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US chamber chief expects trade tariffs to end soon

Bahrain Business
Mon, 10 Sep 2018
By Avinash Saxena
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MANAMA: US Chamber of Commerce president and chief executive Thomas J Donohue expects the new American trade tariff regime to be dismantled in the near future as the Trump Administration comes under pressure from US businesses and consumers.

Speaking at a roundtable discussion titled US–Bahrain Trade: Envisioning the Future at the Capital Club Bahrain yesterday, he said due to mounting pressure from local businesses and counter measures by all countries affected, the tariffs were not expected to go on for long.

He feels the upcoming US mid-term elections will be a turning point and that the Trump Administration’s approach to trade is now moving in the right direction.

“The US chamber is leading the effort for a speedy resolution, as it is in everyone’s interest... Chambers have to be activists, we will have to act and get things done.”

Mr Donohue has been a vocal critic of the tariffs imposed by Washington, saying retaliation would boomerang badly on the American economy.

Soon after the announcement this March, the chamber, the nation’s largest business lobbying group, said the White House was risking a global trade war with its push to protect US industry and workers with tariffs.

The chamber, which says it represents the interests of three million companies, has asserted the tariff would harm US businesses.

“The administration is threatening to undermine the economic progress it worked so hard to achieve,” Mr Donohue had said.

“We should seek free and fair trade, but this is just not the way to do it.”

US President Donald Trump in March announced a 25 per cent tariff on steel imports and 10pc tariff on aluminium imports to counter what he has described as unfair international competition.

Canada, Mexico and the European Union were granted temporary exemptions, whereas Bahrain despite a free trade agreement (FTA) with the US was not.

Exemption

Industry, Commerce and Tourism Minister Zayed Alzayani, who has been working with American Chamber of Commerce (AmCham) Bahrain and industry players like Alba, Garmco and Midal Cables to get an exemption for the kingdom since then, said discussions with the Trump Administration were ongoing and he was hopeful of a positive outcome.

“The faster way would be to get product specific exemptions and we have advised all affected parties to work on those lines.

He said Bahraini companies had a strong case as about 85pc of aluminium products exported from Bahrain to the US were semi-finished goods and raw materials used by American companies to make products for local consumption, thus creating jobs for Americans and adding value to the US economy.

According to Mr Alzayani, ongoing talks among United States, Mexico and Canada to revise the North American Free Trade Agreement (NAFTA) are crucial in determining the US government's future stance on trade tariffs.

A 25-year-old pact of the three countries, NAFTA covers $1.2 trillion in trade.

Mr Alzayani also said more than 200 US companies had invested more than $480 million in Bahrain till date.

Garmco chairman Bassem Al Saie who moderated the discussion said $600-700m worth of aluminium exports from Bahrain are affected by the new tariffs.

Aluminium made up 61pc of the kingdom’s exports to the US last year.

“If the United States did not grant an exemption, ultimately the tariffs will be passed along in terms of the Midwest pricing... the consumer is going to pay,” Alba chief executive Tim Murray told Reuters on the sidelines of a conference in London this April, referring to the price of aluminium delivered, duty-paid, to plants in the US Midwest.

He also said this would not affect Alba’s Line 6 expansion project which would make it the world’s largest single aluminium smelter complex with output of 1.5m tonnes annually.

Production at the new pot-line is expected to start by January 1, 2019.

According to a report in the American Journal of Transportation, Bahrain was the world’s eighth-largest producer of aluminium in 2016, with 970,000 tonnes, accounting for 10pc of the country’s economy.

Following the announcement of the Trump tariffs, Bahrain hired a high-profile US law firm, the Washington-based Miller and Chevalier, to help convince the Trump administration to ease the impact of new tariffs that could harm a US ally, the report said.

Failure

Also present at the meeting was Bahrain Chamber of Commerce and Industry (BCCI) chairman Sameer Nass who said Bahrain’s private sector had failed to take full advantage of the US-Bahrain FTA, despite efforts by both governments paving the way.

The GDN had reported in July that bilateral trade and services exchange in 2016 had risen to $3.1 billion and two-way trade between Bahrain and the US had more than doubled since the adoption of the FTA from $782m in 2005 to $1.7bn in 2016.

“As a result of Bahrain’s open and innovative business environment, more than 200 American companies have chosen to operate in the kingdom, including most recently Amazon Web Services (AWS) opting to open its first regional headquarters in Bahrain,” said Mr Nass.

AmCham Bahrain president Qays Zu’bi opened the roundtable saying, “AmCham had taken up the tariff issue with the US Embassy in Bahrain and was working with the American Chamber of Commerce in Washington to seek a change in policy.”

Bahrain’s trade with the US rose to $1.32bn through the first six months of 2018, according to a WorldCity analysis of latest US Census Bureau data, says a report on US TradeNumbers.com.

That’s 39.94pc above the total trade during the same time period last year.

Bahrain’s exports increased 79.32pc while imports rose 2.21pc.

The US surplus with Bahrain was $335.14m.

avinash@gdn.com.bh

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