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— European Trade Commissioner Phil Hogan arrives in Washington this week with the major task of trying to reset U.S.-EU trade relations amid simmering disputes between the two economic giants.
— President Donald Trump is set to sign his “phase one” China trade deal on Wednesday and administration officials are adamant that nothing will be lost in the translation of the agreement.
— Passage of the U.S.-Mexico-Canada Agreement is set to get further ensnared in impeachment politics as the Senate works through a half-dozen unexpected markups that could coincide with the start of an impeachment trial.
IT’S MONDAY, JAN. 13! Welcome to Morning Trade, where your host thinks Diego the tortoise is a credit to his species. Got any trade tips to start the week? Let me know: abehsudi@politico.com or @abehsudi.
Driving the Day
BIG PHIL COMES TO WASHINGTON: Hogan arrives in town this week with what could be an impossible mission: resetting trade relations between the United States and European Union.
A simmering dispute over France’s new digital services tax and European support for Boeing’s chief rival, Airbus, could give Trump more ammunition to fire his tariff cannon amid a looming impeachment trial.
"Phil Hogan is a serious man, who I think takes his job very seriously, and his belief and feeling in the EU is strong," said former U.S. Agriculture Secretary Tom Vilsack, who sparred with Hogan during unsuccessful talks on the proposed Transatlantic Trade and Investment Partnership pursued by the Obama administration. "He is a tough negotiator, but fair."
Hogan has said publicly he wants “to reset the relationship between the EU and the U.S., and I think that's the message that he would obviously be conveying privately to [U.S. Trade Representative] Robert Lighthizer,” an EU official said.
JAPAN ALSO ON THE VISITOR LOG: Japanese Minister of Economy, Trade and Industry Hiroshi Kajiyama will arrive in Washington today for a meeting with Lighthizer and other officials. The trip will be the Japanese official’s first as minister since he took over the position last October.
Kajiyama’s visit, which extends through Tuesday, will coincide with Hogan’s arrival. Planning had been underway for a trilateral meeting with Lighthizer, a Japanese official said. The U.S., EU and Japan have held a regular trilateral trade dialogue throughout Trump's administration where officials have focused on addressing non-market oriented trade policies and subsidies by China and other countries.
Kajiyama's trip will focus on issues related to the World Trade Organization and digital trade but won't include discussion about a second phase of U.S.-Japan trade talks. The next round of talks is supposed to begin four months from when the initial deal took effect on Jan. 1. The trade talks will continue to fall under the responsibility of Japanese Foreign Minister Toshimitsu Motegi, the official said.
MNUCHIN: NOTHING LOST IN TRANSLATION FOR CHINA DEAL: Treasury Secretary Steven Mnuchin said there won’t be anything changed in the translation of a “phase one” trade deal with China.
“It was not changed in translation. I don’t know where that rumor started. We've been going through a translation process that I think we said was really a technical issue. The language will be released this week,” Mnuchin said on Fox News on Sunday.
Mnuchin reiterated that China will purchase between $40 billion and $50 billion in U.S. agricultural goods in the first year after the deal is signed and roughly $200 billion worth of products including energy and services over the next two years.
White House ceremony: A Chinese delegation led by Vice Premier Liu He will be at the White House on Wednesday to sign the deal with Trump in an event that is expected to be well attended by lawmakers, corporate executives and press. Trump will likely look at the event as an opportunity to tout an outcome from his confrontational trade tactics the same week the House will send articles of impeachment to the Senate.
“It’s ironic that we’re going to have this week the signing of the Chinese trade deal at the same time they’re going to vote to send the impeachment articles over [from] the House because these are inextricably linked,” former White House chief strategist Steve Bannon said on Fox News on Sunday.
A new U.S.-China dialogue: Washington and Beijing are also expected to announce this week the launch of a new semiannual economic and strategic dialogue that will run in parallel to a second phase of trade talks. Morning Trade first reported Friday that a dialogue was under consideration. Treasury and USTR in a statement confirmed to The Wall Street Journal on Saturday that the effort to confer on “macroeconomic issues” will be headed by Mnuchin and Liu.
