Weekly Trade Spotlight: USTR’s 2012 Year in Review
This week’s trade spotlight highlights many of USTR’s successful 2012 efforts to support more American jobs through international trade and to level the global playing field for American businesses and workers by enforcing our trade rights.
In 2012, the Office of the United States Trade Representative (USTR) successfully advanced President Obama’s National Export Initiative (NEI) and other global trade objectives by securing and maintaining markets for U.S. goods and services. U.S. Trade Representative Ron Kirk continued to lead USTR’s comprehensive efforts to engage with trading partners, maximize market opportunities, and remove barriers to U.S. exports. In addition, USTR celebrated the fiftieth anniversary of President Kennedy’s 1962 signature of legislation creating a Special Representative for Trade Negotiations.
“Fifty years after President Kennedy created the Special Representative for Trade Negotiations, USTR’s mission to promote open international markets remains vital to America’s continued prosperity. This year, President Obama created a new Interagency Trade Enforcement Center (ITEC), which helped us fight to secure a level playing field for American workers and businesses by challenging unfair trade practices from China to India to Argentina. We brought new trade agreements into force with Korea, Colombia, and Panama, and we made meaningful progress in negotiations for the next-generation Trans-Pacific Partnership regional trade agreement. We secured legislation to help ensure U.S. exporters reap the full benefits of Russia’s World Trade Organization (WTO) membership, and to support textile and apparel trade between U.S. producers and partners in Africa and Latin America. We reached the first-ever agreement among Asia-Pacific Economic Cooperation (APEC) economies to reduce tariffs on environmental goods, and we leveraged U.S. legal victories to secure a better deal for U.S. film exports to China. We are pursuing promising pathways to liberalize 21st century trade in services and information and communications technology, and we continue to play an active leadership role in multilateral negotiations to ensure that all WTO members are able to remove trade barriers and enhance the global flow of goods and services,” said Ambassador Kirk. “Connecting U.S. exporters with billions of customers beyond our borders supports millions of American jobs, and that’s why we will keep fighting to maximize market-opening, job-supporting trade opportunities moving forward.”
Supporting More American Jobs Through U.S. Exports
Increased U.S. exports continue to support American economic recovery and job growth. In coordination with Congress and agencies across the Administration, USTR actively pursued opportunities to enhance international trade and boost U.S. exports through dialogue and negotiations this year.
• Implementing New Trade Agreements with Korea, Colombia, and Panama. USTR worked with Korea, Colombia, and Panama to begin implementing the trade agreements approved by Congress in 2011. The U.S.-Korea trade agreement entered into force on March 15, followed by the U.S.-Colombia trade agreement on May 15 and the U.S.-Panama trade agreement on October 31. USTR is now using the consultative mechanisms set out in each agreement to ensure that all elements of the agreements continue to operate properly. Job-supporting U.S. exports to each market are anticipated to grow in the coming months and years.
• Terminating Application of the Jackson-Vanik Amendment and Extending PNTR In Order to Apply the WTO Agreement to Russia and Moldova. Following the December passage of legislation terminating application of the Jackson-Vanik amendment and authorizing President Obama to extend permanent normal trade relations status (PNTR) to Russia and Moldova, the United States and Russia simultaneously withdrew their notifications of “non-application” of the WTO Agreement and consented to have the WTO Agreement apply between them. This action will ensure that American firms, exporters, farmers, ranchers, workers, innovators and creators enjoy the same benefits of Russia’s WTO membership as their international competitors. It will also provide the trade tools necessary to hold Russia accountable for its commitments, including commitments to apply only science-based health and safety measures to agricultural trade and to protect intellectual property rights. In addition, in December, USTR announced that the United States and Russia signed an Action Plan to improve IPR protection and enforcement in all spheres, including over the Internet. Increasing U.S. exports to Russia’s large and growing market will support additional American jobs at home. The United States took similar steps to extend PNTR to Moldova, permitting the application of the WTO Agreement between the United States and Moldova, and opening up exporting opportunities for U.S. businesses and workers in that market.
• Extending the Third-Country Fabric (TCF) Provision of AGOA. The TCF provision passed by Congress in August is crucial to the continued survival of Africa’s textile and apparel industry. It has generated hundreds of thousands of jobs in sub-Saharan Africa, including in least developed countries, and has helped American retailers reduce their costs and diversify their supply chains. The TCF provision was set to expire in September, and this legislation extends it until September 30, 2015 when overall AGOA legislation is set to expire. The Administration looks forward to working with Congress next year to extend and renew AGOA, including the TCF provision, beyond 2015.
• Improving Textile and Apparel Trade under the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR). August 2012 legislation implementing technical corrections and modifications to the product-specific rules of origin for textile products covered under the CAFTA-DR agreement between the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua will help support an industry-estimated 2,000 jobs in the United States with U.S. production located in North Carolina, Florida, South Carolina, and Alabama, and additional jobs in Central America and the Dominican Republic. These modifications had the strong support of the U.S. domestic textile industry as well as U.S. importers and retailers who source from the region.
