Matt Haffner, OEC’s President Customs Brokerage, answers questions about how the United States may change its approach to trade in 2021.
Q: What do you think US trade strategy will be in 2021?
A: As a very sweeping view of trade in the coming year, I don’t foresee any major changes in our approach. What I’ve heard and what we expect, is the current situation or relationship over trade with respect to China, will not be a priority for the coming administration during the first year. We will still see Section 232 and 301 Tariffs that range from 10 – 25%. You may see a real focus of attention toward rebuilding relationships with longstanding trading partners like the EU, UK, Japan, and Singapore, which were strained over the last four years. The purpose behind that is to create a bloc, which would eventually be used to, in unison, work toward approaching China for trade relations that are more favorable to our global allies.
Q: Are there any areas primed for growth?
A: That’s going to be determined by a couple things. Generally, the consumer will continue driving trade priorities on what we see moving in and out of the country. It’s really a wild card at this point because we are engaged in a pandemic. Over the course of the next year, with a vaccine, we will see a more normalized pattern of trade. From an administrative prospective, there’ll be a shift toward green technologies that have been neglected in recent years. Toward the second half of the year, an increase in trade related to renewable energy sourcing is expected.
Q: You spoke about green technology and this multi-lateral approach to China. In the past, those ideas have had a lot to do with US partners across the Pacific. Do you have any thoughts on the Trans-Pacific Partnership and whether it will be revisited in the New Year?
A: It will be revisited in the next year or two. It won’t be a top priority anytime soon. Eventually, there will be negotiations to further enhance the benefits to the United States. The focus will mirror the USMCA (United States – Mexico – Canada Agreement), which we saw come out of the NAFTA agreements. Attention toward agricultural tariffs, auto industry tariffs that are more beneficial to the US, and even labor negotiations where parties that were involved with the trade negotiations would have to agree to labor unions and a minimum salary associated with certain industries are going to take center stage. I see us going back to it when the time is right, but I don’t see it as a top priority.
Q: You just alluded to some of the more unique terms of the USMCA and how that may play into a new TPP in the future. Do you think they might use the USMCA as a template moving forward, or will they go back to more traditional arrangements?
A: No, the USMCA framework is marketable to Congress, which is paramount in the ratification process. I see it as a foundation for future trade negotiations which are more favorable to US industry than others that have been negotiated in the past, so I do foresee that being the framework for future negotiations.
Q: Do you have any thoughts on how the renewal of the Generalized System of Preferences might play out?
A: The GSP, Generalized System of Preferences, is a system of US trade preferences provided decades ago to third world and developing countries to help improve their economies. It is not bilateral, it is unilateral, where the US agreed to do this without any negotiations. I expect we’ll do what we’ve done before, which is to retroactively apply any trade preference that may be lost on December 31, 2020. I don’t see any major impact. I suspect that Congress will follow the same path it has taken in the past and pass a bill in the coming weeks or months.