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.
Small- and medium-sized businesses are the backbone of the U.S. economy, and the primary source of jobs for Americans. These businesses grow faster and hire more workers when they export. Now in effect, the U.S.-Korea trade agreement opens doors for U.S. businesses to export more, create more jobs, and grow their businesses. Below are businesses across the country that will benefit from increased exports because of the U.S.-South Korea trade agreement.
Profile Products LLC
Buffalo Grove, Illinois
In spite of a challenging international economic environment, Profile Products LLC has opened new doors for its business and continues to thrive. Profile Products is a small-business leading in the world of organic and inorganic soil products. Its focus on international sales and expanding its export capabilities has enabled the company to survive and grow under difficult market conditions.
Although Profile Products has already begun to develop a South Korean market, the company sees substantial opportunity for growth. The previous tariffs on Profile’s products, which ranged from six to 14 percent, placed debilitating limits on the company’s sales prospects in South Korea. The U.S.-South Korea trade agreement gives Profile Products the ability to compete on a level playing field with South Korean companies, providing affordable merchandise for South Korean consumers and building an American company that employs nearly 200 people.
“International business is critical to the growth of our company in revenue and job creation. South Korea has been a country where we have developed good partnerships and are poised for substantial growth in sales. The added expense of importation fees puts us at a disadvantage and sales are being lost to other countries,” says Vice President of Marketing Joe Betulius. “My biggest concern is not just the loss of immediate sales, but it opens the door for other countries to develop relationships with our customers that will have long term negative consequences.”
Profile Products has been able to develop opportunities, save jobs, and open new markets through exports to South Korea and other countries. And the company’s international experiences have also helped Profile to develop more advanced and specialized products and to build cross-culture relationships, expanding its business at home and abroad and keeping American workers employed.
PakSense, a company that makes time and temperature monitor labels used in food and other industries, credits open trade with the business’s global boom.
PakSense’s business relies on export sales, as well as sales to companies that do international business, to ensure continually expanding markets and a growing customer base. South Korea is one of the company’s most promising opportunities, and the U.S.-South Korea trade agreement means retention of jobs and expansion of the firm’s business into sprawling international markets.
PakSense looks at the U.S.-South Korea trade agreement as having a domino effect; allowing more products to be exported from the U.S. to South Korea expanding sales opportunities for PakSense in the United States and abroad, and the growth of South Korean exports will boost international sales openings. In order to be a viable participant in the market, PakSense needs opportunities like those the U.S.-South Korea trade agreement supports.
“South Korea is an important market, and it’s a good market for us… but when we have unfair taxes it creates problems for us,” says Gerd Uitdewilligen, International Sales Manager for PakSense. “We are competing against other products that could be substituted from the European market, so it’s important we have a level playing field.”
Global trade benefits small companies like PakSense, allowing them to retain jobs within the firm and build stronger businesses. Broadening trade prospects with South Korea gives PakSense the chance to be a strong international competitor. But the U.S.-South Korea trade agreement has even greater far-reaching impacts around the country, giving companies of all sizes the opportunity to expand, to export, and to help grow the American economy.
K&N Engineering, a family-owned business in Riverside, California, produces reusable air filters for cars and motorcycles. K&N, which opened its doors over forty years ago, employes over 400 workers and sells its products to consumers and businesses in over 80 countries around the world. K&N’s Made in America exports account for almost a quarter of their overall sales – helping this small business prosper during the economic recovery.
Always on the lookout for new business opportunities and company growth, K&N heavily relies on international trade for success.
The U.S.-South Korea trade agreement is exactly what this business needs to grow and hire new workers, says Kevin Floody, K&N Engineering’s International Business Manager. “The [trade agreement] with South Korea stimulates more exports, which in turn will generate more production and this equals more jobs.”
This agreement eliminates tariffs on over 95 percent of industrial and consumer goods within five years of implementation, allowing businesses across America the opportunity to expand sales in South Korea and grow.
Analytical Graphics, Inc.
For over twenty years, Analytical Graphics, Inc. (AGI) has been an international player in software development for professionals in the fields of aerospace, defense and intelligence. The company employs 260 men and women in the United States, and has international offices and partners in more than twenty countries.
AGI exports make-up 15 percent of the company’s sales, and the firm does business around the world from South America to Europe to Asia. South Korea especially presents tremendous potential for growth to the company.
AGI has worked closely with the Department of Commerce and other government agencies to develop a significant presence in international markets with a solid reputation for high-quality service. The U.S.–South Korea trade agreement provides AGI with additional opportunities in this rapidly growing market.
Although this company currently exports to Korea duty-free, the U.S.-South Korea trade agreement still offers AGI and all other technology companies’ intangible benefits.
AGI is a vocal supporter of the Intellectual Property Rights and Enforcement chapter of the trade agreement. Under this chapter, South Korea has promised to uphold vigorous enforcement of intellectual property rights of U.S. companies. Increased enforcement of these rights is good for the protection of intellectual property for everyone. AGI also supports the U.S.-South Korea trade agreement for the positive light it shines on general exports of American technologies and the promotion of the general partnership of the two countries.
The expansion of AGI to more and more countries has led the company to hire more staff to support the higher volume of international sales. In fact, at AGI, jobs focused on global markets have grown from 6 percent of the company’s employees to 11 percent.
These factors contribute to AGI’s enthusiasm for the U.S.–South Korea trade agreement, which has the potential to create even more opportunities for the company to increase international sales and support new jobs.
