Localization Barriers to Trade
In the last few years, a growing number of America’s trading partners have imposed what are called “localization barriers to trade” - measures designed to protect, favor, or stimulate domestic industries, service providers, and/or intellectual property (IP) at the expense of goods, services, or IP from other countries. Localization barriers are measures that can serve as disguised trade barriers when they unreasonably differentiate between domestic and foreign products, services, IP, or suppliers, and may or may not be consistent with WTO rules. Examples of localization barriers include:
- Local content requirements, i.e., requirements to purchase domestically-manufactured goods or domestically-supplied services
- Subsidies or other preferences that are only received if producers use local goods, locally- owned service providers, or domestically-owned or developed IP, or IP that is first registered in that country;
- Requirements to provide services using local facilities or infrastructure;
- Measures to force the transfer of technology or IP ;
- Requirements to comply with country- or region-specific or design-based standards that create unnecessary obstacles to trade
- Unjustified requirements to conduct or carry out duplicative conformity assessment procedures in-country.
When foreign goods, services, or IP are either disadvantaged in a market compared to domestic goods, services, or IP, or when they’re kept out of the market altogether, that can distort trade, discourage foreign direct investment, and push other trading partners to impose similarly detrimental measures. And, consequently, often over the long term, these measures can actually stand in the way of the economic growth and competitiveness objectives that they were intended to achieve.
For these reasons, it has been longstanding U.S. trade policy to advocate strongly against localization barriers and instead encourage trading partners to pursue policy approaches that help their economic growth and competitiveness without discriminating against imported goods or services.
Now, USTR has established the Trade Policy Staff Committee Task Force on Localization Barriers to Trade to develop and execute a more strategic and coordinated approach to address localization barriers. This work will build upon USTR initiatives already underway, including those that are seeking to address localization barriers through binding trade agreements, enforcement, and advocacy. It will promote global-level policy approaches that offer better ways to stimulate job creation and economic growth. The Task Force will pursue this mission through a variety of bilateral, regional, and multilateral forums, including the WTO, APEC, OECD, and the Trade and Investment Framework Agreement dialogues with other countries. It will also work closely with U.S. industry and other stakeholders, as well as with trading partners around the world, to carry out its mission and reduce market access challenges posed to U.S. goods, services, and IP by localization barriers.