2018 USTR Trade Agenda Highlights WTO Reform, FTA Talks

8 March 2018

US Trade Representative (USTR) Robert Lighthizer released the latest version of the annual President’s Trade Policy Agenda last week, outlining the administration’s plans for the coming year. The document focuses on topics such as WTO reform and negotiations, trade agreements with other countries, and trade law enforcement.

The trade policy agenda is sent to Congress every year and is followed by hearings during which the US trade chief discusses and debates the agenda with lawmakers.

This year’s edition comes at a pivotal year, given the various ongoing trade negotiations and investigations underway, as well as the upcoming US midterm elections and a July 2018 deadline for renewing Trade Promotion Authority (TPA) legislation. It also sets US trade negotiating objectives and empowers the executive branch to negotiate these international agreements. It also allows Congress to vote on these deals under a straight up-or-down vote, no amendments, subject to certain conditions, in what is known as “fast track” procedure.

The 2018 USTR Agenda highlights trade law enforcement and strengthening the US economy, along with national security, among its main pillars.

The document is especially critical of the trade policy of recent administrations, and repeatedly highlights the importance of safeguarding the national interest and ensuring “freer and fairer trade for all Americans.”

The 2018 USTR Agenda described the past year’s trade policy actions as setting in motion “a new era in American Trade Policy.”

“We are already seeing the results of President [Donald] Trump’s agenda pay off for American workers, farmers, ranchers, and businesses,” said Lighthizer.

FTA negotiations, TPA renewal request coming up

Since taking office last year, Trump has withdrawn the US from the Trans-Pacific Partnership Agreement (TPP), along with launching negotiations to update the North American Free Trade Agreement (NAFTA) and amend the Korea-US Free Trade Agreement (KORUS).

The document highlights these talks and notes the US’ interest in trade deals with other partners, including the possibility of negotiations with the UK in the post-Brexit era, as well as with TPP individual members or member groups.

The document confirms that Trump Administration would like to see Congress extend TPA until 2021. The current version of TPA was signed into law in 2015 under then-President Barack Obama and includes the possibility of a one-time renewal in 2018 for an additional three years, so long as Congress does not disapprove. (See Bridges Weekly, 2 July 2015)

On the NAFTA talks, which just wrapped up their seventh round this week, the 2018 Agenda emphasised the value of “strong provisions” on digital trade, sound regulatory practices, and state-owned enterprises, among others, as well as binding labour and environmental provisions. (For more on NAFTA, see related story, this edition)

Regarding the KORUS agreement, the US administration would like to see an “expedited timetable” to resolve concerns related to implementation, while also flagging tariffs and automobile non-tariff barriers as particular areas of interest. The KORUS amendment talks were requested late last year.

The report also voiced dissatisfaction with how existing rules on areas such as labour, competition, customs, pharmaceuticals, and medical devices have been implemented.

The text pledges that the administration will watch the outcomes of the UK-EU Brexit negotiations closely, including what they mean for Washington. It also outlines plans for continued efforts by a US-UK working group to lay the groundwork for a potential trade deal once the UK is no longer a EU member state.

Aside from its stated interest in negotiating new trade deals or updating past ones, the new Trump Administration has also launched various investigations into trade practices from US partners, including the self-initiation of a Section 301 investigation into China’s alleged forced technology transfers and intellectual property rights practices.

It has also undertaken safeguard probes under Section 201 of the Trade Act of 1974 and national security-related trade investigations under Section 232 of a 1960s era law. The former has led to duties on imported solar cells or modules and imported washing machines, while the latter is expected to see tariffs confirmed on steel and aluminium within days. (See related story in this week’s edition)

WTO dispute settlement, trade remedies

The 2018 USTR Trade Policy Agenda also devotes a significant section to the WTO, both in terms of negotiations as well as its dispute settlement mechanism. It also raised related US enforcement actions.

The US has come under scrutiny by various other WTO members over the past year, partly due to its decision to block the start of processes to select new judges for the organisation’s Appellate Body.

Washington has cited concerns such as alleged judicial overreach in Appellate Body rulings that “have added to or diminished rights or obligations” of WTO members, as well as working procedures which have allowed Appellate Body members whose terms have expired to continue working on cases that they were already involved in.

The Appellate Body is the WTO’s highest court and now has three of its seven seats vacant.

The report reiterates those concerns along with naming some others, such as the Appellate Body’s frequent struggles to release rulings within the 90-day timeframe dictated by trade rules. The USTR document also criticises dispute panels and the Appellate Body for often making findings that are “unnecessary to resolve a dispute or on issues not presented in the dispute,” along with questioning the legal standard that the Appellate Body uses when reviewing facts. Additionally, it does not agree with the practice of Appellate Body reports being used as “precedent” for subsequent cases.

The US report also lists its offensive and defensive approaches for enforcement regarding particular disputes. This includes the debate over China’s non-market economy (NME) status and what that means for trade remedy investigations. The US has taken issue with the interpretation of a provision in China’s accession protocol which set a 15-year limit to using third-country prices in these probes in the place of “non-market prices or costs,” under certain circumstances.

In the report, the US also cites as justification the General Agreement on Tariffs and Trade (GATT) documents and practice prior to the WTO’s establishment, as well as some WTO rules on trade remedies. The USTR document suggests the GATT and WTO already allow for the possibility of using third-country prices in lieu of allegedly non-market prices.

WTO negotiations

In the area of WTO negotiations, the USTR document criticises some members for being “too rigid in perceiving that new agreements and other forms of outcomes can only occur at ministerial conferences, and that all work must be tied back to the [Doha Development Agenda] mandate, with very few exceptions.”

It also refers repeatedly to the debate over differentiation, noting that at the WTO, members can designate themselves as developing countries. The document argues that this move “undermines the predictability of the WTO rules and diminishes the certainty of negotiated outcomes under new liberalisation agreements.”

The text therefore calls for addressing this issue, while calling for members to look for ways to reach trade liberalisation-focused results whenever possible, and not just wait for the WTO’s biennial ministerial conferences to do so. The document highlights agriculture, fisheries, and e-commerce as areas of particular interest for Washington.

“The Administration’s major focus at the WTO on agriculture in 2018 will be to enhance notifications and transparency to inform discussions about the problem that face agricultural trade today and to begin consideration of new ways forward in negotiations on agriculture,” the text says.

Meanwhile, on fisheries, it calls for “strong prohibitions” on subsidies to illegal, unreported, and unregulated (IUU) fishing as well as those which contribute to overfishing and overcapacity. It similarly highlights the importance of transparency, such as through subsidy programme notifications, and says that major producers and exporters must be covered in a final deal. It names China and India in that respect. 

The document also highlights the new initiative involving around 70 WTO members to explore ways forward on digital trade, with the possibility of launching formal trade negotiations in the future. The US is one of the members involved and has called for establishing “commercially meaningful” rules in this area. 

ICTSD reporting.

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