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6 Big Business Predictions for 2023


Morning Trade polled the trading minds: What’s your biggest and boldest prediction for trade policy in the new year? Here’s what six experts see happening in 2023.

The senator who voted on the Cut Inflation Act pledged to clarify the bill’s intent after the Treasury Department shared much-anticipated guidance on implementing electric vehicle tax credits.

Today is Tuesday, January 3. Welcome to Morning Trade. Good year! As we turn the calendar and look to the future, what do you foresee for the US trade program this year? Share your unofficial hopes and skepticism with your host at [email protected] or by PM Twitter.

As always, keep sending the team your business updates: [email protected], [email protected]and [email protected].

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WHAT TRADE WATCHERS PREDICTS FOR 2023: President Joe Biden’s trade agenda has deepened over the past year. His administration launched an economic initiative in the Indo-Pacific, tightened export controls on Chinese entities and passed industrial subsidies that angered major trading partners.

The coming year should bring developments on all these efforts, of course. But there’s bound to be more progress and more conflict to come as Biden enters his third year in the White House and faces, for the first time in his term, an opposition-controlled chamber of Congress.

So what comes next? Here’s what six seasoned trade executives told Morning Trade:

Congress to challenge Biden on trade: “A Republican-led House and a Democratic-led Senate will find common ground in urging the Biden administration to aggressively pursue new trade initiatives to support American businesses and workers and strengthen foreign policy ties. Look for a bipartisan group of lawmakers to push for the launch of commercially meaningful trade deals with the UK and key partners in the Western Hemisphere. Also count on Congress to act on key programs like the Miscellaneous Tariffs Bill and the Generalized System of Preferences, as well as U.S. leadership encouragement and oversight on the global digital economy and protecting privacy. intellectual property, commercial ties with China, and the administration’s continued use of tariffs. — Jake Colvin, Chairman of the National Trade Council

Trade tensions with China will grow: “We will remain in this law enforcement-focused mode of commerce for the foreseeable future. There’s a fair amount of activity on the enforcement side in China – whether it’s forced labour, whether it’s intellectual property, whether it’s anti-dumping and countervailing duty evasion. The way China has handled its trade relationship with the United States is a source of frustration, and that frustration goes back to when I was in office nine years ago. It has just reached a boiling point where we are destined to have a more aggressive posture for the foreseeable future. — Francisco Sánchez, co-director of Holland & Knight’s international business practice and former undersecretary of commerce for commerce

Industrial incentives will boost Biden’s climate agenda: “Finally, 2023 will mark America’s most important step forward in the high-tech ecosystem, characterized by the rapid growth of domestic supply chains and national security measures that more aggressively regulate transfers. of critical assets and technologies overseas. Across all sectors, industrial policy will favor technologies that advance the administration’s climate change goals. And as U.S. innovation accelerates, Congress and the Biden administration will expand national security restrictions on technology transfers to China and other countries of concern, and new restrictions on the relocation of national security assets and critical capabilities will likely emerge. — Nazak Nikakhtar, Partner at Wiley Rein and Former Assistant Secretary of Commerce for Industry and Analysis

Digital protectionism will attract new attention: “A slowing economy and new political constraints on the national agenda will draw attention to foreign markets as a driver of prosperity and jobs – and therefore the need to finally take seriously the trade barriers that are hampering US businesses.Sectors heavily dependent on exports, such as digital trade, will regain essential support for US global competitiveness, resulting in a less optimistic view of the digital protectionism that the EU is methodically putting in place (and is attracting followers), and implications for U.S. extractive industry interests and the redistributive aspects of these policies. , especially without the Trade Promotion Authority, laying the groundwork for meaningful negotiation and leveraging the goodwill of gr Developments such as the Indo-Pacific economic framework will create more positive trade dynamics. — Jonathan McHale, Vice President for Digital Commerce at the Computer & Communications Industry Association and former Deputy Assistant to the U.S. Trade Representative

