The Trump Administration Pursues NAFTA Renegotiation

On May 18, 2017, the Trump administration formally notified Congress of its intent to renegotiate the North American Free Trade Agreement (NAFTA). The notification started the clock on a 90-day period that must elapse before the renegotiations with Canada and Mexico may start. The letter to Congress from U.S. Trade Representative Robert Lighthizer expressed “the Trump Administration’s commitment to concluding the negotiations with timely and substantive results for U.S. consumers, businesses, farmers, ranchers, and workers.” The USTR is required by Congress to publish more-detailed objectives at least 30 days before formal negotiations begin. Negotiations will begin no earlier than August 16, 2017.

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How to Prepare Your Company for Changes in the International Economy

Steve Dickinson, co-chair of Cozen O’Connor’s International Practice Group, and Evan Berquist, an associate in Cozen O’Connor’s International Practice Group, discuss preparing for changes in the international economy in the Iowa Trade Office’s International Update. Steve and Evan note that, “Recent developments around the world and proposals for change in economic and trade relationships may create a fluid environment for international business.” Among the business strategies for maximizing opportunities and minimizing risks, they suggest that a company review business models, consult experienced counsel, and “bear in mind that it pays to be prepared to adapt quickly when changes occur.” However, Steve and Evan add that before making any changes, companies should be aware that, “Foreign laws may regulate contractual relationships, often much differently than U.S. laws, and they frequently take precedence over the terms of a contract.”

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Trump Wants to “Tweak” NAFTA

After meeting with Prime Minister Justin Trudeau in early February, President Trump said he plans to “tweak” the North American Free Trade Agreement (NAFTA) with Canada. Before this announcement, it was unclear whether the President would demand greater changes to NAFTA because during his presidential campaign, Trump discussed his desire to renegotiate or even scrap the trade agreement altogether. In a joint statement issued by the two leaders, they said the two countries share a commitment to “strengthen our ties for the benefit of our mutual prosperity and security.” The statement recognized the importance of the Canadian-U.S. relationship when it comes to the economy, declaring, “millions of American and Canadian middle-class jobs, including in the manufacturing sector, depend on our partnership.” President Trump’s announcement of making only minor changes to the U.S. trade relationship with Canada are in stark contrast to the rhetoric used when discussing U.S. trade with Mexico. President Trump and Mexican President Erique Pena Nieto have not met to discuss NAFTA, as a meeting that was scheduled for the end of January was canceled after tensions mounted over the proposed southern border wall.

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Trump Administration Turns Up the Heat on Iran

On February 3, 2017, in response to recent Iranian ballistic missile tests, the U.S. Office of Foreign Assets Control (OFAC) added 13 individuals and 12 entities to the Specially Designated Nationals and Blocked Persons (SDN) list. The additions, which include individuals and entities in Iran, United Arab Emirates, Lebanon, and China, were made pursuant to two existing executive orders that address weapons of mass destruction proliferation and counterterrorism (EO 13382 and EO 13224). Accordingly, these new additions to the SDN list are consistent with U.S. commitments under the Joint Comprehensive Plan of Action (JCPOA), and no new nuclear-related sanctions or secondary sanctions have been imposed or reimposed. The press release describing the actions taken by OFAC can be found here.

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Trump Nominates Robert Lighthizer as U.S. Trade Representative

On January 3rd, President-Elect Trump nominated Robert E. Lighthizer as the U.S. Trade Representative. Lighthizer currently works as a partner at Skadden, Arps, Slate, Meagher & Flom, where he specializes in international trade issues. Before working at Skadden, Lighthizer worked as a Deputy U.S. Trade Representative in the Reagan Administration. Lighthizer was an early backer of Trump for president and is well known to be a skeptic on free trade, as well as a harsh critic of China’s trade practices. He has been a strong advocate for keeping the steel sector competitive in the U.S. As an attorney, Lighthizer represented the U.S. steel industry and other companies, helping to establish tariffs that have reduced Chinese steel imports. The U.S. Trade Representative office has responsibility over negotiating trade agreements with other countries, including the Trans-Pacific Partnership, which was negotiated under the Obama Administration. Trump has already stated that he plans to withdraw from this deal on his first day in office.

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Trump’s New Trade Council and Advisor

President-elect Donald Trump announced the creation of a new White House National Trade Council and appointed economist Peter Navarro to head up this new council. Mr. Navarro is a professor at University of California, Irvine and known for his strong stance against trading with China. He has advocated for a more aggressive stance on economic relations with China and written several books, including: “The Coming China Wars” and “Death by China: Confronting the Dragon – A Global Call to Action,” which was made into a documentary film. Mr. Navarro believes that globalism has benefited China and harmed the American economy. Trump’s transition team stated that the new National Trade Council’s goal is to make U.S. manufacturing great again and bring American jobs home. During Trump’s campaign and in his “100 Day Action Plan to Make American Great Again,” he promised to label China as a currency manipulator and aggressively enforce trade law violators. Critics of Trump’s appointment are concerned that curtailing trade with China would ultimately damage the American economy.