• Advancing the Trans-Pacific Partnership Negotiations and Welcoming New Partners. Through five formal negotiating rounds and numerous intersessional meetings this year, TPP partners together made meaningful progress in all areas of the agreement as outlined by TPP Leaders in late 2011. Significant headway was made on many of the 29 chapters under negotiation in the agreement, including customs, sanitary and phytosanitary measures, technical barriers to trade, cross-border services, government procurement, telecommunications, competition policy, and other issues. Work in other areas continued to move forward as well, including ambitious market access packages on goods, services, investment and government procurement, and strong commitments in other chapters of the agreement on such issues as labor, environment, intellectual property, and electronic commerce. TPP partners also made good progress on chapters related to new cross-cutting issues like regulatory coherence, integrating small- and medium-sized exporters more fully into regional trade, enhancing supply chain connectivity and competitiveness, cooperation and capacity building, and development.
In December, Mexico and Canada joined the negotiations, which will result in the fulfillment of President Obama’s pledge to address concerns related to the North American Free Trade Agreement (NAFTA). TPP partners including the United States also continued consultations regarding Japan’s expression of interest in the TPP negotiations and welcomed Thailand’s public expression of interest in TPP as well
• Securing a Historic Agreement to Reduce Tariffs on Environmental Goods among Asia-Pacific Economic Cooperation (APEC) Member Economies. The United States worked closely with APEC partner economies to reach agreement on a list of environmental goods on which tariffs will be cut to five percent or less by 2015 – marking the first time that trade negotiations have produced a list of environmental goods for tariff cuts. The APEC List of Environmental Goods includes a wide range of core products in the sector, including renewable and clean energy technologies, wastewater treatment equipment, air pollution control technologies, and environmental monitoring and assessment equipment. Tariffs on some of these products in the region recently ranged as high as 35 percent. The United States exported $27 billion of these environmental goods to the APEC region in 2011, of which $1.2 billion faced tariffs above five percent. Thus, the tariff cuts on these products will contribute to President Obama’s National Export Initiative goal to double U.S. exports in five years while also advancing green growth throughout the region.
• Securing a Better Deal for U.S. Film Exports to China. In a February agreement that followed USTR enforcement victories at the WTO, Vice President Joe Biden announced that China agreed to increase market access significantly for U.S. movies being shown in China. The increased market access will enable more job-supporting U.S. film exports to China and provide fairer compensation to U.S. film producers for the movies being shown there. Specifically, the agreement allows significantly more exports of U.S. blockbuster films to China, ensures significantly higher revenue for American producers when their blockbuster films are distributed by Chinese state-owned enterprises, and strengthens the opportunities for independent American producers and small firms to have their films distributed in China on fair commercial terms.
• Making Progress with China on Key Trade Issues. USTR used the U.S.-China Joint Commission on Commerce and Trade, the Strategic and Economic Dialogue and other bilateral engagement to make meaningful progress on key trade and investment issues, though there is more work to do.
o Eliminating Barriers to Market Access for Goods: China agreed to address U.S. concerns regarding various measures impeding exports of U.S. goods, such as medical devices, IT and telecommunications equipment, and an array of manufactured products, and to delay implementation of procurement rules that threatened to restrict sales of cars produced by U.S. companies.
o Government Procurement: China improved its offer to join the WTO Government Procurement Agreement and agreed to tackle two major obstacles to joining – state owned enterprises and covering a valuable set of public works projects.
o State-owned Enterprises: China committed not to discriminate in favor of its SOEs in providing credit, taxation incentives, or in regulatory policies.
o Localization of Intellectual Property and Technology: Given U.S. concerns about measures pressuring innovators to localize these assets in China, China committed to treat IPR owned or developed in other countries the same as Chinese IPR. China also made commitments not to interfere with businesses’ technology transfer decisions, and to promptly correct any measures inconsistent with its commitment.
o Software Legalization: China committed to extend its efforts to ensure the use of legal software by Chinese enterprises, in addition to employing more regular audits of software on computers used by the Chinese government. China confirmed it requires state-owned enterprises and state-owned banks under the supervision of the central government to purchase and use legal software.
• Exploring Enhancements to Transatlantic Trade, Investment, and Jobs. In June, a U.S.-EU High-Level Working Group on Jobs and Growth issued an interim report that concluded that a comprehensive transatlantic trade and investment agreement, if achievable, is the option that has the greatest potential for supporting jobs and promoting growth and competitiveness across the Atlantic. The HLWG continues to analyze key components of a potential comprehensive transatlantic agreement in preparation for a final recommendation to Leaders. The United States and European Union (EU) share the world’s largest bilateral trade and investment relationship, which supports millions of jobs on both sides of the Atlantic.
