The National Trade Estimate Report provides an inventory of the most important foreign barriers affecting U.S. exports of goods and services, foreign direct investment by U.S. persons, and protection of intellectual property rights. Such an inventory enhances awareness of these trade restrictions and facilitates negotiations aimed at reducing or eliminating these barriers. The report covers significant barriers, whether they are consistent or inconsistent with international trading rules. This report discusses the largest export markets for the United States, including 58 countries, the European Union, Taiwan, Hong Kong, and one regional body. This document is a companion piece to the President’s Trade Policy Agenda published by USTR in March. Among the most noteworthy changes in the last year, both positive and negative, in the barriers in U.S. export markets are:
AFRICA
NIGERIA
- Additional levies and increased duties: In October 2013, the Nigerian government announced an Automotive Industry Development Plan, which seeks to expand domestic vehicle assembly. Under the plan, effective October 2013, a 70 percent tariff rate is applied to imports of fully assembled vehicles while zero percent and 5 percent tariffs are applied to imports of completely knocked down and semi-knocked down vehicles, respectively.
- Nigeria has also imposed a number of supplemental levies and duties on selected agricultural imports that significantly raise effective tariff rates. These levies and duties increase the effective duty on wheat grain imports from 5 percent to 20 percent, on wheat flour imports from 35 percent to 100 percent, on brown rice imports from 5 percent to 35 percent, and on milled rice imports from 30 percent to 80 percent. In 2013, the government raised effective tariffs to 60 percent on raw sugar imports and 80 percent on refined sugar.
- The United States has raised concerns about these policies bilaterally.
GHANA
- Local Content requirements: In November 2013, Ghana implemented local content requirements for the oil and gas sector. Of particular concern are the following: local ownership and content percentages for local private equity participation, procurement of supplies, equipment, and provision of services; mandatory local private equity participation in upstream activities, exacerbated by a lack of transparency in the selection of equity partners and the role of the Minister of Energy; and a requirement for the Minister to approve all contracts/sub-contracts and purchase orders above $100,000. The United States has raised concerns about these requirements bilaterally.
KENYA
- Implementation of single clearance window: In November 2013, Kenya implemented an automated, integrated clearance single window portal, the Kenya National Electronic Single Window System (dubbed Kenya TradeNet), to streamline the process of air, land, and sea cargo arrival and departure. Kenya simultaneously launched the National Gateway Payment System, an integrated, electronic platform that enables importers and exporters to apply for permits online and pay for them electronically through a payment gateway. U. S. exporters will be among the direct beneficiaries of these improvements targeting inefficient border procedures which are particularly prevalent in sub-Saharan Africa.
SOUTH AFRICA
- U.S. Exports to South Africa Face Higher Tariffs Than to EU Exports: The South Africa-EU trade agreement, some provisions of which took effect in 2011, has resulted in application of import tariffs on EU goods that in many cases are much lower than tariffs on U.S. goods. For some products, exports from the EU enjoy a 10 percent to 15 percent tariff advantage compared to U.S. products. Key categories in which the United States faces a tariff disadvantage compared to the EU include cosmetics, distilled spirits, chocolate and confectionery products, plastics, textiles, trucks and parts, fiber optic cable, agricultural equipment, and arms and ammunition. The United States highlights the need to address this disparity in bilateral discussions with South Africa.
EUROPE AND THE MEDITERRANEAN
ISRAEL
- Israel removed from Special 301 Report Watch List: In February 2014, Israel passed patent legislation that satisfied the remaining commitments Israel made in a bilateral Memorandum of Understanding signed in 2010. USTR, in response, removed Israel from the Special 301 Report Watch List.
MOROCCO
- Morocco trade facilitation agreement reduces barriers to U.S. goods exports: In order to further assist the flow of trade, the United States and Morocco signed a trade facilitation agreement in November 2013. The agreement includes new commitments reflecting practices developed since the FTA was signed in 2004 that will facilitate the movement of goods. These commitments include provisions on Internet publication, transit, transparency with respect to penalties, and other topics that will improve Morocco’s environment for trade in goods. The United States-Morocco agreement is the most modern bilateral trade facilitation agreement the United States has signed with any partner. Trade facilitation boosts trade by reducing costs and delays for traders through measures that provide predictability, simplicity and uniformity in customs and other border procedures. It makes it easier for businesses big and small to participate in trade.
RUSSIA
- Even as a WTO Member, Russia has a challenging business environment: In its first full year as a WTO Member, Russia continued to employ questionable customs and regulatory practices that adversely impacted a variety of U.S. exports, including alcoholic products, audio visual products, consumer electronics, meat and poultry, automobiles, among others. In addition, Russia continued to adopt localization policies in such sectors as telecommunications, navigation technology and pharmaceuticals. Although Russia undertook important WTO commitments to enforce and protect intellectual property rights, concerns remain about its inadequate enforcement of intellectual property rights, especially piracy over the Internet. Russia’s services market is largely open to U.S. services suppliers, but concerns remain, especially in the banking sector. Despite some efforts to improve its investment climate, Russia remains a difficult business environment.
