The United States and Mexico agreed to a new trade deal this week regarding the sugar trade, but some viewed it as a precursor to negotiations on the North American Free Trade Agreement (NAFTA).

American sugar refineries previously complained about Mexico introducing cheap sugar into the U.S. economy, while simultaneously refusing to export raw sugar to their American counterparts, according to The New York Times. This has resulted in the movement of sugar-based jobs from America to Mexico over the years.

Commerce Secretary Wilbur Ross had previously threatened an 80 percent tariff if the two sides did not reach a deal by early this month, according to Politico.

The talks between the two neighboring countries began in March, about two months after President Donald Trump took office on a platform of protecting American workers and companies. Ross led the negotiations with Ildefonso Guajardo, Mexico’s economy minister, The New York Times reported. At a news conference in Washington D.C., Ross said:

We have gotten the Mexican side to agree to nearly every request made by the U.S. sugar industry to address flaws in the current system and ensure fair treatment of American sugar growers and refiners.

Some politicians, businessmen, and analysts have viewed these negotiations as a possible preview to upcoming discussions on the existing NAFTA deal. Those negotiations are expected to begin in August, according to Reuters.

Just the fact that the Trump Administration dove into negotiations with a country they have often insulted was an encouraging sign, according to CNN Money.

U.S. Agriculture Secretary Sonny Perdue said the deal “sets an important tone of good faith leading up to the renegotiation of the North American Free Trade Agreement.”

Under the terms of this new agreement, Mexico would greatly reduce the amount of refined sugar it exports to America while increasing its raw sugar exports. But many are unhappy with Trump’s first major economic agreement.

One American sugar producer, Ohio-based Spangler Candy, has voiced its displeasure at the deal. Spangler Candy, which has moved plants into Mexico for access to cheaper sugar, believes that the administration has failed on one of its main campaign promises.

“To be honest, I’m just very disappointed that the Trump administration didn’t do more to level the playing field, which is something they promised over and over again to do for the American worker,” Spangler Chief Executive Officer Kirk Vasha said in a phone interview with Reuters.

U.S. Coalition for Sugar Reform, a trade group representing U.S. sugar buyers, disavowed the deal because of the burden raising tariffs will put on consumers. The coalition estimates that the cost to consumers in higher prices will be around $1 billion, according to Reuters. The Sweetener Users Association also projected the costs at around $1 billion.

Hershey and Mondelez International, which owns the Kraft brand, both referred Reuters to those price estimates as their response to the deal. Ross has said he hopes that their concerns can be calmed in the drafting process of the deal.

So while the deal may not be ideal in the view of some companies or consumers, the deliberations bode well for future compromise between the two nations. After feuding between Mexican leaders and Trump, or his surrogates, throughout his campaign, the negotiations offered a glimpse of the upcoming collaboration regarding NAFTA.

Trump has repeatedly promised to bring jobs back to America, which he attempted to accomplish in this sugar deal. Soon enough he’ll have the chance to work on NAFTA, another major point of his throughout the campaign.

I will renegotiate NAFTA. If I can’t make a great deal, we’re going to tear it up. We’re going to get this economy running again. #Debate

— Donald J. Trump (@realDonaldTrump) October 20, 2016

Even those from the Mexican side feel the sugar deal bodes well. Carlos Vejar, a former senior Mexican trade official who served as general counsel for the trade for Mexico’s Economy Ministry, believes that sugar is “obviously an issue that is so controversial it is a good example that agreements can be reached.”

Trump’s main campaign promise was to fix America’s place in the global economy and to bring jobs back. Many are disappointed in his first attempt, so perhaps he can do better when it comes to renegotiating NAFTA.

Josh Schmidt

Josh Schmidt is an editorial intern and is a native of the Washington D.C Metropolitan area. He is working towards a degree in multi-platform journalism with a minor in history at nearby University of Maryland. Contact Josh at staff@LawStreetMedia.com.

The post U.S. Sugar Deal with Mexico Previews NAFTA Discussions appeared first on Law Street.