The Quad will turn to trade barriers: “The quadrilateral dialogue between the United States, Japan, Australia and India was first proposed by the late Japanese Prime Minister Shinzo Abe in 2007 as a ‘democratic security diamond’, but does not managed to establish itself only in 2017. Since then, the Quad has grown in importance in the region despite a proliferation of trilateral and plurilateral arrangements.While until now it had a strategic orientation and security, expect that to change in 2023 as trade ministers and others begin to meet in the Quad meetings.The Biden administration and its Quad partners are under pressure to demonstrate that the Quad does not is not a military grouping. At the same time, the region has been highly critical of the lack of a U.S. trade strategy in the Indo-Pacific. A Quad trade track, as well as the Indo-Pacific economic framework, could align the policies and develop initiatives to mitigate supply chain risks. — Nisha Biswal, Senior Vice President for International Strategy and Global Initiatives at the U.S. Chamber of Commerce and former Assistant Secretary of State for South and Central Asian Affairs

Trade equity will focus on developing countries: “2023 could finally be the year of inclusive and sustainable trade. The year 2022 saw the first-ever WTO Gender Equality Congress and a new memorandum of understanding between the United States and the African Continental Free Trade Area that recognized “the mutual interest of inclusive sustainable development”. The question remains, however, inclusive and sustainable trade for whom? As trade tensions between major economies dominate and the traditional model of trade agreements fails to address distributional issues, the room for maneuver is with developing economies and a model that rebalances the gains from trade and enables more collective approaches. — Katrin Kuhlmann, Faculty Co-Director and Visiting Professor at Georgetown Law’s Center on Inclusive Trade and Development

NEW TENSIONS ON EV TAX CREDITS: Here’s a trade rift that will spill over into the new year: the dispute over US tax credits for North American-made electric vehicles.

The Treasury Department has released a long-awaited outline of its plans to implement the subsidies that Congress approved in the Inflation Reduction Act earlier this year. The agency said it will broadly define countries that have a “free trade agreement” with the United States, potentially allowing more foreign automakers to access some of the tax credits. A separate tax credit for clean commercial vehicles could also benefit foreign manufacturers who lease cars to consumers through dealerships.

Brewing the Battle of Congress: While a lengthy regulatory process must take place before the agency’s thinking becomes formal, the announcement nonetheless infuriated the lawmaker whose vote made the legislation possible.

Sen. Joe Manchin (DW.V.) said the Treasury’s interpretation “benefits the desires of companies looking for loopholes and is clearly inconsistent with the intent of the law.” The advice, he continued, “only serves to weaken our ability to become a more energy-secure nation.”

Manchin didn’t stop there. He also pledged to introduce legislation when the Senate returns to Washington that “further clarifies the original intent of the law and prevents this dangerous interpretation of the Treasury from moving forward.”

The Treasury responds: The Biden administration has not backed down. The Treasury has insisted that it is “just following the tax laws and the IRA as written”. And its leased vehicle tax credit guidelines, the department added, are based on “long-standing, established and clear” tax laws.

As for business partners: The European Union called the clean commercial vehicle tax credit guidelines a “win-win” for both countries, while noting that its automakers would be eligible for the benefit “without requiring changes to business models. established or planned”.

But he still wants vehicles produced in the EU to be eligible for the $7,500 tax credit for electric vehicles made in North America from critical minerals sourced from the US or countries with which the US United have entered into a free trade agreement.

The White House has been negotiating with the EU, as well as South Korea and Japan, on this issue for months. A National Security Council spokesman said “these are regular conversations and we expect the conversations to continue.”

– The United States officially terminated Burkina Faso’s trade benefits on Jan. 1 due to its “unconstitutional change of government,” according to the Office of the U.S. Trade Representative. The decision had already been announced.

– Biden’s actions to suppress Beijing’s tech development will do more to hamper the Chinese economy than Trump ever has, POLITICO’s Gavin Bade reports.

– The head of the International Monetary Fund warns that slowing growth in the United States, Europe and China will be a drag on the global economy, writes Reuters.

– South Korean exports fell again in December, which is a bad sign for global trade, according to Bloomberg.

– China is deepening its economic ties across Asia at a time when the United States wants nations to be less dependent on Beijing, reports the Wall Street Journal.

THAT’S ALL FOR THE MORNING TRADE! See you soon! In the meantime, send a note to the team: [email protected], [email protected] and [email protected]. follow us @POLITICOPro and @Morning_Trade.



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