Trade Policy Review: United States of America
This Trade Policy Review has been a very useful opportunity for Members to understand the economic, trade, and investment policies of the United States. I would like to thank the delegation led by Ambassador Michael Punke, our discussant, Ambassador Daniel Blockert, and the more than 60 delegations that had either taken the floor or had shared their written statements with us, for their valuable contributions.
For many years, the United States had stood by its commitment to open and liberal trade and investment policies. These policies had helped its economy recover from the deep recession since 2008. During this review period, their benefits had become even more evident. Robust private consumption and investment growth had underpinned continuous economic expansion, and steady job creation had allowed unemployment to be halved since its peak in the financial crisis. The United States remains the world’s top importer and second largest exporter of goods and services, and is the number one destination for foreign direct investment.
Several Members pointed out that globalization had enabled many countries to pursue development through trade. In this connection, the importance of the US’ unilateral trade preferences was highlighted in many interventions, as Members welcomed the reauthorization of the US’ Generalized System of Preferences and the extension of the African Growth and Opportunity Act (AGOA) in 2015. The United States was also encouraged to work on the simplification of rules of origin in line with the Nairobi Decision in favour of LDCs.
The prompt ratification of the Trade Facilitation Agreement (TFA) in early 2015 by the United States was universally welcome. Recognition was also given to the single window International Trade Data System (ITDS) which would be fully implemented by the end of this year. Members were well aware of the U.S.’ security concerns and its desire to put in place necessary import controls, but they were of the view that a balance should be struck between the promotion of trade flows and security, and that measures at the border should be proportionate to the risks. Unnecessarily cumbersome requirements restrict trade and create high compliance costs, and these costs will ultimately be borne by US industries and consumers.
The openness of the US trade regime for goods is evident in the generally low tariffs. Nearly 70% of all imports entered duty free in 2015, and the trade-weighted average tariff is 1.5% on an applied basis; or 3.5% if we consider the simple (unweighted) average tariff. Nevertheless, some Members noted that tariff peaks remained on goods of significant export interest to them, notably in textiles and clothing, and on certain agricultural products.
Although trade defensive instruments are legitimate measures within the WTO framework, many Members stressed, once again, that the United States was a particularly active user of anti‑dumping and countervailing measures, that certain methodologies applied by the United States were disputed, and that the continued extension of such measures in many cases were perceived as unwarranted. The United States explained that, as permitted under WTO rules, the decision to impose a measure was based on factual determination of whether dumping or countervailable subsidies existed, and whether such dumped or subsidized imports had caused, or threatened to cause, material injury to its domestic industry.
As to non-tariff measures, some Members appreciated working with the United States through initiatives such as the “Standards Alliance” to ensure broad and effective implementation of WTO obligations related to technical barriers to trade. However, some other Members perceived that a lack of information about standards and technical requirements at federal and sub-federal levels in the United States acted as barriers for exporting companies. They suggested that the creation of a single point of information could help both the United States and foreign operators overcome the existing information gap. On this issue, Members were informed that the U.S. federal agencies were barred from engaging in any standards-related activity that created unnecessary obstacles to foreign commerce, and that in applying standards, imports must be treated no less favorably than like domestic products.
Concerning sanitary and phytosanitary (SPS) measures, while Members generally supported and understood the United States’ efforts to modernize its food safety system, some Members felt that the burdensome new requirements regarding verification, certification, audit and inspection had become undue barriers to trade. Specific concerns were also expressed regarding inspection procedures for certain fish products and the establishment of maximum residue limits (i.e. tolerances) for food. Commenting on U.S.’ new measures to address concerns regarding illegal, unreported and unregulated (IUU) fishing, in particular the introduction of traceability requirements for seafood, some Members stressed that such measures should be consistent with WTO rules and based on objective risk analysis. They were informed by the United States that its policy was to secure more open and equitable market access through robust rules on SPS measures that encouraged the adoption of international standards and required provision of science-based justifications.
In the examination of government procurement policies, and also in relation to trade in certain services, many Members were concerned about the prevalence of Buy America legislation at federal and state levels and related local content provisions. It was pointed out that such requirements were impediments to efficient cross-border supply chains, for example, in the transportation, infrastructure and water supply sectors. The United States stressed that it was a strong supporter of the Government Procurement Agreement, and that its domestic policies were fully compliant with the Agreement. While the Federal Government did not regulate procurement by the states, the federal procurement system was transparent with real time information. As regards the services sectors, Members acknowledged the openness of most of these sectors in the United States, but they once again encouraged the authorities to address inefficiencies stemming from restrictive maritime services and cabotage regulations, and foreign investment restrictions in the air transportation sector.
The 2014 Farm Act continued to be a subject that attracted many Members’ attention. In particular, the United States was urged to provide more timely notifications of its domestic support to the WTO — which, we are pleased to note, will be submitted later this week. It was pointed out that the high subsidies the US provided for products such as soybeans, cotton, sugar, and dairy had had a negative impact on more competitive producers. Other specific questions were raised regarding the credit mechanism for agricultural exports and the recent use of special safeguards on imports.
In the area of intellectual property, Members showed interest in the recent patent reform, the new trade secrets law, and the level of protection for geographical indications.
In this review, the United States had received more than 1,600 advance written questions, and it has already responded to most of them. In a month’s time, Members should receive the few outstanding replies, which will then mark the successful conclusion of this TPR.
I cannot conclude this meeting, however, without reflecting on the US’ long-standing commitment to the multilateral trading system, and its leadership in the WTO which has shaped many of its trade rules as we know today.
The new Trade Promotion Authority granted to the US administration in 2015 has allowed it to successfully pursue the expanded Information Technology Agreement, advance negotiations on an Environmental Goods Agreement (EGA), and most recently to launch plurilateral negotiations to discipline the use of fisheries subsidies. The United States is currently involved in multiple trade negotiations both within and outside the WTO framework. Many Members said they hoped the United States would continue to show leadership in liberalizing global trade.
I echo the sentiment expressed by many Members, that in the face of persistent anti-trade rhetoric, it is important that the benefits of open markets are understood and the value of our multilateral trading system appreciated. Ambassador Punke has been referring to “pragmatic multilateralism”. I hope this idea will help the United States and other WTO Members stay constructively engaged as we explore common interests and prepare for a fruitful outcome at the 11th Ministerial Conference.