- Given Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity, we have suspended trade and investment engagement with Russia.
WESTERN HEMISPHERE
- Geographical Indications – Engagement in Latin America: In 2013, a number of Latin American countries which had entered into Association Agreements with the European Union began drafting legislative amendments governing protections for geographical indications (GIs) or began implementing a system identifying GIs in response to the process of reviewing and making determinations regarding European Union applications to register a range of GIs in these countries. The United States engaged extensively with these countries, including the Central American CAFTA-DR countries, Panama, and Colombia, and stressed the need for consistency in protections and process, including public notice and opportunity for opposition and cancellation, and transparency in decision making, particularly with regard to the scope of coverage of protection.
DOMINICAN REPUBLIC
- Improved CAFTA-DR Tariff Rate Quota Administration: Under the CAFTA-DR, tariff rate quotas (TRQs) are to be made available for an entire calendar year, beginning on January 1 of each year. In 2013, the Dominican Republic made substantial improvement to its administration of its CAFTA-DR TRQs, with the annual tariff allocations issued by January 10, 2013, which is the earliest date those allocations have ever been made. The Dominican Republic also eliminated the use of physical import certificates and established an electronic document system minimizing the opportunity for quota holders to sell the import certificates, both of which significantly facilitated U.S. exports of TRQ products to the Dominican Republic.
COLOMBIA
- Truck scrappage requirements restrain U.S. exports of trucks to Colombia: In March 2013, Colombia imposed, with no public consultation or transition period, a one-for-one scrapping requirement based on the cargo capacity of old trucks as a condition for the sale and registration of new freight trucks. Numerous U.S. freight trucks, valued at approximately $113 million, imported to Colombia in 2013 cannot be sold due to insufficient supply of old trucks to be scrapped and excessive prices requested for those old trucks. The United States has raised concerns with the scrapping requirements as well as the lack of a transparent public consultation process and transition period for those requirements in multiple fora. Late in 2013, Colombia passed another decree, also without consultation or a transition period, but this decree did not address U.S. concerns. U.S. efforts continue.
CANADA
- Canada further restricts access to its dairy sector: During 2013, Canada took actions to limit U.S. exporters’ access to the Canadian dairy market. In November 2013, Canada changed the way in which it applies import duties to certain commercial “food preparations” which will result in the cheese components of these products being subject to prohibitively high tariff rates. In October 2013, Canada announced an “agreement-in-principle” with the European Union for the Canada-EU Comprehensive Economic and Trade Agreement (CETA). Under the terms of the CETA, the Canadian government agreed to the EU’s request to automatically protect 179 food and beverage terms without providing for due process safeguards, such as the possibility of refusal of applications or objection by third parties. Although the agreement also to provides some limited safeguards for the use of generic terms with respect to a short list of specific terms for existing producers, serious concerns remain about the right for future producers to use those terms and for current and future producers to use generic terms with respect to other products.
MEXICO
- New licensing procedures for the importation of certain steel products: On December 5, 2013, Mexico published, in the Mexican government gazette, new licensing procedures for the importation of certain steel products. These procedures were made effective on January 27, 2014. Two of the stated goals of the procedures are to combat fraud and improve statistical monitoring. Although the new import licensing system is supposed to issue licenses automatically, industry representatives have reported long delays in the review and issuance of licenses. These administrative delays have led to disruptions back through the supply chain, as shipments must remain at the border, thereby incurring additional costs. The U.S. Government is collecting additional information on the problem and will work with industry stakeholders and the Mexican government to address the issue.
CHINA
- Trade Secrets: At the 2013 U.S. China Joint Commission on Commerce and Trade (JCCT) meeting, China committed to adopt and publish an action plan on trade secrets protection and enforcement for 2014 that is expected to include concrete enforcement actions, as well as to work with the United States on proposals to amend China’s trade secrets law and regulations.
- Patent Protection for Pharmaceutical Inventions: During Vice President Biden’s trip in December 2013 and at the 2013 JCCT meeting, China committed to permit supplemental data supporting pharmaceutical patent applications.
- Vehicle Procurement: At the 2013 JCCT meeting, China committed not to finalize or implement a selection catalogue and rules governing official use vehicles that would have excluded vehicles produced by foreign enterprises or foreign-invested enterprises from important government procurement opportunities.
- Bilateral Investment Treaty (BIT) Negotiations: At the 2013 S&ED meeting, China committed to negotiate a high-standard BIT that will embrace the principles of openness, non-discrimination and transparency, provide national treatment at all phases of investment, including market access (i.e., the “pre-establishment” phase of investment), and employ a “negative list” approach in identifying exceptions (meaning that all investments are permitted except for those explicitly excluded).
- WTO Dispute on Chicken Broiler Products: The chicken broiler products dispute confirms that China failed to abide by WTO disciplines when imposing duties.
