5 Takeaways from Commerce Secretary Wilbur Ross on Trade.

1China

Donald Trump regularly blasted China’s trade surplus during the presidential campaign, and threatened tough action. He and his aides have taken a softer tone since President Xi Jingping’s early April visit to Florida and the launch of a “100-day” plan for concrete actions to curb the bilateral trade imbalance. So far, “I’m somewhat encouraged,” Mr. Ross said. “I would say it’s off to a good start.” He added he’s expecting by end of summer a list of “tangible things” like “tariff lowering, artificial trade barrier lowering… some of the inspection requirements” that will be changed when the 100 days runs out.

2Nafta

Mr. Ross set an ambitious timetable for completing negotiations of the North American Free Trade Agreement with Canada and Mexico. Due to congressional rules, talks can’t start until late July at the earliest. But the Commerce Secretary is still aiming for completing a rewrite by end of the year, citing the need to do so before Mexican elections next year. (And while he didn’t say so, U.S. congressional elections in 2018 will also make completion difficult). What does he want to try to change? “The rules of origin, the countries of origin in Nafta is not a very sturdy one,” he said, referring to rules that require a certain portion of goods produced in North America to include content from the continent in order to qualify for the trade breaks. “In autos they’ve had a pretty high percentage of car come from outside Nafta.  So, in concept, what it would mean, a Japanese manufacturer with a factory in China could bring in Chinese parts, send them to Mexico, assemble them into a car….  That’s a weird trade agreement.”

3The Negotiating Agenda

Beyond rewriting Nafta, Mr. Ross sees trade talks with Europe and Japan. He’s willing to consider reviving the dormant Transatlantic Trade and Investment Partnership with the European Union and even the Bilateral Investment Treaty with China. What about the U.K., post-Brexit? Mr. Trump once said that would be a priority. “We would be happy to,” said Mr. Ross, before ticking off a long list of reasons why it would likely take a long time before the U.K. could ever get to it. He warned South Korea, which just celebrated the fifth anniversary of its free-trade agreement with the U.S., that the Trump team may want to reopen that deal in the same way it wants to re-examine Nafta.

4Westinghouse

The commerce secretary is clearly paying attention to the travails of Westinghouse Electric Co., the nuclear-reactor company owned by Japan’s Toshiba Corp. that filed for bankruptcy protection in the U.S. last month. He’s not offering government money–yet. But he didn’t rule it out.  Asked if he was considering public funds, Mr. Ross said: “In my discussions with the Westinghouse people and the Toshiba people, and with the Japanese government, everyone believes that the debtor-in-possession financing…. plus the regular financing that they have – everyone believes, at least for the immediate future, that should be adequate.” But, he added: “Unknown is, as you know, they’re having a little bit of trouble with their own accountants.  They’ve now changed accountants a couple of times.  So the variable is how big is the hole.  I don’t think anybody really knows precisely how big the hole is.  Well, hard to fill a hole until you know its dimension.”

5Man of Steel

Before taking on his current job, the 79-year-old billionaire was an active investor in the steel industry, long one of the most aggressive American sectors in seeking protections from imports. In discussing the industry’s travails, Mr. Ross at one point said, “so we’re only operating as an industry… at 71% capacity.” He then caught himself, laughed, and said “I say ‘we,’ because I was in the industry for so long.” The Commerce Department last week said it would investigate whether steel imports are a threat to national security, and the administration could impose tariffs on all countries’ exports if Mr. Trump determines there’s a threat.

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