• Building Strong Momentum in Geneva for a Potential International Services Agreement (ISA). This year, United States has helped to build support among a diverse group of 20 like-minded WTO Members for a potential new multiparty International Services Agreement. Offering an innovative way to lay the foundation for further global services liberalization, the ISA negotiations would seek high standards and cover all service sectors and modes of supply. The agreement also would provide a new platform where members could work to build a stronger international consensus on new and improved rules to address new issues. As the United States currently has trade agreements with only 10 of the 20 members exploring the ISA, it could offer a venue to work on deeper services integration with partners as diverse as Japan, Taiwan, Israel, Pakistan, and Turkey.
• Initiating Negotiations to Expand Product Coverage of the WTO Information Technology Agreement (ITA). In May, the United States and other ITA participants commenced negotiations to expand the scope of products covered by the ITA. While annual global trade covered by the ITA exceeds four trillion dollars, the ITA product coverage has not been updated since the agreement was concluded in 1996. Eliminating duties on the newer products that have been developed and the advances still to come would provide a significant boost for U.S. technology exports. At the APEC 2012 summit in Vladivostok in September, APEC Leaders welcomed the ongoing work on ITA expansion in Geneva, and instructed officials to “work in earnest in order to swiftly achieve a good outcome of the negotiations.” APEC Ministers also called on all APEC Economies to join the ITA.
• Advancing a Multilateral Trade Facilitation Agreement at the WTO and Providing Technical Assistance for Developing Countries. The United States joined WTO Members in advancing technical negotiations for a multilateral trade facilitation agreement to ensure that all WTO Members are able to remove trade barriers and enhance the global flow of goods and services, which will deliver significant development gains. In addition to playing an active role in negotiations, the United States provided $150,000 to support developing countries’ participation in negotiations, and $1 million to help developing countries participate effectively in all the activities of the WTO.
• Developing and Advancing the new Presidential Policy Directive for sub-Saharan Africa. USTR provided key input to a new White House strategic policy to guide U.S. engagement with Africa over the next five years. A key element is to spur economic growth, trade, and investment to mutually benefit both African and U.S. businesses. USTR is now working with interagency colleagues and trading partners at both the bilateral and regional level, to support President Obama’s strategy through numerous trade and investment initiatives.
• Launching the U.S.-ASEAN Expanded Economic Engagement (E3) Initiative. USTR’s work this year with ASEAN (Association of Southeast Asian Nations) including Ambassador Kirk’s August trip to the ASEAN economic ministerial meeting and first-ever U.S.-ASEAN Business Summit, was critical to establishing a strong foundation for launch of the E3, a new framework for economic cooperation designed to expand trade and investment ties between the United States and ASEAN. E3 will create new business opportunities and jobs in all eleven countries by identifying specific cooperative activities to facilitate U.S.-ASEAN trade and investment, increase efficiency and competitiveness of trade flows and supply chains throughout ASEAN, and build greater awareness of the commercial opportunities that the growing U.S.-ASEAN economic relationship presents. Joint work on E3 initiatives may also help establish the groundwork for ASEAN countries to prepare to join high-standard trade agreements, such as the Trans-Pacific Partnership (TPP).
• Promoting Improvements to Intellectual Property (IP) Laws in Key U.S. Export Markets. Milestones in 2012 included significant new measures to protect IP by major trading partners, such as new copyright laws in Canada and Malaysia, measures to better protect trademarks and pharmaceutical IP in Mexico, and implementation of new measures against Internet-based piracy in Spain. Colombia and Panama enacted high-standard protections into their respective national laws, as required under recently implemented trade agreements with the United States.
• Updating the Model Bilateral Investment Treaty (BIT). USTR and interagency partners concluded a thorough review of the United States’ model bilateral investment treaty (BIT), the text of which provides for increased public participation; sharpens the disciplines that address preferential treatment for state-owned enterprises; and strengthens protections relating to labor and the environment. With this new policy tool, U.S. negotiators have re-engaged efforts to secure high-standard BITs with trading partners such as China and India, as well as Mauritius, Pakistan, and the Czech Republic. USTR has also resumed exploratory BIT discussions with a number of countries including Russia, Cambodia, Ghana, Gabon, and the East African Community (EAC).
• Agreeing to Joint Investment Principles with the EU. USTR played a key role through the Transatlantic Economic Council (TEC) to secure agreement between the United States and European Union on common principles to promote open, transparent, and non-discriminatory investment policies. These principles will serve as a strong foundation for future cooperation, both bilaterally and in joint efforts to promote open investment regimes in other markets.
Enforcing U.S. Trade Rights to Support American Jobs, Exports, and Innovation
Using new and existing tools to the fullest extent, USTR this year intensified already-robust efforts to enforce U.S. rights under our trade agreements, ensuring that more Americans realize the benefits promised by those pacts. Strong trade enforcement helps to increase export opportunities and keep U.S. producers globally competitive in a variety of sectors and industries. President Obama’s comprehensive trade enforcement strategy also promotes and protects innovation critical to U.S. exports and well-paying, 21st century jobs, and upholds key commitments to protect labor rights and the environment.
