Weekly Trade Spotlight: USTR’s 2010 Year in Review
This week’s trade spotlight summarizes USTR’s 2010 efforts to advance America’s economic recovery and create new jobs through trade.
President Obama has said that to grow the jobs that Americans need and get our economy back on track, we have to invent, discover, create, and build the best products and sell them all over the world.
In his State of the Union address earlier this year, the President launched the National Export Initiative. He set a goal to double U.S. exports over the next five years to support two million new American jobs.
Ambassador Ron Kirk, the United States Trade Representative (USTR), is helping to create jobs by opening world markets to U.S. exports – and keeping them open; by maintaining a level playing field for American workers in the global marketplace; and by making sure that two-way trade benefits Americans as workers and as consumers.
“This year USTR supported job creation in America by enforcing our trade agreements and opening up markets around the world. Thanks to our efforts American farmers and ranchers are selling more high-quality U.S. beef in Europe; we re-opened the market for U.S. poultry in Russia; U.S. manufacturers are selling more Made in America goods in Israel and Indonesia; and U.S. companies and their workers are selling more services overseas,” said Ambassador Kirk. “And we’ve leveled the playing field for American producers with enforcement that upholds science-based standards for U.S. agricultural exports, protects American innovation against counterfeiting and piracy, and requires foreign governments to take their thumbs off of the scale in key manufacturing industries like aerospace and clean energy. Across a wide range of issues we’ve delivered results that work for America’s working families.”
Opening Global Markets, Creating Better U.S. Jobs
In 2010, USTR aggressively pursued market-opening opportunities in every part of the world for American businesses and workers. Along with agencies across the Obama Administration, we empowered more American workers and businesses to compete in the global marketplace.
• Increasing Exports that Support Job Creation through the National Export Initiative (NEI). Boosted by an ambitious and ground-breaking National Export Initiative, U.S. goods and services exports have increased by 17 percent since this time last year. As part of the President’s Export Promotion Cabinet, USTR was instrumental in shaping key National Export Initiative goals, including opening foreign markets, reducing barriers to trade, and robustly enforcing our trade agreements.
• Winning a Better Deal for American Businesses and Workers in the U.S.-Korea Trade Agreement. On December 3, 2010, President Obama announced that USTR had successfully negotiated a better deal for America’s automotive sector as part of an effort to advance the pending U.S.-Korea trade agreement. New measures will give American auto manufacturers more access to the Korean market and a level playing field to take advantage of that access. The agreement, which is expected to support at least 70,000 American jobs in goods trade alone, also strengthens our ability to support and defend manufacturing jobs in the United States. It will increase exports of agricultural products for American farmers and ranchers and open Korea’s $560 billion services market to American companies. High standards for the protection of workers’ rights and the environment are key elements of this agreement, which also reinforces American leadership in the Asia-Pacific region. USTR will work closely with Congress to secure approval of this landmark trade agreement, which could support tens of thousands of new U.S. jobs.
• Helping America’s Small and Medium-Sized Businesses Trade More. USTR collaborated closely with federal agencies in committing to helping small businesses grow – and support additional jobs – through international trade. We have expanded our outreach to small businesses across the country to better integrate their concerns and priorities into U.S. trade policy activities. In 2010, three USTR-requested reports from the U.S. International Trade Commission offered critical insights into key barriers to trade affecting these American businesses, and revealed that these smaller exporters grow faster and pay higher wages than non-exporting firms. Overall, exports by small businesses supported an estimated four million U.S. jobs in 2007.
• Fighting Piracy of U.S. Goods to Protect American Jobs and Innovation. This year USTR and partner countries representing more than half of global trade finalized the text of the Anti-Counterfeiting Trade Agreement (ACTA). The agreement is an important new tool to fight the global scourge of counterfeiting and piracy, which threatens jobs that depend on innovation – including those here in the United States.
• Opening Asia-Pacific Markets. Talks in the Trans-Pacific Partnership (TPP) – an effort to create a regional trade agreement that gives American businesses and workers better access to the growing markets of the Asia-Pacific, have moved forward quickly in 2010. The groundwork is laid for 2011 market access discussions, and innovative proposals are advancing on integrating small businesses into Asia-Pacific supply chains, regulatory coherence, and other cross-cutting issues not tackled in previous trade agreements. Malaysia has joined the talks, Vietnam is participating as a full member and several other countries have begun preliminary consultations with the United States on joining.
