On March 28, the Office of U.S. Trade Representative (USTR) released its annual National Trade Estimate Report on Foreign Trade Barriers–a long and often technical document that usually gets little fanfare. However, this year, the report referred to the “sovereign right” of all governments to “govern in the public interest.” That would allow governments to erect tariffs and other trade barriers if they asserted a public interest in doing so–a major pivot for USTR.

That astonishing move is part of a larger pattern emerging in the Biden Administration, which has adopted an approach to trade policy that goes against traditional U.S. foreign policy.

The USTR may simply be embracing a protectionist posture that supports the administration’s “Buy America” agenda. But in turning inward, the agency is abandoning the thousands of American businesses that fuel some $250 billion in goods and services trade beyond our borders. In short: the agency seems to have forgotten the “U.S.” in USTR.

The most recent decision follows a similarly baffling decision by USTR to withdraw support for crucial digital trade provisions at the World Trade Organization (WTO). These proposals–supported both by prior USTRs and many of our global allies–aimed to protect cross-border data flows, prohibit data localization mandates, and safeguard intellectual property. They advance the principles of fair trade and open markets that the U.S. has long championed, and that our innovation economy was built on. In backing away from them, the U.S. approach now resembles those of countries like China, and risks legitimizing authoritarian practices that hurt innovation and undermine fair competition.

The justification for this abrupt policy reversal is flimsy at best. Claims that digital trade rules would unfairly benefit large American technology companies at the expense of smaller ones simply defy reality. Digital trade barriers, including data localization requirements and forced disclosure of source code, disproportionately hurt smaller businesses, hindering their ability to compete on the global stage.

The USTR’s decision jeopardizes America’s leadership in shaping global trade norms and risks eroding America’s moral authority on the world stage. The USTR must stop leveraging foreign policy to aid a misguided domestic competition policy. Instead, the agency should recommit to a robust trade policy that prioritizes the interests of American businesses of all sizes.

The U.S. has a proud and successful history of leading the charge for open and fair trade. Amid growing protectionism and authoritarianism around the globe, our government must stand firm in defense of those values and interests. Robust trade policy isn’t just about economic prosperity but also about safeguarding the principles that define who we are as a nation.

The time to act is now, before irreparable damage is done to America’s standing in the global economy and the integrity of the international trading system. Otherwise, it would be an abdication of American leadership and certainly a departure from the norm. If our own leaders don’t champion American innovation wherever it takes place, who will?

Ed Brzytwa is the vice president of international trade at the Consumer Technology Association (CTA).

To read the full commentary piece as it appears on FORTUNE’s website, click here.

The post America is Mirroring China’s Tech Protectionism and Reversing Decades of Free Trade Doctrine. Here’s Why That’s Bad News for U.S. Leadership appeared first on WITA.

The release of annual federal agency reports are rarely given significant airtime beyond some select circles. This year, however, the release of the Congressionally-mandated National Trade Estimate Report (NTE) by the Office of the United States Trade Representative (USTR) and its decision to remove broad sets of barriers—including many significant measures harming operations of U.S. digital exporters—has sparked debate about the overall merits of identifying and challenging unfair trade practices abroad.

The issue surrounds the report that, under the 1974 Trade Act, USTR is required to publish to identify and analyze “significant barriers to, or distortions of” U.S. goods and services exports globally and, when possible, estimate the distortive impact they have on U.S. commerce.  This report serves as a key part of USTR’s mandate from Congress to protect U.S. businesses from unfair treatment abroad.  By chronicling the obstacles to operations and the cross-border delivery of goods and services in key foreign markets, the report lays down a marker for laws, regulations, and other policies abroad that are of concern to the United States.  

Through this process, USTR signals to the countries in question that these policies are being monitored by the United States government, are seen as problematic, and that further investigation or action—including, where appropriate, formal dispute settlement— could be forthcoming.  This is a crucial piece of USTR’s job assessing the global landscape for U.S. firms, targeting unfair treatment of U.S. goods and services exports, and addressing these barriers.  Inclusion of a barrier in the NTE does not necessarily mean enforcement action is forthcoming from USTR, but it is an indication that a rule or regulation is hindering international trade and puts that country on notice.

The problem at the heart of this year’s NTE is that USTR has removed a sizable collection of barriers from last year’s report (466 pages’ worth) in this year’s edition (392 pages’ worth)—with a particular and concerning deprioritizing of barriers to digital trade.  This is in direct contradiction to USTR’s statutory obligation to “identify and analyze acts, policies, or practices of each foreign country which constitute significant barriers to, or distortions of… United States electronic commerce” through the NTE.  More recently, this move also runs contrary to the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 that directs USTR “to ensure that governments refrain from implementing trade-related measures that impede digital trade in goods and services, restrict cross-border data flows, or require local storage or processing of data.”  The recent trajectory of USTR also opposes the agency’s stated goal to “[d]efend U.S. interests in digital trade and digitally delivered services” that the agency outlined in its FY2025 budget request.  

In a previous article I covered the importance of digital trade to the U.S. economy—in 2022, digitally-deliverable services brought in $626 billion to the United States, with a $256 billion surplus in the sector.  Overall, the U.S. government estimates that in 2022, the digital economy brought in $2.6 trillion in value added, representing 10% of the U.S. GDP and supported 8.9 million jobs that generated $1.3 trillion in annual compensation.  Export strength in digital products and services also serves as a key foundation promoting U.S. competitiveness on the global stage.  

Further, restrictions to cross-border data flows, requirements to localize data, and obstacles to operate cloud services abroad all directly harm companies exporting goods and services across industries and of all sizes.  This is very much true for services providers, where 70 percent of U.S. services exports are made up of digitally-deliverable services and impacting sectors such as financial services and entertainment (where global markets have contributed to a boom in recent years).  However, companies in the goods world would also be hit by data localization mandates and cross-border data flow restrictions.  For example, automotive and pharmaceutical companies depend on data flows both to operate abroad as well as to conduct testing to ensure safety standards are met and strengthen their products.

USTR defended its decision to scale back inclusion of digital trade barriers by stating the agency is returning the report to “its stated statutory purpose” and that every government “has the sovereign right to govern in the public interest and to regulate for legitimate public policy reasons.”  

First, the claim that this reverts the report back to its “statutory purpose” is dubious—the 1974 Trade Act does not include any caveats in the section delineating the obligations for the NTE regarding whether a country behind any given barrier argues it is regulating in the public interest.

Second, and more importantly, the argument regarding what is suggested as justifiable discrimination is problematic and could have repercussions.  Of course, it is true that every country has the power and right to issue laws, rules, and regulations in the public interest—however, ceding such broad discretion regarding discriminatory or otherwise unfair practices in foreign markets undermines the very purpose of trade norms and rules—to voluntarily refrain from implementing policies that harm trade partners.  “Legitimate” is often in the eye of the beholder.  Governments generally adopt laws and regulations in the furtherance of what they would likely label as “legitimate public policy reasons,” even if those policies are harmful to imports from a specific or all other countries.  For governments enacting distortive industrial policy strategies, the discriminatory or harmful nature of the policy may actually be a central aspect of what the government sees as a legitimate public policy reason, whether that is to catalyze local production or boost employment in certain industries.  The removal of specific barriers from this report with the explanation implies that governments can pursue targeted or otherwise harmful policies for U.S. exports and claim it is in the public interest to be deemed justified and evade USTR scrutiny.  

More concerning in the near-term, the exclusion of such a broad swath of digital trade barriers with the suggestion that they are legitimate declares to these countries that they are justified in these actions and demonstrates to third-party countries that they are free to impose similar obstacles to U.S. digital products and services.  Of course, if the goal is to lay the foundation for protecting one’s own, newly-designed glass house, to shield it from attack by one’s trade partners, one might discern a certain logic. But, at least in the digital sphere, U.S.-proposed laws, regulations, or policies that would invite such challenges are absent, and thus declining to address foreign barriers only hurts U.S. interests, with no corresponding benefit.

The Barriers that USTR Removed Are Harmful to U.S. Economic Interests 

Looking closer at the barriers that were removed between the 2023 and 2024 reports, a broad trend that barriers to the cross-border delivery of digital products and services are now seen as reasonable becomes clear.  To the extent these laws, proposals, or regulations are now seen as acceptable by the United States, it can carry consequences for companies not only in these markets but others that may decide to adopt similar restrictive policies.  It is unclear why these barriers are now seen as justifiable by the U.S. government.  

Below are some of the most prominent trade barriers that appeared in the 2023 NTE and that clearly disadvantage U.S. firms that have since been dropped by USTR:

Online News

References to laws that require online services providers to make mandatory payments to news publishers for the presence of any news content, including hyperlinks, have been removed in this year’s NTE after being included in the last few iterations.  Specifically, Australia’s News Media Bargaining Code and Canada’s Online News Act, both of which exclusively target U.S. digital exports and pose threats to the online ecosystem writ large, are no longer listed as significant barriers to trade in the report, despite neither law changing in any meaningful way to alleviate concerns. 

European Union

References to the EU’s Digital Markets Act (DMA) have been removed from the report entirely.  The law is still highly experimental and disproportionately affects U.S. companies—the European Commission has designated six companies as so-called “gatekeepers” under the DMA, and five out of those six companies are from the United States, while the sixth is Chinese.  Meanwhile, this still-burgeoning concept of “gatekeeper” is being applied to industrial data markets through the DATA Act and is being considered for the online banking realm through the Payment Services Regulation, thereby restricting U.S. companies from these sectors.  As such, the threat of this law to U.S. exports, and massive compliance burden it entails is very much a live issue, but is no longer labeled a significant barrier through the NTE—suggesting free reign for the application of the “gatekeeper” label to spread to other sectors, shutting out U.S. companies, and empowering other governments to adopt regulations where the consequences are not yet known.  The DMA is clearly a barrier and in concert with the Digital Services Act would reportedly impose vast costs on U.S. businesses and smaller companies, but whether or not it is justified is not yet known—deleting it, therefore, is a premature stamp of approval on a policy for which the potential harms or benefits have not yet materialized.  The Digital Services Act has also been cut significantly from detailing the different obligations under the law for “Very Large Online Platforms” to instead solely focusing on the law’s impact on intellectual property rights such as copyrights and trademarks.

