Compliance to New International Trade Rules
After the historic presidential and congressional elections last fall it was obvious that U.S. trade policy would change. The question then was how it would change, and while we still don't have all the answers, some things are becoming clear. One is that despite the rhetoric on the campaign trail, the Obama administration and the Democratic majority in Congress have recognized that remaining open to international trade is vital part to the effort to restore the health of the U.S. economy. But another thing that has become evident is that this openness has a price, and that price is enforcement.
It should be noted that enforcement--ensuring that U.S. rights under bilateral and multilateral trade agreements, as well as U.S. trade laws and regulations, are upheld--is not a partisan issue. It had become associated with Democrats as they railed against a Bush administration trade policy that they believed focused more on negotiating new trade pacts than policing existing ones. In fact a number of Republicans are also of the view that the U.S. has not sufficiently stood up to its competitors. The ongoing economic recession, which--rightfully or not--is seen in some quarters as having been exacerbated by open market and free trade policies, has only magnified these concerns.
Administration and congressional officials have also been careful to emphasize that enforcement is not the same as protectionism; it is not a tool for erecting more barriers. Instead, it is aimed at helping restore the support for open trade that has waned in recent years. While according to one senior law maker the "consensus to advance international trade is frayed" and "our faith in the international trading system is badly shaken," it is critical to ensure that rules are being respected. Countries should be able to do so without being accused of "protectionism," which one member of the House who oversees trade issues argued is associated with measures like tariffs, quotas and non-tariff barriers to imports and exports. Ensuring that the rights of threatened industries are upheld, on the other hand, can help speed an economic recovery and thus help reestablish popular support for global commerce.
Because U.S. trade agreements, laws and regulations are so broad in scope, efforts to enforce them will be as well. Businesses are therefore finding themselves in an environment where their global supply chains are being scrutinized like never before on everything from product safety to cargo container security to environmental practices.
With this in mind, let's take a look at some of the issues where enforcement efforts are likely to be especially targeted in the months ahead.
China - Intellectual property rights, industrial policies and market access for agriculture and services will continue to be major issues and the threat of action at the World Trade Organization will never be far from the surface. The alleged undervaluation of China's currency, however, is not the focal point it has been in recent years.
Trade Data - Ensuring the quality and timeliness of the import and export data submitted to U.S. Customs and Border Protection to aid supply chain security and revenue collection efforts will be a top priority. CBP will look to ensure compliance with its new 10+2 rule requiring additional shipment information, while lawmakers have indicated concern with product misclassification.
Intellectual Property Rights - IPR enforcement is high on the to-do list for both the administration and Congress, not only because infringement can cost businesses hundreds of millions of dollars a year in direct losses and significantly hamstring their competitiveness but also because the widespread counterfeiting of consumer and industrial goods is a major public health and safety concern. Policymakers are examining a number of additional ways to improve prevention, detection and interdiction efforts.
Remedies for Unfair Trade - Expect to see an increase in complaints that foreign manufacturers are dumping below-cost and unfairly subsidized goods in the U.S. market. New limits on governmental actions that could be seen as weakening trade remedy laws are on the horizon.
Trade Agreements - Much more attention will be given to ensuring U.S. rights as a member of the World Trade Organization and as a party to various bilateral and regional free trade agreements are respected. Although administration officials have said they should not be judged by the number of new cases filed, an increase is well within the realm of possibility. Compliance with established criteria by countries that receive duty-free benefits when exporting to the U.S. market will also be closely scrutinized.
Import Safety - Implementation of the many provisions of the Consumer Product Safety Improvement Act of 2008 will be a primary focus, but Congress is already moving ahead with similar legislation addressing food, drugs, cosmetics and medical devices. Additional initiatives to improve the targeting and identification of violative goods and the foreign firms that supply and transport them are under consideration.
Just as there are a wide range of issues to be included in enforcement efforts, those efforts will take a variety of forms. Staff within agencies like CBP, the Department of Commerce, the International Trade Commission and the U.S. Trade Representative's office will be devoting more time to ensuring compliance with applicable rules and regulations. New financial and personnel resources are flowing to these agencies to make sure they can sufficiently perform these functions. And comprehensive trade enforcement legislation is likely to pass in Congress. Already a bill has been introduced in the House that supporters are hoping to move sooner rather than later, which includes provisions to accelerate actions against foreign trade barriers, create or strengthen enforcement-related posts within the executive and legislative branches and bolster unfair trade remedies. In the Senate, key Democratic and Republican leaders are working together on what is expected to be a similarly broad measure.