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Cybersecurity, Tariffs, IPR, Import Restrictions Highlighted in Annual Trade Barriers Report

Tuesday, April 04, 2017
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.

This year’s report again includes technical barriers, such as product standards and testing and certification requirements; 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; and barriers to exports of telecommunication goods and services.

In addition, to highlight the growing and evolving trade using or enabled by electronic networks and information and communications technology, relevant country chapters include a dedicated section on barriers to digital trade. This section covers those barriers formerly categorized under “electronic commerce” and will highlight ongoing and emerging barriers such as restrictions and other discriminatory practices affecting cross-border data flows, digital products, Internet-enabled services, and other restrictive technology requirements.

USTR states that among the notable changes concerning barriers to U.S. exports in 2016, both positive and negative, are the following.

Canada. Ottawa advanced by two years, to 2017, an increase in the threshold for review for foreign investment to C$1 billion.

China. China has begun to take steps to address excess steel production capacity but these have been inadequate to date and even fewer efforts have been taken with respect to aluminum and other sectors. China has continued to move forward with cybersecurity measures that would impose severe restrictions on a wide range of U.S. and other foreign information and communications technology products and services, with an apparent long-term goal of replacing foreign ICT products and services with those made domestically. Delays in China’s approval process for agricultural products derived from biotechnology worsened, and the asynchrony between China’s product approvals and those made by other countries widened. 

Colombia. Effective Jan. 1, 2017, Colombia replaced its previous law on tax treatment of distilled spirits and federal oversight of provincial-level alcohol monopolies (which appeared to result in lower tax rates on spirits produced locally) with a more neutral combination of a specific tax based on alcohol content and an ad valorem tax on the retail price. The law also includes provisions aimed at disciplining discriminatory practices of the provincial-level alcohol monopolies. 

The trade ministry published a decree reversing a prohibition on imports of mobile devices and parts via mail or express delivery, with some limitations, and allowing more flexibility with respect to the documentary requirements for the export of used phones (e.g., for servicing and repair or recycling and safe disposal of electronic waste).

Ecuador. Ecuador began easing tariff surcharges, with a commitment to fully eliminate them by June 2017; eliminated automobile and cellular telephone import quotas beginning Jan. 1, 2017; and lowered exorbitant fees for registration and maintenance of patents.

Honduras. Honduras implemented a work plan that addresses the need for more effective administrative and criminal enforcement of IPR violations, including by combatting cable and satellite signal piracy.

India. Incremental positive steps forward on IPR protection and enforcement “were far overshadowed by intransigence on longstanding concerns and alarming new developments.” 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. On the other hand, India agreed to no longer require an importer's name and address to be sewn onto bulk packaging, a requirement that increased costs and delays for U.S. exporters.

Indonesia. Indonesia adopted regulations that require importers of devices with 4G technology to provide evidence of contributions to the development of the domestic device industry or cooperation with domestic manufacturing, design, or research firms to obtain an import permit.

 

Kazakhstan. Kazakhstan lowered tariff rates on certain food products, automobiles, airplanes, railway wagons, lumber, alcoholic beverages, pharmaceuticals, freezers, and jewelry to implement its World Trade Organization commitments to lower 3,512 tariff rates to an average of 6.1 percent by 2020. 

Kenya. Kenya doubled the duty rate on used clothing to 35 percent or $0.40/kg, whichever is higher, as a first step toward implementing a decision by East African Community governments to eliminate imports of used clothing and footwear within three years. 

Mexico. Regulations were completed to implement a 2013 law making sweeping reforms in Mexico’s energy sector and paving the way for new investment by U.S. companies in deep and ultra-deep water exploration. Telecom reform legislation adopted several years ago has allowed increased competition that led to declining consumer prices and improved quality of service in the wireless sector.

Vietnam. To promote the development of a local electronic payments industry the Vietnamese government mandated that all credit and debit transactions be processed through a national switch starting in 2018.

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