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Significant Trade Deficits to be Focus of May 18 Hearing

Wednesday, April 19, 2017
Sandler, Travis & Rosenberg Trade Report

The Department of Commerce and the Office of the U.S. Trade Representative will accept written comments through May 10 and hold a public hearing May 18 to assist in preparing a new report on significant U.S. trade deficits. This report will inform the further development of the Trump administration’s trade policy as well as its approach to potential trade negotiations.

The DOC has identified the following as foreign trading partners with which the U.S. had a significant goods trade deficit in 2016: Canada, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Switzerland, Taiwan, Thailand, and Vietnam. Executive Order 13786 requires the DOC and USTR to submit within 90 days a report that assesses the following for each of these partners.

- the major causes of the trade deficit; e.g., differential tariffs, non-tariff barriers, injurious dumping, injurious government subsidization, intellectual property theft, forced technology transfer, denial of worker rights and labor standards, and any other form of discrimination against U.S. commerce or other factors contributing to the deficit

- whether the trading partner is, directly or indirectly, imposing unequal burdens on, or unfairly discriminating in fact against, U.S. commerce by law, regulation, or practice and thereby placing U.S. commerce at an unfair disadvantage

- the effects of the trade relationship on the production capacity and strength of the U.S. manufacturing and defense industrial bases

- the effects of the trade relationship on U.S. employment and wage growth

- imports and trade practices that may be impairing U.S. national security

In addition to these topics, commenters may address the following issues.

- which bilateral trade deficits are structural or cyclical rather than mercantilist-driven

- the extent to which non-market economies operating within a market-based system create trade imbalances

- the extent to which chronic industrial overcapacity resulting from government subsidies affects the U.S. trade deficit

- whether and how free trade agreements have contributed to bilateral trade deficits

- the extent to which weak enforcement and dispute resolution mechanisms have inadequately addressed trade issues that result in trade deficits

- any other factors related to trade deficits that should be considered

Finally, with regard to manufacturing and the defense industrial base (with specific focus on electronics, aerospace, avionics, materials, machinery, and equipment), comments may address how the following requirements or practices of trading partners have affected opportunities for increased U.S. exports, profitability, and employment.

- mandated co-production and licensed production

- mandated subcontracting

- counter trade

- required technology transfer

- required collaborative research and development

- mandated joint ventures and intellectual property transfer

- required capital investments

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