Trade Remedies Archives - WITA http://www.wita.org/atp-research-topics/trade-remedies/ Thu, 22 Aug 2024 21:11:59 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.1 /wp-content/uploads/2018/08/android-chrome-256x256-80x80.png Trade Remedies Archives - WITA http://www.wita.org/atp-research-topics/trade-remedies/ 32 32 How ‘Economic Security’ is Re-shaping Presidential Power /atp-research/economic-security-power/ Tue, 16 Jul 2024 15:12:49 +0000 /?post_type=atp-research&p=49492 The Biden administration’s recent decision to raise tariffs on Chinese goods ranging from electric vehicles and advanced batteries to medical equipment came as little surprise in an election year. The White House described the move...

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The Biden administration’s recent decision to raise tariffs on Chinese goods ranging from electric vehicles and advanced batteries to medical equipment came as little surprise in an election year. The White House described the move as one that would create “good jobs in key sectors that are vital for America’s economic future and national security.” This latest development followed the Trump administration’s original imposition of tariffs on other products from China in an effort to stop Beijing’s theft of sensitive technologies and intellectual property. Now, several years on, it is clear that imposing tariffs was only one exercise of the executive branch’s foreign commercial power – and one of an increasing number of tools that the executive branch justifies by linking foreign commerce issues to U.S. security.

Indeed, officials from both the Trump and Biden administrations have invoked economic security as a reason for action across a wide range of policy issues. In addition to tariffs on goods from China and on steel and aluminum, take the proposed outbound investment screening mechanism, the Trump administration’s efforts to force a sale of TikTok, or the extensive new export controls, as obvious examples. The justifications reflect a broader conversation on security that is now pervasive in trade policy circles. Compare the U.S. Trade Representative’s Annual Report published in 2016 to the version published this March. The 2016 report mentioned security 25 times, frequently in the context of food security. The 2024 report mentioned security 129 times. And the 2024 Report added a section on “enhancing economic security,” just one example of the securitization of U.S. foreign affairs, especially in Washington’s relationship with Beijing.

In a forthcoming article, we argue that this linking of “foreign commerce” to “economic security” in U.S. policymaking has had the effect of dangerously, and often erroneously, intermingling authority that Congress has delegated to the executive branch with the president’s constitutional powers to oversee foreign affairs. The Constitution assigns plenary authority over taxes, tariffs, and commerce – including, explicitly, foreign commerce – to Congress. The Constitution assigns other kinds of foreign affairs powers, such as the role of commander-in-chief of the armed forces or the power to negotiate treaties, to the president. The executive branchs authority over foreign commerce began as a statutory authority, but over time the executive, with some backing from the courts, has increasingly claimed that such authority has constitutional dimensions. Constitutional claims over the presidents non-commercial foreign affairs authority have begun to engulf understandings of Congresss plenary authority over the regulation of commerce with foreign nations – from the perspective of both the executive branch as well as the courts. 

Assertions of Executive Branch Power in Foreign Commerce

Officials from both the Biden and Trump administrations have advanced novel arguments before the courts asserting this point: foreign commerce is part of security, and therefore the president has his own constitutional foundations for action in the domain of commerce. In a case concerning the Trump administration’s tariffs on steel and aluminum, the government argued that “[t]he Presidents coexistent constitutional foreign affairs and national security responsibilities compel the conclusion that Congress did not enact an unconstitutional statute.” In the context of a case about tariffs, this claim is extraordinary. The text of the Constitution expressly allocates the power to tax, as well as the power to regulate foreign commerce, to Congress exclusively. It makes no difference that the statute in question – Section 232 of the Trade Expansion Act of 1962 – invites the president to evaluate a threat to national security as a predicate to exercising purely delegated power to impose taxes. Such an exercise of delegated power does not open the door to his constitutional authority; rather, it draws on his expertise. 

The idea that statutory interpretation – which, as the Supreme Court has emphasized, is the crux of nondelegation analysis – would be different because the president has constitutional authority over other kinds of foreign affairs issues represents a significant effort to expand extra-textual presidential foreign affairs powers into areas reserved to Congress. And this argument was not a one-off. Although courts have not embraced the executive branch’s most expansive arguments, they have usually upheld challenged action that the executive branch has defended in these terms. For example, in Transpacific Steel LLC v. United States, the government defended the president’s decision to impose additional tariffs under Section 232 after the statutory deadline for presidential action by arguing that the president has inherent authority to modify his actions “when the President is exercising powers that are quintessentially executive in nature” such as “foreign policy and national security.” Although the Federal Circuit did not embrace this expansive argument explicitly, it interpreted Section 232 to allow the president to modify his actions after the statutory deadline. In this way too, disputes over foreign commerce are coming to resemble those over national security, where the president (almost) always wins.