Elsewhere in the NTE, references to the EU’s AI Act and the DATA Act have been greatly diminished, restricted to narrow references to trade secrets and proprietary information.  As both develop, it is critical that the U.S. government remains wary of tiered oversight models whereby U.S. companies receive higher levels of scrutiny or punishment compared to those of European or third-party origin.  This is particularly visible for the DATA Act, which features prescriptive rules on when, where, and how companies should be able to access, process, and share non-personal and personal data with other companies and governments. The DATA Act would prohibit U.S. companies from becoming third parties to receive IoT data in Europe if designated as “gatekeepers;” create a separate regime for non-personal data, and in practice has the potential to also sweep in personal data, transferred internationally for cloud services providers subject to third party countries’ data access requests; and by potentially empowering national regulators to oversee aspects of the proposal, it would raise the possibility of duplicative enforcement throughout the 27 member states. Such regulation could leave U.S. companies at a distinct disadvantage compared to Europeans in a constantly innovating and growing IoT market—all of which is left out of this year’s NTE.

Indonesia  

This year, USTR removed references relating to:

1. barriers to building and maintaining submarine cables
2. digital taxation and duty reporting requirements
3. financial services regulations that require data localization for certain banking data
4. the Personal Data Protection Law No. 27, which was described by USTR in last year’s report as imposing “requirements for data collection, processing, and transfer, as well as criminal and administrative penalties for violations, and may restrict cross-border data flows.” 

USTR did include a regulation (​​MOF Regulation No. 190/PMK.04/2022) that imposes obligations for customs declarations within 30 days of receiving payment for the importing of digital products (which could sweep in potentially all software downloads).  However, the NTE language has been significantly adjusted: last year its focus was on “cybersecurity, privacy, and data protection concerns,” noting the impact on small-and-medium sized enterprises, and potentially undermining the moratorium on customs duties on electronic transmissions at the World Trade Organization; this year the harms are most glossed over, to a much more scaled-back “paperwork retention requirement that is undefined and uncertain.”

Japan

This year’s NTE removed reference to the Act on Improving Transparency and Fairness of Digital Platforms and the two reports on “competition for mobile operating systems and for voice assistants and wearables, with the eventual goal of possible regulation under the Transparency Act” published by the Digital Market Competition Headquarters.  Similar to the concerns regarding the DMA, the fact that USTR has removed this barrier at such a nascent stage of the regulation signals a lack of U.S. concern regarding the experimental regulatory proposals suggested in these reports, which include forcing digital platforms to share data with third parties and to provide third parties access to analytics (such as click-and-query search data); restrictions on platforms using data across services; and harming intellectual property by imposing obligatory sharing of trade secrets and copyright.

Turkey

This year’s NTE has removed reference to the 2016 Law on the Protection of Personal Data, which was previously described by USTR in last year’s report by explaining that “[r]estrictions on the flow of data have a significant effect on the conditions for the cross-border supply of numerous services and for enabling the functionality embedded in smart devices.” Circular 2019/12—a data localization measure—and the Law on Regulation of E-Commerce (Law No. 6563) were also excluded in this year’s report after inclusion last year. 

Vietnam

Although USTR included the highly-problematic Law on Cybersecurity as a barrier, it downplayed a data localization measure issued under the law—Decree 53—in this year’s report after including a lengthy explanation of the data localization hurdles last year.  Last year, USTR noted that the Decree required all domestic companies, including subsidiaries of foreign investors, to “store a copy of Vietnamese user data on servers located within Vietnam and establish a physical office in Vietnam that would be under the jurisdiction of Vietnamese law enforcement. If international firms, that do business in Vietnam are found to be in violation of the Law on Cybersecurity, then Vietnam’s Ministry of Public Security (MPS) could force the firms to localize their data as well, following a 12-month notification period.”  This year, the report focused more on “uncertainty around the scope of specific requirements for businesses as they apply broadly to domestic and foreign enterprises that provide services on telecommunications networks or the Internet, or that provide other value-added services in cyberspace in Vietnam.”

The Positive Aspects of this Year’s NTE Report: The Issues Included by USTR

Despite all of the above, it is important to note that USTR did include several barriers to digital exports in this year’s report.  This reflects commendable, continued work in important areas including problematic policies on cloud services providers, online streaming requirements and obligatory funding mechanisms, and network usage fees, among other specific data localization and cross-border data flow restrictions.  The following measures were included in USTR’s 2024 NTE report:

• Australia’s online streaming funding obligations.
• Canada’s online content funding obligations through the Online Streaming Act and Digital Services Taxes.
• The European Union’s EU Cybersecurity Certification Scheme for Cloud Services (EUCS), network usage fees, and Digital Services Taxes.
• Indonesia’s GR 71/2019 which requires “private sector electronic system operators (ESOs) to facilitate supervision by government agencies, including by granting access to electronic systems and data for monitoring and law enforcement purposes.”  Also included, with adjusted language as previously mentioned, was Regulation No. 190/PMK.04/2022 on mandatory digital product customs declaration.
• Korea’s network usage fees, restrictions on the export of geospatial data, and barriers to the public secret market for cloud services providers posed by the Cloud Security Assurance Program (CSAP).  However, although the original CSAP regime was included by USTR in this year’s report, the 2023 amendments to the program that have since meant that no foreign supplier has been able to provide service under the program were not included.
• Vietnam’s online content proposals for over-the-top radio and television in Decree 71; the Revised Telecom Law; the Law on Cybersecurity and Decree 53 with adjusted language as previously discussed; strict online content restrictions implicating free speech and online services providers’ ability to operate in Decree 72; and the Personal Data Protection Decree (Decree 13/2023/ND-CP).

The Scaling Back of Digital Trade Language in the National Trade Estimate Report is Part of a Continuing and Concerning Trend

This move to trim the NTE of barriers in the digital space does not come in a vacuum.  In the past year, USTR has significantly receded from defending U.S. interests in the digital trade space.  In October, USTR announced that the United States was withdrawing support for key digital trade rules at the World Trade Organization’s Joint Statement Initiative on E-Commerce (JSI) to ensure that participating countries’ firms receive reasonable treatment with respect to cross-border data flows, data localization, and the protection of companies’ source code.  Then, in November, it emerged that the United States rescinded those same digital trade rules at the Indo-Pacific Economic Framework (IPEF).  

The United States is alone in this regard when compared to its allies in the region that are also members of the IPEF initiative that the United States itself was central to generating with the goal of “restoring U.S. economic leadership in the region and presenting Indo-Pacific countries an alternative to China’s approach to these critical issues,” as Secretary of Commerce Gina Raimondo told reporters at the launch of the framework.  IPEF members are themselves seeking strong digital trade rules with partners.  For example, Kevin Rudd, Australian Ambassador to the U.S., told an audience in July when discussing IPEF: “Some say in the case of digital trade that it only benefits big corporations. We in Australia don’t see it this way.”  Additionally, Singapore has signed Digital Economy Agreements with several other fellow IPEF members (New Zealand, Australia, and South Korea) with strong provisions since 2020.  Japan has been a leader in digital trade, including in partnership with the United States by striking a Digital Trade Agreement in 2019.

The United States has abdicated leadership in this realm with the argument that it must provide “policy space” for domestic and foreign legislators and regulators “examining their approaches to data and source code, and the impact of trade rules in these areas.”  Jonathan McHale has detailed why such arguments are flawed and should not result in abandoning digital trade rules on the international stage.  Countries have been free to regulate in the public interest since the onset of trade rules through the General Agreement on Tariffs and Trade—so long as those rules do not discriminate against a supplier or producer from a specific country through thresholds or other means.  This remains true today, and despite hundreds of trade agreements globally, governments have continued to legislate and regulate.

To read the full article as it appears on the Disruptive Competition Project’s website, click here.

The post Why a USTR Report Represents Another Step Back for Digital Trade appeared first on WITA.

The requirement for this report is contained in Section 181 of the Trade Act of 1974. The relevant part requires USTR to

“identity [sic] and analyze acts, policies, or practices of each foreign country which constitute significant barriers to, or distortions of—(i) United States exports of goods or services (including agricultural commodities; and property protected by trademarks, patents, and copyrights exported or licensed by United States persons), (ii) foreign direct investment by United States persons, especially if such investment has implications for trade in goods or services, and (iii) United States electronic commerce.”

That is not all it requires, but it is the key element—USTR is to report on trade practices in foreign countries that “constitute significant barriers to, or distortions of” U.S. exports of goods or services. In its press statement announcing this year’s report, however, USTR laid out a somewhat different set of criteria:

“The NTE Report has received unprecedented attention this year because we are taking steps to return it to its stated statutory purpose. We respect that each government—including our own—has the sovereign right to govern in the public interest and to regulate for legitimate public policy reasons. Over the years, the NTE Report expanded from its statutory purpose to include measures without regard to whether they may be valid exercises of sovereign policy authority. Examples include efforts by South Africa to render its economy more equitable in the post-Apartheid era; import licensing requirements for narcotics and explosives; and restrictions on imports of endangered species. By carefully editing and returning the NTE Report to the statute’s intent, USTR is making it a more useful document that enumerates significant trade barriers that could be addressed to expand market opportunities and help our economy grow.”

This is a terrible idea on several levels. First, the “stated statutory purpose” is the first quote above. I can confidently say that none of the people who prepared this report, including Ambassador Tai, were out of grade school in 1974, and they don’t have much credibility in discussing what Congress intended. I was working in Congress at that time, and I’m reasonably confident that the authors’ interests were more prosaic—they simply wanted to identify trade barriers that hurt Americans.