• Standing Up the Interagency Trade Enforcement Center (ITEC). In his 2012 State of the Union Address, President Obama called for the creation of an interagency trade enforcement unit charged with investigating unfair trading practices. In February, President Obama established the Interagency Trade Enforcement Center (ITEC), bringing together resources and expertise from across the federal government into one organization reporting to the USTR and led by USTR and the Department of Commerce with a clear, “all hands on deck” commitment to strong trade enforcement. In a close, collaborative effort, USTR and the Department of Commerce have assembled critical ITEC infrastructure and staff from a variety of agencies including the Departments of Commerce, Agriculture, and State, and with a diverse set of language skills and expertise including intellectual property rights, subsidy analysis, economics, agriculture, and animal health science. ITEC has gotten off to a strong start in fulfilling President Obama’s goals and has played a critical role in providing research and analysis regarding three important WTO matters launched since ITEC’s creation: (1) China Rare Earths Export Restraints, (2) Argentina Import Licensing, and (3) China Export Bases. As Congress continues to provide valuable input, the ITEC is significantly enhancing the Administration’s capability to investigate potentially unfair trade practices and enforce U.S. trade rights proactively.
• Prevailing Against China’s Unfair Restrictions on Access to Raw Materials. In January 2012, the WTO adopted panel and Appellate Body reports agreeing with the United States that Chinese export restraints on a number of industrial raw materials (i.e., bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc) violated China’s WTO obligations. These export restraints skew the playing field against U.S. producers and exporters of processed steel, aluminum and chemical products, and a wide range of further processed products. The export restraints artificially increase world prices for these raw material inputs while artificially lowering input prices for Chinese producers, creating significant advantages for China’s producers when competing against U.S. producers both in China’s market and other countries’ markets. The United States will scrutinize carefully China’s actions taken to comply with this important victory. China’s period of time for compliance ends on December 31, 2012.
• Prevailing Against Chinese Duties on U.S. Steel Exports. In an important decision, the WTO in November 2012 adopted panel and Appellate Body reports vindicating U.S. claims that China failed to abide by its substantive and procedural obligations in imposing anti-dumping and countervailing duties on hundreds of millions of dollars’ worth of grain-oriented electrical steel (GOES) made in Ohio and Pennsylvania. These duties raised prices and reduced U.S. GOES exports to China’s large and growing market. China will now have a period of time in which to comply.
• Prevailing Against Chinese Measures Affecting Electronic Payment Services (EPS). The United States successfully challenged before a WTO panel China’s restrictions on foreign suppliers of EPS for card-based transactions. Millions of payment card transactions occur every day in China, and each year well over one $1 trillion worth of electronic payment card transactions are processed in China. China’s discriminatory measures severely distort competition and prevent participation by foreign suppliers of EPS for domestic currency payment card transactions. The WTO panel report was adopted in August 2012, and its findings under the General Agreement on Trade in Services (GATS) make clear that China’s pervasive and discriminatory measures deny a level playing field to foreign service providers, including the American EPS providers who are world leaders in this sector. By industry estimates, the U.S. stands to gain 6,000 jobs related to EPS. China now has until July 2013 to bring its measures into compliance.
• Exercising U.S. Trade Rights to Defend and Secure a Level Playing Field for American Aerospace Manufacturers. The Administration continues to fight for U.S. aerospace engineers, electricians, and related suppliers, whose jobs depend on U.S. aircraft manufacturers having on a more level playing field for global competition. In April, the United States initiated compliance panel proceedings due to the EU’s failure to comply with the WTO’s 2011 findings that $18 billion in subsidies conferred on Airbus by the EU and member countries were WTO-inconsistent. In March, the WTO Appellate Body found that the value of subsidies provided by the United States to American aerospace manufacturers was in the range of $3-4 billion, and those subsidies had far fewer distortive effects on the aircraft market than subsidies provided by the EU. After the United States announced compliance by the end of its period of time for implementation, in October 2012, the EU initiated compliance panel proceedings, and USTR is vigorously defending U.S. interests. The United States remains prepared to engage in any meaningful efforts, through formal consultations and otherwise, that will lead to the goal of ending WTO-inconsistent subsidies at the earliest possible date.
• Challenging Argentina’s Widespread Use of Import Restrictions. In December, the United States filed a request for the WTO to establish a dispute settlement panel to examine Argentina’s import restrictions on all U.S. goods imported into Argentina. These measures include the broad use of non-transparent and discretionary import licensing requirements that have the effect of unfairly restricting U.S. exports. Argentina further disadvantages U.S. exports by requiring importers to agree to undertake burdensome trade balancing commitments, such as agreeing to export a certain value of Argentine goods, in exchange for authorization to import U.S. goods. The ITEC provided significant investigative and analytical resources to support USTR’s monitoring and enforcement unit in the initiation and development of this dispute in May. Consultations with Argentina were held in September, but they failed to resolve the matter. The European Union and Japan have also requested the establishment of panels to examine Argentina’s import restrictions.