Congress Can Restore the Balance

Given that the courts usually have not been willing to course-correct in this area, it falls on Congress to restore the balance in its favor. And rightly so; the complex geopolitical problems of today may require more guidance from our elected leaders. Existing delegations to the executive branch – which, like Section 232 and Section 301 of the Trade Act of 1974, often date from the Cold War – are imperfect instruments for the set of geoeconomic challenges currently facing the United States. Congress should reconsider these authorities with attention to the domestic, economic, and foreign policy challenges of this century, not the last. To the extent “economic security” is a central element of U.S. foreign and domestic policy, the many constituencies in that policy space should press for Congress’s attention. Our article outlines three potential paths to serve that end. 

First, we argue that Congress should amend a variety of statutes (such as Section 232 and Section 301) to sunset the president’s economic security actions after 90 or 180 days without the possibility of renewal unless Congress authorizes their extension. As the cases discussed above illustrate, the president has used his constitutional authority over foreign affairs to push the limits of broadly-worded delegations, and to deflect efforts to persuade courts to read such delegations narrowly for separation of powers reasons. A clear statutory withdrawal of tariff authority would blunt the president’s efforts, in effect, to constitutionalize control of foreign commerce and to wage trade war. It would still enable the president to act quickly in the face of an emergency, but without sacrificing Congress’s role. During the Trump administration, a number of bills were introduced that would have curtailed the president’s authorities in ways similar to those we propose, but none made it out of committee. Given the uncertainty created by this year’s presidential election – in which former President Trump has promised even more expansive uses of executive authority, including an across-the-board 10 percent tariff on imported products if reelected – Congress may be more disposed to enact such legislation in 2024, regardless of which candidate occupies the White House in 2025. 

Second, Congress should prohibit the executive branch from relying on an international agreement it has negotiated as the legal basis under which any good or service is imported into the United States, exported from the United States, or regulated while in the United States, unless Congress has either explicitly authorized the agreement in advance or approved it after its conclusion. Trade agreements and their negotiations have increasingly become a flashpoint for tension between the executive branch and Congress. In recent decades, the executive branch has concluded hundreds of commercial agreements – often with significant geopolitical and foreign affairs implications – that were neither authorized nor approved by Congress. Congress should clarify and reform the executive branch’s trade agreement authorities by imposing bright-line rules via statute. While the executive branch might object that such a statute interferes with its constitutional authority to negotiate with foreign countries, our proposal is carefully drawn to limit only the domestic effects of agreements, not the president’s authority to negotiate the agreements in the first place – an approach that falls well within Congress’s plenary constitutional authority over commerce.

Third, and finally, Congress should eliminate the U.S. Court of Appeals for the Federal Circuit’s exclusive jurisdiction over appeals in most trade cases and transfer that jurisdiction to the U.S. Court of Appeals for the D.C. Circuit. At present, the Federal Circuit is the appellate court for final decisions from the U.S. Court of International Trade. In that role, it has been responsible for the decisions we discuss above upholding broad exercises of authority by the executive branch. But the Federal Circuit is primarily an intellectual property court. Indeed, one member of the court has estimated that intellectual property cases consume more than half the court’s docket and more than 80% of its time. Given that international trade law cases in federal court are primarily statutory interpretation and administrative law cases, the D.C. Circuit makes more sense as a forum for appeals. As the premier administrative law circuit in the country, running appeals through the D.C. Circuit would force the bar and the Court of International Trade to approach these administrative law cases in the same manner as other administrative law cases – and that would enhance review of the executive’s activities in a way that is currently lacking. 

Judicial Review Without Chevron

A shift to the D.C. Circuit would be especially well-advised in light of the Supreme Court’s recent line of cases cutting back on administrative agencies’ authority. The most recent such decision is Loper Bright Enterprises v. Raimondo, which eliminates “Chevron deference.” Under the “Chevron doctrine,” courts deferred to an agency’s reasonable interpretation of an ambiguous statute. The Chevron framework applied generally, not specifically to trade statutes, but agencies administering trade statutes regularly relied on Chevron deference to defend their interpretations. Chevron’s demise leaves the scope of deference to agencies up to the federal courts to determine going forward. 