The new criteria ignore whether a policy is a barrier and instead focus on whether the other countries’ policies were undertaken for legitimate public policy reasons and were “valid exercises of sovereign policy authority.” That completely misses the point of the statute. The issue is not whether trade measures were legitimate or valid for the implementing country, but how they affect us. In other words, Section 181 is as much about us as it is about them, meaning barriers that adversely affect Americans should be listed. Whether they are good for the country imposing them is irrelevant to USTR’s mandate. I could understand USTR saying that it would not try to tear down a particular barrier because the United States regarded it as a legitimate public policy, but to deny it’s a barrier and encourage countries to continue it undermines the statute’s intent. It also undermines the trade rules we have spent 75 years building. There is a big difference between saying, “I don’t like what you’ve done, but I’m not going to do anything about it,” and “I’m fine with what you’ve done—keep on doing it.”

This new approach is particularly harmful to the digital sector, which, notably, is specifically mentioned in Section 181. As usual, Jake Colvin at the National Foreign Trade Council said it best:

“Specifically, in failing to call out significant barriers to American e-commerce and digitally-enabled exports, the Biden Administration is wasting an opportunity to stand up for U.S. innovation and inviting discrimination against American companies and workers by our economic competitors. By refusing to catalog local content requirements and other key foreign trade barriers, USTR is also willfully ignoring its congressional mandate to identify ‘significant barriers’ to U.S. exports of goods and services, foreign investment and electronic commerce.”

Over the past three years, the Scholl Chair has done a lot of work on digital trade issues, and we are about to publish a policy tracker that help readers stay on top of digital policies in some 30 countries. We are doing this because of the enormous growth in digital trade and digital services over the past two decades and because of the sector’s importance to the U.S. economy. U.S. companies are leaders in this space, and it is in the nation’s interest to maintain and grow that lead globally. Instead, the USTR’s failure to even identify barriers, much less go after them, undermines our companies, hurts our economy, and ignores USTR’s own mission of advancing U.S. trade interests and promoting international trade rules. It appears the agency has moved from simply missing opportunities, as with the Indo-Pacific Economic Framework for Prosperity, to doing actual harm to our economy, which should be cause for all of us to be concerned. 

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.

To read the full National Trade Estimate Report on Foreign Trade Barriers published by the Office of U.S. Trade Representative, click here.

To read the full commentary by William Alan Reinsch as it appears on the CSIS’ website, click here.

The post Moving from Missed Opportunities to Actual Harm appeared first on WITA.

U.S. engagement in the Pacific is critical to this country’s workers, small businesses, values and economic and national security interests. The Indo-Pacific Economic Framework (IPEF) is an important initiative, recognizing the value of the U.S. as a standard-setter — for worker, environmental, digital and infrastructure standards — in order to continue as a 21st century global leader. This is especially important given China’s regional dominance. The IPEF’s goal of high labor and environment standards, as well as digital standards of democracy, transparency and accountability, are important counterparts to China’s model.

An important challenge facing the Biden administration is offering sufficient incentives for less-developed countries, especially ASEAN countries, to join the framework. The framework has four key pillars — infrastructure, supply chain resiliency, fair and resilient trade, and tax and anti-corruption. The first two pillars are the most attractive; they offer the potential for financing of infrastructure and sourcing of suppliers. The trade pillar is more challenging since it seeks to develop digital, labor and environmental standards. While the ASEAN countries welcome U.S. regional reengagement, setting these standards will require difficult domestic concessions from them. If the IPEF is to attract countries beyond Australia, New Zealand, Japan, Singapore and South Korea, it must include strong incentives for countries to make these changes.

The U.S. has a limited range of incentives to offer countries to make difficult concessions. Lowering U.S. tariffs to offer increased access to the U.S. market is undoubtedly the best incentive. Although U.S. tariffs are generally low, tariffs are high in sectors such as agriculture or textiles, which are of particular interest to developing countries. When Vietnam wanted to gain access to lower duties on footwear and apparel by joining the Trans-Pacific Partnership, it pushed through significant domestic reforms. Tariff market access ultimately may be necessary to achieve the IPEF’s vision, and congressional passage may be necessary to assure countries that a future administration will not pull out of the framework.

For political reasons, however, this option is not on the table, so we must consider other incentives to encourage less-developed countries to join the trade pillar. Although the U.S. is not offering to lower its bound tariff rates, there are other ways it could increase access to the U.S. market. A number of Indo-Pacific countries still face Section 232 (national security) tariffs on steel and aluminum exports, imposed by President Trump in 2018. These tariffs should be eliminated for countries meeting certain standards in the IPEF trade pillar.

Secondly, while the U.S. isn’t offering to lower its tariffs, it can offer assurances that they won’t be raised — an important benefit during this time of increased protectionism. In a side letter to the United States.-Mexico-Canada Agreement (USMCA), the U.S. agreed to put in place guardrails for future Section 232 tariff increases and added a 60-day notice and consultation requirement before undertaking tariff measures. This reduces the likelihood of surprise tariffs and can help resolve crises before imposing trade barriers. The U.S. could incorporate similar provisions in the IPEF, perhaps expanding them to include other types of tariff measures, for countries that meet key standards. The U.S. should work cooperatively with countries regarding regulatory measures that facilitate those countries’ exports to the United States.

The U.S.could create a preferred supplier, or “trusted country,” status for countries meeting a certain level of labor, environmental and digital standards assurances — including ensuring that no forced labor is used throughout their supply chains. These countries could benefit from an expedited process through U.S. customs. (A similar program exists to expedite imports for companies who meet certain standards.) Advancing paperless trading by making e-versions of documents available, such as e-invoicing and digital rules of origin certificates, also could be part of the trusted country program. Countries that meet certain standards would be allowed to use electronic signatures and certificates to expedite product shipments.

The second category of incentives is providing capacity-building funding and technical assistance to countries to facilitate their reaching desired standards. For example, the U.S. offered Mexico $210 million to help raise its labor standards, as required under the USMCA.

In addition to government-funded capacity-building, the U.S. could create opportunities to partner with American companies in the region. This can take the form of investment projects or skills training. Many companies have programs that could be expanded upon, especially with government support.

For the best incentives, the U.S. should consider integrating the pillars, rather than asking countries to join each one individually. For example, the U.S. could use money allotted for the infrastructure pillar as a carrot to incentivize a country’s participation in the trade pillar. The infrastructure pillar also offers opportunities to leverage decarbonization and anti-corruption goals.

The supplier resiliency pillar can be tied to the trusted country program: Qualifying countries could gain advantages through this pillar. Such “friend-shoring” can be an important part of supplier resilience, especially when moving sourcing for key technologies out of China. This is a chance to rethink U.S. supply chains and to encourage sourcing from countries that advance labor rights, support decarbonization and adopt transparent, democratic digital standards.

The Indo-Pacific Economic Framework provides an important opportunity for U.S. leadership in the region, including providing countries a values-driven alternative to China’s standards. America must make it attractive for developing countries to adopt higher labor, environmental and digital standards. Achieving this goal would produce an important result — for the U.S. and for businesses and workers in the Indo-Pacific.

Dr. Orit Frenkel is co-founder and CEO of the American Leadership Initiative. She is a former senior executive at the General Electric Company and served as director for trade in high-technology products at the Office of the U.S. Trade Representative.

To read the full commentary by The Hill, please click here.

The post Let’s make it attractive to join the Indo-Pacific Economic Framework appeared first on WITA.

That is why we must approach digital trade policy with thoughtfulness and wisdom so that we pursue growth that is inclusive, fair, sustainable, and advances the quality of life of human beings.
 
Trade policy sits at the intersection of domestic and foreign policy, so the policies we develop must be calibrated with our broader agenda.  But we have seen over time that trade policy becomes unsustainably fragile whenever it becomes detached from the issues facing ordinary working people. 
 
At USTR, we are putting workers at the center of our trade policy – and thinking about how our work will impact their day-to-day lives.  And second, we are creating durable trade policies that work in concert with our domestic economic and foreign policies.  This is key to building broad-based support for our work among all of our stakeholders – and creates the foundation required for steadfast U.S. leadership in the global economy.
 
What does this mean for digital trade?
 
It is important to recognize that there is no bright line separating digital trade from the digital economy – or the “traditional” economy for that matter.  Nearly every aspect of our economy has been digitized to some degree.  Our efforts to formulate and pursue digital trade policies should, therefore, begin with a high level of ambition to be holistic and inclusive.
 
Despite their expansiveness, there is not an agreed definition of “digital economy” or “digital trade.” 
 
But the general consensus seems to coalesce around the notion that the digital economy comprises economic activity generated by the marriage of an ever-greater, distributed computing power, and ever-faster transmission networks. 
 
This includes:

1. Infrastructure: fixed and mobile telecommunications networks, including 5G, and large-scale data centers;
2. Platforms: these are the services, based on cloud computing, that allow suppliers to interact with consumers and businesses globally; and
3. Applications: both tools that end-users need – for example, word-processing, inventory management, and accounting software, as well as direct-to-consumer products, such as e-books, videos, and games.

There are a few key topics that arise whenever we talk about the digital economy, including:

• A high degree of mobility, and how technology reduces the relevance of borders;
• Concerns about data, including privacy and security;
• How governments balance accountability, freedom, innovation, and growth;
• The concentration of power and how that affects the interests of small- and medium-sized businesses; and
• Energy and resource needs in the context of sustainability.
   

Around the world, we see different responses across governments to similar digital challenges.  Embedded in those responses are varying societal and political values, including authoritarian instincts that are deeply incompatible with our tenets and principles.
 
I mentioned earlier that USTR wants to develop durable trade policies.  But with technology and our digital economy constantly evolving, achieving durability requires us to prioritize flexible policies that can adapt to changing circumstances. 
 
We’ve seen what happens when trade agreements and trade policy become outdated and fail to address modern challenges.  By maintaining flexibility in our digital trade policies, we can ensure they remain resilient and long-lasting.
 
I also believe that our approach to digital trade policy must be grounded in how it affects our people and our workers.
 
We must remember that people and workers are wage earners, as well as consumers.  They are more than page views, clicks, and subjects of surveillance.  They are content creators, gig workers, innovators and inventors, and small business entrepreneurs.
 
This means they have rights that must be protected – both by government policy and through arrangements with other governments.
 
