Trump's Trade Demands Go Beyond Tariffs05/05 06:16

   The Trump administration says the sweeping tariffs it unveiled April 2, then 
postponed for 90 days, have a simple goal: Force other countries to drop their 
trade barriers to U.S. goods.

   FRANKFURT, Germany (AP) -- The Trump administration says the sweeping 
tariffs it unveiled April 2, then postponed for 90 days, have a simple goal: 
Force other countries to drop their trade barriers to U.S. goods.

   Yet President Donald Trump's definition of trade barriers includes a slew of 
issues well beyond the tariffs other countries impose on the U.S., including 
some areas not normally associated with trade disputes. Those include 
agricultural safety requirements, tax systems, currency exchange rates, product 
standards, legal requirements, and red tape at the border.

   He's given countries three months to come up with concessions before tariffs 
ranging from 10% to more than 50% go into effect. Tariffs on China are already 
in effect.

   On many issues it will be difficult, or in some cases impossible, for many 
countries to make a deal and lower their tariff rates.

   In addition, many trade officials from targeted countries say privately that 
it isn't always clear what the Trump administration wants from them in the 
negotiations.

   Vice President JD Vance announced that India has agreed to the terms of 
trade talks with the United States, but other countries are still trying to set 
the contours for any negotiations. The White House has highlighted conflicting 
goals for its import taxes: It's seeking to raise revenues and bring 
manufacturing back to the U.S., but it also wants greater access to foreign 
markets and massive changes to other nations' tax and regulatory policies.

   Here are several non-tariff areas the administration is targeting:

   CURRENCY EXCHANGE RATES

   Trump has accused Germany, China and Japan of "global freeloading" by -- in 
his view -- devaluing their currencies to make their exports cheaper.

   The European Central bank has been cutting interest rates to support growth. 
That could also weaken the euro, which has strengthened sharply against the 
dollar since Trump took office. The ECB says it doesn't target the exchange 
rate.

   In Japan's case, the Bank of Japan has been gradually raising rates anyway 
after keeping them at zero or in negative territory for years, which should 
drive the yen up against the dollar. The U.S. dollar has fallen recently to 
140-yen levels, down from about 160 yen last summer. Shrikant Kale, a 
strategist at Jefferies, believes the dollar will fall to 120 yen over the next 
18 months.

   FARM PRODUCTS

   Agricultural safeguards against importing pests or health hazards have been 
a sticking point with U.S. trade partners for years. They include Japan's 
restrictions on rice and potato imports, the EU's ban on hormone-treated beef 
or chlorine-disinfected chickens and Korea's ban on beef from cows more than 30 
months old.

   Yet changes face stiff political resistance from voters and farm lobbies in 
those countries.

   For years, U.S. potato growers have sought access to Japan's potential $150 
million market for table potatoes. Japan has engaged in talks but taken years 
simply to supply a list of concerns to U.S. negotiators. The delay is "pure 
politics," intended to protect domestic growers, says National Potato Council 
CEO Kam Quarles. If Japanese politicians perceive the pain from Trump's tariffs 
might be worse than from their own potato growers, "that makes it more likely 
to make a deal," Quarles said.

   But "if they perceive the pain domestically will be worse than the Trump 
administration can bring to them ... we're going to be stuck where we are."

   Korea's beef restrictions started as a measure to keep out bovine spongiform 
encephalopathy, or mad cow disease. The 30-month rule has been maintained in 
the wake of mass protests in 2008, even as the U.S. has become the largest beef 
exporter to Korea.

   "It's still politically controversial because of the scar at the time in 
2008. I think the government will be very cautious," said Jaemin Lee, professor 
of law at Seoul National University and an expert on trade issues.

   TAXATION

   Trump has railed against value-added tax as a burden to U.S. companies, 
although economists say this kind of tax is trade-neutral because it applies 
equally to imports and exports. Value-added tax, or VAT, is paid by the end 
purchaser at the cash register but differs from sales taxes in that it is 
calculated at each stage of the production process.

   Trump's view could mean higher tariffs for Europe, where individual 
countries levy VAT of 20% or more depending on the type of good, and for the 
more than 170 countries that use this kind of tax system. The U.S. is an 
outlier in that it doesn't use VAT; instead, individual states levy sales taxes.

   There's little chance countries will change their tax systems for Trump. The 
EU for one has said VAT is off the table.

   "The domestic taxation system has not been a conventional topic in trade 
negotiation because domestic taxation is directly related to national 
sovereignty or the domestic economic regime," trade expert Lee said. "It's very 
hard to understand why VAT has become an important topic in the trade 
discussion."

   PRODUCT STANDARDS

   U.S. officials have complained about Japan's non-recognition of U.S vehicle 
safety standards and its different testing procedures for car equipment.

   Japan also provides subsidies for the Japanese-designed ChaDeMo plug 
standard for electric cars, requiring foreign makers to use an outdated 
technology if they want the subsidy.

   BUREAUCRACY

   Concerns about excessive or baffling bureaucratic procedures to get goods 
into a country are mentioned repeatedly in the administration's latest trade 
assessment. The U.S. has complained about expensive delays getting permission 
to export seafood to Japan. Meanwhile, Japan requires wheat imports to be sold 
to a government entity and has "highly regulated and intransparent" quota 
system that keeps rice imports from the U.S. to a minimum.

   Most of these issues are years old, raising questions about whether 90 days 
is enough to make a deal over them.

   U.S. pharmaceutical companies have complained about Korea's system for drug 
imports, while automakers say environmental equipment standards are unclear and 
expose only importers to criminal penalties in case of violations.

   BUY AMERICAN

   Analysts say that despite the long list of non-tariff issues, the 
administration's main focus may lie elsewhere: on Trump's desire to reduce 
trade deficits, cases where a country sells more to the U.S. than it buys.

   And the solution may be other countries buying more U.S. products, from 
energy to soybeans, and builingd more plants in the U.S.

   U.S. energy is already a major export to Europe. Trump has mentioned a 
figure of $350 billion for potential EU gas imports. The EU does need imported 
gas. But Trump's figure would be a stretch given that last year's exports of 
liquefied natural gas to the EU were around $13 billon, and that Europe is 
seeking to reduce its use of fossil fuels over the longer term.

   THE HEART OF THE MATTER?

   Discussions about non-tariff issues may simply be leverage to underpin 
Trump's stiff tariff levels.

   "It's just a thing that's there to justify my tariffs," said Tobias Gehrke, 
senior policy fellow at the European Council of Foreign Relations.

   While lower level trade officials and industry representatives are acutely 
aware of non-tariff issues like agricultural safety, "Trump and his cabinet... 
don't really care about chlorinated chicken regulations in Europe and food 
standards," Gehrke said. "They have much bigger thinking."

   "They want to have European companies significantly move production to 
America... and to export from America to Europe. That would change the trade 
balance."

   "And if that's the main logic, then there's no real deal to be had on 
non-tariff barriers."