• Challenging China’s Subsidies to Auto and Auto Parts Exporters. In September 2012, the United States initiated a WTO dispute concerning China’s auto and auto parts “export base” subsidy program. Through this program, China provides extensive subsidies to auto and auto parts enterprises located in designated regions known as “export bases” and that meet export performance requirements. These subsidies, which appear to be prohibited under WTO rules, provide an unfair advantage to auto and auto parts manufacturers located in China, which compete with producers located in the United States and other countries. ITEC investigators contributed to the development of this dispute. USTR estimates that China made at least $1 billion in subsidies available to auto and auto-parts exporters in China during the years 2009 – 2011.
• Challenging China’s Export Restraints on Rare Earth Elements, Tungsten, and Molybdenum. In March 2012, the United States initiated a WTO challenge to China’s unfair export restraints on rare earth elements, tungsten, and molybdenum, key inputs in many U.S. manufacturing sectors and American made products including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals. These restraints appear to be part of a troubling industrial policy aimed at providing substantial competitive advantage for Chinese manufacturers at the expense of foreign manufacturers. As a leading global producer of these materials, its export restraints provide unfair advantages to China’s downstream producers and create pressure on foreign producers to move their operations, jobs, and technologies to China. The WTO established a panel at the request of the United States in July 2012, and panel proceedings are underway.
• Challenging Chinese Duties on U.S. Exports of Chicken Broiler Products and Automobiles. In January and October, respectively, the United States obtained establishment of WTO panels to consider U.S. challenges to China’s antidumping and countervailing duties on chicken broiler products and automobiles. These cases are separate from, but similar to, the successful U.S. challenge against China’s imposition of antidumping and countervailing duties on grain-oriented electrical steel (GOES). In each of these cases, USTR is fighting to ensure that China does not block U.S. exports by misusing its trade laws and violating its international trade commitments.
• Challenging India’s Import Ban on Agricultural Products. In March 2012, the United States initiated a WTO challenge to India’s prohibition on the importation of certain U.S. agricultural products, including poultry meat and chicken eggs. Although India’s measure purports to be concerned with preventing avian influenza, the measure does not have a scientific basis and is not in line with international standards. The measure thus appears to be inconsistent with India’s obligations under the WTO Agreement. In June 2012, the WTO established a panel at the request of the United States.
• Cracking Down on Theft of Intellectual Property. In April, USTR issued its annual comprehensive “Special 301” report on intellectual property protection and enforcement by U.S. trading partners. The report removed Malaysia and Spain from the Special 301 Watch List based on significant improvements to their copyright laws. Israel was removed from the Special 301 Priority Watch List based on its progress implementing a 2010 agreement on pharmaceutical intellectual property rights, while Ukraine was added to the Special 301 Priority Watch List based on its failure to implement a previously agreed action plan on intellectual property rights.
In December, USTR issued a Special 301 Out-of-Cycle Review of Notorious Markets to continue shining a spotlight on marketplaces that facilitate and sustain global piracy and counterfeiting. Eight markets USTR identified one year ago were able to be removed from the 2012 list, thanks to significant law enforcement actions or significant voluntary actions aimed at addressing IP theft. USTR added several new sites in China and other parts of the world to encourage continued progress, and warned sites removed from list that they could be listed again in the future if corrective actions prove inadequate or short-lived.
• Holding Peru to Its Environmental Commitments. With input from concerned stakeholders, USTR led a rigorous review of Peru’s efforts to implement its commitments under the U.S.-Peru trade agreement with respect to the harvest and export of bigleaf mahogany and Spanish cedar timber products. As a result of this review, the United States developed an action plan that addresses the underlying challenges identified in the forestry sector in Peru, and which will support Peru in its ongoing forestry reform efforts. USTR will continue to monitor the situation in Peru, and continue to work cooperatively with the Peruvian Government on the action plan, with U.S. capacity-building support as appropriate.
• Holding Countries to Their Commitments under the Generalized System of Preferences (GSP). USTR led interagency reviews of country practices regarding several GSP beneficiary countries. Following these reviews, President Obama suspended the GSP trade benefits of Argentina based on that country’s failure to enforce arbitral awards in favor of two U.S. companies. USTR closed the GSP review of Sri Lanka without any change to Sri Lanka’s trade benefits in view of Sri Lanka’s progress in addressing worker rights issues. USTR also launched new GSP reviews regarding worker rights in Fiji and Iraq and protection of intellectual property rights in Indonesia and Ukraine.
Engaging with Global Partners to Enhance Trade and Economic Growth
USTR’s active engagement with international trading partners yielded significant and timely results for American farmers, ranchers, businesses, and workers. Through dialogue and negotiation, USTR worked with partners to address concerns, reduce trade barriers, and foster mutual economic growth through trade.