On the other side of the equation, we must also recognize that our technology companies are not just innovators and service providers.  They are also forces changing the nature of our lived experiences and our society.  It is not hyperbole to say that these companies have the power to affect the lives of people and the direction of our civilization’s development.
 
That power requires responsibility and accountability.  And these stakeholders have responsibilities in shaping the digital economy.
 
Cybersecurity is an illustration of this challenge.  Companies and individuals both benefit from digital technologies – but the data they store and process puts both them and their consumers at significant risk of attack by criminal and state actors, often from abroad. 
 
Companies may face a prisoner’s dilemma – will they invest in cybersecurity protection if their competitors gain a price advantage by not making that investment?  How can governments and businesses work together to address this pernicious threat? These goals are not just about national security, but global security.
 
While these are important ideas – corporate accountability in our tech sector, protecting the rights of consumers – we must acknowledge there is a trust gap and ask whether we have adequately designed digital trade rules to meet the needs of ordinary people. 
 
We must overcome the trust gap, particularly for workers and consumers – and recognize that the digital economy should also address sustainability concerns.
 
As we think about digital trade policy, we are asking big and consequential questions at USTR that will guide our approach, including:

• How do we ensure that our digital trade agenda supports our broader national security interests, for example with respect to physical infrastructure, cybersecurity, and reliable semiconductor supplies?
• How do we ensure our digital trade agenda works hand-in-hand with our other domestic and foreign policies, while maintaining flexibility for future challenges?
• How can we work with our allies on issues like artificial intelligence in a way that safeguards economic security for workers while protecting democracies against external threats?
• How can we balance the right of governments to regulate in the public interest, with the need for rules that guard against behavior that discriminates against American workers and businesses?

There are no easy answers to these questions.  But if our starting point is a desire to put people at the center for our policies – as it has been for our entire trade agenda since I was sworn in – then the outcomes we reach can be more inclusive and responsive to their needs.
 
The imagination of our artists and story tellers have often illustrated our hopes and anxieties about technology and where it will lead us.
 
Recently, I re-watched the Pixar film “WALL-E.”  It tells the story of a rusty robot named WALL-E who cleans up trash alone on an environmentally devastated and uninhabitable earth. He encounters a modern robot named EVA, sent from a faraway spaceship where humans have taken refuge.  Her mission is to look for signs of life on earth.
 
The movie features relevant themes about the threats our way of life poses to sustainability, the displacement of workers and future of work, and a struggle of wills between technology – in the form of robots and AI – and humanity. 
 
But it is ultimately a tremendously hopeful story about love, inclusiveness, and resilience. 
 
People are rightfully concerned about the future of technology and how it will impact their lives and livelihoods.  But there is a lot that we can and should do to address those anxieties, to guide the development of the digital transformation in a positive direction.
 
Governments and policymakers cannot lose sight of the needs of our people and our collective humanity.  And we therefore must approach our work on digital trade with thoughtfulness, deliberation, and care.
 
It is particularly important that our approach includes students, like the ones here today, because you represent the most technologically sophisticated generation in history.  And I suspect that you will be the ones with the most open and creative minds that we will need to address many of the policy questions that we face. 
 
The challenges around digital trade policy will not be solved overnight; it begins with conversations like this. 
 
So, let’s dive in.
 
Thank you.

To read the Ambassador’s full remarks, please click here.

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As part of the Biden administration’s Build Back Better policy, Tai explained why America’s workers must have a seat at the table in the early stages of trade negotiations so that our economy can grow from the “bottom up and middle out” instead of relying on the failed trickle-down policies of past administrations.

“The president has been clear that trade policy will play a critical role in carrying out his vision for an economy where, as he puts it, ‘everyone is cut in on the deal.’” Tai said. “And that is why I am here today, to talk about your important role in the Biden-Harris administration’s pursuit of a worker-centered trade policy.

“We know that trade is essential to a functioning global economy. It is clear, however, that the past promises made to workers on trade were not met. Certain sectors of the economy have done well. But far too many communities and workers were left behind.

“The consequences for families when factories closed, and jobs were sent overseas were real. And they were real for the workers who lost their jobs to unfairly traded imports, too. This created a trust gap with public about free trade.”

For many years now we have heard many of America’s elected officials expound on the benefits of so-called “free trade.” Call it what you wish, but it certainly has not been “fair trade.”

“In the United States, real wages have stagnated for decades and the wealth gap – particularly between Black and white workers – has widened significantly,” Tai continued. “CEOs now make an average 320 times more than their employees. And the percent of workers in unions – a good indicator of higher wages and job stability – is half of what it was 40 years ago.

“This inequality isn’t fair or sustainable. It didn’t happen overnight. It is the result of a long pursuit of tax, trade, labor and other policies that encouraged a race to the bottom.”

Tai’s major trade policy address at the virtual town hall was unique in that her remarks were not directed only to corporate leaders and top labor union officials, but to the everyday hard-working men and women of the labor movement. She made this clear at the beginning of her remarks telling the union members “This speech is for you.”

One of those people: Kameen Thompson, president of the United Steelworkers Local 9462 near Philadelphia. Thompson represents approximately 150 workers at the Conshocken mill, which makes high-alloy steel that is vital to the United States military.

Thompson has seen large drops in production at the mill over the years and is an advocate for investments in our military and infrastructure. He had a chance to ask Tai about the threat to America’s steel industry because of overcapacity brought on by the illegal dumping of steel products into the U.S. market by China and other foreign countries.

“There is a growing future in demand in renewable energy that holds great promise for American workers throughout our supply chain and I will give you an example,” Thompson told Tai. “Each new megawatt of solar power requires between 35 to 45 tons of steel and each megawatt of wind-power requires 103 to 110 tons of steel and I would like to know if we envision taking full advantage of these opportunities particularly given the ongoing problem of global overcapacity of critical goods like steel?”

Tai responded that Biden is aware of his need to address overcapacity, noting she will travel with the president to Brussels next week to meet with allies to discuss a sustainable solution:

“The steel industry is critical to our economy and our national security and as you point out it is also really important for the climate agenda because it is a crucial component in solar and wind. We know that workers like you at steel mills around the country have faced unfair competition from global overcapacity. China and several other countries have used industrial policies, including unfair subsidies, to flood the global market.

“President Biden is committed to protecting our steel industry and workers like you from unfair trading practices. We will be better able to respond to global overcapacity if we consult closely with the United Steelworkers and partner with our allies.”

Throughout her remarks, Tai stressed Biden’s commitment to all Americans when it comes to matters of trade policy.

“By bringing workers from all backgrounds and experiences to the table, we will create inclusive trade policy that advances economic security and racial and gender equality,” she said. “We want to lift up women, communities of color and rural America – people that have been systematically excluded or overlooked.

“We know that when workers have a seat at the table in their workplace, wages go up, retirement benefits go up, workplaces are safer, and discrimination and harassment get addressed. We want trade to deliver the same results.

Tai said that the U.S. is also working with allies to make U.S. supply chains “less vulnerable and more resilient,” given the problems that were exposed during the COVID-19 pandemic.

“For too long, the United States has taken certain features of global markets as inevitable – especially the fear that companies and capital will flee to wherever wages, taxes and regulations are lowest. The pandemic laid bare the challenge of this approach and we need to fix it,” Tai said.

“A worker-centered trade policy seeks to expand opportunities for businesses by expanding economic security for workers here at home. I hope American companies of all sizes will join us in this effort. We need their ideas, experience, energy and partnership.”

An aggressive and progressive trade policy is a complicated issue in these days of mercantile economies. But Tai left the workers with a message of hope.

“You are the sweat, the muscle and the brains behind American ingenuity, perseverance and competitiveness,” she told the workers. “You are the backbone of our economy and democracy. You are the guiding light of trade policy for the Biden-Harris administration.”

Jeffrey Bonior began his writing career as a reporter and copy editor in 1977 at the Los Angeles Herald Examiner. He later wrote copy as a voice-over talent in Delray Beach, Florida. Mr. Bonior was born in Detroit to an active, pro-manufacturing, pro-union family, and is a veteran of numerous political and initiative campaigns.

To read the full commentary by the Alliance for American Manufacturing, please click here.

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AFL-CIO Town Hall Featuring: 

Richard L. Trumka, President AFL-CIO

Ambassador Katherine Tai, United States Trade Representative 

Transcript

Thank you President Trumka for that very kind introduction.  You have been a fearless champion for working people throughout your life, and I am grateful for your leadership.  

I also want to recognize AFL-CIO Secretary Treasurer Liz Shuler, another fierce advocate for workers, and the other union leaders and members of the AFL-CIO Executive Council who are here today in the room and via zoom.

Also, I want to thank the union members who have joined us as well.  This speech is for you.

The past 15 months have been hard for all of us, but especially hard for frontline workers.  Nearly 600,000 Americans have lost their lives to COVID-19, including union members who paid the ultimate price for showing up to work.  

Ending the pandemic is President Biden’s top priority, and thanks to his leadership, we are making progress.  The majority of American adults have received at least one shot, and we are pushing to get more Americans vaccinated as quickly as possible.  The pandemic isn’t over for any of us until it’s over for all of us.  

That’s why we will share 80 million vaccine doses with other countries by the end of this month and yesterday the United States announced it will purchase and donate 500 million Pfizer vaccine doses to help the rest of the world with its vaccination efforts.  And in May, we declared our support for a waiver of intellectual property protections under the TRIPS Agreement for COVID-19 vaccines.  

President Biden understands that our economy cannot fully recover until we defeat the virus, but there are signs of improvement.  We are on track for the fastest economic growth in 40 years, and in our first five months, the Biden-Harris Administration oversaw the creation of a record two million jobs – that’s more than any other Administration, ever.  Real wages are finally going up, the unemployment rate is coming down, and the number of initial weekly jobless claims has been cut in half.  

But there is more to do. 

Build Back Better starts by growing the economy from the bottom up and the middle out and putting workers at the center of our economic plans.  

Workers and worker power are fundamental to those ideas, and that’s why the Protecting the Right to Organize Act – the PRO Act – needs to become law.  We can’t rebuild an economy that works for everyone without empowering workers and giving them a voice to secure the better wages, benefits, and working conditions they deserve.

