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2020 International Trade & Tariffs Outlook

As the Trump Administration pushed for concessions from major trading partners in 2019, most industries in America were focused on international trade policy and its impact. For the oil and gas industry, tariffs increased the price of production and caused disruptions throughout the supply chain.

PESA’s International Trade Policy Committee has engaged to support Member Companies affected by import tariffs. Many PESA Members source certain parts used in the manufacturing process of larger end products from qualified foreign suppliers and were therefore subject to potential tariffs under the Section 301 Investigations.

The product exclusion process allows individual companies or trade organizations to file requests for particular products to be exempted from additional duties. After organizing and submitting product exclusions on behalf of Members, PESA was granted six different exclusions providing relief for many Members and other U.S. businesses.

Opportunities and Stability in 2020
Trade agreements with vital partners can be expected for the new year; the United State Mexico Canada Agreement (USMCA) and establishing trade terms with the United Kingdom post-Brexit, when the UK will detach itself from the European Union.

USMCA updates the decades-old North America Free Trade Agreement (NAFTA) with new country of origin rules, labor provisions and intellectual property rights, among others. After several rounds of negotiations, Democratic House Members who control the lower chamber cleared a revised USMCA for passage in December. In the coming weeks, several Senate committees will need vote to approve if the bill can move to the full Senate floor.

What could the updates to NAFTA mean for the oil and gas industry?

According to the Office of the U.S. Trade Representative:

  • USMCA maintains the free flow of energy across borders in North America
  • Fixes a longstanding issue in allowing hydrocarbons transported through pipelines to qualify as originating, provided that any diluent, regardless of origin, does not constitute more than 40% of the volume of the good
  • U.S. liquefied natural gas exports to Mexico and Canada will continue to receive automatic export approvals, whereas exports to partners not in the free trade agreement require a determination that they are in the public interest

Establishing a fair and balanced trade agreement for North America secures our industry’s future and that of many U.S. businesses. If you are interested in learning more about PESA’s International Trade Policy Committee, contact Vice President, Government Affairs Tim Tarpley.