Operation of the Trade Agreements Program
71st Report
August 2020
Publication Number: 5055
United States International Trade Commission
Commissioners
Jason E. Kearns, Chair
Randolph J. Stayin, Vice Chair
David S. Johanson
Rhonda K. Schmidtlein
Amy A. Karpel
Catherine DeFilippo
Director,
Office of Operations
William Powers
Director,
Office of Economics
Address
all communications to
Secretary to the Commission
United States International Trade Commission
Washington, DC 20436
This
report was prepared principally by:
Project Leader
Stephanie Fortune-Taylor, Office of Economics
Deputy Project Leader
Andrew Knipe, Office of Economics
Chapter Captain
Christopher Montgomery, Office of Economics
Office of Economics
Nabil Abbyad, Erika Bethmann, John Benedetto, Pamela
Davis, Justino De La Cruz, Lauren Gamache, Alexander Hammer,
Lin Jones, Romina Kazandjian, Trevor Litwin, Carlos Payan, Caroline
Peters, Meagan Martin, Kladius Maynard, Steven Seifert, Gregory
Taylor, and Wen Jin “Jean” Yuan
Office of the General Counsel
William W. Gearhart
Office of Industries
Natalie Hanson and Sarah Oliver
Office of Investigations
Salvatore Mineo
Office of Tariff Affairs and Trade
Agreements
Donnette Rimmer
Office of Unfair Import Investigations
David Lloyd
Office of Analysis and Research Services
Maureen Letostak, Laura Thayn, and Aaron Woodward
Editorial Review
Judy Edelhoff and Peg Hausman
Statistical Review
Russell Duncan
Content Reviewer
Jeffrey Clark
Administrative Support
Justin Holbein and Hau Nguyen
Special Assistance
Carrin Brown and Vamsi Motaparthy
Under the direction of
Arona Butcher, Chief
Country and Regional Analysis Division, Office of Economics
This report is the 71st in a series of annual reports
submitted to the U.S. Congress under section 163(c) of the Trade Act of 1974
(19 U.S.C. 2213(c)) and its predecessor legislation. Section 163(c) states that
“the International Trade Commission shall submit to the Congress at least once
a year, a factual report on the operation of the trade agreements program.”
This report is one of the principal means by which the U.S.
International Trade Commission provides Congress with factual information on
trade policy and its administration for 2019. The trade agreements program
includes “all activities consisting of, or related to, the administration of
international agreements which primarily concern trade and which are concluded
pursuant to the authority vested in the President by the Constitution” and by
congressional legislation.
This report on the operations of the trade agreements
program is prepared by the U.S. International Trade Commission (Commission or
USITC) as required by section 163(c) of the Trade Act of 1974. The 71st in a
series, this report covers trade-related actions in the calendar year 2019.
[1]
The level of U.S. imports and U.S. exports of goods and
services depends on many factors, including the strength of the U.S. and other
economies. Growth in these economies contributes to growth in cross-border
trade. The rate of global economic growth fell slightly from 3.6 percent in
2018 to 2.9 percent in 2019, reflecting slower growth in advanced as well as
emerging and developing economies. The economies of advanced countries grew 1.7
percent in 2019, down from 2.2 percent in 2018. The growth rate of
emerging-market and developing economies also dropped—from 4.5 percent in 2018
to 3.7 percent in 2019—due to broad-based decelerations across most regions of
the emerging market world, with the exception of sub-Saharan Africa. All of the
United States’ eight major trading partners, except Japan, showed slower growth
rates in 2019 than in 2018.
[2]
The economic rate of growth in the United States also slowed in 2019: U.S. real
gross domestic product (GDP) increased 2.3 percent in 2019, compared to an
increase of 2.9 percent in 2018.
In 2019, the U.S. dollar depreciated 0.5 percent against a
broad trade-weighted index of major foreign currencies. However, it experienced
varying exchange rates against the currencies of its main trading partners.
Between January 1 and December 31, 2019, the U.S. dollar appreciated by 3.4
percent against the Chinese yuan, 2.7 percent against the euro, 0.6 percent
against the Indian rupee, and 0.1 percent against the Japanese yen. Over the
same period, the dollar depreciated 0.4 percent against the Mexican peso, 1.0
percent against the Canadian dollar, and 1.6 percent against the British pound
sterling.
Both U.S. exports and U.S. imports of goods decreased by
value in 2019. The value of U.S. merchandise exports totaled $1,645.2 billion
in 2019, down 1.2 percent ($20.8 billion) from $1,666.0 billion in 2018. The
value of U.S. merchandise imports totaled $2,497.5 billion in 2019, down by 1.6
percent ($41.9 billion) from $2,539.3 billion in 2018. The largest increase in
U.S. exports was a $7.5 billion increase in energy-related products, whereas
the largest increase in U.S. imports was a $12.5 billion increase in
transportation equipment. Of the U.S. economy’s broad merchandise sectors, all
but one, the energy-related products sector, experienced a trade deficit in
2019.
[3]
Overall, U.S. exports decreased less than U.S. imports, resulting in an $21.1
billion decrease in the U.S. merchandise trade deficit that brought it to
$852.3 billion in 2019 (figure ES.1).
U.S. two-way cross-border trade in private services,
increased 3.3 percent between 2018 and 2019.
[4]
U.S. exports of private services grew 2.2 percent to $823.7 billion in 2019,
while U.S. imports of private services grew 5.0 percent to reach $571.3 billion
in 2019. As a result, the U.S. surplus in private services decreased 3.4
percent to $252.4 billion.
Figure ES.1:
U.S.
trade balance in goods and services, 2005–19
Source: USDOC, BEA, interactive data, “Table
1.2: U.S. International Transactions, Expanded Detail,” April 14, 2020.
Note: Underlying data for this figure can
be found in appendix table
B.1
.
Safeguard actions:
The Commission conducted
no new safeguard investigations during 2019 under sections 201–204 of the Trade
Act of 1974 or under any of the provisions that implement safeguard provisions
in free trade agreements (FTAs) involving the United States.
Two safeguard measures were in place during 2019, on certain
large residential washers and on certain crystalline silicon photovoltaic
cells. During 2019, the Commission conducted and completed a safeguard
monitoring investigation on certain large residential washers.
Section 301:
There were two ongoing
investigations and two new investigations in 2019 under section 301 of the
Trade Act of 1974.
The first ongoing investigation was instituted in 1987 and
concerned various European Union (EU) meat hormone directives, which prohibit
the use of certain hormones that promote growth in farm animals. Following a
successful challenge at the World Trade Organization (WTO), the United States
imposed additional duties on certain imports from the EU in 1999. The United
States lifted the additional duties in 2011. In December 2016, representatives
of the U.S. beef industry filed a request with the Office of the U.S. Trade
Representative (USTR) asking that the additional duties be reinstated, and USTR
initiated a process to consider whether to reinstate the additional duties. In
2018, the European Commission received a mandate from the European Council to
begin formal negotiations with the United States to resolve the matter. In June
2019, the United States and the
EU signed an agreement
guaranteeing EU market access for U.S. high-quality beef under a tariff-rate
quota,
and USTR concluded its section 301 proceedings against the EU,
effective January 1, 2020.
The second investigation ongoing in 2019 was initiated on
August 18, 2017. USTR sought to determine
whether any
of China’s laws, policies, practices, or actions may be unreasonable or
discriminatory and may be harming American intellectual property rights (IPRs),
innovation, or technology development.
Following
publication of its findings on March 22, 2018, where it identified four
categories of acts, policies, and practices that it found unreasonable or discriminatory,
the United States initiated a WTO dispute and requested consultations with
China on its findings involving one of the categories of acts, policies, and
practices identified in the section 301 investigation. In response to the other
categories of acts, policies, and practices, and at the direction of the
President, USTR imposed an additional 25 percent duty on certain Chinese
products with an annual trade value of about $50 billion. These added tariffs
fell into two tranches. Following this action, China imposed retaliatory
tariffs on U.S. goods. On September 24, 2018, USTR imposed additional duties on
a third tranche of products from China with an approximate trade value of $200
billion. On
August 24, 2019, the United States announced an additional
10 percent tariff on a fourth tranche of imports from China, worth an
approximate $300 billion. These added tariffs were divided into two different
groups that were set to be implemented in the fall of 2019. Tariffs on the
first group took effect on September 2019, with tariffs on the second group
scheduled to take effect December 15, 2019. However, in light of the Phase One
trade deal, tariffs on the first group were again modified in late December
2019, from 15 percent to 7.5 percent, for implementation in February 2020,
while tariffs on the second group were suspended indefinitely.
The first new section 301 investigation of 2019 was
instituted by the USTR on April 12, 2019, concerning a 15-year-old WTO dispute
on subsidies to the EU large civil aircraft industry. The USTR initiated the section
301 investigation to enforce the U.S. rights in connection with the WTO dispute.
After considering the outcomes of the WTO proceedings, public comment, and the
advice of the Section 301 Committee, the USTR determined that EU large civil
aircraft subsidies were inconsistent with the WTO agreement, and that the EU
had failed to implement the recommendation of the WTO Dispute Settlement Body
(DSB) to rectify the issue. On October 2, 2019, the WTO arbitrator issued its
decision that the United States was authorized to enact $7.5 billion in
countermeasures against the EU annually, as a result of large civil aircraft
subsidies. Duties on EU goods took effect on October 18, 2019.
The USTR initiated a second new section 301 investigation on
July 10, 2019, concerning then-pending legislation on a French tax on
international companies providing digital interface services and certain
internet advertising services to French users. The law enacting the tax was
signed on July 24, 2019, and initial tax payments from covered companies were
due to the French government on November 25, 2019. USTR issued its
investigation findings in a report on December 2, 2019, following a public
hearing on proposed duties under the investigation and consultations between
the U.S. and French governments on the matter. Finding that the tax was
discriminatory and an unreasonable burden to U.S. companies, on December 6,
2019, USTR proposed duties of up to 100 percent on about $2.4 billion of imports
of food, beverage, cosmetics, and other products from France. Duties had not
yet been imposed by the end of 2019.
Special 301:
On April 25, 2019, USTR
released its annual
Special 301 Report
. The report identifies trading
partners that do not adequately or effectively protect and enforce IPRs or
otherwise deny market access to U.S. innovators and creators that rely on
protection of their IPRs. Trading partners that currently present the most
significant concerns regarding IPRs are placed on the Priority Watch List or
Watch List. USTR identified 36 such countries for these lists in the
2019 Special 301 Report
.
Antidumping duty investigations:
The Commission instituted 37 new antidumping investigations and made 33 preliminary
determinations and 33 final determinations in 2019. Antidumping duty orders
were issued by the U.S. Department of Commerce (USDOC) in 33 final
investigations on 20 products from 15 countries.
Countervailing duty investigations:
The Commission instituted 21 new countervailing duty investigations and
made 17 preliminary determinations and 21 final determinations during 2019.
Countervailing duty orders were issued by USDOC in 20 final investigations on
16 products from five countries.
Reviews:
The Commission instituted 83 reviews of existing
antidumping and countervailing duty orders and suspension agreements, as
required by law, either five years after initial publication or five years
after publication of a subsequent determination to continue them. The
Commission completed 60 reviews, resulting in the continuation of 51
antidumping duty and countervailing duty orders for up to five additional
years.
Section 129 investigations:
Section 129 of
the U.S. Uruguay Round Agreements Act established a procedure by which the
Administration may respond to adverse reports from WTO panels (quasi-judicial
tribunals) or the WTO Appellate Body in trade remedy cases. There were no section
129 determinations made or proceedings underway during 2019.
Section 337 investigations:
During calendar
year 2019, there were 128 active section 337 investigations and ancillary
proceedings alleging unfair import practices, such as patent infringement.
Fifty-nine of these proceedings were instituted in 2019. Of those new
proceedings, 47 were new section 337 investigations and 12 were new ancillary
(secondary) proceedings relating to previously concluded investigations. The
Commission completed a total of 63 investigations and ancillary proceedings
under section 337 in 2019, and issued 6 general exclusion orders, 9 limited
exclusion orders, and 25 cease and desist orders.
Section 337 proceedings active in 2019 involved a broad
spectrum of products. Technology products remained the single largest category,
with approximately 29 percent of the active proceedings involving computer and
telecommunications equipment. The second-largest category was pharmaceuticals
and medical devices, which were at issue in about 15 percent of the active
proceedings. Together, automotive, manufacturing, and transportation products
were at issue in about 12 percent of the active proceedings. Three
categories—consumer electronics, small consumer items, and lighting
products—were each at issue in about 6 percent of the proceedings; together,
they represented about 18 percent of the proceedings.
Section
232 national security investigations:
During 2019, USDOC completed two
investigations under the national security provisions in section 232 of the
Trade Expansion Act of 1962,
[5]
on certain automobiles and parts and on uranium. No section 232 trade remedy
actions were imposed during 2019 on products covered by those investigations. USDOC
instituted one new investigation under section 232, on titanium sponge. Additional
tariffs imposed in 2018 under section 232 on certain steel and aluminum imports
remained in place throughout 2019, but with certain adjustments in May 2019.
Adjustments included the termination of the section 232 tariffs on steel and
aluminum from Canada and Mexico, and a reduction in the section 232 tariffs on
steel from Turkey from 50 percent ad valorem to 25 percent ad valorem.
Trade Adjustment Assistance (TAA):
The U.S.
Department of Labor (USDOL) administers the TAA for Workers programs, while the
TAA for Firms program is administered by USDOC. In fiscal year (FY) 2019, USDOL
received 1,235 petitions for TAA for Workers, a slight decline from the 1,273
petitions received in FY 2018. USDOL certified 799 petitions covering 88,001
workers as eligible for TAA and denied 316 petitions covering 21,881 workers.
In FY 2019, USDOC certified 67 petitions as eligible for assistance under the
TAA for Firms program and approved 66 adjustment protocols.
U.S. imports under preference
programs have declined in recent years; from 2018 to 2019, the preference
program share of total U.S. general imports fell to 1.1 percent (down from 1.4
percent). Total preference program imports declined by 21.0 percent, and the
share of imports under HTS subheadings that are eligible for preferences under
the African Growth and Opportunity Act (AGOA), the Caribbean Basin Economic
Recovery Act (CBERA), the U.S.-Caribbean Basin Trade Partnership Act (CBTPA),
and the Generalized System of Preferences
(GSP) declined by about 15.8 percent.
Generalized System of Preferences (GSP):
U.S.
imports under GSP dropped 12.5 percent, falling to $20.9 billion in 2019. These
imports accounted for 8.9 percent of total U.S. imports from all GSP
beneficiary countries and 0.8 percent of U.S. imports from all countries. The
top five beneficiary countries (Thailand, India, Indonesia, Brazil, and the
Philippines) accounted for more than two-thirds of GSP imports.
USTR opened new GSP eligibility reviews for South Africa and
Azerbaijan, and closed eligibility reviews—with no loss of GSP eligibility—for
Bolivia, Iraq, and Uzbekistan. Turkey was removed from the GSP program,
effective May 17, 2019, based on its level of economic development. India was
removed from GSP, effective June 5, 2019, based on India’s failure to provide
the United States with equitable and reasonable access to its markets. About
one-third of Thailand’s GSP benefits—$1.3 billion in trade preferences under
the GSP—were suspended based on its failure to adequately provide worker
rights. A portion of Ukraine’s GSP benefits, previously removed in 2017, were
restored in recognition of Ukraine’s tangible progress on IPRs.
Thailand was the leading source of imports that entered
under the GSP program in 2019, followed by India and Indonesia
(interactive
dashboard
in appendix A). These three countries together accounted for
about half of all U.S. imports under GSP in 2019.
Nepal Trade Preferences Act (NTPA):
The
NTPA was implemented in December 2016 to improve Nepal’s export competitiveness
and help Nepal’s economic recovery following a 2015 earthquake. In 2019, U.S.
imports from Nepal under NTPA were $3.1 million (a decrease of 2.1 percent from
the previous year), accounting for 3.4 percent of all U.S. imports from Nepal.
African Growth and Opportunity Act (AGOA):
In 2019, 39 sub-Saharan African (SSA) countries were eligible for AGOA
benefits. Of these countries, 27 were eligible for AGOA textile and apparel
benefits for all or part of 2019. As a result of the 2019 annual AGOA
eligibility review, Cameroon’s AGOA eligibility was terminated effective
January 1, 2020 because of human rights violations, while 38 SSA countries
remained eligible for AGOA benefits in 2020.
In 2019, the value of U.S. imports that entered free of duty
from beneficiary countries under AGOA (including imports under GSP) was $8.4
billion, a 30.1 percent decline from 2018. These imports accounted for 40.5
percent of total imports from AGOA countries in 2019. The decline in U.S.
imports under AGOA between 2018 and 2019 mainly reflected a decline by value of
imports of crude petroleum, refined petroleum products, and passenger motor
vehicles under the program.
Caribbean Basin Economic Recovery Act (CBERA):
At
yearend 2019, 17 countries and dependent territories were eligible for CBERA
preferences, and a subset of 8 countries were designated eligible for Caribbean
Basin Trade Partnership Act (CBTPA) preferences. In 2019, the value of U.S.
imports under CBERA decreased by 7.7 percent to $5.6 billion, mainly reflecting
a drop in U.S. imports of methanol. Haiti was the leading supplier of U.S.
imports under CBERA in 2019, followed by Trinidad and Tobago. Imports under
CBERA programs accounted for 11.7 percent of all imports from CBERA beneficiary
countries in 2018.
Haiti Initiatives:
Over the years, several
amendments to CBERA have expanded trade benefits to Haiti, benefiting Haiti’s
apparel industry. Nearly all (96.9 percent) of U.S. imports of apparel from
Haiti entered duty free under CBERA. U.S. imports from Haiti under CBERA are
brought in under CBTPA, the Haitian Hemisphere
Opportunity through Partnership Encouragement Act of 2006 and 2008 (HOPE Acts),
and the Haiti Economic Lift Program of 2010 (HELP Act), with a growing
portion entering under these acts. The value of U.S. imports of apparel
entering under the HOPE/HELP Acts rose 12.2 percent to $720.0 million in 2019
and represented nearly 72 percent of all U.S. apparel imports from Haiti.
WTO developments:
Negotiations towards a
plurilateral agreement on fisheries subsidies and the trade-related aspects of
e-commerce continued in 2019. Two existing moratoriums—one on imposing customs
duties on electronic transmissions, and the other on submitting nonviolation
and situation complaints under the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)—were extended until June 2020. WTO
membership remained at 164 in 2019.
WTO dispute settlement:
During 2019, WTO
members filed 19 new requests for dispute settlement consultations. This number
was significantly lower than the 39 requests filed during 2018 and closer to
the 17 requests filed in 2017 and the number filed in earlier years. The United
States filed one new dispute in 2019, against India, and was the named
respondent in three new disputes filed by the EU, Russia, and China.
Four of the disputes filed during 2018—two by the United
States and one each by Canada and Mexico—were terminated in May 2019 after the
three countries reached a mutually agreed settlement. The disputes concerned
additional duties imposed by the United States in 2017 on imports of certain
steel and aluminum products and countermeasures imposed in response by Canada
and Mexico on U.S. imports.
One of the year’s most significant developments occurred in
October 2019 in a dispute originally brought by the United States in 2004 that
concerned subsidies provided to the large European aerospace company Airbus by
the EU and four member states. After the issuance of several panel and
Appellate Body reports in favor of the United States, a WTO arbitrator rendered
a decision about the level of countermeasures sought by the United States. The
decision stated that countermeasures of up to $7.5 billion annually were
commensurate with the degree and nature of the adverse effects determined to
exist. The award of $7.5 billion annually is by far the largest in WTO
history.
During 2019, WTO dispute settlement panels and the WTO Appellate
Body issued reports in nine disputes to which the United States was a party,
including the four disputes noted above in which the United States, Canada, and
Mexico reached mutually agreed settlements. Three of the remaining five involved
disputes filed by the United States, and the remaining two involved disputes
filed against the United States. These totals reflect only panel and Appellate
Body reports relating to the original disputes and not reports by compliance
panels or arbitrators following adoption of panel and/or Appellate Body reports
by the DSB in the original dispute.
Organisation for Economic Co-operation and
Development (OECD):
The OECD ministerial council meeting was held in
Paris, France, on May 22–23, 2019. Discussions focused on digitalization and
addressing its disruptive effects on competitiveness, taxation, governance, and
digital transition. There were 37 OECD members at yearend 2019. During the
year, the OECD Trade Committee focused on broad topics such as trade policy
concerns, digital trade, agricultural subsidies, and export credits. In 2019,
after a disagreement arose between the United States and France about Frances's
proposed digital tax, the OECD stepped in and sought to create a resolution
mechanism to settle digital tax disputes. Following a mandate from the G20
Finance Ministers to review the implications of digitalization for taxation,
the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) continued
to work on forming a consensus-based long-term solution through its Task Force
on the Digital Economy (TFDE).
[6]
Finally, the Global Forum on Steel Excess Capacity (GFSEC), which is chaired by
the OECD, held its third ministerial meeting in Tokyo, Japan, on October 26,
2019. Members of the GFSEC could not reach an agreement on renewal at the
ministerial meeting, and the GFSEC expired in November 2019.
Asia-Pacific Economic Cooperation (APEC):
In 2019, under Chile’s leadership, APEC member economies highlighted the theme of
“Connecting People, Building the Future.” APEC focused on the digital
revolution; facilitating trade via uniform procedures and regulations; growth
that benefits women and small and medium-sized businesses; and climate change.
APEC’s major accomplishments in 2019 included carrying out work on the internet
economy, digital trade, and e-commerce; developing a 2020–25 blueprint to
further global value chain development and cooperation in the region; and
identifying areas for which APEC could contribute to support the multilateral
trading system, among other achievements.
Trade and Investment Framework Agreements (TIFAs):
TIFAs provide a framework to expand trade and investment and a forum to resolve
trade and investment issues between the United States and various trading
partners. By yearend 2019, the United States was party to 56 TIFAs; no new
TIFAs entered into force in 2019. A number of TIFA Council meetings took place
in 2019, including those with Central Asia, Egypt, Iraq, Maldives, Mongolia,
New Zealand, Rwanda, Thailand, Tunisia, and Uruguay.
U.S. free trade agreements (FTAs) in force in 2019:
The United States was party to 14 FTAs involving a total of 20 countries as of
December 31, 2019. In chronological order by date of entry into force, the United
States’ FTAs in force during 2019 were with Israel; Canada and Mexico; Jordan;
Singapore; Chile; Australia; Morocco; Bahrain; the six countries of the Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR), comprising
Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and
Nicaragua; Peru; Oman; South Korea; Colombia; and Panama.
FTA merchandise trade flows with FTA partners:
Total two-way merchandise trade between the United States and its 20 FTA
partners was $1.6 trillion in 2019, accounting for 39.6 percent of total U.S.
merchandise trade with the world. U.S. trade with the two other North American
Free Trade Agreement (NAFTA) countries, Canada and Mexico continued to
contribute the most to overall U.S. trade with its FTA partners. In 2019, these
countries accounted for $1.2 trillion, or 74.7 percent, of total U.S. trade
with its FTA partners. From 2018 to 2019, however, the value of U.S. exports to
NAFTA countries decreased 2.9 percent ($16.5 billion) to $548.8 billion, while U.S.
general imports from NAFTA countries
rose
1.9 percent ($13.0 billion), to $677.8 billion. As a result, the U.S.
merchandise trade deficit with its NAFTA partners increased by 29.5 percent to
$129.1 billion in 2019.
U.S. trade with its FTA partners other than Canada and
Mexico was valued at $415.0 billion in 2019, which was a 0.2 percent increase
from 2018. U.S. exports to these FTA partners increased 0.3 percent ($730
million), from $217.1 billion in 2018 to $217.9 billion in 2019. At the same
time, U.S. imports from these partners increased less than 0.1 percent ($105
million) from $197.0 billion in 2018 to $197.1 billion in 2019. U.S. exports rose
more than imports, causing the U.S. merchandise trade surplus with FTA partners
other than Canada and Mexico to grow 3.1 percent to $20.8 billion.
The value of U.S. imports for consumption entered under FTAs
totaled $408.3 billion in 2019, accounting for nearly half (46.7 percent) of
total U.S. imports for consumption from FTA partners and for 16.3% of U.S.
Imports for consumption from the world. The value of U.S. imports for
consumption entered under FTAs in 2019 increased by $249 million (less than 0.1
percent), up from $408.0 billion in 2018. FTA imports from Jordan grew 15.6
percent ($251 million), representing the second-largest percentage increase.
Imports under the FTA with Bahrain increased by 18.1 percent ($92 million);
however, it changed from a smaller baseline. Imports from South Korea accounted
for the greatest increase by value, rising by $3.1 billion (9.2 percent) to
$36.4 billion. Imports from Mexico increased by 1.1 percent ($2.2 billion). On
the other hand, imports from Canada fell by $5.4 billion (4.2 percent), and combined
imports from Mexico and Canada fell 1.0 percent ($3.2 billion). The largest
percent decline in U.S. imports under any FTA was seen in imports from Oman, which
fell by 17.8 percent ($161 million).
U.S.-Mexico-Canada Trade Agreement (USMCA)
negotiations:
The United States, Mexico, and Canada entered into
negotiations for the United States-Mexico-Canada Agreement (USMCA) on August
16, 2017, in Washington, DC, with the dual purpose of modernizing provisions. On
November 30, 2018, after concluding negotiations, the three countries signed USMCA.
In response to outstanding concerns from members of Congress, the USTR and
members of Congress negotiated changes to USMCA during 2019. USTR then
negotiated amendments to USMCA with Mexico and Canada that were included as a
protocol of amendment to USMCA signed on December 10, 2019 by the three
countries. On December 12, 2019, Mexico approved the amendments after having
previously ratified the signed USMCA in June 2019. On January 29, 2020, the President
signed U.S. legislation that approved USMCA and provided for implementation. The
Parliament of Canada concluded the final ratification of USMCA on March 13,
2020. The preexisting NAFTA remained in effect until USMCA entered into force on
July 1, 2020.
[7]
North American Agreement on Environmental Cooperation (NAAEC):
In 1994, NAFTA parties undertook commitments concerning enforcement of
environmental laws and other environment-related matters in a companion
agreement to NAFTA called the NAAEC. At the end of 2019, five cases regarding
enforcement of environmental laws subject to the review of NAFTA’s Commission
for Environmental Cooperation, which was established under NAAEC, remained
active under Articles 14 and 15. Two involved Canada (one was submitted in 2017
and the other in 2018), and three involved Mexico (all submitted in 2018).
NAFTA dispute settlement:
In 2019, 1 active
Chapter 11 (investor-state dispute settlement) case was filed against the
United States by Canadian investors; 5 cases were filed by U.S. investors
against Canada; and 4 were filed by U.S. investors against Mexico. At the end
of 2019, the NAFTA Secretariat listed 1 binational panel active under Chapter
19 (Review and Dispute Settlement in Anti-dumping and Countervailing Duty
Matters); these are reviews of final determinations made by national authorities
in antidumping and countervailing duty cases. The review concerned a case filed
by the United States contesting Mexico’s determination.
FTA Negotiations:
USTR published
negotiating objectives for trade agreements with the EU and the UK in January and
February 2019, respectively. Formal negotiations with both economies had yet to
begin at the end of 2019. However, the European Council approved mandates for
the European Commission to open negotiations with the United States on the
elimination of tariffs on industrial goods and on conformity assessment in
April 2019. The United States also signed four mutual recognition agreements with
the UK on wine, spirits, pharmaceuticals, and marine equipment in January and
February 2019 to minimize trade disruption once EU agreements no longer apply
to the UK following Brexit.
[8]
One year after USTR notified Congress of its intent to
negotiate a formal trade agreement with Japan, the United States and Japan
signed two separate trade agreements—the United States-Japan Trade Agreement
(USJTA) and the United States-Japan Digital Trade Agreement (USJDTA)—on October
7, 2019. As part of USJTA, Japan agreed to tariff reduction, elimination, and
country-specific quotas for $7.2 billion of U.S. food and agricultural exports
to Japan. In total, Japan has agreed to completely eliminate tariffs on $4.3
billion worth of U.S. agriculture exports, with tariffs on $1.3 billion
eliminated on January 1, 2020. For its part, the United States agreed to reduce
or eliminate tariffs on 42 tariff lines for agricultural imports from Japan
valued at $40 million in 2018 and on certain industrial goods such as machine
tools, fasteners, and bicycles. As part of USJDTA, the United States and Japan
have agreed to several measures that reduce digital trade policy uncertainty,
including bans on digital trade tariffs and prohibitions on cross-border data
flow restrictions. USJDTA also includes protections for digital consumers,
requiring both parties to maintain a legal framework for protecting digital consumers’
personal information.
Developments with FTAs already in force:
U.S.
officials met with a number of partners representing member states of the 14
U.S. FTAs in force during 2019. Discussions with U.S. partners covered a range
of trade- and investment-related issues, in addition to the labor and
environmental provisions included in most of these agreements. Following the
negotiation and signing of a modified U.S.-Korea FTA (KORUS), the agreement
entered into force on January 1, 2019.
[9]
From March 11 to March 15, 2019, the United States and Israel held the second
round of negotiations on a permanent agreement to succeed the 2004 U.S.-Israel
Agreement on Trade in Agricultural Products.
This report includes a review each year of the United
States’ bilateral trade relations with its largest trading partners. This year,
the report covers the following eight trading partners: the EU, Mexico, Canada,
China, Japan, South Korea, India, and Taiwan (ordered by the value of their
two-way merchandise trade). Two-way merchandise and private services trade for
each trading partner are presented in figures ES.2 and ES.3, respectively.
Figure ES.2
U.S. merchandise
trade with major bilateral trading partners, 2019
Source: USITC DataWeb/USDOC
(accessed February 14, 2020).
Note: Underlying data for this figure can
be found in appendix table
B.2
.
Figure ES.3
U.S. trade
in private services with major bilateral trading partners, 2019
Source: USITC DataWeb/USDOC (accessed
May 9, 2019); USDOC, BEA, interactive data, tables 1.2 and 1.3, April 14, 2020.
Note:
Underlying data for this figure can be found in appendix table
B.3
. U.S. trade in services from the EU and India are
overstated because the data include government goods and services not included
elsewhere.
European Union
The EU, viewed as a single market, continued to be the
United States’ largest merchandise trading partner in 2019, representing 20.6
percent of total U.S. two-way merchandise trade (exports plus imports) with the
world.
U.S. two-way merchandise trade with the EU increased 5.8
percent to $851.7 billion in 2019. U.S. exports to the EU were $337.0 billion,
which placed the EU as the top U.S. export market for the fourth year in a row.
U.S. merchandise imports from the EU were $514.7 billion in 2019, with the EU
surpassing China as the top source market for imports into the United States.
Both U.S. exports and U.S. imports with the EU increased in 2019, but U.S.
imports grew more, widening the U.S. merchandise trade deficit with the EU to
$177.7 billion, an increase of 5.4 percent from the previous year. Leading U.S.
exports to the EU included civil aircraft and parts; crude petroleum; and
nonmonetary gold. Leading U.S. imports were medicaments; passenger vehicles
with gasoline engines between 1.5 and 3 liters; and immunological products.
The EU remained a leading U.S. services trading partner in
2019, representing $475.4 billion or 34.1 percent of two-way U.S. cross-border
services trade.
[10]
U.S. cross-border service exports to the EU increased by $12.0 billion, or 4.7
percent, to $265.6 billion in 2019, while U.S. cross-border service imports
from the EU increased by $11.2 billion, or 5.6 percent, to $209.8 billion. As a
result, the U.S. surplus in services trade with the EU grew by 1.4 percent to
$55.7 billion from $55.0 billion the year before.
The
United States’ largest services exports in 2019 included other business
services ($76.0 billion); charges for intellectual property (IP) use ($49.3
billion); and travel services ($42.4 billion). Major U.S. services imports from
the EU were travel services ($50.2 billion); other business services ($47.1
billion); and transport services ($39.4 billion).