This is particularly true for workers of color, who have the dual burden of fighting for workers’ rights and for racial justice.  They need the support of organized labor, and the Senate needs to send that bill to the President’s desk so he can sign it into law.  

We also need to enact President Biden’s American Jobs Plan and the American Families Plan to invest in our future.

The President has been clear that trade policy will play a critical role in carrying out his vision for an economy where, as he puts it, “everyone is cut in on the deal.”  And that is why I’m here today: to talk about your important role in the Biden-Harris Administration’s pursuit of a worker-centered trade policy.

We know that trade is essential to a functioning global economy.  It is clear, however, that the past promises made to workers on trade were not met.  Certain sectors of the economy have done well.  But far too many communities and workers were left behind.  The consequences for families when factories closed and jobs were sent overseas were real.  And they were real for the workers who lost their jobs to unfairly traded imports, too.  This created a trust gap with the public about free trade.  

This wasn’t because of trade agreements alone.  Recent tax policy favored corporations over workers.  Tax cuts for the wealthiest individuals and corporations never trickled down.  President Biden knows this, which is why he wants them to pay their fair share.

In the United States, real wages have stagnated for decades, and the wealth gap – particularly between Black and white workers – has widened significantly.  CEOs now make on average 320 times more than their employees.  And the percent of workers in unions – a good indicator of higher wages and job stability – is half of what it was 40 years ago. 

This inequality isn’t fair or sustainable.  It didn’t happen overnight.  It is the result of a long pursuit of tax, trade, labor, and other policies that encouraged a race to the bottom.   

President Biden is leading us on a new path.  He wants an economic policy, including a trade policy, that delivers shared prosperity for all Americans, not just profits for corporations.

We want to make trade a force for good that encourages a race to the top.  

The first step to achieving this goal is creating a more inclusive process.  In order to understand how trade affects workers, we want to come meet with, listen to, and learn from them.  

By bringing workers from all backgrounds and experiences to the table, we will create inclusive trade policy that advances economic security and racial and gender equity.  We want to lift up women, communities of color, and rural America – people that have been systematically excluded or overlooked.  

Last week I joined Senator Sherrod Brown and some of his constituents in Ohio for a virtual roundtable.  We talked about their priorities and the changes we can make to trade policy that will help their businesses and towns.  I hope to have many more conversations like this in the weeks and months to come.  

Our goal is to improve worker representation in trade policy in the United States and in multilateral organizations.  The WTO, for example, doesn’t adequately hear from workers, and we want to change that.  We’ll keep asking for this in other international organizations, such as APEC and the OECD, too.

We know that when workers have a seat at the table in their workplace, wages go up, retirement benefits go up, workplaces are safer, and discrimination and harassment get addressed.  We want trade to deliver the same results.  

The USMCA agreement is a good example of what can happen when labor is at the table.  It’s not perfect, but because we collaborated closely with President Trumka and many of the union leaders here today, we negotiated a better deal for American workers.  

Because of our partnership, the USMCA now includes:
–    The strongest labor and environmental standards in any agreement ever;
–    A new rapid response mechanism that allows us to quickly take action at a specific factory where workers are being denied their rights to freedom of association and collective bargaining; and
–    Critical changes to the intellectual property provisions designed to increase access to affordable medicine for regular people.

Unlike previous trade agreements, USMCA passed with overwhelming, bipartisan support.  It is proof that consulting – really listening and working with workers, the labor movement, and a broad range of stakeholders – leads to more pro-worker, more meaningful, and more popular policy.  

Less than a year after USMCA went into effect, we’re already using its labor enforcement tools. Last month, we asked Mexico to investigate whether workers at a GM facility in Silao were denied their rights during a contract ratification.   

This was the first time that the new rapid response tool was used by the U.S. government.  It was also the first time in history that the United States proactively initiated labor enforcement in a trade agreement.  

The AFL-CIO recently filed a Rapid Response petition alleging workers’ rights had been violated at an auto parts manufacturer.  Yesterday, we asked Mexico to review the allegations – the second time we’ve taken this step in the last month.

Under previous agreements, labor petitions could – and did – languish for years without a response from the Administration.  But we have acted quickly.  

These enforcement actions matter.  The Rapid Response Mechanism will help to protect the rights of workers, particularly those in low-wage industries who are vulnerable to exploitation.  Because when we fight for workers overseas, we are fighting for workers here at home.

And we’ll do that across the board.  Enforcing all of our trade rules is a priority for the Biden-Harris Administration.  Those who work hard and play by the rules, you deserve to have the government on your side when faced with illegal and unfair trade practices. 

We must apply the same principles at the WTO.  Despite a preamble that says “trade…should be done with a commitment to raising living standards and ensuring full employment,” the WTO’s rules actually don’t include any labor standards, and workers are often an afterthought.  This needs to change.

The United States recently submitted a proposal to ensure that fighting forced labor is included in any agreement the WTO reaches to prohibit harmful fisheries subsidies.  We know that forced labor is a serious problem in the fisheries sector, particularly on distant water fishing vessels.  I hope WTO Members will commit to a high-standards, meaningful agreement that includes our common-sense provision and that will contribute to tackling this problem.  

This is not just an economic issue.  This is a moral imperative, and I ask all of you to help us to build support for our effort.  The WTO must show in these negotiations that it can improve the lives of regular people and that it is capable of responding to crises and tackling difficult matters, particularly when it comes to worker abuse.

If the WTO is to be relevant and a force for good, it must be revitalized and modernized.  We must take bold steps to fix its negotiating function, commit to greater transparency, and reform the dispute settlement process.  

Under the Biden-Harris Administration, we will bring dignity of work – and the empowerment of workers – to the WTO.  

I am excited to work with Dr. Ngozi Okonjo-Iweala, the new Director General.  With her leadership, and if WTO Members choose to meet this moment, the commitments of that preamble may finally come true.

Whether we’re negotiating issues at the WTO, or in other settings, we will be more successful if we partner with our allies.

The President promised that he would focus on rebuilding the American economy and the American middle class before he enters into any new trade deals, and that’s exactly what he is doing.  But he also knows that the world won’t wait.  

That’s why we will also reengage with our friends, trading partners, and multilateral institutions to promote democracy, labor rights, and economic security.  We know in the past other goals – including important national security and foreign policy concerns – have sometimes drowned out workers’ voices in trade discussions and weakened our focus on serving American workers’ best interests.   

This time we’re putting foreign policy and trade to work for the middle class.  That means working with allies on a shared agenda that will lift up workers, increase economic security, and strengthen democracy around the world.

And we’re already seeing results.  We are close to an agreement on a global minimum tax, thanks to recent progress with G7 and G20 partners.  And just last month, the G7 Trade Ministers made a historic commitment to work together to protect individuals from forced labor, including mitigating the risks of forced labor in global supply chains.

We’re also working with allies to make our supply chains less vulnerable and more resilient.  We need to diversify our international suppliers and reduce geographic concentration risk.  For too long, the United States has taken certain features of global markets as inevitable – especially the fear that companies and capital will flee to wherever wages, taxes and regulations are lowest.  The pandemic laid bare the challenge of this approach.  And we need to fix it.  

And crucially, by working with allied democracies on trade enforcement, we will more effectively respond to the policies of autocratic, non-market economies that hurt our ability to compete.  We will increase our leverage so that we can achieve more for American workers.  That’s why I am leading a Trade Task Force as part of the President’s Supply Chain Resilience effort: to propose unilateral and multilateral enforcement actions against unfair foreign trade practices that have eroded critical supply chains.

Next week, I will join the President on his trip to Brussels and meet with my European counterparts.  We’ll participate in intense negotiations to resolve the 16-year old Boeing/Airbus disputes and to find a path forward on products like steel and aluminum.  These talks will give us a chance, first and foremost, to champion the rights and interests of our workers in those industries, while also creating new standards to combat the harmful industrial policies of China and other countries that undermine our ability to compete.

From my conversations so far, I am optimistic that we will be successful.

Finally, a worker-centered trade policy means addressing the damage that U.S. workers and industries have sustained from competing with trading partners that do not allow workers to exercise their internationally recognized labor rights.  

This includes standing up against worker abuse and promoting and supporting those rights that move us toward dignified work and shared prosperity: the right to organize and to collectively bargain.  USTR will utilize the full range of trade tools and work with our allies to protect labor rights, including the elimination of forced labor and the worst forms of child labor, especially forced child labor.  We must also achieve greater accountability from those in the business community that profit from this exploitation. 

We will be more effective if our trading partners also commit to promoting, protecting, and enforcing internationally recognized workers’ rights as part of their trade policies.  And we will lead the way on this issue as a core American value.

Together with our allies, we must create high-standard trade agreements that empower workers and prevent other countries from violating labor rights to gain an unfair advantage in the global market.  And we must aggressively enforce them.  

We know we can’t do this work alone.  In addition to bringing workers to the table and partnering with our allies, we need to consult closely with the business community.  

American companies have the know-how and expertise that we will need to identify market access opportunities, respond to unfair trade practices, and build strategic and resilient supply chains, all at the same time.

We want to partner with U.S. companies to send products stamped with Made in America to all corners of the world and to invest in American workers and communities.  This is part of the Biden-Harris Administration’s pledge to Build Back Better.

A worker-centered trade policy seeks to expand opportunities for businesses by expanding economic security for workers here at home.  I hope American companies of all sizes will join us in this effort.  We need their ideas, experience, energy, and partnership. 

At the beginning, I said this speech was for the workers who took the time out of their busy day to listen in.  

You are the sweat, the muscle, and the brains behind American ingenuity, perseverance, and competitiveness.  You are the backbone of our economy and our democracy.  You are the guiding light of trade policy for the Biden-Harris Administration.

When I go to Europe next week, it will be to encourage other allied democracies to pursue a worker-centered trade policy, too.

To work with us to set a high standard alternative to state-directed economies that do not promote the rights of workers and to combat forced labor, the worst illustration of the race to the bottom.