The Supreme Court’s opinion suggests that lesser deference, such as when a court uses an agency interpretation as an aid in the court’s decision as to a statute’s correct interpretation, might continue to be appropriate. In trade cases, however, the government is almost sure to double down on its constitutional arguments, invoking “foreign affairs exceptionalism” – “the belief that legal issues arising from foreign relations are functionally, doctrinally, and even methodologically distinct from those arising in domestic policy” – to try to shield its interpretations of trade authorities from judicial review. The Federal Circuit’s record in trade cases suggests that it may be open to these arguments, creating special deference for trade statutes (over which, again, it often has exclusive jurisdiction), while other circuits develop a less deferential standard based on Loper Bright for other kinds of regulation. 

An early test of how the Federal Circuit will handle the Supreme Court’s new administrative law doctrines in these foreign commerce contexts is likely to come in HMTX Industries v. United States (in full disclosure, one of us has filed an amicus brief in HMTX in support of the challengers). That case asks whether Section 301 – which authorizes, and sometimes mandates the U.S. Trade Representative to take a variety of measures to counter unjustifiable, unreasonable, or discriminatory actions by foreign countries that burden U.S. commerce – allows the executive branch to increase the tariffs on products from China without the investigation usually required by the statute. The government asserts that a new investigation is unnecessary because these new tariffs address the tariffs China imposed on U.S. goods in response to the Trump administration’s Section 301 tariffs, which were designed to combat China’s intellectual property theft. Despite the Supreme Court’s recent change of direction with regard to agency authority, the government has continued to argue that the decision to expand the tariffs without a new investigation is subject to only limited review. 

As “economic security” has become an organizing concept for U.S. foreign commerce policy, the executive branch has drawn on this blurry policy space to argue that statutory limits on its foreign commercial authority do not bind it. Instead, it has buttressed its delegated authority with claims of independent constitutional authority over commercial matters like tariffs. And unlike Founding Era courts, todays judiciary has often accepted these claims. Clearly, some members of Congress have different views on how to address economic security concerns. Congress has grabbed some low-hanging fruit by enacting legislation that reclaims some of its authority over trade agreements and there are signs of bipartisan interest in other trade actions. But whether Congress will intervene to address the executive’s efforts to use economic security to expand its control over commerce remains to be seen.

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To read the full article published by Just Security, click here.

To read the authors’ original source paper, click here.

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Section 301 of the Trade Act of 1974 /atp-research/section-301-trade-act-1974/ Tue, 15 Jun 2021 14:52:03 +0000 /?post_type=atp-research&p=18223 Section 301 of the Trade Act of 1974 (19 U.S.C. §2411) grants the Office of the United States Trade Representative (USTR) a range of responsibilities and authorities to investigate and...

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Section 301 of the Trade Act of 1974 (19 U.S.C. §2411) grants the Office of the United States Trade Representative (USTR) a range of responsibilities and authorities to investigate and take action to enforce U.S. rights under trade agreements and respond to certain foreign trade practices. Prior to the Trump Administration and since the conclusion of the Uruguay Round of multilateral trade negotiations in 1995, which established the World Trade Organization (WTO), the United States has used Section 301 authorities primarily to build cases and pursue dispute settlement at the WTO. However, former President Trump was more willing to act unilaterally under these authorities to promote what its Administration considered to be “free,” “fair,” and “reciprocal” trade. The recent use of Section 301 has been the subject of congressional and broader international debate.

The Trump Administration attributed this shift in policy to its determination to close a large and persistent gap between U.S. and foreign government practices that it said disadvantaged or discriminated against U.S. firms. In addition, it justified many of its tariff actions—particularly those against China—by pointing to alleged weaknesses in WTO dispute settlement procedures and the inadequacy or nonexistence of WTO rules to address certain Chinese trade practices. It also cited the failure of past trade negotiations and agreements to enhance reciprocal market access for U.S. firms and workers.

While the Biden Administration is reportedly reviewing the previous administration’s trade policies, most analysts do not expect any immediate changes to Section 301 actions or to the tariff exclusions on U.S. imports from China.

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To view the full report from the Congressional Research Service, please click here.

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Protectionism or National Security? The Use and Abuse of Section 232 /atp-research/abuse-of-section-232/ Tue, 09 Mar 2021 15:45:13 +0000 /?post_type=atp-research&p=26601 President Biden took office at the height of modern American protectionism. The trade policy legacy he inherited from the Trump administration puts the United States at a crossroads. Will Biden go...

