Nairobi, Kenya – The United States Government, represented by the United States Trade Representative, and the East African Community (EAC) today issued the following statement outlining further progress under the U.S.-EAC Trade and Investment Partnership:
Today, 19th October 2012, the East African Community and the United States have taken important steps to advance the U.S.-EAC Trade and Investment Partnership – a new initiative that supports the economic integration of the EAC and enhances the U.S.-EAC trade and investment relationship. This new Partnership is built on the recognition of the important role that trade and investment play in economic and social development including job creation, both in East Africa and the United States.
The EAC and the United States agreed on a framework to move forward on the establishment of a Commercial Dialogue, which will be formally launched in late November 2012.
The EAC and the United States also agreed that their respective technical teams will meet at the soonest possible date for further consultations toward negotiation of a proposed investment treaty and a trade facilitation agreement. The technical teams will further discuss and agree on the trade capacity building assistance, including identification and agreement of priority areas to support the Trade and Investment Partnership. The EAC acknowledged that the United States already provides substantial assistance to the EAC Partner States and the Secretariat, including an additional amount of up to $10 million (ten million United States Dollars) that the United States will provide over the next five years to the EAC Secretariat to support regional economic integration.
As the next step, the EAC Ministers responsible for Trade and Investment, and the U.S. Trade Representative agreed to advance the U.S.-EAC Trade and Investment Partnership within their respective administrations. They also agreed to hold their next Ministerial meeting on the margins of the 2013 AGOA Forum.
The statement follows a Ministerial meeting on October 19, 2012 in Nairobi, Kenya attended by Ministers from the EAC Partner States, the Deputy United States Trade Representative, the representative of the EAC Secretary General, Senior Officials from the EAC Partner States, and senior U.S. Government officials from a number of U.S. Government agencies, including the Departments of State, Commerce, and Transportation, and the U.S. Agency for International Development.
The EAC and the United States announced this new Trade and Investment Partnership at the AGOA Forum in Washington D.C. earlier this year. The initial items the EAC and the United States have agreed to explore under this new Partnership include an investment treaty, a trade facilitation agreement, continued trade capacity building assistance, and a commercial dialogue. Building upon the foundations of our existing trade and investment relationship, the Partnership will help to promote EAC regional integration, social and economic growth, and expand and diversify U.S.-EAC trade and investment. It could also serve as building blocks towards a more comprehensive trade agreement over the long term.
The U.S.-EAC Trade and Investment Partnership is an important component of the U.S. Strategy Toward Sub-Saharan Africa, which President Obama announced in June 2012.
ITEC coordinates closely not only with USTR, but with government agencies to which companies and individuals most frequently report barriers and trade-related concerns. These agencies’ reporting processes remain in effect, and American stakeholders are encouraged to continue to use them. Issues that cannot be resolved through these processes may be referred to ITEC for further action.
Q: When was the Interagency Trade Enforcement Center (ITEC) established?
A: On February 28, 2012, the President signed Executive Order 13601 establishing ITEC to enhance enforcement of U.S. trade rights and domestic trade laws.
Q: What is ITEC’s mission?
A: ITEC is charged with fighting for American workers, farmers, ranchers, and businesses by bringing a more aggressive “whole-of-government” approach to addressing unfair trade practices around the world. ITEC will be supported by the Departments of Agriculture, Homeland Security, Justice, State, and the Treasury, as well as the intelligence community. The personnel from these agencies will enhance U.S. trade enforcement capabilities and facilitate increased engagement with foreign trade partners at the World Trade Organization (WTO) and elsewhere through the creation of an expanded team of language-proficient researchers, subject matter experts, and economic analysts. ITEC is designed to help leverage and mobilize resources and expertise across the federal government to develop trade enforcement actions that will address unfair foreign trade practices and barriers that could otherwise imperil our nation’s export promotion and job recovery efforts.
Q: How is ITEC different from existing trade enforcement programs?
A: ITEC is unique in that it constitutes a more dedicated “whole-of-government” approach to addressing unfair trade practices and trade barriers. This new approach will provide a primary forum within the federal government to bring together experts from executive departments and agencies to coordinate trade enforcement. ITEC will permit a sustained focus on particular issues not possible previously.
