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2017 USTR Trade Policy Agenda and 2017 Annual Report Summary

SUMMARY REVIEW

As required by the Trade Act of 1974, the Trump Administration released on March 2, 2017 its 2017 Trade Policy Agenda and 2016 Annual Report. As noted in the introduction, the trade policy agenda piece of the report is much shorter than is typical in large part because the U.S. Trade Representative (USTR) has not yet been confirmed. The introduction also cites the statute creating the Office of the USTR, emphasizing that the USTR will “act as the principal spokesman of the President on international trade,” clearly acknowledging the USTR’s authority over trade policy.

The report notes both overall purposes of U.S. trade policy and identifies key objectives, which it identifies as the following:

“Ensuring that U.S. workers and businesses have a fair opportunity to compete for business – both in the domestic U.S. market and in other key markets around the world.

  • Breaking down unfair trade barriers in other markets that block U.S. exports, including exports of agricultural goods
  • Maintaining a balanced policy that looks out for the interests of all segments of the U.S. economy, including manufacturing, agriculture, and services, as well as small businesses and entrepreneurs.
  • Ensuring that U.S. owners of intellectual property (IP) have a full and fair opportunity to use and profit from their IP.
  • Strictly enforcing U.S. trade laws to prevent the U.S. market from being distorted by dumped and/or subsidized imports that harm domestic industries and workers.
  • Enforcing labor provisions in existing agreements and enforcing the prohibition against the importation and sale of goods made with forced labor.
  • Resisting efforts by other countries – or Members of international bodies like the World Trade Organization (WTO) – to advance interpretations that would weaken the rights and benefits of, or increase the obligations under, the various trade agreements to which the United States is a party.
  • Updating current trade agreements as necessary to reflect changing times and market conditions.
  • Ensuring that United States trade policy contributes to the economic strength and manufacturing base necessary to maintain – and improve – our national security.
  • Strongly advocating for all U.S. workers, farmers, ranchers, services providers, and businesses, large and small – to assure the fairest possible treatment of American interests in the U.S. market and in other markets around the world.”

The Trade Policy Agenda is notably different in substance compared to similar reports from past administrations, with its heavy focus on sovereignty and the lack of significant positive mentions of how trade agreements have opened up markets to spur greater opportunities. The review of 2016 activities is also much slimmer and less positive about the use of existing trade mechanisms and the international rules based architecture.

The Report outlines for major priorities for the new Administration:

(1) defend US national sovereignty over trade policy

(2) strictly enforce US trade laws

(3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of US intellectual property rights

(4) negotiate new and better trade deals with countries in key markets around the world.

On negotiating new trade agreements, the Report reiterates President’s Trump (TPP) preference for negotiating bilateral deals and signals that high on the list will be the countries in the TPP that do not already have trade pacts with the United States.  The President’s decision to withdraw the United States from the TPP has paved the way for bilateral deals with those countries, the report says.

The Administration also intends to review – and where needed – renegotiate existing US trade deals. It singles out the North American Free Trade Agreement and the US bilateral trade deal with South Korea as trade agreements that have not benefitted country, only leading to big trade deficits.

Notably, the report makes no mention of initiating consultations on a renegotiation of NAFTA. It notes that it is reviewing TTIP. On TPP, it notes the administration’s early action to remove formally the United States from the TPP, but also indicates that it has “begun consultations related to bilateral discussions with our trading partners in the region.”

The Trump Administration is questioning the authority of the WTO Dispute Settlement Body and is prepared to disregard any rulings it believes challenge US sovereignty, according to President’s the annual Trade Policy Agenda released yesterday. “The Trump Administration will aggressively defend American sovereignty over matters of trade policy,” the report declares. The White House will not accept WTO rulings that impede its ability to address unfair trade practices. The report also suggests that the WTO has not always been successful in disciplining other countries that fail to live up to their obligations.

The Report reiterates President’s Trump preference for negotiating bilateral deals and signals that high on the list will be the countries in the TransPacific Partnership that do not already have trade agreements with the United States. The President’s decision to withdraw the United States from TPP has paved the way for bilateral deals with those countries, the report says.

New Commerce Secretary Wilbur Ross told his department’s employees yesterday that they will be playing a key role in renegotiating “bad trade deals like NAFTA.” The current trade system has “gutted” US manufacturing, he said. He seems en route to becoming the locus of trade power in the Administration but we still await USTR Robert Lighthizer confirmation and the entire “balance of forces” with National Trade Council (NTC) Director Peter Navarro in the White House.

The Report also pledges that the Administration will be more aggressive in tackling unfair trade practices, including by self-initiating trade remedy cases.

Of note on NAFTA:

•         Section I, The President’s Trade Policy Agenda: A key objective will be “updating current trade agreements as necessary to reflect changing times and market conditions.” [Page 2]

•         Section I, The President’s Trade Policy Agenda: “There are significant reasons to be concerned with other major agreements as well. For years now, the United States has run trade deficits in goods with our trading partners in the North American Free Trade Agreement (NAFTA). In 2016, for example, our combined trade deficit in goods with Canada and Mexico was more than $74 billion. As long ago as 2008, both Barack Obama and Hillary Clinton called for the United States to renegotiate NAFTA – and to withdraw from NAFTA if such renegotiations were unsuccessful.” [Page 6]

•         Section III, Bilateral and Regional Negotiations and Agreements: Overview and general updates on NAFTA. [Page 128]

Documents/Links

•         Statement of House Ways and Means Committee Chairman Kevin Brady and Trade Subcommittee Chairman Dave Reichert.

•         Statement of House Ways and Means Committee Ranking Member Richard Neal and Trade Subcommittee Ranking Member Bill Pascrell, Jr.

•         Statement of Senate Finance Committee Ranking Member Ron Wyden

 

The Summary Review is courtesy Manchester Trade Limited Inc in Washington, DC, US/Latin America trade/investment and business advisors to CAIC and partner firm to DYKON Developments.

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