Also in the Asia-Pacific, USTR led efforts to get real results at the November Asia-Pacific Economic Cooperation Forum (APEC) Leaders Summit in Yokohama, Japan. APEC economies took concrete steps towards achieving a Free Trade Area of the Asia-Pacific (FTAAP) by defining it as a next generation trade agreement that will be developed through regional agreements like the TPP. They also agreed to reduce the time, cost, and uncertainty of moving goods through the region by 10 percent by 2015; took steps to prevent technical barriers to trade from emerging related to key regulatory issues; and continued to lay the groundwork for work in both the WTO and APEC to eliminate barriers to trade and investment in environmental goods and services. These 2010 results will lay the foundation for a robust agenda in 2011 when the United States hosts APEC - which will be an opportunity to advance trade and investment in the Asia-Pacific and to connect the APEC economies with American businesses here at home.
• Breaking Down More Barriers to U.S. Agricultural and Manufacturing Exports. In 2010, USTR delivered on a promise to tackle needless and discriminatory barriers to U.S. exports arising from regulations and standards. Working extensively interagency and with U.S. stakeholders, including the business and agricultural communities, USTR identified and addressed numerous barriers with our trading partners. These efforts were documented in two new reports, the 2010 Reports on Technical Barriers to Trade and on Sanitary and Phytosanitary Measures. Both of these reports enabled USTR to better target barriers on the ground in trading partner countries, ensuring market access for American farmers, ranchers, and businesses.
• Opening Markets for American Pharmaceuticals. In 2010, USTR successfully negotiated to expand the list of pharmaceutical products eligible for duty-free treatment under the WTO pharmaceutical agreement. Effective January 1, 2011, this action will add over 700 new pharmaceutical products and chemical inputs to the agreement. The U.S. International Trade Commission estimates this action will eliminate duties on more than $400 million in U.S. imports, and at least $150 million in additional U.S. exports. This additional market access will help America’s makers of medicine sell more pharmaceutical products around the world and help control the cost of medicines imported into the United States.
• Leading Toward Ambitious Outcomes in the Doha Round. USTR continued to advance U.S. interests in an ambitious, market-opening conclusion to the Doha Round, highlighting the importance of meaningful market access commitments from emerging economies such as China, India and Brazil. In addition, the United States raised the profile of services as an essential element of the market access package.
Enforcing America’s Trade Rights, Preserving American Jobs
This year, USTR ensured that more Americans saw the benefits promised by our trade agreements through the vigorous enforcement of our rights under those pacts. This is helping American farmers, ranchers, manufacturers, and service providers remain globally competitive even in today’s difficult economic environment.
• Winning at the WTO Against EU Subsidies to Airbus. In the largest case ever heard by a WTO panel, the United States proved that more than $18 billion in subsidies conferred on Airbus by the EU and member countries were illegal, hurting the U.S. aerospace industry and its workers with lost sales and loss of global market share. Thanks to this finding, the jobs of thousands of U.S. aerospace engineers and electricians from Washington State to Kansas and South Carolina are more secure. More Americans will have a chance at future jobs as the EU comes into compliance and our aircraft manufacturers compete on a more level playing field.
• Enforcing Labor Rights Under CAFTA. In the first labor case the United States has ever brought against a trade agreement partner, USTR initiated consultations with Guatemala under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), for apparent violations of Guatemala’s obligations on labor rights. This reflects the Administration’s determination to protect the rights of workers in America and abroad, and to provide a level playing field for workers here at home.
• Fighting for the Environment. USTR worked closely with the Government of Peru as it sought to reform Amazon forest timber management policies. Peru has increased criminal penalties for illegal logging and other activities, and put enforcement officers in the field. Prospects remain strong for passage of comprehensive reform legislation.
• Challenging China’s Unfair Trade Practices and Industrial Subsidies. In October, USTR responded to a “Section 301” petition by investigating whether China unfairly protects and supports its renewable energy sector and making clean energy a priority topic in the U.S.-China Joint Commission on Commerce and Trade (JCCT). At the JCCT, China committed to revise an onerous experience requirement that threatened U.S. market access to China’s large-scale wind power sector.
• Challenging Chinese Duties on Grain Oriented Electrical Steel (GOES). In September, the United States requested WTO consultations with China regarding China’s procedures and final determinations in its anti-dumping and countervailing duty investigations of grain oriented flat-rolled electrical steel from the United States. The duties imposed by China have raised the price of hundreds of millions of dollars’ worth of American steel headed into China, with the practical effect of reducing or blocking exports of our steel to that country. This case makes clear that the United States will not permit China to threaten American steelworkers’ jobs by abusing WTO procedures to protect its market.
