A discussion paper on the Brazilian Trade policy in recent years

INTERNATIONAL TRADE AND TRADE POLICY  ON BIDEN ADMINISTRATION AND IMPACTS TO  BRAZIL 

Aluisio de Lima-Campos 

Renata Amaral 

Barbara Medrado 

Lucas Queiroz Pires 

Marcia Pulcherio 

ABSTRACT 

This article provides a general look into U.S. trade policy  under the Biden Administration, with more focused comments on  its most important aspects. It follows an introductory overview with  discussion of its multilateral approach as well as the potential risks of  measures like the Buy American. The authors review the multilateral  approach in light of the recent developments in U.S.-Europe trade  negotiations and their impact on Brazil, including those related to  environmental concerns. The recent trends on trade remedies are also  discussed, namely AD/CVD and the U.S. tariff actions on the grounds  of Section 232 and 301, including their challenges in U.S. courts. U.S.- China trade relationship is also examined, particularly regarding the  effects of the trade war, its perspectives and impacts on Brazil. The 

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article concludes with a review on Biden’s supply chain, specifically  concerning the trade impacts of COVID-19 vaccines.  

Keywords: International Trade, Trade Policy, United States,  Brazil, Europe, Biden Administration, Multilateralism, Environment,  Trade Remedies, AD/CVD, Tariffs, Section 301, Section 232, Global  Supply Chain, COVID-19 vaccines 

RESUMO12345 

Este artigo fornece uma visão geral da política comercial dos  EUA sob a administração de Biden, com comentários mais focados  nos seus aspectos mais importantes. Em seguimento a uma análise  geral introdutória, discute-se sua abordagem multilateral, bem como  os riscos potenciais de medidas como o Buy American. Os autores  revisam a abordagem multilateral à luz dos recentes desenvolvimentos  nas negociações comerciais entre os EUA e a União Europeia, seus  

1 Professor Lima-Campos, who chairs the ABCI Institute, combines 10 years of experience in financial  markets with over 35 years of practice in trade policy and business diplomacy. He has been a trade  policy professor at American University since 2007. He is a highly rated former WTO trade policy  instructor, with countless articles published on international trade topics and three books, the most  recent a textbook, “Introduction to Trade Policy” (2018), by Routledge, co-authored with Juan Antonio  Gaviria. 

2 Renata is an Adjunct Professor at American University Washington College of Law. She holds a Ph.D.  in international trade law from Maastricht University and the title of Doctor of Laws from UFSC. She  is the Vice Chair of ABCI Institute, and the Founder of Women Inside Trade. 

3 Barbara holds a B.S. degree in Industrial Engineering from the Federal University in Rio de Janeiro  (UFRJ) and a J.D. from Harvard Law School, which nominated her as Salzburg Cutler Fellow in 2019.  Barbara worked for the Foreign Trade Secretariat in Brazil for three years, conducting anti-dumping  investigations and assisting dispute settlement cases at the WTO involving trade remedies. She has  published regarding trade agreements and technical aspects of anti-dumping calculations. 

4 Lucas is Special Legal Consultant at Alston & Bird, in Washington DC. He practiced in Brazil and  interned at the Legal Affairs Division of the WTO. Lucas holds an LL.M. in International Economic and  Business Law from Georgetown University (graduating with honors and distinction). He holds a Law  degree from FGV School of Law of São Paulo and a Masters in Business Economics from FGV School  of Economy of São Paulo. 

5 Marcia Pulcherio is an attorney in Brazil, the United States and Europe. Her practice is focused on  international trade law, policy and compliance. Marcia holds an LL.M in International Economic Law,  Business & Policy from Stanford University, and a Law Degree from Universidade do Estado do Rio  de Janeiro (UERJ). She advises clients in trade negotiations, trade remedy and compliance matters,  economic sanctions and export controls.

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impactos para o Brasil, incluindo no tocante a questões ambientais.  As tendências recentes em defesa comercial também são discutidas,  especificamente AD/CVD e as tarifas dos EUA com base nas Seções  232 e 301, incluindo suas contestações nos Tribunais dos EUA. A  relação comercial EUA-China também é examinada, sobretudo no  que diz respeito aos efeitos da guerra comercial, suas perspectivas e  impactos para o Brasil. O artigo conclui com uma revisão da cadeia  de abastecimento durante a administração de Biden, inclusive com  relação ao impacto das vacinas COVID-19 no comércio internacional. 

Palavras-chave: Comércio Internacional, Política Comercial,  Estados Unidos, Brasil, Europa, Administração Biden, Multilateralis mo, Meio Ambiente, Defesa Comercial, AD/CVD, Tarifas, Seção 301,  Seção 232, Cadeia de Abastecimento Global, Vacinas COVID-19 

1. OVERVIEW OF U.S. TRADE POLICY UNDER BIDEN 

Environment and labor have become the main focus of United  States (“U.S.”) trade policy under the U.S. President Joseph Biden  administration, as indicated during the presidential campaign and as  later became clear with the choice of cabinet members. Soon after taking  office, Biden rejoined the Paris Agreement and signed an Executive  Order (“EO”) tackling the climate crisis at home and abroad6. In  April 2021, Biden welcomed 40 world leaders to a summit on climate 7.  He also launched the US$2.3 trillion American Jobs Plan, designed to  be “an investment in America that will create millions of good jobs,  rebuild our country’s infrastructure, and position the United States to  out-compete China.” 8 Part of it, close to US$1 trillion, is earmarked  for transportation and manufacturing, which should also benefit  agriculture. Initiatives to make it easier for workers to join unions  

6 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on tackling-the-climate-crisis-at-home-and-abroad/  

7 https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/23/leaders-summit-on-climate summary-of-proceedings/ 

8 https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american jobs-plan/ 

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are also in the works9. Labor’s influence in policy is expected to rise  significantly. As stated in the 2021 Trade Policy Agenda, “a worker centered trade policy requires extensive engagement with unions and  other worker advocates. Under the Biden Administration, workers  will have a seat at the table in the development of trade policies.” 10 

This does not imply that labor and environment are the only  concerns: relationships with China, trade partners, and international  organizations are also in question. In most trade issues, the Biden  administration’s approach is more diplomatic, less confrontational,  but not dramatically different in substance from Trump’s. In the case  of China, pressure to force the Chinese government to alter its unfair  trade practices is being applied diplomatically by bringing allies into  the fold. But, at the same time, none of the trade barriers imposed  by the Trump Administration on Chinese imports under Section 301  of the Trade Act of 1974 (“Section 301”) have been revoked. The  same goes for Section 232 of the Trade Expansion Act (“Section 232”)  restrictive measures on aluminum and steel, which still stand and  affect important U.S. trade partners, such as the European Union  (“EU”), United Kingdom (“UK”), Japan, South Korea, Brazil, among  others. The U.S. has announced a more constructive approach at the  World Trade Organization (“WTO”) and followed it by breaking the  deadlock in the election of its new Director General (“DG”). However,  no further action, concrete or otherwise, has been taken regarding  WTO reform or dispute settlement. It remains to be seen what the  new head of the Office of the United States Trade Representative  (“USTR”) Katherine Tai11, who has thus far enjoyed only a short  period in office (since March 18), might accomplish in the wake of  the urgent COVID-19 related discussions, which are taking priority. 

