Lecturer, Lisa Cummins, Executive Director of UWIConsulting and Cadian Dummond, Attorney at Law. The discussion was expertly moderated by Melanie Jones, Partner at Lex Caribbean Attorneys-At-Law.

    I spoke to the possible implications of the Trump Presidency in regards to de-risking, FATCA and visa restrictions.

    For those who missed the panel discussion and have expressed interest in my remarks, please find a copy of same in powerpoint form here. Enjoy!

    For more on past presentations I have done, please see news and announcements.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

     

     

  • President Trump’s Trade Policy Agenda for 2017 Released

    President Trump’s Trade Policy Agenda for 2017 Released

    Alicia Nicholls

    The Office of the United States’ Trade Representative (USTR) today released a preliminary report outlining President Trump’s Trade Policy Agenda for 2017.  It should be noted that this is a preliminary report prepared in order to comply with the statutory deadline for the report’s annual release March 1, but bearing in mind that President Trump’s nominee for USTR, experienced trade lawyer and former deputy USTR under former President Ronald Reagan, Robert Lighthizer, has not yet been confirmed by the Senate. As such, it has been noted in the report that  a more detailed version will be published once the USTR has been confirmed and has had the opportunity to provide input in that report’s development.

    As stated in the report, President Trump sees bipartisan support by the American people for a complete overhaul of US trade policy. In order to effect this, the report states that the overarching purpose of the Trumpian trade policy “will be to expand trade in a way that is freer and fairer for all Americans”.

    To this effect, the report outlines four priorities identified by the Administration:

    (1) defend U.S. national sovereignty over trade policy;

    (2) strictly enforce U.S. trade laws;

    (3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and

    (4) negotiate new and better trade deals with countries in key markets around the world.”

    Several preliminary things stand out from the report:

    (1) The report highlighted that the US is not bound by WTO decisions and evinces a policy stance going forward not to accept any adverse rulings from the WTO. The paragraph below taken directly from the report is instructive:

    “And, when the WTO adopts interpretations of WTO agreements that undermine the ability of the United States and other WTO Members to respond effectively to these real world unfair trade practices with remedies expressly allowed under WTO rules, those interpretations undermine confidence in the trading system. None of these outcomes is in the interest of the United States or a healthy global economy.”

    This is coupled with what appears to be the Trump administration’s plans to make greater use of unilateral remedies.

    US disregard for adverse WTO rulings is a troubling prospect for many reasons, but particularly for small island states’ enforcement of their trade interests. It should be noted that the Caribbean island state of Antigua & Barbuda is still awaiting compensation from the US, after many years, since winning the US-Gambling dispute. It remains to be seen whether this will ever be resolved.

    (2) Based on the arguments made in this report, I think it likely that Trump’s team will advocate for changes to be made to the WTO’s dispute settlement mechanism for their own interest.

    (3) The Administration has stated its intention to not only more aggressively go after countries the US deems to be “engaging in unfair trade practices”, but will also with equal zeal go after countries which do not sufficiently open their markets to US exports. As mentioned previously, the pursuit of countries’ trading practices which are perceived to be inimical to US interests is not new and has been US policy for years. The singling out of China in this regard came as no surprise.

    (4) The Trump administration’s criterion for whether a trade agreement is bad or good appears to be based solely on whether the US has a trade (merchandise) deficit with the country in question. This is not just a facile way of assessing the merits of a trade agreement, but also ignores services trade and investment which in many cases the US has a surplus with its trading partners.

    (5) While there are references to “free and fairer trade” throughout the report, I believe the term “zero sum” trade may be the more appropriate term to describe these proposals.

    The full report may be viewed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

     

  • Trump Trade Policy ‘Achievements’: The First Month

    Trump Trade Policy ‘Achievements’: The First Month

    Alicia Nicholls

    February 20th marked United States (US) President Donald Trump’s first full month in the Oval Office. And what a month it has been! We have seen a lot of focus by his administration on immigration. But what about trade? Trade occupied a major part of the platform of then US presidential candidate Trump. In his Contract with the American Voter , he had enumerated several trade-related pledges as part of his 100-day action plan to “Make America Great Again”. His first one hundred days are not yet up, but it is worth looking at what have been the achievements towards his “America first” trade policy during his first month in office.

    President Trump’s Trade Promises

    As a reminder, these were the major trade-related promises gleaned from his Contract with the American Voter. He pledged to:

    • Announce his intention to renegotiate the North American Free Trade Agreement (NAFTA) or withdraw from the deal under Article 2205;
    • Announce the US’ withdrawal from the Trans-Pacific Partnership;
    • Direct the Secretary of the Treasury to label China a currency manipulator;
    • Direct the Secretary of Commerce and U.S. Trade Representative to identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately;
    • Work with Congress to introduce the “End Offshoring Act” to establish tariffs to discourage US companies from laying off their workers in order to relocate in other countries and ship their products back to the U.S. tax-free.

    Three main reasons possibly explain Mr. Trump’s slow progress on his trade agenda thus far. Firstly, two key members of his trade team  who are needed to help effect his policies are still awaiting Senate confirmation, namely his United States Trade Representative (USTR) pick, noted trade lawyer and former deputy USTR under President Ronald Reagan, Robert Lighthizer, and his commerce secretary nominee, Wilbur Ross, an investor and former banker.