A confusing couple of hours on Thursday had people on Twitter asking a vital question: are avocado prices about to skyrocket? Of course, people also questioned whether the U.S. is on the brink of a trade war with Mexico, and how the wall on the Mexican border might ultimately be paid off by the American people. And this whole thing actually started on Wednesday, President Donald Trump signed an executive order to jump-start the building of the wall, which he reiterated will be, in one way or another, paid for by Mexico.

Mexican President Enrique Peña Nieto did not take kindly to Trump’s message. “I regret and condemn the United States’ decision to continue with the construction of a wall that, for years now, far from uniting us, divides us,” Peña Nieto said in a video message Wednesday evening. Trump responded, as he is wont to do, on Twitter:

The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers…

— Donald J. Trump (@realDonaldTrump) January 26, 2017

of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.

— Donald J. Trump (@realDonaldTrump) January 26, 2017

On Thursday, Peña Nieto canceled his meeting with Trump. Later that day, at a GOP retreat in Philadelphia, Trump indicated that a change in the tax code could provide funding for the border wall. “We’re working on a tax reform bill that will reduce our trade deficits, increase American exports, and will generate revenue from Mexico that will pay for the wall if we decide to go that route.” he said.

A few hours later, at a news conference in Washington D.C., White House Press Secretary Sean Spicer said that Trump is embracing a House Republican plan that would raise import tariffs to 20 percent. He said the proceeds from that tariff would pay for the wall, which could cost as much as $20 billion to build. After a few hours of frenzied criticism, Spicer walked his statement back, saying the 20 percent import tax is just “one idea.” Trump’s Chief of Staff Reince Priebus said the administration was considering a “buffet of options.”

So while the U.S.-Mexico relationship may have been damaged on Wednesday and Thursday, it is unclear if there will be a 20 percent tax levied on Mexican goods. If there is however, it could be American consumers who ultimately foot the bill for the wall. Companies that sell Mexican imports in the U.S. could either increase prices to offset the increased tariffs, or they could absorb the tax and accept decreased profits.

Imported goods from Mexico can be found all over the U.S., from grocery produce bins to suburban driveways. In 2015, Mexico was the third-largest supplier of goods to the U.S., with $295 billion worth of goods funneling into the country. From vehicle imports ($74 billion) and electrical machinery ($63 billion), to vegetables ($4.8 billion) and fruits ($4.3 billion), Mexican-made or Mexican-grown products are consumed all over the U.S. And yes, that includes avocados: 78 percent of all avocados grown in Mexico are exported to the U.S.

Editor’s note: the article previously stated Mexico imported $60 billion worth of goods to the U.S. in 2015. The correct figure is $295 billion. 

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post Will Trump Raise Tariffs on Mexican Imports to Pay for his Wall? appeared first on Law Street.

In the latest action taken by the U.S. government against what it deems as unfair trade practices by China, U.S. Trade Representative (USTR) Michael Froman announced on Tuesday the U.S. intends to file a complaint with the World Trade Organization against high poultry tariffs imposed by China.

Calling China’s heavy duties on poultry imports from the U.S. “unfair” and “unjustified,” Froman reiterated the Obama administration’s support of U.S. farmers against Chinese actions: “American farmers deserve a fair shot to compete and win in the global economy and this Administration will continue to hold China responsible when they attempt to disadvantage our farmers, businesses and workers,” he said.

Trade between the world’s two largest economies has long been a point of contention. This would be the 12th action the administration has brought to the WTO in regards to Chinese trade policy. The U.S. has won all previous cases.

The most recent WTO complaint brought by the U.S. came in 2013, when it won the international trade body’s support in enforcing a ruling that required China to halt its average of 64.5 percent duties on U.S. poultry producers, which forced the U.S. to cut its exports to the Asian power by 80 percent. 

In an email sent by Tyson Foods to Law Street Media, the processed poultry giant expressed support for the ongoing fight for freer markets in China:

“We believe in open trade and hope that our government’s latest action will result in a resolution of this issue soon,” a spokesperson from the company wrote.  