Trade policy formulation under the Biden Administration is  quite different from Trump’s top-down system, wherein , for the most  

9 https://www.nytimes.com/2021/04/26/business/economy/president-biden-will-promote-unions through-a-white-house-task-force.html 

10 USTR 2021 Trade Policy Agenda, p.15, available at https://ustr.gov/sites/default/files/files/ reports/2021/2021%20Trade%20Agenda/Online%20PDF%202021%20Trade%20Policy%20 Agenda%20and%202020%20Annual%20Report.pdf  

11 Education: Yale University (BA) and Harvard University (JD); Languages: Fluent in Mandarin.

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part, the White House made decisions without much inter-agency  consultation and sent down through the administrative tiers for  eventual implementation. Decisions were fast, but implementation,  to some extent, chaotic.12 Biden is adopting something similar  to Obama’s bottom-up system, wherein the different echelons of  government interact in the preparation and delivery of a proposal  to the White House. It is a slower decision-making process, but one  that usually provides transparency, predictability, and clarity in the  implementation guidelines.  

To put labor and environment at the forefront of his trade  policy, Biden chose Tai, former Chief Trade Counsel of the House  Committee on Ways and Means, to head the Office of the USTR.  She gained notoriety for advocating in favor of stronger labor and  environmental provisions in the United States-Mexico-Canada Trade  Agreement (“USMCA”). As she expressed in her first public address  on trade policy, “[c]omprehensive action [on environment] is the  only way forward, and this challenge must be at the center of U.S.  foreign policy, national security, and economic policy. USTR sits at  the intersection of all three areas, and I am honored to lead this  agency and the dedicated public servants who will answer the call.  During my confirmation hearing, I made clear that protecting our  planet would be a top priority.”13 As Tai acknowledges, the intersection  of three other areas in trade policy, namely that between the USTR  and its pairs at the Department of State, National Security Council,  Department of Commerce (“Commerce”) and the Department of  the Treasury (“Treasury”), is key for her success. Secretary of State  Antony Blinken and National Security Advisor Jake Sullivan belong  to Biden’s inner circle, having served under him in the Obama  Administration. Treasury Secretary Janet Yellen, the first woman to  occupy that position, also served in the Obama Administration, as  chair of the Federal Reserve. Secretary of Commerce Gina Raimondo,  former Governor of Rhode Island, is politically skilled and well  

12 Examples can be found in the implementation of Section 232 import restrictions and exclusions,  tariffs on Chinese imports and following counter retaliations, among others. 

13 https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/april/remarks-ambassador katherine-tai-trade-policy-environment-and-climate-change

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connected in the Democratic Party and holds degrees in law and  economics. Special Envoy for Climate John Kerry, who was Secretary  of State under Obama and one of the leading architects of the Paris  Agreement, has a long history with Biden, both having served in the  Senate and its Foreign Relations Committee. Going for her, Tai has  the most experience in trade law and policy, having worked at USTR  in the Obama administration where she became Chief Counsel for  China Trade Enforcement, overseeing China cases at the WTO, and,  more recently, as Chief Trade Counsel, where she advised lawmakers  in Congress on trade related matters. She was approved by the Senate  with a vote of 98-0, showing a rare bipartisan agreement in a deeply  divided Washington. 

1.1. Multilateral Trade Policy under Biden  

The U.S. approach to multilateral institutions and agreements  has already changed under Biden. But the longstanding bipartisan  concerns over the WTO persist, and the need for reform remains  central.  

The support14 that the new administration gave to the candidacy  of Dr. Ngozi Okonjo-Iweala was an easy win for Biden’s team in the  multilateral trading system. It may indicate that the U.S. will engage  in fewer unilateral trade actions. The new team is also signaling that  it may engage more actively with allies, specifically in China-related  matters. 

Biden has been vocal about the respect his administration has  for trade agreements – as he stated in his first address to Congress15 – but until the present moment, Biden has not lifted any of the  unilateral trade sanctions applied by his predecessor.  

Republicans and Democrats share concerns about the WTO, and  they go beyond criticism targeting the Appellate Body (“AB”). In fact,  the crisis that culminated with the blockage of the AB was initiated  

14 https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/february/office-united states-trade-representative-statement-director-general-world-trade-organization 

15 https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/04/28/remarks-as-prepared for-delivery-by-president-biden-address-to-a-joint-session-of-congress/

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during the Obama administration that, in 2016, first obstructed the  reappointment of AB members. Trump doubled down on what Obama  had started, reaffirming that the AB was inefficient and incapable of  observing deadlines, that it has strayed beyond acceptable limits, and  that it often incorrectly adjudicated trade remedies cases.  

But the U.S. dissatisfaction towards the WTO spans all three  major functions of the organization: negotiations, monitoring,  and dispute settlement. There is a shared and broad concern over  transparency rules regarding the monitoring functions and the  perceived lack of commitment that many members show towards  them.  

With respect to the negotiation branch of the WTO, both U.S.  parties have expressed concerns about abuse of developing country  status by some members, as well as the system’s inability to update  rules. More specifically, members of the Democratic party have  addressed the Organization’s inability to address priorities, such as  labor and environment.  

The majority of WTO members uncontestably claim for the  need of a reform at the Organization. The new DG has recognized  that WTO needs changes to reinvigorate. But philosophical differences  between big players, like the U.S. and the EU, remain and have  significantly undermined any chance of progress so far. The reform  is key to have a comprehensive set of enforceable rules on China’s  non-market practices.  

That being said, the WTO’s issues – and its need for reform  – are not a priority to the Biden Administration. Thus, it may take  some time for real action to happen in that arena. The good news is  that the new U.S. administration seems to be inclined to follow the  multilateral trading system rules in its trade actions for the next term. 

1.2. Buy American’s risks 

In spite of the Biden’s cooperative rhetoric, the Buy American  gives pause to anyone paying attention to his economic plan. In the  first weeks of his administration, the new U.S. president signed the 

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Made in America EO, 16 which addresses national preferences related  to federal purchases, federal subsidies, and other forms of federal  assistance. 

The Made in America agenda refers to and is based on the Buy  American Act, from 1933. It aims to force the federal government to  buy more U.S. goods and addresses one of Biden’s most important  campaign promises: to bolster the national manufacturing sector. 

The Buy American is not new. It is provided for in title 41  of the United States Code § 10 et seq. and refers to the legislation  enacted by the U.S. Congress at the time of the Great Depression.  In essence, it established a general preference for the purchase of  materials manufactured in the country when the materials are being  procured by the U.S. government, for public use in the country. 

The novelty lies within the two EOs, one signed by Trump in  August 2020 and another by Biden in January 2021. Trump’s EO  instructed (i) the Food and Drug Administration (“FDA”) to develop  a list of products critical in public health emergencies, and (ii)  the USTR to withdraw the right of companies based in countries  participating in the Government Procurement Agreement (“GPA”) of  the WTO and in Free Trade Agreements (“FTA”) to bid on government  procurement to sell products under the same conditions as products  made “in America.” 

The Biden EO did not terminate the previous one signed by  Trump and is broader – as it deals essentially with all products sold to  U.S. government agencies. The difference is that the new administration  seems to be willing to implement everything in accordance with U.S.  commitments under WTO rules. 

During its announcement of the Made in America EO, Biden  acknowledged that efforts to promote national content have been  a familiar part of previous U.S. Presidents’ agendas. While not a  novelty in itself, the Biden EO confirms the shift in consensus in  American trade policy to direct government intervention to promote  

16 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/

A política comercial e perspectivas sob a administração Biden nos EUA 19 U.S. manufacturers. 

2. RECENT DEVELOPMENTS IN U.S.-EUROPE RELATIONS  AND IMPLICATIONS FOR BRAZIL  

During the Trump-Pence Administration, U.S. preference for  unilateral trade actions – to the detriment of multilateralism – upset  the relationship with its traditional allies, such as the EU. In contrast,  the Brazilian government attempted to strengthen its ties with the U.S.  through the personal relationship between Trump and Bolsonaro.  At the onset of the Biden-Harris Administration, as Brasilia drifted  apart from the White House, Brussels seemed to perceive a renewed  opportunity for cooperation.  