Among the important U.S.-EU trade developments in 2019 were
the implementation of section 301 duties against imports from the EU and
certain member states as a countermeasure for subsidies to the EU’s large civil
aircraft industry, the initiation of a section 301 investigation of a French
tax on multinational digital services firms, and enforcement actions by U.S.
and EU authorities to protect the privacy of EU data subjects under the General
Data Protection Regulation and the U.S.-EU Privacy Shield Framework.
Mexico
In 2019, Mexico surpassed China and Canada to become the
United States’ largest single-country merchandise trading partner. U.S. two-way
merchandise trade with Mexico amounted to $614.5 billion in 2019, an increase
of 0.5 percent from 2018. Mexico accounted for 14.8 percent of U.S. trade with
the world. U.S. merchandise exports to Mexico totaled $256.4 billion in 2019,
which is a 3.4 percent decrease from 2018, and U.S. merchandise imports from
Mexico amounted to $358.1 billion, which is a 3.5 percent increase from 2018.
As the growth in imports outpaced that of exports, the merchandise trade
deficit grew by $21.0 billion (26.0 percent) from the previous year, totaling
$101.7 billion in 2019. Leading U.S. exports to Mexico included light oils,
refined petroleum products, and computer parts and accessories. Leading U.S.
imports from Mexico included computers, passenger vehicles with gasoline
engines between 1.5 and 3L, and light trucks.
Mexico was the United States’ fourth-largest single-country
trading partner for private services in 2019. U.S. exports of private services
to Mexico remained roughly unchanged compared to 2018, at $33.4 billion, while
U.S. private services imports from Mexico increased 6.0 percent ($1.5 billion)
to $27.2 billion in 2019. This resulted in the U.S. trade surplus in private
services decreasing by $1.5 billion in 2019, to $6.2 billion from $7.7 billion
the year before.
A major focus of U.S.-Mexico trade relations in 2019 was conclusion
of a protocol of amendment to USMCA on December 10, 2019.
[11]
The United
States also reached an agreement with Mexico to remove section 232 tariffs, and
Mexico agreed to remove its countermeasures in return. Joint efforts to modernize
border procedures and facilities also continued in 2019, with the creation of
new customs and inspection processes, pedestrian and vehicle inspection
facilities, and vehicle processing lanes.
Canada
In 2019, Canada surpassed China to become the United States’
second-largest single-country trading partner. The value of U.S. two-way
merchandise trade with Canada decreased by 1.0 percent to $612.1 billion in
2019, accounting for 14.8 percent of total U.S. merchandise trade with the
world. The U.S. merchandise trade deficit with Canada increased by $8.3 billion
to $27.3 billion.
U.S. merchandise exports decreased by 2.5 percent to $292.4
billion, and imports from Canada increased by 0.3 percent to $319.7 billion in
2019. Leading U.S. exports to Canada included crude petroleum, civil aircraft,
and light trucks. Top U.S. imports from Canada included crude petroleum, and
passenger motor vehicles and their parts and accessories.
U.S. private services exports to Canada increased by 1.0
percent to $64.3 billion in 2019, and U.S. private services imports from Canada
increased by 4.5 percent to $37.2 billion. Leading U.S. services exports to
Canada included travel services, other business services, and charges for IP
use. Leading U.S. services imports from Canada included other business
services, travel services, and transport services.
In 2019, a major focus of U.S.-Canada trade relations was conclusion
of a protocol of amendment to USMCA on December 10, 2019. The United States
also reached an agreement with Canada to remove section 232 tariffs, and Canada
agreed to remove its countermeasures in return. Additionally, a dispute
regarding sales of imported wine in British Columbia was addressed by
regulatory changes in July 2019, so that imported wine can now be sold
alongside British Columbia wine in grocery stores. A longstanding dispute
regarding imports of softwood lumber from Canada also continued, with a NAFTA
dispute settlement panel remanding a USITC AD/CVD determination.
China
In 2019, China was the United
States' third-largest single-country trading partner in terms of two-way trade,
accounting for 13.5 percent of total U.S. merchandise trade. It dropped from
its position as the United States’ largest single-country trading partner in
2018. In 2019, U.S. merchandise trade with China decreased by 15.3 percent,
from $659.8 billion to $558.9 billion. The U.S. merchandise trade deficit with
China decreased by $73.9 billion to $345.6 billion. The decrease in the
bilateral merchandise trade deficit reflects a $13.5 billion decrease in U.S.
exports combined with a $87.4 billion decrease in imports.
China remained the third-largest
single-country destination for U.S. merchandise exports in 2019, accounting for
6.5 percent of global U.S. exports. U.S. merchandise exports to China decreased
from $120.1 billion in 2018 to $106.6 billion in 2019, an 11.3 percent
decrease. The top U.S. exports to China during the year
were civil aircraft and parts; soybeans; and processors and
controllers.
China remained the largest single-country
source of U.S. merchandise imports in 2019, accounting for 18.1 percent of
global U.S. imports. U.S. merchandise imports from China decreased from $539.7
billion in 2018 to $452.2 billion in 2019, a 16.2 percent decrease. The top
U.S. imports from China during the year were cell phones, portable
computers and tablets, and telecommunications equipment.
In 2019, U.S. cross-border trades in private services with
China totaled $74.9 billion, or 5.4 percent of total U.S. services trade. U.S.
cross-border service exports to China fell by $0.4 billion, or 0.8 percent, to
$56.3 billion in 2019, while U.S. cross-border service imports from China rose
by $0.4 billion, or 2.2 percent, to $18.7 billion. As a result, the U.S.
surplus in services trade with China decreased 2.2 percent to $37.6 billion
from $38.4 billion the year before (figure 6.8).
The United States’ largest
services exports in 2019 included travel services ($31.1 billion), charges for
IP use ($9.2 billion), and transport services ($5.2 billion). Major U.S.
services imports from China were other business services ($6.1 billion),
transport services ($4.9 billion), and travel services ($4.4 billion).
Since China’s accession to the WTO in 2001, the United
States has filed 23 WTO disputes against it. In
total, China has filed 23 WTO disputes since its
accession, 16 of which have been against the United States. Tariffs from
both countries continued to escalate in 2019. In May 2019, USTR increased
the additional rate of duty on the previously published “List 3” of
Chinese imported items, worth an estimated $200 billion. On August 24, 2019, the United States announced
additional tariffs on a fourth list of imports from China, worth approximately
$300 billion. These added tariffs were divided into two different groups: tariffs
on the first group took effect on September 2019, with tariffs on the second
group scheduled to take effect December 15, 2019. However, in light of the
Phase One trade deal, tariffs on the first group were lowered in February 2020,
while tariffs on the second group were suspended indefinitely.
The United States announced a
“Phase One” economic and trade agreement with China on December 13, 2019. According
to USTR, the United States agreed to modify its section 301 tariff actions in a
“significant” way. China agreed to undertake structural reforms in a variety of
areas, to make substantial additional purchases of U.S. goods and services in
the coming years, and to participate in a dispute resolution system with the
United States.
Japan
In 2019, Japan remained the United States’ fourth-largest
single-country trading partner in terms of two- way trade, accounting for 5.3
percent of total U.S. merchandise trade. U.S. two-way merchandise trade with
Japan grew by 0.3 percent from $217.7 to $218.3 billion in 2019. U.S.
merchandise exports to Japan totaled $74.7 billion in 2019, and U.S.
merchandise imports from Japan amounted to $143.6 billion, yielding a U.S.
merchandise trade deficit with Japan of $69.0 billion in 2019—a $1.8 billion
increase from 2018’s deficit figure. The increase in the bilateral merchandise
trade deficit reflects a $0.5 billion decrease in U.S. exports combined with a
$1.2 billion increase in imports from Japan. Leading U.S. exports to Japan were
civil aircraft and parts, liquefied propane, and corn. Leading U.S. imports
from Japan were passenger motor vehicles with gasoline engines between 1.5 and
3L, passenger motor vehicles with gasoline engines exceeding 3L, and parts for
airplanes or helicopters.
In 2019, U.S. cross-border trade in private services with
Japan totaled $79.4 billion, or 5.7 percent of U.S. services trade. U.S.
cross-border private service exports to Japan increased by $3.7 billion, or 8.3
percent, to $48.1 billion in 2019, while U.S. cross-border service imports from
Japan increased by $0.9 billion, or 2.9 percent, to $31.3 billion. As a result,
the U.S. trade surplus in services with Japan increased $2.8 billion, to $16.8
billion from $14.0 billion the year before.
On October 7, 2019, one year after the USTR notified
Congress of the United States’ intent to negotiate a trade agreement with Japan,
the United States and Japan signed two separate trade agreements—the United
States Japan Trade Agreement (USJTA) and the United States-Japan Digital Trade
Agreement (USJDTA). As part of USJTA, Japan agreed to tariff reduction,
elimination, and country-specific quotas for $7.2 billion worth of U.S. food
and agricultural exports to Japan. In total, Japan has agreed to completely eliminate
tariffs on $4.3 billion worth of U.S. agriculture exports, with tariffs on $1.3
billion eliminated on January 1, 2020. Other agriculture-related trade
developments in 2019 included the reopening of the Japanese market to U.S.
exports of beef, regardless of age.
As part of USJDTA, the United States and Japan have agreed
to several measures that reduce digital trade policy uncertainty, including
bans on digital trade tariffs and prohibitions on cross-border data flow
restrictions. USJDTA also includes protections for digital consumers, requiring
both parties to maintain a legal framework for protecting digital consumers’
personal information. The United States and Japan continued to work, along with
the EU, in addressing issues related to nonmarket economic policies, including
industrial subsidies, state-owned enterprises, and forced technology transfers.
Other digital trade-related developments in 2019 included Japan’s revision of
its procedures on public supercomputer procurement.
Republic of Korea
The Republic of Korea (South Korea) continued to be the
United States’ sixth-largest single-country merchandise trading partner in
2019, accounting for 3.2 percent of total U.S. trade with the world. Two-way
merchandise trade grew 2.8 percent from the previous year, to $134.3 billion in
2019. U.S. merchandise exports to South Korea were valued at $56.9 billion in
2019, while U.S. merchandise imports from South Korea totaled $77.4 billion.
The resulting merchandise trade deficit with South Korea was
$20.8 billion in 2019, an increase of 16.0 percent from 2018, as the increase
in U.S. imports from South Korea from 2018 to 2019 outpaced the increase in
U.S. exports to South Korea over the same period. Leading U.S. exports to South
Korea included crude petroleum; processers and controllers; and civil aircraft
and parts. Leading U.S. imports from South Korea included passenger motor
vehicles gasoline engines between 1.5 and 3 liters; computer parts and
accessories; and cellphones.
In 2019, two-way cross-border private services trade with
South Korea totaled $33.2 billion, representing 2.4 percent of total U.S.
services trade with the world. U.S. private services exports to South Korea
grew 4.8 percent in 2019 to $22.9 billion, while U.S. services imports from
South Korea rose by 4.3 percent in 2019 to reach $10.3 billion. As a result,
the U.S. services trade surplus with South Korea increased by 5.2 percent, from
$12.0 billion in 2018 to $12.7 billion in 2019.
Key developments in the U.S.-South Korea trade relationship
in 2019 included South Korea providing country-specific access for the United
States to South Korea’s rice market and the passage of new South Korean
legislation to curb the practice of illegal, unreported, and unregulated (IUU) fishing.
The second development occurred after the United States requested consultations
under the KORUS Environment Chapter regarding South Korea’s commitments to
implement its obligations under the Commission for the Conservation of
Antarctic Marine Living Resources (CCAMLR).
This report provides information on the operation of the
U.S. trade agreements program for calendar year 2019. Section 163(c) of the
Trade Act of 1974 (19 U.S.C. 2213(c)) states that “the International Trade
Commission shall submit to the Congress at least once a year, a factual report
on the operation of the trade agreements program.” Section 1 of Executive Order
11846 defines the trade agreements program to include “all activities
consisting of, or related to, the negotiation or administration of
international agreements which primarily concern trade,” and section 163(a) of
the Trade Act of 1974 sets out the types of information that the President is
to include in his annual report to the Congress on the operation of the trade
agreements program.
[12]
This report provides information on the activities defined
in the Executive Order and, to the extent appropriate and to the extent that
there were developments to report and information was publicly available, the
elements set out in section 163(a). This year marks the 71st edition of the
report on the operation of the trade agreements program prepared by the U.S.
International Trade Commission (Commission or USITC).
This first chapter gives an overview of the international
economic and trade environment within which U.S. trade policy was conducted in
2019. It also provides a timeline of selected key trade activities. Chapter 2
covers the administration of U.S. trade laws and regulations in 2019, including
tariff preference programs such as the Generalized System of Preferences.
Chapter 3 focuses on U.S. participation in the World Trade Organization (WTO),
including developments in major WTO dispute settlement cases during 2019.
Chapter 4 covers 2019 developments at the Organisation for Economic
Co-operation and Development (OECD) and the Asian-Pacific Economic Cooperation
(APEC) forum, as well as developments involving trade and investment framework
agreements. Chapter 5 describes U.S. negotiation of and participation in free
trade agreements (FTAs) in 2019, and chapter 6 covers trade data and trade relations
in 2019 with major U.S. trading partners.
This report is based on primary-source materials about U.S.
trade programs and administrative actions pertaining to them. These materials
chiefly encompass U.S. government reports,
Federal Register
notices,
and news releases, including publications and news releases by the Commission
and the Office of the United States Trade Representative (USTR). Other primary
sources of information include publications of international institutions, such
as the International Monetary Fund (IMF), World Bank, OECD, WTO, United
Nations, and foreign governments. When primary-source information is
unavailable, the report draws on professional journals, trade publications, and
news reports for supplemental information.
Like past reports,
The Year in Trade 2019
relies on
data from the U.S. Census Bureau (U.S. Census) of the U.S. Department of
Commerce (USDOC) for the U.S. merchandise trade statistics presented throughout
the report. Most tables in the report present U.S. merchandise trade statistics
using “total exports” and “general imports” as measures, except for data on
imports that have entered the United States with a claim of eligibility under
trade preference programs and FTAs.
[13]
Such data require an analysis of U.S. “imports for consumption”—the total of
all goods that have been cleared by U.S. Customs and Border Protection (CBP) to
enter the customs territory of the United States with required duties paid.
[14]
Also, much of
the trade data used in the report, including U.S. services and merchandise
trade data, are revised over time, so the trade statistics for earlier years in
this report may not always match the data presented in previous reports. New
this year, a supplemental merchandise trade dataset reflecting the data used in
this report will also be released.
[15]
Chapters 1 and 6 also offer data on services trade. The
information on services trade is based on data for cross-border trade in
private services, which exclude government sales and purchases of goods and services
not included elsewhere. The source of these data is the Bureau of Economic
Analysis (BEA) of USDOC.
The United States had a $21.4 trillion economy in 2019.
[16]
The U.S.
economy grew at a robust rate in 2019 but more slowly than in 2018: U.S. real
gross domestic product (GDP) increased by 2.3 percent in 2019, compared to 2.9
percent in 2018 (figure 1.1).
[17]
The industries driving the 2019 growth rate were professional and business
services, mining, retail trade, finance and insurance (in the first half of the
year), and manufacturing (in the second half of the year).
[18]
Figure 1.1
U.S. real gross domestic product, percentage change, 2015–19
Source:
USDOC, BEA, Interactive data, National Data, National Income and Product
Accounts, “Table 1.2.1, Percent Change from Preceding Period in Real Gross
Domestic Product” (accessed March 19, 2020).
Note: Underlying data for this figure
can be found in appendix table
B.4
.
As
discussed below, the U.S. economy in 2019 featured moderate-to-low inflation,
low unemployment, and rising stock market indices, factors that are usually
associated with higher demand for both domestic and imported goods and
services. Similarly, Federal Reserve monetary policy stimulus also generally
increased domestic demand.
Most broad economic indicators of the U.S. economy were
positive in 2019. The U.S. unemployment rate fell from 3.9 percent in December
2018 to 3.5 percent in December 2019.
[19]
Over the same period, total employment increased 1.4 percent to 152.0 million
jobs,
and average hourly earnings of
private sector workers rose 3.0 percent to $28.37.
[20]
Consumer
confidence rose 1.0 percent.
[21]
The Consumer Price Index rose 2.3 percent, while the Producer Price Index fell
0.9 percent.
[22]
The S&P 500 index of the stock market rose 28.7 percent from January 2,
2019, to December 31, 2019, and consumer credit increased 4.5 percent.
[23]
However, a few indicators showed slight declines. Gross
private investment declined 0.7 percent from the fourth quarter of 2018 to the
fourth quarter of 2019.
[24]
Industrial production fell 0.9 percent from December 2018 to December 2019.
[25]
In 2019, the Federal Open Market Committee (FOMC), a
committee within the Federal Reserve System, lowered interest rates three
times, after having raised them four times in 2018. At the end of 2018, the
target range for the Federal Funds rate was 2.25 to 2.5 percent. In July 2019,
September 2019, and October 2019, the FOMC lowered its target by 0.25
percentage points each time, resulting in a range of 1.5 to 1.75 percent at the
end of 2019. The FOMC described the U.S. unemployment rate as remaining low in
2019, although it cited low inflation as a reason it could reduce interest
rates to fulfill its dual mandate of maximum employment and price stability.
The FOMC also cited softening business investment, weaker exports, and the
global economic outlook as reasons for lowering target rates.
[26]
The global economic growth rate decelerated somewhat from
3.6 percent in 2018 to 2.9 percent in 2019 (figure 1.2).
[27]
Growth in the
advanced economies slowed to 1.7 percent in 2019, down from 2.2 percent the
previous year.
[28]
The IMF attributed this deceleration to a return to more normal expansion rates
for the United States (rates that the IMF described as continuing to be
robust), as well as the rollout of new automotive emissions standards in Europe
(which resulted in curbing German car production).
[29]
Except for
Japan, all of the United States’ top eight trading partners (based on two-way
trade) showed slower growth rates in 2019 than in 2018 (figure 1.2).
The growth rate of emerging markets and developing economies
also fell, decreasing 0.8 percentage point from 4.5 percent in 2018 to 3.7
percent in 2019.
[30]
This deceleration was broad-based across most regions of the emerging market
world.
[31]
Notably, growth in China weakened, a slowing which the IMF
attributed both to U.S. tariffs and Chinese government efforts to rein in debt.
[32]
Countries and
regions with economies particularly tied to China, such as South Korea and
Taiwan, saw slower growth due to their economic linkages with China. Still
other major economies (including Brazil, India, Russia, and South Africa)
experienced slow growth for reasons specific to their own economies.
[33]
For example,
the IMF attributed India’s growth deceleration to regulatory uncertainty and
concerns over the health of the nonbank financial sector, and attributed Mexico’s
economic contraction to policy uncertainty and higher borrowing costs.
[34]
However,
although growth was decelerating in China and India, economic growth in these
two countries remained high compared to the rest of the world.
Figure 1.2
Economic growth (real GDP) trends in the world, the United
States, and major trading partners, 2017–19
Note: Underlying data for this figure
can be found in appendix table
B.5
.
Overall world trade volume for goods and services increased
in 2019 by 0.9 percent, a substantially slower rate of growth than the 3.8
percent increase seen in 2018.
[35]
Advanced economies showed slower growth rates in imports and exports in 2019
than in 2018, while emerging economies showed a slower growth rate in exports,
as well as an outright contraction in imports.
[36]
As has been the case for many years, the European Union (EU)
and some East Asian countries and regions continued to run large current
account surpluses, while North American countries ran current account deficits.
[37]
Exchange rates can affect trade flows by making U.S. exports
more expensive and U.S. imports less expensive (if the dollar appreciates), or
by making U.S. exports less expensive and U.S. imports more expensive (if the
dollar depreciates). Exchange rates can also reflect trade flows and other
economic trends. The value of the U.S. dollar was relatively unchanged compared
to the currencies in the broad dollar index, falling 0.5 percent between
December 2018 and December 2019.
[38]
This relative flatness was preceded by a 4.5 percent appreciation in the same
measure from December 2017 to December 2018.
[39]
As shown in figure 1.3, some currencies of major U.S.
trading partners rose against the dollar, while others fell, contributing to
the relatively steady level of the broad dollar index over 2019. From January 2
to December 31, 2019, the U.S. dollar appreciated by 1.5 percent against the
Chinese yuan, 1.2 percent against the Euro, and 1.9 percent against the Indian
rupee. Over the same period, the dollar depreciated 4.6 percent against the
Canadian dollar, 3.8 percent against the Mexican peso, 5.1 percent against the
British pound sterling, and 0.5 percent against the Japanese yen.
[40]
Figure 1.3
Indexes of U.S. dollar exchange rates for selected major
foreign currencies, daily, 2019
Note: This figure shows the units of
the foreign currency per unit of the U.S. dollar. A decrease in the index
represents a depreciation of the U.S. dollar relative to the foreign currency,
and an increase in the index represents an appreciation of the U.S. dollar
relative to the foreign currency.
The value of U.S. merchandise total exports was $1.6
trillion in 2019, a 1.2 percent decrease from the 2018 level (figure 1.4 and
the
interactive
dashboard
in appendix A).
[41]
The value of U.S. merchandise general imports totaled $2.5 trillion over the
same period, a 1.6 percent decrease from the 2018 level (figure 1.4 and the
interactive
dashboard
in appendix A).
[42]
U.S. exports decreased less than U.S. imports, leading to an $21.1 billion
decrease in the U.S. merchandise trade deficit to $852.3 billion in 2019.
[43]
Ten of the 11
broad sectors that make up the U.S. merchandise trade experienced a trade
deficit in 2019: these include agricultural products, forest products,
chemicals, textiles and apparel, footwear, minerals and metals, machinery,
transportation equipment, electronic products, and miscellaneous manufactures.
[44]
The remaining
sector, energy-related products, experienced a trade surplus of $2.3 billion in
2019 after having a trade deficit of $36.4 billion in 2018.
Figure 1.4
U.S. merchandise trade with the world, 2017–19
Source:
Official USDOC trade statistics as maintained by USITC (accessed February 14,
2020).
Exports of energy-related products rose by $7.5 billion from
2018 to 2019, while imports of those products fell by $31.2 billion over the
same period. Since 2007, the United States has increasingly produced natural
gas and crude oil through shale drilling, resulting in the United States
becoming the world’s largest producer of natural gas (as of 2011) and of crude
oil (as of 2018). These increases in U.S. production have also lowered natural
gas and crude oil prices. The United States became a net exporter of natural
gas in 2017 and a net exporter of crude oil in September 2019.
[45]
Nonetheless,
along with these increases in production, 2019 also saw increased concern about
the profitability of shale production.
[46]
Transportation equipment continued to be the largest U.S.
export sector in 2019, accounting for 20.6 percent of total U.S. exports—virtually
the same share as in 2018. Other large export sectors included chemicals and related
products (14.8 percent of total exports) and energy-related products (12.5
percent of total exports) (table 1.1 and the
interactive
dashboard
in appendix A). Electronic products were a large share of total
exports; however, 41.5 percent of these exports were re-exports rather than domestic
exports.
[47]
The top export products (from total exports) were civil
aircraft, engines, and parts; crude petroleum; petroleum oils other than crude;
light oils; and electronic integrated circuits
(interactive
dashboard
in appendix A).
Table 1.1
U.S. merchandise total
exports to the world, by USITC digest sector, 2018–19
Source:
Official trade statistics of USDOC as maintained by USITC (accessed March 4,
2020).
Note: Because of rounding, figures may
not add to totals shown. For a definition of special provisions, see footnote 47
U.S. total exports decreased by 1.2 percent ($20.8 billion)
in 2019 (table 1.1). Seven sectors reported decreases in total exports, with
the largest decreases in minerals and metals (down $8.7 billion) and machinery
(down $6.0 billion). Two sectors (chemicals and related products, and
transportation equipment) exported approximately the same amount in 2019 as in
2018. Four sectors (chemicals, footwear, energy-related products, and special
provisions) had larger total exports in 2019 than 2018, led in value by
energy-related products, exports of which grew $7.5 billion.
At the product level, there were both increases and
decreases in top exports between 2018 and 2019. The largest increases at the
product level included exports of crude petroleum
(up $17.1 billion to $65.3 billion),
electronic integrated circuits (up $4.5 billion to $23.6 billion), and midsize
passenger vehicles (up $3.0 billion to $20.4 billion). The largest decrease was
in civil aircraft, engines, and parts, exports of which fell by $5.2 billion to
$125.5 billion, a decline of 4.0 percent.
[49]
Other large decreases occurred in total exports included light oils (down $5.1
billion to $34.5 billion), petroleum oils other than crude (down $3.3 billion
to $53.0 billion), and nonmonetary gold (down $3.2 billion to $16.3 billion)
(interactive
dashboard
in appendix A).
[50]
Electronic products and transportation equipment continued
to be the top two import sectors in 2019, accounting respectively for 19.4
percent and 18.9 percent of 2019 general U.S. imports (table 1.2 and the
interactive
dashboard
in appendix A). Other large categories of general imports
included crude petroleum ($126.8 billion), midsize passenger motor vehicles
($102.8 billion), medicaments ($60.9 billion), cellphones ($53.8 billion), and
portable computers ($40.4 billion)
(interactive
dashboard
in appendix A).
[51]
Table 1.2
U.S. merchandise general
imports from the world, by USITC digest sector, 2018–19
Source:
Official USDOC trade statistics as maintained by USITC.
Note: Because of rounding, figures may
not add to totals shown. For a definition of special provisions, see footnote 453
The value of U.S. imports declined 1.6 percent in 2019
(table 1.2 and the
interactive
dashboard
in appendix A). Five sectors declined; the largest decline was in
energy-related products (down $31.2 billion). Two sectors (machinery and
textiles and apparel) showed little change. Five sectors showed increases, with
the largest increases being in transportation equipment (up $12.5 billion) and
special provisions (up $11.7 billion).
U.S. crude petroleum imports alone declined by $30.0 billion
to $126.8 billion in 2019, nearly three-quarters of the total decline in U.S.
general imports over the period.
[53]
A large decrease in imports was also recorded in machines for the reception of
data (down $8.1 billion to $39.2 billion).
[54]
Large increases in imports were recorded in immunological products (up $7.0
billion to $20.9 billion in 2019) and medicaments (up $5.0 billion to $60.9
billion in 2019)
(interactive
dashboard
in appendix A).
[55]
Table 1.3 shows U.S. trade with major trading partners,
ranked by total trade (exports plus imports) in 2019. In 2019, the EU was the
United States’ top trading partner in terms of two-way merchandise trade,
followed by Mexico, Canada, and China. Among the trading partners listed in
table 1.3, the largest U.S. trade deficit was with China, followed by the EU
and Mexico. Ranked by exports, the EU was the leading market for U.S. total
exports at $337.0 billion (20.5 percent of total exports), with Canada and
Mexico following closely behind at $292.4 billion (17.8 percent) and $256.4
billion (15.6 percent) respectively (figure 1.5). Ranked by U.S. imports, the
EU was the leading source of imports into the United States at $514.7 billion
(20.6 percent of imports), followed by China at $452.2 billion (18.1 percent),
Mexico at $358.1 billion (14.3 percent), and Canada at $319.7 billion (12.8
percent) (figure 1.6).
[56]
In 2018, China had been the leading source of U.S. imports, but U.S. general
imports from China fell 16.2 percent from 2018 to 2019. In 2019, the United
States continued and expanded enforcement of section 301 duties on imports from
China.
Table 1.3
U.S. merchandise trade
with major trading partners and the world, 2019 (million dollars), ranked by
two-way trade
Major trading partner
U.S. total exports
U.S. general imports
Trade balance
Two-way trade (exports plus imports)
European Union
337,020
514,692
-177,672
851,712
Mexico
256,374
358,108
-101,734
614,482
Canada
292,382
319,728
-27,346
612,110
China
106,627
452,240
-345,613
558,866
Japan
74,653
143,636
-68,983
218,289
South Korea
56,897
77,426
-20,528
134,323
India
34,410
57,499
-23,090
91,909
Taiwan
31,219
54,256
-23,037
85,475
Vietnam
10,883
66,680
-55,797
77,563
All others
444,710
453,204
-8,494
897,914
Total
1,645,174
2,497,468
-852,293
4,142,642
Source:
Official USDOC
trade statistics as maintained by USITC (accessed March
4, 2020).
Note: Because of rounding, figures may
not add to totals shown.
U.S. total exports to the EU and much of Asia increased from
2018 to 2019, while U.S. exports to China, Japan, Canada, and Mexico decreased
(table 1.4). The largest increase in exports by value was a $18.6 billion (5.9
percent) increase in exports to the EU. The largest decline in U.S. exports by
value was with China (down by $13.5 billion or 11.3 percent). It was followed
by a $9.0 billion (3.4 percent) decrease in exports to Mexico and a $7.4
billion (2.5 percent) decrease in exports to Canada. In percentage terms, the
largest increase in exports between 2018 and 2019 was to Vietnam (12.5
percent), with the largest decrease to China (11.3 percent).
Table 1.4
U.S. merchandise total
exports to major trading partners and the world, 2018–19, ranked by 2019 total
exports
Trading
partner
2018
(Million $)
2019
(Million $)
Change 2018-19
(Million $)
Change 2018-19
(%)
European Union
318,376
337,020
18,644
5.9
Canada
299,769
292,382
-7,387
-2.5
Mexico
265,443
256,374
-9,069
-3.4
China
120,148
106,627
-13,521
-11.3
Japan
75,229
74,653
-576
-0.8
South Korea
56,507
56,897
391
0.7
India
33,503
34,410
907
2.7
Taiwan
30,560
31,219
658
2.2
Vietnam
9,675
10,883
1,208
12.5
All others
456,782
444,710
-12,072
-2.6
Total
1,665,992
1,645,174
-20,818
-1.2
Source: Official USDOC trade
statistics as maintained by USITC (accessed March 4, 2020).
Note: Because of rounding, figures may
not add to totals shown.
U.S. imports increased from all major trading partners
except China in 2019 (table 1.5). The largest rise in value was a $27.8 billion
increase in imports from the EU (a 5.7 percent increase), followed by a $17.5
billion increase in imports from Vietnam (the largest percentage increase at
35.6 percent). As stated above, the only major trading partner experiencing a
decrease in imports was China. China’s imports declined by $87.4 billion (16.2
percent), which alone more than offset the gains in imports from all other
major trading partners. Imports from all other countries collectively fell
$29.2 billion, or 6.1 percent.
In 2019, two-way merchandise trade (total exports plus
general imports) between the United States and its FTA partners totaled $1.6
trillion, the same as in 2018, accounting for 39.6 percent of total U.S.
merchandise trade with the world ($4.1 trillion).
[57]
This share in
2019 is higher than for 2018, when 39.1 percent of total U.S merchandise trade
was accounted for by FTA partners.
The value of U.S. imports for consumption entered under FTAs
was $408.3 billion in 2019, the same as in 2018.
[58]
These imports accounted
for 46.7 percent of all imports from FTA partners in 2019 and for 16.3 percent
of total U.S. imports from the world.
U.S. imports under trade preference programs decreased by 18.5
percent, from $36.6 billion in 2018 to $29.6 billion in 2019; they accounted
for 1.1 percent of total U.S. imports during 2019, and 1.4 percent of total
U.S. imports in 2018. Imports that claimed eligibility under the U.S.
Generalized System of Preferences program totaled $20.9 billion in 2019;
imports under the African Growth and Opportunity Act totaled $7.3 billion;
imports under the Caribbean Basin Economic Recovery Act and the Caribbean Basin
Trade Partnership Act totaled $0.7 billion; imports under the Haiti initiatives
totaled $0.7 billion; and imports under the Nepal Trade Preference Program
totaled $0.003 billion ($3.1 million).
[59]
U.S. cross-border trade in private services increased 3.3
percent from 2018 to 2019.
[60]
U.S. private services exports increased by 2.2 percent, from $805.7 billion to
$823.7 billion, while imports increased by 5.0 percent from $544.3 billion to
$571.3 billion. From 2018 to 2019, the U.S. trade surplus in cross-border private
services trade shrank by 3.4 percent from $261.4 billion to $252.4 billion
(figure 1.7).