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President Biden took office at the height of modern American protectionism. The trade policy legacy he inherited from the Trump administration puts the United States at a crossroads. Will Biden go down the problematic path of executive overreach like his predecessor, or will he forge a new path? We may not need to wait long to find out. In his first trade action, President Biden reinstated tariffs on aluminum from the United Arab Emirates under Section 232 of the Trade Expansion Act of 1962, which authorizes the president to impose tariffs when a certain product is “being imported into the United States in such quantities or under such circumstances as to threaten to impair national security.” Though infrequently used in the past, Section 232 was a favored trade tool of the Trump administration, which was responsible for nearly a quarter of all Section 232 investigations initiated since 1962. While Congress has constitutional authority over trade policy, Section 232 gives the president broad discretion to enact protectionist measures in the name of national security.

Why is this law a problem? First, the statute’s lack of an objective definition of “national security” permits essentially anything to be considered a threat, regardless of the merits. Second, the law’s lack of detailed procedural requirements encouraged the Trump administration to cut corners in applying the law, thus breeding cronyism and confusion. Third, President Trump took advantage of the law’s ambiguity to shield key Section 232 findings from Congress and the public, undermining both transparency and accountability.

The Trump administration’s abuse of the rarely used Section 232 has allowed the statute to become an excuse for blatant commercial protectionism, harming American companies and consumers and our security interests. It’s unclear whether the Biden administration will continue this troubling trend or seek reform. The best course of action would be the latter: Biden should avoid using Section 232 and support congressional efforts to rein in presidential power, thus ensuring an end to the calamitous episodes that were common during the Trump era.

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To read the original policy analysis from the CATO Institute, please click here

 

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Report on the United Kingdom’s Digital Services Tax /atp-research/uk-digital-services-tax/ Wed, 13 Jan 2021 19:49:41 +0000 /?post_type=atp-research&p=28608 The Organisation for Economic Co-operation and Development (OECD) and G20 countries began negotiations in 2013 to address tax matters related to the digitalization of the economy as part of a...

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The Organisation for Economic Co-operation and Development (OECD) and G20 countries began negotiations in 2013 to address tax matters related to the digitalization of the economy as part of a broader review of international tax rules. Additional multilateral negotiations in that area are ongoing at the OECD.

On July 22, 2020, despite ongoing negotiations at the OECD, the United Kingdom adopted a Digital Services Tax (DST). The UK’s unilateral DST applies a two percent tax on the revenues of certain search engines, social media platforms and online marketplaces. The UK DST applies only to companies with “digital services revenues” exceeding £500 million and “UK digital services revenues” exceeding £25 million. Companies became liable for the DST on April 1, 2020.

On June 2, 2020, the U.S. Trade Representative initiated an investigation of the UK DST under section 302(b)(1)(A) of the Trade Act of 1974, as amended (the Trade Act). Section 301 of the Trade Act sets out three types of acts, policies, or practices of a foreign country that are actionable: (i) trade agreement violations; (ii) acts, policies or practices that are unjustifiable (defined as those that are inconsistent with U.S. international legal rights) and burden or restrict U.S. commerce; and (iii) acts, policies or practices that are unreasonable or discriminatory and burden or restrict U.S. commerce. If the Trade Representative determines that an act, policy, or practice of a foreign country falls within any of the categories of actionable conduct, the Trade Representative must determine what action, if any, to take.

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To read the full report by the Office of the U.S. Trade Representative, please click here.

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Human Rights in China /atp-research/human-rights-in-china/ Wed, 13 Jan 2021 18:08:30 +0000 /?post_type=atp-research&p=25926 Over thirty years after the June 1989 Tiananmen Square crackdown, the Communist Party of China (CCP) remains firmly in power. The U.S. Department of State describes the People’s Republic of...

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Over thirty years after the June 1989 Tiananmen Square crackdown, the Communist Party of China (CCP) remains firmly in power. The U.S. Department of State describes the People’s Republic of China (PRC) as an “authoritarian state.” PRC leaders have maintained political control through a mix of repression and responsiveness to some public preferences, delivering economic prosperity to many citizens, co-opting the middle and educated classes, and stoking nationalism to bolster CCP legitimacy. The party is particularly vigilant against unsanctioned collective activity among sensitive groups, such as religious groups and ethnic minorities, labor organizations, political dissidents, and human rights activists.

The U.S. government employs various policy tools to support human rights in China (see “Selected U.S. Policy Tools” below). Since 2019, the United States has imposed visa, economic, and trade-related sanctions and restrictions on some PRC officials and entities, particularly in response to reports of mass detentions and forced labor of Uyghurs and other ethnic minorities in Xinjiang province. These measures have been implemented pursuant to the Global Magnitsky Human Rights Accountability Act, Section 307 of the Tariff Act of 1930, Export Administration Regulations, and other authorities.

