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Defending the High-Paying Jobs Supported by Made-in-America Exports with Bipartisan Backing
“I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration – and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.”
-President Barack Obama, 1/24/2012
“I have made rigorous trade enforcement a central pillar of U.S. trade policy, and we have moved aggressively to protect American workers and to improve labor laws and working conditions with trading partners across the globe.”
-President Barack Obama, 5/19/2015
Under President Obama, Made-in-America exports have hit record-breaking levels for the last 5 consecutive years, and those exports now support an all-time high of 11.7 million well-paying jobs all across our country to the benefit of American farmers, workers, and businesses of all sizes.
Now, to unlock greater economic opportunity for American exporters, President Obama’s Middle Class Economics strategy has prioritized increasing U.S. exports through smart, cutting-edge trade agreements. These 21st century trade agreements, such as the Trans-Pacific Partnership, will open vital markets for our exporters, support jobs, level the playing field for our workers with groundbreaking labor standards, and enhance American competitiveness by shaping globalization in a way that builds on our strengths in the global economy.
And if trade agreements with high standards are to deliver their maximum benefits to American families, then it is imperative that the United States government vigilantly monitors and enforces them. That is because when our trading partners in any region of the world break the rules set in our agreements and undermine American exporters’ hard-won access to international markets, it hurts our economy, it costs us good jobs, and it undercuts efforts to invest in and grow the jobs, skills, and technologies that will thrive in the 21st century economy.
To that end, with bipartisan support, the Obama Administration has executed the most robust upgrade of United States trade enforcement in the history of modern trade policy. The result has been an unprecedented record of enforcement victories against countries ranging from China to India to Indonesia to Argentina. Those enforcement victories have been worth billions of dollars to American workers, businesses and farmers – and every billion dollars of American goods and services exports supports nearly 5,800 jobs.
HIGHLIGHTS OF THE OBAMA ADMINISTRATION’S TRADE ENFORCEMENT RECORD
- Since President Obama was inaugurated in 2009, the United States has filed 20 enforcement complaints at the World Trade Organization (WTO) – the chief world forum for trade enforcement. That’s more than any other WTO Member.
- And the United States has won every single one of those disputes that has been decided by the WTO so far.
- Export figures and industry estimates confirm that these enforcement wins are worth billions of dollars combined for American farmers and ranchers, manufacturers of high-tech steel, aircraft, and automobiles; solar energy exporters, cutting edge service providers and many others. And keep in mind that every billion dollars of American goods and services exports supports nearly 5,800 jobs.
- For example, since 2009 the U.S. has won significant cases that affect aircraft ($18 billion in illegal EU subsidies), autos and SUVs (illegal Chinese taxes on over $5 billion annual U.S. exports), steel (illegal Chinese taxes on exports once worth $250 million annually), agriculture (India’s illegal ban on U.S. poultry), clean energy technologies, services exports, and access to raw materials and rare earth elements that are key to production of advanced electronic products and other high-quality U.S. products.
- The Obama Administration has brought 11 trade enforcement challenges against China, three against India, and several other complaints against a series of major economies including Indonesia, Argentina, the Philippines, and the European Union. To ensure the greatest economic benefits for American workers and exporters, the Obama Administration has used our trade enforcement actions to emphasize opening these large, strategic markets to which the United States exports a diverse array of products and services.
- The Obama Administration has also leveraged United States resources in new, more effective ways to support trade enforcement actions. In his 2012 State of the Union Address, President Obama announced the creation of the Interagency Trade Enforcement Center (ITEC) run by the U.S. Trade Representative, a first-of-its kind body dedicated to investigating international trade abuses.
- In addition to the creation of ITEC, as part of President Obama’s trade enforcement agenda, the United States has collaborated with like-minded trading partners such as Japan and the EU when bringing disputes to the WTO.
- Due to our stepped-up trade enforcement efforts, the Obama Administration has significantly increased the rate at which the U.S. brings cases against China.