Figure 1.7
U.S. cross-border exports and imports in private services
with the world, 2017–19
Source:
USDOC, BEA, International Transactions, table 3.1, “U.S. International Trade in
Services” (accessed March 19, 2020).
Note: Data for 2019 are preliminary.
Underlying data for this figure can be found in appendix table
B.7
.
Travel services exports represented the largest share of
total services exports in 2019, with a total value of $213.5 billion, or 25.9
percent of total exports.
[61]
Other major U.S. services export categories included other business services
($180.1 billion, or 21.9 percent of exports), charges for intellectual property
n.i.e. ($128.9 billion, or 15.7 percent of exports), and financial services
($111.3 billion, or 13.5 percent of exports).
[62]
The fastest-growing services export category from 2018 to 2019 was
telecommunications, computer, and information services, which saw a 10.7
percent increase in total exports from 2018 to 2019. Other business services
also saw strong growth at 8.6 percent.
[63]
Transport services, financial services, and travel services all saw small
declines in exports from 2018 to 2019 (by 1.6 percent, 0.7 percent, and 0.6
percent, respectively). In 2020, exports of travel services, in particular, are
likely to see a sharp decline due to the COVID-19 pandemic.
[64]
Travel services was also the largest category of services
imports in 2019, representing 26.7 percent of all imports, or $152.3 billion.
Other major categories of imports are other business services ($117.6 billion,
or 20.6 percent of imports) and transport services ($110.1 billion, or 19.3
percent of imports). Imports of services increased in every services category
between 2018 and 2019, with the greatest growth seen in insurance services (14.3
percent), financial services (7.6 percent), and travel services (5.4 percent).
More information on services exports and imports by product category is
available in the
interactive
dashboard
in appendix A.
The EU was the largest market for U.S. services exports, as
well as the largest source of services imports in 2019 (table 1.6). U.S.
services exports to the EU totaled $265.6 billion in 2019, or 32.0 percent of
total U.S. services exports, while U.S. imports from the EU totaled $209.8
billion, or 36.7 percent of total U.S. services imports.
[65]
The United
Kingdom (UK) was the largest single-country trading partner, both globally and
within the EU, with $74.3 billion in private services exports in 2019.
[66]
Following its
departure from the EU in January 2020, the UK alone is likely to be the
second-largest U.S. services trading partner in 2020, with the EU remaining the
largest partner. Following the EU, the top export markets for U.S. services in
2019 were Canada, China, and Japan, while the largest sources of imports were
Canada, Japan, and India.
Of the major trading partners presented in table 1.6, India
is the only partner with which the U.S. has a services trade deficit. In 2018,
the largest sector-level trade deficit between the U.S. and India was in
computer services, for which the U.S. imported $14.6 billion from India,
contrasted with $914 million in U.S. computer services exports to India.
[67]
This services
trade deficit is in line with the export-oriented nature of the Indian
information technology (IT) market. India exported 75.7 percent of the IT
services the country supplied in 2019, representing a total value of $137
billion globally.
[68]
In contrast, U.S. global exports of computer services in 2019 were $28.6
billion.
[69]
Table 1.6
U.S. cross-border trade in
private services with top 10 trading partners, 2019 (billion dollars)
Major trading partner
U.S. exports
U.S. imports
Trade balance
Two-way trade (exports plus imports)
European Union
a
265.6
209.8
55.7
475.4
Canada
64.3
37.2
27.0
101.5
China
56.3
18.7
37.6
74.9
Japan
48.1
31.3
16.8
79.4
Mexico
33.4
27.2
6.2
60.6
South Korea
23.0
10.3
12.7
33.2
India
a
26.4
30.3
-3.9
56.7
Singapore
22.6
9.7
12.9
32.3
Taiwan
10.2
8.0
2.2
18.2
Brazil
26.1
6.1
20.0
32.3
All others
247.8
182.6
65.2
430.5
Total
823.7
571.3
252.4
1,395.0
a
U.S.
trade with the EU and India includes government goods and services.
Source: USDOC, BEA, International
Transactions, table 1.3, “U.S. International Transactions, Expanded Detail by
Area and Country” (accessed March 19, 2020).
Note: Due to rounding and data
limitations, individual trade flows may not sum to total.
Figure 1.8
Leading U.S. export markets for private services, by share, 2019
Source:
USDOC, BEA, International Transactions, table 1.3, “U.S. International Transactions,
Expanded Detail by Area and Country” (accessed March 19, 2020).
Note: U.S. trade with the EU and India
includes government goods and services. Data are preliminary. Underlying data
for this figure can be found in appendix table
B.8
.
Figure 1.9
Leading U.S. import markets for private services, by share, 2019
Source:
USDOC, BEA, International Transactions, table 1.3, “U.S. International
Transactions, Expanded Detail by Area and Country” (accessed March 19, 2020).
Note: U.S. trade with the EU and India
includes government goods and services. Data are preliminary. Underlying data
for this figure can be found in appendix table
B.8
.
The
following timeline presents selected key trade events between the United States
and its trading partners in 2019. Some of these developments are presented in
more detail in chapters 2 through 6.
January
1:
Modifications of the U.S.-Korea Free Trade Agreement (KORUS) enter into force.
The newly effective KORUS amendments include provisions on extending the
phaseout of U.S. tariffs and the harmonization of testing practices for certain
automotive products, and on changing customs procedures and commitments to
nondiscriminatory treatment of U.S. pharmaceuticals by South Korea.
1:
The eighth annual set of tariff reductions under the U.S.-Colombia Trade
Promotion Agreement (TPA) take effect for industrial products with a 10-year
phaseout period.
1:
The eighth round of tariff reductions under the U.S.-Panama TPA take place.
4:
The United States requests the “first-ever” environmental consultations under
the U.S.-Peru TPA.
7:
A
U.S. delegation headed by Deputy USTR Jeffrey Gerrish and other senior
Executive Branch officials visits Vice Premier Liu He in China’s Foreign
Ministry to discuss IP rights protections, technology transfer issues, and
nontariff barrier issues in China.
8-10:
EU Commissioner for Trade Cecilia Malmström and USTR Robert Lighthizer meet in
Washington, DC, under the framework of the U.S.-EU Executive Working Group.
Discussions focus on implementing the U.S.-EU trade agenda set forth by
President Donald Trump and European Commission President Jean-Claude Juncker in
their July 2018 joint statement.
9:
USTR
Lighthizer meets with the Japanese Minister of Economy, Trade and Industry
Hiroshige Seko and EU Commissioner for Trade Malmström in Washington, DC, in
the third trilateral meeting between the nations. Ministers continue talks on
developing stronger rules on industrial subsidies and state-owned enterprises,
technology transfer policies and practices, and the maintenance of
market-oriented conditions in global trade.
11:
The United States publishes its negotiating objectives for a U.S.-EU trade
agreement. Objectives address tariff and nontariff barriers in the trade of
goods and services, and seek agreement provisions ensuring effective
implementation and enforcement of fair trade practices.
16:
A WTO panel is composed at the request of the United States in the dispute
China—Certain Measures Concerning the Protection of Intellectual Property
Rights (DS542).
23:
Following negotiations between the United States and Chile, Chile agreed not to
impose tariffs on imports of milk powder from the United States valued over $21
million and certain cheese valued at over $34.4 million.
25:
A WTO panel is composed at the request of India in the dispute United
States—Certain Measures on Steel and Aluminum Products (DS547).
25:
A
WTO panel is composed at the request of the United States in the dispute
China—Additional Duties on Certain Products from the United States (DS558).
28:
A
WTO panel is established at the request of the United States in the dispute
Turkey—Additional Duties on Certain Products from the United States (DS561).
28:
A WTO panel is established at the request of China in the dispute United
States—Tariff Measures on Certain Goods from China (DS543).
29:
The EU requests WTO dispute settlement consultations with the United States in
United States—Anti-dumping and Countervailing Duties on Ripe Olives from Spain
(DS577).
31:
The United States and the UK sign two mutual recognition agreements on wine and
on spirits to ensure that trade in these products is not disrupted when the UK
leaves the EU.
February
8:
The decision of an arbitrator is circulated relating to
South Korea’s proposed level of suspension of concessions
in United
States—Anti-Dumping and Countervailing Measures on Large Residential Washers
from Korea (DS464).
10–11:
A meeting of the WTO Committee on Trade and Development and an informal
open-ended meeting on the WTO Work Program on Electronic Commerce take place in
Geneva, Switzerland. Participants view the draft work program for 2020–21 and
attend presentations on Aid for Trade member activities. A workshop focused on
rural development and transformation is held.
14:
The
United States and the UK sign two mutual recognition agreements on marine
equipment and on pharmaceuticals to ensure that trade in these products is not
disrupted when the UK leaves the EU.
21:
The United States and Peru jointly hold the eighth Environmental Affairs
Council meeting to review progress made under other TPA environment chapter
obligations.
27:
Paraguay accedes to the WTO’s Agreement on Government Procurement (GPA) as an
observer.
28:
A
WTO panel circulates its report on the dispute filed by the United States in
China—Domestic Support for Agricultural Producers (DS511).
28:
The United States publishes its negotiating objectives for a U.S.-UK Trade
Agreement. Objectives address tariff and nontariff barriers in the trade of
goods and services, and seek agreement provisions ensuring effective
implementation and enforcement of fair trade practices.
March
2:
WTO’s Least-Developed Countries Member Group Retreat takes place in Montreux,
Switzerland. WTO Director-General Roberto Azevêdo speaks at a panel on current
challenges and perspectives for the 12th ministerial conference as part of the
WTO’s Sustainable Development Goals agenda.
4:
USTR
announces that the United States intends to terminate India’s and Turkey’s
participation in the Generalized System of Preferences (GSP) program because
they no longer meet the statutory eligibility criteria. The termination of India’s
participation is announced for India’s failure to provide the United States
with equitable and reasonable access to its markets in numerous sectors. Turkey’s
removal from GSP is announced based on a finding that it is sufficiently
economically developed.
4:
The U.S. Department of Commerce (USDOC) initiates an
investigation to determine the effects on the national security of imports of
titanium sponge under section 232 of the Trade Expansion Act of 1962, as
amended (19 U.S.C. §1862), based on industry petition.
6:
EU Commissioner for Trade Malmström and USTR
Lighthizer meet in Washington, DC, under the framework of the U.S.-EU Executive
Working Group.
7-8:
The
Asia-Pacific Economic
Cooperation (APEC) First Senior Officials’ Meeting is held in Santiago, Chile.
11-15:
The United States and Israel hold the second round of negotiations on a successor
agreement to the 2004 U.S.-Israel Agreement on Trade in Agricultural Products.
14:
At the request of the USTR, the U.S. International Trade Commission (USITC)
institutes Investigation No. FTA-103-032,
U.S.-Korea
Free Trade
Agreement (FTA)
:
Advice on Modifications to Certain Textile
and Apparel Rules of Origin
, to provide advice on modifications to the
KORUS rules of origin for certain textile and apparel goods.
14:
The Committee for the Implementation of Textile
Agreements receives a request on behalf of a Moroccan swimwear firm to modify
the rules of origin for women’s and girls’ swimwear made from certain knit
fabric.
15:
USTR requests consultations with the South Korea
under Chapter 16 (Competition-Related Matters) of KORUS, the first
consultations held since the KORUS agreement entered into force on January 1,
2012.
16:
One hundred countries/jurisdictions agree to
respond to a Group of Twenty (G20)/ Organisation for Economic Co-operation and
Development (OECD) mandate to work on the implications of the international tax
system on digitalization for taxation.
19–21:
WTO meetings for the Council for Trade in
Services, the Working Party on Domestic Regulation, and Committee on Specific
Commitments take place. Topics discussed at these meetings include electronic
commerce, cybersecurity, and scheduling issues related to mode 4 services trade
(presence of natural persons in a foreign territory).
19–21:
The United States and Singapore convene a FTA Joint Committee meeting to
discuss issues ranging from digital trade to sanitary and phytosanitary (SPS)
measures, agriculture, and geographical indications (GIs).
25–26:
The 86
th
Session of the OECD Steel
Committee takes place with a focus on steelmaking capacity, steel trade and
policy developments, and state-owned enterprises.
26:
USDOC invites the general public and other federal
agencies to comment on the Commercial Availability Provision of the U.S.-Panama
TPA before the Committee for the Implementation of Textile Agreements.
27–29:
The WTO Informal Open-ended Negotiating Group
on Rules (Fisheries Subsidies) meets in Geneva, Switzerland. The group advances
four draft texts on eliminating subsidies that contribute to illegal,
unreported, and unregulated (IUU) fishing.
28:
The WTO Appellate Body circulates its report on ongoing compliance proceedings
in United States—Measures Affecting Trade in Large Civil Aircraft (Second
Complaint) (DS353).
April
April:
Representatives of USTR and the U.S. Department of Labor (USDOL) travel to Peru
to discuss and review progress made to address reported labor concerns.
2:
The United States and the EU hold the second joint meeting of the Bilateral
Agreement on Prudential Measures Regarding Insurance and Reinsurance (the
U.S.-EU Covered Agreement) in Washington, DC.
9:
The United States and Egypt convene the Trade and Investment Framework
Agreement (TIFA) Council in Washington, DC, to discuss improving bilateral
trade and investment in goods and services.
9:
The United States and Peru successfully resolve concerns raised in first-ever
environment consultations under the U.S.-Peru TPA. As a result, the Peruvian
government cancels a previous decision to make the Agency for the Supervision
of Forest Resources and Wildlife (OSINFOR) a subordinate organization within
Peru’s Ministry of Environment rather than an independent agency as called for
under the U.S.-Peru TPA.
9:
A
WTO panel circulates its report on the dispute filed by Canada in United
States—Anti-Dumping Measures Applying Differential Pricing Methodology to
Softwood Lumber from Canada (DS534).
12:
USTR announces the initiation of an investigation under section 301 of the
Trade Act of 1974 to enforce U.S. rights in a long-running WTO dispute,
European Communities and Certain Member States—Measures Affecting Trade in
Large Civil Aircraft (DS316). In the notice of initiation, USTR sought written
comments on several aspects of the investigation, as well as comments on a list
of products with a value of $21 billion being considered for additional duties
of up to 100 percent.
15–16:
USTR Lighthizer and Japan’s Economic Revitalization Minister Toshimitsu Motegi
meet in Washington, D.C. to continue negotiations on the U.S.-Japan Trade
Agreement.
18:
A WTO panel circulates its report on the dispute filed by the United States in
China—Tariff Rate Quotas for Certain Agricultural Products (DS517).
24:
The
United States and Mongolia TIFA Council meets in Washington, DC, with a focus
on promoting and broadening bilateral trade and investment.
25:
The 175
th
Plenary Session of the OECD Trade Committee takes place with a focus on
Ministerial Council Meeting and Group of Seven (G7)/G20 Summits, trade policy,
digital trade, agricultural subsidies, and export credits.
25:
USTR releases its annual Special 301 Report. The report identifies trading
partners that do not adequately or effectively protect and enforce intellectual
property (IP) rights or otherwise deny market access to U.S. innovators and
creators that rely on protection of their IP rights. Trading partners that
currently present the most significant concerns regarding IP rights are placed
on the Priority Watch List or Watch List. USTR identifies 36 such countries for
these lists in the 2019 Special 301 Report. USTR removes Canada from this Watch
List, citing provisions in the United States-Mexico-Canada Agreement (USMCA)
that address issues regarding the enforcement of IP rights in Canada.
26:
President Trump and Prime Minister Shinzo Abe meet in Washington, DC,
reaffirming their commitment to accelerate trade agreement discussions.
26:
The 175
th
Confidential Session of the OECD Trade Committee takes place.
29:
A meeting of the WTO Committee on Trade and Development’s Dedicated Session on
Small Economies takes place. Participants focus on the challenges facing small,
vulnerable economies, such as export performance, competitiveness, and climate
change.
30:
Members of the United States-Australia FTA Joint Committee, including those
from USTR and the U.S. Departments of Commerce, Treasury, and State, meet with
their Australian counterparts to discuss IP, investment, and digital trade
issues.
May
7:
A North American Free Trade Agreement (NAFTA)
dispute settlement panel convenes a hearing on the United States’ softwood
lumber Antidumping and Countervailing Duties (AD/CVD) determination.
14:
Meeting of the WTO Committee of Participants on
the Expansion of Trade in Information Technology Products takes place.
Participants focus on implementation issues concerning India, China, and
Indonesia.
15–16:
The
APEC Second Senior
Officials’ Meeting and related meetings are held in Valparaiso-Viña del Mar,
Chile.
15–16:
In connection with its proposed determination
on EU subsidies for large civil aircraft under section 301 of the Trade Act of
1974, USTR holds a hearing on proposed duties of up to 100 percent on about $21
billion of imports from the EU.
Mid-May:
Pursuant to commitments made under a 2013 U.S.-Jordan
Implementation Plan Related to Working and Living Conditions of Workers in
Jordan, Jordan passes multiple amendments to the labor law prohibiting wage
discrimination on the basis of gender and creates accommodations for workers
with children.
16:
The United States and Tunisia hold a meeting in
Washington, DC, under the bilateral TIFA. Officials discuss expanding trade and
investment opportunities and creating jobs.
16:
At the urging of USTR and other U.S. government agencies, Guatemala implements
a policy change allowing corrections to the CAFTA-DR Certifications of Origin.
16:
Turkey’s GSP eligibility is removed.
17:
U.S. Secretary of Agriculture Sonny Perdue
announces that the United States and Japan have agreed on new terms and conditions
that eliminate Japan’s longstanding restrictions on U.S. beef exports. The new
terms allow U.S. products from all cattle, regardless of age, to enter Japan
for the first time since 2003.
17:
USTR publishes a Tranche 4 list of Chinese
imported items that would be subject to an additional tariff of up to 25
percent on the basis of section 301 actions. The list of goods affected
accounts for approximately $300 billion in U.S. imports from China the year
before.
17:
President Trump proclaims motor vehicle and parts imports a
national security threat under section 232 of the Trade Expansion Act of 1962,
as amended (19 U.S.C. §1862), and directs the USTR to negotiate with EU, Japan,
and others to resolve the issue.
19:
President Trump exempts Canada and Mexico from section
232 steel and aluminum duties. Canada, Mexico, and United States announce a
process for reinstating tariffs should imports surge.
22–23:
The 2019 OECD Ministerial Council Meeting takes
place in Paris, France. Ministers focus on digitalization and addressing its
disruptive effects.
22:
EU Commissioner for Trade Malmström and USTR
Lighthizer meet in Paris under the framework of the U.S.-EU Executive Working
Group.
23:
USTR Lighthizer meets with the Japanese Minister
of Economy, Trade and Industry Seko, and EU Commissioner for Trade Malmström in
Paris. This gathering is the fourth trilateral meeting between the nations.
Ministers continue discussions on issues related to third countries’
non-market-oriented policies and practices, forced technology transfers, WTO
reform, digital trade, and industrial subsidies and state-owned enterprises,
with an emphasis on the latter topic.
23:
The U.S. Senate introduces the Taiwan Allies
International Protection and Enhancement Initiative (TAIPEI) Act, which among
other things calls for the United States and Taiwan to restart talks aimed at
reaching a bilateral free trade agreement.
27:
The United States removes section 232 tariffs on
steel and aluminum from Mexico and Canada, and Canada lifts its countermeasures.
At about the same time, the United States, Canada, and Mexico inform the WTO
Dispute Settlement Body (DSB) that they have resolved, by mutual agreement,
their respective disputes in DS550, DS551, DS557, and DS560 regarding the U.S.
measures and Canadian and Mexican countermeasures.
30:
President Trump’s administration submits a letter
to Congress to initiate the USMCA approval process. The President announces his
intent to invoke the International Emergency Economic Powers Act authorities to
impose a 5 percent tariff on all imports from Mexico, starting June 10, 2019.
The tariff is to increase by 5 percent monthly to 25 percent in response to
concerns over Mexico’s immigration policies affecting the United States.
June
June:
The U.S.-Morocco FTA Agriculture and Sanitary and Phytosanitary (SPS)
Subcommittee meeting yields an agreement to increase tenders and improve the
administration of the FTA’s tariff-rate quota on wheat.
4:
Canada notifies the WTO DSB of its decision to appeal some of the panel’s
findings on the United States’ softwood lumber AD/CVD determinations.
5:
India’s GSP eligibility is removed.
7:
President Trump announces that the United States has reached an agreement with
Mexico on certain immigration policies and that he has indefinitely suspended
the tariffs proposed on May 30.
13:
The United States and Uruguay meet in Washington, DC, for the eighth session
under their TIFA. Representatives from both countries discuss current trade and
investment issues and their respective trade agenda.
14:
The
United States and Iraq hold the second session of the Trade and Investment
Council in Washington, DC, to discuss bilateral trade issues and integrating
Iraq into the global economy.
17:
India imposes retaliatory tariffs on 28 U.S. products following the revocation
of its GSP preferences.
17:
The 108
th
Session of the OECD Working Party No. 1 on Tax Conventions and Related
Questions takes place. The focus is on digital service taxes levied by European
countries.
17:
An informal meeting of the WTO Work Program on Electronic Commerce takes place.
Members consider a joint submission by India and South Africa’s submission to
rethink the moratorium on the imposition of customs duties on electronic
transmissions.
19:
Mexico ratifies the USMCA agreement.
23:
Delegations from the United States and the Republic of Maldives meet in Malé,
Maldives, under the U.S.-Maldives TIFA for a dialogue on reciprocal trade and
private sector engagement.
24:
A
WTO panel is established at the request of the EU in the United
States—Anti-dumping and Countervailing Duties on Ripe Olives from Spain (DS577)
dispute.
24:
The 81
st
Session of Working Party of the OECD Trade Committee takes place. The focus is
on foreign direct investment and trade in agriculture and agrifood global value
chains.
26:
Ecuador and the Philippines accede to the WTO Agreement on Government
Procurement (GPA) as observers.
27:
A
WTO panel circulates its report on the dispute filed by India in United
States—Certain Measures Relating to the Renewable Energy Sector (DS510).
July
July:
In a 2019 Coordinator Committee meeting, the CAFTA-DR countries approved U.S.
requests that U.S. Food and Drug Administration-approved food additives be
added to the Central American Technical Regulation.
3:
The
United States requests WTO dispute settlement consultations with India
regarding additional duties imposed on U.S. products in India—Additional Duties
on Certain Products from the United States (DS585).
3–5:
The Monitoring and Evaluation Exercise for the WTO’s Aid for Trade Global
Review takes place in Geneva, Switzerland. Members conduct the exercise to
survey Aid for Trade priorities and support for economic empowerment.
5:
Russia
requests WTO dispute settlement consultations with the United States regarding
certain U.S. antidumping measures in United States—Anti-Dumping Measures on
Carbon-Quality Steel from Russia (DS586).
7:
In accordance with the Labor Rights Monitoring and Action Plan (MAP) instituted
as a result of a 2012 public submission under CAFTA-DR, the government of
Honduras issues an implementing regulation for a 2017 labor inspection law
related to implementation of its CAFTA-DR obligations.
7:
Officials
from the United States and Thailand meet in Bangkok, Thailand, under the TIFA
to discuss their trade relationship and reducing the U.S. deficit on trade in
goods.
8:
The government of British Columbia makes regulatory changes ending the
province’s longstanding prohibition on offering imported wine for sale
alongside British Columbia wine in response to a side letter that is part of
USMCA. This prohibition was also the subject of a WTO dispute brought by the
United States, Canada—Measures Governing the Sale of Wine in Grocery Stores
(Second Complaint) (D531).
9:
The fourth meeting of the U.S.-UK Small and Medium-Sized Enterprise (SME)
Dialogue is held in Bristol, UK. Obstacles faced by SMEs engaging in bilateral
U.S.-UK trade, opportunities for enhancing services and digital trade through
the use of emerging technologies, and best business practices for SMEs working
in the fields of artificial intelligence, virtual reality, and mobile
applications are discussed.
9:
USTR leads formal consultations with South Korea regarding the practices of the
Korea Fair Trade Commission (KFTC), calling for KFTC’s immediate compliance
with the provisions in Chapter 16 (Competition-Related Matters) of KORUS. This
meeting marks the first time consultations have been held under the Competition
chapter of KORUS. Consultations take place in Seoul, South Korea.
10–11:
The sixth meeting of the U.S.-UK Trade and Investment Working Group is convened
in London, with discussions focusing on strengthening the trade and investment
relationship between the two economies.
11:
WTO panels circulate a report stating that a solution has been reached in
disputes filed by the United States regarding increased duties imposed by
Canada (DS557) and Mexico (DS560) on certain products of U.S. origin.
11:
WTO panels circulate reports stating that a solution has been reached in
disputes filed by Canada (DS550) and Mexico (DS551) regarding certain U.S.
measures on steel and aluminum products.
12:
President
Trump does not concur with USDOC findings that “uranium imports threaten to
impair national security” and declines to impose quotas or other trade measures
under section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C.
§1862), but establishes U.S. Nuclear Fuel Working Group to develop
recommendations to revive the domestic industry.
16:
The WTO Appellate Body circulates a report on the findings of a compliance
panel in a dispute originally filed by China in United States—Countervailing
Duty Measures on Certain Products from China (DS437).
16:
The U.S. and Morocco hold the sixth meeting of the FTA Joint Committee, with
discussions centered on multiple agriculture and SPS issues, geographical
indications (GIs)., IP protection, and certain textile and apparel cases.
17:
At the U.S.-Jordan Joint Committee meeting, the U.S. urges Jordan to (1) lift a
ban on U.S. genetically modified food products, (2) prioritize international
over EU industrial standards, (3) adopt EU GIs, and (4) host a consultative FTA
subcommittee meeting to address government procurement commitments.
24:
USITC transmits its report to the President in Investigation No. FTA-103-032,
advising that the proposed modifications to KORUS rules of origin are likely to
have a negligible effect on U.S. imports and U.S. exports, while potentially
impacting the U.S. industry that produces some of the affected articles.
25:
An informal open-ended meeting of the WTO’s Work Program on Electronic Commerce
takes place in Geneva, Switzerland. Members consider South Africa’s submission
on the need to rethink the moratorium on imposing customs duties on electronic
submissions.
25:
The U.S. Department of Agriculture announces the details of its $16 billion
support package for American farmers who have been adversely affected by
deteriorated U.S.-China trade conditions.
26:
The United States blocks future timber imports from a Peruvian exporter on
behalf of the Interagency Committee on Trade in Timber Products from Peru
(Timber Committee) after the exporter’s supply chain is found to contain
illegally harvested timber.
August
2:
USTR Lighthizer announces the signing of an agreement to give duty-free EU
market access to U.S. beef exports of 18,500 metric tons annually under a
tariff-rate quota, which will increase to 35,000 metric tons annually over the
course of seven years.
4–6:
The 18
th
African Growth and Opportunity Act (AGOA) Forum takes place in Abidjan, Côte
d’Ivoire, with government officials, civil society leaders, and business
representatives in attendance.
5:
In connection with its proposed determination on EU subsidies on large civil
aircraft under section 301 of the Trade Act of 1974, USTR holds a hearing on
proposed duties of up to 100 percent on approximately $4 billion of imports
from the EU.
5:
The U.S. Treasury Department designates China a “currency manipulator” under
the provisions of the Omnibus Trade and Competitiveness Act of 1988.
15:
The
WTO establishes a panel at the request of China in a dispute relating to
certain U.S. safeguard measures in United States—Safeguard Measure on Imports
of Crystalline Silicon Photovoltaic Products (DS562).
15:
U.S. notifies the DSB it will appeal to the Appellate Body certain issues of
law and legal interpretations in the panel report in United States—Certain
Measures Relating to the Renewable Energy Sector (DS510).
20:
In line with their TIFA, Taiwan implements an
amendment to its Pharmaceutical Affairs Act, which creates a system for
registering patent linkages. Producers of newly approved drugs can list in the
system any patent protecting their products and assert those against generic
drug applicants, which can support early resolution of patent disputes.
20:
The United States modified the tariff rate on the Tranche 4 list of Chinese products
by imposing an additional 10 percent tariff. The products subject to the additional
tariffs are separated into two groups with different implementation dates:
September 1 and December 15, 2019.
25:
President Trump and UK Prime Minister Boris
Johnson release a joint statement establishing a Special Relationship Economic
Working Group which will develop market-oriented principles for economic growth
and increase bilateral cooperation between the two economies.
29–30:
APEC’s Third Senior Officials’ Meeting and
related meetings are held in Puerto Varas, Chile.
30:
The United States modified the tariff rate on the Tranche 4 list by imposing an
additional 15 percent tariff.
September
September:
The United States and Panama meet to discuss various issues concerning labor
law enforcement, with a dedicated focus on child labor and inspection laws.
20:
The first group of Tranche 4 tariffs on imports from China goes into effect.
2:
China
requests WTO dispute settlement consultations with the United States regarding
tariff measures imposed on goods from China: United States—Tariff Measures on
Certain Goods from China III (DS587).
4:
The NAFTA dispute settlement panel issues its interim decision and order to
remand the USITC’s findings regarding the United States’ softwood lumber AD/CVD
determinations.
17:
USITC publishes its 10th and final report on the U.S. Earned Import Allowance
Program for Dominican Republic textiles.
18:
Taiwan signs a letter of intent to buy $3.6 billion worth of U.S. agriculture
products between 2020 and 2021, including purchases of $1.1 billion of corn,
$1.1 billion of soybeans, $960 million of beef products, and $576 million in
wheat products.
18–19:
The 10th U.S.-EU Workshop for SMEs is held in Little Rock, AR. Discussions
focus on SME participation in transatlantic supply chains and local SME
workforce training for global competitiveness.
19:
USTR announces its intention to request “first-ever” consultations under the KORUS
Environment Chapter regarding South Korea’s commitments under KORUS to
implement its obligations under the Commission for the Conservation of
Antarctic Marine Living Resources (CCAMLR) related to illegal, unreported, and
unregulated (IUU) fishing.
25:
President Trump and Prime Minister Abe announce they have reached a final
agreement on the U.S.-Japan Trade Agreement (USJTA) and the U.S.-Japan Digital
Trade Agreement (USJDTA).
26–27:
The 87
th
Session of the OECD Steel Committee takes place with a focus on steelmaking
capacity, steel trade and policy developments, and state-owned enterprises.
October
October:
The U.S. Federal Mediation and Conciliation Services lead a USDOL-funded
training with labor inspection supervisors at the Guatemalan Ministry of Labor
and Social Welfare, which includes monitoring compliance of CAFTA-DR labor
obligations.
2:
A WTO arbitrator issues its decision that the level of U.S. countermeasures
commensurate with the degree and nature of adverse effects from European
subsidies to Airbus is up to $7.50 billion annually in the dispute European Communities
and Certain Member States—Measures Affecting Trade in Large Civil Aircraft
(DS316)).
7:
The United States and Japan sign USJTA and USJDTA, with the agreements to enter
into force on January 1, 2020.
7:
World Cotton Day is held in Geneva, Switzerland, in collaboration with the Food
and Agriculture Organization of the United Nations, United Nations Conference
on Trade and Development, International Trade Centre, and International Cotton
Advisory Committee, emphasizing the need for increased assistance to developing
countries on cotton and cotton-related products.
14:
The WTO DSB authorizes the United States to suspend concessions in the amount
set by the arbitrator in its decision of October 2 involving European
Communities and Certain Member States—Measures Affecting Trade in Large Civil
Aircraft (DS316).
17:
USTR leads formal consultations with South Korea regarding South Korea’s
commitments under the KORUS Environment Chapter to implement its obligations
under CCAMLR related to IUU fishing. Consultations take place in Seoul, South
Korea.
18:
A 10 percent tariff on U.S. imports of aircraft and aircraft parts from France,
Germany, Spain, or the UK, as well as a 25 percent tariff on U.S. imports of
certain food, alcohol, machinery, and textiles and apparel products from some
or all EU member states, go into effect under section 301 of the Trade Act of
1974, in accordance with the arbitrator’s decision in European Communities and
Certain Member States—Measures Affecting Trade in Large Civil Aircraft (DS316).
