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Trade Policy Agenda Vows to Defend U.S. Sovereignty, Open Export Markets

Monday, March 06, 2017
Sandler, Travis & Rosenberg Trade Report

The Trump administration intends to pursue “a new trade policy” that defends U.S. sovereignty, enforces U.S. trade laws, uses leverage to open foreign markets, and negotiates new trade agreements that are fairer and more effective for both the U.S. and the world trading system, according to the annual trade policy agenda the White House submitted to Congress March 2. The agenda contrasts this approach with that of the past 20+ years, which focused on “trade policies that emphasized multilateral and other agreements designed to promote incremental change in foreign trade practices, as well as deference to international dispute settlement mechanisms” but too often put the U.S. “at an unfair disadvantage in global markets.” The “overarching purpose” of this new policy, the agenda states, will be to “increase [U.S.] economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports.”  

Asserting U.S. Sovereignty. The administration is committed to “aggressively defend U.S. national sovereignty over trade policy” by resisting efforts by other countries or international bodies like the World Trade Organization 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.” The agenda highlights the “clear and express legal limitation” in the WTO’s Dispute Settlement Understanding that WTO dispute settlement findings or recommendations may not add to or diminish U.S. rights or obligations under the WTO agreements. It also points out that adverse WTO decisions do not automatically lead to a change in U.S. law or practice.

Addressing Unfair Trade Practices. Proclaiming it “essential to both the United States and the world trading system that all U.S. trade laws be strictly and effectively enforced,” the administration pledges to “act aggressively as needed” against the unfair trade practices that have distorted important sectors of the global economy and significant markets around the world, including foreign government subsidies, theft of intellectual property, currency manipulation, unfair competitive behavior by state-owned enterprises, violations of labor laws, and use of forced labor. Tools that may be used in this effort include the following.

- antidumping and countervailing duty laws, noting that the Department of Commerce has the right to self-initiate AD/CV cases if circumstances warrant

- section 201 safeguards that may be imposed if increasing imports are a substantial cause of serious injury to a domestic industry

- section 301 actions in response to foreign actions that violate an international trade agreement or are unjustifiable, unreasonable, or discriminatory and burden or restrict U.S. commerce, which when “properly used … can be a powerful lever to encourage foreign countries to adopt more market-friendly policies”

Opening Foreign Markets. The agenda states that exports of manufactured goods, agricultural products, and services are “an important and essential aspect of the U.S. economy” and that the administration will “use all possible leverage to encourage other countries to give U.S. producers fair, reciprocal access to their markets.” Among the challenges the administration will seek to address as part of this effort are lack of adherence to free-market principles and insufficiently transparent legal and regulatory systems.

The agenda also pledges a “major review of how we approach trade agreements” because the results of existing agreements “have often not lived up to expectations.” For example, the U.S. has seen slower economic growth, lower median incomes, higher trade deficits, and a sharp net loss of manufacturing jobs. The administration’s new approach will focus on negotiating bilateral (rather than multilateral) trade agreements, particularly with countries committed to a market-based economy.

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