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President Obama’s Trade Agenda: Unlocking Economic Opportunity for Americans
President Obama has made increasing American exports a centerpiece of his Middle Class Economics strategy because exports unlock economic opportunity for American workers and businesses. USTR’s efforts to spotlight and address barriers to Made-in-America exports all over the world reinforce that goal and are aimed at helping businesses of all sizes grow their exports and support more well-paying American jobs. Made-in-America exports are a major source of economic growth and support 11.7 million jobs across our country.
The National Trade Estimate Report, a companion to the President’s Trade Policy Agenda published by USTR in March, enhances awareness of these trade restrictions and facilitates discussions and negotiations aimed at reducing or eliminating these barriers. The report covers significant barriers, whether they are consistent or inconsistent with international trading rules, in our largest export markets, including 58 countries, the European Union, Taiwan, and Hong Kong.
USTR is continually working to unlock important export opportunities for American businesses, workers, farmers and ranchers, as we progress toward realizing President Obama’s trade agenda in order to promote economic growth, support more jobs, and strengthen the American Middle Class.
Among the most noteworthy changes in the last year, both positive and negative, in the barriers in U.S. export markets are:
- New Information and Communications Technology Trade Barriers: In late 2014, China announced two measures relating to information technology equipment used in the banking services sector and in providing Internet- or telecommunications-based services that raise fairness and transparency concerns as well as other industrial policy-related concerns. The United States has pressed China to suspend these measures.
- Agriculture Market Access: At the December 2014 JCCT meeting, China made commitments that should promote significant increases in U.S. exports of soybeans, corn and dairy products to China. Specifically, China announced that it would approve the importation of new biotechnology varieties of U.S. soybeans and corn and also that it would pursue a regular dialogue with the United States focused on the benefits of the increased use of innovative technologies in agriculture, for both the United States and China.
- Intellectual Property Rights Protection: At the July 2014 S&ED meeting and the December 2014 JCCT meeting, China's IPR-related commitments addressed a range of needed improvements, which should benefit U.S. businesses in a wide variety of industries that rely on the ability to protect their trade secrets, as well as U.S. holders of patents, trademarks and copyrights. For example, China agreed to pursue criminal and other actions to deter the misappropriation of trade secrets, to ensure that criminal and civil cases are tried and the resulting judgments are published, and to protect trade secrets contained in materials submitted by companies as part of regulatory, administrative and other proceedings.
- Innovation Policies: At the December 2014 JCCT meeting, China committed to ensure that its policies and practices treat foreign IP rights holders the same as domestic IP rights holders. China also agreed to streamline China’s regulatory processes and cut red tape for imports of new, innovative pharmaceuticals and medical devices.
- Competition Policy Enforcement: At the July 2014 S&ED meeting, China recognized that the objective of competition policy is to promote consumer welfare and economic efficiency rather than promote individual competitors or industries, that enforcement of China’s competition laws should be fair, objective, transparent and non-discriminatory, and that it would provide any party under an Anti-monopoly Law investigation with information about the enforcement agency’s concerns and an effective opportunity for the party to present evidence in its defense. At the December 2014 JCCT meeting, China made additional commitments, including to treat domestic and foreign companies equally and to provide increased transparency for investigated companies.
- WTO Dispute Regarding China’s Export Restraints on Rare Earth Elements: In this dispute, the United States successfully challenged China's export restraints on rare earths, tungsten, and molybdenum, which are used as key components in U.S. made products for critical American manufacturing sectors such as hybrid car batteries and wind turbines. The WTO rejected China's appeal and upheld the panel's decision declaring China's export restraint measures to be inconsistent with China's WTO obligations.
- WTO Dispute Regarding China’s Duties on U.S. Automobiles: In this dispute, the United States successfully challenged duties placed by China on American-made cars and SUVs, a critical sector. The WTO panel found that China's imposed duties were inconsistent with its WTO obligations in their calculation, determination, and lack of transparency. China announced its termination of the duties.
- Tariff and Non-Tariff Restrictions on Trade: Ecuador imposes a broad range of tariff and non-tariff restrictions on trade in goods, services and investment. This trend began several years ago, but accelerated in 2014. For example, throughout 2014, Ecuador issued a series of resolutions that effectively restrict imports of a wide range of U.S. products by requiring certificates to demonstrate that products conform to Ecuador’s technical regulations. Ecuador continued to apply a mandatory and cumbersome process to allocate import licenses for various products including cheese, butter, milk, potatoes (including french fries), beef, pork, chicken, turkey, beans, sorghum, and corn. Under this process, import licenses are not granted automatically; rather, they are issued depending on the level of domestic production relative to demand. Imports of these products are prohibited during times of high domestic production. In March 2015, Ecuador implemented a tariff surcharge ranging from 5 percent to 45 percent on 2800 tariff lines, which represents approximately 32 percent of the value of Ecuador’s imports. Ecuador claims that the tariff surcharge is a balance of payments safeguard measure, though Ecuador has not notified this measure to the WTO Balance of Payments Committee, as it is required to do.
