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The 2010 National Trade Estimate Report: Key Elements


On March 31, 2010, United States Trade Representative Ron Kirk delivered to Congress the National Trade Estimate Report, required by statute to describe significant barriers to U.S. trade and investment faced in the last year as well as the actions being taken by the Office of the U.S. Trade Representative (USTR) to address those barriers.  Key barriers noted in this year's report include the following:


Industrial Policies:  China's industrial policies limit market access by non-Chinese origin goods by protecting favored sectors and industries, using tools like standards, local content rules, and government procurement regulations.  One example involves China's so-called "indigenous innovation" policies, which, among other things, provide preferences to products containing Chinese-developed IP for government procurement purposes.

Inadequate IPR Enforcement: In China, sales of infringing goods displace legitimate goods, and reduce U.S. access to China's market and other markets affected by China's infringing exports.  Inadequate IPR enforcement affects a wide range of products, including films, music, publishing, software, pharmaceuticals, chemicals, information technology, consumer goods, industrial goods, food products, medical devices, electrical equipment, automotive parts, clothing and footwear.

Services Restrictions:  China maintains prohibitions on foreign participation, restrictive licensing systems, foreign equity limitations, restrictions on scope of business and other measures that limit or block market access in a variety of services sectors.  One example involves the telecommunications sector, where China has not approved any new suppliers of basic telecom services since joining the WTO in 2001 and maintains a web of restrictive policies that severely limits access to its value-added sector.


WTO Information Technology Agreement: The EU imposes duties on certain high-tech products (set-top cable and satellite boxes that can access the Internet, LCD computer monitors, and multifunction digital machines) covered by its duty-free commitments under the WTO Information Technology Agreement (ITA).  After consultations failed to resolve the dispute, the United States, Japan, and Chinese Taipei made a joint request for the establishment of a WTO dispute settlement panel to determine whether the EU is acting consistently with its WTO obligations.  A panel was established on September 23, 2008 and is expected to issue its report in the near future.

Government Support for Airbus: Over many years, the EU and the governments of France, Germany, Spain, and the United Kingdom have provided several billions of dollars in launch aid and other forms of subsidies to their Airbus-affiliated companies to aid in the development, production, and marketing of Airbus large civil aircraft.  These governments have financed between 33 percent and 100 percent of the development costs for all Airbus aircraft models (launch aid) and have provided other forms of support, including equity infusions, debt forgiveness, debt rollovers, infrastructure support, and marketing assistance.  In recent months, certain EU member State governments have announced their intentions to provide billions more in launch aid for the new Airbus A350 aircraft, even though Airbus has barely begun to repay the financing it received for the A380.  In 2004, the United States initiated dispute settlement proceedings in the WTO against EU aircraft subsidies.  The WTO panel considering the dispute issued a confidential version of its final report to the parties on March 23.


Tariffs: India maintains a system of cascading tariffs, taxes and other import charges that taken together are often cost-prohibitive.  India's tariff regime is characterized by pronounced disparities between bound rates (i.e., the rates that under WTO rules generally cannot be exceeded) and applied rates (i.e., the actual rates charged), and the average applied rate is among the highest in the world.  Furthermore, India's tariff schedule is not publicly available in one transparent, easily accessible location, which imposes significant burdens on importers.

Legal and Regulatory Issues: India's legal and regulatory regime lacks transparency across all sectors.  U.S. companies report unnecessary burdens, bureaucratic delays, discrimination and corruption as a result of unclear and inconsistent implementation of India's trade and investment rules.  Problems are encountered across all sectors, including government procurement, the tariff structure, import requirements, and investment policies.


Pharmaceuticals:  Indonesia continues to impose marketing approval requirements on pharmaceuticals that force foreign pharmaceutical companies to manufacture their products in Indonesia if they want to sell their products there.  This requirement will drive foreign pharmaceutical companies out of the Indonesian market as existing authorizations expire and new approvals are not granted.

Telecommunications Local Content Requirements: Also in Indonesia, the Ministry of Communication and Information is implementing new decrees requiring telecommunications operators to expend a certain percentage of their capital and operating expenditures on locally produced goods and services.