21:
The United States meets with governments of several Central Asian countries
under the U.S.-Central Asia TIFA. Topics discussed include expanding trade and
private sector development.
23–24:
The 2019 OECD Global Forum on Trade, titled “Levelling the Playing Field:
Measuring and Addressing Trade-distorting Government Support,” takes place. The
focus is on digital trade, agriculture, aluminum, high-technology sectors, and
the “Osaka track” agreements to promote and protect cross-border data flows.
23:
The 176
th
Plenary Session of the OECD Trade Committee takes place with a focus on the G20
Summit, trade policy, digital trade, agricultural subsidies, and export
credits.
24:
The 176
th
Confidential Session of the OECD Trade Committee takes place.
24:
The 2019 Report of the Working Party Chair to the OECD Trade Committee is
released. Topics covered include the Services Trade Restrictiveness Index’s
country coverage, the OECD Trade Union Advisory Committee, and intersessional
activities and reports.
26:
The 2019 Ministerial Meeting on the Global Forum on Steel Excess Capacity takes
place in Tokyo, Japan, with participation from 33 economies.
28:
The WTO establishes a panel at the request of the United States concerning
India—Additional Duties on Certain Products from the United States (DS585).
30:
The Chilean government canceled the 27th APEC Leaders’ Week Meetings scheduled in
mid-November due to ongoing social unrest and protest in the country.
31:
The
U.S.-Rwanda TIFA Council is convened in Washington, DC, to discuss matters
relating to strategic objectives for maximizing growth, reducing trade
barriers, and strengthening cooperation.
31:
A WTO panel circulates its report in the dispute filed by the United States in
India—Export Related Measures (DS541).
November
November:
In a Coordinator Committee meeting, the CAFTA-DR countries jointly establish
the Agricultural Review Commission to exchange data and review CAFTA-DR’s impact
on member countries’ agricultural trade.
1:
With regard to a dispute brought by China, United
States—Certain Methodologies and Their Applications to Anti-Dumping Proceedings
Involving China (DS471), a WTO arbitrator circulates a decision stating that
the level of nullification and impairment was $3.579 billion, approximately
half the amount requested by China. The decision states that China may request
authorization from the DSB to suspend concessions or other obligations in an
amount not to exceed that amount.
1:
The 2019 Global Forum on Steel Excess Capacity expires.
6:
The United States and New Zealand meet in
Washington, DC, under the U.S.-New Zealand TIFA to discuss enhancing their
trade relationship.
7:
USDOL posts a Notice of Proposed Rulemaking to the
Federal
Register
that would expand worker access to support opportunities, such as
apprenticeships, as well as making it easier for states to administer the Trade
Adjustment Assistance Program. The Final Rule is expected to be issued in FY 2020.
11:
The WTO concludes the verification process for
South Korea’s rice tariff regime. The new tariff regime sets a U.S.-specific
quota for South Korean rice imports of at least 132,304 metric tons on an
annual basis and will go into effect on January 1, 2020.
13:
Period for Auto 232 expires without action.
13–14:
The CAFTA-DR Environmental Affairs Council convenes in Miami, FL, to discuss
its continued work toward commitments made under the CAFTA-DR Environment
Chapter.
15:
A
WTO compliance panel circulates its report in United States—Countervailing
Measures on Certain Hot-Rolled Carbon Steel Flat Products from India (DS436).
19:
India notifies the DSB of its decision to appeal to the Appellate Body certain
issues of law and legal interpretations in the panel report in India—Export
Related Measures (DS541).
December
December:
A USDOL evaluation reveals outstanding weaknesses in the functioning of
Guatemala’s labor laws. The evaluation results in the establishment of the
Office of the Prosecutor for Crimes against Justice Operators and Trade
Unionists by the Guatemalan Attorney General’s office.
2:
A
second WTO compliance panel, requested by the EU, issues its report on the
dispute European Communities and Certain Member States—Measures Affecting Trade
in Large Civil Aircraft (DS316). The panel finds that the EU continues to be in
breach of certain articles in the Agreement on Subsidies and Countervailing
Measures (SCM Agreement). The EU notifies the DSB four days later of its
decision to appeal certain findings of the compliance panel.
2:
USTR releases a report on the investigation of France’s digital services tax
under section 301 of the Trade Act of 1974.
2:
The 82
nd
Session Working Party of the OECD Trade Committee takes place, with a focus on
foreign direct investment and trade in agriculture as well as on agrifood
global value chains.
6:
USTR
determines that France’s digital services tax, covered in the investigation
under section 301 of the Trade Act of 1974, is unreasonable or discriminatory
and burdens or restricts U.S. commerce. USTR requests comments and announces a
public hearing on additional tariffs of up to 100 percent on a proposed list of
approximately $2.4 billion of French products.
10:
The year-end formal meeting of the WTO General Council takes place in Geneva,
Switzerland. Members vote to extend the existing moratoriums related to customs
duties on electronic transmissions and to nonviolation and situation complaints
under the Trade-Related Aspects of Intellectual Property Rights (TRIPS)
agreement until the WTO’s 12th Ministerial Conference in June 2020. South
Africa and India oppose the further extension of this moratorium in the WTO,
citing concerns about loss of government revenue for developing countries.
10:
The
United States, Mexico, and Canada sign a protocol of amendment to USMCA.
12:
The Mexican Senate approves the USMCA protocol of amendments
13:
The
Trump Administration submits to Congress the proposed USMCA implementing
legislation, which also reflects the recent amendments.
13:
The United States and China reach a “Phase One” Economic and Trade Agreement.
17:
The USMCA Implementation Act, which approves the Agreement and includes
implementing legislation, is reported out by the U.S. House of Representatives
Ways and Means Committee.
18:
The United States notifies the WTO DSB of its decision to appeal issues of law
covered by the compliance panel and legal interpretations developed by the
compliance panel in the dispute United States—Countervailing Measures on
Certain Hot-Rolled Carbon Steel Flat Products from India (DS436).
18:
The USTR suspends indefinitely the imposition of the 15 percent additional
duties on imports from China that were scheduled to take effect December 15,
2019.
19:
The USMCA Implementation Act is passed by the full U.S. House of
Representatives.
26:
The President terminates Cameroon’s AGOA eligibility effective January 1, 2020,
because it has been determined that Cameroon engages in gross violations of
internationally recognized human rights.
Source:
Compiled from official and private sources, including the U.S. Department of
Agriculture, U.S. Department of Treasury, Office of the U.S. Trade
Representative, U.S. Congress, White House,
Federal Register
,
Asia-Pacific Economic Cooperation, Organization for Economic Co-operation and
Development, World Trade Organization, European Commission, Government of UK,
Government of Japan, Singapore Ministry of Trade and Industry, NAFTA Dispute
Settlement, Commission for Environmental Cooperation,
Inside U.S. Trade
,
Reuters, Bloomberg,
Washington Post
,
Fortune
, Mondaq, CBC
Canada, and Ogletree Deakins.
This chapter surveys activities related to the
administration of U.S. trade laws during 2019, covering import relief laws,
laws against unfair trade practices, national security investigations, trade
adjustment assistance programs, and tariff preference programs. Tariff
preference programs encompass the U.S. Generalized System of Preferences, the
Nepal Trade Preferences Act, the African Growth and Opportunity Act, and the
Caribbean Basin Economic Recovery Act, including initiatives aiding Haiti.
This section covers safeguard actions under statutes
administered by the Commission, including the global safeguard provisions in
sections 201–204 of the Trade Act of 1974, and statutes implementing safeguard
provisions in various free trade agreements involving the United States.
[70]
The Commission
conducted no new safeguard investigations during 2019 under section 202 of the
Trade Act of 1974 (the U.S. global safeguard provision), or under any of the
provisions that implement safeguard provisions in free trade agreements
involving the United States. However, two safeguard measures were in place
during 2019, on certain large residential washers (washers) and on
certain
crystalline
silicon photovoltaic cells, whether or not partially or fully assembled into
other products
(CSPV cells and modules). During 2019,
the Commission conducted and completed a monitoring investigation under section
204(a)(2) of the Trade Act of 1974 with respect to the safeguard measure on
washers, and had underway at yearend a monitoring investigation and an advice
investigation with respect to the safeguard measure on CSPV cells and modules.
[71]
The President imposed the global safeguard measures on
washers and on CSPV cells and modules in separate proclamations effective on
February 7, 2018, following affirmative determinations by the Commission in
late 2017.
[72]
The measure on washers was imposed for a period of three years and one day, and
the measure on CSPV cells and modules was imposed for a period of four years.
[73]
In accordance
with section 204(a)(1) of the Trade Act of 1974, which requires that the
Commission monitor developments with respect to the domestic industry so long
as any measure is in effect, and in accordance with section 204(a)(2) of the
Trade Act of 1974, which requires the Commission to submit a report regarding
this monitoring at the midpoint of a remedy measure whenever the measure
exceeds three years, the Commission submitted its monitoring report on the
washers measure to the President and the Congress on August 7, 2019.
[74]
The Commission’s
monitoring report on CSPV cells and modules was still in preparation at the end
of 2019.
[75]
In accordance with section 204(a)(4) of the Trade Act of
1974, the U.S. Trade Representative, on December 6, 2019, acting under
authority delegated by the President, asked the Commission to provide advice to
the President on the probable economic effect of increasing the level of the
tariff-rate quota on CSPV cells.
[76]
This report was also in preparation as of the end of 2019.
[77]
Section 301 of the Trade Act of 1974 is the principal U.S.
statute for addressing unfair foreign practices affecting U.S. exports of goods
or services.
[78]
Section 301 may be used to enforce U.S. rights under bilateral and multilateral
trade agreements or to respond to unjustifiable, unreasonable, or
discriminatory foreign government practices that burden or restrict U.S.
commerce.
[79]
Interested persons may petition the Office of the U.S. Trade Representative
(USTR) to investigate foreign government policies or practices, or USTR may
initiate an investigation itself.
[80]
If the investigation involves a trade agreement and
consultations do not lead to a mutually acceptable resolution, section 303 of
the Trade Act of 1974 requires USTR to use the dispute settlement procedures
available under the agreement in question. If the matter is not resolved by the
conclusion of the consultations, section 304 of the Trade Act of 1974 requires
USTR to determine whether the practices in question fulfill any of three
conditions: (1) they deny U.S. rights under a trade agreement; (2) they are
unjustifiable and burden or restrict U.S. commerce; or (3) they are
unreasonable or discriminatory, and burden or restrict U.S. commerce. If the
practices fulfill either of the first two conditions, USTR must take action.
[81]
If the
practices fulfill the third condition—that is, if they are unreasonable or
discriminatory, and they burden or restrict U.S. commerce—USTR must determine
whether action is appropriate.
[82]
In either case, the USTR must determine the appropriate action to take in
response to the practice. The time period for making these determinations
varies according to the type of practices alleged.
[83]
Section 301 Investigations
Meat Hormones and European Union (EU) Directives.
A section 301 investigation related to a longstanding dispute about EU measures
concerning meat and meat products was resolved in 2019. The investigation
concerned various meat hormone directives of the EU, which prohibit the use of
certain hormones that promote growth in farm animals. The United States had
successfully challenged the EU measures at the World Trade Organization (WTO),
and in 1999 had imposed additional ad valorem duties of 100 percent on about
$117 million in imports from the EU in retaliation for the EU measures.
[84]
After a series of consultations aimed at resolving the
dispute, on May 13, 2009, the United States and the EU signed a memorandum of
understanding (MOU).
[85]
Under the first phase of the MOU, the EU agreed to establish a tariff-rate
quota (TRQ) with an in-quota tariff rate of zero for high-quality beef in the
amount of 20,000 metric tons (mt).
[86]
Given the successful operation of the MOU in providing increased EU market
access to U.S. beef producers, the United States agreed to remove all
additional duties on the EU products in May 2011.
[87]
The United
States and EU entered into the second phase of the MOU in August 2012, which implemented
a TRQ for high-quality beef in the amount of 45,000 mt, open to the United
States and other qualifying suppliers.
[88]
The MOU was later revised in 2013, extending the duration of the second phase for
an additional two years to August 2015.
[89]
The EU maintained the 45,000 mt TRQ for high-quality beef following the
conclusion of phase 2 of the MOU.
[90]
In February 2016, Congress amended section 301 to authorize
USTR to reinstate any additional duties that had been previously imposed under
section 301 and then terminated.
[91]
The 2016 amendment provides that USTR may reinstate a section 301 action
following receipt of a written request from a petitioner or any representative
of the domestic industry. It requires that USTR, following the receipt of such
a request, consult with the petitioner and representatives of the domestic
industry and provide an opportunity for public comments. In addition, it
requires that USTR review the effectiveness of the reimposed additional duties.
The amendment also allows USTR to suspend concessions in the meat hormone
dispute with the EU.
[92]
On December 9, 2016, representatives of the U.S. beef
industry filed a request with USTR asking that the additional duties be
reinstated.
[93]
In 2017, USTR held a hearing and engaged in discussions with the EU about
possible modifications of the TRQ for high-quality beef.
[94]
In September
2018, the European Commission requested a mandate from the European Council to
negotiate with the United States, suggesting that the United States be
allocated a part of the existing quota that is also available to other
qualifying exporting countries.
[95]
The EU Council adopted the mandate in October 2018, enabling formal
negotiations to begin.
[96]
In June 2019, the United States and the EU reached an
agreement setting a country-specific quota for U.S. high-quality beef.
[97]
On August 2,
2019, the EU and the United States signed the
Agreement on the Allocation to the United States of a
Share in the Tariff Rate Quota for High-Quality Beef Referred to in the Revised
MOU Regarding the Importation of Beef from Animals Not Treated with Certain
Growth-promoting Hormones and Increased Duties Applied by the United States to
Certain Products of the European Union.
[98]
Under the
agreement, U.S. beef producers will initially have duty-free access to the EU
market under the TRQ of 18,500 mt annually, valued at approximately $220
million. After a seven-year phase-in period, U.S. duty-free access to the EU
beef market under the TRQ will grow to 35,000 mt annually, valued at
approximately $420 million.
[99]
A revised MOU between the United States and the EU was
issued on October 21, 2019, incorporating the provisions of the new agreement.
[100]
The agreement
was adopted by the European Parliament on November 28, 2019.
[101]
In light of
the successful negotiations with the EU to resolve U.S. concerns about beef
market access under the EU’s TRQ regime, USTR published a notice in the
Federal
Register
of its determination not to reinstate action in connection with
the European Union’s measures; the proceeding was terminated effective January
1, 2020, the date the EU applied the U.S.-specific TRQ allocation.
[102]
Subsidies for Large Civil Aircraft by the EU and
Certain Member States.
On
April 12, 2019, USTR published a notice in the
Federal Register
announcing the initiation of a section 301
investigation to enforce U.S. rights in the WTO dispute against
the EU and certain EU member states regarding EU subsidies on large civil
aircraft. USTR proposed that the WTO determine that the EU and certain member states
have denied U.S. rights under the WTO Agreement and have failed to implement
WTO Dispute Settlement Body (DSB) recommendations from previous years. USTR
proposed to take action in the form of additional duties on products of the EU
or certain member states, to be drawn from the preliminary list annexed to the
notice of investigation. As part of the notice, USTR announced that the
interagency Section 301 Committee was seeking public comments and had scheduled
a public hearing in connection with the proposed determinations.
[103]
The WTO proceedings in this dispute (DS316) dated back to
October 6, 2004, when USTR requested consultations with the EU on this
matter under section 303 of the Trade Act of 1974. Following the panel
determination that the EU, with additional subsidies from France, Spain,
Germany, and the UK, all provided Airbus subsidized
financing (“launch aid”), which resulted in lost sales and displaced
exports of U.S. large civil aircraft, the EU notified the WTO’s DSB in December
2011 that it had brought its measures into compliance by the end of the
implementation period. The United States disagreed with the EU’s notification,
however, and USTR requested consultations with the EU again in April 2012 after
the dispute’s compliance proceedings were initiated.
[104]
For more on
this dispute see chapter 3 of this report.
[105]
As part of the section 301 investigation, USTR proposed
additional ad valorem duties of up to 100 percent on certain products from the
EU totaling approximately $21 billion.
[106]
A public hearing on these proposed duties was held on May 15–16, 2019.
[107]
In response to
hearing comments and public submissions, USTR proposed additional ad valorem
duties of up to 100 percent for a second list of products totaling
approximately $4 billion, and sought comment through written submissions and a
public hearing held on August 5, 2019.
[108]
After considering the work products of the WTO proceedings
throughout the dispute, as well as public comment and the advice of the Section
301 Committee, USTR announced its determination that U.S. rights had been
violated under the WTO agreement, that EU large civil aircraft subsidies were
inconsistent with the WTO agreement, and that the EU had failed to implement
the recommendation of the DSB to rectify the issue. The DSB authorized
retaliation against the EU on October 14, 2019.
[109]
As a result,
USTR finalized the list of products from the EU subject to countermeasures.
[110]
Duties on EU
goods took effect on October 18, 2019, with U.S. imports of aircraft and
aircraft parts from France, Germany, Spain, or the UK subject to an additional
10 percent tariff, and certain food, alcohol, machinery, and textiles and
apparel products from some or all EU member states subject to an additional 25
percent tariff. U.S. imports of these products were estimated to have an annual
trade value of $7.5 billion, consistent with the appropriate level of
countermeasures as established in the WTO arbitration proceedings.
[111]
On December 12, 2019, USTR published a notice seeking
comment on whether products subject to additional duties should be removed or
remain on the final list, whether the rate of additional duty on specific
products should be increased up to 100 percent, and whether additional duties
should be imposed on some products which had been subject to public comment but
were not included in the final list of products subject to the October 18
tariff action (e.g., whiskies and cognac). Public comments on the review were
due by January 13, 2020.
[112]
French Digital Services Tax.
USTR conducted
a section 301 investigation into a French law taxing the revenues of digital
services companies earned from French users. Despite repeated prior U.S.
requests to French officials not to enact the tax and to work with the United
States to develop a fair and appropriate multilateral tax solution, the French
digital services tax (DST) was signed into law on July 24, 2019.
[113]
Under the
French DST law, companies exceeding a threshold global revenue of €750 million
and a threshold French revenue of €25 million are subject to a 3 percent tax
levied on revenue generated from certain “digital interface” services (e.g., online
marketplaces for goods and services) and certain internet advertising services.
[114]
The DST was
applied retroactively on revenues of covered companies back to January 1, 2019,
with the initial payment due by November 25, 2019.
[115]
To determine whether the DST constituted an actionable
matter under section 301 of the Trade Act of 1974, USTR initiated an
investigation on July 10, 2019, shortly after the tax legislation language was
agreed upon by the French parliament. On the same day the investigation was
initiated, the United States requested consultations with the French government
pursuant to section 303 of the Trade Act of 1974.
[116]
A public
hearing was held on August 19, 2019,
and
U.S. consultations with France on the matter were held on November 14, 2019.
[117]
Based on information obtained during the investigation and
the advice of the Section 301 Committee, USTR issued its findings in a report
on December 2, 2019.
[118]
The report listed five major findings concerning the DST:
Its intent and enactment are discriminatory against U.S. digital
companies, due to reasons including the selection of services covered and the
revenue thresholds.
Its retroactive application is unusual and inconsistent with
prevailing tax principles and renders the tax particularly burdensome for U.S.
companies covered under the law.
Its application to revenue rather than income contravenes
prevailing tax principles and is particularly burdensome for U.S. companies
covered under the law.
Its application to revenues unconnected to a physical presence in
France contravenes prevailing international tax principles and is particularly
burdensome for U.S. companies covered under the law.
Its application to a small group of digital companies contravenes
international tax principles, which advise against targeting the digital
economy for special, unfavorable tax treatment.
[119]
Concluding that the DST was “unreasonable or discriminatory
and burdens or restricts U.S. commerce,” USTR proposed duties of up to 100 percent
on approximately $2.4 billion of imports of food, beverages, cosmetics, and
other products from France on December 6, 2019.
[120]
As of yearend
2019, these tariffs had not been enacted. USTR requested public comment on the
action and convened a hearing on the matter in early 2020.
[121]
The United
States remains engaged in the OECD process to reach international consensus on
the issue of digital taxation, and remains supportive of efforts to arrive at a
multilateral solution.
[122]
China Technology Transfer.
In a memorandum dated August 14, 2017, the President directed USTR to determine,
consistent with section 302(b) of the Trade Act of 1974, whether to investigate
any of China’s laws, policies, practices, or actions that might be unreasonable
or discriminatory and might be harming American intellectual property rights
(IPRs), innovation, or technology development.
[123]
USTR initiated
an investigation on August 18, 2017,
[124]
and published the findings of the investigation on March 22, 2018.
[125]
USTR’s findings concerned four
categories of acts, policies, and practices, as follows:
China
uses foreign ownership restrictions, such as joint venture requirements and
foreign equity limitations, and various administrative review and licensing
processes, to require or pressure technology transfer from U.S. companies.
China's
regime of technology regulations forces U.S. companies seeking to license
technologies to Chinese entities to do so on non-market-based terms that favor
Chinese recipients.
China
directs and unfairly facilitates the systematic investment in, and acquisition
of, U.S. companies and assets by Chinese companies to obtain cutting-edge
technologies and intellectual property and generate the transfer of technology
to Chinese companies.
China
conducts and supports unauthorized intrusions into, and theft from, the
computer networks of U.S. companies to access their sensitive commercial
information and trade secrets.
[126]
On March 23, 2018, the United
States initiated a dispute under the WTO Dispute Settlement Understanding with
respect to the second category of acts, policies, and practices (involving
technology-licensing regulations) and requested consultations with China.
[127]
At the request
of the United States, the WTO Dispute Settlement Body (DSB) established a panel
on November 21, 2018, and also at the request of the United States, the WTO
Director-General composed the panel on January 16, 2019. On June 3, 2019, the
United States requested the panel to suspend its proceedings until December 31,
2019, and on June 4, 2019, China agreed with the U.S. request. On December 23,
2019, the United States requested the panel to further suspend its work until
February 29, 2020.
[128]
With respect to the other three categories
of acts, policies, and practices, the USTR, at the direction of the President, determined
to impose additional duties on certain products of China. The additional duties
were imposed in two tranches following public comment and hearings.
[129]
In July 2018,
an additional duty was imposed on the first tranche of goods, known as “List 1”
goods, covering 818 tariff subheadings with an approximate annual trade value
of $34 billion.
[130]
In August 2018, an additional 25 percent duty was imposed on “List 2” goods,
which covered 279 tariff subheadings, with an approximate annual trade value of
$16 billion.
[131]
The USTR also established exclusion processes by which stakeholders may request
that particular products classified within a covered tariff subheading be
excluded from the additional duties.
[132]
In September 2018, the USTR, at the
direction of the President, determined to modify the prior action in the
investigation by imposing additional duties on products of China (“List 3”
products) classified under 5,733 tariff subheadings with an approximate annual
trade value of $200 billion.
[133]
The rate of the additional duty on these List 3 products was initially set at
10 percent ad valorem, and it was later increased to 25 percent ad valorem in
May 2019, following public comment and hearing.
[134]
USTR also
established an exclusion process for products of China covered under List 3,
and received approximately 30,000 exclusion requests.
[135]
As of February
14, 2020, USTR had approved approximately 730 requests.
In August 2019, the USTR, at the direction of the President,
and following public comment and hearings, determined to modify the prior
action in the investigation by imposing additional 10 percent ad valorem duties
on products of China classified under approximately 3,805 tariff subheadings
with an approximate annual trade value $300 billion.
[136]
The tariff
subheadings subject to the 10 percent additional duties were separated into two
lists, with different effective dates: September 1, 2019, for the list in
Annex A (“List 4A”), and December 15, 2019, for the list in Annex C (“List
4B”). Subsequently, at the direction of the President, the USTR determined to
increase the rate of the additional duties from 10 percent to 15 percent.
[137]
On December 18, 2019, following an
announcement on December 13 of the Phase One trade deal with China, and at the
direction of the President, the USTR determined to suspend indefinitely the
imposition of the 15 percent additional duties on products of China covered by
List 4B, which otherwise would have been effective on December 15, 2019.
[138]
Also, in light
of the Phase One deal, and at the direction of the President, the USTR
determined to reduce the rate of additional duties on products of China covered
by List 4A, from 15 percent to 7.5 percent, effective February 14, 2020.
[139]
USTR also
developed an exclusion process for the imported goods in List 4A, with a
deadline for submitting requests of January 31, 2020.
[140]
Special 301
The Special 301 law requires that
the USTR annually identify and issue a list of foreign countries that deny
adequate and effective protection of IPRs, or deny fair and equitable market
access to U.S. persons who rely on IPR protection.
[141]
Under the
statute, a country denies adequate and effective IPR protection if the country
does not allow foreign persons “to secure, exercise, and enforce rights relating
to patents, process patents, registered trademarks, copyrights, trade secrets
and mask works.”
[142]
A country denies fair and equitable market access if it denies access to a
market for a product that is protected by a copyright or related right, patent,
trademark, mask work, trade secret, or plant breeder’s right using laws and
practices that violate international agreements or that constitute
discriminatory nontariff trade barriers.
[143]
A country may be found to deny adequate and effective IPR protection even if it
is in compliance with its obligations under the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement).
[144]
In addition, the Special 301 law
directs the USTR to identify so-called “priority foreign countries.”
[145]
Priority
foreign countries are countries that have the most onerous or egregious acts,
policies, or practices with the greatest adverse impact (actual or potential)
on the relevant U.S. products.
[146]
Such countries must be designated as priority foreign countries unless they are
entering into good-faith negotiations, or they are making significant progress
in bilateral or multilateral negotiations to provide adequate and effective IPR
protection.
[147]
The identification of a country as a priority foreign country triggers a
section 301 investigation, unless the USTR determines that the investigation
would be detrimental to U.S. economic interests.
[148]
The USTR has adopted a practice of
naming countries to a “watch list” or a “priority watch list” when the countries’
IPR laws and practices fail to provide adequate and effective IPR protection,
but the deficiencies do not warrant listing the countries as priority foreign
countries.
[149]
The priority watch list identifies countries with significant IPR concerns that
warrant close monitoring and bilateral consultation. If a country on the
priority watch list makes progress, it may be moved to the watch list or
removed from any listing. On the other hand, a country that fails to make
progress may be raised from the watch list to the priority watch list or from
the priority watch list to the list of priority foreign countries.
In February 2016, Congress enacted
amendments to the Special 301 statute that provided that USTR should develop an
action plan for each country that has been identified as a priority watch list
country and that has remained on the priority watch list for at least one year.
[150]
The action
plan should contain benchmarks designed to assist the country to achieve, or
make significant progress toward achieving, adequate and effective protection
of IPRs and fair and equitable market access for U.S. persons that rely on IPR
protection.
In the 2019 Special 301 review,
USTR examined the adequacy and effectiveness of IPR protection in more than 100
countries.
[151]
In conducting the review, USTR focused on a wide range of issues and policy
objectives, including inadequate IPR protection and enforcement worldwide,
compulsory technology licensing and transfer, and the unauthorized use of
unlicensed software by foreign governments.
[152]
Although no country was identified
as a priority foreign country in the
2019 Special 301 Report
, the
report identified 11 countries on the priority watch list: Algeria, Argentina,
Chile, China, India, Indonesia, Kuwait, Russia, Saudi Arabia, Ukraine, and
Venezuela.
[153]
In addition, the report identified 23 countries on the watch list.
[154]
In keeping China on the priority
watch list, the report highlighted serious challenges with respect to adequate
and effective IPR protection in that country, as well as fair and equitable
market access for U.S. persons that rely on IPR protection.
[155]
The report
cites many longstanding concerns, such as coercive technology transfer
requirements; structural impediments to effective IPR enforcement; widespread
infringing activity, including trade secret theft; rampant online piracy and
counterfeiting; and high levels of pirated and counterfeit exports. India
remained on the priority watch list in 2019 due to a lack of measurable
improvement to its IPR regime, particularly with respect to patents,
copyrights, trade secrets, and enforcement.
[156]
Indonesia and Saudi Arabia were also specifically mentioned in the report’s
Executive Summary.
As part of the annual Special 301
process, USTR usually also issues a separate report on so-called notorious
markets. USTR defines notorious markets as online or physical marketplaces that
are reported to engage in or facilitate commercial-scale copyright piracy and
trademark counterfeiting. The report highlights those markets where the scale
of this activity is such that it can cause significant harm to U.S. IPR
holders.
[157]
The USTR listed 38 online markets and 34 physical markets throughout the world
in the 2019 review.
[158]
The “issue focus” section of the
Notorious
Markets List
highlights an issue related to the facilitation of substantial
counterfeiting or piracy.
[159]
Past issue focuses highlighted free trade zones (2018), illicit streaming
devices (2017), stream ripping (2016), emerging marketing and distribution
tactics in Internet-facilitated counterfeiting (2015), and domain name
registrars (2014). The report’s issue focus for 2019 explored the nexus between
online piracy and malware, which is tied to financial incentives.
Cybercriminals who create and operate malware benefit as the malware spreads among
infected devices: they sell stolen personal and financial information, mine for
cryptocurrency, collect ransoms, rent botnets, and sell cyberattack
capabilities.
[160]
These bad actors pay piracy websites and applications (apps) to deliver malware
to those who visit the websites or use the apps—between $50–$200 per 1,000
malware installations, according to a 2015 study. This study estimated that 229
piracy websites, including notorious online markets identified by USTR in its
2015
Notorious Markets List
, generated roughly $3.3 million that year by
delivering malware to their visitors.
[161]
The nexus between online piracy and malware can also encompass the pirated
content itself. Websites—such as cyberlockers or BitTorrent sites—that require
users to download rather than stream the infringing content may contain malware-infected
content, including software, games, movies, music, and books.
[162]
The 2019 review process also highlighted
a growing concern about the proliferation of counterfeiting and piracy facilitated
by social media platforms, as well as e-commerce and third-party marketplace
platforms. For example, submissions by right holders emphasized a growing trend
of counterfeit products being offered for sale on e-commerce features related
to large platforms worldwide, and the difficulties of combating them. Among the
examples cited are several foreign e-commerce platforms owned by Amazon, including
amazon.ca in Canada, amazon.de in Germany, amazon.fr in France, amazon.in in
India, and amazon.co.uk in the United Kingdom.
[163]
USTR stated that it will further
study and monitor these concerns. In the 2019 review, it recommended that
platforms begin to address these concerns by establishing industry-standard IP
enforcement policies, increasing transparency and collaboration with right
holders to quickly address complaints, and working with law enforcement to
identify IP violators.
The U.S. antidumping law is found in Title VII of the Tariff
Act of 1930, as amended.
[164]
This law offers relief to U.S. industries that are materially injured by
imports that are dumped—that is, sold at “less than fair value” (LTFV). The
U.S. government provides a remedy by imposing an additional duty on LTFV
imports.
Antidumping duties are imposed when (1) the U.S. Department
of Commerce (USDOC) has determined that imports are being, or are likely to be,
sold at LTFV in the United States, and (2) the Commission has determined that a
U.S. industry is materially injured or threatened with material injury, or that
the establishment of an industry in the United States is materially retarded,
by reason of such imports. Such a conclusion is called an “affirmative
determination.” Investigations are generally initiated in response to a
petition filed with USDOC and the Commission by or on behalf of a U.S.
industry, but can be self-initiated by USDOC. USDOC and the Commission each
make preliminary determinations and, if the Commission’s preliminary
determination is affirmative, then each agency will make final determinations
during the investigation process.
In general, imports are considered to be sold at LTFV when a
foreign firm sells merchandise in the U.S. market at a price that is lower than
the “normal value” of the merchandise.
[165]
Generally, normal value is the price the foreign firm charges for a comparable
product sold in its home market.