Q: Doesn’t the U.S. government already have the capacity to address unfair trade practices and trade barriers?
A: A priority of the Administration is to better leverage the government’s trade enforcement activities by focusing its existing resources to address unfair trade practices and foreign trade barriers more effectively. ITEC will link, leverage and align both existing and new resources more efficiently across the executive branch and with stakeholders. The key here is efficiency. ITEC’s goal is to build upon existing capacity to give U.S. companies, workers and producers every chance to compete on a level playing field in today’s global marketplace.
Q: How many people will be working at ITEC at any given time?
A: By October 2012, ITEC had more than a dozen full-time and part-time staff and that number should increase substantially by the end of FY13. These figures are subject to change as issues, priorities and available funding change.
Q: How do you determine the issues for priority attention and action?
A: The Director and Deputy Director, along with the various offices within USTR, and in cooperation with other agencies will examine various trade issues and will establish priority projects for investigation. As is currently the case, a variety of factors will be taken into account in setting those priorities, including economic impact of the issue, systemic impact of resolution on international trading practices, ability to document and demonstrate the problem, available resources, and broad trade goals.
Q: Is ITEC’s purpose to bring more trade remedies and WTO cases against Chinese products?
A: ITEC’s purpose is to help ensure that all of our trading partners play by WTO rules and abide by their obligations, including commitments to maintain open markets on a non-discriminatory basis, and to follow rules-based procedures in a transparent way.
Q: What countries will ITEC be working on?
A: ITEC will be addressing trade enforcement issues originating in a variety of regions across the globe. It is USTR policy not to discuss publicly cases that it is developing to avoid giving advance notice to governments overseas.
Q: What will the role of ITEC be in administering domestic trade laws?
A: The Department of Commerce has statutory responsibility for administration of the antidumping and countervailing duty (AD/CVD) laws and will continue to administer them. The International Trade Commission (ITC) will continue to make injury determinations with regard to all AD/CVD investigations and sunset reviews. ITEC was not intended to duplicate the efforts that are assigned by statute to particular agencies. ITEC will be looking for areas where it can add value to the work already being done.
Q: What will the role of ITEC be in dealing with circumvention of antidumping and countervailing duty orders?
A: Import Administration’s Customs Unit and U.S. Customs and Border Protection will continue to take the lead on issues related to circumvention of antidumping and countervailing duty orders. Deliberate evasion of AD/CVD duties by providing false information in a customs declaration constitutes customs fraud, and is a breach of U.S. law, punishable by fine or imprisonment. In addition, the National Intellectual Property Rights Coordination Center (NIPRCC) plans to step up enforcement of commercial fraud laws related to evasion of antidumping and countervailing duties.
Q: Will ITEC be involved in “self-initiation” of antidumping or countervailing duty cases?
A: Antidumping and countervailing duty investigations may be initiated as the result of a petition filed by a domestic interested party or at the Secretary of Commerce's own initiative. Self-initiation of such investigations has been a very rare occurrence. However, should the Secretary of Commerce request ITEC assistance in such a self-initiation, ITEC will provide support as appropriate.
Q: How will ITEC engage with the NIPRCC and the Intellectual Property Enforcement Coordinator (IPEC)?
A: The NIPRCC’s focus is on the law enforcement response to IPR theft, primarily coordinating investigation and prosecution of IPR infringers under the criminal laws of the United States. The NIPRCC also is a key participant in international cooperation on criminal enforcement activities involving various other partner governments and international police organizations such as Interpol and Europol. ITEC’s focus is enforcement of U.S. rights under trade agreements across a wide set of issues – including intellectual property. ITEC has and will continue to coordinate with the NIPRCC and the IPEC.
Q: Will ITEC serve a rapid response function, including with respect to identifying subsidies in overseas markets?
A: ITEC will be focusing on enforcement of U.S. rights under trade agreements which require some time to investigate, develop, and coordinate. However, to the extent ITEC becomes aware of issues requiring a rapid response through its monitoring or outreach functions, it will bring such issues to the attention of that part of USTR or another agency best positioned to take more immediate action.
