Goods Flowing from China into the U.S. via Mexico Gaining Attention
In this video from The Franklin Partnership, contributing author Omar Nashashibi offers insight into what the Biden Administration is thinking related to domestic and global supply lines.
USTR Supply Chains Inquiry
The Office of the U.S. Trade Representative is seeking input from stakeholders by April 22nd on how the agency can “promote supply chain resilience.” In addition to the written comments due on April 22nd, members of the public can appear in person to testify at a hearing in Washington, D.C. on May 2nd. For those interested in speaking on the state of the supply line, a filing of notice of intent to testify at the hearing is due April 12. Reach out to CLA if you would like to file a statement or appear in person to testify.
In conversations with the Biden administrations and others in Washington, D.C., the Office of the USTR views this public comment period as an open canvas to receive stakeholder input. Their goal is to receive feedback not only on areas over which the USTR has jurisdiction, but also new tools Congress could bestow upon the Executive Branch.
They are interested in receiving information on sector-specific policy tools to strengthen manufacturing. This is an open invitation to assist the Biden administration in developing trade and investment policy to support investment in manufacturing. A focus is on preventing the “same offshoring that we have experienced over the past few decades,” and how to more strengthen mutual labor and environmental protections with allies.
USTR identifies several sectors of particular focus for the comment period, including, aerospace and components, automotive and parts, critical minerals, metals, semiconductors, renewables, textiles and pharmaceuticals and medical goods. The comment notice invites input from other sectors as well that “may need dedicated trade and investment policy approaches.”
The notice includes a list of 12 questions on which USTR is soliciting input, and one stood out for the way policymakers drafted the inquiry. Question 8, states, that:
“There is concern that preferential rules of origin in free trade agreements can operate as a ‘backdoor’ benefiting goods and/or firms from countries that are not party to the agreements and are not bound by labor and environmental commitments. What actions could be taken to mitigate these risks and maximize production in the parties?”
This is a clear reference to Mexico and transshipment of goods from China into the U.S. using the new NAFTA free trade agreement, known as the U.S.-Mexico-Canada Agreement, or USMCA. The U.S. is increasingly concerned over the surge in imports from Mexico in a range of goods that clearly originate, in whole or in part, through Mexico. Sources here in Washington indicate that the Biden administration is considering additional steps to prevent transshipment of products to avoid the 25 percent tariffs on direct imports from China.
Lawmakers on Capitol Hill are pressing for legislation that would allow the Commerce Department to apply tariffs on goods shipped through third-party countries. This is likely one of the tools outside groups will include in their comments to USTR that the Executive Branch could use to support U.S. manufacturing.
Sources indicate that following the hearing and filing of post-hearing briefs due on May 16, USTR may issue a report on its findings and trade policy recommendations intended to bolsters U.S. manufacturing and domestic supply lines. While the timing is uncertain, we could see a report issued in September of this year and may lead to new action by the Commerce Department and USTR related to enforcing existing trade laws and using enhanced and new tools to target imports.
In a related action, on March 7th, Secretary of Commerce Gina Raimondo met with the Advisory Committee on Supply Chain Competitiveness. Recharted in November 2023, Secretary Raimondo the Supply Chain Center created to partner with the private sector to prevent challenges in the supply chain.
The focus on downstream supply chains remains a priority for the White House and their National Economic Council, which is coordinating supply chain policy for the Biden Administration. The Commerce Department’s Supply Chain Advisory Committee, USTR’s public inquiry on trade policy, and the recent release of the President’s 2024 trade policy agenda on March 1, are all leading up to presenting a more comprehensive approach to trade policy than we have seen to this point in the Biden administration.
We will be watching the USTR hearing and comment period closely to identify which policies stakeholders recommend the Biden administration may work to implement. Trade is a top priority for the Biden administration and we will report back on what response we hear from USTR following the hearing on May 2nd.
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Jennifer Clement is an executive sales and marketing leader specializing in value creation for the C-suite. In her current role at CLA, Jennifer collaborates on strategy with executives of global manufacturing and distribution companies to accelerate results. Previously Jennifer served as a Global Business Acceleration Leader for Complete Manufacturing and Distribution (CMD). During her time with CMD, Jennifer lived and worked in Asia from 2015-2019. Prior to CMD, she spent 10 years in senior care technology. Jennifer started her career at Johnson Controls (JCI) and spent nine years in leadership roles; followed by five years at Rockwell Automation (ROK) leading c-suite strategy and marketing operations.