CTA views the Trade Security Act introduced last month in the Senate as a "tool" to fight President Donald Trump’s “failing tariff strategy,” said CEO Gary Shapiro Wednesday. Sen. Rob Portman, R-Ohio, introduced S-3329 with three co-sponsors to boost congressional oversight of the Trade Expansion Act Section 232 tariff process and require the Defense Department rather than the commerce secretary to justify Section 232 duties on national-security grounds. Congress has “limited tools” to dispute Trump's “unfounded” national-security claims as the basis to levy Section 232 tariffs on steel and aluminum “that are hurting American business and consumers,” said Shapiro. Portman is “uniquely qualified” as a former U.S. trade representative “to address targeted reforms that set clear guidelines on the president's misuse of his authority pertaining to trade," said Shapiro. Portman was USTR for a year beginning in May 2005 under President George W. Bush.

The Trump administration’s proposed Trade Act Section 301 tariffs on a third tranche of Chinese goods worth about $200 billion in customs value “would target many key components that make cloud computing possible,” reported the Information Technology and Innovation Foundation Tuesday. The administration “in theory” initiated the tariffs to “counteract unfair Chinese trade practices and improve U.S. competitiveness,” said ITIF. “But their practical effect would be to advantage foreign technology competitors, thereby threatening U.S. leadership in both the adoption and provision of cloud computing, and stunting U.S. economic growth,” it said. Though Chinese “innovation mercantilism” is a “laudable and necessary mission,” the administration needs to “seek alternative policy measures that do not raise the cost of key productivity -- and innovation-enhancing capital goods and services such as information technology and cloud computing,” it said. ITIF fears that tariffs would raise prices for businesses and consumers and force cloud-service providers to cut costs through job reductions or curtail spending on new data centers or the R&D “needed to stay ahead of international competitors,” it said. It also worries that cloud providers “may be forced to invest elsewhere to remain competitive,” it said. Tariffs also “threaten to disrupt finely crafted global supply chains for the manufacture of information-technology products,” it said. Those supply chains can’t “easily be reinvented in the short term without significant detriment to, and dislocation of, U.S. industry,” it said.

Though the vast majority of the nearly 3,000 comments in docket USTR-2018-0026 opposed a third tranche of Trade Act Section 301 tariffs on Chinese goods, Veeco Instruments supports the proposed duties on “indicator panels incorporating LCDs or LEDs” imported from China under the Harmonized Tariff Schedule’s 8531.20.00 subheading, said the company in Aug. 30 comments posted Sunday. Veeco also wants U.S. Trade Representative Robert Lighthizer to impose duties on six more tariffs lines of LED-related goods not currently proposed in the third tranche, said the company in a heavily redacted document to hide “business confidential” information. The eight-page document also contained roughly two dozen redactions to hide Veeco's identity, except for one reference by name to Veeco that apparently slipped through. A revised document posted in the docket Tuesday deleted that one Veeco reference and replaced the previous document, which is now listed in the docket as "restricted to show metadata only because it contains confidential business information data." The publicly traded Veeco did about $485 million in 2017 revenue, mainly through the sales of semiconductor process equipment used to produce LEDs and other components, said the company’s most recent SEC 10-K. Imposing tariffs on LEDs and products containing them will “ensure that Chinese producers” positioned to manufacture those products “will not benefit from having unfettered access to the U.S. market,” said Veeco. The tariffs also “will encourage U.S. consumers to purchase such products from other sources that do not rely on stolen intellectual property to make these products,” it said. Luke Meisner, the Schagrin Associates lawyer who filed the comments on Veeco's behalf, declined comment Tuesday.

Sen. Elizabeth Warren, D-Mass., wants the Commerce Department to open a probe into the Trump administration’s practices of granting exemptions to the Trade Act Section 232 tariffs on steel and aluminum, she wrote Inspector General Peggy Gustafson Wednesday. Warren’s staff’s investigation and media reports suggest the exemption process is “arbitrary and opaque, replete with mistakes, and subject to political favoritism,” she said. “It is therefore imperative that your office investigate.” Warren cited a report that Office of Management and Budget Director Mick Mulvaney was trying to use his influence to win a tariffs exemption for Element Electronics, whose president, Mike O'Shaughnessy, a former Polaroid and Frigidaire executive, contributed $5,400 to Mulvaney's 2016 congressional re-election campaign in South Carolina, where Element runs what it bills as the only LCD TV assembly plant in the U.S. Element is fighting proposed Trade Act Section 301 tariffs -- not Section 232 duties -- on the LCD panels and motherboards its Winnsboro, South Carolina, assembly plant sources from China. Element will be forced to close the plant and source finished TVs from China if the proposed tariffs go through, David Baer, its general counsel, testified at public hearings Aug. 21 (see 1808270004). Baer didn’t comment Friday.