    Secondly and related to the first point,Mr. Trump’s policy inexperience means he will likely be more reliant on the guidance and advice of his yet-to-be confirmed trade team than would other presidents. Thirdly, it is possible that Mr. Trump is realising that there is a wide chasm between presidential campaign rhetoric and how Washington and the role of president actually work, particularly when contrasted with being a CEO of one’s own company.

    What has he achieved so far and what hasn’t he?

    With that in mind, it is not surprising that of his stated promises, his only substantive trade policy achievement thus far has been directing the USTR via a presidential memorandum to withdraw the US from the Trans-Pacific Partnership (TPP). Withdrawal from the TPP was a low-hanging fruit. The US had signed but not yet ratified the Agreement and there was almost bi-partisan criticism of the deal. The acting USTR has since followed up on this memorandum, submitting a withdrawal letter to the TPP depository and TPP partners, and indicating their interest in bilateral trade deals with former TPP partners with which the US does not currently have a trade agreement.

    Further to the latter point, President Trump and his soon-to-be confirmed trade team have been consistent so far on their preference for bilateralism over multilateralism. Trade was one of the hot button topics at his initial meetings with United Kingdom (UK) Prime Minister Theresa May,   Japan’s Shinzo Abe and Canadian Prime Minister, Justin Trudeau.

    In keeping with his campaign promise that post-Brexit UK would not be at the back of queue for a trade deal, Mr. Trump received Prime Minister May as his first foreign head of government. The two have reportedly agreed to establish working groups in regards to a possible post-Brexit US-UK trade deal. Indeed, the UK House of Common’s International Trade Committee has already launched an inquiry on this.  However, formal negotiations on any such deal can only legally begin once the UK concludes its withdrawal agreement with the European Union (EU) pursuant to Article 50 of the Lisbon Treaty.

    More immediately possible, however, may be trade talks between Japan and the US. Despite Mr. Trump’s earlier criticism of former TPP partner Japan’s “unfair trade practices”, the meeting with Mr. Abe went cordially, with agreement in principle for beginning US-Japan trade and investment talks. It should be noted that Japan has a large trade surplus with the US, boosted particularly by automobile exports, which might be a bone of contention in any trade talks between the two countries.

    Outside of withdrawing from the TPP and these preliminary aspirational trade talks, there has been limited progress so far on his specific campaign promise in comparison to the ambitious agenda he proposed. So far he has not labelled China a “currency manipulator”. Indeed, the International Monetary Fund (IMF) had indicated that China’s currency was no longer below value. Nonetheless, Trump’s Secretary of the Treasury, Steve Mnuchin, hesitated in a recent CNBC interview to “pass judgment” on China’s currency practices, stating his preference to go through the US Treasury’s established process on judging whether China (and other countries) was manipulating its currency to boost exports.

    Additionally, President has not yet triggered the 90-day notice period by informing Congress of his intention to renegotiate NAFTA, which he had promised to do “immediately”. While Mr. Trump has criticised the shift of US jobs to Mexico and the US’ large merchandise trade with that NAFTA partner, it is also not clear on what particular provisions of the agreement he wishes to “tweak”.

    What is clear is that Mr. Trump’s main grievance with NAFTA appears to be with Mexico more so than with Canada. Indeed, Mr. Trump took a less protectionist stance towards Canada during his meeting with Prime Minister Trudeau, speaking collectively of keeping jobs and wealth within North America (US and Canada) and not just the US. While reporting on his meeting with Canada’s Prime Trudeau indicates that he would be looking for greater access by American firms to Canadian procurement markets, it is unclear when the NAFTA renegotiation talks will begin.

    With respect to the promise to direct the USTR to identify countries engaging in “unfair trade practices”, his USTR nominee is still awaiting confirming. However, it has been longstanding US policy to challenge nations whose actions are against US economic and trading interests, as evidenced by the large number of disputes brought by the US before the WTO’s dispute settlement body.  Therefore, President Trump will not be doing anything more than what previous US administrations have done in this regard, although we will likely see an even more aggressive stance towards China’s trade practices.

    Mr. Trump has spoken frequently against US companies which offshore production processes (and therefore jobs), as evidenced by his deal with air conditioner maker Carrier. He has promised to, but has not yet proposed, legislation to impose a punitive tax on US companies seeking to offshore may receive stiff opposition from the business community and from Congress.

    He has, however, vacillated in his views on the controversial Border  Adjustment  Tax (BAT) proposal being pushed by Congressional Republicans as part of their tax reform plan. Different from Trump’s border tariff proposal, the GOP BAT Proposal seeks to convert the US corporate income tax from an origin-based to a destination-based tax. It would prevent companies from deducting the costs of their imported goods as an expense, while giving a tax break to companies which export. However, while some business leaders have praised the idea, some economists have argued that it will not boost US exports.

    What next?

    Besides the questions surrounding the renegotiation of NAFTA and which other nations the Administration will earmark for future bilateral deals, it is unclear what will be the Trump administration’s stance on other existing trade agreements, and on the on-going negotiations, including the Trans-Atlantic Trade and Investment Partnership (TTIP) with the EU and on the plurilateral negotiations such as the Trade in Services Agreement (TISA). There is also need for clarity on the Administration’s position on key multilateral trade issues, bearing in mind the WTO’s upcoming 11th Ministerial Conference in Buenos Aires at the end of this year.  Nonetheless, it is early days yet and it is hoped there will be greater policy clarity before the one hundred days have elapsed.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.