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Presented by Canadian Pacific: Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy. | | | | | |  | | By Doug Palmer | Presented by Canadian Pacific | With help from Steven Overly and Jakob Hanke Vela Editor’s Note: Weekly Trade is a weekly version of POLITICO Pro’s daily Trade policy newsletter, Morning Trade. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. | | | — The White House turns its attention to the global semiconductor shortage this afternoon as top administration officials convene with chief executives from chip makers, auto manufacturers and tech giants. — The Senate Finance Committee is working on a bipartisan China bill as part of the bigger effort that Majority Leader Chuck Schumer is pushing. And the Biden administration’s first report on foreign currency practices is due out on Thursday. — U.S. Trade Representative Katherine Tai has chosen the topic for her first speech since taking office: how U.S. trade policy can help clean up the environment. It’s Monday, April 12. Welcome to Morning Trade. It’s spring and your classical musical choices to mark the occasion are abundant. There’s Igor Stravinsky’s “The Rite of Spring,” Aaron Copland’s “Appalachian Spring” and Robert Schumann’s “Spring” Symphony No. 1. But for capturing the pure joy of being outside and feeling the full explosion of the season on your senses, you can’t beat “Grazing in the Grass” by The Friends of Distinction. Can you dig it, baby? Send us your favorite springtime tunes and news: soverly@politico.com, gbade@politico.com and dpalmer@politico.com. | | A message from Canadian Pacific: Canadian Pacific & Kansas City Southern recently announced plans to combine to create the first U.S.-Mexico-Canada rail network that would drive competition and economic production and create jobs across North America. This combination will unlock economic growth for shippers across the industrial heartland while delivering unsurpassed levels of service, safety, and sustainability. See important information at www.futureforfreight.com. | | | | | | SEMICONDUCTORS ON THE WHITE HOUSE AGENDA: Industry executives will gather virtually with senior administration officials this afternoon to discuss the global semiconductor shortage that is already hampering American companies in sectors ranging from automobiles to electronics to defense. “The semiconductor shortage is a perfect example of an urgent economic and national security priority for the Biden Administration,” national security adviser Jake Sullivan, who will co-host today’s meeting, said in a statement. “The shortage is impacting the lives of American workers and families as plants sit idled.” Indeed, major American automakers including General Motors and Ford have temporarily shuttered some plants because of scarce supplies. Other industries have also reported production snags and extended delivery times that are poised to worsen. The Biden administration’s response: The American Jobs Plan includes $50 billion to fund the CHIPS Act, which aims to boost U.S. semiconductor manufacturing. Another $50 billion would establish a Commerce Department office to oversee industrial capacity and invest in stronger supply chains. Commerce Secretary Gina Raimondo is scheduled to attend today’s meeting. The U.S. relies primarily on semiconductors manufactured in Asia, particularly Taiwan and China, a potential weakness in the supply chain that administration officials are eager to fix. “Over the past year, the importance of robust and reliable supply chains was made clearer than ever before, as the Covid-19 pandemic exposed economic vulnerabilities that must be addressed,” National Economic Council Director Brian Deese, the meeting’s other co-host, said in a statement. The solutions offered up by the White House so far would take years to manifest and it’s unclear how much the U.S. government could do in the short term to remedy the global shortage. Biden initiated a 100-day review of the semiconductor supply chain in late February that is expected to generate additional recommendations. The people in the (virtual) room: Today’s guest list includes top executives from semiconductor and circuit manufacturers including Intel, Micron, Taiwan Semiconductor Manufacturing Co., Global Foundries, SkyWater Technology and NXP. Other attendees represent industries stymied by the chip shortage. Automakers General Motors, Ford and Stellantis will be present, as well as tech and telecom heavyweights Google, Dell, HP, AT&T and Samsung. Rounding out the guest list are medical technology company Medtronic, defense contractor Northrop Grumman, engine builder Cummins, auto supplier Piston Group and truck manufacturer PACCAR. SOUTH KOREAN FIRMS SETTLE BATTERY SQUABBLE: South Korean battery manufacturers LG and SK Innovation have reached a $1.8 billion settlement that spares President Joe Biden from having to decide whether to overturn a U.S. International Trade Commission ruling so SK can complete a new production facility in Commerce, Georgia to make batteries for a suite of Volkswagen vehicles and the electric Ford F-150 truck. "We need a strong, diversified and resilient U.S.