To read the full report, please click here

Human Rights in China

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Revitalizing the World Trade Organization /atp-research/revitalizing-the-wto/ Mon, 09 Nov 2020 14:51:16 +0000 /?post_type=atp-research&p=24769 All three pillars of the World Trade Organization (WTO) have played a key role in promoting “rules-based” international trade for the past twenty-five years. Negotiations: The negotiations creating the WTO...

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All three pillars of the World Trade Organization (WTO) have played a key role in promoting “rules-based” international trade for the past twenty-five years.

  1. Negotiations: The negotiations creating the WTO were a major success, leading to a broad range of new rules that prohibit members from raising tariffs beyond agreed-upon levels, restrict non-tariff barriers, and ban discriminatory trade measures. Since then, a few negotiations have helped further lower barriers, including the Trade Facilitation Agreement (TFA) and Information Technology Agreement (ITA). Today, average applied tariffs are approximately half of what they were when the WTO was created, and numerous unfair trade practices have been discontinued.2
  2. Implementation and Monitoring: The WTO recognizes that the implementation and monitoring of commitments are essential to maintaining the integrity of an effective rules-based system. Accordingly, the WTO includes mechanisms to track implementation and rules that require members to notify it of changes in trade policies and share information on trade-distorting practices (e.g., subsidies). Transparency and information sharing promote business predictability, while the discussion of trade-distorting policies often leads to their modification or abandonment before adoption.
  3. Dispute Settlement: The WTO dispute-settlement system helps resolve trade disputes to minimize unilateral action and cycles of retaliation. Many countries use the dispute-settlement system to challenge adverse measures. In most cases, the member losing the dispute changes the offending measure. In other cases, that member exercises its sovereignty and chooses not to change the policy, freely accepting the consequences (retaliatory tariffs). Additionally, many disputes are settled before litigation commences.

The world has changed considerably since the WTO’s creation. It has experienced the rise of the Internet and other advanced technologies, China’s economic expansion, greater skepticism about the benefits of trade, and greater concern about income inequality. The world has changed, and so must the WTO. At the same time, the WTO itself has not met expectations. WTO negotiations have not readily facilitated new rules or additional market-access openings, the implementation and monitoring pillar has not held countries accountable for ignoring its requirements, and the dispute-settlement system has not strictly applied the rules as negotiated. As a result, the WTO is falling far short of its promise and mandate in different ways.

WTO negotiations have failed to update international trade rules to: account for non-market economies and deal with related unfair trade practices, such as forced technology transfer and massive industrial subsidies; account for new technologies, such as the Internet; improve commitments in key areas covered in detail by free-trade agreements (FTAs), such as intellectual property and services; and fully address politically important policy issues, such as labor and the environment. WTO negotiations have also failed to substantially lower or equalize tariff treatment among major economies.

The ability of large emerging economies to self-declare “developing-country” status and avoid taking on the same commitments as competitors has compounded the challenge. Worse yet, many countries claim that trade liberalization and the WTO rules that promote it are anti-development, undermining the WTO’s core mission.

Compliance with the WTO’s implementation and monitoring function has not been widespread, with many members failing to follow the basic notification requirements necessary to ensure the transparency and predictability of trade.

WTO dispute settlement has drifted from its original design. It has failed to properly adjudicate certain disputes, including by inventing new rules without consensus and improperly applying the rules to non-market economies;  allowed the WTO Secretariat to wield too much power in decision-making; and taken too long, depriving workers and businesses of real-time solutions.

Accordingly, all three pillars require reform to ensure the WTO retains a constructive and central role in resolving disputes before they spiral out of control, and in shaping international trade rules and behavior. When the WTO is functioning properly, it provides a mechanism to enforce agreed-upon rules in a predictable manner and create new rules to protect workers and businesses. When the rules are inadequate and disputes take too long, countries are more inclined to adopt unfair practices, and may be forced to respond unilaterally to protect their interests.