[166]
Under certain circumstances, the foreign firm’s U.S. sales price may also be
compared with the price the foreign firm charges in other export markets or
with the firm’s cost of producing the merchandise, taking into account the
firm’s “selling, general, and administrative expenses” and its profit. Under
the law, this latter basis for comparison is known as “constructed value.”
[167]
Finally, when the
producer is located in a nonmarket economy, a comparison is made between
average U.S. prices and a “surrogate” normal value (its factors of production,
as valued by use of a “surrogate” country).
[168]
A nonmarket-economy country means any foreign country that the administering
authority determines does not operate on market principles of cost or pricing
structures, so that prices paid on sales of merchandise in such a country do
not reflect the fair value of the merchandise.
[169]
In all three instances, the amount by which the normal value
exceeds the U.S. sales price is the “dumping margin.” The duty specified in an
antidumping duty order reflects the weighted average dumping margins found by
USDOC, both for the specific exporters it examined and for all other exporters.
[170]
This rate of
duty (in addition to any ordinary customs duty owed) will be applied to
subsequent imports from the specified producers/exporters in the subject
country, and may be adjusted if USDOC receives a request for an annual review.
[171]
The Commission instituted 37 new antidumping investigations
and made 33 preliminary determinations and 33 final determinations in 2019.
[172]
As a result of
these affirmative final USDOC and Commission determinations, USDOC issued 33
antidumping duty orders on 20 products from 15 countries in 2019 (table 2.1).
The status of all antidumping investigations active at the Commission during
2019—including, if applicable, the date of final action—is presented in the
interactive
dashboard
in appendix A. A list of all antidumping duty orders and
suspension agreements (agreements to suspend investigations) in effect as of
the end of 2019 also appears in the
interactive
dashboard
in appendix A.
[173]
Table 2.1
Antidumping duty orders
that became effective during 2019
a
(alphabetical by trade partner)
Trade partner
Product
Range of dumping margins
(%)
Austria
Strontium Chromate
25.90
Canada
Large Diameter Welded Pipe
12.32
China
Common Alloy Aluminum Sheet
49.85-59.72
China
Truck and Bus Tires
9.00–22.57
China
Rubber Bands
27.27
China
Large Diameter Welded Pipe
132.63
China
Plastic Decorative Ribbon
61.99–370.04
China
Cast Iron Soil Pipe
235.93
China
Steel Wheels
231.70
China
Quartz
265.81–336.69
China
Steel Propane Cylinders
25.52–108.60
China
Steel Trailer Wheels
38.27–44.35
China
Steel Racks
18.06–144.50
China
Aluminum Wire and Cable
58.51–63.47
China
Vertical Metal File Cabinets
198.50
China
Refillable Stainless Steel Kegs
77.13
China
Mattresses
57.03–1,731.75
France
Strontium Chromate
32.16
Germany
Refillable Stainless Steel Kegs
7.47
Greece
Large Diameter Welded Pipe
10.26
India
Large Diameter Welded Pipe
50.55
India
Glycine
10.86–13.61
Japan
Glycine
53.66-86.22
Mexico
Refillable Stainless Steel Kegs
18.48
Singapore
Acetone
66.42-131.75
South Korea
Large Diameter Welded Pipe
6.87–20.39
Spain
Acetone
137.39–171.81
Thailand
Rubber Bands
5.87
Thailand
Steel Propane Cylinders
10.77
Thailand
Glycine
201.59–227.17
Thailand
Carbon and Alloy Steel Threaded Rod
20.83
Turkey
Large Diameter Welded Pipe
2.57–5.11
Vietnam
Laminated Woven Sacks
109.46–292.61
Source:
Compiled by USITC from
Federal Register
notices.
a
Antidumping
duty orders become effective following final affirmative determinations by
USDOC and the Commission. The rates in the table apply in addition to any
ordinary customs duty owed.
b
See Federal Register
notice
85 Fed. Reg. 35264
regarding the revocation of
Antidumping duty order for Refillable Stainless Steel Kegs from Germany.
Countervailing Duty Investigations
The U.S. countervailing duty law is
also set forth in Title VII of the Tariff Act of 1930, as amended. It provides
for the imposition of additional duties to offset (“countervail”) foreign
subsidies on products imported into the United States.
[174]
In general,
procedures for such investigations are similar to those under the antidumping
law. Petitions are filed with USDOC (the administering authority) and with the
Commission. Before a countervailing duty order can be issued, USDOC must find
that a countervailable subsidy exists. In addition, the Commission must make an
affirmative determination that a U.S. industry is materially injured or
threatened with material injury, or that the establishment of an industry is
materially retarded, because of the subsidized imports.
The Commission instituted 21 new
countervailing duty investigations and made 17 preliminary determinations and
21 final determinations during 2019. USDOC issued 20 countervailing duty orders
on 16 products from 5 countries in 2019 as a result of affirmative USDOC and
Commission determinations (table 2.2). The status of all countervailing duty
investigations active at the Commission during 2019, and, if applicable, the
date of final action, is presented in the
interactive
dashboard
in appendix A. A list of all countervailing duty orders and
suspension agreements in effect at the end of 2019 also appears in the
interactive
dashboard
in appendix A.
[175]
Table 2.2
Countervailing duty orders
that became effective during 2019
a
(alphabetical by trade partner)
Trade partner
Product
Range of countervailable
subsidy rates (%)
China
Common Alloy Aluminum Sheet
46.48–116.49
China
Truck and Bus Tires
20.98–63.34
China
Large Diameter Welded Pipe
198.49
China
Plastic Decorative Ribbon
14.27–94.67
China
Cast Iron Soil Pipe
14.69–109.27
China
Steel Wheels
457.10
China
Quartz
45.32–190.99
China
Steel Propane Cylinders
37.91–142.37
China
Steel Trailer Wheels
386.45–388.31
China
Steel Racks
102.23
China
Vertical Metal File Cabinets
271.79
China
Aluminum Wire and Cable
33.44–165.63
China
Refillable Stainless Steel Kegs
16.21–145.23
China
Glycine
144.01
China
Rubber Bands
125.77
India
Glycine
3.03–6 .99
India
Large Diameter Welded Pipe
541.15
South Korea
Large Diameter Welded Pipe
0.01–27.42
Turkey
Large Diameter Welded Pipe
0.92–3.72
Vietnam
Laminated Woven Sacks
3.02–198.87
Source:
Compiled by the USITC from
Federal Register
notices.
a
Countervailing duty orders become effective following
final affirmative determinations by USDOC and the Commission. The rates in the
table apply in addition to any ordinary customs duty owed.
Reviews of Outstanding Antidumping and Countervailing Duty
Orders/Suspension Agreements
Section 751(a) of the Tariff Act of 1930 requires USDOC, if
requested, to conduct annual reviews of outstanding antidumping duty and
countervailing duty orders to ascertain the amount of any net subsidy or
dumping margin and to determine compliance with suspension agreements. Section
751(b) also authorizes USDOC and the Commission, as appropriate, to review
certain outstanding determinations and agreements after receiving information
or a petition that shows changed circumstances.
[176]
Where a
changed circumstances review is directed to the Commission, the party that is
asking to have an antidumping duty order or countervailing duty order revoked
or a suspended investigation terminated has the burden of persuading the
Commission that circumstances have changed enough to warrant revocation. On the
basis of reviews from either USDOC or the Commission, USDOC may revoke an
antidumping duty or countervailing duty order in whole or in part, or may
either terminate or resume a suspended investigation.
Additionally, pursuant to section 751(c) of the Tariff Act
of 1930, both USDOC and the Commission must conduct reviews of existing
antidumping duty and countervailing duty orders and suspension agreements five
years after their initial publication and five years after publication of any
subsequent determination to continue them. This process of five-year reviews,
referred to as sunset reviews, began in 1995. These reviews are intended to
determine whether revoking an order or terminating a suspension agreement would
be likely to lead to the continuation or recurrence of dumping or a
countervailable subsidy and of material injury. If either USDOC or the Commission
reach negative determinations, the order will be revoked or the suspension
agreement terminated. During 2019, USDOC and the Commission instituted 83
sunset reviews of existing antidumping and countervailing duty orders or
suspended investigations, and the Commission completed 60 reviews. As a result
of affirmative determinations by USDOC and the Commission, 51 antidumping duty
and countervailing duty orders were continued. The
interactive
dashboard
in appendix A lists, by date and action, the reviews of
antidumping duty and countervailing duty orders and suspended investigations
completed in 2019.
Section 129 Investigations
Section 129 of the Uruguay Round
Agreements Act sets out a procedure by which the Administration may respond to
an adverse WTO panel or Appellate Body report concerning U.S. obligations under
the WTO agreements on safeguards, antidumping, or subsidies and countervailing
measures. Specifically, section 129 establishes a mechanism permitting USTR to
request that the agencies concerned—USDOC and the Commission—issue a
consistency or compliance determination, where such action is appropriate, to
respond to the recommendations in a WTO panel or Appellate Body report.
[177]
Neither USDOC or the Commission made any determinations under
section 129 during 2019, nor were any proceedings in process.
[178]
Section 337 Investigations
Section 337 of the Tariff Act of 1930, as amended, prohibits
certain unfair practices in the import trade. In the context of patent
infringement—the most commonly asserted unfair practice—section 337 prohibits
the importation into the United States, the sale for importation, and the sale
within the United States after importation of articles that infringe a valid
and enforceable United States patent, provided that an industry in the United
States, relating to articles protected by the patent concerned, exists or is in
the process of being established.
[179]
Similar requirements govern investigations involving infringement of other
federally registered IPRs, including registered trademarks, registered
copyrights, registered mask works, and registered vessel hull designs. In
addition, the Commission has general authority to investigate other unfair
methods of competition and unfair acts in the importation and sale of products
in the United States (such as products manufactured abroad using stolen U.S.
trade secrets), the threat or effect of which is to destroy or injure a U.S.
industry, to prevent the establishment of a U.S. industry, or to restrain or
monopolize trade and commerce in the United States.
[180]
The Commission
may institute an investigation on the basis of a complaint or on its own
initiative.
[181]
If the Commission determines that a violation exists, it can
issue an exclusion order directing U.S. Customs and Border Protection to block
the imports in question from entry into the United States. The Commission can
also issue cease and desist orders that direct the violating parties to stop
engaging in the unlawful practices. The orders enter into force unless
disapproved for policy reasons by USTR within 60 days of issuance.
[182]
During calendar year 2019, there were 128 active section 337
investigations and ancillary (secondary) proceedings, 59 of which were
instituted that year. Of these 59 new proceedings, 47 were new section 337
investigations and 12 were new ancillary proceedings relating to previously
concluded investigations. In 33 of the new section 337 investigations
instituted in 2019, patent infringement was the only type of unfair act
alleged. Of the remaining 14 investigations, 3 involved allegations of patent
infringement and trademark infringement; 2 involved allegations of trademark
infringement; 4 involved allegations of trade secret misappropriation; 1
involved allegations of trade secret misappropriation and unfair competition; 1
involved allegations of patent infringement and false advertising; 1 involved
allegations of false advertising and unfair competition; 1 involved allegations
of trade secret misappropriation, false advertising, and tortious interference;
and 1 involved allegations of false designation of origin, false advertising,
and unfair competition.
The Commission completed a total of 63 investigations and
ancillary proceedings under section 337 in 2019, including 3 enforcement
proceedings, 4 rescission proceedings, 1 proceeding relating to bond forfeiture
and return, 2 remand proceedings, 3 modification proceedings, 1 advisory
opinion proceeding, and 2 declassification proceedings.
[183]
In addition,
the Commission issued 6 general exclusion orders, 9 limited exclusion orders,
and 25 cease and desist orders during 2019. The Commission terminated 24
investigations without determining whether there had been a violation. Of these
terminated investigations, 19 were terminated on the basis of settlement
agreements and/or consent orders, 4 were terminated based on withdrawal of the
complaint, and 1 was terminated for other reasons. Commission activities
involving section 337 proceedings in 2019 are presented in the
interactive
dashboard
in appendix A.
[184]
Figure 2.1
Product types at issue in active 337 proceedings, by
percentage of active proceedings, 2019
Source:
USITC calculations.
Note: Underlying data can be found in
appendix table
B.9
.
As in past years, the section 337 investigations active in
2019 involved a broad spectrum of products. Technology products remained the
single largest category, with approximately 29 percent of the active
proceedings involving computer and telecommunications equipment. The
second-largest category was pharmaceuticals and medical devices, which were at
issue in about 15 percent of the active proceedings. Automotive, manufacturing,
and transportation products were at issue in about 12 percent of the active
proceedings. Consumer electronics, small consumer items, and lighting products
were each at issue about 6 percent of the proceedings. The remaining 26 percent
of active proceedings involved a wide variety of other types of articles,
including adjustable child carriers, botulinum toxin products, luxury vinyl
tiles, female fashion dresses, lithium-ion batteries, industrial food service
equipment, toner cartridges, collapsible furniture, and pouch-type battery
modules.
At the close of 2019, 65 section 337 investigations and
related proceedings were pending at the Commission. As of December 31, 2019,
there were 120 exclusion orders based on violations of section 337 in effect. The
interactive
dashboard
in appendix A lists the investigations in which these exclusion
orders were issued. Copies of the exclusion orders are available on the Commission’s
website at
https://www.usitc.gov/intellectual_property/exclusion_orders.htm.
For additional detailed information about section 337 investigations instituted
since October 1, 2008, see the Commission’s “337 Info” database, found at
https://pubapps2.usitc.gov/337external.
USDOC completed two investigations during 2019 under the
national security provisions in section 232 of the Trade Expansion Act of 1962:
one on certain automobiles and parts, and the other on uranium.
[185]
USDOC also instituted one new investigation in 2019 under
section 232, on titanium sponge.
[186]
Developments in all three of these investigations are
described below.
No new section 232 measures were imposed by the President
during 2019.
Tariff increases imposed in 2017
under section 232 on certain steel and aluminum imports remained in place
throughout 2019, with two adjustments: in May 2019, section 232 tariffs on
steel and aluminum from Canada and Mexico were terminated, and section 232
tariffs on steel from Turkey were reduced from 50 percent ad valorem to 25
percent ad valorem.
Section 232 of the Trade Expansion Act requires the
Secretary to submit a report to the President within 270 days of instituting an
investigation. The report must include the Secretary’s findings “with respect
to the effect of the importation of such article in such quantities or under
such circumstances upon the national security” and his recommendations for
action or inaction. The statute also provides that if the Secretary finds that
the imported article “is being imported into the United States in such
quantities or under such circumstances as to threaten to impair the national
security,” he must so advise the President in his report.
[187]
Steel and Aluminum Tariffs
As explained in greater detail in the 2018 report, on March
8, 2018, the President issued two proclamations, Proclamation 9705
[188]
and 9704,
[189]
imposing additional tariffs on certain steel and aluminum
products, respectively. The President issued the proclamations following
receipt of reports and findings from the Secretary of Commerce under section
232 of the Trade Expansion Act of 1962 following the initiation of investigations
in April 2017.
[190]
The additional tariffs—25 percent ad valorem on certain
steel products, and 10 percent ad valorem on certain aluminum products—remained
in effect for the duration of 2018 and through the end of 2019.
[191]
The President modified the proclamations several times during 2018 to exempt
certain countries and products, and further modified the proclamations in 2019.
The most significant of the 2019 modifications was made in May 2019, when the
President, as part of agreements reached with Canada and Mexico, terminated the
section 232 tariffs imposed on imports of certain Canadian and Mexican steel
[192]
and aluminum products.
[193]
At the same time,
Canada and Mexico each agreed to terminate certain measures imposed on imports
of certain U.S. goods in response to the U.S. section 232 tariffs, and all
three countries agreed to withdraw WTO dispute litigation challenging each
other’s measures.
[194]
In a second adjustment in May 2019, the United States
reduced the duty on imports of certain steel products from Turkey from 50
percent ad valorem to 25 percent ad valorem, effective May 21, 2019, following
a decline in imports from Turkey.
[195]
The tariff on imports from Turkey had been increased
effective August 13, 2018, to further reduce imports of certain steel products and
increase U.S. steel producers’ capacity utilization.
[196]
Automobiles and Automobile Parts
The Secretary of Commerce
initiated his investigation on automobiles and automobile parts on May 23,
2018, to determine the effects on the national security of imports of
automobiles, including cars, SUVs, vans and light trucks, and automobile parts.
On February 17, 2019, the Secretary of Commerce transmitted his report to the
President. The Secretary found and advised the President that imports of such
automobiles and automobile parts threatened to impair the national security.
One recommendation by the Secretary was to pursue negotiations to obtain
agreements addressing the threatened impairment of national security. In the
Secretary's judgment, successful negotiations could allow American-owned
automobile producers to achieve long-term economic viability and increase
research and development spending to develop cutting-edge technologies that are
critical to the defense industry.
[197]
In Proclamation 9888 of May 17,
2019, the President announced that he concurred with the Secretary’s finding
and directed the U.S. Trade Representative, in consultation with other
officials, to pursue negotiation of agreements to address the threatened impairment
of national security
due to imports of
automobiles
and automobile parts from the EU, Japan, and other trading partners.
[198]
The President further directed the Trade Representative to
update him within 180 days and directed the Secretary to continue to monitor
imports.
[199]
The President
announced that if agreements were not reached within 180 days, the President would
determine whether and what further action would need to be taken.
[200]
As of the end of
2019, no agreements had been announced and no measures imposed.
Uranium
On April 14, 2019, the Secretary
of Commerce transmitted his report to the President on his investigation into
the effect of imports of uranium (uranium ore, uranium concentrate, uranium
hexafluoride, enriched uranium, and enriched uranium in fuel assemblies) on the
national security. The Secretary had initiated his investigation on uranium on
July 18, 2018.
[201]
The Secretary reported that uranium is being imported into
the United States in such quantities and under such circumstances as to threaten
to impair the national security. He reported that the United States currently
imports approximately 93 percent of its commercial uranium, compared to 85.8
percent in 2009, and attributed the increase to elevated production by foreign
state-owned enterprises, which he said have distorted global prices and made it
more difficult for domestic mines to compete.
[202]
The President did not concur with
the Secretary’s finding. Although stating that the Secretary’s findings raise
significant concerns, the President concluded “that a fuller analysis of
national security considerations with respect to the entire nuclear fuel supply
chain is necessary at this time.”
[203]
He stated that
domestic mining, milling, and conversion of uranium, while significant, “are
only part of the nuclear supply chain necessary for national security.”
[204]
To address the concerns identified by the Secretary, the
President directed that the Assistant to the President for National Security
Affairs and the Assistant to the President for Economic Policy establish a
United States Nuclear Fuel Working Group to develop recommendations for
reviving and expanding domestic nuclear fuel production.
[205]
Titanium Sponge
On March 4, 2019, in response to a
petition, the Secretary of Commerce initiated an investigation to determine the
effects on the national security of imports of titanium sponge.
[206]
Titanium sponge is the primary form of titanium metal from
which almost all other titanium products are made.
[207]
The investigation was still underway at the end of 2019.
[208]
For several decades, the United States has provided trade
adjustment assistance (TAA) to aid U.S. workers and firms adversely affected by
import competition.
[209]
Title IV of the Trade Preferences Extension Act (TPEA)—the Trade Adjustment
Assistance Reauthorization Act of 2015 (TAARA 2015)—amended and reauthorized
TAA for six years, until June 30, 2021.
[210]
The main TAA programs in
effect in fiscal year (FY) 2019 were TAA for Workers, administered by the U.S.
Department of Labor (USDOL), and TAA for Firms, administered by the U.S.
Department of Commerce (USDOC). A third program, TAA for Farmers, administered
by the U.S. Department of Agriculture (USDA), was reauthorized by Congress
under the TPEA of 2015.
[211]
However, the U.S. Congress did not appropriate funding for new participants in
this program for FY 2019.
[212]
As a result, USDA did not accept any new petitions or applications for benefits
in FY 2019.
[213]
Table 2.3 provides information on the amount of funding allocated to TAA
programs in recent years. Selected developments in the TAA programs for workers
and firms during FY 2019 are summarized below.
[214]
Table 2.3
Funding
by the TAA Program, FY 2015–19 (million dollars)
TAA for Workers
TAA for Firms
TAA for Farmers
2015
507.4
20
0
2016
626.8
13
0
2017
716.4
13
0
2018
667.1
13
0
2019
582.1
13
0
Source: USITC,
Year in Trade 2015
; USITC,
Year in Trade 2016
; USITC,
Year in Trade 2017
;
USITC, Year in Trade
2018
; USTR,
2020 Trade Policy Agenda and
2019 Annual Report
, February 2020, 139–40.
The provisions relating to TAA for Workers are set out in chapter
2 of title II of the Trade Act of 1974.
[215]
The program provides federal
assistance to eligible workers who have been adversely affected by import
competition. The TAA program offers a variety of benefits and services to
eligible workers, including training, help with healthcare premium costs, trade
readjustment allowances, reemployment assistance, and employment and case
management services.
[216]
Current information on provisions of the TAA for Workers program, as well as
detailed information on program eligibility requirements, benefits, and
available services, is available at USDOL’s Employment and Training
Administration (ETA) website for TAA,
https://www.dol.gov/agencies/eta/tradeact.
For petitioning workers to be eligible to apply for TAA, the
Secretary of Labor must determine that they meet certain criteria relating to
the reasons they were separated from their firm, including declining sales or
production at their firm and increased imports of like or directly competitive
articles.
[217]
(Workers often apply in groups based on their former firms.) Workers at firms
that are or were suppliers to or downstream users of the output of
TAA-certified firms may also be eligible for TAA benefits.
[218]
In 2019, $582.1 million was allocated to state governments
to fund different aspects of the TAA for Workers program. Funding of $401.0
million for “Training and Other Activities” included funds for training, job
search allowances, relocation allowances, employment and case management
services, and related state administration; $161.8 million for Trade Readjustment
Allowance benefits; and $19.3 million for Alternative Trade Adjustment
Assistance/ Reemployment Trade Adjustment Assistance benefits.
[219]
Groups of workers submitted 1,235 petitions for TAA in FY
2019, a slight decline from the 1,273 petitions filed in FY 2018. USDOL
certified 799 petitions covering 88,001 workers as eligible for TAA, and denied
316 petitions covering 21,881 workers.
[220]
The largest number of
petitions certified in FY 2019 was in the South census region, followed by the
West, Northeast, and Midwest (table 2.4).
[221]
By state, California had the
most workers certified (10,555 workers), followed by Virginia (6,354), Georgia
(5,400), and Illinois (5,303).
[222]
Source: USDOL, ETA, email message to USITC
staff, March 4, 2020.
The majority (53.1 percent, 424 petitions) of the TAA
petitions certified during FY 2019 were in the manufacturing sector, covering
51,693 workers. Petitions in this category were followed by those in the
professional, scientific, and technical services sector (14.3 percent, 114
petitions) and the finance and insurance sector (9.0 percent, 72 petitions)
(figure 2.2).
[223]
Figure 2.2
Share of TAA petitions certified by industry sector in FY 2019
Source:
USDOL, ETA, email message to USITC staff, March 4, 2020.
a
“Other” includes all
industry sectors where less than 30 petitions were certified in FY 2019.
Note: Underlying data can be found in
appendix table
B.10
.
On November 7, 2019, the USDOL posted a Notice of Proposed
Rulemaking to the
Federal Register
that would both expand worker access
to support opportunities, such as apprenticeships, and make it easier for
states to administer the TAA Program.
[224]
This is the first proposed
regulatory update to the TAA Program in more than two decades. The public
comment period closed on December 11, 2019, and the final rule is expected to
be issued some time in FY 2020.
[225]
The TAA for Firms program provides technical assistance to
help U.S. firms experiencing a decline in sales and employment to become more
competitive in the global marketplace.
[226]
The program provides cost-sharing technical assistance to help eligible
businesses create and implement targeted business recovery plans. The program
pays up to 75 percent of the costs of developing the recovery plans, with firms
also contributing a share of the cost of creating and implementing their
recovery plans.
[227]
Current information on provisions of the TAA for Firms program, as well as
detailed information on program eligibility requirements, benefits, and
available services, is available at USDOC’s Economic Development Administration
(EDA) website for TAA,
http://www.taacenters.org/index.html.
To be eligible for the program, a firm must show that an
increase in imports of like or directly competitive articles “contributed
importantly” to the decline in sales or production and to the separation or
threat of separation of a significant portion of the firm’s workers.
[228]
The program supports a nationwide network of 11 nonprofit or
university-affiliated Trade Adjustment Assistance Centers to help firms to
apply for a certification of eligibility and to implement a business recovery
plan or adjustment proposal.
[229]
Historically, most firms that apply for Trade Adjustment Assistance for Firms
certification are in the manufacturing sector.
[230]
In FY 2019, EDA awarded a total of $13 million in TAA for
Firms Program funds to its national network of 11 Trade Adjustment Assistance Centers.
[231]
During FY 2019, EDA certified 67 petitions for eligibility and approved 66
adjustment protocols.
[232]
Tariff preference programs allow the United States to assist
beneficiary countries by providing greater access to the U.S. market.
[233]
U.S. imports
under preference programs have declined in recent years; from 2018 to 2019, the
preference program share of total U.S. general imports fell to 1.1 percent
(down from 1.4 percent). Total preference program imports declined by 21.0
percent, and the share of country imports entered under the African Growth and
Opportunity Act (AGOA), Caribbean Basin Economic Recovery Act (CBERA)/Caribbean
Basin Trade Partnership Act (CBTPA), and U.S. Generalized System of Preferences
(GSP) declined by at least 15.8 percent (see table 2.5). Sharp reductions in
AGOA imports for consumption from Angola (72.1 percent), Chad (99.1 percent), Côte
d’Ivoire (99.2 percent), and Gabon (99.9 percent)
(interactive
dashboard
in appendix A), were driven, in part, by a reduction in imports
of petroleum oils (41.9 percent) and passenger motor vehicles (37.2 percent)
(interactive
dashboard
in appendix A).
[234]
Reductions in CBERA/CBTPA imports from Trinidad and Tobago (65.8 percent)
(interactive
dashboard
in appendix A), were driven, in large part, by an overall
reduction of methanol imports (20.6 percent) and complete disappearance of methanol
imports under CBERA (100 percent).
[235]
Reductions in GSP imports from India (54.9 percent) and Turkey (59.0 percent)
were driven, in large part, by their loss of GSP eligibility at the end of May
2019.
Table 2.5
Imports
for specified tariff preference programs as a share of total program-eligible
country imports, 2017–19.
Tariff preference program
Share of program-eligible country imports
2017
2018
2019
% change 2018–19
AGOA
80.0
77.4
64.2
-17.1
CBERA/CBTPA
41.7
40.4
27.7
-31.4
GSP (including GSP-LDBC)
imports
50.7
49.9
42.0
-15.8
NPP
37.0
45.8
47.4
3.5
Source:
USITC
DataWeb/USDOC (accessed March 4, 2020).
Note: AGOA is the African Growth and
Opportunity Act; CBERA is the Caribbean Basin Economic Recovery Act (CBERA);
CBTPA is the Caribbean Basin Trade Partnership; GSP is the U.S. Generalized
System of Preferences, and GSP-LDBC is U.S. Generalized System of Preferences for
least-developed beneficiary developing countries; NPP is the Nepal Preference
Program discussed later in this chapter. Percentages reflect the total imports
for consumption under the specified program as a share of imports for
consumption of products classified under eligible Harmonized Tariff Schedule
8-digit subheadings from program-eligible countries.
Generalized System of Preferences
The U.S. Generalized System of Preferences (GSP) program
authorizes the President to grant duty-free access to the U.S. market for about
3,500 products that are imported from designated developing countries and territories.
[236]
Certain
additional products (about 1,500 products) are allowed duty-free treatment only
when imported from countries designated as least-developed beneficiary
developing countries (LDBDCs).
[237]
The President‘s authority to provide duty-free treatment under the GSP program
expires on December 31, 2020.
[238]
The goal of the GSP program is to accelerate economic growth
in developing countries by offering unilateral tariff preferences for imports
into the U.S. market.
[239]
An underlying principle of the GSP program is that the creation of trade
opportunities for developing countries encourages broader-based economic
development and creates momentum for economic reform and liberalization.
[240]
Countries are designated as “beneficiary developing
countries” under the GSP program by the President, although they can lose this
designation based on findings of country practices that violate the provisions
of the GSP statute, including inadequate protection of IPRs or of
internationally recognized worker rights.
[241]
Complaints about such violations (country practice allegations) are usually
brought to the attention of the interagency GSP subcommittee by a petition
process. Some beneficiary developing countries are also designated as LDBDCs
and, as such, are eligible for GSP benefits for an additional list of about
1,500 products.
The President also designates the articles that are eligible
for duty-free treatment, but he is not permitted to designate any articles that
he determines to be “import sensitive” in the context of GSP. In addition, certain
goods (e.g., most footwear, textiles, and apparel) are designated by statute as
“import sensitive” and thus not eligible for duty-free treatment under the GSP
program.
[242]
The statute further provides that countries “graduate” from the program when
they become “high income,” as defined by the World Bank’s per capita income
tables.
[243]
In addition, the statute allows for ending the eligibility of certain imports,
or imports from specific countries, under certain conditions.
Competitive need limitations (CNLs) are another important
part of the GSP program’s structure. CNLs are quantitative ceilings on GSP
benefits for each product and beneficiary developing country.
[244]
The GSP
statute provides that a beneficiary developing country will lose its GSP
eligibility with respect to a product if the CNLs are exceeded, though waivers
may be granted under certain conditions.
[245]
Two different measures for CNLs may apply to U.S. imports of a particular
product from a beneficiary developing country during any calendar year. One CNL
measure applies to imports from a beneficiary developing country that account
for 50 percent or more of the value of total U.S. imports of that product. The
other applies to imports that exceed a certain dollar value ($190 million in
2019).
[246]
The legislation to reauthorize the GSP program in 2006 provided that a CNL
waiver in effect on a product for five or more years should be revoked if total
U.S. imports from a beneficiary developing country exceed certain
“super-competitive” value thresholds—that is, 75 percent of all U.S imports or
150 percent of the current year’s CNL dollar limit.
[247]
The following developments with respect to the U.S. GSP
program occurred in 2019:
On May 16, 2019, the President issued Proclamation 9887 terminating
Turkey’s designation as a beneficiary developing country, effective May 17,
2019, based on its level of economic development.
[248]
Turkey was the
fifth leading GSP beneficiary in 2018.
On May 31, 2019, the President issued Proclamation 9902, terminating
India’s designation as a beneficiary developing country, effective June 5,
2019, based on India’s failure to provide the United States with equitable and
reasonable access to its markets.
[249]
India was the leading GSP beneficiary country in 2018.
On September 7, 2019, additional results of the 2018/2019 GSP
Annual Review included the denial of two petitions to remove two polyethylene
terephthalate (PET) products from GSP eligibility for Pakistan. A CNL waiver
was granted for plastic spectacle lenses from Thailand, while a CNL waiver
petition for stearic acid from Indonesia was denied. North Macedonia exceeded
the CNL for diesel engine motor vehicles designed to carry 16 passengers and no
waiver petitioner was filed, so imports of that product from that country are
no longer eligible for GSP benefits. De minimis CNL waivers were granted for 27
eligible products.
[250]
Three products that had been excluded during prior GSP reviews, but for which
import levels had dropped below the threshold amounts set for the current
review, were redesignated as GSP eligible (fresh orchids from Thailand and two
plywood veneer products from Indonesia).
[251]
On October 25, 2019, USTR announced the suspension of $1.3
billion in trade preferences under the GSP for Thailand (about a third of
Thailand’s GSP benefits) based on its failure to adequately provide worker
rights.
[252]
On October 25, 2019, USTR announced the partial restoration of
Ukraine’s GSP benefits in recognition of Ukraine’s tangible progress on
intellectual property rights. The restored benefits had been removed in 2017.