• Engaging with Korea, Colombia, and Panama to Ensure American Farmers and Ranchers Reap the Benefits of New Trade Agreements. As new trade agreements with Korea, Colombia, and Panama took effect this year, USTR established relevant consultative mechanisms with our trading partners and worked quickly to ensure U.S. agricultural producers could seize the significant benefits of these agreements. For example, USTR, in coordination with USDA, the U.S. Embassy/Seoul, and U.S. cherry exporters, engaged the Korean government concerning the efficient administration of Korea’s sampling regime for imported U.S. cherries, a critically important process given the highly perishable nature of the product in question. A combination of these efforts and the immediate elimination of Korea’s 24 percent tariff as called for in the agreement contributed to an increase of U.S. exports through September 2012 to nearly $74 million, as compared to $39 million in the preceding year. USTR and USDA coordinated similar efforts with Colombia and Panama to ensure U.S. agricultural producers can realize the job-supporting benefits of those trade agreements as well.
• Signing a Historic Equivalence Agreement on Organic Products with the EU. In February, the United States and the European Union (EU) reached a historic agreement stipulating that organic products certified in the United States or in the EU may be sold as organic in either region. The EU is the second largest export market for U.S. organic products, and the combined value of the U.S. and EU organics sector is more than $50 billion. This agreement between the two largest organic producers in the world took effect in June, establishing a strong foundation for promoting organic agriculture that supports jobs and businesses on both sides of the Atlantic.
• Enhancing Market Access for U.S. Beef Exports to Mexico, Taiwan, and the United Arab Emirates. USTR and USDA negotiators made important progress with key trading partners to enhance market access for U.S. beef exports. Mexico now allows all U.S. beef products from cattle less than 30 months of age to enter the Mexican market. USDA estimates this increased market access will yield an additional $50 million of U.S. beef exports to Mexico annually. USTR and USDA also reached agreement with authorities in Taiwan to adopt and implement a maximum residue limit (MRL) for beef raised with the feed additive, ractopamine, and country-specific labeling for beef. Following implementation of these measures in August, monthly shipments of U.S. beef to the Taiwan market more than doubled from $2 million to $5 million per month. USTR and USDA also reached an agreement with the United Arab Emirates (UAE) to provide for full market access for U.S. beef. Shipments of U.S. beef to the UAE increased 28 percent from January – September compared to the same period in 2011.
• Streamlining U.S. Telecommunications Exports to Israel. In October, USTR signed a mutual recognition agreement (MRA) with Israel that will ease burdens on U.S. companies, especially smaller manufacturers, seeking to export telecommunications products to Israel. This agreement will permit recognized U.S. laboratories to test telecommunications products for conformity with Israeli technical requirements, and vice versa, while maintaining high levels of safety protection. This saves American manufacturers the time and expense of additional product testing in Israel and lowers prices for consumers.
• Securing Agreement with Brazil to Recognize Bourbon, Whiskey, and Cachaça as Unique Distilled Spirits. The United States and Brazil reached an agreement that will enhance export opportunities for makers of U.S. Bourbon Whiskey and Tennessee Whiskey and Brazilian Cachaça. Specifically, the United States agreed to initiate a process to designate Cachaça as a distinctive product of Brazil, and Brazil agreed to designate Bourbon Whiskey and Tennessee Whiskey as distinctive products of the United States. These spirits are among the United States’ and Brazil’s most unique and well-recognized exports. In 2011, Brazil was the United States’ eighth largest goods trading partner with $74 billion in total two-way goods trade. This agreement reflects both governments’ commitment to building stronger bilateral trade ties.
• Extending the United States-Canada Softwood Lumber Agreement (SLA). In January, the United States and Canada signed a two-year extension of the 2006 U.S.-Canada Softwood Lumber Agreement (SLA), so that the Agreement will be in effect through October 12, 2015. The SLA helps to provide a more predictable and fair environment for conducting international trade in softwood lumber. The United States will consult with Canada before the extended expiration date on whether a further extension is in the interest of both countries.
• Working with Colombia to Strengthen and Protect Labor Rights. The U.S. Government engaged intensively with Colombia throughout the year, continuing efforts to ensure full implementation of the Colombian Action Plan Related to Labor Rights. This included cabinet level meetings in Washington as well as Colombia and multiple trips by a team of USTR and Labor Department officials to Colombia. Among the areas of progress during 2012 were: the hiring of nearly one hundred additional labor inspectors; imposition of fines of up to $1 million on 10 companies for using abusive contracting that violated labor rights; improved Colombian government response to cases of threats of violence against labor leaders and activists; and enhanced cooperation between the Prosecutor General’s Office and representatives of the labor movement.
• Establishing an Administration-wide Task Force to Address Localization Barriers to Trade. USTR established an Administration-wide task force to find new and better ways to address localization barriers to trade. Localization barriers to trade present significant market access obstacles to U.S. exports, such as: requiring goods to be produced locally; providing preferences for the purchase of domestically-manufactured or produced goods and services; and requiring firms to transfer technology in order to trade in a foreign market. Such measures distort trade and create an uneven playing field for all exporters. In the last few years, the use of localization barriers to trade has increased, especially in some of the world's largest and fastest growing markets. The Administration-wide task force will coordinate an all-hands-on-deck approach to tackle this growing challenge in bilateral, regional, and multilateral forums, and through trade agreements, enforcement, and policy advocacy.
