Wednesday, April 14, 2010

Wednesday Quick Hits

I wish I could say I had a lot of good news today, but, well, I'd be lying.  So let's just give today's quick hits the Band-Aid treatment and rip 'em off as fast as possible:
  • Mexico, US Still Miles Apart on Trucking Dispute.  Reuters reports on something that I unfortunately forecast months ago: the US-Mexico dispute over America's NAFTA-illegal ban on Mexican trucks won't be resolved for a long, long while.  Just how slow are things moving, you ask?  Well, on Monday, the two sides finally agreed to establish, in the words of Transportation Secretary Ray LaHood a "a working group to consider next steps of the cross-border trucking program."  In other words, after 14 months of Mexican retaliatory sanctions on $2.4 billion worth of US exports, the US and Mexico have finally agreed to form a bilateral group to talk about how to ultimately resolve the problem.  Eureka!  Of course, with 78 teamster-loving, perma-campaigning members of Congress openly demanding the renegotiation of NAFTA's liberalized trucking requirements, the administration's slow-walk of this dispute isn't really surprising.  Frankly, I'm just surprised that we didn't just try to pay the Mexicans off.
  • US Promises on "Zeroing" Mean Zilch to Our Trading Partners.  BNA reports (subscription) that Vietnam and South Korea have officially lodged new WTO complaints against the United States' use of zeroing in antidumping investigations and reviews.  Those complaints are available here and here, and it appears that Vietnam is challenging the US practice in both original investigations and annual reviews, while Korea is challenging only original investigations.  As I've noted repeatedly, the US has been under constant fire for its use of zeroing, and it consistently loses on the issue at the WTO.  And while US officials have recently claimed that the administration will end the practice, they haven't done that yet, and America's trading partners obviously won't stop complaining until the practice is truly dead.  Indeed, as BNA notes, "The United States argues it cannot correct investigation results based on the illegal use of zeroing without a WTO case being filed by an aggrieved country.... Several countries, however, believe Washington has shown bad faith on the issue."  The result of US "bad faith," of course, is more WTO challenges like the Vietnamese and South Korean complaints, as well as eventual retaliation when the US loses and ultimately fails to comply with the WTO's rulings.  The EU has recently asked the WTO for permission to impose $311 million in retaliatory sanctions, and Japan might seek another $248.5 million in retaliation.  (Oh goody.)  Closing thought: given that the Korean complaint is only on original investigations, it's quite likely that the United States will "settle" the dispute quickly like it has in past cases.  The Vietnamese complaint, on the other hand, promises to be more interesting: if the US truly intends to end zeroing in both original investigations (which it did in 2007) and annual reviews, USTR would "settle" the Vietnamese case too, right?  Hmm.  Well, I don't know about you, but I'll believe it when I see it.
  • New Steel Pipe Duties Could Drill US-China Trade Relations (and Energy Prices!).  I've frequently stated that US trade remedies (antidumping and countervailing duty) actions against Chinese imports shouldn't be considered a good litmus test for US-China trade relations, but the latest Commerce Department ruling against Chinese imports of "oil country tubular goods" (human language: steel pipe used in oil and gas wells) is going to sting a little.  Why?  Well, as Reuters reports, this is the largest US case against Chinese imports ever - OCTG imports topped $1 billion in 2009 and $2.5 billion in 2008 - and anti-dumping duties ranged from about 30% to 100% (on top of countervailing duties of 10% to 15%).  That's a pretty big hit for Chinese exporters and, of course, US businesses and consumers.  Indeed, as Oil & Gas Journal indicates, the new duties will likely have rather painful consequences for American energy producers and drill pipe suppliers/retailers.  Considering that US natural gas producers (who use the targeted drill pipe) are one of the few American industries experiencing really good times right now, a ruling like this could significantly increase costs and thus blunt the impressive economic benefits coming from the booming US sector.  Just what our economy needs right now, eh?  Well, at least energy prices aren't climbing.  Oh, wait.

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