Not long after the confirmation of the election results, the  European Commission and the High Representative for Foreign  Affairs and Security Policy published a joint communication to the  European Parliament, the European Council and the EU Council,  offering a new EU-U.S. agenda for global change (EU-U.S. agenda).  The text describes the election as an opportunity to reestablish severed  ties across the Atlantic. The EU and the U.S. find renewed common  ground in multilateralism, particularly in the debates to face climate  change and WTO reform, while looking for ways to address common  challenges such as the health crisis (see item 4 below), or tensions  involving unilateral actions, such as Section 232 (see item 3.1) or  digital taxes. 

2.1. Reforming the multilateral trading system 

U.S. dissatisfaction towards the multilateral trading system  did not begin with the Trump Administration. When Biden was  vice-president under Obama, the U.S. already stressed the WTO’s  failure to address China’s alleged non-compliance with multilateral  rules and the AB’s inadequate meddling in U.S. sovereignty by  interpreting terms that had not been negotiated in the multilateral 

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trade agreements. Obama was the first to block the reappointment  of the South Korean judge to the WTO’s AB in the early stages of  the crisis that has effectively created a void in the organization’s  appellate system since 2019. The EU has expressed its frustration with  the U.S. position and has developed a parallel appellate mechanism,  which relied on Brazilian support. The Multiparty Interim Appeal  Arbitration Arrangement, similar to the usual WTO appellate system,  is open to any interested members, while the AB is paralyzed.  

The trade wars, escorted by unilateral actions and prompt  retaliations, deeply affected the WTO credibility and the system stability,  along with the effects of the COVID-19 pandemic over international  supply chains and trade in general (item 4 below). Biden’s first step  to demonstrate the new-found commitment with the multilateral  organization was to join the consensus and support the election of  the WTO’s DG Okonjo-Iweala, after the Trump Administration’s  resistance. The support to jump-start the Organization is still shy,  though. Since Biden took office, he has maintained the block on new  appointments to the AB, blaming it on the presidential transition.  

To overcome the stalemate, the EU proposes in its EU-U.S.  agenda that the U.S. and Japan join its efforts to lead the WTO reform  and invites the U.S. to work together to solve bilateral trade irritants.  Brazil is an active member of the organization, directly interested in  an operative AB. President Bolsonaro has demonstrated his support  to the reform before the G20, in line with Europe’s proposals. Brazil’s  commitment to the rules-based trading system is also reflected in its  recent decision to adhere to the GPA at the WTO and to comply  with the best regulatory practices to be admitted into the OECD.  The diverse platforms are an important opportunity for Brazil to  reestablish international leadership and strengthen the multilateral  approach to overcome economic challenges. 

In its EU-U.S. agenda, Europe invited the U.S. to develop a  regulatory framework for the new digital needs. While multilateral  discussions about digital services taxes are ongoing at the OECD,  some European countries have already moved forward with unilateral  taxation. These taxes have a great impact on U.S. companies, prompting 

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the U.S. to initiate Section 301 investigations that threatened tariffs  in retaliation against France, UK, and other partners. Brazil has also  initiated discussions about the creation of a digital tax, possibly named  the Social Contribution on Digital Services (“Contribuição Social sobre  Serviços Digitais”), to be levied on digital services, which could similarly  elicit U.S. retaliation. To face the challenges of the digital economy  and to avoid international isolation, Brazilian authorities should  engage in discussion in the OECD, WTO, and other multilateral  arenas for discussions.  

2.2. A collective approach to the environment 

From his early days in office, President Biden returned the U.S.  to the Paris Climate Agreement and shifted the government’s attention  towards the environment, establishing new emission targets for 2030.  By reaffirming the belief in global warming, the U.S. initiated a  movement to take the lead and prompt its partners to review policies  and practices to preserve the environment. Global warming requires  a “collective approach” by its own nature, USTR Katherine Tai noted  during her confirmation hearing. 17 By focusing on the collective  approach, the U.S. took an important step demonstrate leadership in  the multilateral agenda, which has been lacking in recent years. 

The environment has traditionally been on the center stage of  EU politics and has now become an important common ground to  reestablish cooperation with Washington. The White House’s Leaders  Summit on Climate in April was a hallmark of the cooperation in  preparation for the United Nations Climate Change Conference  (“COP 26”) in November 2021 in Glasgow, with the purpose of  “galvaniz[ing] efforts by the major economies to tackle the climate  crisis.” 18 In stark contrast with the Trump Administration, the Biden  Administration committed to reduce U.S. greenhouse gas emissions  by 50-52% by 2030 compared to 2005 levels. It also published a  

17 See “US Senate holds confirmation hearing to consider Katherine Tai as US Trade Representative”.  Video available at: https://www.youtube.com/watch?v=6c9ceDEJzJE 

18 See “President Biden Invites 40 World Leaders to Leaders Summit on Climate”, White House. 26  March 2021. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/26/ president-biden-invites-40-world-leaders-to-leaders-summit-on-climate/

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Climate Finance Plan with a strategic orientation for the future of  U.S. climate finance to guide the work of government agencies. In  turn, Europe reinforced its binding target of 55% emissions reduction  by 2030, while defending the need for carbon pricing and for greater  contributions from developed nations to climate finance.  

Since the signature of the Paris Agreement, Europe has defended  that countries take concrete steps to implement concrete climate  policies. In its action plan, the European Green Deal, Europe outlines  investments and financing tools available to ensure transition to a  greener economy. The EU’s 2050 long-term strategy indicates that  the Union aims to be carbon neutral – with net-zero greenhouse gas  emissions – by 2050, in line with the EU’s commitment under the  Paris Agreement. As part of the Deal, the Commission also proposed  the first European Climate Law to enshrine the 2050 climate-neutrality  target into law in March 2020. In April 2021, the proposal became the  provisional agreement on the EU climate law, which will enter into  force after it is formally approved by Parliament and Council.  

Brazilian authorities understand that the climate change agenda  has been gaining momentum in the multilateral arena with the new  administration in the U.S. and the continued efforts from the EU. The  U.S. has been discussing potential financial aid for Brazil to protect  the Amazon region, and the environment has been cited as a central  obstacle for the ratification of the EU-Mercosur deal signed in 2019.  To demonstrate its commitment, during the Climate Summit, Brazil  pledged to become climate neutral by 2050 and to eliminate illegal  deforestation by 2030, while pointing out the importance of financial  contributions from developed countries to help Brazil develop the  bioeconomy in the Amazon – region Brazil emphasized the relevance  of in a global carbon market. Europe generally supports this idea as  a WTO-compatible carbon border adjustment mechanism, which is  under discussion within the U.S. government.  

Critics note that Brazil has yet to deliver concrete measures that  benefit the environment before it can demand further contribution  from developed countries. The negotiations for additional funds may  benefit from a cooperative approach, particularly considering the 

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relevance that the EU gives to the use of an upcoming EU Carbon  Border Adjustment Mechanism. The EU expects this mechanism to  avoid carbon leakage and create an opportunity to work together with  the U.S. and other countries to set a global template for emissions  trading, carbon pricing, and taxation. In line with this, Brazil may  benefit from joining a wider transatlantic green trade agenda, which  could also jointly develop a Trade and Climate initiative within WTO. 