[253]
On October 25, 2019, USTR also announced it was opening new
GSP-eligibility reviews for two countries: South Africa, based on IP protection
and enforcement concerns, and Azerbaijan, based on worker rights concerns. USTR
also closed GSP-eligibility reviews with no loss of GSP eligibility for three
countries: the results for the first two, Bolivia and Iraq, were based on
improvements in the protection of worker rights in those countries, and the
result for the third, Uzbekistan, was based on improvements in its protection
and enforcement of IP rights.
[254]
On November 19, 2019, USTR announced a GSP country practice
review hearing to be held in January 2020. The announcement stated that the hearing
would focus on country practices in Azerbaijan, Ecuador, Georgia, Indonesia,
Kazakhstan, Thailand, South Africa, and Uzbekistan, and also would review the
country eligibility of Laos.
[255]
U.S. imports under GSP dropped 12.5 percent from $23.8
billion in 2018 to $20.9 billion in 2019 (table 2.6). GSP accounted for 8.9
percent of imports from all GSP-eligible countries, down from 10 percent in
2018.
Thailand was the leading source of imports entered under the
GSP program in 2019, followed by India and Indonesia
(interactive
dashboard
in appendix A). These three countries together accounted for
about half of all U.S. imports under GSP in 2019, while the top five countries
(including Brazil and Philippines) accounted for about three-fourths of GSP
imports.
Table 2.6
U.S.
imports for consumption from GSP beneficiaries, 2017–19
Item
2017
2018
2019
Total imports
from GSP beneficiaries (million $)
214,488
237,301
234,682
Total imports under
GSP (million $)
21,608
23,837
20,869
Imports
under LDBDC provisions (million $)
a
104
142
182
Imports under non-LDBDC
provisions (million $)
b
21,504
23,695
20,686
Imports under
GSP (as a share of all imports from GSP beneficiaries)
c
10.1
10.0
8.9
Source: USITC DataWeb/USDOC (accessed
March 23, 2020).
Note: Because of rounding, figures
may not add to totals shown. LDBDC = least-developed beneficiary developing
country. An alternative presentation of this table with additional data can be
found in appendix table
C.1.
a
LDBDC-eligible products are those for which the rate of duty of “free” appears
in the special rate column of the HTS, followed by the symbol “A+” in
parentheses. The symbol “A+” indicates that all LDBDCs (and only LDBDCs) are
eligible for duty-free treatment with respect to all articles listed in the
designated provisions.
b
Non-LDBDC-eligible products are those for which a rate of duty of “free”
appears in the special rate column of the HTS followed by the symbols “A” or
“A*” in parentheses. The symbol “A” indicates that all beneficiary countries
are eligible for duty-free treatment with respect to all articles listed in the
designated provisions. The symbol “A*” indicates that certain beneficiary
countries (specified in general note 4(d) of the HTS) are not eligible for
duty-free treatment with respect to any article listed in the designated
provision.
c
Not all products are eligible for GSP.
In 2019, imports under GSP declined in several leading
sectors. The agricultural products sector was the top sector for imports
claiming eligibility under GSP, but agricultural imports under GSP dropped 14.3
percent from their 2018 level
interactive
dashboard
(in appendix A).
[256]
Similarly, while forest products ranked second in 2019, imports under GSP of
forest products dropped by 5.5 percent from 2018. The chemical sector ranked
third, but imports under GSP of chemicals dropped 18.8 percent from 2018
levels. On the other hand, in the energy sector, which ranked fourth, GSP
imports increased 12.5 percent over 2018. Among the leading product sectors,
footwear accounted for the only other increase in GSP imports compared to 2018,
ranking sixth overall by value and increasing 5.9 percent.
Among the top 15 U.S. imports under GSP by HTS
(interactive
dashboard
in appendix A), luggage and flat goods were the leading GSP
import by value, increasing 85 percent from 2018. Gold jewelry imports were the
second-highest GSP import product by value.
[257]
Those imports increased 15 percent from 2018. The third- and fourth-highest GSP
imports by value were handbags imported under two different subheadings of the
HTS.
[258]
Those imports increased 70 percent and 39.3 percent over 2018 levels. The
increase in the level of GSP imports of luggage, handbags, and flat goods is likely
the result of the relatively recent addition of these products to GSP
eligibility from all GSP beneficiary countries.
[259]
Nepal Trade Preference Program
The Nepal Trade Preferences Act (NTPA) was established under
section 915 of the Trade Facilitation and Trade Enforcement Act of 2015. This
act entered into effect on December 30, 2016.
[260]
The Nepal
Trade Preference Program, which was launched under the authority of NTPA, was
designed to help Nepal’s economic recovery following a 2015 earthquake.
[261]
It is
scheduled to expire on December 31, 2025.
[262]
NTPA authorizes the President to provide preferential
treatment to articles imported directly from Nepal into the United States if
the President determines that Nepal meets certain requirements set forth in
NTPA, in the African Growth and Opportunity Act (AGOA), and in GSP statutes.
[263]
NTPA originally
gave Nepal duty-free access to the U.S. market for goods classified under 66
HTS 8-digit tariff lines, including certain luggage and flat goods in HTS
chapter 42, certain carpets and floor coverings in chapter 57, some apparel in
chapters 61 and 62, two non-apparel made-up textile articles in chapter 63, and
various headwear items in chapter 65.
[264]
Nepal is eligible for duty-free treatment on 77 tariff lines, 31 of which are
also duty free under GSP.
[265]
However, NTPA’s rules of origin differ from GSP’s—under NTPA, U.S. content may
be counted toward part of the requirement for 35 percent value added.
[266]
In 2019, total U.S. imports from Nepal were $90.9 million;
imports from Nepal under GSP were $12.8 million; and imports under NTPA were
$3.1 million. Imports under NTPA represented 3.4 percent of total imports from
Nepal, a slight rise from 3.2 percent in 2018 (table 2.7). U.S. imports under
NTPA and GSP as a share of all imports from Nepal under HTS codes that were
eligible for NTPA and GSP preferences rose from 62.8 percent in 2018 to 63.0
percent in 2019.
Table 2.7
U.S.
imports for consumption from Nepal, 2017–19
Item
2017
2018
2019
Total imports
from Nepal (thousand $)
91,681
98,526
90,872
Imports under GSP (thousand $)
8,567
9,256
12,783
Imports under
NTPP (thousand $)
2,368
3,127
3,061
Share of total imports from Nepal:
Imports
under GSP (%)
9.3
9.4
14.1
Imports under NTPP (%)
2.6
3.2
3.4
Imports under NTPP and GSP as a share of
all NTPP-eligible imports (%)
a
59.1
62.8
63.0
Source: USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.2.
a
Nepal Trade Preference Program (NTPP)-eligible products are those for which a
rate of duty of “free” appears in the special rate column of the HTS followed
by the symbol “NP” in parentheses. The symbol “NP” indicates that Nepal is
eligible for duty-free treatment with respect to all articles listed in the
designated provisions. Includes imports for which preferential tariff treatment
was claimed for NTPP-eligible goods by U.S. importers under GSP, for HTS rate
lines with special duty symbols “A,” “A*,” or “A+.”
Enacted in 2000, the African Growth and Opportunity Act
(AGOA) gives tariff preferences to eligible sub-Saharan African (SSA) countries
pursuing political and economic reform.
[267]
In particular, AGOA provides duty-free access to the U.S. market for all
GSP-eligible products, and for more than 1,800 additional qualifying HTS
8-digit tariff-line items that are eligible under AGOA only. While AGOA’s
eligibility criteria and rules of origin are similar to those of the GSP
program, AGOA beneficiary countries are exempt from the GSP competitive need
limitations (CNLs).
[268]
AGOA also provides duty-free treatment for certain apparel articles cut and
sewn in designated beneficiary countries on the condition that additional
eligibility criteria are satisfied.
[269]
The current AGOA expiration date is September 30, 2025.
[270]
Each year, the President must consider whether individual
SSA countries are, or remain, eligible for AGOA benefits based on the eligibility
criteria. USTR initiates this annual eligibility review with the publication of
a notice in the
Federal Register
requesting comments and announcing a
public hearing. In 2019, 39 SSA countries were eligible for AGOA benefits.
[271]
Of these
countries, 27 were eligible for AGOA textile and apparel benefits for all or
part of 2019.
[272]
Of the countries in the latter group, all but one (South Africa) were also
eligible for additional textile and apparel benefits intended for least-developed
beneficiary countries (LDBCs) for all or part of 2019.
[273]
Notable among
these extra benefits is the third-country fabric provision for LDBCs. This
provision provides duty-free treatment for certain apparel articles cut and
sewn in designated beneficiary countries from non-U.S., non-AGOA fabrics as
long as additional eligibility criteria are satisfied.
[274]
Meanwhile, as
a result of the 2019 annual AGOA eligibility review, Cameroon’s AGOA
eligibility was terminated effective January 1, 2020; 38 SSA countries remain
eligible for AGOA benefits in 2020.
[275]
In 2019, the value of U.S. imports that entered free of duty
from beneficiary countries under AGOA (including imports under GSP) was $8.4
billion, a 30.1 percent decline from 2018. These imports accounted for 40.5
percent of total imports from AGOA countries in 2019. In 2019, imports entering
the United States exclusively under AGOA (excluding those entered under GSP)
were valued at $7.3 billion, accounting for 35.3 percent of U.S. imports from
AGOA countries (table 2.8).
Table 2.8
U.S.
imports for consumption from AGOA beneficiaries, 2017–19
Item
2017
2018
2019
Total imports
from AGOA countries (million $)
24,868
24,524
20,763
Total imports under
AGOA (million $)
a
13,550
12,025
8,400
Imports
under AGOA, excluding GSP (million $)
12,235
10,791
7,328
Total imports under AGOA
(as a share of all imports from AGOA countries)
54.5
49.0
40.5
Source: USITC DataWeb/USDOC (accessed
March 18, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.3.
a
AGOA-eligible
products are those for which a rate of duty of “free” appears in the special
rate column of the HTS followed by the symbol “D” in parentheses. The symbol
“D” indicates that all AGOA beneficiaries are eligible for duty-free treatment
with respect to all articles listed in the designated provisions. In addition,
provisions of subchapters II and XIX of chapter 98 of the HTS set forth
specific categories of AGOA-eligible products, under the terms of separate
country designations enumerated in subchapter notes. Includes imports for which
preferential tariff treatment was claimed for AGOA-eligible goods by U.S.
importers under GSP, for HTS rate lines with special duty symbols “A,” “A*”
(unless the AGOA beneficiary country is excluded), or “A+.”
The decline in U.S. imports under AGOA in 2019 compared to
2018 mainly reflected a decline—affecting both price and quantity—in the value
of imports of crude petroleum and refined petroleum products, as well as a
decline in imports of passenger motor vehicles under the program.
[276]
The value of
U.S. crude petroleum imports under AGOA dropped 41.9 percent ($3.2 billion)
from 2018 to 2019, while the value of U.S. refined petroleum products imports
under AGOA dropped by 50.5 percent ($98.4 million).
[277]
The value of
U.S. imports of passenger motor vehicles under AGOA fell by 37.2 percent
($198.8 million) from 2018 to 2019
(interactive
dashboard
in appendix A).
[278]
Nigeria and Angola, two of the top petroleum-producing countries in SSA, both
experienced declines in the value of their exports of crude petroleum to the
United States under AGOA. Meanwhile, South Africa, the major SSA exporter of
passenger motor vehicles to the United States, experienced considerable
declines in the value and quantity of its exports of passenger motor vehicles to
the United States under AGOA
(interactive
dashboard
in appendix A).
The major suppliers of duty-free U.S. imports under AGOA in
2019 were Nigeria (42.7 percent of total AGOA imports), South Africa (16.7
percent), Angola (7.4 percent), Kenya (7.0 percent), Ghana (5.7 percent), and
the Republic of the Congo (5.6 percent). These six countries accounted for 85.0
percent of total imports by value under AGOA in 2019
(interactive
dashboard
in appendix A).
Crude petroleum continued to be the leading import under
AGOA. It accounted for 59.7 percent of the total value of AGOA imports in 2019,
a 10.1 percentage point decline from 69.8 percent in 2017. The decline in value
of U.S. crude petroleum imports under AGOA was mainly due to the decline of
U.S. imports of such products from Nigeria and Angola under the program.
Imports from Angola entering under AGOA declined by $1.4 billion (to $504
million in 2019) as the country’s crude petroleum production fell, partly due
to reduced foreign investment in the industry.
[279]
U.S. imports
from Nigeria entering under AGOA fell by $1.2 billion from 2018 to 2019 (to
$3.1 billion), as a greater share of U.S. crude petroleum imports from Nigeria
either did not apply or did not qualify for duty-free preferences under the
program.
[280]
Passenger motor vehicles and apparel products were two other
major U.S. imports under AGOA. They accounted for 4.6 percent and 13.9 percent
of the value of total AGOA imports in 2019, respectively
(interactive
dashboard
in appendix A).
[281]
U.S. passenger motor vehicle imports under AGOA came exclusively from South
Africa, and they declined in value by 37.2 percent, from $534.5 million in 2018
to $335.7 million in 2019. The decline was driven in part by a reallocation of
imports—the United States imported more passenger motor vehicles from Japan and
Canada in 2019 than in 2018, and therefore less from various other places.
[282]
Moreover, in
2018, BMW—the largest vehicle exporter in South Africa—shifted production from the
3-Series, which it previously had exported to the United States, to the X3 SUV,
which is destined for Europe.
[283]
This shift in production and export destination likely also contributed to the
decline of U.S. imports of passenger motor vehicles under AGOA.
Section 105 of AGOA required the President to establish the
U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum (also known as the
AGOA Forum) to discuss trade, investment, and development at an annual
ministerial-level meeting with AGOA-eligible countries.
[284]
The 18th
annual AGOA Forum was held in Abidjan, Côte d’Ivoire, on August 4–6, 2019.
[285]
The theme of
the forum was “AGOA and the Future: Developing a New Trade Paradigm to Guide
U.S.-Africa Trade and Investment.” Participants from the U.S. side included
senior government officials, members of Congress, and private sector and civil
society representatives. Participants from the African side were mainly trade
and commerce ministers from the AGOA-eligible countries, heads of African
regional economic communities, and representatives from the private sector and
civil society.
[286]
During the forum, U.S. officials discussed the benefits of
its model free trade agreement (FTA) initiative, indicating the advantages such
a reciprocal agreement could offer compared to the current AGOA program, which
provides unilateral trade preferences. U.S. officials stated that an FTA with
the United States would signal a commitment to high standards of transparency
and due process that is critical to attracting business investment. The
long-term objective of the model FTA initiative is to have a network of
agreements in place that could serve as building blocks for an eventual
continental trade partnership between Africa and the United States.
[287]
Meanwhile,
USTR also cited the African Continental Free Trade Area (AfCFTA), which
launched in May 2019, as a “remarkable achievement.” At the forum, USTR and the
African Union (AU) Trade Commissioner signed a Joint Statement memorializing
U.S. technical support for and partnership with the AU for the ongoing
negotiation and implementation of the AfCFTA.
[288]
The Caribbean Basin Economic Recovery Act (CBERA) was
enacted in 1983 as part of the United States’ Caribbean Basin Initiative. Its
goal is to encourage economic growth and development in the Caribbean Basin by
using duty preferences to promote increased production and exports of
nontraditional products.
[289]
The Caribbean Basin Trade Partnership Act (CBTPA) amended
CBERA in 2000 and expanded the list of qualified articles to include certain
apparel.
[290]
The CBTPA also extended rates of duty to a number of other products previously
excluded from CBERA.
[291]
These products include certain tuna; crude petroleum and petroleum products;
certain footwear; watches and watch parts assembled from parts originating in
countries not eligible for normal trade relations (NTR) rates of duty; and
certain handbags, luggage, flat goods, work gloves, and leather wearing
apparel.
[292]
Products that are still excluded from CBERA preferential treatment include
textile and apparel products not otherwise eligible for preferential treatment
under CBTPA (mostly textile products) and above-quota imports of certain
agricultural products subject to tariff-rate quotas (primarily sugar, beef, and
dairy products).
While the original CBERA has no expiration date, CBTPA
preferential treatment provisions expire September 30, 2020.
[293]
In the section
that follows, the term CBERA refers to CBERA as amended by the CBTPA.
At the end of 2019, 17 countries and dependent territories
were designated eligible for CBERA preferences, and 8 of those countries were
designated eligible for CBTPA preferences.
[294]
Several countries have asked to be designated as eligible for benefits under
CBERA, CBTPA, or both, including Turks and Caicos Islands (which requested
eligibility under CBERA); Aruba, The Bahamas, Dominica, Grenada, Montserrat,
Saint Kitts and Nevis, and Saint Vincent and the Grenadines (under CBTPA); and
Sint Maarten and Suriname (under both CBERA and CBTPA).
[295]
In 2019, the total value of U.S. imports from CBERA
beneficiaries decreased by 7.7 percent to $5.6 billion from $6.0 billion in
2018 (table 2.9). The top five imports under CBERA in 2019—cotton T-shirts (HTS
6109.10), crude petroleum oils (HTS 2709.00), cotton sweaters (HTS 6110.20),
polystyrene (HTS 3903.11), and yams (HTS 0714.30)—comprised 72.2 percent of
imports under the program
(interactive
dashboard
in appendix A). The largest increase in the value of U.S. imports
under CBERA was in crude petroleum oils (subheading 2709.00), which rose by
296.2 percent to $152.78 million. The next-largest increase in import value was
raw cane sugar (HTS 1701.14), which increased by 659.6 percent to $17.8
million. However, the value of all U.S. imports under the program declined in
2019 by 36.9 percent from $1,031 million in 2018 to $651 million in 2019. U.S.
imports of products below the top 15 declined by $479 million (88.3 percent),
largely due to a decrease in methanol imports from CBERA of 20.6 percent (HTS
2905.11). U.S. imports of cotton sweaters (HTS 6110.20) declined by $16 million
(20.5 percent), and U.S. imports of melamine (subheading 2933.61) declined by
$5.0 million (25.5 percent)
(interactive
dashboard
in appendix A).
[296]
Table 2.9
U.S.
imports for consumption from CBERA/CBTPA beneficiaries, 2017–19
Item
2017
2018
2019
Total imports
from CBERA countries (million $)
5,800
6,020
5,559
Total imports under
CBERA/CBTPA (million $)
960
1,031
651
Imports
under CBTPA (million $)
a
344
344
410
Imports under
CBERA, excluding CBTPA (million $)
b
617
687
241
Imports under
CBERA (as a share of all imports from CBERA countries) (%)
16.6
17.1
11.7
Source: USITC DataWeb/USDOC (accessed
March 4, 2020).
Note: The data for U.S. imports
under CBERA include U.S. imports under CBERA as amended by both CBTPA and the
HOPE and HELP Acts. In previous Year in Trade reports, trade data under the
HOPE and HELP Acts were reported and analyzed separately only in the “Haiti
Initiatives” section. Thus, numbers from the previous report are not comparable
to the numbers in the table above. USITC staff have tracked U.S. Census data of
textile and apparel imports under HOPE/HELP at the shipment level. These data
are cross-checked against aggregate figures from USDOC’S Office of Textiles and
Apparel (OTEXA), which is part of the International Trade Administration, to
ensure an accurate reporting of HOPE/HELP utilization rates. An alternative
presentation of this table with additional data can be found in appendix table
C.4.
a
CBTPA-eligible
products are those for which a special duty rate appears in HTS’s special rate
column, followed by the symbol “R” in parentheses. The symbol “R” indicates
that all CBTPA beneficiary countries are eligible for special duty-rate
treatment with respect to all articles listed in the designated provisions. In
addition, subchapters II and XX of HTS chapter 98 set forth provisions covering
specific products eligible for duty-free entry, under separate country
designations enumerated in those subchapters (and including former CBTPA
beneficiaries El Salvador, Guatemala, Honduras, Nicaragua, the Dominican
Republic, Costa Rica, and Panama).
b
CBERA
(excluding CBTPA)-eligible products are those for which a special duty rate
appears in HTS’s special rate column, followed by the symbols “E” or “E*” in
parentheses. The symbol “E” indicates that all beneficiary countries are
eligible for special duty rate treatment with respect to all articles listed in
the designated provisions. The symbol “E*” indicates that certain articles,
under HTS general note 7(d), are not eligible for special duty treatment with
respect to any article listed in the designated provision.
U.S. imports under CBERA accounted for 11.7 percent of all
U.S. imports from CBERA countries in 2019. Haiti was the leading supplier of
U.S. imports under the program in 2019, accounting for 41.5 percent of the
total value
(interactive
dashboard
in appendix A). Haiti is the only supplier of apparel under
CBERA. Trinidad and Tobago was the second leading supplier of U.S. imports
under CBERA in 2019, accounting for 29.0 percent of the total value
(interactive
dashboard
in appendix A). The country was the sole supplier of several top
U.S. imports under CBERA, including petroleum products and melamine. Haiti and
Trinidad and Tobago together supplied about 70.5 percent of U.S. imports under
CBERA preferences. Jamaica and The Bahamas were the third and fourth leading
suppliers, accounting for 14.3 and 9.3 percent of the total, respectively
(interactive
dashboard
in appendix A).
Haiti Initiatives
Since 2006, several amendments to
CBERA expanded and enhanced the trade benefits available to Haiti. These
benefits give Haitian apparel producers more flexibility in sourcing yarns and
fabrics beyond the preferences available under the Caribbean Basin Trade
Partnership Act (CBTPA), which rely on the use of U.S. yarns only. The Haitian
Hemisphere Opportunity through Partnership Encouragement Act of 2006 (HOPE Act)
and of 2008 (HOPE II Act) (collectively referred to as HOPE or the HOPE Acts)
amended CBERA to expand the rules of origin for inputs to apparel and wire
harness automotive components assembled in Haiti and imported into the United
States.
[297]
The Haitian Economic Lift Program of 2010 (HELP Act) expanded existing
U.S. trade preferences (especially duty-free treatment for certain qualifying
apparel, regardless of the origin of inputs) for Haiti that were established
under the CBTPA and HOPE Acts through September 30, 2020.
[298]
The Trade
Preferences Extension Act of 2015 extended the HOPE/HELP Acts preferences
through September 30, 2025.
[299]
To date, there have been no other changes to the HOPE/HELP Acts.
Table 2.10
U.S. imports of textiles and apparel from Haiti,
2017–19
Item
2017
2018
2019
Total textile
and apparel imports from Haiti (million $)
862.1
923.9
1,005.7
Textile and apparel
imports under a trade preference program (million $)
853.8
896.0
974.7
CBERA/CBTPA
(million $)
276.8
254.3
254.7
HOPE and HELP Acts
(million $)
577.0
641.7
720.0
Share of total
textile and apparel imports from Haiti:
(%)
Textile and apparel
imports under a trade preference program
99.0
97.0
96.9
CBERA/CBTPA
(percent)
32.1
27.5
25.3
HOPE and HELP Acts
(percent)
66.9
69.5
71.6
Source: USITC DataWeb/USDOC (accessed
various dates).
Note: These data reflect detailed U.S.
general import data under trade preference programs sorted by category and
published by the Office of Textiles and Apparel at the U.S. Department of
Commerce (accessed April 8, 2019 and March 13, 2020). An alternative
presentation of this table with additional data can be found in appendix table
C.5.
As in 2018, nearly all (96.9
percent) of U.S. imports of textiles and apparel from Haiti entered duty free
under trade preference programs in 2019 (table 2.10). Currently, manufacturers
in Haiti benefit from flexibilities offered by both the CBTPA and HOPE/HELP
provisions. Whereas the CBPTA preferences for apparel all rely on the use of
U.S.-origin yarns, the HOPE/HELP provisions permit the limited use of yarns and
fabrics of any origin.
Approximately one-quarter (25.3
percent) of total U.S. imports of apparel from Haiti ($254.7 million) entered
under CBTPA provisions in 2019. This share continued to fall, reflecting a
continued shift of U.S. textile and apparel imports from Haiti from entering
under CBTPA provisions to entering under the HOPE/HELP Acts. The decline in the
utilization of CBTPA preferences may be attributed to not only the more
flexible rules of origin offered under HOPE/HELP but also to the impending
expiration of CBTPA on September 30, 2020. The value of U.S. imports of textile
and apparel entering under the HOPE/HELP Acts rose 12.2 percent, from $641.7
million in 2018 to $720.0 million in 2019, and represented 72 percent of total
U.S. textile and apparel imports from Haiti, up from 70 percent in 2018 and 67
percent in 2016. Table 2.11 shows the usage of each type of preference rule
under CBTPA and Haiti HOPE/HELP.
Table 2.11
Textiles and apparel:
U.S. general imports from Haiti, by duty treatment, 2017–19 (million dollars)
2017
2018
2019
Duty-free imports
CBTPA
Certain apparel
of regional knit fabrics of U.S. yarns
a
124.8
133.5
137.9
Certain knit T-shirts of
regional fabrics of U.S. yarns
b
96.9
76.4
75.6
Apparel cut and
assembled from U.S. fabric
c
55.1
44.5
41.2
Subtotal CBTPA only
276.8
254.3
254.7
HOPE/HELP Acts
Knit apparel regional limit
d
273.8
299.2
328.1
Woven apparel
regional limit
e
142.8
151.7
122.4
Value-added regional limits
f
120.8
108.3
121.5
Earned Import
Allowance Program (EIAP)
g
36.3
71.4
127.1
Home goods
h
2.7
10.2
15.2
Headwear
i
0.0
0.5
4.9
All other
0.5
0.6
0.8
Subtotal HOPE/HELP
only
577.0
641.7
720.0
Total duty-free imports
853.8
896.0
974.7
Dutiable imports (NTR
rates)
Total dutiable imports
8.3
27.8
31.1
Grand total
862.1
923.9
1,005.7
Source: Compiled from official
statistics of USDOC, International Trade Administration, Office of Textiles and
Apparel (accessed March 4, 2019).
Note: Because of rounding, figures
may not add to totals shown. Data in this table are for U.S. general imports.
a
HTS subheading 9820.11.09.
b
HTS subheading 9820.11.12.
c
HTS subheading 9820.11.06 and HTS 9820.11.18.
d
HTS subheading 9820.61.35.
e
HTS subheading 9820.62.05.
f
HTS subheading 9820.61.25 and HTS 9820.61.30.
g
HTS subheading 9820.62.25.
h
HTS subheading 9820.63.05.
i
HTS
subheading 9820.65.05.
Apparel production in Haiti remains
concentrated in high-volume, basic commodity garments such as knit T-shirts,
pullovers, and undergarments. Such garments have relatively predictable
consumer demand and require few styling changes.
[300]
In terms of
non-apparel textile imports from Haiti, of special note are the imports under
the HOPE/HELP home goods provision, which first appeared in 2017 and increased
fourfold from 2017 to 2018 to $10.2 million, and increased again in 2019 to
$15.2 million (49 percent).
[301]
This chapter covers developments in 2019 in the World Trade
Organization (WTO). These include programs and related items under the WTO
General Council, as well as plurilateral agreements hosted under WTO auspices.
[302]
The chapter
also summarizes developments in major WTO dispute settlement cases during the
year.
At the WTO General Council session in October 2019, WTO
members agreed to extend two moratoriums—on customs duties on electronic
transmissions and on nonviolation and situation complaints under the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS)—until WTO’s
12th Ministerial Conference in June 2020.
[303]
During the WTO General Council session in July 2018, members agreed to hold
this conference from June 8 to June 11, 2020, in Nur-Sultan, Kazakhstan.
[304]
However, as of
March 12, 2020, the Director-General and General Council Chair advised that
this meeting would not be feasible due to the declaration of a global pandemic
of coronavirus disease (COVID-19) by the World Health Organization. The two
leaders began consultations with WTO member countries to organize a special
meeting of the General Council in order to make alternative plans.
[305]
Work Programs, Decisions, Waivers, and Reviews
At the yearend meeting of the General Council, delegates
reviewed a variety of work programs, including those on electronic commerce,
small economies, and Aid for Trade. They also reviewed progress on the
initiative on the development assistance aspects of cotton, and reviewed
waivers, as described below.
Work Program on Electronic Commerce
The moratorium on the Work Program on Electronic Commerce
has been in effect since 1998. On June 17, 2019, an informal open-ended meeting
was held, which considered India and South Africa’s June 4 submission on the
need to rethink the moratorium based on revenue implications, the scope and
definition of the issue, the technical feasibility of customs duties, and wider
consequences on trade and industrialization.
[306]
On July 23, 2019, the Chair of the General Council reported on the periodic
review held under the Work Program on Electronic Commerce. This review
discussed in particular the moratorium on imposing customs duties on electronic
transmissions. In October 2019, members agreed to extend this moratorium for
two years while they worked toward possible future negotiations on electronic
commerce (e-commerce).
[307]
Work Program on Small Economies
The Committee on Trade and Development reported on meetings
held during 2019 in keeping with its standing General Council mandate. These
included a meeting held on April 29, 2019, which focused on the factors that
contribute to higher trade costs faced by small and vulnerable economies (SVEs)
and trade facilitation. The meeting also addressed how these economies’
vulnerabilities to natural disasters affected trade. Finally, the committee
discussed best practices and policy approaches to mitigate the effects of these
factors.
[308]
Aid for Trade Initiative
The WTO-led Aid for Trade initiative seeks to mobilize
resources to address the trade-related constraints identified by developing and
least-developed countries (LCDs).
[309]
The Committee on Trade and Development carries out its activities under the Aid
for Trade initiative based on a two-year work program.
[310]
The Aid for Trade Global Review in 2019
focused on supporting economic diversification and empowerment, with a focus on
participation by microbusinesses and small and medium-sized enterprises (SMEs),
women, and youth. Participants in the review sessions discussed topics
including e-commerce, trade finance, tourism, intellectual property, and
financing digital industrialization.
[311]
Development Assistance Aspects of Cotton
WTO Director-General Azevêdo reported to the General Council
on the development assistance aspects of cotton, as called for originally under
the 2004 Doha Work Program and reinforced subsequently by decisions taken at
the ministerial conferences held in 2013 and 2015.
[312]
In particular,
he reported on the launch of the first World Cotton Day and emphasized the need
for increased development assistance on cotton and cotton-related products,
especially for LDCs. World Cotton Day was held by the WTO Secretariat in
collaboration with the Secretariats of the Food and Agriculture Organization of
the United Nations, the United Nations Conference on Trade and Development, the
International Trade Centre, and the International Cotton Advisory Committee.
[313]
The Deputy
Director General then reported on progress made under the Consultative
Framework Mechanism on Cotton, which looks to “discuss new cotton projects,
track developments regarding development assistance, and exchange information
on results and lessons learned from the implementation of such projects.”
[314]
Review of Waivers of Obligations under Article IX:4 of the WTO Agreement
In 2019, the WTO’s Council for Trade in Goods (Goods
Council) conducted its annual review of waivers under Article IX:4 of the WTO
Agreement. It granted a waiver to the United States for the Caribbean Basin
Economic Recovery Act and the African Growth and Opportunity Act (through
September 30, 2025).
[315]
Under the terms of the waiver, the United States is required to submit an
annual report to the General Council covering trade under these programs during
the previous year.
[316]
These waivers allow the United States to continue to provide preferential trade
access to the partner economies covered by the two programs. The other approved
waiver, presented by Chile, China, India, and Thailand, consisted of a
preferential tariff treatment for LDCs; this waiver was approved through June
30, 2029.
[317]
WTO Membership
In 2019, WTO membership remained at 164.
[318]
In addition, the WTO counted 24 observer
governments, as well as approximately 140 observer institutions. Curaçao,
formerly part of the Netherlands Antilles, applied for WTO accession in October
2019.
[319]
According to the WTO Director-General, 23 of the 24 observer governments were
at some stage in the process of WTO accession at the end of 2019. Of these 23
governments, the Office of the U.S. Trade Representative (USTR) considered 11
to be engaged in the accession process during the year, while the remaining 12
either were dormant or had not yet submitted initial documentation on their
foreign trade regimes
during 2019.
[320]
The WTO Agreement on Trade Facilitation (TFA) aims to
expedite the movement, clearance, and release of goods, including goods in
transit. It establishes measures for cooperation on trade facilitation and
customs compliance issues between customs authorities and other appropriate
authorities. The TFA was designed to help reduce trade costs and boost global
trade. In addition, the agreement provides for technical assistance and
capacity building to facilitate trade.