I’ll be asking them to join me in making global trade policy a force for good that raises wages and increases economic security.   

The more we invest in our workers at home and abroad, the stronger democracy will be worldwide.  And by partnering with our allied democracies, we will more effectively respond to the threats of autocratic, non-market countries whose policies undercut our workers.  

We’ve shown in our first few months – through USMCA enforcement, our WTO forced labor proposal, and many other actions – that we can craft a worker-centered trade policy if we partner with you.

It is still early days, and we have far more to do.  But I have confidence that we will build off of these early efforts.  By working together, we will achieve a trade policy that prioritizes the dignity of work and workers, that promotes shared prosperity and racially inclusive, equitable economic growth here at home and abroad.  

Thank you.  

Richard L. Trumka is president of the 12.5-million-member AFL-CIO. An outspoken advocate for social and economic justice, Trumka is the nation’s clearest voice on the critical need to ensure that all workers have a good job and the power to determine their wages and working conditions. He heads the labor movement’s efforts to create an economy based on broadly shared prosperity and to hold elected officials and employers accountable to working families.

Ambassador Katherine Tai was sworn in as the 19th United States Trade Representative on March 18, 2021. As a member of the President’s Cabinet, Ambassador Tai is the principal trade advisor, negotiator, and spokesperson on U.S. trade policy.

Prior to her unanimous Senate confirmation, Ambassador Tai spent most of her career in public service focusing on international economic diplomacy, monitoring, and enforcement. She previously served as Chief Trade Counsel and Trade Subcommittee Staff Director for the House Ways and Means Committee in the United States Congress. In this capacity, Ambassador Tai played a pivotal role in shaping U.S. trade law, negotiations strategies, and bilateral and multilateral agreements, including the recently re-negotiated United-States-Mexico-Canada Agreement.

Ambassador Tai is an experienced World Trade Organization (WTO) litigator. She previously developed and tried cases for the Office of the United States Trade Representative, eventually becoming the Chief Counsel for China Trade Enforcement. Before transitioning to federal service, she practiced law in the private sector, clerked for district judges, and taught English in Guangzhou, China.

Ambassador Tai earned a Bachelor of Arts degree in history from Yale University and a Juris Doctor from Harvard Law School. She is fluent in Mandarin.

To watch the full town hall from the AFL-CIO, please click here.

To read the full remarks from USTR Ambassador Tai, please click here.

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Jayme White is the Senate Finance Committee Democratic counterpart to Ambassador Katherine Tai (formerly with the House Ways and Means Committee) with a distinguished career as a Senate staffer. Sarah Bianchi has extensive prior Administration experience in both the Obama/Biden and Clinton/Gore administrations.

The profile of each as included in the White House announcement is copied below.

“Sarah Bianchi, Deputy United States Trade Representative

“Sarah Bianchi has spent nearly a decade in government roles in economic and domestic policy including in the Office of the Vice President, the White House Domestic Policy Council, the Office of Management and Budget, and the Senate Health, Education, Labor and Pensions Committee.   In 2011, Ms. Bianchi was appointed by then Vice President Biden as his head of economic and domestic policy in the White House, where she ran the economic and domestic policy team in the Office of the Vice President and coordinated policy initiatives ranging from workforce competitiveness to manufacturing to budget negotiations. She also served as Deputy Assistant to the President for Economic Policy.  Bianchi has also served as a senior advisor to the Biden Institute at the University of Delaware, where she worked on a variety of economic policies and served as Chair of the Institute’s Policy Advisory Board.

“Bianchi has served in a number of private sector roles as well. In 2019, she joined Evercore ISI in the macroeconomic research group where she leads the U.S. public policy research.  She graduated magna cum laude from Harvard University in 1995 and has served on the Senior Advisory Committee at the Institute of Politics at Harvard University since 2004.  Bianchi and her husband live in Arlington, Virginia with their twelve-year-old daughter and ten-year-old son.

“Jayme White, Deputy United States Trade Representative

“Jayme White has spent two decades working to ensure American trade policy empowers American workers and promotes a sustainable environment. Mr. White grew up in Seattle, WA, where his family were union workers for Boeing. He went to Washington, DC to work for his hometown member of Congress in the House of Representatives, Representative Jim McDermott, who served on the Committee on Ways and Means, which has jurisdiction over international trade. Since then, he has played a role in nearly every major trade issue and trade legislation, over the last 20 years.

“Mr. White has served in the U.S. Senate since 2009, including as the chief trade advisor for the Senate Committee on Finance since 2014, under the leadership of Chairman Ron Wyden. During this tenure, White led efforts to level the playing field for American workers, through trade negotiations and agreements, and by reforming US trade laws to better respond to unfair foreign trade practices. In his role on the Finance Committee, he has long represented and advanced bipartisan US views to foreign trade leaders, and the outcomes of those efforts are evident in many trade agreements. Key provisions — especially enforceable measures on labor and the environment — found in the United States-Mexico-Canada Agreement (USMCA) are a result of his efforts.”

Both nominees reflect the focus that the Biden Administration has on making trade work for all, especially workers, and be a tool to build back better and help the U.S. address climate change and other environmental issues.

The Chairman of the Senate Finance Committee, Senator Ron Wyden of Oregon, and the USTR, Ambassador Katherine Tai, issued statements on the 16th strongly supporting the nominations of both and, in Amb. Tai’s case, looking forward to both nominees being part of the USTR team to move the Biden agenda forward. Both nominees have strong policy backgrounds and should be confirmed relatively easily. When these nominees are confirmed, the Biden Administration will be an important step closer to filling out its trade team.

There is a third Deputy USTR slot that remains open as well as the position of Chief Agriculture Negotiator. So more nominations should be forthcoming in the coming weeks or months. It is not clear whether either nominee is being considered for the Geneva slot as Permanent Representative to the World Trade Organization.

The press release from Senator Wyden and Ambassador Tai are embedded below.

Chairman's News | Newsroom | The United States Senate Committee on Finance

Statement from Ambassador Tai on Bianchi, White nominations | United States Trade Representative

• Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.

To view the original blog post, please click here

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“The 2021 National Trade Estimate Report on Foreign Trade Barriers (NTE) is the 36th in an annual series that highlights significant foreign barriers to U.S. exports, U.S. foreign direct investment, and U.S. electronic commerce. This document is a companion piece to the President’s 2021 Trade Policy Agenda and 2020 Annual Report, published by the Office of the United States Trade Representative (USTR) in March.

“In accordance with section 181 of the Trade Act of 1974, as amended by section 303 of the Trade and Tariff Act of 1984 and amended by section 1304 of the Omnibus Trade and Competitiveness Act of 1988, section 311 of the Uruguay Round Trade Agreements Act, and section 1202 of the Internet Tax Freedom Act, USTR is required to submit to the President, the Senate Finance Committee, and appropriate committees in the House of Representatives, an annual report on significant foreign trade barriers. The statute requires an inventory of the most important foreign barriers affecting U.S. exports of goods and services, including agricultural commodities and U.S. intellectual property; foreign direct investment by U.S. persons, especially if such investment has implications for trade in goods or services; and U.S. electronic commerce. Such an inventory enhances awareness of these trade restrictions, facilitates U.S. negotiations aimed at reducing or eliminating these barriers, and is a valuable tool in enforcing U.S. trade laws and strengthening the rules-based system.”

This year’s report covers 65 countries or country groups, so not all trading partners are covered by the annual report. China has the largest section of the report for an individual country (36 pages) while the European Union (covering 27 countries) has the largest section overall (52 pages). Other important trading partners with significant sections in the report include India (24 pages), Russian Federation (20 pages), Japan (18 pages), Indonesia (16 pages), Republic of Korea (14 pages), Brazil (14 pages), Vietnam (14 pages). the USMCA partners had smaller sections — Canada (8 pages) and Mexico (12 pages). the countries covered account for nearly 100 percent of U.S. trade in goods and nearly 90% of U.S. services trade.

The USTR press release from March 31, 2021 (majority of release copied below) provides an outline of some of the major areas of concern. See USTR, Ambassador Tai releases 2021 National Trade Estimate Report, March 31, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/ambassador-tai-releases-2021-national-trade-estimate-report.

“Significant Barriers to U.S. Exports in 65 Trading Partners Detailed

“WASHINGTON – United States Trade Representative Katherine Tai today released the 2021 National Trade Estimate (NTE) Report, providing a detailed inventory of significant foreign barriers to U.S. exports of goods and services, investment, and electronic commerce.

“’The President’s Trade Agenda released earlier this month outlined a clear vision for supporting America’s working families by promoting a fair international trading system that boosts inclusive economic growth,’” said Ambassador Tai. ‘The 2021 NTE Report identifies a range of important challenges and priorities to guide the Biden Administration’s effort to craft trade policy that reflects America’s values and builds back better.’

“Published annually since 1985, the NTE Report is a comprehensive review of significant foreign trade barriers affecting U.S. exports of goods and services. The 570-page report examines 65 trading partners and country groups, including the U.S.’ largest trading partners, all 20 U.S. FTA partners, and other economies and country groupings of interest such as the Arab League, the United Kingdom (included as a separate entity for the first time in this report), and the European Union. Together, these economies account for 99 percent of U.S. goods trade and 87 percent of U.S. services trade. 

“The NTE Report covers significant trade barriers in 11 areas, including (1) import policies such as tariffs, import licensing and customs barriers; (2) technical barriers to trade; (3) sanitary and phytosanitary measures; (4) subsidies; (5) government procurement; (6) intellectual property protection; (7) services barriers; (8) barriers to digital trade and electronic commerce; (9) investment barriers; (10) competition; and (11) other barriers. 

“Taken as a whole, the NTE Report highlights significant barriers that present major policy challenges with implications for future U.S. growth opportunities, and the fairness of the global economy. Examples of these significant obstacles include: 

“Agricultural Trade Barriers:  The NTE Report details an array of tariff and nontariff barriers to U.S. agricultural exports across trading partners and regions, ranging from non-science-based regulatory measures, opaque approval processes for products of agricultural biotechnology, burdensome import licensing and certification requirements, and restrictions on the ability of U.S. producers to use the common names of the products that they produce and export. USTR will continue to engage foreign governments on barriers that hamper the ability of U.S. farmers, ranchers and food processors to access markets worldwide. 

