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Annual Foreign Trade Barriers Report Includes Technical, SPS and Digital Measures

Tuesday, April 05, 2016
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative has issued its annual National Trade Estimate report, which describes significant foreign barriers to U.S. exports of goods and services, foreign direct investment and intellectual property rights protection as well as the actions being taken to address those barriers. The NTE report covers the most important barriers, including those that may be consistent with international trade rules (e.g., very high tariffs), affecting U.S. exports to 58 countries, the European Union, Taiwan, Hong Kong and one regional body. Sections on Bangladesh, Algeria and Tunisia were added this year to reflect the growing importance of these countries as markets for U.S. exports, while sections on Iraq and Uzbekistan were removed due to the relatively small size of their markets, a lack of progress in government-to-government engagement, and the absence of major trade complaints from representatives of U.S. goods and services sectors.

Technical barriers, such as product standards and testing and certification requirements, and sanitary and phytosanitary barriers, which include measures used to ensure that foods and beverages are safe for consumers and to protect animals and plants from pests and diseases, are included after being covered in stand-alone reports from 2010 to 2014. USTR notes that for the first time this year’s NTE report also incorporates the agency’s annual Section 1377 review of barriers to exports of telecommunication goods and services and showcases some of the most serious barriers to digital trade.

USTR states that among the most noteworthy changes in the last year, both positive and negative, concerning barriers to U.S. exports are the following.

China. In early 2015 the U.S. and others raised serious concerns about Chinese banking regulations calling for secure and controllable information communication technology products in the country’s banking system, effectively shutting out foreign ICT providers. China subsequently suspended those regulations, committed that all commercial technology product regulations would be nondiscriminatory and without nationality-based requirements, agreed to enhance transparency in this area, and committed not to unnecessarily limit commercial sales opportunities for foreign suppliers of ICT products.

China has announced several efforts to revise its trade secrets system, including through changes to its civil judicial system, and in early 2016 published for public comment draft revisions to its Anti-Unfair Competition Law that include changes with respect to trade secrets.

With respect to competition policy, China agreed to attach great importance to maintaining coherent rules relating to intellectual property rights in the context of its Anti-Monopoly Law. China also committed to properly protect parties’ commercial secrets during anti-monopoly enforcement proceedings and to ensure that anti-monopoly enforcement agencies are free from intervention by other agencies in AML enforcement actions.

On agriculture, China agreed to issue biotech approvals in a timely manner and approved several key biotech products in early 2016. China also agreed to revise its regulations to ensure a more transparent, predictable and science-based approval process.

Ecuador. In March 2015 Ecuador implemented a tariff surcharge ranging from 5 to 45 percent on 2,800 tariff lines representing approximately 32 percent of the value of the country’s imports. Ecuador claimed that the surcharge is a balance of payments safeguard measure but did not promptly notify it to the World Trade Organization as it was required to do.

Honduras. The government has taken concrete actions to address concerns about IPR protection and enforcement, including by bolstering its criminal enforcement capacity and issuing official clarifications that certain generic terms are not protectable as geographical indications. Honduras has also made a series of commitments to promote more effective border enforcement and combat the unauthorized rebroadcast of cable and satellite signals.

India. The Indian government mandates that manufacturers of certain information and communications technology products register their products with laboratories affiliated with or certified by the Bureau of Indian Standards, even if the products are already certified by internationally recognized laboratories. However, 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.

India remained on the priority watch list in USTR’s 2015 Special 301 Report because of concerns regarding weak IPR protection and enforcement. India is in the process of undertaking an examination of its current IPR environment and is in the final stages of developing a national IPR policy. However, despite meaningful progress on discrete IPR issues of the past year, India has yet to undertake the reforms necessary to achieve its innovation, creative and investment goals. The U.S. and India have committed to an IPR work plan for 2016 that includes continued work on copyright, trade secrets, trademarks and patents.

Indonesia. The U.S. and Indonesia launched a new insurance dialogue to address market access issues and held the inaugural meeting last November.

In February a WTO panel held its first hearing on U.S. complaints about Indonesia’s administration of trade-restrictive import licensing requirements that impede imports of horticultural products, animals and animal products.

Mexico. In 2015 Mexico continued implementation of its major reforms of its energy and telecommunications sectors. Full implementation of the 2014 energy reform legislation, which opened Mexico’s oil and gas sector to private participation for the first time since 1938, has created opportunities for greater private investment, including in power generation. Since the telecom reforms, consumer prices in the wireless sector have declined by 20 percent and market penetration, quality of service and carrier accountability have improved.

Philippines. In 2015 USTR closed a longstanding Generalized System of Preferences review of worker rights in the Philippines based on progress by the government in addressing worker rights issues, including through reforms of labor laws and regulations.

South Africa. In the context of an out-of-cycle eligibility review under the African Growth and Opportunity Act, South Africa lifted restrictions on imports of U.S. poultry, pork and beef products, which could now reach $160 million annually.

South Korea. The U.S. and Korea cooperated closely to address implementation and bilateral concerns with respect to their free trade agreement. For example, consultations achieved a more streamlined and effective regime on cross-border data transfers in the financial services area as well as progress on automotive regulatory issues. Discussions were also launched on Korea’s regulatory environment.

Turkey. The government is reportedly moving to implement recent legislation that would bar electronic payment companies from the Turkish market if they do not locate personal data banks in Turkey.

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