Q: How will ITEC help small and medium-sized enterprises? What is the difference between what ITEC does and what the Trade Compliance Center at the Department of Commerce does?
A: Small and medium-sized enterprises (SMEs) are encouraged to continue to report their specific market access problems to the Trade Compliance Center (TCC) at the Department of Commerce. If the TCC is unable to resolve an issue, especially when it has noted a trend, the TCC will report the problem to ITEC. By leveraging the expertise of the TCC, ITEC will have a head start on dealing with trade issues that are affecting SMEs. Small and medium-sized enterprises may also work through their associations to bring industry-wide problems to the attention of ITEC.
Q: How will ITEC interact with other parts of USTR that may already be engaged in working on an issue of concern to certain companies or industries?
A: ITEC is in close contact with the various offices within USTR. USTR sector experts and negotiators are aware of ITEC activities and vice versa to ensure full coordination. Parties which have been working closely with USTR offices on issues of concern should continue to do so.
Q: What role will ITEC play in section 301 cases?
A: Interested persons may file petitions with USTR under section 301 of the Trade Act. Depending on the nature of the petition, ITEC may be involved in doing additional research during the 301 investigation phase. It is important to note that, although USTR can initiate a section 301 investigation itself, USTR does not need to do so in order to initiate WTO dispute settlement action. With regard to the majority of WTO dispute settlement actions, we anticipate that ITEC will be doing some of the same types of research that outside parties would typically do themselves in order to file a 301 petition.
Q: What role will ITEC play in section 201 cases?
A: Section 201 investigations will continue to be carried out by the International Trade Commission, which has statutory responsibility for implementing this section of U.S. trade law. Although it is a historically rare occurrence, the President or USTR can request the ITC to conduct a section 201 investigation. ITEC may have a role in providing information that can be used to inform the decision as to whether the President or USTR should make such a request.
Q: Will ITEC monitor the new free trade agreements to ensure that trading partners are not erecting new non-tariff barriers that would limit the benefits U.S. companies are supposed to gain from the agreements?
A: While ITEC will monitor certain issues, it does not have the staff to monitor every aspect of every FTA. ITEC continues to work with other offices within USTR to ensure compliance with FTAs and will continue to request that industry and companies bring problems to ITEC’s attention.
President Obama recognized that when it came to autos, the 2007 U.S.-South Korea trade agreement did not go far enough to provide new market access to U.S. auto companies and to level the playing field for U.S. auto manufacturers and workers. The new agreements signed in February 2011 make a number of important improvements:
To deal with the large disparity between South Korean auto sales to the United States and American car sales in South Korea, U.S. auto companies and American auto workers now have provisions that give them the opportunity to increase sales to South Korea before U.S. tariffs on imports of South Korean autos come down.
To increase overall sales in South Korea of more affordable American vehicles, and support more auto jobs here at home, we agreed to eliminate non-tariff barriers that severely restricted American automakers’ access to the South Korean market and raised the cost of producing vehicles for sale in that market.
To level the playing field for America’s auto industry and workers, we strengthened enforcement and protections from sudden harmful import surges.
INCREASING ACCESS TO SOUTH KOREA’S AUTO MARKET TO EXPAND U.S. EXPORTS AND CREATE JOBS HERE AT HOME
Automotive Safety Standards: South Korea’s system of automotive safety standards has effectively operated as a non-tariff barrier to U.S. auto exports. The 2011 agreement allows manufacturers that sell 25,000 or fewer U.S.-made autos and trucks in South Korea to import their U.S.-made vehicles into South Korea by meeting U.S. federal safety standards rather than certifying to South Korean standards. This number is almost four times as high as was provided for in the 2007 agreement.
Automotive Environmental Standards: To avoid a disproportionate burden on U.S. automakers while maintaining high standards for environmental protection, the 2011 agreements allow U.S. autos – already subject to strict American environmental standards – to be considered compliant with new South Korean environmental standards on fuel economy and greenhouse gas emissions, developed since the 2007 agreement, if they achieve targets within 19 percent of those in South Korea’s new regulations. This provision helps American automakers sell their cars affordably in South Korea without undermining South Korea’s environmental objectives.