3. TRADE REMEDIES  

3.1. Trends in Antidumping (AD) and Countervailing  Duties (CVD)  

Under Trump’s directions, Commerce initiated 306 new AD  and CVD investigations – a 278% increase from the comparable period  in the previous administration.19 Still, commentators predict that  the Biden Administration will likely bring a continued uptick in AD  and CVD investigations,20 confirmed by the limited data currently  available. Between January 21 and April 25, the Biden Administration  initiated 12 new AD and CVD investigations.21  

The main reason for that is that the Biden Administration  is inclined to more traditional trade remedies, such as AD/CVD  to protect the U.S. industry, rather than pursuing controversial,  unilateral remedies, on which the Trump Administration relied, such  as Section 232 or 301 tariffs.  

There is a growing concern over the efficacy of U.S. trade  

19 International Trade Administration Press Release, U.S. Department of Commerce Fins Dumping  on Countervailable Subsidization of Vertical Shaft Engines from China (Jan. 5, 2021), available at  https://www.trade.gov/press-release/us-department-commerce-finds-dumping-and-countervailable subsidization-vertical-shaft. 

20 Industry Week, What’s Ahead for US Trade Policy in 2021?, (Han. 25, 2021), available at https:// www.industryweek.com/the-economy/public-policy/article/21153223/whats-ahead-for-us-trade policy-in-2021 

21 See Certain walk behind snow throwers from China (AD & CVD), Certain mobile access equipment  and subassemblies from China (AD & CVD), Organic Soybean Meal from India (AD and CVD),  Granular Polytetrafluoroethylene Resin from India (AD & CVD), Granular Polytetrafluoroethylene  Resin from Russia (AD & CVD), Pentafluoroethane (R-125) from China (AD & CVD).

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remedies. Because of that, a surge in enforcement actions for evading  or circumventing AD/CVD duties will naturally increase. Also, in  an effort to strengthen U.S. trade remedy laws, U.S. Senators Rob  Portman (R-OH) and Sherrod Brown (D-OH) introduced on April  16, 2021 the Eliminating Global Market Distortions to Protect American  Jobs Act, a bipartisan legislation that seeks to establish the concept of  “successive investigations” to respond to “repeat offenders and serial  cheaters.”22 

The proposed legislation seeks to block the “whack-a-mole”  problem that occurs when trade remedy orders are imposed on  imports from one country, and as a result the U.S. market is flooded  with dumped or subsidized imports of that same product from a  different country.  

On the other hand, the future of CVD due to currency  manipulation in the Biden Administration remains unclear. Yellen  stated at her confirmation hearing for Treasury in January that she  would work to fulfill Biden’s promise to “oppose any and all attempts  by foreign countries to artificially manipulate currency values to gain  an unfair advantage in trade.” 23 But the policy framework set in place  to counter such manipulation has been weakened. On February 4,  2020, Commerce issued a final rule on imposing tariffs on imports  from countries determined by the U.S. government to be undervaluing  their currency relative to the U.S. dollar.24 The rules explain that,  when making its consideration, Commerce “intend[s] to defer to  Treasury’s expertise with respect to currency undervaluation,” noting  that Treasury’s analysis is distinct from the analysis as to whether here  

22 U.S. Senator Rob Portman Website, Press Release on Portman, Brown Introduce Legislation to  Strengthen Trade Remedy Laws, Protect American Workers (Apr. 16, 2021), available at https://www. portman.senate.gov/newsroom/press-releases/portman-brown-introduce-legislation-strengthen trade-remedy-laws-protect#:~:text=WASHINGTON%2C%20D.C.%20%E2%80%93%20U.S.%20 Senators%20Rob,unfair%20trade%20practices%20and%20protect  

23 James Politi and Colby Smith, “Janet Yellen vows to take hard line against currency manipulation,”  Financial Times, January 19, 2021. 

24 Modification of Regulations Regarding Benefit and Specificity in Countervailing Duty Proceedings,  Enforcement and Compliance, International Trade Administration, Department of Commerce, 85 Fed.  Reg. 6031 (Feb. 4, 2020).

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is undervaluation for purposes of a CVD proceeding.25 

Yet, as Treasury released its first foreign exchange report of  Biden’s administration, it did not designate China as a currency  manipulator.26 China remained on the watch list over its currency  practices instead. 

In fact, the report provides that no U.S. trading partner met the  relevant 1988 or 2015 legislative criteria for currency manipulation or  enhanced analysis.27 This includes Vietnam, against which Commerce  announced on November 4, 2020 that a preliminary determination  finding that imports of passenger vehicles and light truck tires  were subsidized due to alleged currency manipulation among other  programs.28 

By doing this, the Biden Administration might be distancing  itself from tactics adopted during the Trump era, when Treasury was  accused of politicizing the report after it abruptly designated China  a manipulator in mid-2019 outside its usual release schedule, only  to lift the label later to win concessions in a trade deal. Whether the  Biden Administration will choose to pursue CVD against currency  manipulation as promised or shy away from a practice that is not  expressly provided for under multilateral agreements remains to be  seen.  

3.2. Section 232  

In 2018, the U.S. determined that steel and aluminum  imports posed a significant threat to the country’s national security  and imposed tariffs under Section 232 on steel and aluminum of  25% and 10% respectively.29 On January 24, 2020, Trump issued a  

25 Id. at 6038. 

26 U.S Department of Treasury, Office of International Affairs, Report to Congress: Macroeconomic  and Foreign Exchange Policies of Major Trading Partners of the United States (Apr. 2021), at 4. 

27 Id. 

28 Countervailing Duty Investigation of Passenger Vehicle and Light Truck Tires from Vietnam:  Preliminary Determination (Nov. 4, 202). 

29 Proclamation 9705 of March 8, 2018 Adjusting Imports of Steel Into the United States, 83 Fed. Reg.  11625.

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proclamation under Section 232 expanding the scope of existing  steel and aluminum tariffs to cover certain derivatives of aluminum  and steel such as nails, wire, and staples, which went into effect on  February 8, 2020. Some countries negotiated export quotas to avoid  the tariffs, and others received temporary tariff exemptions, but as of  June 1, 2018, the tariffs were being imposed against most U.S. trading  partners.30 

In addition to the retaliatory tariffs, from April to August 2018  nine governments requested consultations at the WTO, which is the  first step in WTO litigation. From November 2018 to January 2019,  the WTO established dispute settlement panels to hear the cases. Given  delays due to COVID-19, the WTO recently announced it does not  expect to rule in these cases, or in the cases the U.S. filed in response,  until the latter half of 2021. 

On Biden’s first week as President, the EU stated that it would  gladly lift its retaliatory tariffs on US$3.4 billion in American exports  if Biden removed the U.S. national security tariffs on European steel  and aluminum. If the U.S. tariffs remain in place, however, the EU  warned that it fully intends to amplify its retaliation.31 

Commentators have been ambivalent trying to predict Biden’s  actions towards the Section 232 tariffs. Biden’s appeal to working  together with instead of punishing allies suggested that he would  be open to withdrawing these measures. Biden’s forceful statements  on the importance of domestic supply chain of certain products  predicates he would likely prefer to retain the Section 232 measures. 