China not diverging on Iran: Mnuchin on Sunday also said China was making an effort to cease oil-related transactions with Iran. The U.S. imposed another raft of sanctions on Tehran on Friday. The Treasury secretary said this weekend that he met recently with a delegation of Chinese officials to discuss Iran sanctions. He claimed that China’s state-owned companies have not been purchasing Iranian oil.
“China is subject to sanctions like everybody else,” he said. “We actually sanctioned some of their shipping companies that were involved in the oil and we will continue to pursue sanctions activities against China and anybody else around the world.”
REPORT: BILATERAL APPROACH TO CHINA WON’T BE ENOUGH: A leading U.S. technology think tank says any hope of bringing Beijing to bear on its industrial policies and controversial trade practices going forward will have to be a collective effort among the U.S., EU and Japan.
“China has progressed enough economically and technologically that it no longer fears bilateral pressure against its mercantilist trade violations, but it sees collective action as a real deterrent,” said Nigel Cory, associate director for trade policy for the Information Technology and Innovation Foundation. The ITIF report advocates for a stronger trilateral approach to set global rules.
GROUPS REBEL AT COMMERCE SUPPLY CHAIN PROPOSAL: Trade associations and other groups are calling on the Trump administration to dump or significantly narrow a proposal that would give the Commerce Department expansive new powers to block technology supply chain transactions involving a foreign "adversary”.
The proposed regulation issued in late November is part of a broader Trump administration effort to keep Huawei and other Chinese tech companies out of the U.S. market because of concern they are cooperating with the Chinese government in spying on the United States.
“In its current form, the proposed rule would subject every purchase, or even use, of ICT products or services in which any foreign company has an interest to the risk of unwinding upon the government’s direction. This would be an extraordinary and unnecessary action,” the Computing Technology Industry Association said in its comments.
The Information Technology Industry Council called the rule “fundamentally flawed in several respects” and cautioned against Commerce adopting it without major changes.
“Nothing less than a very significant reconsideration of both substance and process will render such a rule workable or effective in terms of American national security, U.S. economic competitiveness, or overall due process,” the group said.
USMCA FUTURE COMPLICATED BY IMPEACHMENT: House Speaker Nancy Pelosi announced Friday she will send the articles of impeachment against Trump to the Senate this week, a move that is widely expected to kill chances of USMCA passage in the coming weeks.
The Senate trial could begin almost immediately after Senate Majority Leader Mitch McConnell receives the articles, which would likely keep USMCA from being ratified until after the trial. McConnell has previously said the deal would be passed after the president’s impeachment trial.
Blame game: Senate Finance Chairman Chuck Grassley on Friday blamed Pelosi for holding up passage of the deal, noting that House Democrats took nearly a year to vote on the pact after Trump signed it. “The speaker’s indecision on impeachment will now keep the trade deal from being ratified for even longer,” Grassley said in a statement.
But a spokesman for Pelosi pushed back on Grassley’s criticism, noting that the Senate has had ample time to pass the deal since the House passed it on Dec. 19. “After all their grandstanding, turns out Senate Republicans don't actually care enough to get the job done on time,” said Henry Connolly, a Pelosi spokesman.
Markup mania: Trying to keep track of all the USMCA markups this week? Here’s a rundown of what to expect in the Senate. View the full graphic online. Want to add DataPoint to your POLITICO Pro account? Learn more about DataPoint on POLITICO Pro.
International Overnight
— Two years of the trade war between the U.S. and China took a toll on the U.S. economy but not a big one, The Wall Street Journal reports.
— The Trump administration has reached out to North Korea to resume diplomacy that has been all but dead since October, Axios reports.
— The real challenge of a preliminary China trade deal will be if Beijing can stay true to its commitments, Bloomberg reports.
THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: abehsudi@politico.com; mcassella@politico.com; dpalmer@politico.com; srodriguez@politico.com; jyearwood@politico.com and pjoshi@politico.com. Follow us @POLITICOPro and @Morning_Trade.
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