- Packaging and Labeling Requirements: The United States continues to raise food and beverage packaging and labeling concerns with India to ensure that U.S. brands have access to the Indian market. While challenges remain, particularly with implementation of the amendment to the Legal Metrology (Packaged Commodities) Rules, 2011, some progress was made in other areas during the November 2014 United States – India Trade Policy Forum (TPF). In the TPF joint statement, India “noted the potential reconciliation of the definition of wholesale pack between Departments, forthcoming rules to allow supplemental labeling of maximum retail prices at the port, and timely implementation efforts concerning these issues.” The United States is actively engaging the Indian government on the implementation of these reforms in 2015.
- Localized Safety Testing Requirements: For certain information and communications technology (ICT) products, the Indian government mandates that manufacturers register their products with laboratories affiliated or certified by the Bureau of Indian Standards (BIS), even if the products are already certified by internationally recognized laboratories. The ICT industry is facing significant delays in product registration due to lack of Indian government testing capacity, a cumbersome registration process, and tens of millions of dollars in additional compliance costs, which includes factory level as well as component level testing. The government of India has never articulated how such a domestic certification requirement advances India’s public safety objectives, but an additional 15 categories (on top of the existing 15 categories) of electronics and ICT goods were added to the list of goods covered by the requirement in late 2014. The United States continues to actively raise concerns with this requirement bilaterally, including during meetings on the margins of the TPF, and multilaterally in the WTO TBT Committee.
- Intellectual Property Rights Concerns: India remained on the Priority Watch List in the 2014 Special 301 Report because of concerns regarding weak protection and enforcement of intellectual property rights (IPR). The United States also conducted an Out-of-Cycle Review of India’s IPR environment focused on the level of government engagement with the United States on IPR issues. India is in the process of undertaking an examination of its current IPR environment, including by developing a National IPR Policy to provide more clarity for stakeholders. However, India has yet to undertake substantive amendments to its IPR legal regime that would lead to improvements in its IPR environment. To advance IPR related work, in 2014 the United States and India committed to establish an annual high-level Intellectual Property (IP) Working Group under the TPF, and an IPR work plan for 2015 has been established.
- Restrictions on Agricultural Imports: Indonesia administers trade restrictive import licensing requirements that impede imports of horticultural products, animals, and animal products. After three rounds of consultation failed to resolve U.S. concerns, the United States, with co-complainant New Zealand, announced in March 2015 that it was requesting the establishment of a WTO panel.
- Higher Local Content Requirements for Foreign Contractors: In June 2014, the Kenyan government issued new regulations increasing local content requirements for foreign contractors. The National Construction Authority (NCA) stipulates that foreign contractors must either form joint ventures with local contractors or locally subcontract a percentage of the work. The new regulations require joint ventures to recruit from the local labor market and to recruit foreign technical or skilled workers only when such skills are not available locally. The foreign contractor also must agree to transfer technical skills that are not available locally to its local firm or person.
- U.S.-Korea Free Trade Agreement (KORUS) Implementation and Bilateral Issues: The United States and Korea cooperated closely to address a number of implementation and bilateral concerns. Throughout 2013 and 2014, the United States worked with Korea to develop a common approach to origin verification procedures that would facilitate trade under KORUS and resolved origin verification issues for many categories of U.S. exports to Korea. For example, the United States and Korea have made significant progress in addressing concerns in areas such as automotive and financial services, and the United States remains committed to ensuring KORUS commitments are fully implemented in these and other sectors.
- Inadequate Intellectual Property Rights Protection: In 2014, the United States elevated Kuwait to the Special 301 Priority Watch List as a result of its failure to introduce legislation that would result in a copyright law that is consistent with international standards, as well as its failure to effectively prosecute copyright and trademark infringement.
- Completed Audit of the U.S. Sanitary System for Pork: After several years of engagement, in 2014 Malaysia’s Department of Veterinary Services agreed to conduct an audit of the U.S. sanitary system for pork. The United States received an official notice in September 2014 that the inspected plants would be eligible to export pork to Malaysia. As a result, U.S. pork can once again be exported to Malaysia.