The Dixie Group
Since 1920, the Dixie Group has been manufacturing high quality carpets and rugs to residential and commercial customers. Founded in Chattanooga, Tennessee, the Dixie Group manufactures its products here in the United States.
From its base in Tennessee and Alabama, the Dixie Group exports to more than 35 countries, including South Korea. In fact, ten percent of Dixie’s commercial sales are from foreign customers, and sales can increase with more market access and lower tariffs.
South Korea currently charges Dixie a ten percent tariff on its nylon and wool carpeting upon entrance onto South Korean ports – making Dixie’s products less competitive. That’s why the Dixie Group is excited for the U.S.-South Korea trade agreement because it eliminates all tariffs on its nylon and wool carpeting products immediately.
What does eliminating the 10 percent tariff mean for the Dixie Group? It means the company now competes on a more level playing field with its South Korean competitors regardless of where the high quality carpet product is manufactured. This gives the Dixie Group more incentive to invest additional time and money in promoting their product into South Korea’s lucrative market.
Robert Munisteri, Director of International Sales, believes that the trade agreement provides the company with extensive opportunities to grow in South Korea, one of Dixie’s most robust export markets.
“Growing our export business is a key part of the Dixie Group’s mid- to long-term strategic plans and a subject on which we are passionate about. We basically have the same goal as President Obama; to double our international/export business in the next two years,” Munisteri says.
As their U.S. domestic market continues to recover, international sales are helping the Dixie Group sustain business growth and support their employees in Tennessee and Alabama. The increased export opportunities that the U.S.– South Korea trade agreement porvide, help the Dixie Group expand their operations enough to hire more people to sustain its growth.
Quality Float Works
Quality Float Works is a small company that packs a big punch. Based in Schaumburg, Illinois, this family-owned business designs and manufactures valves and metal float balls that are used to level liquid controls for critical components in the operation of heavy equipment. Quality Float Works’ production capacity and design capabilities gave it the unique ability to meet the needs of companies across many different industries in the United States and abroad. Today, Quality Float Works exports to over 30 countries.
Quality Float Works has been exporting since 1958 and still has yet to break into the South Korean market. There is a demand for quality in the South Korea market, and Quality Float Works knows that its products can meet those demands in the shipbuilding, plumbing, and agricultural industries.
So what are they waiting for? Vice President Jason Speer explained some months ago, “We know that there’s a demand for high quality products from South Korea, but we’re waiting for the U.S.-South Korea trade agreement to pass before we can responsibly invest time and money to promote our product in that market.”
Trade barriers that affect pricing for American goods weaken the competitive advantage Quality Float Works is known for: the ability to custom design a complex integrated system of float balls and valves to each customer’s specifications. International clients often request competing vendors to present their offer in a complete design, manufacturing, and cost proposal that integrates the float balls and valves from the same company. Before the U.S.-Korea trade agreement, Quality Float Works valves were charged an 8 percent tariff - forcing Quality Float Works to present a more expensive project proposal to clients compared to their competitors.
Quality Float Works’ is often considered by South Korean clients because of its reputation for quality but their products are more expensive. However, the U.S.-South Korea trade agreement provides a more level playing field on which to compete. The tariff on valves is now signifigantly reduced. With a more level playing field, Quality Float Works has the opportunity to make sales from South Korea with higher profit margins, enabling it to be more competitive around the world.
Quality Float Works is a vocal supporter of increasing export opportunities for American small businesses.
“Exporting has led us to hire about 30 percent more employees, and we hope to grow that number. We view our employees as family, when we do well, we give back to them. The better and stronger our company performs, the better benefits and wages we can offer,” shares Jason Speer.
The Langdale Company
The Langdale Company is just one example of how a small business is poised to win the future through trade. The company currently exports their industrial wood products from ten manufacturing facilities in Georgia to Asia, the Caribbean, Central America, Europe, and Mexico. For over 35 years, Langdale has exported to different markets around the world, spreading Langdale’s reputation for exceptional service, competitive prices, and an extensive product line. And Langdale has plans to expand into even more global markets.
Even with such a large portfolio of international customers, the Langdale Company has its eye on the South Korean market’s tremendous business opportunities. Bryan Harvey, vice president of sales, sees the South Korean market as a large growth opportunity for his company, but before the trade agreement, barriers to trade limited Langdale’s growth in South Korea.
“The passage of the U.S.-South Korea trade agreement eliminates duties, thereby making our products more affordable. This helps increase our export volumes to the South Korea market,” said Harvey.
Although the product that Langdale currently exports to South Korea doesnot receive immediate tariff elimination, this company's long-term growth plans still benefit from lower duties and increased competitiveness from the phase out of Korea’s tariffs on this product under the agreement.
South Korea is our seventh largest trading partner, but before the agreement was in effect, exporting to South Korea currently has a few price tags. American businesses were charged an average tariff of 5.9 percent, which used to reach as high as 12 percent, to export wood and lumber. Estimated duties paid on exports of U.S. wood and lumber to South Korea were over $17 million from 2007 to 2009. However, more than 93 percent of U.S. wood and lumber exports to South Korea by value now receive duty-free treatment in the first three years of implementation of the U.S.-South Korea trade agreement.
The U.S.-South Korea trade agreement also allows Langdale the opportunity to export a wider portfolio of existing products to the South Korean market.