[321]
The TFA entered into force on February 22, 2017, after it was ratified by the
necessary two-thirds of the WTO membership.
[322]
The Committee on Trade Facilitation,
established as part of the agreement, held its first session on May 16, 2017.
The committee receives updates on ratifications and notifications under the
TFA, as well as on activities of the WTO Trade Facilitation Agreement Facility.
[323]
The Committee on Trade Facilitation held three sessions in
2019. In October, it reviewed 87 notifications and focused on assistance,
capacity building (especially for human resources), training, regulatory and
legislation frameworks, and information technology.
[324]
Thematic
discussions involved the establishment of national committees, transparency
issues, single customs windows, and rules of procedure. By October 2019, the
committee had received 45 implementation notifications for three categories of
trade facilitation measures (known as Categories A, B, and C), and 55 of 60
developing-country members had committed to definitive implementation dates for
a given category.
[325]
The Agreement on Trade in Civil Aircraft entered into force
on January 1, 1980, as part of the Tokyo Round agreements. During the process
of establishing the WTO in 1995, the Agreement on Trade in Civil Aircraft was
one of two plurilateral agreements carried out that committed to core
disciplines only applicable to signatories. In 2019, there were 32 signatories
to this agreement (including the United States), of which 20 were European
Union (EU) member states. The agreement eliminated import duties on all civil
(i.e., nonmilitary) aircraft, as well as on other related products covered by
the agreement. Examples of covered products are civil aircraft engines and
their parts and components; components and sub-assemblies of civil aircraft;
and flight simulators and their parts and components.
[327]
Aside from the Committee on Trade in Civil
Aircraft deciding to hold informal consultations on the product Annex listing
product descriptions to simplify the process, there have been no further
developments in the negotiations on the Agreement on Trade in Civil Aircraft.
[328]
Agreement on Government Procurement
The initial Agreement on Government Procurement (GPA) was
signed in 1994 as a plurilateral agreement under the WTO, administered by the
WTO Committee on Government Procurement.
[329]
The initial agreement had 19 parties,
including the United States.
[330]
The agreement aims to open bidding to all
suppliers from GPA parties on government procurement contracts covering goods,
services, and construction services. Once the agreement came into effect, the
parties opened negotiations to improve its provisions, leading to the Revised
Agreement on Government Procurement in 2012. Signed by the initial 19 parties
and a number of others, the new agreement covered 47 WTO members overall.
[331]
On May 5, 2019,
Australia’s accession entered into force, bringing the total number of members
covered by the agreement to 48.
In 2019, Kazakhstan applied to the GPA; as a result, 11
members are currently in the process of accession to the GPA. In addition, on
February 27, 2019, and June 26, 2019, Paraguay, Ecuador, and the Philippines
were accepted by the Government Procurement Committee as observers.
[332]
Expansion of the Information Technology Agreement
The Information Technology Agreement (ITA) is a plurilateral
agreement that eliminates tariffs on certain information and communications
technology products, such as computers, telecommunication equipment,
semiconductors, semiconductor manufacturing and testing equipment, software,
and scientific instruments, as well as most of the parts and accessories for
these products.
[333]
It was concluded by 29 participants at the December 1996 Singapore Ministerial
Conference.
[334]
In 2015, participants agreed to eliminate tariffs on an additional 201
products.
[335]
New products covered by the ITA expansion
included new-generation semiconductors, semiconductor manufacturing equipment,
optical lenses, Global Positioning System (GPS) navigation equipment, and
medical equipment such as magnetic resonance imaging products and ultrasonic
scanning apparatus.
To date, more than 50 additional WTO members have confirmed
their acceptance of tariff concessions, bringing membership in the agreement to
a total of 82 participants, including the United States. ITA members now
account for about 97 percent of world trade in information technology products.
No new members signed onto the ITA in 2019. In 2019, no new members signed onto
the ITA, which currently totals 82 participants, including the United States.
[336]
WTO members that participated in the negotiations to expand
the ITA implemented their fourth set of tariff reductions on July 1, 2019. As
of 2019, 95.4 percent of products were subject to tariff elimination.
[337]
In 2019, the
Committee of Participants on the Expansion of Trade in Information Technology
Products met on May 14 and October 31. These meetings focused on three
implementation issues concerning India, China, and Indonesia.
[338]
This section covers negotiations on fisheries subsidies and
exploratory talks on electronic commerce, which were active during 2019. There
have been no new developments in the negotiations on an environmental goods
agreement since 2016.
[339]
Negotiations on an Agreement on Fisheries Subsidies
WTO negotiations on fisheries subsidies began during the
Fourth WTO Ministerial Conference with the advent of the Doha Development
Agenda in 2001, and were formalized under the WTO’S Negotiating Group on Rules
(Negotiating Group).
[340]
The negotiating mandate was further elaborated
in 2005 at the Sixth Ministerial Conference in Hong Kong, China. The aim of
these negotiations was to improve WTO disciplines on fisheries subsidies. In
2005, the negotiations were expanded to include work toward prohibiting certain
forms of fisheries subsidies that contribute to overfishing and overcapacity.
In September 2015, world leaders adopted the United Nations’
Sustainable Development Goals (SDGs). The inclusion of a targeted goal on
fisheries in the SDGs helped to renew attention to the topic. In particular,
SDG target 14.6 aimed to eliminate subsidies that contribute to illegal,
unreported, and unregulated (IUU) fishing, and to prohibit certain forms of
subsidies that contribute to overcapacity and overfishing by 2020. This target
also identified special and differential treatment for developing and
least-developed countries as an integral part of the negotiations on fisheries
subsidies. This approach translated into the Negotiating Group holding
discussions on disciplines, exemptions, transitional periods, and
implementation assistance.
[341]
On July 28, 2017, members circulated a “compilation” within
the WTO Negotiating Group reflecting seven proposals put forward by various
negotiating groups or economies: (1) New Zealand, Iceland, and Pakistan; (2)
the EU; (3) Indonesia; (4) the African, Caribbean, Pacific (ACP) Group of
States; (5) a Latin American group composed of Argentina, Colombia, Costa Rica,
Panama, Peru, and Uruguay; (6) the Least-Developed Countries Group; and (7)
Norway.
[342]
The compilation included a matrix that organized the seven proposals into six
categories: (1) general provisions; (2) prohibitions; (3) standstill
(concerning new or enhanced subsidies);
[343]
(4) special and differential treatment, and
technical assistance and capacity building; (5) transparency; and (6)
transitional provisions and institutional arrangements/review.
[344]
Based on the compilation matrix, the
Negotiating Group produced a working document that compiled the proposals’
definitions, scope, prohibited subsidies, and exceptions into a single
document.
For its scheduled January–July 2019 work program, the
Negotiating Group continued to support more substantive talks aimed at actual
negotiations.
[345]
Under the work program, specific topics were
assigned to meetings of Incubator Groups before the Negotiating Group’s cluster
meetings to better inform the Negotiating Group’s discussions. Eighteen topics
were developed at the outset for Incubator Groups to address, and Incubator
Group members consolidated texts into one report. Examples included how to
identify a subsidy’s harmful effects on fish stocks and fishing capacity;
approaches to “positive” or “nonharmful” subsidies; how to define and determine
IUU fishing and overfished stocks; how to distinguish capacity from overcapacity,
and fishing activity from overfishing; aspects of fisheries management, such as
regional fisheries management organizations (RFMOs); the applicability of any
disciplines established to at-sea activities, onshore activities, and fishing
in areas of the high seas not under management by an RFMO; the role of outside
expertise in developing fisheries disciplines; and overall transparency
provisions.
[346]
After negotiating issues such as carrier flags and
transition periods, during March 2019 the Negotiating Group advanced four draft
texts of rules that apply to fisheries subsidies, including a joint proposal
from the United States and Australia, the EU, and the Philippines. On December
2, 2019, Argentina, Australia, Indonesia, Japan, New Zealand, the United
States, and Uruguay issued a revision with draft text proposing a prohibition
of subsidies for vessels not flying the flag of the subsidizing member.
Shortly after this draft text was proposed,
on December 5, the EU, adding Japan and Indonesia as co-sponsors, proposed to
add a reporting mechanism relating to the IUU subsidy prohibition by members
with ports where fishing vessels dock. Facilitators were tasked with serving as
neutral parties on topics to refine submissions and positions into targeted options.
Working papers from six facilitators were circulated for members to study
before talks resumed in January 2020.
[347]
Electronic Commerce Initiative
The Joint Statement on Electronic Commerce of January 25,
2019, focused on addressing electronic commerce and highlighted developing
countries, microbusinesses, and SMEs.
[348]
Seventy-six WTO members signed the Joint
Statement, accounting for 90 percent of global trade.
[349]
In January 2020, trade ministers met
informally in Davos, Switzerland, to discuss electronic commerce negotiations,
and agreed to develop a consolidated negotiating text ahead of the 12th
Ministerial Conference.
[350]
This section
gives an overview of the WTO dispute settlement process, as well as information
about proceedings during calendar year 2019, particularly those in which the
United States was a complaining or responding party. More specifically, it
provides (1) a tally of new requests for consultations filed by WTO members
during calendar year 2019 under the WTO Dispute Settlement Understanding; (2) a
table that lists the new dispute settlement panels established during calendar
year 2019 in which the United States was either the complaining party or the
named respondent; and (3) short summaries of the procedural and substantive
issues in disputes involving the United States that moved to the panel stage
during 2019, as well as summaries of panel and Appellate Body reports issued
during 2019 in disputes that involved the United States. At the end of this
section, U.S. concerns with the WTO dispute settlement process are described,
along with the actions taken as a result.
Figure 3.1
Timeline for a typical WTO dispute settlement process
This section’s
summaries of issues and of findings and recommendations in panel and Appellate
Body reports are based entirely on information in publicly available documents.
Sources include summaries published online by the WTO, summaries included in
USTR’s
2020 Trade Policy Agenda and 2019 Annual Report
, and summaries
included in USTR press releases. The summaries in this report should not be
regarded as comprehensive or as reflecting a U.S. government or Commission
interpretation of the issues raised or addressed in the disputes or in panel or
Appellate Body reports. A table showing procedural developments during 2019 in
disputes in which the United States was the complainant or respondent appears
in the
interactive
dashboard
in appendix A.
This section
focuses on developments during 2019, including panel and Appellate Body reports
issued during 2019 and adopted by the Dispute Settlement Body (DSB). With minor
exceptions, panel and Appellate Body reports and DSB actions after the close of
2019 will be summarized in the Commission’s report covering 2020. A number of
disputes filed before 2019 remained inactive throughout 2019, either at the
consultation stage or with a panel established but not composed. With minor exceptions,
this report will not address those disputes.
Finally, this
section focuses only on developments through the panel and Appellate Body stage
and does not include matters that arose after the DSB adopted panel or
Appellate Body reports in the original dispute. As indicated in the flowchart
in figure 3.1, dispute litigation often continues beyond the adoption of the
panel or Appellate Body report, particularly when the defending party is the
“losing” party. Issues may arise about the reasonableness of the time sought by
the losing party to implement findings and recommendations, the adequacy of
actions taken by that party to comply with the findings and recommendations,
and possible compensation and retaliation. Matters may be referred to the
original panel or to a new panel for further findings and recommendations on
compliance and other matters, and when appropriate, the parties may seek the
help of an arbitrator to resolve matters.
The
interactive
dashboard
in appendix A sets out the timeline for procedural actions in
specific active WTO dispute settlement cases, including procedural actions at
the implementation, compliance, and compensation/retaliation stages. A number
of disputes were still active at the compliance stage or were before an
arbitrator during 2019.
One example of
a dispute that was before an arbitrator in 2019 is a dispute involving large
civil aircraft. That dispute was initially filed in 2004 by the EU and
concerned U.S. subsidies provided to Boeing. Following an appeal of a 2017
compliance panel report, the Appellate Body issued a report on March 28, 2019,
rejecting arguments made by the EU that U.S. Federal and state programs gave
more than $10 billion in subsidies to Boeing large civil aircraft. The report
affirmed a 2017 compliance panel report that had rejected EU arguments that 29
U.S. state and Federal programs conferred $10.4 billion in subsidies to Boeing
over six years, finding only one program—a Washington state tax measure worth
an average annual value of about $100 million from 2013 to 2015—to be
WTO-inconsistent.
[351]
On June 5, 2019, at the request of the EU, the arbitration regarding the level
of countermeasures was resumed.
[352]
During 2019,
WTO members filed 19 new requests for dispute settlement consultations. This
number was significantly lower than the 39 requests filed during 2018 and more
in keeping with the 17 requests filed in 2017 and the number filed in earlier
years. Requests filed by one member—the EU (five requests)—accounted for nearly
25 percent of the requests filed during 2019; no other member filed more than
one request. India was the named respondent in nearly a third of the disputes (seven
disputes), while the United States was the named respondent in three disputes
and Colombia in two; no other member was the named respondent in more than one
dispute. The large number of requests filed in 2018 was attributable to the
nine complaints filed against the United States challenging U.S. national
security tariffs on steel and aluminum products, and the six complaints filed
by the United States challenging measures taken by other WTO members in
response to the U.S. steel and aluminum tariffs. The issues presented in these
disputes are described below. The 19 new requests included 20 different named
WTO members, either as a complainant or named respondent or in both capacities.
[353]
As of the end
of 2018, seven of the eight disputes filed by the United States during 2018
were at the panel stage, with the panel composed in one of those disputes. The
eighth was still at the consultation stage. As of the end of 2018, 14 of the 19
disputes filed against the United States during 2018 had advanced to the panel
stage, including two in which a panel had also been composed. The remaining
five disputes were still in the consultation phase. Four of the disputes—two
filed by the United States against Canada and Mexico, respectively, and one
each filed by Canada and Mexico against the United States—were terminated in
May 2019 after the parties reached a mutually agreed solution.
[354]
Disputes Filed by the United States
In the one
dispute filed by the United States (DS585), filed on July 3, 2019, the United
States requested consultations with India concerning India’s imposition of
additional duties with respect to certain products originating in the United
States. The United States claimed that the measures appear to be inconsistent
with Articles I:1(a), II:1(a), and II:1(b) of the General Agreement on Tariffs
and Trade (GATT) 1994. When consultations failed to resolve the dispute, the
United States, on September 19, 2019, requested the DSB to establish a panel.
Following agreement of the parties, the panel was established on January 7,
2020.
[355]
Disputes in Which the United States Was the Named Respondent
The three
requests for disputes filed against the United States were filed by the EU, the
Russian Federation (Russia), and China. The first two concerned the imposition by
the United States of countervailing duties and/or antidumping duties, and the
third concerned measures imposed by the United States on certain goods from
China. As of the end of 2019, a panel had been established and composed in only
the first of the three disputes.
In the first
dispute, DS577, filed on January 29, 2019, the EU requested consultations with
the United States about the imposition of countervailing duties and antidumping
duties on ripe olives from Spain, as well as the legislation that was the basis
for the imposition of those duties. The EU claimed that the challenged measures
appear to be inconsistent with Articles 1.1(a), 1.1(b), 1.2, 2.1, 2.2, 2.4, 10,
12.1, 12.5, 12.8, 14, 15.1, 15.2, 15.5, 19.1, 19.3, 19.4, and 32.1 of the
Agreement on Subsidies and Countervailing Measures (SCM Agreement); Articles
3.1, 3.2, and 3.5 of the Antidumping Agreement, and with Articles VI:1, VI:2,
and VI:3 of GATT 1994. When consultations failed to resolve the dispute, the EU
on May 16, 2019, requested establishment of a panel. The DSB established a
panel on June 24, 2019. On October 8, 2019, the EU requested the
Director-General to compose the panel, and the Director-General composed the
panel on October 18, 2019.
[356]
In the second
dispute, DS586, filed on July 5, 2019, Russia requested consultations with the
United States about antidumping measures imposed by the United States on
hot-rolled flat-rolled carbon-quality steel products from Russia. Russia
claimed that the measures appear to be inconsistent with Articles 1, 2.1, 2.2,
2.2.2.2, 2.4, 6.8, 6.10, 9.1, 9.2, 9.3, 9.4, 11.1, 11.2, 11.3., and 18.1 of the
Antidumping Agreement, and with Articles VI:1 and VI:2 of GATT 1994.
The dispute was in consultations at the end
of 2019.
[357]
In the third
dispute, DS587, filed on September 2, 2019, China requested consultations with
the United States regarding measures imposed by the United States on certain
goods from China. China claimed that the measures appear to be inconsistent
with Articles I:1, II:1(a), and II:1(b) of the General Agreement on Tariffs and
Trade (GATT) 1994, and with Articles 23.1, 23.2(a), 23.2(b), and 23.2(c) of the
Dispute Settlement Understanding. On September 12, 2019, the United States
requested the Chair of the DSB to circulate a communication where it indicated
that the United States took note of additional tariffs imposed by China. The
communication indicated that the United States would look forward to hearing,
at the consultations, China’s basis for imposing those additional tariffs. The
communication concluded that the United States accepted China’s request to
enter into consultations and stood ready to confer on a mutually convenient
date for them. The dispute was in consultations at the end of 2019.
[358]
As indicated in
table 3.1, during 2019, five dispute settlement panels were established in
which the United States was a named party—two in which the United States was
the complaining party, and three in which the United States was the responding
party. This compares with 23 panels established during 2018, when the United
States was the complaining party in 8 of the disputes, and the responding party
in 15 disputes.
Table 3.1
WTO dispute settlement
panels established during 2019 in which the United States was a party
Case no.
Complainant
Respondent
Case name
Panel established
DS543
China
United States
United States—Tariff Measures on Certain
Goods from China
01/28/2019
DS561
United States
Turkey
Turkey—Additional Duties on Certain Products from
the United States
01/28/2019
DS562
China
United States
United States—Safeguard Measure on
Imports of Crystalline Silicon Photovoltaic Products
08/15/2019
DS577
European Union
United States
United States—Antidumping and Countervailing Duties
on Ripe Olives from Spain
06/24/2019
DS585
United States
India
India—Additional Duties on Certain
Products from the United States
During 2019, a
WTO dispute settlement panel issued a report in nine disputes to which the
United States was a party, including four in which the panel report was
confined to a brief description of the case and to reporting that a solution
had been reached (DS550, DS551, DS557, and DS560). The United States was the
named complainant in five of the disputes and the named respondent in the
remaining four (table 3.2). This section covers only panel and Appellate Body
reports relating to the original disputes and does not include subsequent
reports, such as those of a compliance panel or an arbitrator. Many of the
latter reports are noted in table A.25, which contains a procedural summary of
most of the dispute settlement cases that are still active in some respect.
Table 3.2
WTO dispute settlement
panel and Appellate Body reports circulated and/or adopted in 2019 in which the
United States was a party
Case no.
Complainant
Respondent
Case name
Date of report circulation or adoption
DS510
India
United States
United States—Certain Measures Relating
to the Renewable Energy Sector
Reports in Which the United States Was the Complainant
China
—
Domestic
Support for Agricultural Producers (DS511)
On September 13, 2016, the United States requested
consultations with China regarding certain measures through which China
appeared to provide domestic support in favor of agricultural producers,
particularly those producing wheat, indica rice, japonica rice, and corn.
Specifically, the United States alleged that China’s level of domestic support
was in excess of its commitment level of
nil
specified in Section I of
Part IV of China’s Schedule CLII. For example, China was providing domestic
support in excess of its product-specific
de minimis
level of 8.5 percent each for wheat, indica rice, japonica
rice, and corn. The United States claimed that the measures appeared to be
inconsistent with Articles 3.2, 6.3, and 7.2(b) of the Agreement on
Agriculture. After consultations failed to resolve the dispute, the United
States requested establishment of a panel, and the DSB established a panel on
January 25, 2017.
[359]
On February 28, 2019, the Panel circulated its report. The
Panel found that China had breached Articles 3.2 and 6.3 of the Agriculture
Agreement by exceeding, in each year from 2012 to 2015, its
de minimis
level of support for wheat,
indica rice, and japonica rice.
[360]
The DSB adopted the report on April 26, 2019. The United States and China
agreed that the reasonable period for China to come into compliance with WTO
rules would expire on March 31, 2020.
[361]
China
—
Tariff-Rate
Quotas for Agricultural Producers (DS517)
On December 15, 2016,
the United States requested consultations with China concerning China’s
administration of its tariff-rate quotas (TRQs), including those for wheat,
short- and medium-grain rice, and corn. Specifically, the United States alleged
that the measures taken by China that were listed in the request established a
system by which the China’s National Development and Reform Commission annually
allocated quotas to eligible enterprises and then reallocated quotas returned
unused, based on eligibility requirements and allocation principles that were
not clearly specified. The United States further claimed that the TRQs for
these commodities were being underfilled, even in years where market conditions
would suggest demand for imports.
The United States
alleged that China’s administration of these TRQs inhibited filling them,
restricting opportunities for U.S. and other trading partners to export wheat,
corn, and rice to China. The United States claimed that these measures appeared
to be inconsistent with Articles X:3(a), XI:3, and XIII:3(b) of GATT 1994. It
also claimed that the measures appeared to be inconsistent with paragraph 1.2
of Part I of China’s Protocol of Accession, to the extent that this protocol
incorporates paragraph 116 of the
Report of the Working Party on the
Accession of China Working Party Report
). After consultations failed to resolve the dispute, the
United States requested establishment of a panel. The DSB established a panel
on September 22, 2017, and the panel was composed on February 22, 2018.
[362]
The panel circulated
its report on April 18, 2019. With respect to the United States’ claims under
Paragraph 116 of China’s Working Party Report, the panel found:
The basic eligibility criteria used in China's administration of
its TRQs for wheat, rice, and corn were inconsistent with China’s obligations
to administer TRQs on a transparent, predictable, and fair basis, and to
administer TRQs using clearly specified requirements;
The allocation principles used in China's administration of its
wheat, rice, and corn TRQs were inconsistent with the obligations to administer
TRQs on a transparent, predictable, and fair basis, and to administer TRQs
using clearly specified administrative procedures;
The reallocation procedures used in China's administration of its
wheat, rice, and corn TRQs were inconsistent with the obligation to administer
TRQs using clearly specified administrative procedures;
The public comment process used in China's administration of its
wheat, rice, and corn TRQs was inconsistent with the obligations to administer
TRQs on a transparent, predictable, and fair basis, and to administer TRQs
using clearly specified administrative procedures;
The administration of state trading enterprise (STE) and non-STE
portions of China’s wheat, rice, and corn TRQs was inconsistent with the
obligations to administer TRQs on a transparent, predictable, and fair basis,
to administer TRQs using clearly specified administrative procedures, and to
administer TRQs in a manner that would not inhibit the filling of each TRQ;
The usage requirements for imported wheat and corn used in China's
administration of its TRQ for wheat and corn were inconsistent with the
obligations to administer TRQs on a predictable basis, using clearly specified
administrative procedures, and in a manner that would not inhibit the filling
of each TRQ.
[363]
The DSB adopted the panel report on May 28, 2019. The United
States and China agreed that the reasonable time for China to implement the
DSB’s recommendations and ruling would expire on December 31, 2019.
[364]
India
—
Export Related
Measures (DS541)
On March 14, 2018, the United States requested consultations
with India concerning certain alleged export subsidy measures relating to
export subsidy programs, including (1) the Export Oriented Units Scheme and
sector-specific schemes, including the Electronics Hardware Technology Parks
Scheme; (2) the Merchandise Exports from India Scheme; (3) the Export Promotion
Capital Goods Scheme; (4) Special Economic Zones, and (5) a duty-free imports
for exporters program. The United States claimed that the measures appear to be
inconsistent with Article 3.1(a) and 3.2 of the SCM Agreement. When
consultations failed to resolve the dispute, the United States requested
establishment of a panel, and the DSB established a panel on May 28, 2018. On
July 16, 2018, the United States requested that the Director-General compose
the panel, and the Director-General composed the panel on July 23, 2018.
[365]
The panel issued its report on October 31, 2019. It found
all of the challenged export subsidy programs inconsistent with Articles 3.1(a)
and 3.2 of the Agreement on Subsidies and Countervailing Measures. The Panel
rejected India’s two principal defenses of its programs. First, it disagreed
with India’s argument that India continued to have an exemption, based on a
“certain developing country” status designation, to provide subsidies
contingent upon export performance. Second, it rejected India’s defense that
the export subsidy programs qualified as “duty-drawback” schemes. With respect
to certain product lines under the duty-free imports for exporters program, the
panel found language for those lines limited the import duty exemption at issue
to products used in the manufacture/processing of final products for export. Those
product lines were exempted and were not deemed to be subsidies. However, the
remaining product lines did not qualify for duty-drawback protection and were
found to be subsidies.
[366]
On November 19, 2019, India notified the DSB of its decision
to appeal the panel’s report.
Canada
—
Additional
Duties on Certain Products from the United States (DS557)
On July 16, 2018, the United States requested consultations
with Canada concerning the imposition by Canada of increased duties with
respect to certain products originating in the United States. Canada imposed
the additional duties in retaliation for the action the President took under
section 232 of the Trade Expansion Act of 1962, as amended, on imports of steel
and aluminum products that threatened to impair U.S. national security. The
U.S. consultations request alleged that the additional duties contravened
Canada’s obligations under the WTO Agreement because they (1) failed to extend
to U.S. products an advantage, favor, privilege or immunity granted by Canada
to products originating in the territory of other WTO members; (2) accorded
less favorable treatment to products originating in the United States; and (3)
imposed duties in excess of those set forth in Canada’s schedule. The United
States claimed that the measures appeared to be inconsistent with Articles I:1,
II:1(a), and II.1(b) of GATT 1994.
When consultations failed to resolve the dispute, the United
States requested establishment of a panel, and the DSB established a panel on
November 21, 2018. On January 7, 2019, the United States requested that the
Director-General compose the panel, and the Director-General composed the panel
on January 25, 2019.
[367]
On May 27, 2019, the United States and Canada jointly wrote
to the panel advising it that they had reached a mutually agreed solution,
terminating the dispute. The report of the panel was circulated to WTO members
and made public on July 11, 2019. In the report, the panel took note of the
mutually agreed solution between the United States and Canada.
[368]
Mexico
—
Additional
Duties on Certain Products from the United States (DS560)
On July 16, 2018, the United States requested consultations
with Mexico concerning the imposition by Mexico of increased duties with
respect to certain products originating in the United States. Mexico increased
the duties in retaliation for the action the President took under section 232
of the Trade Expansion Act of 1962, as amended, on imports of steel and aluminum
products that threatened to impair U.S. national security. The U.S.
consultations request alleged that the additional duties contravened Mexico’s
obligations under the WTO Agreement because they failed to extend to U.S.
products an advantage, favor, privilege or immunity granted by Mexico to
products originating in the territory of other WTO members. The United States
claimed that the measures appeared to be inconsistent with Articles I:1 of GATT
1994.
[369]
When consultations failed to resolve the dispute, the United
States requested establishment of a panel, and the DSB established a panel on
November 21, 2018. On January 7, 2019, the United States requested that the
Director-General compose the panel, and the Director-General composed the panel
on January 25, 2019.
[370]
On May 27, 2019, the United States and Canada jointly wrote
to the panel advising it that they had reached a mutually agreed solution,
terminating the dispute. The report of the panel was circulated to WTO members
and made public on July 11, 2019. In the report, the panel took note of the
mutually agreed solution between the United States and Canada.
[371]
Reports in Which the United States Was the Respondent
United States
—
Certain
Measures Relating to the Renewable Energy Sector (DS510)
On September 9, 2016, India requested consultations with the
United States regarding certain measures of the United States relating to
domestic content requirements and subsidies instituted by the governments of
the states of Washington, California, Montana, Massachusetts, Connecticut,
Michigan, Delaware, and Minnesota, in the energy sector. India claimed that the
measures appeared to be inconsistent with Articles III:4, XVI:1, and XVI:4 of
GATT 1994; with Articles 2.1 and 2.2 of the Agreement on Trade-Related Investment
Measures (TRIMS Agreement); and Articles 3.1(b), 3.2, 5(a), 5(c), 6.3(a),
6.3(c), and 25 of the SCM Agreement. After consultations failed to resolve the
dispute, India requested establishment of a panel, and the DSB established a
panel on March 21, 2017. On April 24, 2018, the Director-General composed the
panel.
[372]
The panel circulated its report on June 27, 2019. The panel
found that certain measures maintained by the states of California,
Massachusetts, Minnesota, and Washington were not within its terms of
reference. With respect to the other measures, the panel found that each of the
measures was inconsistent with Article III:4 of GATT 1994 because it accorded
less favorable treatment to imported products as compared to like domestic
products. The panel exercised judicial economy on India’s claims under Articles
2.1 and 2.2 of the TRIMS Agreement and Articles 3.1(b) and 3.2 of the SCM
Agreement.
[373]
On August 15, 2019, the United States notified to the DSB of
its decision to appeal to the Appellate Body certain issues of law and legal
interpretations in the panel report. On August 20, 2019, India notified the DSB
of its decision to cross-appeal. On October 14, 2019, the Chair of the
Appellate Body informed the DSB that the Appellate Body would not be able to
circulate its report within the required 90 days because of the queue of
pending appeals.
[374]
United States
—
Anti-Dumping
Measures Applying Differential Pricing Methodology to Softwood Lumber from
Canada (DS534)
On November 28, 2017, Canada requested consultations with
the United States regarding the United States’ antidumping measures applying a
differential pricing methodology to softwood lumber products from Canada.
[375]
Specifically,
Canada challenged the U.S. Department of Commerce’s (USDOC’s) application of a
differential pricing methodology, including the United States’ use of zeroing
when applying the average-to-transaction comparison methodology. Canada claimed
that the measures appear to be inconsistent with Articles 1, 2.1, 2.4, and
2.4.2 of the Antidumping Agreement, and Article VI:1 and VI:2 of GATT 1994.
After consultations failed to resolve the dispute, Canada requested
establishment of a panel, and the DSB established a panel on April 9, 2018. On
May 22, 2018, the Director-General composed the panel.
[376]
The panel circulated its report on April 9, 2019. The panel
found that USDOC’s use of zeroing when applying the average-to-transaction
comparison methodology was not inconsistent with the Antidumping Agreement or
GATT 1994. Among other things, the panel reasoned that nothing in the text of
the Antidumping Agreement directly addresses the use of zeroing. The panel
agreed with the United States that, if the use of zeroing were prohibited in
connection with the alternative, targeted dumping methodology, then the
alternative calculation methodology necessarily always would result in a margin
of dumping that is mathematically equivalent to that calculated using the
normal calculation methodology, which would render the alternative methodology useless.
In coming to its conclusion, the panel also examined and disagreed with
findings in prior WTO panel and Appellate Body reports. The panel explained why
it found the approach of those reports not persuasive.
[377]
The panel also found that one aspect of USDOC’s differential
pricing analysis was inconsistent with the requirements of the WTO Antidumping
Agreement. In this aspect, USDOC aggregated differences in export prices across
categories (i.e., purchasers, regions, and time periods) to find a single pattern
of export prices which differed significantly among different purchasers,
regions, and time periods.
[378]
On June 4, 2019, Canada notified the DSB of its decision to
appeal to the Appellate Body certain issues of law and legal interpretations in
the panel report. On August 2, 2019, the Chair of the Appellate Body informed
the DSB that the Appellate Body would not be able to circulate its report
within the required 90 days because of the queue of pending appeals.
[379]
United States
—
Certain
Measures on Steel and Aluminum Products (DS550)
On June 1, 2018, Canada requested consultations concerning
certain duties that the United Stated had imposed under section 232 of the
Trade Expansion Act of 1962, as amended, on imports of steel and aluminum
products that threatened to impair U.S. national security. Canada claimed that
imposition of the duties breached various provisions of GATT 1994 and the
Agreement on Safeguards. The United States and Canada held consultations on
July 20, 2018, but the consultations failed to resolve the dispute. Canada
requested establishment of a panel, and the DSB established a panel on November
21, 2018. On May 23, 2019, the United States and Canada informed the DSB that
they had reached a mutually agreed solution, terminating the dispute.