It is now clear that the Biden administration approves these  measures. Commerce Secretary Raimondo stated, “Let me say those  tariffs have been effective. The data show that those tariffs have been  

30 Argentina, Brazil, and South Korea agreed to quotas instead of tariffs; uniquely, Australia got a  full exemption. Only in the case of Canada and Mexico have they been dropped. Hours before the  inauguration of President Biden, former president Donald Trump replaced the Section 232 aluminium  tariff on the United Arab Emirates (UAE) with a quota. A few days later, the Biden Administration  reinstated the tariffs. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/01/a 

proclamation-on-adjusting-imports-of-aluminum-into-the-united-states/  

31 Bryce Baschuk, EU to End Tariffs on $3.4 Billion Goods If U.S. Lifts Metal Duty, Bloomberg (Jan.  27, 2021).

A política comercial e perspectivas sob a administração Biden nos EUA 27 

effective.” 32 

In the longer term, Biden might have less authority to make  changes to the Section 232 duties currently in place. Trump’s frequent  use of Section 232 has Congress looking to rein in executive authority  on trade. Draft legislation in both the House and Senate aims to  limit the President’s use of these national security tariffs unless the  Department of Defense or Congress signs off. One such effort is the  Trade Security Act, which was reintroduced on March 15, 2021.  

Even if these duties are withdrawn, imports of steel will  continue to face barriers to enter the U.S. market. According to the  U.S. International Trade Commission, the U.S. as of February 2021  had in place 555 AD/CVD orders on a widely variety of steel products  imported from a total of 47 countries. By far the largest number (206)  was imposed on Chinese steel products.33 

Domestically, there have been court challenges against the  tariffs imposed under Section 232 and against the constitutionality of  Section 232 itself. We analyze these next. 

3.2.1. U.S. Court challenges to 232 action 

Most of the recent Section 232 actions above affecting U.S.  imports of steel, aluminum, and their derivatives from virtually all  countries, including Brazil, have been challenged in U.S. domestic  courts. The U.S. Court of International Trade (CIT) has initial  jurisdiction to review the President’s actions under Section 232. One  can appeal a CIT decision before the U.S. Court of Appeals of the  Federal Circuit (CAFC). A CAFC decision is appealable to the U.S.  Supreme Court (SCOTUS), subject to the raising of a constitutional  issue.  

In April 2018, a U.S. subsidiary of a Russian steel producer  

32 Eric Martin and Joe Deaux, Biden Commerce Chief Says Steel, Aluminum Tariffs Effective,  Bloomberg (Mar. 4, 2021).] USTR Tai has indicated tariffs are a “legitimate tool.”[ USTR nominee Tai  says tariffs are ‘legitimate tool’ for trade policy, Reuters (Feb. 25, 2021) 

33 https://www.google.com/url?q=https://www.usitc.gov/trade_remedy/documents/orders.xls&sa=D &source=editors&ust=1618288564293000&usg=AOvVaw3aAoW1-FNmLtuoXnBtCfFn

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sought a preliminary injunction to prevent collection of 232 duties  on certain steel products, on the grounds that the President acted  beyond its delegated authority due to an alleged lack of connection  between tariffs and national security.34 CIT denied the motion finding  that plaintiffs were unlikely to prevail on the merits and the parties  dismissed the case on the following month.  

In June 2018, a U.S. trade steel association challenged the  constitutionality of Congress’ delegation of authority to the President  under Section 232.35 CIT rejected the plaintiff’s argument holding that  it was bound by a 1976 SCOTUS ruling establishing an “intelligible  principle” in Section 232 when guiding presidential action. Plaintiff  appealed, but the CAFC affirmed the CIT decision, reiterating that the  case was bound by the SCOTUS precedent.36 The SCOTUS declined  to hear the case in June 2020.37 

The President’s increase of the Section 232 steel tariffs from  25% to 50% on U.S. imports from Turkey, however, had a different  outcome. Specifically, CIT noted that the President’s power to impose  duties under Section 232 is not unlimited, stressing that he must closely  adhere to the procedural requirements provided by the statute.38 The  duty increase was challenged under the Due Process Clause. In July  2020, the CIT ruled that the President violated Section 232 and the  Equal Protection guarantees when increasing the 232 tariffs on steel  imports from Turkey. This was the first CIT decision with findings  against a 232 action on steel products. 

The 232 exclusion process was another set of actions intensely  challenged in courts. The Bureau of Industrial Services (“BIS”) of  Commerce reviews exclusions requests for specific products from  232 tariffs, which are posted publicly and subject to objections,  

34 See Severstal Export GmbH v. United States, No. 18-00057, 2018 WL 1705298, at *2 (CIT April 5, 2018) 

35 Am. Inst. for Int’l Steel, Inc. v. United States, 376 F. Supp. 3d 1335, 1337 (CIT 2019), aff ’d, No. 2019- 1727, 2020 WL 967925 (CAFC February 28, 2020). 

36 Id. 

37 Am. Inst. for Int’l Steel, Inc. v. United States, No. 19-1177, 2020 U.S. LEXIS 3353, at *1 (SCOTUS  June 22, 2020) 

38 Transpacific Steel LLC v. United States, 415 F. Supp. 3d 1267, 1276 (CIT 2019).

A política comercial e perspectivas sob a administração Biden nos EUA 29 

rebuttals, and surrebuttals from interested parties. Several plaintiffs  challenged BIS’s exclusion denials on different grounds.39 They  argued BIS decisions were generic and superficial. Others alleged  improper influences in the process, such as undocumented, off-the 

record, and ex parte communications. Plaintiffs also alleged the denials  were unsupported by the record because objectors could not supply  the merchandise at issue or supply at the quantities and timeline  required.40 Many of these cases resulted in settlement with the U.S.  government, entitling the parties to refunds of duties paid. Some of  these claims are still pending. 

In February 2021, the CIT rejected another challenge to Section  232 steel tariffs, concluding that they did not violate the Section 232  statute, entitling the U.S. government to judgment as a matter of  law.41 The CIT held that the tariffs were legitimate as long as national  security is threatened so that the President should set a “duration” for  the tariffs. 

In April 2021, however, the CIT ruled that the Trump  administration improperly expanded its 232 steel and aluminum  duties to derivative products in January 2020, marking a significant  victory against the tariff action. CIT found that the President did not  comply with the statutory deadlines by expanding the duties nearly  two years after they were imposed.42 

These cases illustrate that Section 232 actions are being  challenged by different parties and are subject to intense scrutiny of  U.S. Courts. Court precedents illustrate that they are bound by strict  procedural rules, in a way that sudden changes or increases would  likely be revoked in court. Moreover, the exclusion process has been  subject to recent changes following these court challenges, such as  

39 See e.g. JSW Steel (USA) Inc. v. United States (CIT 19-00133), Borusan Mannesmann Pipe U.S. Inc.  v. United States (CIT 20-00012), NLMK Indiana, LLC and NLMK Pennsylvania, LLC v. United States  (CIT No. 20-00050), Mirror Metals, Inc. v. United States (CIT No. 20-00040), Allegheny Technologies  Incorporated, Allegheny & Tsingshan Stainless, LLC v. United States (CIT 20-03923), Valbruna Slater  Stainless, Inc. v. United States (CIT 21-00027) 

40 Id. 

41 Universal Steel Prods., Inc. v. United States, No. 19-00209 (CIT Dec. 3, 2019). 42 PrimeSource Bldg. Prods., Inc. v. United States, No. 20-00032 (CIT April 5, 2021).

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by BIS decisions being more thorough when reviewing the exclusion  record more carefully. While the Biden administration has already  signaled that the 232 duties would remain in place, their overall  administrative process should become even more predictable and  transparent to be consistent with these court rulings. 

3.3. U.S.-China Trade Relations 

3.3.1. Background on U.S-China Trade War and its  effects 

The trade war against China boosted in the Trump  Administration coupled with the pandemic have significantly  impacted the global supply chain and the international trade. Foreign  direct investment from China into the U.S. has declined by 90% to  US$4.7 billion in 2020 compared to 2016.43 Thus, U.S.-China trade  and investment relations are a current and prominent issue for the  Biden Administration. 