TAIWAN
- Recognizing the value of innovative pharmaceuticals: On October 2, 2013, Taiwan’s Ministry of Health and Welfare issued regulations to implement Article 46 of the National Health Insurance Act. The new provisions help enhance the recognition of the value of innovative pharmaceuticals in Taiwan’s national healthcare system, including by limiting price adjustments to pharmaceutical products that have gone off-patent beginning January 1, 2013, rather than retroactively applying the cuts to cover all pharmaceutical products whose patents expired within the past five years as originally proposed by Taiwan authorities.
KOREA
- The United States-Korea FTA has been in effect since March 15, 2012, and in these past two years exports of U.S. manufactured goods, services, and agricultural products have seen significant gains as tariff and other barriers to U.S. exports have been dismantled under the agreement. Specifically, overall U.S. exports of manufactured goods increased over 3 percent in 2013 compared to 2011 (before the FTA) – and exports of some products have jumped substantially, such as made-in-the-USA automobiles to Korea which alone have increased 80 percent. Agricultural exports have also seen dramatic increases in products that benefited from tariff elimination or reduction, such as almonds, cherries, wine, and soybean oil. Services exports to Korea have also registered a substantial increase of 18.5 percent over that period. The Agreement provides for meaningful market access commitments across virtually all major services sectors, including improved access for telecommunications and express delivery services, and the opening up of the Korean market for foreign legal consulting services. The Agreement has also improved Korea’s investment environment through strong provisions on intellectual property rights, services, and investment, supporting U.S. exports.
INDIA
- Preferential Market Access (PMA) policy: In 2012 India began implementing the Preferential Market Access (PMA) policy, which mandated that not only government agencies, but also private firms, purchase a certain percentage of domestically manufactured electronic equipment. Following extensive engagement with the United States and other governments regarding telecom network security, India eliminated the discriminatory domestic purchase mandates that the PMA imposed specifically on private firms.
- Weakening Patent Protection: India’s Supreme Court appeared to confirm that India’s Patent Law creates a special, additional criterion for patentability for select technologies, like pharmaceuticals. As a result, India would deny patents to such technologies unless they exhibited “therapeutic efficacy” in addition to the internationally-recognized criteria for patentability (novelty, inventive step, and industrial application). India’s Intellectual Property Appellate Board (IPAB) also upheld the 2012 decision of the Controller-General of Patents, Designs, and Trademarks to effectively require an innovator to manufacture in India in order to avoid being forced to license an invention to third parties.
- Solar Local Content Requirements: Following years of bilateral and multilateral engagement, the United States initiated a WTO dispute in February 2013 challenging local content requirements in India’s national solar policy. India introduced new, expanded local content requirements in its national solar policy in October 2013. Because further engagement failed to address U.S. concerns with these new local content requirements, the United States included them in a WTO dispute filed in February 2014.
SOUTHEAST ASIA
INDONESIA
- Indonesia maintains restrictions on agricultural imports: After the United States filed a WTO request for consultations in January 2013, Indonesia revised its measures, but continues to restrict U.S. and other foreign agriculture imports. In August 2013, the United States and New Zealand separately requested WTO consultations with Indonesia concerning its non-automatic import licensing requirements that serve as serious impediments to trade in horticultural products, animals, and animal products. The United States continues to seek resolution to address our concerns, including through the WTO Dispute Settlement process.
- Indonesia Codifies Protectionism: In early 2014, Indonesia passed two new laws – the Law on Industry and the Law on Trade - that provide the legal framework for further sweeping trade-restrictive measures. Although the Indonesian government has two years to issue regulations to implement them, the laws reinforce Indonesia’s recent protectionist turn.
- Indonesia Enforces Domestic Processing of Mineral Ores: In January 2014, Indonesia began fully enforcing a ban on exports of raw mineral ores. It also imposed domestic processing requirements for these minerals.
MALAYSIA
- National Automotive Policy: The Malaysian government announced the results of its National Automotive Policy (NAP) in January 2014. The new NAP seeks to transform the country into a hub for energy efficient vehicles, but the policy maintains Malaysia’s non-transparent import permit and gazette pricing system, excise duties that disproportionately affect imported vehicles, and special tax reductions for vehicles with Malaysian-manufactured components.
VIETNAM
- Digital Commerce Restrictions: In 2013, Vietnam implemented new restrictions on digital commerce, over which the United States has raised serious concerns. It has restricted online advertising, imposed stringent licensing requirements on Internet service providers, and is considering a draft decree that would impose licensing and registration requirements on providers of information technology services, including restrictions on the cross-border supply of cloud computing and data center services.
PHILIPPINES
- Enhanced IP Efforts. In 2013, the Philippines began implementing its new copyright law and took significant enforcement efforts against pirated and counterfeit products. The United States has worked closely with the Philippines over the past several years to support its efforts to strengthen its IPR regime.