- The United States has also broken new ground on the enforcement of labor rights, including the first-ever case under a trade agreement to seek the enforcement of worker rights. That case challenges Guatemala’s failure to enforce its labor laws.
- And in 2011, the United States successfully defended, for the first time ever in the WTO, a trade safeguard to stop disruption of our domestic market, which upheld President Obama's decision to impose tariffs on Chinese tires.
CREATION OF THE INTERAGENCY TRADE ENFORCEMENT CENTER
- The Obama Administration’s unprecedented emphasis on trade enforcement led to President Obama’s 2012 creation of the Interagency Trade Enforcement Center (ITEC), which the President announced in his State of the Union Address. The ITEC is a USTR-led body of trade analysts with expertise in a wide range of subject areas.
- The ITEC includes members with expertise in areas such as research, subsidies, intellectual property, economics, agriculture, and animal health science, and with a variety of language skills including Chinese, Russian, Bahasa, Vietnamese, Portuguese, and Spanish.
- The ITEC dramatically upgrades America’s ability to research and analyze potential violations of trade agreements to support USTR enforcement actions. It represents an historic commitment of personnel and budget to enforcement efforts, giving the United States greater capacity to find and prove breaches of trade agreements.
IMPACT ON AMERICAN WORKERS, BUSINESSES AND FARMERS
The Obama Administration’s unprecedented enforcement efforts will benefit American workers and businesses by leveling the playing field and by demonstrating our commitment to upholding trade rules to support future American economic growth and jobs. This takes on even greater meaning once we have finalized cutting-edge new trade agreements like the Trans-Pacific Partnership that play to American advantages and contain the strongest labor and environmental standards in history. For example:
- 98% of the American companies that export are small and medium-sized businesses, which are a primary driver of job creation in the United States. However, small businesses often lack the resources to take on unfair trade barriers. Therefore, President Obama has targeted trade enforcement cases to take on policies that are specifically harmful to our small business exporters, such as burdensome agricultural and technical regulations, restrictive licensing requirements, and limits on American auto parts manufacturers.
- The U.S. case targeting the European Union’s Airbus subsidies will bring enormous benefits to American aerospace workers and companies of all sizes by bringing about a more level playing field and limits on new civil-aircraft subsidy programs.
- The U.S. case against Chinese restrictions on electronic payment services establishes the value of WTO commitments to open markets for services trade and the digital world.
- Through the case against Chinese export restraints on rare earths, the Administration is striving to provide major benefits to U.S. high-tech industries that make use of these important inputs.
- The case against India’s solar-energy local content rules is aimed at localization policies adopted by India that discriminate against U.S. products, creating a financial incentive for Indian solar power developers to buy Indian products and for producers of solar cells and modules to move operations to India.
- The case filed against Guatemalan labor practices under the CAFTA-DR sends the strong signal that the United States will use the full range of tools at our disposal, including formal dispute settlement, to ensure that workers’ rights are protected.
- Several cases offer especially important economic impacts for small and medium-sized businesses. These include WTO challenges against Chinese export subsidies for makers of auto parts, hardware and building materials, furniture, and ceramics, Indian use of non-science-based import restrictions to block poultry imports, and unfair import licensing rules in Argentina.
OVERVIEW OF OBAMA ADMINISTRATION ENFORCEMENT WINS
For a comprehensive document detailing the Obama Administration’s specific trade dispute cases, please click here.
Presidential Safeguard Action on Tires from China: In September 2009, President Obama directed the imposition for three years of additional tariffs to stop a harmful surge of imports of Chinese tires for passenger cars and light trucks. The surge caused production of U.S. tires to drop, domestic tire plants to close, and Americans to lose their jobs. Acting on behalf of American manufacturers and workers, President Obama invoked a law that had never before been used to give the United States the right under WTO rules to address harm caused by imports from China. USTR successfully defended China’s WTO challenge to the President’s action, resulting in WTO findings that rejected China’s challenge in its entirety.