WTO reform provides the quickest and most constructive path to adequately address China’s unfair trade practices. The US-China Phase One trade deal made important progress on certain structural issues, but did not meaningfully address industrial subsidies or state-owned enterprises (SOEs), and it is unlikely that China will ever address these matters bilaterally given the government’s central role in its economy. Therefore, concerted multilateral pressure that paints these policies as a threat to the global trading system as a whole is necessary to effectuate change. In many respects, the WTO provides the ideal forum for countries to work together to persuade China to change its most problematic behavior. The WTO already has a core set of principles, such as non-discrimination, that are critical to countering such practices, and an existing infrastructure for negotiating, monitoring, and enforcing those rules. The WTO’s membership is also critical—it includes many countries impacted by these issues, as well as China itself. The broad reach of the WTO will also help ensure other countries do not adopt similar non-policies.

The United States has been calling for significant WTO reform for years, and many countries have recently joined the chorus. For example, in December 2018, all Group of Twenty (G20) members endorsed the following language in the leaders’ statement: International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning.

Despite these high-level statements, WTO members have struggled to gain momentum toward tangible reform. Some blame the United States for refusing to offer specific proposals on dispute settlement, the European Union (EU) for an unwillingness to meaningfully address US concerns on this issue, China for refusing to engage on proposals related to its practices, and India for leading the fight to preserve preferential developing country status for large, emerging economies.

Regardless of who is to blame, the WTO is in crisis, and momentum for ambitious reform must be generated before the system loses its relevance. To catalyze momentum, members should quickly resolve ongoing negotiations while “thinking big” about the future and significantly raising their levels of ambition. The successful conclusion of ongoing negotiations, such as those on fisheries subsidies, will create new confidence in the WTO by demonstrating that the system is still capable of solving problems. But, negotiations will not solve the biggest problems facing the system. Therefore, even as members seek to make incremental progress, they increase their ambition with respect to the overall scope of reform needed to create a system fit for purpose in the twenty-first century and on “outside-the-box” ideas to solve some of the more intractable problems before it is too late.

Any successful WTO reform effort requires the United States and the European Union to better cooperate and coordinate. The United States and EU share common values, jointly spearheaded the creation of the original international trading system, and have both used it to promote trade-liberalizing, market-oriented policies around the globe. The economies of the United States and the EU are also equally challenged by China’s policies. If they cannot reach consensus on how to fix the WTO, it is inconceivable that the rest of the world could do so.

To this end, this paper proposes an ambitious WTO reform proposal that both the United States and the European Union should be able to endorse, and ultimately work together to promote. In particular, a joint US-EU WTO reform proposal should

  • address problems with all three pillars—negotiations, implementation and monitoring, and dispute settlement; these functions complement each other and reform is needed in all three to make the system work as a whole;
  • address the most difficult issues, including China’s unfair trade policies and how to fit a non-market economy into a system built by market economies;
    • create new rules to address issues that have emerged since the WTO was created, such as digital trade, and upgrade existing agreements, such as the intellectual property and services agreements, to the higher standards included in many FTAs;
  • include more robust commitments on politically important issues, such as labor and the environment, which are critical to regaining domestic support for trade;
  • eliminate the unfairly high tariff rates imposed by certain countries, and bring greater parity in tariff levels among major economic powers;
  • promote liberalization by all members, not just “developed” economies, while recognizing the unique challenges faced by least-developed countries (LDCs) and allowing for differential treatment predicated on fact-based need;
  • consider novel approaches to rescue the negotiating function, such as the use of plurilateral agreements that only benefit participants (non-most favored nation), or non-binding commitments for LDCs as an initial approach in certain areas;
  • increase high-level political engagement from capitals to promote greater ambition in Geneva;
  • hold countries accountable for failing to follow fundamental rules related to transparency;
  • fully address the underlying shortcomings of the dispute settlement system by
    • ensuring that adjudicators better respect the limited mandate provided by WTO members, and do not create rules to which members never agreed;
    • making institutional reforms to improve the transparency and accountability of the process, and address the imbalance in decision-making between the WTO Secretariat and the appointed adjudicators; and
    • improving the system’s efficiency so it serves as a viable “real-time” alternative to unilateral action; and
  • recognize that fixing the negotiating function is critical to fixing dispute settlement in a sustainable manner.

The will of all WTO members will ultimately be necessary to achieve the broad-based reforms envisioned in this paper, but improving cooperation and coordination between the United States and European Union is a necessary start. Section II of this paper further outlines some of the existing problems with the WTO system, while Section III details a joint US-EU reform agenda.

To download the full report, please click here.

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Clete R. Willems is a Nonresident Senior Fellow with the Atlantic Council’s GeoEconomics Center. Mr. Willems is a partner at Akin Gump Strauss Hauer & Feld, where he advises multinational companies, investors, and trade associations on international economic law and policy matters. Until April 2019, Mr. Willems was Deputy Assistant to the President for International Economics and Deputy Director of the National Economic Council.

