Intro to this week’s Cabot Undervalued Stocks Advisor

by Crista Huff, Chief Analyst, Cabot Undervalued Stocks Advisor, December 12, 2017

 

The Office of the U.S. Trade Representative and the Department of Commerce have taken a decidedly different approach to U.S. participation in international trade since November 2016. We’ve recently seen the Trump administration’s serious pushback against long-standing trade abuses in the softwood lumber and steel industries (see the reviews below pertaining to Boise Cascade, Commercial Metals, Nucor and Weyerhaeuser). It’s therefore worth examining what else they’re working on, since they’re apparently focused on solving problems that could affect our investing decisions.

I realize that international trade can be somewhat of a dry topic, but since these decisions are affecting the bottom line in U.S. industry, stock market opportunities are unfolding before us. Here are the bullet points on the hot topics in international trade today:

• Members of the World Trade Organization (WTO) are meeting in Buenos Aires, Argentina this week through December 13. USTR Robert Lighthizer is pushing the WTO to solve disagreement surrounding its dispute settlement system, the development status of nations and the enforcement of current rules, before creating new rules or appointing new members to the WTO Appellate Body. Contentious topics also include chronic overcapacity, fisheries, agriculture, subsidies and state-owned enterprises. Lighthizer plans to “advocate for U.S. economic and trade interests, including WTO institutional reform and market-based, fair trade policies.”

• A moratorium on e-commerce duties is set to expire at the end of this week’s WTO ministerial (meeting) unless the trade ministers take action to renew them. Political friction adds color to the outcome.

• Representatives from the U.S., Mexico and Canada are meeting this week in Washington D.C. through December 15 to discuss potential changes to the North American Free Trade Agreement (NAFTA). This week’s topics include digital trade, trade facilitation, good regulatory practices, telecommunications, customs, technical barriers to trade and sanitary and phytosanitary measures.

• Whirlpool (WHR) filed a petition with the U.S. International Trade Commission (USITC) in May 2017, which was backed by General Electric (GE), contending that South Korea’s Samsung and LG have manipulated production facilities of large residential washers in order to circumvent anti-dumping duties imposed by the U.S. Commerce Department. The USITC delivered a final report on its investigation last week, acknowledging the trade abuses, suggesting tariff-rate quotes, while also allowing Samsung and LG to continue selling to U.S. customers and opening manufacturing facilities in South Carolina and Tennessee.

I’m sorry if that was a little boring, but this is the kind of news I read in order to identify possible investment opportunities. I’ll stay abreast of the trade news, and you’re welcome to send me questions and comments if you’re a policy wonk!

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Crista Huff is a stock market expert and an international trade advocate. She played a significant role in defeating the Trans-Pacific Partnership (TPP) trade agreement, which would have given away U.S. sovereignty. She is also Chief Analyst at Cabot Undervalued Stocks Advisor. Send questions and comments to research@goodfellowllc.com.

 

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