Chinese AD/CVD Duties on Autos from the United States: In July 2012, USTR challenged China’s anti-dumping and countervailing duties on certain automobiles from the United States. The WTO agreed with the United States that China’s duties breached numerous international trade rules. Following the U.S. challenge and before issuance of the panel’s report, China announced the termination of its AD and CVD duties. In 2013, those duties had been imposed on exports of over $5 billion of American-made cars and sport-utility vehicles (SUVs). Through this dispute, the Administration is ensuring the right of American companies to fair treatment in antidumping and countervailing duty investigations in China.
Export Restraints on Rare Earths: In March 2012, the United States challenged China’s export restraints on rare earths, tungsten and molybdenum products. China is the world’s leading producer of rare earths, producing an estimated 130,000 metric tons of rare earth oxide, which accounted for approximately 97 percent of global production in 2011. In all, China’s export restraints on the materials at issue in this dispute cover approximately 100 tariff codes. The United States brought this dispute to create a level playing field for U.S. workers and businesses that manufacture many important downstream products in the United States, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum and chemicals. In late 2014, the WTO agreed with the United States and found that China’s export restraints are inconsistent with WTO rules. China announced that it has eliminated WTO-inconsistent export duties and quotas on these products. The United States is closely monitoring China’s actions to ensure that these illegal policies are in fact discontinued and that China fully complies with its obligations.
Export Restraints on Raw Materials: In June 2009, the United States challenged China’s export restraints on nine raw materials to create a level playing field for U.S. workers and businesses that manufacture downstream products in the steel, aluminum and chemical sectors. The export restraints enabled China's downstream producers to obtain a dramatic competitive advantage by significantly decreasing their input costs. For example, in 2008, the input cost for coke was 36 percent less for Chinese domestic steel producers than their foreign counterparts. In 2011, the WTO found China’s quotas and duties to be inconsistent with its WTO commitments. In December 2012, China eliminated the offending measures.
Chinese AD/CVD Duties on High Tech Steel from the United States: In September 2010, the United States challenged China's imposition of antidumping (AD) and countervailing duties (CVD) against U.S. exports of grain oriented flat-rolled electrical steel (GOES). This action cut off more than $250 million in U.S. exports of this high-tech steel product. In July 2012, the WTO found China’s measures to be inconsistent with its WTO commitments. In 2014, USTR challenged China’s failure to comply with WTO rules in the WTO’s first ever compliance proceeding brought against China. The WTO concluded that China’s actions following the WTO findings in 2012 were inconsistent with WTO rules. China revoked the AD and CVD duties on GOES from the United States.
Electronic Payment Services: In September 2010, the United States challenged China’s restrictions and requirements on electronic payment services (EPS) for payment card transactions and the suppliers of those services. Each year well over one $1 trillion worth of electronic payment card transactions are processed in China. In 2012, the WTO agreed with the United States that China’s measures discriminate against U.S. suppliers. China has taken some steps to address the problems identified by the WTO, and the Administration continues to work with U.S. stakeholders and China to ensure American credit and debit card companies’ fair access to China’s market.
Wind Power Equipment: In December 2010, following a petition from the United Steelworkers, the United States initiated a WTO case challenging subsidies that China provided to manufacturers in its wind power equipment sector. The subsidies appeared to require the use of local content, at the expense of foreign manufacturers’ products. At the time of the dispute, grants provided under this program from 2008 to 2010 totaled several hundred million dollars. In response to USTR’s challenge, China terminated the challenged subsidy program.
Chinese AD/CVD Duties on Poultry from the United States: In September 2011, the United States challenged China’s AD/CVD duties on U.S. exports of chicken “broiler products.” According to industry estimates at the time, the U.S. poultry industry stood to lose approximately $1 billion in sales to China by the end of 2011. In June 2013, the WTO agreed that China’s measures were inconsistent with its WTO commitments. China issued a new measure in response to the WTO finding in 2014. The United States is reviewing that measure.
Chinese Export Bases for Autos and Auto Parts: In September 2012, the United States challenged a Chinese export subsidies program to auto and auto parts enterprises in China that severely distort competition. In the years 2002 through 2011, the value of China’s exports of autos and auto parts increased more than nine-fold, from $7.4 billion to $69.1 billion, and China rose from the world’s 16th largest to the 5th largest auto and auto parts exporter during this period. U.S. efforts to address this important program are ongoing.