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A Fresh Start for US Trade Policy: Unilateral Trade Liberalization through a Tariff Reform Commission /atp-research/trade-liberalization-tariff-reform/ Mon, 14 Sep 2020 13:23:26 +0000 /?post_type=atp-research&p=23407 Unilateral trade liberalization has been an underutilized tool to promote the freedom, prosperity, and global influence of Americans. For all the reasons expounded above, cleaning up the tariff code and...

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Unilateral trade liberalization has been an underutilized tool to promote the freedom, prosperity, and global influence of Americans. For all the reasons expounded above, cleaning up the tariff code and ridding the nation of these self-imposed and self-damaging taxes on international commerce would promote the US national interest. It would enhance the already considerable strengths of the United States’ dynamic market economy and its leadership as the world’s largest economy. As the acclaimed free-market economist Milton Friedman wrote more than half a century ago,

“I believe that it would be far better for us to move to free trade unilaterally, as Britain did in the 19th century when it repealed the Corn Laws. We, as they did, would experience an enormous accession of political and economic power. We are a great nation and it ill behooves us to require reciprocal benefits from China, Mexico or Europe before we reduce a tariff on products from those countries. Let us live up to our destiny and set the pace, not be reluctant followers.”

Policy models exist for overcoming the institutional barriers to unilateral trade liberalization in the United States. In the Base Realignment and Closure and the Miscellaneous Tariff Bill processes, the US government has already implemented an approach that could be used to successfully reduce and eliminate thousands of economically damaging tariffs that have been imposed either by law or by executive fiat, to the detriment of American producers and consumers alike. While the details will be a matter of compromise, a Tariff Reform Commission in the pattern of the BRAC or MTB processes would be a practical policy goal.

Embracing a process of unilateral trade liberalization would allow the US Congress and presidential administration to implement tariff reforms on a timely basis that would strengthen the US economy and aid in the fight against COVID-19 and other public health threats, while setting a powerful example for other nations. Implementing such a policy would not be an experiment based on theory alone, but the Americanization of a policy approach that has been practiced successfully by other nations for decades. It would be an agreement among Americans to act in their sovereign national interest regardless of the trade policies pursued by other nations.

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Daniel Griswold is the co-director of the Trade and Immigration Project at the Mercatus Center at George Mason University.

Donald J. Boudreaux is the senior fellow for the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics; Martha and Nelson Getchell Chair for the Study of Free Market Capitalism; a Mercatus Center Board Member; and a Professor of Economics at George Mason University

To download the full paper, please click here

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Trade Remedies: Antidumping /atp-research/trade-remedies-antidumping/ Thu, 10 Sep 2020 15:40:51 +0000 /?post_type=atp-research&p=23112 The U.S. Constitution grants to Congress the power to regulate trade with foreign nations and levy tariffs. Since 1922, U.S. law and foreign policy have favored applying tariffs and duties...

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The U.S. Constitution grants to Congress the power to regulate trade with foreign nations and levy tariffs. Since 1922, U.S. law and foreign policy have favored applying tariffs and duties equally to all trading partners. This principle, known as most-favored-nation (MFN) treatment, has been central to the rules-based global trading system since 1947.

One of the most frequently invoked exceptions to MFN treatment are three “trade remedy” laws. These laws are enforced primarily through administrative investigations of two U.S. government agencies: the International Trade Administration of the Department of Commerce (ITA) and the U.S. International Trade Commission (USITC). Trade remedy laws enable the United States to impose additional duties aimed at specific producers or countries to remedy unfair trade practices and to help domestic industries adjust to sudden surges of fairly traded goods. The three types of laws traditionally classified as “trade remedies” are:

Antidumping (AD) laws provide relief to domestic industries that have been, or are threatened with, material injury caused by imported goods sold in the U.S. market at prices that are shown to be less than fair market value. The relief provided is an additional import duty placed on the dumped imports based upon calculations made by the ITA. Antidumping orders are the most frequently used and the most controversial trade remedy.

Countervailing duty (CVD) laws give a similar kind of relief to domestic industries that have been, or are threatened with, material injury caused by imported goods that have been found to have received WTO-inconsistent government subsidies, and can therefore be sold at lower prices than similar goods produced in the United States. The relief provided is an additional import duty placed on the subsidized imports.

