Shutdown could impact ITC’s work on USMCA report

A partial federal government shutdown continues as a critical deadline in the congressional consideration process for the agreement looms.

Shutdown could impact ITC’s work on USMCA report

A partial federal government shutdown continues as a critical deadline in the congressional consideration process for the agreement looms.

Shutdown could impact ITC’s work on USMCA report

A partial federal government shutdown continues as a critical deadline in the congressional consideration process for the agreement looms.

 
The ongoing closure of the International Trade Commission (ITC) could complicate its submission of a likely economic impacts report on the U.S.-Mexico-Canada Agreement (USMCA) due to Congress on March 15, trade analysts told American Shipper.
    A question emailed to an ITC spokesperson regarding the report’s status generated an automatic reply stating that the commission has “ceased regular operations” and that a response couldn’t be submitted until it receives funding.
    “Certainly the shutdown delays their work,” Center for Strategic and International Studies senior adviser Bill Reinsch said in an email.
    With ongoing furloughs affecting ITC employees, it’s difficult to imagine that the commission is working on the study, Reinsch said.
    Trade Promotion Authority (TPA) legislation states that ITC studies on the likely economic impacts of free trade agreements are to be submitted to Congress 105 days after the U.S. enters into a trade agreement. Representatives of USMCA member countries signed the pact on Nov. 30, giving the commission until March 15 to submit the report.
   “The ITC can’t function right now,” Heritage Foundation trade economist Tori Whiting said in an interview. “They’re not allowed to.”
    There’s no clear sense on how much of the report has been completed, so it’s tough to gauge when the report will be released, she said.
    But even if the ITC submits the report after March 15, “there’s no TPA jail,” Wiley Rein attorney Stephen Claeys said in an interview. “They can go past [that date], and what’s anybody going to do about it?”
    The Trump administration can pressure the ITC, but success could be limited, because the commission operates independently, outside of executive branch control, according to Claeys, who worked as a trade counsel for the House Ways and Means Committee from 2011 to 2017, during which he drafted and helped to pass TPA.
    Different elements associated with the USMCA report have contrasting influences on the timing of its release, according to Reinsch.
   Some have suggested the analysis will be less complicated than previous reports because tariffs between NAFTA parties are already mostly zero, yet ITC Chairman David Johanson has said USMCA’s automotive rules of origin are very complicated and will take some time to examine, Reinsch noted.
    And while many analysts expect the report to indicate no significant overall impact of the USMCA to the U.S. economy, that prospective conclusion doesn’t necessarily mean less work for ITC staff, Reinsch said.
    Nothing is stopping the independent ITC from proclaiming that they will postpone the submission of the report because of days lost during the shutdown, Claeys said.
    But Reinsch and Claeys said that because the ITC started work on the report before the USMCA was signed, completion by March 15 is possible.
    In the broader context of USMCA approval, the government shutdown could hurt the Trump administration’s ability to quickly advance USMCA implementing legislation by impairing critical outreach efforts to Capitol Hill, Claeys said.
   For Congress, the federal shutdown “takes all the air out of the room so nothing else can be worked on and discussed,” he said.
    The Trump administration isn’t required to wait for the ITC to submit its report before sending implementing legislation to Congress, but most observers argue it would be wise to wait, Reinsch said.
    “Otherwise you give opponents an easy argument — the administration wants you to vote on an agreement before we know what its effect is going to be,” Reinsch said. “At the same time, the administration is also not required to submit the bill once the ITC report is finished. There is no statutory timeline for submitting the bill.”
    The administration must submit a copy of the pact’s final legal text and a draft statement of administrative action describing the administration’s interpretation and application of USMCA for purposes of domestic law and international obligations at least 30 days before the Trump administration submits to Congress a draft implementation bill and other final documentation required by TPA.
    Then, submissions of the draft implementing bill, final statement of administrative action and other supporting information allow Congress to consider final implementation legislation.
   Although TPA sets forth several administrative requirements, it’s ultimately up to Congress to decide whether to advance any implementing bill it receives, and it’s not politically feasible that a Democrat-controlled House, for instance, would consider the legislation prior to receiving the ITC report, Claeys said.
    Before Congress ultimately passed the implementing bill for the U.S.-Colombia Free Trade Agreement in October 2011, House Speaker Nancy Pelosi, D-Calif., squashed consideration of an earlier version of the legislation during the George W. Bush administration in April 2008, about a year and a half after the countries entered into the agreement, Claeys mentioned.
    “They can just turn off the clock, and say, ‘Look, we’re just not going to follow it,’ and really there’s nothing the administration can do to force them to do it,” Claeys said.
Normally, the fourth quarter is a peak season for air cargo. So, essentially flat growth in November is a big disappointment. While our outlook is for 3.7 percent demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs.
The Drewry-assessed World Container Index, a composite of container freight rates on eight major routes to and from the U.S., Europe and Asia, was down 5.7 percent to $1,689.95 per 40-foot container as of Jan. 10.
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