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Countering Forced Localization Measures for ICT Products is Aim of ITA Strategy

Thursday, April 12, 2018
Sandler, Travis & Rosenberg Trade Report

The International Trade Administration is seeking information by May 14 on trade-related forced localization policies, practices, and measures that affect the U.S. information and communications technology hardware manufacturing industry. Comments will be used to support the development of a holistic strategic plan for counteracting and deterring the expansion of such barriers.

The ITA states that over the past five years there has been a rapid expansion of laws, regulations, trade policies, directives, and practices by various U.S. trading partners designed to force the production and development of ICT hardware to be localized within a country’s territorial boundaries while also cultivating and incubating select domestic industries, technologies, or intellectual property at the expense of imported goods or foreign-owned or -developed IP. These measures include local content requirements for ICT products sold in the domestic market; subsidies or other government preferences made contingent on the use of local ICT products, indigenous technology, or domestically owned IP; mandates for service providers to purchase domestically-manufactured ICT hardware or ICT products with specific levels of domestic content; measures to force the transfer of technology or IP to local entities; and unjustified requirements to conduct conformity assessment and certification procedures in-country.

According to the ITA, these forced localization measures threaten not only U.S. production of ICT hardware currently in the market but also the United States’ competitive position in new and emerging technology sectors across the entire ICT-enabled industrial base as these policies expand to broader technology segments. The ITA is therefore seeking input on the following issues as it reviews policy options and potential remedies that can be utilized to develop a strategic response.

- laws, regulations, policies, trade practices, non-tariff barriers, and other trade-related measures put in place by U.S. trading partners that appear to be specifically structured to force the localization of production and technology development of ICT hardware and unfairly harm U.S. ICT hardware manufacturers and exports

- the estimated burden and harm caused by the identified measures in terms of lost revenue, market share, exports, employment, income, or other metrics to quantify the damage and harm to the U.S. ICT hardware manufacturing industry and related export opportunities

The scope of products included in this strategic review are ICT goods that fall under NAICS codes 3341, 3342, 3343, 3344, 3345, 3346, and 3359 or HS codes 8443, 8471, 8473, 8486, 8504, 8517, 8518, 8519, 8520, 8521, 8522, 8523, 8525, 8528, 8529, 8533, 8534, 8541, 8542, 8544.20, 8544.70, 9001.10, 9030, 9031.41, 8504.40, 8504.50, and 8504.90.

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