• Challenging Chinese Measures Affecting Electronic Payment Services (EPS). In September, the United States sued China at the WTO over China’s restrictions on electronic payment services and suppliers. Electronic payment services facilitate and manage the millions of funds transfers that occur every day between the banks of credit and debit cardholders and merchants’ banks, and China currently blocks participation by foreign suppliers of these services – including American businesses.
• Successfully Defending Job-Creating Enforcement Actions. In October, the World Trade Organization acknowledged that the United States has the right to apply both antidumping duties – which respond to unfair pricing practices – and countervailing duties – which respond to government subsidies – on dumped and subsidized products from non-market economies such as China. The panel also rejected nearly all of China's claims against other aspects of U.S. countervailing duty decisions. In December, the WTO acknowledged that the U.S. had every right to take action to stop a harmful surge of Chinese tire imports into the United States – a decision made by President Obama in September 2009 that has helped to restore U.S. tire industry jobs. Together, these victories vindicate USTR’s efforts to enforce U.S. trade agreements in support of jobs for hard-working Americans affected by trade.
• Getting U.S. Poultry Back into Russia. Reacting to a January ban on U.S. poultry exports, USTR negotiators reached an agreement that restored shipments to Russia in August. Thanks to these efforts, total poultry exports in 2010 reached about 260,000 tons (approximately $250 million). USTR and Department of Agriculture also successfully prevented Russia from banning the import of frozen poultry meat.
• Reopening China’s Market for U.S. Pork: China imposed a ban on U.S. exports of pork product in April 2009, ostensibly related to its concern about the transmission of the H1N1 influenza virus. USTR played an active role in pressing China to remove its H1N1-related bans on U.S. pork products, which allowed pork shipments to resume in May 2010.
• Boosting U.S. Beef Exports to Europe. During the first year of the U.S.-EU beef agreement negotiated by USTR in 2009, American ranchers exported nearly 10,000 tons (approximately $100 million) of high-quality American beef to that market. U.S. beef exports to the EU have not reached this level since the EU hormone ban went into effect in January 1989; American ranchers are selling more beef to Europe than they have in decades.
• Reopening Indonesia’s Market to American Products and Services. USTR successfully utilized our Trade and Investment Framework Agreement with Indonesia to get American pork back into the Indonesian market and to keep American packaged food products and American films flowing there as well.
• Winning WTO Claims in Support of U.S. High-Tech Exports to Europe. In August, a WTO panel ruled that the European Union (EU) violated its WTO tariff commitments by imposing duties as high as 14% on three high-tech products (certain monitors, printers, and set-top boxes). This victory helps ensure that U.S. producers of high-tech products will continue to be able to export those products to Europe duty-free.
• Insisting on America’s Rights in the Canada Softwood Lumber Agreement. In October, the United States took the first step in formal dispute settlement proceedings with Canada to challenge apparent subsidies given to lumber producers in British Columbia. Allowing Canadian softwood lumber producers to purchase increasing amounts of timber harvested from public lands for salvage rates would circumvent Canada’s obligations under the 2006 Softwood Lumber Agreement. USTR acted to ensure a level playing field for U.S. softwood lumber products and the communities whose jobs depend on them.
• Protecting Intellectual Property for U.S. Pharmaceuticals. After more than 5 years of consultation and negotiation, the United States and Israel reached an understanding that once implemented will enable U.S. manufacturers to sell medicine in Israel with assurances that their clinical test data is secure and their intellectual property is recognized and respected to a degree appropriate for a country at Israel’s advanced level of development.
• Improving Intellectual Property Enforcement. The Czech Republic, Hungary, Poland, and Saudi Arabia were all removed from the Special 301 Watch list due to actions each of these countries took to shut down illegitimate trade in counterfeit and pirated goods, which threatens thousands of U.S. jobs that depend on innovation. Improving enforcement of intellectual property rights in these countries makes them more attractive markets for U.S. exports that support American jobs.
Advancing U.S. Interests with Partners Around the World
USTR continued to work with trading partners around the world to grow economic opportunities for American workers and businesses, tackling issues together – from market access, to environmental and regulatory concerns
• Winning Opportunities for U.S. Businesses to Compete in Canada. In February, the United States won permanent U.S. access to Canadian provincial and territorial procurement contracts in accordance with the World Trade Organization (WTO) Government Procurement Agreement (GPA). In addition, the agreement enables American companies to compete for Canadian provincial and municipal construction contracts not covered by the GPA through September 2011. The United States will provide reciprocal access for Canadian companies to 37 states already covered by the GPA and a limited number of Recovery Act programs.