China Demonstration Bases for Common Service Platform: In February 2015, USTR requested WTO consultations on China’s measures that appear to establish a program of prohibited export subsidies. China is directing a variety of service providers to offer discounted or free services to producers across a wide range of industries, including agriculture, light industry, new materials (including ferrous and non-ferrous alloys), pharmaceuticals, textiles, hardware and building materials, and specialty chemicals. These producers are clustered in designated export regions called “Demonstration Bases.” In addition, producers may also receive subsidies such as cash grants, grants for research and development, subsidies to pay interest on loans, and preferential tax treatment for exporting. The WTO established the dispute settlement panel in April 2015 at the request of the United States. Through this action, USTR is challenging Chinese subsidies that provide an unfair advantage to businesses located in China, distorting competition with American-made products.
Ban on U.S. Agriculture Exports: In June 2015, the WTO found in favor of the United States in a dispute challenging India’s ban on various U.S. agricultural products – such as poultry meat, eggs, and live pigs – allegedly to protect against avian influenza. The reports of the WTO panel and Appellate Body agreed with the United States that India’s ban breached numerous international trade rules, including because it was imposed without a scientific risk assessment. The U.S. poultry industry, which employs over 350,000 workers and consists of nearly 50,000 family farms, has been particularly affected by India’s restrictions. The industry estimated that U.S. exports to India of just poultry meat alone could exceed $300 million a year once India’s restrictions were removed – and exports are likely to grow substantially in the future as India’s demand for high quality protein increases. India and the United States are discussing the period of time for India to comply with WTO rules.
Restrictions on U.S. Goods Exports: In January 2015, the WTO found in favor of the United States in a dispute challenging Argentina’s widespread restrictions on the importation of U.S. goods. The measures potentially affect billions of dollars in U.S. exports each year in job-creating industries, including energy products, electronics and machinery, aerospace and parts, pharmaceuticals, precision instruments and medical devices, miscellaneous chemicals, motor vehicles and vehicle parts, and agricultural products. Argentina has until December 31, 2015, to bring its import regime into compliance with WTO rules.
In 2012, the WTO adopted panel and appellate findings agreeing with the United States that Philippine excise taxes on imported distilled spirits were discriminatory and inconsistent with the Philippines’ WTO obligations. The Philippines had imposed taxes on imported distilled spirits, such as whiskey and gin, at approximately ten to forty times higher than those applied to domestic products. The Philippines implemented a new system that went into effect in January 2013, which removed the raw materials requirement that was the basis for discrimination.
REACTION FROM MEMBERS OF CONGRESS AND KEY OFFICIALS
As the Administration has worked to step up enforcement efforts, we have also worked to keep members of Congress and key labor and industry officials updated and informed on our efforts to hold trading partners accountable. Below are reactions from some of these key officials in response to recent actions this Administration has taken:
- United Steelworkers (USW) International President Leo W. Gerard: “China has targeted industry after industry with unfair and often secret subsidies. America’s aerospace industry, one that widely supports manufacturing jobs all across the country, is yet another example. Tens of thousands of USW members working in the aluminum, steel, glass and tire sectors produce and supply materials and parts used in the domestic aerospace industry. The USTR’s actions are a critical part of a strategy to maintain U.S. leadership in this vital sector.” [United Steelworkers, 12/8/2015]
- United Auto Workers: “Today the U.S. Government took a strong stand with the WTO to protect U.S. jobs by exposing the unfair and concealed advantage of Chinese aircraft companies over sales of American aircraft and aircraft parts in China….This policy is aimed squarely at the U.S. aviation industry which has provided $580 million in small aircraft to China and over $5 billion in sales of aviation components in the past three years. We commend the Obama Administration for taking this action and urge the Chinese government to institute a consistent policy immediately.” [United Auto Workers, 12/8/2015]