 

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How Trump’s First 100 Day Plan Effects Trade

President-elect Donald Trump has released his “100-Day Action Plan to Make America Great Again.” The plan includes many policies that will impact trade. The first item on President-elect Trump’s plan is his promise to renegotiate NAFTA or withdraw from the deal under Article 2205. This Article states that any party to the agreement can withdraw six months after providing written notice. The North American Free Trade Agreement (NAFTA) has been in effect since 1994, when the agreement was negotiated by President George H.W. Bush and implemented when President Bill Clinton took office. In addition, President-elect Trump pledged to withdrawal from the Trans-Pacific Partnership (TPP) Trade Agreement, a trade agreement President Obama negotiated and is currently awaiting Congressional approval. President-elect Trump also said he would direct his Secretary of the Treasury (not yet announced) to label China a “currency manipulator.” During his campaign, Trump often stated that the only way China sells so many goods in America is because it has devalued its currency. Lastly, President-elect Trump promised to direct the Secretary of Commerce and U.S. Trade Representative (not yet announced) to “identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately.” These proposed changes would not necessarily need congressional authorization, as international trade agreements have split authority between the White House and Congress.

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Britain’s High Court Rules on Brexit

On November 3rd, Britain’s High Court ruled that before the country can leave the European Union, Prime Minister Theresa May must first get approval from Parliament before the process can begin. The Prime Minister had previously said she plans to invoke Article 50, the legal mechanism used for exiting the EU, by the end of March 2017. This new ruling adds another step in the process, and further complicates the Brexit process. The government has appealed the ruling and Britain’s Supreme Court has granted this appeal. The Supreme Court has set aside four days, starting on December 5th, for all eleven Justices to hear the appeal.  According to a statement released by the Supreme Court, they will deliver their judgment “probably in the New Year.”

Many pro-Brexit politicians and a majority of the public were unhappy with the High Court’s decision. British voters chose to leave the EU (“Brexit”) earlier this year by a margin of 52% to leave and 48% to stay. While the public had voted by a majority on the referendum to leave, many members in Britain’s Parliament wanted Britain to stay in the EU. The idea that Parliament must now be consulted regarding any exit plans is seen as a blow to the Prime Minister. While it seems unlikely for Parliament to go against the will of the voters by blocking an exit plan, if the ruling stands, Theresa May would be forced to work with Parliament to negotiate a plan. Once Article 50 is triggered, the talks and negotiations will be lengthy and are likely to focus on border control/EU immigration and Britain’s desire to retain access to the EU’s single market.

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The White House Announces an End to Sanctions Against Myanmar

After nearly 20 years, the U.S. will lift economic sanctions against Myanmar (known as Burma until 1989). President Obama made this announcement on September 14, 2016 after meeting with the country’s de facto leader Aung San Suu Kyi.  This was Suu Kyi’s first visit to Washington since winning landmark elections last year for her party, the National League for Democracy. The Obama Administration has been working for years to normalize relations with Myanmar. Since 2011, the U.S. had been easing sanctions as the country has demonstrated progress in reducing the military’s influence on the government, which was a requirement.

 While some U.S. sanctions will remain, this announcement eases trade across many industries with Myanmar and the United States.  The Obama Administration is continuing to push Myanmar to change the country’s constitution in order to reduce the military’s power even further. Currently, Myanmar’s military still controls the country’s defense and interior ministries and shares power with Suu Kyi’s administration.

 

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Cozen Represented at Georgetown Law Careers in International Law Panel Discussion

On July 20, 2016, Marcy Stras moderated and spoke at a panel entitled, “Pathways to Employment in International Law.” The panel was hosted by the American Bar Association Section of International Law and was held at the Georgetown University Law Center. In addition to Marcy, representing Cozen O’Connor, the panel included: Adejoke Babington-Ashaye from The World Bank and Michael H. Byowitz from Wachtell Lipton Rosen & Katz. The discussion was geared towards law students, new lawyers, and other professional interested in international law. The goal was to bring law students and new lawyers together with experienced practitioners to explore opportunities for employment in international law. More than 100 students attended the event and kept the speakers an extra hour with questions after it was to end.

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About Beyond Borders
In a world of growing global interdependence, laws are transcending borders and increasingly affecting international business. Thus, making significant developments in the international community of utmost importance. Cozen O’Connor’s international business law blog, Beyond Borders: An International Business Blog, focuses on topics, trends and laws impacting the international business community.
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