• Stopping Harmful Trade Retaliation by Brazil. USTR averted the imposition by Brazil of more than $800 million in retaliatory measures targeting U.S. industrial and agricultural products by finding a path forward in the WTO dispute involving export credit guarantees for U.S. agricultural exports and domestic supports for upland cotton. This included more than $560 million in higher tariffs against U.S. exports which were scheduled to go into effect on June 21, 2010, as well as possible countermeasures on U.S. intellectual property. Brazil’s proposed retaliation list included important U.S. manufactured products, such as motor vehicles, medicines, chemicals, and cosmetics, and agricultural products such as wheat, fruits, pork, food preparations and dairy products.
• Improving Trade with China. Through this year’s U.S. – China Joint Commission on Commerce and Trade (JCCT), USTR made progress on issues of concern to Americans doing business with China. The United States won wide-ranging commitments from China including to:
- Implement new measures to enforce intellectual property rights that will protect American jobs through increased purchase and use of legal software, steps to address piracy of electronic journals, more effective rules for addressing Internet piracy, and a crack down on landlords who rent space to counterfeiters in China.
- Eliminate discriminatory “indigenous innovation” criteria used to select industrial equipment for preferential treatment, ensuring access to China’s market for American machinery manufacturers, as well as commit to open and neutral standards for 3G and future technologies in one of the world’s largest telecommunications markets.
- Provide openness, non-discrimination, and transparency in China’s smart grid market, and cooperation on smart grid standards, creating more opportunities in a market that is estimated to be worth $600 billion.
- Ensure there is no discrimination in government procurement decisions based on where the intellectual property component of the products was developed, as well as no discrimination against innovative products made by foreign suppliers operating in China, and a commitment to accelerate China’s accession to the WTO’s Government Procurement Agreement – which will help America’s innovators and entrepreneurs continue to support American jobs by selling to the Chinese Government.
- Resumption of talks on beef market access with the goal of re-opening China’s market in early 2011.
• Intensifying Cooperation with Turkey and Ukraine: At the initiative of President Obama and Turkish President Gul, the United States and Turkey formally inaugurated the Framework for Strategic Economic and Commercial Cooperation, an annual cabinet level dialogue co-chaired for the United States by USTR and the Department of Commerce. The United States also re-invigorated consultations with Ukraine under our Trade and Investment Cooperation Agreement (TICA), resulting in an Action Plan to improve Ukraine’s protection of intellectual property rights. These enhanced contacts with key emerging markets in the Eurasia region will create additional opportunities to expand U.S. exports. Turkey is an identified priority market under the NEI.
• Combating Protectionism and Promoting Transparency through the WTO. USTR vigorously used the WTO’s Trade Policy Review Mechanism (TPRM) to ensure a comprehensive and effective review of the trade policies of 18 WTO members during 2010. The TPRM provides a unique opportunity to uphold principles of transparency in the development and implementation of WTO member trade policies, a benefit that has been particularly critical during a period of global economic crisis. As such, the TPRM is a critical element of USTR’s enforcement agenda. This year also saw the biannual WTO Trade Policy Review of the United States’ trade policies, an opportunity that USTR welcomed to explain and defend key U.S. economic and trade policies and to demonstrate U.S. leadership in the WTO. During the review, WTO members acknowledged the crucial leadership role of the United States in upholding the rules-based multilateral system embodied in the WTO.
• Helping U.S. Exporters Sell More to Mexico. In August 2010, Mexico recognized the equivalence of certain U.S. and Canadian standards covering certain electrical and electronic products, expediting the entry of these products into the Mexican market and reducing the costs for U.S. companies that export products to Mexico.
• Helping Russia Advance its Efforts to Join the WTO. Following direction from Presidents Obama and Medvedev, respectively, USTR and Russian government officials worked to resolve key bilateral issues related to the WTO accession process, including encouraging Russia to enact certain legislation critical to protecting intellectual property. These efforts have added significant momentum to Russia’s effort to join the WTO, which will create new market opportunities for U.S. exports of goods and services.
• Deepening Engagement with Japan. The United States and Japan agreed in November 2010 to launch a bilateral Economic Harmonization Initiative. The goal of this Initiative is to contribute to economic growth through cooperation to harmonize our approaches in ways that facilitate trade, address business climate and individual issues, and advance coordination on regional issues of common interest. This important new initiative with our fourth largest trading partner will begin in early 2011.
