Tuesday, 7 March 2017
President Trump's 2017 Trade Policy Agenda Released
The United States Trade Representative has released the President’s 2017 Trade Policy Agenda document (Agenda) on March 1, 2017. The Agenda sets forth its purpose as well as its top priorities. Interestingly, the purpose points to the voters as the impetus for the focus of the Agenda:
In 2016, voters in both major parties [?] called for a fundamental change in direction of U.S. trade policy. The American people grew frustrated with our prior trade policy not because they have ceased to believe in free trade and open markets, but because they did not all see clear benefits from international trade agreements. President Trump has called for a new approach, and the Trump Administration will deliver on that promise.
The overarching purpose of our trade policy – the guiding principle behind all of our actions in this key area – will be to expand trade in a way that is freer and fairer for all Americans. Every action we take with respect to trade will be designed to increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports. As a general matter, we believe that these goals can be best accomplished by focusing on bilateral negotiations rather than multilateral negotiations – and by renegotiating and revising trade agreements when our goals are not being met. Finally, we reject the notion that the United States should, for putative geopolitical advantage, turn a blind eye to unfair trade practices that disadvantage American workers, farmers, ranchers, and businesses in global markets. [emphasis added]
One of the specific key objectives noted by the Agenda includes “Ensuring that U.S. owners of intellectual property (IP) have a full and fair opportunity to use and profit from their IP.” The Agenda further lays out its top priorities as: “(1) defend U.S. national sovereignty over trade policy; (2) strictly enforce U.S. trade laws; (3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and (4) negotiate new and better trade deals with countries in key markets around the world.” [emphasis added].
In discussing the first priority and the WTO Dispute Settlement Understanding, the Agenda states: “[E]ven if a WTO dispute settlement panel – or the WTO Appellate Body – rules against the United States, such a ruling does not automatically lead to a change in U.S. law or practice. Consistent with these important protections and applicable U.S. law, the Trump Administration will aggressively defend American sovereignty over matters of trade policy.” On strictly enforcing U.S. trade laws, the Agenda states: “We strongly support true market based competition – and we welcome the partnership of any country that agrees with us. Unfortunately, however, large portions of the global economy do not reflect market forces. Important sectors of the global economy, and significant markets around the world, have been at times distorted by foreign government subsidies, theft of intellectual property, currency manipulation, unfair competitive behavior by state-owned enterprises, violations of labor laws, use of forced labor, and numerous other unfair practices.”
On using leverage to open markets, the Agenda asserts that: “Other countries have looked to harm U.S. companies by blocking or unreasonably restricting the flow of digital data and services, or through theft of trade secrets. In still others, foreign countries can use technical barriers – such as unnecessary regulations on particular items – to limit competition, including in the services sector. Concerns have also been raised over currency practices and their impact on the competitiveness of U.S. goods and services. These are only a few examples of the tactics that can be used to block or impede the competitiveness of U.S. exporters.” The Agenda notes that transparency in implementing regulations of WTO rules and trade agreements would be helpful.
On the section on negotiating new and better trade deals, the Agenda notes the following issues:
1. In 2000, the U.S. trade deficit in manufactured goods was $317 billion. Last year, it was $648 billion – an increase of 100 percent.
2. Our trade deficit in goods and services with China soared from $81.9 billion in 2000 to almost $334 billion in 2015 (the last year for which such data are available), an increase of more than 300 percent.
3. Of course, a rising trade deficit may be consistent with a stronger economy. However, that has not been the experience of the typical American household. In 2000, U.S. real median household income (in 2015 dollars) was $57,790. In 2015 (the most recent year for which data are available), it was $56,516. In fact, despite the recovery since the financial crisis, real median household income in the United States remains lower today than it was 16 years ago.
4. In January 2000, there were 17,284,000 manufacturing jobs in the United States – a figure roughly in line with the total number of U.S. manufacturing jobs going back to the early 1980s. In January 2017, there were only 12,341,000 manufacturing jobs in the United States – a loss of almost 5 million jobs.
5. In the 16 years before China joined the WTO – from 1984 to 2000 – U.S. industrial production grew by almost 71 percent. In the period from 2000 to 2016, U.S. industrial production grew by less than 9 percent.
The Agenda also notes that the most important trade deal under the Obama Administration—with South Korea—resulted in a massive trade deficit. It will be interesting to see how intellectual property policy works out in coming negotiations.