No records exist at the Office of the U.S. Trade Representative explaining how and why the agency removed finished TVs from China from the first tranche of Trade Act Section 301 tariffs imposed July 6 (see 1806150030), USTR emailed Thursday. We filed a Freedom of Information Act request Aug. 6 asking the agency for copies of all emails, reports and any other physical or electronic documentation shared among the 17 members of the interagency Section 301 committee charged with deciding which tariffs would stay and which would go from the list released April 6. We sought documents that would shed light on the deliberations among the committee members that led the agency to spare TVs from the 25 percent tariffs. It’s “difficult to read the tea leaves” why the USTR’s office deleted 40 percent of the product lines from its first list of proposed tariffs, including TVs, said a trade expert in July, just after the first tranche of duties took effect (see 1807180058). The agency did an automated search of the records stash of four USTR officials who are on the committee using an “eDiscovery tool,” and also did a “manual search” but found no materials that were “responsive” to our FOIA request, it said. The four officials whose records the agency said it searched were: Arthur Tsao, assistant general counsel and lead attorney in the Section 301 tariffs proceedings; Julia Howe, director-China; William Busis, deputy assistant USTR for monitoring and enforcement, and chairman of the Section 301 committee; and Terry McCartin, assistant USTR for China affairs. The list of 818 tariff lines released June 15 for action starting July 6 was culled from the 1,333 tariff lines proposed April 6, said the USTR’s office then. The list, which was compiled “based on extensive interagency analysis and a thorough examination of comments and testimony from interested parties,” didn't include goods “commonly purchased by American consumers such as cellular telephones or televisions,” it said then.

EBay views as good news the de minimis value threshold in Mexico as part of the U.S.-Mexico trade deal (see 1808280003), it announced Wednesday. "This allows low-value shipments to cross borders with minimum effort, allowing for stronger global trade" and "the eBay Government Relations team has long advocated that countries raise their de minimis thresholds to promote trade," it said. The trade deal would double Mexico's de minimis to $100, though it's still well below the U.S. de minimis of $800.

Though the Trump administration “so far” hasn’t targeted “fashion watches” for Trade Act Section 301 tariffs on Chinese imports, “that could be a potential for the future,” said Movado Group CEO Efraim Grinberg on a Wednesday earnings call. “We are looking at different ways to hope to be able to mitigate that, if that were to occur,” he said. “In the short-to-medium-term, if they were to occur, that would be a threat to the overall margins.” Movado expects to close its $100 million MVMT Watches buy around Oct. 1, said Grinberg. MVMT, only four years old, has built “a truly special business that is targeted in millennials,” based on “a community of social media followers,” he said. “While others believe that young consumers would not be interested in the watch category,” MVMT “proved them wrong,” he said. “In MVMT, we are acquiring a company with over 4.5 million followers on Facebook and Instagram, a brand that offers beautiful quality products at prices that are accessible to young consumers and a digital brand experience that resonates with millennials.”

As the U.S. and Mexico move forward in talks to renew the trade relationship between the countries in the North American Free Trade Agreement (see 1808270048), a senior administration official told reporters Monday that investor-state dispute settlements [ISDS] will have some changes. Some sectors, including telecom, “will get the old-fashioned ISDS,” he said. It also would establish a notice-and-takedown system for copyright safe harbors for ISPs, announced the Office of the U.S. Trade Representative.

CTA and the National Retail Federation praised Monday’s announcement of a preliminary bilateral trade deal between the U.S. and Mexico (see 1808280010) as an encouraging first step, stopping short of endorsement pending details. “A deal that encourages free trade between our countries certainly is welcome,” said Michael Petricone, CTA senior vice president-government and regulatory affairs. If President Donald Trump “really wants a better deal” than the North American Free Trade Agreement, any pact “must support our country's technology leadership,” said Petricone. “We look forward to learning more about the details." NRF thinks “coming to terms with Mexico is an encouraging sign, but threatening to pull out of the existing agreement is not,” said CEO Matthew Shay. “NAFTA supports millions of U.S. jobs and provides hardworking American families access to more products at lower prices. To preserve these benefits and protect complex, sophisticated and efficient supply chains, the administration must bring Canada, an essential trading partner, back to the bargaining table and deliver a trilateral deal.”

Secretary of Commerce Wilbur Ross said he appointed former federal prosecutor Roscoe Howard of Barnes & Thornburg to be the U.S. government’s special compliance coordinator leading monitoring ZTE’s compliance with the settlement that lifted the Department of Commerce’s ban on U.S. companies selling telecom software and equipment to ZTE. The settlement, which took effect in July, included $1.76 billion in fines and other fees and an agreement for ZTE to allow U.S. inspectors to monitor the company's compliance with U.S. export control laws (see 1807130048). Congressional pique over Commerce’s lift of the ZTE ban failed to result in a reversal of the decision. Capitol Hill passed a conference version of the FY 2019 National Defense Authorization Act that contained language to bar U.S. agencies from using “risky” technology produced by ZTE or fellow Chinese telecom equipment firm Huawei, rather than harder language that would have reinstated the ZTE ban (see 1807200053 and 1807260049). “Today’s appointment is the continuation of the unprecedented measures imposed on ZTE by the Department of Commerce,” Ross said in a Friday news release. Howard “is exceptionally well-versed in corporate compliance, having tried more than 100 cases as a federal prosecutor, as well as helping those in the private sector on compliance and ethics issues.” Commerce didn’t comment on reports Ross had earlier chosen former Commerce Assistant Secretary-Export Administration Peter Lichtenbaum to lead the U.S. compliance team but rescinded the offer after learning Lichtenbaum was among a group of national security officials who signed onto an August 2016 letter opposing President Donald Trump’s candidacy.