As indicated above, the Biden Administration approach towards  China is not dramatically different in substance from Trump’s. For  instance, the trade barriers on Chinese imports continue, along with  the pressure to make the Chinese government change its unfair trade  practices. Emerging trends from the Trump’s Administration on the  U.S. customs front are also continuing, such as restrictions on imports  based on human rights violations like forced labor. Section 301, that  tariffs against virtually all products from China, remain in place. 

The U.S. tariffs against China and China’s retaliatory measures  against the U.S. have severely affected U.S. imports from many  countries. Beginning in July 2018, the Trump Administration imposed  Section 301 actions in the form of additional duties on certain  Chinese products. Specifically, when these products of Chinese origin  are imported into the U.S., they are subject to additional import  duties, varying from 7.5% to 25%, unless the products are covered  

43 Analysis: Barriers to China-U.S. investments could outlast Trump, Reuters (November 3, 2020),  available at: https://www.reuters.com/article/us-usa-election-china-investments-analys/analysis barriers-to-china-u-s-investments-could-outlast-trump-idUSKBN27J0RL

A política comercial e perspectivas sob a administração Biden nos EUA 31 

by product-specific exclusions granted by the USTR. However, most  of the exclusions granted expired by December 31, 2020. Only a few  COVID-19 related items (e.g., masks, gloves, medical equipment)  continued to enjoy exclusions through March 31, 2021.  

Although the U.S. and China reached a Phase One trade deal  in January 2020, the additional tariffs remained in place and the  Biden administration has not removed them. In fact, the prospect of  removing the existing Section 301 tariffs is low at this point. Many  organizations, trade associations, and Congressmen have urged the  Biden Administration to reopen the exclusion process. But the USTR  Tai stressed that the 301 duties against China provide important  leverage to the United States in trade negotiations,44 indicating they  should remain in place. The status of the tariffs and exclusion process  may change as the trade relationships between China and the U.S.  evolve. 

3.3.2. Section 301 Litigation 

In late 2020, thousands of U.S. importers and trade organizations  filed claims at the CIT against Section 301 tariffs on China, arguing  that former President Trump was not within his rights to impose  the duties.45 Importers sought duty refunds plus interest. The claims  covered US$320 billion worth of goods from China. 

According to the plaintiffs, the Trump Administration  imposed the duties under so-called lists 3 and 4 “in an arbitrary  and capricious manner because they did not provide a sufficient  opportunity for comment, failed to meaningfully consider relevant  factors when making their decisions, and failed to adequately explain  their rationale.” 46 This action allegedly violated The Administrative  Procedure Act (“APA”). Plaintiffs also argued that the USTR tariffs on  

44 “New Trade Representative Says U.S. Isn’t Ready to Lift China Tariffs”, Wall Street Journal (March  28, 2021), available at: https://www.wsj.com/articles/new-trade-representative-says-u-s-isnt-ready-to lift-china-tariffs-11616929200  

45 HMTX Industries LLC et al. v. United States (Court No. 20-00177) (CIT 2019) and over 3,000  complaints filed in September 2020 challenging the USTR authority to levy Section 301 tariffs on  products of List 3 and 4A. 

46 Id.

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lists 3 and 4 were imposed more than a year after the initial Section  301 investigation was initiated, and the USTR did not tie these tariff  actions to the original 301 determination.47 

In response, the USTR argued they were “acting at the direction  of the President in promulgating lists 3 and 4, and the President  is not subject to the APA.” In February 2021, CIT asked the then  Biden administration to provide generic responses to the thousands  of claims. The master answer in March 2021 raised that the USTR’s  implementation of those decisions presented a non-justiciable,  political question. Even if CIT consider it a justifiable question,  substantial deference is afforded, in a way that the CIT should not  revoke the 301 action because “there was no clear misconstruction of  a governing statute, significant procedural violation, or action outside  delegated authority.”48 The USTR also argued that they had authority  to expand the tariffs after the one-year expiration date because the  previous actions taken in response to the Section 301 investigation  proved to no longer be appropriate or effective. 

As of May 2021, these cases remain pending. Due to the large  number of complaints and procedural challenges to importers on  how to secure refunds if their challenge is successful, it should take  some time for a final CIT decision on these claims. 

3.3.3. Evolution Perspectives and Impact to Brazil 

President Biden has made clear that the U.S. would continue  to stand up against China on allegedly unfair trade practices that  undercut U.S. workers and industry, particularly with regard to the  potential theft of U.S. technologies and intellectual property.49 With  that regard, Biden’s fiscal year 2022 budget proposal called for a US$2.5  billion increase in funding to launch initiatives aimed at enhancing  U.S. competitiveness in the development of emerging technologies  such as semiconductors and 5G, and implement executive actions  

47 Id. 

48 Id. 

49 “Biden hits China in Speech to Congress”, Washington Trade Daily Vol. 30, N. 84, (April 29, 201)

A política comercial e perspectivas sob a administração Biden nos EUA 33 

on export controls and telecommunications.50 We should therefore  expect the U.S.-China trade relationship under Biden to continue to  hinge on U.S. intellectual property and technology. 

The 301 tariffs against China imposed by the Trump  Administration and sustained by Biden’s have significantly affected  the supply to the U.S. and China from many countries, including  Brazil. For instance, following the U.S.-China trade war, Brazil’s  exports to China grew 35% since 2017, especially with regard to  agricultural goods,51 which compete with U.S. exports, now subject to  retaliatory tariffs in China. This scenario should continue given that  Section 301 tariffs should remain in place in the short term, besides  its challenge in U.S. court. 

4. BIDEN’S SUPPLY CHAIN REVIEW  

The recent “The Biden-Harris Administration and the Future  of Supply Chains in America”52 report produced by Baker McKenzie,  Atlantic Council and Experts of the Americas brings important  insights on the broad-based supply chain resilience as pledged by  President Biden and the role of the U.S. in advancing the development  of greater commercial integration in the Western Hemisphere. 

On its EO on America’s Supply Chains dated February 24,  202153 Biden demands critical review of the country’s supply chains  and emphasizes in Section 1 that “[t]he U.S. needs resilient, diverse,  

50 Biden budget: More Commerce funding for innovation, export controls, Inside U.S. Trade’s World  Trade Online (April 9, 2021) https://insidetrade.com/daily-news/biden-budget-more-commerce funding-innovation-export-controls 

51 See “Guerra comercial: o que significa, impactos e últimas notícias”, FIA ( April 6, 2020) at: “https:// fia.com.br/blog/guerra-comercial/ and “The US-China trade war has been a boon for Brazil’s soybean  farmers. But can they keep up with Chinese demand?” South China Morning Post (May 17, 2019)  at: https://www.scmp.com/business/companies/article/3010480/us-china-trade-war-has-been-boon brazils-soybean-farmers-can 

52 https://www.bakermckenzie.com/-/media/files/insight/publications/2020/12/the-biden-harris administration-and-the-future-of-supply-chains-in-the-americas.pdf?la=en 

53 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on americas-supply-chains/

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and secure supply chains to ensure our economic prosperity and  national security.”  

Overall, Biden demands in its EO a review of global supply  chains that support key U.S. industries in an attempt to improve  security for the U.S. government and U.S. companies. It seems an  initial step focused on information gathering. Comprehensive reforms  and supply chain strategies will likely follow once the White House  has collected key information. 