Following an outbreak of highly pathogenic avian influenza in December 2014, a handful of top importers of U.S. poultry–including mainland China, the country’s sixth most lucrative poultry market to which $153 million worth of chicken meat and eggs were sold in 2014–announced bans or restrictions on U.S. bred meat and eggs. Despite requests from the U.S. for China to lift the ban, and WTO-backed calls to lower poultry tariffs, China has yet to comply with either.

China’s import ban of U.S. bred chicken broiler parts–frozen thighs, breasts, and wings–would need to be lifted before any action taken by the WTO to force China to lower their anti-dumping and countervailing duties would have an effect. As Hong Kong interacts with international trading partners on its own, the trading decisions of Beijing only affect the mainland. 

Toby Moore, Vice President of Communications with the USA Poultry and Egg Export Council, an advocacy body for U.S. poultry exports, expects the ban to be lifted in the near future.

“Its been a long term issue and I think once China gets its economic issues straightened out I think [U.S.-China trade relations] will be a little better,” he told Law Street Media during a phone interview on Tuesday. “China tends to be a country that links trade issues with unrelated issues.”

Calling the U.S. and China trade relationship “tenuous,” Moore claims that historically, China’s stricter trade stances reflected unrelated domestic troubles, or a response to an unrelated action taken by the U.S. He speculated that China might respond to a threatening U.S. action–meeting with the Dalai Lama, for instance, or acting on China’s island building in the South China Sea–with an aggressive new trade measure.

However as the newest wrinkle in the tit-for-tat world of U.S. and Chinese trade turns out, Tuesday’s announcement came with a flurry of bi-partisan support from Senate members:

“Today’s announcement sends a clear message that the United States will continue to hold China’s feet to the fire until it plays by the rules and opens up its market to our poultry,” said Senator Chris Coons, a Democrat from Delaware and a co-chairman of the Senate Chicken Caucus.

“Trade works when the rules are followed, and it is imperative that China—the world’s second largest economy—lives up to the rules it agreed to when it joined the WTO in 2001,” said Senator Johnny Isakson (R-GA).

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post U.S. Complains: China’s Tariffs on Imported Poultry Too High appeared first on Law Street.

President Obama signed a bill this week that closes a nearly 85-year-old trade loophole allowing the import of slave-produced goods into the United States. The new regulations, which will affect a long list of goods known to be created by child or forced labor, will go into effect in about two weeks.

The loophole allowing goods made by child or forced labor into the United States is found in the Tariff Act of 1930. While these types of goods are traditionally prohibited under U.S. law, there’s an exception in the tariff–“consumptive demand.” Essentially what that means is that if it’s impossible to supply the domestic demand without importing products made via child or forced labor, those products are allowed to be imported.

The list of products that these new regulations will affect most heavily are cotton, sugarcane, tobacco, coffee, cattle, and fish. The Department of Labor’s list of goods produced by child labor or forced labor also includes things like gold, diamonds, electronics, and pornography–depending of course on the producing country.

There’s been a particular focus on the use of forced labor in the Thai fishing industry, after a number of exposes written over the last year have exposed the use of trafficked Rohingya migrants as slave workers on Thai fishing boats. According to the Guardian:

Hundreds of people are thought to have been traded as slaves to support Thailand’s $7.3bn seafood industry. Costco and CP Foods are facing a lawsuit, filed in California, to prevent the sale of Thai prawns/shrimp tainted by slavery. In January, European Union investigators visited Thailand to see whether it had made enough progress on the issue of slavery to avoid an EU-wide ban on seafood imports from the country.

Senator Sherrod Brown (D-Ohio) proposed the amendment that closed the loophole, and now his office is asking the U.S. Customs and Border Protection agency to begin enforcing the new roles as soon as they go into effect in 15 days. Brown stated:

It’s embarrassing that for 85 years, the United States let products made with forced labor into this country, and closing this loophole gives the U.S. an important tool to fight global slavery.

Brown is right–while this may mean less choices for consumers in the U.S., it will be a comfort to know that we no longer lend such support to forced labor.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post President Obama Bans Import of Slave-Produced Goods appeared first on Law Street.