• Launching a Regional Trade and Investment Partnership with the East African Community (EAC). USTR led the Administration’s development of a new Trade and Investment Partnership with the East African Community, securing agreement in June on a four-pronged approach to pursue an investment treaty, a trade facilitation agreement, continued trade capacity building assistance, and a commercial dialogue. This new partnership will build on the foundations of existing trade and investment mechanisms, including the African Growth and Opportunity Act (AGOA), and the U.S.-EAC Trade and Investment Framework Agreement (TIFA). Activities outlined in this agreement will help to promote EAC regional integration, economic growth, and expand and diversify U.S.-EAC trade and investment. They could also serve as building blocks towards a more comprehensive trade agreement over the long term.
• Implementing the Middle East/North Africa Trade and Investment Partnership. As part of the Administration’s strategy to foster continued progress and development across the Middle East and North Africa (MENA), USTR undertook a number of initiatives to promote economic growth and stability through increased regional trade and investment integration. For example, with Morocco, the United States signed agreements on trade facilitation, foreign investment principles, and information and communication technology services trade principles. USTR is seeking to make progress on similar initiatives with Jordan, Egypt, and Tunisia.
• Creating a Framework to Strengthen Trade and Investment with the Gulf Cooperation Council (GCC). In September, the United States and the Gulf Cooperation Council (GCC) signed a Framework Agreement for Trade, Economic, Investment and Technical Cooperation. The Agreement established a Joint Committee to discuss areas where both the GCC and the United States share mutual interests, including considering opportunities for enhancing economic, commercial, investment and technical cooperation, fostering their economic relations and increasing the volume of trade and investment between them. The GCC, a key strategic U.S. partner in the Middle East and North Africa region, is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The GCC countries, together, ranked tenth as an export market for the United States in 2011, with U.S. goods exports to the region totaling nearly $38 billion.
• Designating South Sudan Eligible for Trade Benefits under GSP and AGOA. This year, President Obama added South Sudan to the lists of countries eligible for trade benefits under GSP and AGOA, respectively. Both the GSP and AGOA trade preference programs offer opportunities for the recently independent nation to use trade to boost economic development while continuing needed economic reforms.
• Strengthening Trade with South Africa through an Enhanced Trade and Investment Framework Agreement (TIFA). In June, the United States and South Africa signed a new TIFA, amending the previous agreement signed in 1999, to deepen the bilateral trade and investment relationship. The amended TIFA will provide for regular dialogue on a full spectrum of topics, including barriers to U.S. exports that have been identified. It will also promote new U.S. investment that is critical to South Africa’s economic development and help to increase and diversify two-way trade between the United States and South Africa, which was valued at $22 billion in 2011.
• Supporting WTO Accession for the Lao People’s Democratic Republic (PDR). The United States provided extensive technical assistance through USAID to support Lao PDR’s WTO accession negotiations, which Lao PDR successfully concluded with WTO Members in October. Pending Lao PDR’s completion of domestic procedures and formal WTO accession, the United States looks forward to enhancing the bilateral trade and investment relationship, as reflected in the agreement in principle on bilateral market access that was signed by both countries last December.
• Supporting WTO Accession, Strong Trade Ties with Partners in Central Asia. USTR worked closely with trading partners in Central Asia, including Afghanistan, Kazakhstan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, to push for reforms and better coordination and collaboration of trade and investment policies in Central Asia. In addition to strengthening the U.S.-Central Asia Trade and Investment Framework Agreement (TIFA), USTR established a dialogue with each of our Central Asia partners on WTO accession and coordinated U.S. government efforts to provide technical assistance in support of those accession efforts. In particular, the United States welcomed the WTO General Council’s approval in December of the terms for Tajikistan’s membership in the WTO.
Developing Inclusive Trade Policy through Dynamic Communications and Enhanced Public Engagement
USTR’s extensive outreach to diverse stakeholders informed and improved many job-supporting trade initiatives this year. Creative new approaches enhanced USTR’s public engagement and helped to address important issues appropriately with both trading partners and concerned citizens.
• Visiting Communities Across the Country to Discuss Trade, Share Ideas, and Listen to Concerns. Ambassador Kirk traveled throughout the United States in 2012 to engage with and hear from the American people directly about various USTR initiatives including the TPP negotiations, trade enforcement activities, and the National Export Initiative. Ambassador Kirk visited a New Balance shoe factory in Norridgewock, Maine to talk to workers about the TPP, and traveled to Pittsburgh, Pennsylvania to tour economic development sites and meet with the United Steelworkers. Over the past 4 years, Ambassador Kirk has made increased domestic outreach a central element of the Obama Administration’s inclusive approach to developing balanced trade policy. Educating stakeholders and gathering input from a wide range of perspectives, the Ambassador traveled to 45 cities in 26 states to broaden the national conversation about trade, exports, and jobs.