Barriers to a Level Playing Field in Insurance, Banking, and Express Delivery: U.S. companies face an unlevel playing field in Japan's insurance, banking, and international express delivery sectors in light of preferential treatment given to Japan Post by the Japanese government.  Examples of advantages in the insurance sector include preferential supervisory tretment given to Japan Post Insurance over its private sector competitiors, and preferential access for Japan Post Insurance to distribute its products through the Japan Post network.  As Japan considers further reforms to Japan Post, while neutral on whether Japan Post should be privatized, the United States continues to urge Japan to fully resolve issues of preferential treatment and establish a level playing field, consistent with its international obligations.


Restricted Market Access for Autos: Market access for U.S. autos is restricted by Japan and Korea through a variety measures, leading to very low market share for U.S. and other imported autos.  In the case of Korea, these measures include tariffs, standards, and discriminatory taxes.  The pending KORUS FTA would address many of the tariff, tax, and standards issues, and we are consulting with Congress and U.S. stakeholders to develop proposals for addressing outstanding concerns with the agreement and further leveling the playing field for U.S. autos.  In Japan, a variety of non-tariff barriers have impeded access, including a lack of transparency in the process of certifying for import new technology vehicles for testing and demonstration purposes.  In 2009, Japan also implemented its "cash for clunkers" program in a way that excluded many U.S. autos.  Although improvements were made to the program in early 2010, barriers still remain.


Port procedures: In Kenya, numerous bureaucratic procedures at the Port of Mombasa significantly increase the cost of imported goods.  Importers are subjected to excessive inspection and clearance procedures by multiple agencies including customs, police, ports, and standards inspection agencies. In Nigeria, importers report erratic application of customs regulations, lengthy clearance procedures, high berthing and unloading costs, and corruption as among the problems that create delays and high costs at Nigerian ports.


Automotive Policies: Malaysia continues to implement a wide range of import restrictions, foreign investment restrictions, and subsidy programs to support its automotive sector and protect it from foreign competition.


Lack of competition in the telecommunications sector: The United States requested a WTO dispute settlement panel in 2002 to address anticompetitive action in cross-border services and in April 2004 the panel agreed with the United States that Mexico's international telecommunications rules were inconsistent with Mexico's WTO obligations.  Mexico complied with the panel's report in 2005.  Nevertheless, weak competition rules in Mexico's domestic market continue to affect U.S. interests, including with respect to cross-border services, with Mexico the number one recipient of all outbound international traffic.  USTR continues to monitor the Mexican government's progress in adopting dominant-carrier rules, which the dominant carriers continue to seek to thwart.


Import bans: Nigeria continues to ban certain imports, citing the need to protect local industries.  Although the number of items on the import prohibition list has been reduced significantly in recent years, 26 items remain banned for import, including eggs, pork, beef, frozen poultry, refined vegetable oil and fats, certain textile products, and a variety of prepared food products. 


IPR Protection: Russia continues to delay implementation of some of its commitments in the November 2006 United States-Russia bilateral IPR agreement, including commitments to provide stronger enforcement against Internet piracy, enact protections against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, and strengthening border enforcement. Of particular concern, recent amendments to Russia's Law on Medicines failed to include agreed protection against unfair commercial use of undisclosed data.

Market Access for Goods and Services: Russia maintains a wide range of barriers to goods, services, and investment.  Products affected run the gamut from aircraft to pharmaceuticals to agricultural machinery and products.  U.S. service providers face restrictions in several sectors, including financial services and telecommunications.  USTR and other agencies are engaged with Russia, both bilaterally and in the multilateral negotiations on Russia's accession to the WTO, to obtain better access and elimination of these barriers.


Antidumping: Transparency and due process remain issues with respect to the South African government's administration of antidumping laws and regulations.  As of the end of 2009, South Africa maintained antidumping duties on three products from the United States, including chicken meat portions.  U.S. poultry producers have raised concerns about the process through which the antidumping measures on chicken meat were originally imposed and then extended.


Customs: The United States continues to have serious concerns about the lack of transparency of the Thai customs regime, the inconsistent application of Thailand's transaction valuation methodology and repeated use of arbitrary values by the Customs Department.