“Digital Trade:  The 2021 NTE Report details restrictive data policies in India, China, Korea, Vietnam, and Turkey, among other countries; local software pre-installation requirements in Russia, Indonesian tariffs on digital products, and existing or proposed local content requirements for online streaming services in Australia, Brazil, Canada, China, EU, Mexico, Ukraine, and Vietnam; and discriminatory tax measures in Austria, India, Italy, Spain, Turkey, and the UK. USTR will continue to engage foreign governments on digital policies that threaten the regulatory landscape for U.S. exporters of digital products and services and undermine U.S. manufacturers’ and service suppliers’ ability to move data across borders. 

“Excess Capacity:  China’s state-led approach to the economy and trade makes it the world’s leading offender in creating non-economic capacity, as evidenced by the severe and persistent excess capacity situations in several industries, including steel, aluminum, and solar, among others. China also is well on its way to creating severe excess capacity in other industries through its pursuit of industrial plans such as Made in China 2025, pursuant to which the Chinese government is doling out hundreds of billions of dollars to support Chinese companies and requiring them to achieve preset targets for domestic market share–at the expense of imports–and global market share in several advanced manufacturing industries. USTR will continue its bilateral and multilateral efforts to address these harmful trade practices.

“Technical Barriers to Trade:   Technical regulations or conformity assessment procedures that unnecessarily restrict trade or curb the movement of innovative products risk lost opportunities to capitalize on America’s leadership in science and high-tech manufacturing, services, and agriculture. The NTE Report’s many examples of this challenge range from non-transparent European Union chemical regulations to Chinese Information Technology cybersecurity and encryption standards, to Indian and Brazilian testing and certification rules for telecommunications equipment, to technology. 

“The United States is taking steps to address these issues, and encourage flexible regulatory approaches and transparent, open processes, with these and many other partners. Within APEC, for example, the United States is engaged in projects on cybersecurity and blockchain to identify key public policy issues, and has projects in development on aerial drones and 3D printing. Another key example is USTR’s bilateral and multilateral work on standards and regulations related to electric cars, to ensure that vehicles from different manufacturers can all be charged reliably.

“The NTE Report details thousands of individual barriers to specific manufactured goods, farm products, and services. Each can reduce U.S. opportunities to export, invent, support jobs, and raise wages and incomes. These range from Argentina’s imposition of quota limits on imported books in September 2020 to India’s 38.8 percent average tariff on agricultural goods; the anomalous technical standards Saudi Arabia applies to shoes and electronic equipment; Ecuador’s mandatory and cumbersome process for allocating import licenses for agriculture products such as meats and dairy products; Indonesian local content requirements across a broad range of sectors; and Russian bans on imported food.”

What the NTE has to say about China 

The United States has for many years raised multiple concerns with China’s practices which the U.S. views as distorting trade flows and impeding market access to China. While the U.S. and China have engaged bilaterally extensively since China’s WTO accession and the U.S. has pursued several dozen disputes against Chinese practices that were clearly contrary to WTO obligations of China, little overall progress has been made in resolving the wide array of Chinese government distortions created and maintained over the years. These distortions contribute to the extraordinary trade deficit the United States has with China. See, e.g., U.S. Department of Commerce, Bureau of Economic Analysis, MONTHLY U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, FEBRUARY 2021, April 7, 2021, https://www.bea.gov/news/2021/us-international-trade-goods-and-services-february-2021 (U.S. trade deficit in 2020 in goods with China was $310.2 billion; U.S. trade surplus in services was $22.1 billion; U.S. deficit in goods with China increased to $50.9 billion in the January – February 2021 period versus $42.1 billion in the first two months of 2020).

The Trump Administration pursued a 301 investigation on a number of intellectual property concerns with China, conducted Section 232 national security investigations on steel and aluminum — two sectors where Chinese actions have created massive global excess capacity — and negotiated with China the U.S.-China Phase I Agreement which took effect in mid-February 2020. The Agreement both addressed a number of problems in agriculture, intellectual property and services and committed China to expanded purchases of goods and services from the United States in 2021-2022 (and going forward). The NTE reviews where Chinese commitments under the Phase I Agreement apply and what progress is being seen. On the purchase commitments, China has not come close to meeting the commitments in 2021 though there were increased imports from the U.S. of agricultural products and energy products. See, e.g., March 20, 2021, The U.S.-China Phase 1 Trade Agreement under the Biden Administration, https://currentthoughtsontrade.com/2021/03/20/the-u-s-china-phase-1-trade-agreement-under-the-biden-administration/. The U.S. has a long history of China promising reforms that are either not carried out or are undermined by additional restrictions. The list of areas of concern making it into the annual NTE is not exhaustive but illustrative of the challenges to obtaining conditions of fair trade with the world’s most populous nation and second largest economy.

Areas of concern for the United States with China shown in the 2021 NTE include:

Tariffs (there are some high agricultural tariffs, and the large tariffs imposed in retaliation to U.S. Section 232 actions on steel and aluminum and U.S. Section 301 actions for Chinese practices reviewed in the investigation).

Non-tariff barriers include

• Industrial Policies (such as “Made in China 2025” and described generally as follows, “China continues to pursue a wide array of industrial policies that seek to limit market access for imported goods, foreign manufacturers, and foreign services suppliers, while offering substantial government guidance, resources, and regulatory support to Chinese industries. The beneficiaries of these constantly evolving policies are not only state-owned enterprises (SOEs) but also other domestic companies attempting to move up the economic value chain.),

• State-Owned Enterprises (a number of concerns are raised including “China has also previously indicated that it would consider adopting the principle of ‘competitive neutrality’ for SOEs. However, China has continued to pursue policies that further enshrine the dominant role of the state and its industrial plans when it comes to the operation of state-owned and state-invested enterprises.”),

• Industrial Subsidies (massive subsidies to industries creating excess capacity and causing harm to U.S. producers globally; U.S. is working with the EU and Japan on possible amendments to Subsidies Agreement to address certain aspects not effectively handled under existing rules)

• Fisheries Subsidies (size of subsidies by China to its industry),

• Excess Capacity (problem created in many sectors including steel, aluminum, solar panels and others through state programs, subsidies, etc.),

• Indigenous Innovation (including preferences for IP developed in China),

• Technology Transfer (301 investigation looked at “(1) the use of a variety of tools to require or pressure the transfer of technologies and IP to Chinese companies; (2) depriving U.S. companies of the ability to set market based terms in technology licensing negotiations with Chinese companies; (3) intervention in markets by directing or unfairly facilitating the acquisition of U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and IP; and, (4) conducting or supporting cyber-enabled theft and unauthorized intrusions into U.S. commercial computer networks for commercial gains.”)

• Investment Restrictions (different systems for domestic and foreign investment; discriminatory treatment),

• Administrative Licensing (problems continue to be experienced in a wide array of licensing situations)

• Standards (ability of foreign companies to participate in establishing; development of Chinese standards regardless of international standards),

• Secure and Controllable ICT Policies (cybersecurity law used to discriminate against foreign ICT prducts),

• Encryption (“Onerous requirements on the use of encryption, including intrusive approval processes and, in many cases, mandatory use of indigenous encryption algorithms (e.g., for WiFi and 4G cellular products), continue to be cited by stakeholders as a significant trade barrier.”),

• Competition Policy (“Many U.S. companies have cited selective enforcement of the Anti-monopoly Law against foreign companies seeking to do business in China as a major concern, and they have highlighted the limited enforcement of this law against SOEs.” “Instead, these remedies seem to be designed to further industrial policy goals. Another concern relates to the procedural fairness of Anti-monopoly Law investigations of foreign companies. U.S. industry has expressed concern about insufficient predictability, fairness, and transparency in Antimonopoly Law investigative processes.”),

• Pharmaceuticals (some long standing issues addressed in U.S.-China Phase I Agreement; others to be addressed in the future),

• Medical devices (China’s “pricing and tendering procedures for medical devices and its discriminatory treatment of imported medical devices”),

• Cosmetics (“concerns with China’s regulation of cosmetics.” “Despite years of United States engagement with China via the JCCT, the International Cooperation on Cosmetics Regulation, and other fora to share views and expertise regarding the regulation of cosmetics, as of March 2021 China has not yet addressed key U.S. trade concerns, including basic concerns such as the need to use international standards to facilitate cosmetics conformity assessment, nor has it provided assurances that U.S. intellectual property will be protected.”),

• Export restraints (need to bring multiple cases at WTO on inputs where violate Protocol of Accession),

• Value-added Tax Rebates and Related Policies (modifications of rates to change trade flows),

• Import Ban on Remanufactured Products

• Import Ban on Recyclable Materials

• Trade Remedies (problems in transparency and procedural fairness; problems also in apparent use of trade remedies to go after trading partners who use WTO rights against Chinese products),

• Government Procurement (failure to join the WTO GPA yet),

• Corporate Social Credit System (“Foreign companies are concerned that the corporate social credit system will also be used by the Chinese Government to pressure them to act in accordance with relevant Chinese industrial policies or otherwise to make investments or conduct their business operations in ways that run counter to market principles or their own business strategies. Foreign companies are also concerned about the opaque nature of the corporate social credit system.”),

• Other Non-Tariff Measures (“Key areas include China’s labor laws, laws governing land use in China, commercial dispute resolution and the treatment of non-governmental organizations. Corruption among Chinese Government officials, enabled in part by China’s incomplete adoption of the rule of law, is also a key concern.”).

Intellectual Property Protection (many issues were included in the U.S.-China Phase I Agreement, some progress on issues raised).