• Holding Hundreds of Meetings with Congress and Stakeholders on TPP. This year, USTR held hundreds of meetings with Members of Congress and staff to provide information and obtain input on the Trans-Pacific Partnership (TPP). USTR also held more than 350 meetings with a wide range of stakeholders regarding TPP. Such extensive outreach helped USTR continually refine its negotiating positions and develop new proposals on such issues as related to treatment of State-owned enterprises, the sanitary and phytosanitary standards and other regulatory issues, the digital economy, intellectual property, environment, labor, small- and medium-sized enterprises, and development.
• Expanding Stakeholder Participation at TPP Negotiating Rounds. The United States hosted three rounds of TPP negotiations in Dallas, Texas in May; San Diego, California in July; and Leesburg, Virginia in September. At each negotiating round, USTR continued to expand opportunities for stakeholders to share their views with trade negotiators in person. New “Direct Stakeholder Engagement Forums” at the U.S.-hosted 12th, 13th, and 14th rounds of TPP negotiations enabled representatives of industry, non-governmental organizations, academia, and the general public to meet directly with negotiators to discuss specific TPP issues. Based on stakeholder feedback, USTR also made arrangements to enable stakeholders to make formal presentations to negotiators as well as to receive briefings from chief negotiators at each round.
• Holding Public Hearings on New Entrants to the TPP Negotiations. USTR held two separate public hearings in September regarding the entry of Mexico and Canada, respectively, into the TPP negotiations. This supplemented input received through Federal Register Notices and followed an extensive period of domestic consultations with Congress and diverse stakeholders. Ongoing public input continues to inform and refine U.S. negotiating positions with current TPP participants, as well as bilateral discussions with potential future TPP entrants.
• Proposing New Copyright Limitations and Exceptions in the TPP. Informed by input from a wide range of stakeholders, the United States complemented its strong intellectual property rights proposals in the Trans-Pacific Partnership with a new proposal that would, for the first time in any U.S. trade agreement, obligate Parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. These principles are critical components of the U.S. copyright system, and appear in both our law and jurisprudence.
• Coordinating Direct Contact with State Governments and the Private Sector in the United States and India. To deepen the bilateral trade relationship between the United States and India and address important stakeholder concerns, USTR increased contact between state and federal governments and the private sector in both countries. In India, USTR established and strengthened relationships with senior state government officials in Tamil Nadu, Maharashtra, Karnataka, and Andhra Pradesh provinces. In the United States, USTR and the Commerce Department assisted the state governments of Delaware, Maryland, and Virginia with gubernatorial trade missions to India.
• Building the Small Business Network of the Americas. At the Summit of the Americas in Colombia in April, President Obama announced the creation of the Small Business Network of the Americas (SBNA). USTR provides critical support for this interagency initiative to link U.S. Small Business Development Centers across the United States with a growing network of counterpart small business centers in Central America and the Dominican Republic, Mexico, Panama, Colombia and others. Through online trade platforms and business competitions, the network is increasing the ability of small businesses in the United States to export and strengthen international business-to-business connections throughout the region.
• Helping Small Businesses in the United States and European Union Take Advantage of Transatlantic Trade. Through the Transatlantic Economic Council, USTR, the U.S. Department of Commerce and U.S. Small Business Administration partnered with colleagues from the European Commission to convene two U.S.-EU Small- and Medium-Sized Enterprise (SME) Workshops in Rome, Italy in July and Washington, DC in December. These workshops brought together U.S. and EU government officials and small business owners to address trade barriers affecting small business, exchange best practices, and facilitate increased small business participation in transatlantic trade. U.S. small companies from around the country including the Industry Trade Advisory Committee for Small and Minority Business (ITAC 11) and members of the District Export Councils participated in the discussions with the EU. As a result of the workshops, the U.S. and EU concluded a memorandum of understanding on SME trade promotion cooperation in December.
• Bolstering Trade Communications through Enhanced Social Media and Web Features. USTR’s blog and twitter page has become the hub for daily updates and readouts from TPP negotiators, keeping stakeholders informed on the latest developments. An increased focus on developing the USTR Flickr page has helped to illuminate the content on the USTR homepage and in weekly newsletters. To celebrate USTR’s 50th anniversary, USTR Public Affairs staff built www.ustr.gov/50, a one-stop-shop for 50th anniversary videos, photos, events, and information on USTR history. USTR continues to explore new social media platforms such as Tumblr, and welcomes public feedback and ideas for improving the trade communications user experience.
Together with Congress, partner agencies, and a wide range of stakeholders, USTR developed and deployed U.S. trade policy to support additional exports and jobs for American businesses, workers, and families.
“From day one, President Obama has pursued a thoughtful and comprehensive approach to trade that advances U.S. interests and reflects our values. We’ve used every means available – and created new tools as necessary – to secure a level playing field for American exporters to compete and win in world markets. In the process, we’ve proven that trade can be a balanced part of our economic portfolio, helping to increase exports and support jobs, and we look forward to doing even more in the future,” said Ambassador Kirk.