-based electric vehicle battery supply chain, so we can supply the growing global demand for these vehicles and components — creating good-paying jobs here at home, and laying the groundwork for the jobs of tomorrow," Biden said in a statement on Sunday hailing the settlement. The companies announced SK would pay $1.8 billion to LG, as well as a “running royalty” on batteries produced at the plant. The firms did not respond to inquiries about the size of the royalty payments, or how long they will continue. In return, LG agreed to resolve the ITC dispute, a parallel case at the D.C. Circuit Court, and all legal issues in Korea, as well as promising not to sue SK on certain intellectual property claims for 10 years. | | | | SUBSCRIBE TO "THE RECAST" TO JOIN AN IMPORTANT CONVERSATION: Power is changing, in Washington and across the country. More people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. Our twice-weekly newsletter "The Recast” breaks down how race and identity are shaping politics and policy in America and we are recasting how we report on it. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear from important new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel. | | | | | SENATE FINANCE COMMITTEE WORKING ON CHINA BILL: Senate Finance Chair Ron Wyden (D-Ore.) is working with ranking member Mike Crapo (R-Idaho) and others on a bipartisan bill that is intended to be part of the bigger China package that Majority Leader Chuck Schumer hopes to pass this spring, a committee spokesperson said. Talks on the legislation are not far enough along for Wyden to be able to announce a markup date, the spokesperson said. However, the Senate Foreign Relations Committee will vote this Thursday on its Strategic Competition Act, a bipartisan bill that lays out a broad strategy for countering China’s rise. And the Senate Commerce Committee will hold a hearing on another major element of the package the same day. The last China-related legislation to come out of the Finance committee was the Trade Facilitation and Enforcement Act of 2015, which beefed up the Treasury Department’s tool chest for dealing with countries with undervalued currencies. TREASURY CURRENCY REPORT DUE THURSDAY: The Biden administration’s first semi-annual report on the currency practices of China and other major trading partners is due out on Thursday. Although the report is often late, there is no obvious reason why the upcoming one would be. New administrations tend to release their first report on time, even if they fall off schedule in later years, as the Trump administration did. Eyes on Vietnam, Switzerland: In its last report in December, the Trump administration’s Treasury Department labeled both Vietnam and Switzerland as currency manipulators. That fueled fears that USTR would impose punitive tariffs on Vietnam in an unprecedented “Section 301” investigation into Hanoi’s currency practices. But surprisingly, then-USTR Robert Lighthizer left the issue to the Biden administration to decide. U.S. Trade Representative Katherine Tai talked with her Vietnamese counterpart earlier this month and urged the country “to address U.S. concerns on currency practices covered in the Section 301 investigation.” USTR’s currency probe tread into an area that previously had been the sole jurisdiction of Treasury. But Treasury Secretary Janet Yellen, during her Senate confirmation process, said she expected Treasury to work with USTR and Commerce on currency concerns. TAI TO LAY OUT ‘GREEN’ TRADE IDEAS: Tai will discuss the Biden administration’s plans for a more environmentally-friendly trade policy at the Center for American Progress on Thursday in her first speech since taking office. “If confirmed, I will pursue a trade agenda that supports the Biden Administration’s comprehensive vision of reducing greenhouse gas emissions and achieving net-zero global emissions by 2050, or before, by fostering U.S. innovation and production of climate-related technology and promoting resilient renewable energy supply chains,” Tai told senators earlier this year as part of her confirmation process. Last week, a group of Ways and Means Democrats introduced a resolution urging the Biden administration to finish talks on the Environmental Goods Agreement, a proposed tariff-cutting pact that has been stalled since 2016. Meanwhile, the EU is expected to unveil plans this summer for a carbon border adjustment tax to help achieve its goal of creating a climate neutral economy over the next three decades. Republican trade agenda also in the spotlight: When Tai’s speech is over, you’ll have time to take a slow walk around the neighborhood before tuning your computer to a separate event at the Center for Strategic and International Studies, where House Ways and Means ranking member Kevin Brady will discuss the Republican Party’s Trade Agenda. | | | | YOUR GUIDE TO THE BIDEN ADMINISTRATION: As the Biden administration closes in on three months in office, what are the big takeaways? Will polls that show support for infrastructure initiatives and other agenda items translate into Republican votes or are they a mirage? What's the plan to deal with Sen. Joe Manchin? Add Transition Playbook to your daily reads for details you won't find anywhere else that reveal what's really happening inside the West Wing and across the executive