• Trade Secrets (major area of concern and theft, some believed from government-supported entities; some improvements from U.S.-China Phase I Agreement),

• Bad Faith Trademark Registration (a continuing major concern; some progress in U.S.-China Phase I Agreement),

• Online Infringement (“Online piracy continues on a large scale in China, affecting a wide range of industries, including those involved in distributing legitimate music, motion pictures, books and journals, software, and video games.” Some progress made in the U.S.-China Phase I Agreement),

• Counterfeit Goods (a major problem. “The Phase One Agreement requires China to take effective enforcement action against counterfeit pharmaceuticals and related products, including active pharmaceutical ingredients, and to significantly increase actions to stop the manufacture and distribution of counterfeits with significant health or safety risks. The Phase One Agreement also requires China to provide that its judicial authorities shall order the forfeiture and destruction of pirated and counterfeit goods, along with the materials and implements predominantly used in their manufacture. In addition, the Agreement requires China to significantly increase the number of enforcement actions at physical markets in China and against goods that are exported or in transit. It further requires China to ensure, through third party audits, that government agencies and SOEs only use licensed software.”).

Agriculture (“China remains a difficult and unpredictable market for U.S. agricultural exporters, largely because of
inconsistent enforcement of regulations and selective intervention in the market by China’s regulatory authorities. The failure of China’s regulators to routinely follow science-based, international standards, and guidelines further complicates and impedes agricultural trade. The Phase One Agreement addresses structural barriers to trade and aims to support a dramatic expansion of U.S. food, agriculture, and seafood product exports, which will increase U.S. farm and fishery income, generate more rural economic activity, and promote job growth. The Phase One Agreement addresses a multitude of non-tariff barriers to U.S. agriculture and seafood products, including for meat and meat
products, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and feed additives, pet food, and products of agricultural biotechnology. The Agreement also includes enforceable commitments requiring China to purchase and import on average at least $40 billion of U.S. agricultural and seafood products per year in 2021 and 2022, representing an average annual increase of at least $16 billion over 2017 levels. China also agreed that it will strive to purchase and import an additional $5 billion of U.S. agricultural and seafood products each year.”).

• Agricultural Domestic Support (China exceeds the limits allowed it; WTO dispute confirms China in violation of WTO obligations; U.S. seeking authorization to retaliate),

• Tariff-rate Quota Administration (U.S. challenged China’s administration of TRQs on various products and won WTO dispute; U.S.-China Phase I Agreement requires China to comply on the products of concern),

• Agricultural Biotechnology Approvals (China’s system has been a major problem for U.S. producers. U.S>-China Phase I Agreement includes commitments by China to address the major concerns of the U.S. in this area),

• Food Safety Law (China’s actions have been quite burdensome and have failed to provide notices to the WTO in many cases. U.S>-China Phase I Agreement addresses the main concerns),

• Poultry (China restricted U.S. exports after avian influenza in the U.S. and maintained restrictions despite actions by the U.S. that complied with World Organization for Animal Health (OIE) guidelines. U.S.-China Phase I Agreement has China committing to follow OIE guidelines and limiting restrictions to the region where there is a problem in future outbreaks),

• Beef (“In the Phase One Agreement, China agreed to expand the scope of U.S. beef products allowed to be imported, to eliminate age restrictions on cattle slaughtered for export to China, and to recognize the U.S. beef and beef products’ traceability system. China also agreed to establish MRLs for three synthetic hormones legally used for decades in the United States consistent with Codex standards and guidelines. Where Codex standards and guidelines do not yet exist, China agreed to use MRLs established by other countries that have performed science-based risk assessments.”),

• Pork (“China bans the use of certain veterinary drugs and growth promotants instead of accepting the MRLs set by Codex.” Some progress on opening the China market to U.S. pork products was made in the U.S.-China Phase I Agreement),

• Horticultural Products (market access barriers for many U.S. products. U.S.-China Phase I Agreement obtains access for a number of products — fresh potatoes for processing, blueberries, nectarines and avocados from California, and barley, timothy hay and some other products.),

• Value-added Tax Rebates and Related Policies (practice of varying rates on agricultural commodities).

Services (“In 2020, numerous challenges persisted in a number of services sectors. As in past years, Chinese regulators
continued to use discriminatory regulatory processes, informal bans on entry and expansion, case-by-case approvals in some services sectors, overly burdensome licensing and operating requirements, and other means to frustrate the efforts of U.S. suppliers of services to achieve their full market potential in China. These policies and practices affect U.S. service suppliers across a wide range of sectors, including express delivery, cloud computing, telecommunications, film production and distribution, online video and entertainment software, and legal services. In addition, China’s Cybersecurity Law and related draft and final implementing measures include mandates to purchase domestic ICT products and services, restrictions on cross-border data flows, and requirements to store and process data locally. China’s draft Personal Information Protection Law also includes restrictions on cross-border data flows and requirements to store and process data locally. These types of data restrictions undermine U.S. services suppliers’ ability to take advantage of market access opportunities in China. China also had failed to fully address U.S. concerns in
areas that have been the subject of WTO dispute settlement, including electronic payment services and theatrical film importation and distribution. The Phase One Agreement addresses a number of longstanding trade and investment barriers to U.S. providers of a wide range of financial services, including banking, insurance, securities, asset management, credit rating, and electronic payment services, among others. The barriers addressed in that Agreement
include joint venture requirements, foreign equity limitations, and various discriminatory regulatory requirements. Removal of these barriers should allow U.S. financial service providers to compete on a more level playing field and expand their services export offerings in the China market.”)

• Banking Services (U.S.-China Phase I Agreement addresses some concerns re access including bank branches and supplying securities investment fund custody services),

• Securities, Asset Management, and Futures Services (U.S.-China Phase I Agreement resulted in China eliminating limits on equity ownership and commits to nondiscrimination for U.S. suppliers of these services),

• Insurance Services (despite commitments by China as part of the U.S.-China Phase I Agreement, U.S. participation in China’s insurance market remains very limited),

• Electronic Payment Services (China has restricted access to foreign electronic payment services providers. U.S. won a WTO dispute and included provisions in U.S.-China Phase I Agreement. So far just one foreign electronic payment services provider has been licensed in China),

• Internet-enabled Payment Services (major problems for foreign companies to obtain license to provide such services),

• Telecommunications Services (range of barriers have limited foreign suppliers access to both basic telecom services and to value added services),

• Internet Regulatory Regime (“China’s Internet regulatory regime is restrictive and non-transparent, affecting a broad range of commercial services activities conducted via the Internet, and is overseen by multiple agencies without clear lines of jurisdiction. China’s Internet economy had boomed over the past decade and is second in size only to that of the United States. Growth in China has been marked in service sectors similar to those found in the United States, including retail websites, search engines, online education, travel, advertising, audio-visual and computer gaming services, electronic mail and text, online job searches, Internet consulting, mapping services, applications, web domain registration, and electronic trading. However, in the Chinese market, Chinese companies dominate due in large part to restrictions imposed on foreign companies by the Chinese Government. At the same time, foreign companies continue to encounter major difficulties in attempting to offer these and other Internet-based services on a cross-border basis. China continues to engage in extensive blocking of legitimate websites and apps, imposing significant costs on both suppliers and users of web-based services and products. According to the latest data, China currently blocks a significant portion of the largest global sites. U.S. industry research has calculated that more than 10,000 foreign sites are blocked, affecting billions of dollars in business, including communications, networking, app stores, news, and other sites. Even when sites are not permanently blocked, the often arbitrary implementation of blocking, and the performance-degrading effect of filtering all traffic into and outside of China, significantly impair the supply of many cross-border services, often to the point of making them unviable.”),

• Voice-over-Internet Protocol Services (“China’s regulatory authorities have restricted the ability to offer VOIP services interconnected to the public switched telecommunications network (i.e., to call a traditional phone number) to basic telecommunications service licensees.”),

• Cloud Computing Services (foreign service providers can only operate in China by using a Chinese company and turning over brand, IP and other aspects; serious concern for U.S.),

• Audio-visual and Related Services (“China prohibits retransmission of foreign TV channels, prohibits foreign investment in TV production, prohibits foreign investment in TV stations and channels in China, and imposes quotas on the amount of foreign programming that can be shown on a Chinese TV channel each day.”),

• Theatrical Films (despite a WTO dispute and a resulting MOU where China agreed to expand number of U.S. films, China has not fulfilled its commitments)

• Online Video and Entertainment Software Services (foreign suppliers are severely restricted),

• Legal Services (very limited ability for foreign firms or foreign lawyers to practice in China)

• Express Delivery Services (foreign service providers are banned from document delivery and face discriminatory and burdensome actions on package participation),

• Data Restrictions (activities in China are likely to result in local storage requirements and limits on cross-border transfer; major concern to U.S. and many other countries).

Transparency (much work needed by China to meet obligations)

• Publication of Trade-related Measures (WTO obligation to publish in one journal; spotty performance and many types of measures not published in the journal),

• Notice-and-comment Procedures (little progress at sub-central government level; some progress at central government; U.S.-China Phase I Agreement commits China to provide 45 days notice and comment period for matters relating to the Agreement),

• Translations (WTO commitment to provide translations in one of the three official WTO languages. “China does not publish translations of trade-related laws and administrative regulations in a timely manner (i.e., before implementation), nor does it publish any translations of trade-related measures issued by sub-central governments at all.”).

Conclusion

While the U.S. was the first country to produce a national trade estimate, a number of countries do so today. All trading partners have some practices which concern other trading partners, including the United States.

The length of the entry in the NTE for a give country is a reasonable indication both of the importance of the trade relationship and of the breadth of issues of concern. For the United States, the National Trade Estimate is a useful compilation of many of the major concerns raised by industries about problems in access to markets abroad or distortions created by practices of trading partners. Typically items found in the NTE will be part of USTR’s focus during the year in interactions with particular trading partners.

China is the country with the longest entry in the NTE and has been for many years. Considering the array of distortions and other problems identified in this year’s NTE, the focus on China is not surprising.

Some of the problems identified in this year’s NTE with China could be addressed through WTO reform, though China has indicated opposition to such an approach. On some of the issues, the U.S. has received repeated promises from China to address but without meaningful results to date.

What is clear is that U.S. trade relations with China are not balanced and haven’t been for the entire time of WTO membership for China. The challenge for the U.S. and the world is how to restore balance and save the global trading system. There are no obvious answers.

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