Safeguard (also referred to as escape clause) laws give domestic industries relief from surges of imported goods that are fairly traded if serious injury is found or is threatened to the domestic industry. The most frequently applied safeguard law, Section 201 of the Trade Act of 1974, is designed to give domestic industry the opportunity to adjust to the new competition and remain competitive. The relief provided is generally an additional temporary import duty, a temporary import quota, or a combination of both. Safeguard laws also require presidential action in order for relief to be put into effect.

Economists have generally seen antidumping laws and policies as economically inefficient. Some, however, have acknowledged the role that these economically inefficient policies have played in making trade liberalization more politically feasible by providing protection for industries that might otherwise oppose such measures. In recent years, U.S. exports have increasingly become a target of AD measures by several major emerging economies, including India and China. Antidumping laws and policies have also been at the center of dozens of trade disputes between the United States and its trading partners in the WTO. Reports issued by the WTO’s Appellate Body (AB) on the subject have been one of the primary targets of the U.S. Trade Representative’s criticisms of the AB mechanism in the broader WTO dispute settlement system. If Congress wishes to maintain a functional dispute settlement system at the WTO it may consider either directing the President to seek amendments to underlying WTO agreements such that U.S. practices are internationally compliant or direct the ITA to bring its AD policies into conformity with the AB’s interpretation of the WTO’s Antidumping Agreement.

us antidumping crs

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Report on Seasonal and Perishable Products in U.S. Commerce /atp-research/u-s-commerce-agriculture-report/ Tue, 01 Sep 2020 18:34:54 +0000 /?post_type=atp-research&p=22942 Executive Summary The Office of the United States Trade Representative (USTR), the United States Department of Agriculture (USDA), and the United States Department of Commerce (Commerce) have jointly prepared this...

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Executive Summary

The Office of the United States Trade Representative (USTR), the United States Department of Agriculture (USDA), and the United States Department of Commerce (Commerce) have jointly prepared this report outlining the Trump Administration’s plan to address threats that increased imports pose to American producers of seasonal and perishable fruits and vegetables.

Perishable fruit and vegetable producers face unique challenges because of the short window of time during which their produce retains the freshness that retailers and consumers demand. Given this narrow window of marketability, American fruit and vegetable producers’ profitability can be devastated when imports of a product surge immediately before or during the domestic growers’ marketing window for that product. This challenge is compounded when imported products are sold to the consumer at lower prices than the domestically grown produce, and particularly so if the import prices are significantly and artificially lower due to unfair trade practices.

Furthermore, while multiple regions of the United States may be suitable for growing a particular commodity, the disparate climates and temperature patterns among those regions create distinct marketing windows for each region that vary from one another. As such, different regions within the United States that grow the same seasonal commodity can be affected and potentially injured by import competition to drastically differing degrees. The various regions also may differ with regard to the sub-markets in which they primarily market their products. For example, blueberry farmers in Florida and Georgia may have to compete primarily against imports from a particular country in that region’s marketing window, Michigan blueberry farmers against a different country in their window, while blueberry farmers in the northwest in Washington and Oregon may face altogether different competitive dynamics.

Given the unparalleled variety of seasonal specialty crops grown in the United States, the differing marketing windows among regions growing those crops, and the variability of import competition for each crop, there are contrasting opinions on this matter that vary by crop and largely by region of the country. Generally, it is predominantly fruit and vegetable producers in southeastern U.S. states who contend that they are adversely affected by import competition from Mexico, whereas producers and stakeholders in California and western states generally consider foreign production to be countercyclical and beneficially complementary to domestic production in their region.

ReportSeasonalPerishableProductsUSCommerce

Wilbur L. Ross is the Jr. Secretary at the United States Department of Commerce.

Sonny Perdue is the Secretary of the United States Department of Agriculture.

Robert E. Lighthizer is the Ambassador to the Office of the United States Trade Representative 

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A global strategy for shaping the post-COVID-19 World /atp-research/a-global-strategy-for-shaping-the-post-covid-19-world/ Tue, 07 Jul 2020 21:56:26 +0000 /?post_type=atp-research&p=21801 The COVID-19 pandemic is an acute public health and economic crisis that is further destabilizing an already weakened rules-based international system. With cooperation, determination, and resolve, however, the United States...

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The COVID-19 pandemic is an acute public health and economic crisis that is further destabilizing an already weakened rules-based international system. With cooperation, determination, and resolve, however, the United States and its allies can recover from the crisis and revitalize an adapted rules-based system to bring about decades of future freedom, peace, and prosperity.

AC-A-Global-Strategy-for-Shaping-the-Post-COVID-19-World

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