branch. Track the people, policies and power centers of the Biden administration. Subscribe today. | | | | | WHO CHIEF: ‘NATIONALISM’ HAMPERING VACCINE DISTRIBUTION: The biggest obstacle to an equitable global distribution of Covid-19 vaccines is the “narrow nationalism” of many countries where the life-saving medicines are being produced, the head of the WHO said on Friday during a discussion hosted by the World Bank. “The bottleneck here is lack of political will,” WHO Director General Tedros Adhanom Ghebreyesus said. “I think it's better to say it openly. If the major countries agreed to solve this problem, to address vaccine equity, they can do it.” TRIPS waiver debate: Tedros also seemed to endorse India and South Africa’s request at the WTO for a temporary waiver of intellectual property rights on Covid-19 vaccines and related products so that manufacturers around the world can scale up production The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights allows for individual countries to waive pharmaceutical patent protections in times of emergencies, but the U.S., the European Union and some other developed countries have blocked India and South Africa’s request for a general waiver. “As you know, the provisions in the TRIPS agreement [were] meant to waive IP, intellectual property, during emergencies. We haven't seen any emergency like this in our lifetime. If we cannot use it now, then when are we going to use it?,” Tedros said. WTO chief touts open supply chains: The WTO’s new director general, Ngozi Okonjo-Iweala, was not pressed on the issue when she spoke at the World Bank event. However, she will bring together vaccine manufacturers and other interested parties in a closed-door meeting on Wednesday to discuss possible solutions to the vaccine shortage. The pandemic has shown the importance of maintaining open supply chains, Okonjo-Iweala said. “Trade has helped us manage this pandemic … because we've been able to move through trade medicines, vaccines, PPEs from one country to the other. So keeping supply chains open is a very important part of the response,” she said. Be prepared: One other clear lesson is governments need to invest more in preparedness, Okonjo-Iweala said. “If you look at the trillions of dollars that were spent in this pandemic, just responding to the health and economic issues, if we had spent maybe $100 or $200 billion on preparedness before that, we would have been better off,” she said. FRENCH OFFICIAL SEEN IN THE MIX FOR WTO DEPUTY SLOT: France's current ambassador to the WTO, Jean-Baptiste Paugam, is seen as the front runner for the European deputy director general slot at the WTO, our colleague Jakob Hanke in Brussels reports. Other possible contenders for the four open slots, which the director general traditionally divvies up by region, include former Chinese ambassador to the WTO Zhang Xiangchen, former acting Deputy U.S. Trade Representative Wendy Cutler and former Costa Rican Trade Minister Annabelle González, Hanke reports. Cutler has not responded to Morning Trade's queries about her interest in the position. | | | | A message from Canadian Pacific:   | | | | | | — The U.S. and Japan have agreed to work closely to bolster semiconductor supply chains in the face of a global shortage, Japan Today reports. — The International Trade Commission voted on Friday to approve an investigation into imports of mobile access equipment from China that is allegedly subsidized and sold in the United States at less than fair value. — China’s shadow hangs over preparations for the UK-hosted G7 summit, Bloomberg reports. — China’s competition watchdog is adding staff and other resources as it ramps up efforts to crack down on anti-competitive behaviour, Reuters reports. — Record penalty for Ma's Alibaba marks tumultuous stretch for its founder, Reuters reports. — Canada’s ambassador expresses hope for resolving softwood lumber dispute with U.S., The Aldergrove Star reports. — German exports rose in February, boosted by surging trade with China, Reuters reports. — U.S. scrambles to save organic trade relationship with Mexico, Agri-Pulse reports. THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com; gbade@politico.com; soverly@politico.com; jyearwood@politico.com and pjoshi@politico.com. Follow us @POLITICOPro and @Morning_Trade. | | A message from Canadian Pacific: Together, Canadian Pacific and Kansas City Southern will have the ability to deliver enhanced competition and unsurpassed levels of service, safety and economic efficiency for shippers and communities across the U.S., Mexico and Canada. The combination creates a transcontinental USMCA rail network, drives single-line efficiencies, enhances competition, fosters economic growth across North America and supports environmental and sustainability goals. The Canadian Pacific-Kansas City Southern combination adds competition and rail capacity that can drive current and future economic growth, providing benefits in communities across North America, including more efficient use of existing infrastructure, and expanded and alternative network routes offering more options for shippers of all sizes. See important information at www.futureforfreight.com. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