The EO basically outlines two types of assessments by  government agencies: (1) an initial 100-Day Supply Chain Review  focusing on key supply chain risks relating to semiconductors, batteries,  strategic minerals, and pharmaceuticals; and (2) sectoral supply chain  assessments in certain critical business sectors (e.g., national defense,  public health, information and communication technology, energy,  transportation, and agriculture), which will determine the extent to  which these critical sectors are reliant on products from “competitor  nations.” 

The Biden Administration noted that this most recent February  EO is intended to be a successor to the “Ensuring the Future is Made in  All of America by All of America’s Workers” EO54 that Biden signed on  January 25, 2021. Both EOs indicate that supply chain security will  likely be a primary focus for the new U.S. Administration. 

4.1. U.S. Trade and Vaccines  

The work done by the U.S. government in organizing  and subsidizing a complex supply chain for manufacturing and  distributing the COVID-19 vaccines has been impressive. The efforts  on developing the vaccines and on its distribution began under  Trump but has substantially expanded in the first months of Biden’s  administration. 

But the U.S. reality nowadays is enormously different from that  of much of the world. Global demand for vaccine doses overwhelms  

54 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/

A política comercial e perspectivas sob a administração Biden nos EUA 35 

the available supply. A handful of countries are able to manufacture  vaccines at the scale needed to overcome new infections and looming  deaths—and shifting due to the emergence of viral variants. 

In this context, it is problematic that the U.S. and other  countries are hoarding doses and critical vaccine supplies for their  own domestic populations, while failing to provide alternatives to the  vaccine’s waiver asked by WTO members. Indeed, pressure from U.S.  industry has increased for the past months for the U.S. government  not to support the breach (or waiver) of intellectual property rights  on the grounds that this would not have a positive impact on the  increased capacity for vaccine production by industries around the  world.  

Also, experts have been defending that the U.S. should “devote  resources and engage both domestic and international sources in  coordinated, targeted investments to build on the existing global  infrastructure of labs and manufacturers that produce specialized  inputs for the vaccines” […]55. The vaccine manufacturing supply  chain is already global, but it needs to be better organized and the  U.S. can play a critical global role in this effort. 

The United States has been widely criticized for focusing first  on vaccinating Americans. But there is growing optimism that the  U.S. has now secured sufficient doses to vaccinate every willing  American adult. In fact, the most recent movement from the Biden  Administration from May 2021 indicates that the USTR Tai will begin  talks in the WTO on ways to overcome intellectual property issues that  are keeping poorer countries from making their own generic version  of COVID-19 vaccines. Tai announced that Biden administration  would support waiving certain commitments under WTO’s TRIPS  for COVID-19 vaccines and actively participate in negotiations. 

55 https://www.piie.com/blogs/trade-and-investment-policy-watch/heres-how-get-billions-covid-19- vaccine-doses-world

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5. CONCLUSION 

Changes in relation to the previous administration’s trade  policies are evident, especially with the introduction of labor and  environmental concerns as top priorities. Internally, as a result of the  US$2.3 trillion infrastructure bill proposed to Congress and Biden’s  expansion of the Buy American provisions, we should expect more  protection and subsidies for the U.S. industry. Agriculture should also  benefit from the infrastructure bill and receive further support, at least  until its access to the Chinese market is recouped, if ever. Externally,  tariffs, quantitative restraints, and trade remedies should continue to  restrict imports in the short and medium terms, notwithstanding their  challenges in the WTO and U.S. domestic courts. Global supply chain  can shift while these tariffs remain in place, contributing to sourcing  to U.S. and China from different countries, including Brazil. A more  engaged and less acrimonious relationship with Europe is likely, while  with China a more diplomatic and less confrontational attitude is  on-going with most substance continued, however. At the WTO, the  U.S. is adopting a constructive approach, but is not going forward  with WTO reform and dispute settlement for now, or not until the  COVID-19 pandemic is over. 

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A política comercial e perspectivas sob a administração Biden nos EUA 39 

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A política comercial e perspectivas sob a administração Biden nos EUA 41 

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U.S. Senator Rob Portman Website, Press Release on  Portman, Brown Introduce Legislation to Strengthen Trade  Remedy Laws, Protect American Workers (Apr. 16, 2021),  available at: https://www.portman.senate.gov/newsroom/ 

press-releases/portman-brown-introduce-legislation-strengthen trade-remedy-laws-protect#:~:text=WASHINGTON%2C%20 D.C.%20%E2%80%93%20U.S.%20Senators%20Rob,unfair%- 20trade%20practices%20and%20protect  

Universal Steel Prods., Inc. v. United States, No. 19-00209 (CIT  Dec. 3, 2019). 

USTR 2021 Trade Policy Agenda, p.15, at: https://ustr.gov/sites/ default/files/files/reports/2021/2021%20Trade%20Agenda/ Online%20PDF%202021%20Trade%20Policy%20Agenda%20 and%202020%20Annual%20Report.pdf  

USTR nominee Tai says tariffs are ‘legitimate tool’ for trade  policy, Reuters (Feb. 25, 2021) 

Valbruna Slater Stainless, Inc. v. United States (CIT 21-00027)

Brazil and the U.S. signed on October 19 a Protocol that updates the 2011 Agreement on Trade and Economic
Cooperation (ATEC) with three new annexes on provisions of Customs Administration and Trade Facilitation,
Good Regulatory Practices, and Anticorruption. Although it has been called a “trade package”, it has limited
scope. Notwithstanding, ATEC allows engagement on a wide range of issues that affect business, and there is
great value in terms of easing bilateral trade and investments. In fact, the commitments made answer to
historical demands from the private sectors of both countries in terms of automation of customs, greater
predictability of regulations, and anti-corruption practices in trade and investment-related operations. These
commitments will likely contribute to increase U.S. and Brazil trade flows. The Protocol does not require U.S.
congressional approval, but the Brazilian Congress needs to approve it prior to its entry into force.
Following the expansion of the Protocol, the Export-Import Bank of the United States (EXIM) and the Brazilian
Ministry of Economy signed a memorandum of understanding to explore and identify potential opportunities
for EXIM financing in a total aggregate amount of up to $1 billion. This covers facilitation of financing related to
the deployment of 5G technology in Brazil, which directly affects Chinese interests.

 

Section 301 – Vietnam

The U.S. initiated two new Section 301 investigations against Vietnam, related to timber trade and currency
undervaluation. Parties have until November 12, 2020 to submit written comments. U.S. Section 301
investigations led to the current additional tariffs against China. The announcement of these investigations
raised concerns as many U.S. businesses are shifting supply chains from China to Vietnam. This is the 6th Section
301 proceeding under the Trump Administration, such as the ongoing investigation on Digital Services Taxes
against several countries including Brazil.
Section 232 and trade remedies investigations involving Brazil
Currently there are several measures and trade remedies investigations affecting Brazilian exports to the U.S.
In total numbers, there are: (i) four Section 232 actions (steel, aluminum, and their derivatives) and two ongoing
investigations (autos and vanadium); (ii) five countervailing measures and one ongoing investigation; (iii) twelve
anti-dumping duties and two ongoing investigations affecting Brazilian exports to the U.S.

 

IADB New President

Mauricio J. Claver-Carone was elected President of the Inter-American Development Bank (IDB) in September
2020. He took office on October 1, 2020, for a five-year term. As President, he oversees the operations of the
IDB Group, which comprises the IDB, IDB Invest and IDB Lab. He is the first north American President of the Bank
in 60 years of existence.