- U.S. Sen. Ron Wyden, Finance Committee Ranking Member: “As Congress works to rewrite the playbook on trade enforcement, I am glad to see USTR take action to address nontransparent and discriminatory Chinese tax policies that keep American manufacturers from competing on a level playing field. Today’s actions underscore the need to swiftly bring into law a customs package with strong, effective enforcement tools to protect American jobs and priorities.” [12/8/2015]
- U.S. Rep. Pat Tiberi (R-OH), former chairman of the House Ways and Means Subcommittee on Trade: “The Chinese government is undermining fair competition and playing by their own set of rules. Punishing American small and medium sized aircraft and aircraft component manufacturers is a direct violation of WTO commitments, and I commend Ambassador Froman for announcing this enforcement action…Fully enforceable trade commitments are essential to ensuring American-made products can compete on a level playing field around the world. In addition to actions like the one Ambassador Froman is taking today, it is important that we send my bill, the Trade Facilitation and Trade Enforcement Act, which gives Customs and Border Protection stronger tools to enforce our trade laws, to the president’s desk as soon as possible. This is about protecting American workers from unfair treatment and increasing American competitiveness in the global marketplace.” [12/8/2015]
- U.S. Rep. Dave Reichert (R-WA), chairman of the House Ways and Means Subcommittee on Trade: “Global trade has helped create countless jobs here in the United States…With a strong trade agenda, we have the potential to continue growing these jobs and expand opportunities for businesses. However, the success of our global trading system depends on transparency and strong enforcement. Each partnering country must play by the same rules. Today's case is an important confirmation that enforcement matters. At the same time, I will continue working through the customs conference committee to give USTR even more enforcement tools. I am committed to working with Ambassador Froman, USTR, and my fellow Members of Congress to ensure that our exporters are treated fairly.” [12/8/2015]
- AFL-CIO President Richard Trumka on Guatemala labor case: “We welcome today’s historic decision by the U.S. government to resume the arbitration process with Guatemala, to ensure that the government of Guatemala will live up to the commitments made under CAFTA to enforce workers’ basic rights and Guatemalan labor laws….We applaud the actions of our government today.” [AFL-CIO, 9/18/2014]
- U.S. Sen. Ron Wyden (D-OR) on China autos case: “I am pleased that USTR stood up for U.S. autoworkers and their families and I hope this case makes clear that the United States will not back down on trade enforcement in the face of retaliation. Whether we are dealing with foreign companies illegally dumping goods into the United States or Chinese military officers engaged in criminal hacking, the United States must uphold the law when it comes to enforcement.” [5/23/14]
- U.S. Rep. Sandy Levin (D-MI): “Today's outcome is a significant victory in the fight against China's practice of retaliating and intimidating those who dare to stand up to it. The United States will not shy away from enforcing U.S. trade laws, and we certainly won't tolerate the intimidation that China demonstrated in starting the investigation challenged in this dispute. The Obama Administration is to be commended for its activist and determined pursuit of both objectives on behalf of U.S. workers and businesses.” [5/23/14]
- U.S. Sen. Johnny Isakson (R-GA): “This is a great victory for the United States and Georgia poultry, in particular. I have been working to open up India to U.S. poultry since this issue was brought to my attention. I thank USTR, USDA, my colleagues in Congress and U.S. poultry producers for working toward this important decision. [10/14/2014]
- U.S. Sen. Sherrod Brown (D-OH): “This is excellent news for Ohio and American manufacturers. Manufacturing is the backbone of the American economy. But in order for our industry to compete, it needs a level playing field. That means holding countries like China accountable when they violate trade policy by hoarding rare earth and other materials. The World Trade Organization’s decision will help protect American businesses and the jobs they support.” [3/26/14]
- The National Association of Manufacturers (NAM) on Argentina import restrictions case: “Manufacturers strongly welcome today’s decision by the WTO Appellate Body finding that Argentina’s burdensome and trade-limiting import licensing requirements are contrary to the obligations that Argentina took in joining the WTO.” [Linda Dempsey, NAM’s vice president of international economic affairs]