Taxes: In the 2007 agreement, South Korea committed to reduce tax rates for American cars and to streamline current taxes based on engine size, which have tended to raise the cost of the typically larger size of American vehicles sold in South Korea. Under the 2011 agreements, South Korea has additionally committed that any future automotive tax changes based on fuel economy or greenhouse gas emissions will be adopted in a manner consistent with certain general transparency obligations contained in the 2007 agreement.
Transparency: The 2007 agreement prohibits South Korea from adopting new automotive regulations that create unnecessary barriers to trade, and establishes an early warning system for potential trade barriers. The 2011 agreement make two important additions for significant regulations: creating a 12-month period between the time a final regulation is issued and the time auto companies must comply with it, giving companies sufficient time to adjust; and requiring South Korea to develop a new review system within 24 months of entry into force to make sure that existing auto regulations accomplish their objectives in the least burdensome manner possible.
LEVELING THE PLAYING FIELD BY GIVING U.S. AUTOMAKERS AND WORKERS THE OPPORTUNITY TO TAKE ADVANTAGE OF INCREASED ACCESS TO SOUTH KOREA’S MARKET
Car Tariff Elimination: The 2007 agreement would have immediately eliminated U.S. tariffs on an estimated 90 percent of imports of South Korean autos, with remaining tariffs phased out by the third year of implementation. The 2011 agreement keeps the 2.5 percent U.S. tariff in place until the fifth year. At the same time, South Korea will immediately cut its tariff on U.S. auto imports in half (from 8 percent to 4 percent), and fully eliminate that tariff in the fifth year.
Truck Tariff Elimination: The 2007 agreement would have required the United States to start reducing its tariff on imports of South Korean trucks immediately and phase it out by the agreement’s tenth year. The 2011 agreement allows the United States to maintain its 25 percent truck tariff until the eighth year and then phase it out by the tenth year – but holds South Korea to its original commitment to eliminate its 10 percent tariff on U.S. trucks immediately.
Tariffs on Electric Cars: In the 2007 agreement, the United States and South Korea would have eliminated tariffs on imports of electric cars and plug-in hybrids by the tenth year of implementation. Under the 2011 agreement, South Korea will immediately reduce its electric car tariffs from 8percent to 4 percent, and both countries will then phase out their tariffs by the fifth year. This is a concrete step toward achieving President Obama’s goal of supporting America’s green technologies.
MORE SAFEGUARDS FOR AMERICA’S AUTO INDUSTRY SUSTAIN JOBS HERE AT HOME
Special Motor Vehicle Safeguard: While the 2007 agreement contained a safeguard mechanism applicable to all goods, it did not include a safeguard specific to the U.S. auto industry. Under the 2011 agreement, South Korea has committed to add a special safeguard for motor vehicles to ensure that the American auto industry does not suffer from any potential harmful surges in South Korean auto imports due to this trade agreement.
Additional rules strengthen this auto safeguard: In the 2007 agreement, the general safeguard protections against harmful product surges ended in the agreement’s tenth year. Under the 2011 agreement, the special motor vehicle safeguard is available for 10 years beyond the full elimination of tariffs for each South Korean motor vehicle product. Under this motor vehicle safeguard, the U.S. government is not subject to retaliation for up to two years after this particular safeguard is applied if it fails to agree on tariff reductions or other compensation.. The special motor vehicle safeguard can be applied more than once per particular motor vehicle product if more than one surge causes serious injury to U.S. production of that product. The higher tariffs of the special motor vehicle safeguard can be applied to a particular product for as long as four years, instead of three years as in the agreement’s general safeguard. There is no requirement for the United States to progressively re-lower tariffs while the special motor vehicle safeguard is applied. Fewer procedural steps are required to speed up the application of the safeguard when workers need faster relief.
Enforcement: The 2007 agreement creates a tough remedy for the United States to re-impose as much as $200 million in U.S. tariffs (i.e., “snapping back” to pre-agreement levels) on South Korean passenger cars if U.S. auto business in South Korea is materially affected by South Korean violations or nullifications or impairment of the agreement. The 2011 agreement substantially increases Korea’s obligations in a number of areas subject to this strong enforcement mechanism.