- Major Reforms in Energy and Telecommunications: In 2014, Mexico conducted sweeping reforms of the energy and telecommunications sectors, creating significant new opportunities for U.S. investors, manufacturers and service suppliers. Energy reform legislation opened Mexico’s oil and gas sector to private participation for the first time since 1938 and allows greater private investment in power generation. In the telecommunications sector, reform legislation addressed longstanding market access barriers, such as limitations on foreign investment in broadcasting; strengthened independent regulation; and sought to eliminate the dominance of near monopolistic companies in the wireless, fixed telephony and broadcasting markets. The U.S. government will continue to closely monitor the implementation of these significant reform efforts, including the development of regulations implementing local content requirements for the oil and gas sector.
- New Guidelines for the Information, Communications, and Technology (ICT) Sector: The National Information Technology Development Agency (NITDA), under the auspices of the Federal Ministry of Communication Technology, issued Guidelines for Nigerian Content Development in the ICT sector. These guidelines include requirements that multinational companies operating in Nigeria source all hardware products locally; all government agencies source and procure all computer hardware only from NITDA-approved original equipment manufacturers; and ICT companies host all data locally, use only locally manufactured SIM cards for telephone services and data, and use indigenous companies to build cell towers and base stations.
- Investment Restriction in Maritime Services Removed: In 2013, Panama enacted Law 41, which stipulates that Panamanian nationals must own at least 75 percent of companies or vessels engaged in auxiliary maritime services. The United States and the EU each expressed concern regarding aspects of this law in light of Panama’s obligations under its free trade agreements. On February 11, 2015, in Law 4 of 2015, Panama rescinded the provisions of concern in Law 41.
- Bilateral Agreement on Agricultural Concessions: As part of a bilateral agreement reached in 2014, the Philippines will reduce tariffs on a variety of agricultural products, including buttermilk, cheese, grapes, poultry, and walnuts, covering over $66 million of U.S. agricultural exports to the Philippines. These cuts were part of a package in exchange for U.S. support of a Philippines WTO request to extend its restrictions on rice imports.
- Sustained Intellectual Property Rights Improvements: The United States removed the Philippines from the Special 301 Watch List in 2014 as a result of sustained efforts by the Philippine government to improve its IPR laws and enforcement. These included amendments to the Philippines’ Intellectual Property Code, as well as legislation addressing cable signal piracy and IPR infringement relating to money laundering.
- Private Sector Engagement Encouraged: Saudi Arabia issued new automotive fuel efficiency standards in December 2014 mandating fuel efficiency standards for light-duty vehicle fleets. The United States successfully encouraged Saudi officials to work extensively with private sector stakeholders in the process of developing these regulations.
- Intellectual Property Rights Protection: In July 2014, acting on the recommendation of the Media Convergence Review Panel, Singapore’s Parliament passed an anti-piracy amendment to its Copyright Act, which entered into force in December 2014. These changes will enhance right holders ability to seek court orders to disable pirate websites.
- Market Access Barriers to U.S. Poultry Exports: South Africa maintains high import duties for whole chickens of 82 percent, and of 37 percent for imports of frozen bone-in chicken cuts. U.S. imports of frozen bone-in chicken cuts are also subject to antidumping duties.
- Regional Trade Agreement with the European Union (EU) and U.S. Agriculture Exports: Under the EU–Southern African Development Community Economic Partnership Agreement concluded in 2014, South Africa has agreed to prohibit the use of certain terms as geographical indications in its domestic market, a move that will have a significant impact on U.S. agricultural exporters.
- Internet Access Restrictions: In 2014, the Turkish government pursued certain policies related to electronic commerce which drew expressions of concern from a broad spectrum of stakeholders, both domestic and foreign. Under new legal authorities enacted by Parliament in early 2014, the government temporarily blocked Turkish users’ access to the YouTube and Twitter websites, on the grounds that these websites constituted a threat to national security. Court orders later in the year reversed these actions, and annulled some of the new legal authorities. However, Parliament is reportedly considering new legislation which would in part re-institute the government’s ability to block internet access.
- Local Content Requirements: The Turkish government is reportedly reviewing draft legislation that would bar electronic payment companies from the Turkish market if they do not locate personal data banks in Turkey. Such localization requirements would inhibit the further development and expansion of creative electronic services by U.S. companies in Turkey.
- Continued Concerns Regarding Higher Tariffs in Ukraine: In 2014, following significant opposition from the United States and many other WTO Members, Ukraine withdrew its proposal to renegotiate more than 350 tariff bindings. However, early in 2015 Ukraine imposed a one-year tariff surcharge of 10 percent on agriculture products and 5 percent on non-agriculture products (exempting specified “vital commodities”). The Ukraine justified the action as necessary to address Ukraine’s balance of payments crisis. Ukraine’s tariff surcharge will be reviewed in the WTO’s Committee on Balance of Payments.