WTO New DG

Nigeria’s former finance minister and a former managing director of the World Bank, Dr Ngozi Okonjo-Iweala
was announced as the candidate most likely to achieve a consensus for Director-General of the World Trade
Organization (WTO) after the multiple head of delegation confessional meetings. She is the first African and
would be the first woman to occupy the highest position of the WTO. Even with the overwhelming support for
Ms. Okonjo-Iweala, the U.S. announced its support for the South Korean candidate. The formal selection takes
place on November 9. It is not clear how the next DG will be selected if consensus cannot be reached.

 

U.S. Elections

On November 3 ends the voting period to choose the next President of the United States and Congress
representatives. The polls point to the democrat candidate Joe Biden as the winner, but final results are hard to
predict. In Congress, Democrats have held a majority in the U.S. House of Representatives since the 2018
elections, while Republicans have held control of the U.S. Senate since the 2014 elections.
The American choice for President and the new Congress configuration could significantly impact Brazil-U.S.
trade relations. Should the democrats win the presidency, the expansion of the Brazil-U.S. trade package into a
broader trade agreement may be affected negatively.

 

General Updates and Announcements:

• If you missed ABCI’s Event on U.S. Elections and Prospects on International Trade with Jennifer Hillman,
Stephen Vaughn, and Lisa Schroeter held in September 10, 2020 you are welcome to check the recording
on our YouTube channel. The event had great attendance and repercussion. See here.
• Save the date for our virtual 2020 International Trade Symposium: December 3 and 4, 2020.
• Check out the new ABCI Institute Website here!
• Follow us on social media: LinkedIn and Facebook
• The ABCI Institute is a non-profit organization that seeks to foster the study of international trade and
become a unique platform for Brazilian and U.S. international trade professionals and academics. We
welcome and encourage your support. If you are interested in donating or becoming an ABCI member,
please reach us at board.abci@gmail.com.

 

ABCI Board
Aluisio de Lima-Campos, Renata Amaral, Barbara Medrado, Lucas Queiroz Pires, Marcia Pulcherio

The U.S. Mexico Canada Agreement (USMCA) was signed on December 2019 and went into effect on July 1,
2020. It revised the NAFTA text on important topics and added new concepts, such as an expiration date, at
the end of its 16th year. Below are some highlights.
In IP, the USMCA requires national treatment for copyrights, procedural safeguards for recognition of new
geographical indications, more enforcement provisions for IP protection, among others. On digital trade, it
prohibits the application of customs duties and other discriminatory measures to digital products distributed
electronically; ensures that data can be transferred across borders; permits the use of electronic
authentication and electronic signatures; cracks down on data localization measures; promotes collaboration
in addressing cybersecurity challenges; and protects against forced disclosure of proprietary computer source
code and algorithms, among others.
Environmental provisions have been incorporated into the core text of the agreement and are now subject to
dispute resolution. The same goes for labor provisions and eleven other chapters of the agreement. While
regional content for most products is set at 60 percent (transaction value method) or 50 percent (net cost
method), for the automotive industry, USMCA increases the regional value content to 75 percent North
American, establishes that 40 to 45 percent of auto content be made by workers earning at least $16 per hour
and stipulates that at least 70 percent of a producer’s steel and aluminum purchases must originate in North
America1
.
USMCA is now the new starting point, not the template, for trade agreements with the U.S. For countries
outside the agreement, the impact will continue to be negative for exports to USMCA markets, especially in
products where regional content was increased (auto parts, steel and aluminum, for example) and in
agricultural products, where MFN tariff and non-tariff protections in the U.S. are the highest. The full text is
available here.
Section 232
On June 2, 2020, the Department of Commerce initiated a new Section 232 investigation, based on National
Security grounds, adding Vanadium to the list of investigated products (steel and aluminum are others).
Vanadium is a chemical often found with titanium and iron in their ores and that is used in the production of
steel alloys for manufacture of extremely tough plates and tools. According to “Mining Weekly”, in 2019, the
U.S. produced 470 tons of contained vanadium while its apparent consumption was 8,300 tons, making it
almost entirely dependent on imports. Eight countries2 are the main exporters of vanadium in its different
forms to the U.S. market. In the case of Brazil, this investigation adds to steel and aluminum, which have been
1
It is worth noting that it is unclear whether exporters will choose to export under USMCA provisions, as many economists consider
that these provisions are too cumbersome to avoid a tariff of 2.5%. However, exporting under USMCA would be interesting if the US
eventually applies Section 232 tariffs in auto.
2
(Ferrovanadium from Austria (48%), Canada (22%), Russia (14%), Korea (11%) and other countries (5%); and Vanadium Pentoxide
from South Africa (44%), Brazil (29%), China (11%), Taiwan (6%) and other countries (10%).
ABCI Board
Aluisio de Lima-Campos, Renata Amaral, Barbara Medrado, Lucas Queiroz Pires, Marcia Pulcherio
under Section 232 sanctions in the U.S. for a while. On August 28, 2020 the White House reduced the import
quota on semi-finished steel from Brazil, scheduling to hold consultations in December 2020.
Biden’s Trade Policy
A potential Biden win in November is not likely to immediately alleviate U.S. trade tensions. An analysis of
Biden’s official campaign promises reveals that U.S. trade policy led by Biden will offer a similar approach in
terms of dealing with China and trade remedies. In trade negotiations, however, a Biden administration will
likely bring environment and labor provisions to a higher priority.
In terms of similarities, Biden promises to strengthen “Buy American” rules. Trade remedies are likely to be
used with the same intensity as the Trump administration. Biden envisions a “future made in America” and
suggests that this “requires fighting back against unfair trade practices.” Regarding China, the friction will
likely remain at similar levels as Biden’s campaign observes Trump did “nothing to curb Beijing’s trade abuses”
and that “China’s government continues its trade abuses and is failing to live up to its commitments.”
Biden’s Tax and Trade Strategy include the following actions: (1) take aggressive trade enforcement actions
against China or any other country that engage in unfair practices (e.g., currency manipulation, dumping,
state-owned company abuses, or unfair subsidies.); (2) confront foreign efforts to steal U.S. intellectual
property; (3) address state-sponsored cyber espionage against U.S. companies. Biden is also likely to stick to
U.S. Trade Representative Robert Lighthizer’s efforts to persuade U.S. companies to reshore. Biden plans to
establish a “claw-back” provision to force a company to return public investments and tax benefits when the
company transfers U.S. jobs to other countries and to reverse tax policies that encourage outsourcing.
Biden program diverges from the Trump administration’s approach to trade in three main issues. First, Biden
proposes to rally U.S. allies in a coordinated effort to pressure the China. Second, Biden proposes to apply a
carbon adjustment fee against countries that are failing to meet their climate and environmental obligations.
Third, Biden proposes to enforce existing labor provisions and aggressively push for strong and enforceable
labor provisions in trade deals his administration negotiates.
US-China Deal and Agricultural Goods
The six-month review of the U.S.-China phase one trade deal was held on August 24, 2020. According, to the
USTR, both sides see progress and are committed to taking the steps necessary to ensure the success of the
agreement. While there was a significant increase of China’s purchases from the United States, particularly of
agricultural products, China’s total imports from the U.S. was $48.5 billion through July 2020, which is less
than half needed to be on track to meet its commitments, as the PIEE points out. The pandemic spread right
after the phase one deal went into effect also contributed to the reduced demand for many agricultural
products.
It remains to be seen whether current U.S. supply of agricultural products will fulfill the ambitious
commitments of the U.S.-China deal and how other major agricultural players like Brazil will be affected.
Through July 2020, China received 40% of the agricultural products from Brazil, the highest share of China in
Brazil’s agricultural exports to date.

ABCI Board
Aluisio de Lima-Campos, Renata Amaral, Barbara Medrado, Lucas Queiroz Pires, Marcia Pulcherio