• Building on the Success of AGOA in Africa. This year marked the tenth anniversary since passage of the African Growth and Opportunity Act (AGOA), which allows eligible sub-Saharan African countries to export almost any product to the United States duty-free. USTR worked with partners to increase trade and development in Africa through AGOA and other programs:
- Zambia. The United States and Zambia established the U.S.-Zambia Trade Working Group and approved an Action Plan to increase two-way U.S.-Zambian trade, with a special focus on Zambian efforts to diversify exports under the African Growth and Opportunity Act (AGOA).
- Cape Verde and Liberia. USTR organized separate workshops with local businessmen and businesswomen in Cape Verde and Liberia to share opportunities available through trade under AGOA.
- South Africa. The United States re-activated the Trade and Investment Framework Agreement with South Africa, the top sub-Saharan African trading partner for the United States. South Africa represents potentially significant new market access for U.S. exporters. During January-October 2010 U.S.-South Africa two-way trade (exports plus imports) totaled $11.4 billion, up 37.2 percent compared to the same period in 2009.
- Mauritius. USTR completed the first round of Bilateral Investment Treaty negotiations to strengthen investor protections and encourage the continuation of market-oriented economic reforms in Mauritius.
• Helping Haiti Rebuild Through Textile Trade. After an earthquake devastated Haiti in January, USTR worked to develop the Plus One for Haiti initiative, which encourages U.S. brands and retailers to work toward sourcing 1 percent of their total apparel production from Haiti. Several major apparel manufacturers have signed memoranda of understanding with the Haitian Government to construct apparel factories that will eventually provide substantial employment opportunities in Haiti.
• Contributing to Global Development. USTR participated actively in the U.S. government interagency process that produced the first-ever President’s Global Development Strategy released in September 2010. And USTR staff are working to ensure that trade and investment policies continue to be integral elements of implementation plans for the Presidential strategy on global development.
• Supporting Peace and Prosperity for Allies Against Terrorism. To advance economic development and support important national security objectives, this year USTR supported efforts to help Pakistan recover from devastating floods and assisted with preparations for Afghanistan to pursue WTO accession. In December the United States and Yemen successfully concluded bilateral market access negotiations as part of Yemen’s WTO accession efforts. Completing its bid for WTO Membership will encourage greater openness, further development of the rule of law, and economic reform in Yemen.
Continuing a Serious Conversation about Trade at Home
In 2010, USTR focused more intently on domestic outreach than ever before, engaging in a serious conversation with the American people about how to expand the job-building benefits of trade. Ambassador Kirk talked with trade skeptics as well as supporters all across the United States, building broad support for the export-boosting, job-supporting trade policies that America needs.
• Addressing Concerns with Pending Trade Agreements. In working to close the U.S.-Korea trade agreement, USTR obtained an unprecedented level of input from stakeholders, including industry, labor, and Congress. Similar efforts are ongoing for pending trade agreements with Colombia and Panama.
• Winning Recognition for Enhanced Transparency in Trade Policy and Negotiations. In March, USTR was recognized by the Department of Justice for outstanding efforts to provide transparency, especially in regard to public requests for information through the Freedom of Information Act (FOIA). In addition, the USTR website, www.ustr.gov, has been completely re-designed and updated to provide the latest USTR news and features that illustrate the impact of trade on communities around the country – all to uphold the high standards for transparency and public communication set by President Obama. In the negotiating arena, USTR included Congress and stakeholders in every step of Trans-Pacific Partnership activities this year – from inviting stakeholders to make presentations at the San Francisco round of talks to a field hearing in Seattle with key environmental stakeholders and webinars for small business owners and others. USTR also worked closely with a broad range of stakeholders during the ACTA negotiations, releasing multiple texts and seeking public input.
• Bringing New Voices into the Conversation. This year, the President’s Advisory Committee on Trade Policy and Negotiations (ACTPN) was reconstituted to include more representatives from non-governmental organizations, state and local government, public health, consumer interest, labor and environmental groups. These new ACTPN members are already informing USTR’s efforts to develop trade policy that works for all Americans.
“This year we made solid progress toward rebuilding America’s economy through trade policies that are responsible and responsive to Americans’ goals and concerns,” said Ambassador Kirk. “Now we look forward to working with Congress, the American people, and our trading partners in 2011 to promote a job-rich, robust recovery here in America and balanced economic growth around the world.”