[380]
United States
—
Certain
Measures on Steel and Aluminum Products (DS551)
On June 5, 2018, Mexico requested consultations concerning
certain duties that the United Stated had imposed under section 232 of the
Trade Expansion Act of 1962, as amended, on imports of steel and aluminum
products that threatened to impair U.S. national security. Mexico claimed that
imposition of the duties breached various provisions of GATT 1994 and of the
Agreement on Safeguards. The United States and Mexico held consultations on
July 20, 2018, but the consultations failed to resolve the dispute. At Mexico’s
request, the DSB established a panel on November 21, 2018. The Director-General
composed the panel on January 25, 2019. On May 28, 2019, the United States and
Mexico informed the DSB that they had reached a mutually agreed solution,
terminating the dispute.
[381]
The President’s
2018 Trade
Policy Agenda and 2018 Annual Report
issued in March 2018 set out a number
of concerns about how the WTO dispute settlement system functions, including
the concern that a number of WTO dispute settlement reports have not followed
WTO rules. The report stated that the most significant area of concern has been
actions by panels and the Appellate Body adding to or diminishing rights and
obligations under the WTO Agreement by not applying the WTO Agreement as
written, and cited a number of examples. The report also cited additional
concerns about (1) the Appellate Body’s decision to ignore the mandatory 90-day
deadline for deciding appeals; (2) service on the Appellate Body by persons who
are no longer Appellate Body members; (3) the tendency of WTO reports to make
findings unnecessary to resolve a dispute or on issues not presented in a
dispute; (4) the Appellate Body’s approach to reviewing facts, and
de novo
review of a WTO member’s domestic law; and (5) claims by the Appellate Body
that its reports are entitled to be treated as precedent.
[382]
As stated in USTR’s
2020
Trade Policy Agenda and
2019 Annual Report
, during 2019, the United States made a series of
statements at DSB meetings explaining that the United States, for more than 16
years and across multiple U.S. administrations, has been raising serious
concerns with the Appellate Body’s disregard for the rules set by WTO members in
adding to or diminishing rights or obligations under the WTO Agreement.
[383]
USTR detailed
these concerns in its February 2020
Report on the Appellate Body of the
World Trade Organization.
[384]
USTR noted that the United States has also explained that when the Appellate
Body abused the authority it had been given within the dispute settlement
system, it undermined the legitimacy of the system and damaged the interest of
all WTO members who care about having the agreement respected as they had
negotiated and agreed to it.
[385]
USTR indicated that, as a result, the United States was not prepared to agree
to launch the process to fill vacancies on the WTO Appellate Body without WTO members
engaging with and addressing these critical issues.
[386]
This chapter summarizes trade-related activities during 2019
in two major multilateral organizations—the Organisation for Economic
Co-operation and Development (OECD) and the Asia-Pacific Economic Cooperation
(APEC) forum. It also covers the activities conducted under U.S. trade and
investment framework agreements (TIFAs).
The OECD’s membership comprises the world’s leading
market-based economies. It provides a policy forum for member governments to
review, discuss, and find evidence-based solutions to economic, social, and
environmental challenges facing the global economy, such as issues of trade,
taxation, and macroeconomic performance, including job creation.
[387]
As of January
2020, there were 37 OECD members.
[388]
In this section, we review major OECD events
in 2019, including digital tax disputes and developments within the Global
Forum on Steel Excess Capacity, as well as meetings of the ministerial council
meeting, the trade committee and working party of the trade committee, and the
steel committee.
The OECD held its annual Ministerial Council Meeting on May
22–23, 2019, in Paris, France. It was chaired by Slovakia. Ministers focused on
ways to promote well-being and progress by harnessing the ongoing digital
transition of the global economy, under which an increasing share of trade and
other economic activity is moving online. Ministers also addressed the
disruptive effects of digitalization—the transformation of business and other
processes from physical to computerized formats—in areas such as market
competitiveness, taxation, and governance. At the same time, they looked at
ways that the resulting “digital transition” could work to the benefit of all.
[389]
Ministers discussed a number of topics related to digital
challenges and sustainable development, including:
Structural reform, macroeconomic policy, and open markets to help
support digital transition and realization of the 2030 Agenda for Sustainable
Development.
[390]
Artificial intelligence as an important step in international
collaboration.
How to identify tax challenges arising from digitalization.
[391]
How to promote open markets by remaining alert for
anticompetitive behavior among digital firms and supporting cooperation among
competition authorities.
Acknowledging the importance of securing personal data and
privacy.
How to achieve structural changes needed for labor markets to
adapt to digitalization.
Multilateral trade and relieving trade tensions, such as tax
disputes, in the digital era.
[392]
In 2019, the OECD Trade Committee met in April (175th
session) and October (176th session).
[393]
One focus was on preparations for upcoming activities in multilateral bodies,
such as the Ministerial Council Meeting, the Group of 7 Summit, and the Group
of 20 (G20) Leaders’ Summit. A special issue addressed by the Committee was the
need to promote open markets by remaining alert for anticompetitive behavior
among digital firms and supporting cooperation among competition authorities.
The Trade Committee also focused on topics such as trade policy concerns,
digital trade, agricultural subsidies, and export credits.
[394]
Besides
the two plenary sessions, the Trade Committee held confidential sessions in
2019 on April 26 and October 24.
[395]
The Trade Committee also spent time planning for the 2019
OECD Global Forum on Trade, focusing on digital trade negotiations.
[396]
The OECD
Global Forum on Trade was titled “Levelling the Playing Field: Measuring and
Addressing Trade-Distorting Government Support,” and was held on October 23–24,
2019.
[397]
The forum also had sessions on agriculture, aluminum, high-technology sectors,
and the “Osaka track” e-commerce agreements.
[398]
Working Party of the Trade Committee
The Working Party of the Trade Committee—which tackles the
whole range of trade matters considered by the committee—held two meetings in
2019: June (81st session) and December (82nd session).
[399]
At these
meetings, the working party discussed several topics, including:
Foreign direct investment and trade in agriculture.
The capacity and resilience of agrifood global value chains.
Digitalization of sanitary and phytosanitary systems (SPS).
Costs of nontariff barriers, including SPS and technical barriers
to trade, in agriculture.
[400]
In October, the Working Party of the Trade Committee Chair
reported to the Trade Committee on progress in its activities. The update
included topics such as country coverage by the Services Trade Restrictiveness
Index, business at the OECD Trade Union Advisory Committee, and intersessional
activities and reports.
[401]
Issues surrounding taxation of the digital economy were a
focus of the OECD in 2019. With a lack of international consensus leading to
proposals of unilateral and uncoordinated tax policies by various countries in
recent years, member parties have expressed desire for a clear global solution.
[402]
To work towards a consensus on these issues, the OECD/G20
Inclusive Framework (Inclusive Framework) on Base Erosion and Profit Sharing
(BEPS) held public consultations in Paris in March 2019 to seek stakeholder
input on possible solutions to tax challenges arising from the digitalization
of the economy.
[403]
Based on the discussions and submissions from these consultations, the
Inclusive Framework agreed to a new “Programme of Work” at its plenary meeting
in May 2019, which would develop a global solution to the issue. The Programme
of Work provides instructions for the Inclusive Framework and assigns technical
work to subsidiary bodies to establish consensus-based solutions by yearend
2020.
[404]
Related public consultations were held on proposals under the Programme of Work
in October and November 2019.
[405]
The OECD has been considering issues of digital taxation for
several years under its BEPS work program. In September 2013, OECD and G20
member countries adopted a 15-point BEPS Action Plan to address issues related
to international taxation. The plan’s overarching goals included (1) introducing
coherence in the domestic tax rules that affect cross-border activities, (2) reinforcing
substance requirements in the existing international standards, and (3) improving
transparency as well as certainty in tax policy.
[406]
Action 1 under the BEPS Action Plan calls for work to
address the tax challenges of the digital economy. A subsidiary body of the
Committee on Fiscal Affairs, the Task Force on the Digital Economy (TFDE), was
designated to carry out this work, holding consultations with stakeholders and
analyzing submissions by businesses, civil society, academics, and developing
countries.
[407]
With over 45 countries participating in the process, work to develop
recommendations on all 15 actions under the BEPS action plan concluded in 2015,
and TFDE issued its recommended measures to address BEPS work program goals
within the context of the digital economy in a report that year.
[408]
Following the issuance of recommended measures, the
Inclusive Framework on BEPS was established in 2016 to pursue the measures’
implementation via changes to domestic laws or via treaty provisions.
Membership in the Inclusive Framework extended to all interested countries and
jurisdictions, with more than 135 members joining as of July 2020.
[409]
In its interim
report in 2018, the Inclusive Framework acknowledged that broader tax
challenges raised by the digitalization of the economy go beyond concerns
regarding BEPS, as identified in the 2015 report. These challenges chiefly
relate to the question of how taxes on income generated from cross-border activities
in the digital age should be allocated among countries.
[410]
The report
also noted that a number of countries had begun implementing unilateral and
uncoordinated tax policy actions to secure their tax base in regard to the
remote sales of digital products and services into their markets. According to
the report, these moves reflected discontent by some countries with the
taxation outcomes of the current international system and diverging views of
how the business models of digital firms, and digitalization more generally,
should result in changes to international tax rules.
[411]
In an example of such unilateral tax
actions, on March 6, 2019, France released a proposal for a 3 percent tax on
revenues generated from the provision of certain digital services by companies
exceeding thresholds for revenue generated globally and from French customers.
[412]
The bill instituting this digital services tax (DST) was signed into law on
July 24, 2019. Also in July 2019, as discussed in chapter 2, USTR initiated a section
301 investigation of the French DST and found in a report issued in December
2019 that the DST was discriminatory against U.S. companies and particularly
burdensome for U.S. companies covered under the tax. The basis for this
determination was in part due to the fact that the French DST contravenes OECD
guidance issued under the BEPS work program, which counsels against targeting
the digital economy for special unfavorable tax treatment.
[413]
The Steel Committee
In light of concern about market distortions in the steel
industry, the steel committee makes recommendations on capacity reductions in
relevant economies, removal of subsidies, and other support measures for steel
markets. In 2019, the OECD Steel Committee had two meetings: one in March (86th
session) and one in September (87th session).
[414]
In these meetings, the committee focused on:
The global steel market outlook and steelmaking capacity.
Steel trade and policy developments, such as subsidies and
government support, as well as policy intervention.
The environmental impact of steelmaking and the steel trade.
Potential technology solutions to contribute to sustainable
steel-making practices.
Challenges to market openness such as state-owned enterprises,
barriers to exit, and market consolidation in the steel sector.
[415]
During the March and September 2019 meetings, the OECD Steel
Committee expressed concern about excess capacity in the steel sector and
emphasized the need for capacity reductions.
[416]
The committee called for the G20 Global Forum on Steel Excess Capacity (GFSEC)
to implement policy actions aimed at eliminating excess capacity and
market-distorting measures.
[417]
GFSEC was created following calls from leaders of the G20 to
address the structural problem of global excess capacity in the steel industry
(and other industries, when applicable).
[418]
On December 16, 2016, GFSEC was formally established in Berlin, Germany.
[419]
Its mission
was to exchange information and data on global steel capacity developments and
government policies affecting excess steel capacity; develop policy solutions
and recommendations to alleviate excess capacity; and report on its work to the
G20 ministers.
[420]
In 2019, 33 economies participated in the GFSEC, including
several non-OECD steel-producing economies.
[421]
The OECD chaired the forum and facilitated the work produced by the GFSEC.
[422]
GFSEC met
several times in 2019, including at its third ministerial-level meeting, which
was held in Tokyo, Japan, on October 26, 2019. At the meeting, the majority of
the forum indicated agreement with the ministerial report expressing interest
in continuing the work of GFSEC past the three-year expiration date.
[423]
The report
also included conclusions on processes to curb excess capacity through the
removal of subsidies and other government support measures for both public and
private steel producers.
[424]
However, because the forum’s members did not reach a
consensus on renewal, the GFSEC expired in November 2019. As of May 2020, GFSEC
had not been renewed.
Established in 1989 and composed of 21 member economies,
APEC is a regional economic and trade forum.
[425]
The primary objectives of APEC, set out in 1993, include “pursuing
opportunities to liberalize and expand trade; facilitating a more open
environment for investment; developing initiatives to improve the flow of
goods, services, capital and technology within the region; consulting on issues
of importance and developing consensus to expand and strengthen these flows
within the region and globally; and reducing and removing distortions which
impede these flows.”
[426]
These objectives provide high-level guidance to APEC
programs and activities, including economic leaders’ summits, ministerial
meetings, senior officials’ meetings, policy dialogues, and workshops, in which
various trade and economic issues are discussed. APEC decisions are made by
consensus, and commitments are undertaken voluntarily.
[427]
Every year,
one of the 21 APEC member economies hosts APEC meetings and serves as the APEC
chair.
[428]
In 2019, Chile served as the APEC chair and hosted major APEC meetings through
the year.
APEC’s operational structure is based on both “bottom-up”
and “top-down” approaches. Four core committees, including the Committee on
Trade and Investment (CTI), provide strategic policy recommendations to APEC
economic leaders and ministers who meet annually to set the vision for overarching
goals and initiatives.
[429]
The working groups under each committee are tasked with implementing these
initiatives through a variety of APEC-funded projects. Member economies also
take individual and collective actions to carry out APEC initiatives. Capacity
building is a key element of APEC’s operation, playing an important role in
helping realize APEC’s goals by providing skill training and technological
expertise to member economies.
[430]
Under Chile’s leadership in 2019, APEC adopted the theme
“Connecting People, Building the Future,” and chose four priority areas:
“Digital Society; Integration 4.0; Women, Small and Medium Enterprises (SMEs)
and Inclusive Growth; and Sustainable Growth.”
[431]
Under “Digital Society,” APEC focused on improving digital
access and setting up the regulatory framework for digital trade. The effort
includes (1) improving the quality and coverage of telecommunications
infrastructure, (2) creating common regulatory principles and cross-border
digital trade standards that improve digital trade flows, (3) incorporating
changes and adjustments in the education and labor system to meet technological
progress, and (4) developing a methodology for producing harmonized data in APEC
economies.
[432]
The second area, “Integration 4.0,” addresses
next-generation regional integration. APEC focused on trade and investment
issues that would shape regional integration in the future. The effort includes
(1) trade facilitation, (2) customs coordination, (3) border management
automation, (4) regulatory convergence, (5) participation in global value
chains (GVCs), (6) people and knowledge mobility, and (7) investments in
infrastructure.
[433]
Under “Women, SMEs and Inclusive Growth,” the third area of
focus, APEC seeks to increase opportunities for all members and communities in
the region to participate in, contribute to, and benefit from global economic
growth. The effort includes (1) improving the economic empowerment of women,
(2) addressing the regulatory challenges and reducing trade barriers that SMEs
face, (3) improving SMEs’ access to information and communication technologies,
and (4) strengthening the capabilities of SMEs to realize the benefits from
global trade as well as digital trade.
[434]
APEC’s fourth area, “Sustainable Growth,” focuses on green
technology, energy efficiency, and environment protection. The effort includes
(1) protecting oceans and marine ecosystems, (2) combating illegal fishing and
preventing and reducing marine debris, (3) intensifying the work on developing
technology and technical procedures to promote cheaper and cleaner energy as
well as electromobility (e.g., the use of electric vehicles), and (4) improving
cooperation on building smart and green cities.
[435]
2019 APEC Highlights
The CTI and its 11 subgroups champion work on liberalizing
and facilitating trade and investment as a driver of growth in the APEC region.
[436]
In its 2019
annual report to ministers, the CTI acknowledged emerging challenges for trade
and highlighted APEC’s responses to these challenges in 2019. Among them are:
Supporting the multilateral trading system and the World Trade
Organization (WTO) by identifying areas where APEC could contribute. These
areas include e-commerce; fisheries subsidies; micro, small, and medium-sized
enterprises (MSMEs); women’s economic empowerment; domestic regulation of
services sectors; and transparency.
[437]
Advancing APEC’s regional economic integration agenda and the
Bogor Goals by pushing for progress in the five areas concerning services
trade.
[438]
These areas include domestic services regulation; the APEC index for measuring
the regulatory environment in services trade; talent mobility; environment
services; and manufacturing-related services.
[439]
Making overall progress toward the realization of the Free Trade
Area of the Asia-Pacific (FTAAP), including undertaking several initiatives,
projects, and capacity building to support APEC’s FTAAP objectives.
[440]
In addition, the CTI report noted progress made in implementing
the WTO Trade Facilitation Agreement and expanding the Asia-Pacific Model
E-Port Network, among others.
[441]
Digital Trade, Internet Economy, and E-Commerce
[442]
The CTI report noted the proliferation of work done by APEC
in 2019 on the internet economy, digital trade, and e-commerce. It specifically
highlighted the following areas: data privacy; the protection of data,
consumers, and intellectual property rights (IPRs); MSMEs’ participation in
digital trade; digital marketing; online advertising standards; and the policy
and regulatory environment. Some of these areas are discussed in greater detail
below.
[443]
Improving data privacy protection.
APEC undertook
several activities to improve data privacy protection across APEC economies,
such as continuing to promote the enhancement and expansion of the APEC
Cross-Border Privacy Rules System and the APEC Privacy Recognition for
Processors system. These systems would enable businesses to process and
transfer personal data in compliance with privacy protection standards
prescribed by these systems, and they are enforceable in participating APEC
economies.
[444]
Enhancing the protection of data, consumers, and IPRs.
APEC
conducted several workshops on the protection of data, consumers, and IPRs. The
workshops covered topics such as organizational accountability, national data
protection authority, cross-border data flows, a regional cooperation framework
for regulatory enforcement, challenges and best practices in IPR protection,
and dispute resolution and redress mechanisms for consumer protection.
Creating an enabling policy and regulatory environment.
The
APEC Policy Support Unit conducted a study examining the role of data in the
business models of various firms and the challenges they face pertaining to
data use. The study involved 39 firms from sectors such as aviation, logistics,
shipping, payment services, encryption services, and manufacturing in 12 APEC
economies. The study found that data play an important role for firms in both
traditional and new industries. Firms across different sectors collect and use
significant volumes of data for a wide range of purposes and have undertaken
various measures to ensure the privacy and security of data. The study
recommended middle-ground policy and regulatory approaches to data-related
issues, which would have relatively minimal impact on firms’ access and use of
data while ensuring data security and privacy. Such approaches included
“recognizing voluntary standards, reviewing potential and existing domestic regulations
against privacy guidelines/frameworks, complementing lighter touch regulations
with effective enforcement, and enhancing cross-border data flows through
various mechanisms such as adequacy status, mutual recognition system and free
trade agreements, among others.”
[445]
In addition, several project proposals were put forth in
2019, including a proposal by Australia for a digital symposium and a proposal
by the United States and others to develop a guidance document,
Building
Blocks for Facilitating Digital Trade.
[446]
These
proposals seek to examine issues related to digital trade, develop approaches
and policies on building digital literacy and inclusiveness, create a list of
best practices and policy guidance to facilitate digital trade, and promote innovative,
inclusive, and sustainable growth in the APEC region.
The CTI report highlighted several developments in 2019 that
are related to GVC cooperation. One key outcome was the development of the
APEC
Strategic Blueprint for Promoting Global Value Chains 2020–2025 (Blueprint 2.0).
[448]
Built upon the
APEC Strategic Blueprint for Promoting Global Value Chains
Development and Cooperation (Blueprint 1.0), endorsed in 2014, Blueprint 2.0
addresses areas for improvement, next-generation trade and investment
issues, recent business trends, and other initiatives undertaken by APEC.
[449]
Seven
workstreams will lead the implementation of
Blueprint 2.0
. The United
States will champion two of the GVC workstreams, including “addressing trade
and investment issues and barriers that impact GVCs” and “cooperating on
implementing and taking full advantage of statistics related to GVCs.”
[450]
Since 2014, the United States and China have co-led the GVC
Workstream 2 under
Blueprint 1.0, “APEC GVCs and Trade in Value Added (TiVA) Measurement.”
[451]
The objective
of this workstream is to develop an APEC TiVA database. Upon USTR’s request, on
the U.S. side, staff from the U.S. International Trade Commission (Commission)
have been co-leading this project with participants from the U.S. Department of
Commerce’s Bureau of Economic Analysis since 2014. In early 2019, the APEC TiVA
Technical Group circulated the preliminary APEC TiVA Database among the APEC
economies to solicit feedback and comments.
The United States, led by the Commission, organized the
Fourth Capacity Building Workshop in May 2019 to support the effective use of
the database. The workshop provided training on (1) understanding the role of
GVCs in the APEC region in terms of completeness, economic growth, and economic
integration; (2) accessing and using the APEC TiVA Database; and (3) applying
the TiVA approach and APEC TiVA database for trade and investment policy
analysis. After the workshop, the APEC TiVA Technical Group also produced and
published the
APEC TiVA Initiative Report One
, which presents the
methodologies used in constructing the APEC TiVA Database.
In addition, APEC carried out other activities (e.g.,
workshops, studies, and initiatives) in 2019 on GVC-related topics. Examples
include the interdependencies of trade and investment in GVCs, economic
upgrading through GVCs, factors affecting the formation and development of
GVCs, and MSMEs’ integration into GVCs.
Trade and Investment
Framework Agreements (TIFAs) provide principles for dialogue on trade and
investment issues. As of yearend 2019, the United States
had entered 56 TIFAs (table 4.1), with no new TIFAs since 2017. TIFAs
cover diverse matters, including market access, labor, environment, and IPRs.
[452]
TIFA meetings
serve as a setting for the United States and other parties to discuss issues of
mutual interest with the objective of strengthening trade and investment ties.
[453]
The most recent TIFA
negotiations were with Paraguay. Though the U.S.-Paraguay TIFA was signed in
2017, it has not yet been ratified. The U.S.-Paraguay TIFA is expected to enter
into force in 2020, when the first official meeting under this agreement is
scheduled to take place. Until then, discussions on trade and investment issues
between the United States and Paraguay are channeled through the U.S.-Paraguay
Bilateral Council on Trade and Investment.
[454]
Table 4.1
U.S. trade and investment
framework agreements (TIFAs) in 2019
Type and name
Date signed
Bilateral
agreements
U.S.-Afghanistan
TIFA
September
21, 2004
U.S.-Algeria TIFA
July 13, 2001
U.S.-Angola
TIFA
May
19, 2009
U.S.-Argentina TIFA
March 23, 2016
U.S.-Armenia
TIFA
November
13, 2015
U.S.-Bahrain TIFA
June 18, 2002
U.S.-Bangladesh
TICFA
November
25, 2013
U.S.-Brunei Darussalam TIFA
December 16, 2002
U.S.-Burma
TIFA
May
21, 2013
U.S.-Cambodia TIFA
July 14, 2006
U.S.-Egypt
TIFA
July
1, 1999
U.S.-Georgia TIFA
June 20, 2007
U.S.-Ghana
TIFA
February
26, 1999
U.S.-Iceland TICF
January 15, 2009
U.S.-Indonesia
TIFA
July
16, 1996
U.S.-Iraq TIFA
July 11, 2005
U.S.-Kuwait
TIFA
February
6, 2004
U.S.-Laos TIFA
February 17, 2016
U.S.-Lebanon
TIFA
November
30, 2006
U.S.-Liberia TIFA
February 15, 2007
U.S.-Libya
TIFA
December
18, 2013
U.S.-Malaysia TIFA
May 10, 2004
U.S.-Maldives
TIFA
October
17, 2009
U.S.-Mauritius TIFA
September 18, 2006
U.S.-Mongolia
TIFA
July
15, 2004
U.S.-Mozambique TIFA
June 21, 2005
U.S.-Nepal
TIFA
April
15, 2011
U.S.-New Zealand TIFA
October 2, 1992
U.S.-Nigeria
TIFA
February
16, 2000
U.S.-Oman TIFA
July 7, 2004
U.S.-Pakistan
TIFA
June
25, 2003
U.S.-Paraguay TIFA
January 13, 2017
U.S.-Philippines
TIFA
November
9, 1989
U.S.-Qatar TIFA
March 19, 2004
U.S.-Rwanda
TIFA
June
7, 2006
U.S.-Saudi Arabia TIFA
July 31, 2003
U.S.-South
Africa TIFA
a
June
18, 2012
U.S.-Sri Lanka TIFA
July 25, 2002
U.S.-Switzerland
TICF
May
25, 2006
U.S.-Taiwan TIFA
September 19, 1994
U.S.-Thailand
TIFA
October
23, 2002
U.S.-Tunisia TIFA
October 2, 2002
U.S.-Turkey
TIFA
September
29, 1999
U.S.-Ukraine TICA
March 28, 2008
U.S.-United
Arab Emirates TIFA
March
15, 2004
U.S.-Uruguay TIFA
b
January 25, 2007
U.S.-Vietnam
TIFA
June
21, 2007
U.S.-Yemen TIFA
February 6, 2004
Regional
agreements
U.S.-Association
of Southeast Asian Nations (ASEAN) TIFA
c
August
5, 2006
U.S.-Caribbean Community (CARICOM) TIFA
d
May 28, 2013
U.S.-Central
Asian TIFA
e
June
1, 2004
U.S.-Common Market for Eastern and Southern Africa
(COMESA) TIFA
f
October 29, 2001
U.S.-East
African Community TIFA
g
July
16, 2008
U.S.-Economic Community of West African States
(ECOWAS) TIFA
h
August 5, 2014
U.S.-Gulf
Cooperation Council (GCC) Framework Agreement for Trade, Economic,
Investment, and Technical Cooperation
i
September
25, 2012
U.S.-Southern Africa Customs Union (SACU) Trade, Investment, and
Development Cooperative Agreement
j
July 16, 2008
U.S.-West
African Economic and Monetary Union (WAEMU) TIFA
k
Note: TICF stands for Trade and
Investment Cooperation Forum, TICA stands for Trade and Investment Cooperation
Agreement, and TICFA stands for Trade and Investment Cooperation Forum
Agreement. All are considered TIFAs by USTR. For more information, see USTR, “
Trade
and Investment Framework Agreements
” (accessed March 16, 2020).
a
The United States-South Africa TIFA was amended on June 18, 2012. It replaces
the original TIFA, signed on February 18, 1999.
b
On
October 2, 2008, the United States and Uruguay signed a TIFA protocol on trade
and environment and a TIFA protocol on trade facilitation.
c
The
10 countries of ASEAN are Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos,
Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
d
The
15 members of CARICOM are Antigua and Barbuda, The Bahamas, Barbados, Belize,
Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, Saint Kitts
and Nevis, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
It also has five associate members: Anguilla, Bermuda, the British Virgin
Islands, the Cayman Islands, and the Turks and Caicos Islands.
e
The
six parties to the U.S.-Central Asian TIFA are the United States, Kazakhstan,
Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.
f
The
21 members of COMESA are Burundi, Comoros, the Democratic Republic of the
Congo, Djibouti, Egypt, Eritrea, Eswatini (formerly Swaziland), Ethiopia,
Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan,
Somalia, Tunisia, Uganda, Zambia, and Zimbabwe.
g
The
six parties to the U.S.-East African Community TIFA are the United States,
Burundi, Kenya, Rwanda, Tanzania, and Uganda.
h
The
15 members of ECOWAS are Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The
Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal,
Sierra Leone, and Togo.
i
The
seven parties to the U.S.-Gulf Cooperation Council (GCC) Framework Agreement
for Trade, Economic, Investment, and Technical Cooperation are the United
States, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab
Emirates.
j
The
five members of SACU are Botswana, Eswatini (formerly Swaziland), Lesotho,
Namibia, and South Africa.
k
The
eight members of WAEMU are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau,
Mali, Niger, Senegal, and Togo.
During 2019, 10 TIFA
councils met, with results as discussed in this section.
Central Asia
On October 21, 2019, the
United States, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan
met in Washington, DC, for the U.S.-Central Asia TIFA Council meeting.
Representatives from the Afghan and Pakistani governments joined the meeting as
observers. At the meeting, participants discussed expanding trade and creating
a welcoming environment for private sector development in the Central Asian
region. They also discussed U.S.-Central Asian digital trade, noting that
digital trade can enable regional economic growth and innovation. Working
groups met to address issues concerning customs, intellectual property (IP),
technical barriers to digital trade, and sanitary and phytosanitary measures.
In this meeting, the United States continued to advocate for Afghanistan’s full
inclusion as a participant of the TIFA.
[455]
Egypt
On April 9, 2019, the United States and Egypt met in
Washington, DC, under their TIFA Council to discuss expanded bilateral trade
and investment in goods and services. Officials from both countries sought ways
to promote greater reciprocal market access for agricultural and industrial
goods. They discussed several other issues, including Egyptian labor reform, IP
reform, border enforcement measures, and implementation of the WTO Trade
Facilitation Agreement. Both countries agreed that trade under the TIFA should
benefit agricultural producers, importers, exporters, and consumers. Thus, the
countries are collaborating on developing food safety practices consistent with
international guidelines of the Codex Alimentarius Commission.
In this meeting, the United States expressed appreciation
for Egypt’s acceptance of U.S. Federal Motor Vehicle Safety Standards. This
recognition of the U.S. safety standards is expected to create more
opportunities for vehicles assembled in the United States to be exported to
Egypt, a market that was previously dominated by European, South Korean, and
Japanese exports.
[456]
Iraq
The United States and Iraq
held the second session of the Trade and Investment Council in Washington, DC,
on June 14, 2019. During the meeting, both parties discussed a range of
bilateral trade issues. The aim of cooperation in these areas is to assist Iraq
with further integrating into the global economy and promote greater reciprocal
market access, create jobs, and improve investment in both countries.
[457]
In line with these
objectives, the United States showed support for Iraq’s decision to seek
accession to the WTO and to accept tax declarations prepared according to
international financial standards. Iraq has set attracting foreign investment
as a priority; as a result, it will issue multiple-entry visas to U.S. citizens
and investors and will facilitate visits by U.S. investors to the National
Investment Commission.
[458]
Iraq is working with the World Bank to improve Iraqi banks’ performance and to
garner support for small and medium-sized projects. It is also working with the
United Nations Conference on Trade and Development to implement the
single-window system for business registration to reduce impediments to
investors.
[459]
On the issue of reciprocal
market access, the United States discussed reducing unnecessary documentation
requirements and using international standards. The U.S. also encouraged Iraq
to reduce its tariff on poultry imports. Both countries also discussed drafting
a memorandum of understanding on rice and wheat imports, Iraq’s grain tendering
process, and the purchase of medicines, medical devices, and equipment.
[460]
Maldives
On June 23, 2019,
delegations from the United States and the Republic of Maldives met in Malé,
Maldives, under the auspices of the U.S.-Maldives TIFA Joint Council. The
discussions centered on strengthening fair and reciprocal trade under the TIFA
and engaging Maldivian and American businesses. Maldives signaled an interest
in accessing the U.S. Generalized System of Preferences (GSP) program. Both
countries engaged in discussions on IPRs and the unique environmental concerns
of the island nation, as well as workers’ rights and labor conditions within
Maldives. They also discussed improving the investment climate, Maldives’
compliance with the WTO Trade Facilitation Agreement, and the assistance that
the country may need to make the needed reforms.
[461]
Mongolia
During the April 24, 2019, TIFA
Council meeting between the United States and Mongolia in Washington, DC, both
parties focused on promoting and broadening bilateral trade and investment.
They discussed issues such as transparency, the investment climate, IPR
protection and enforcement, trade in cashmere, the U.S. GSP, and trade
facilitation and promotion.
[462]
New Zealand
On November 6, 2019, the
United States and New Zealand met in Washington, DC, under the TIFA to discuss
enhancing their trade and investment relationship, their respective trade
agendas, and digital trade issues.
[463]
Both countries applauded their growing trade relationship and stated their
intent to meet again in 2020.
Officials from the United
States and Thailand met on July 7, 2019, in Bangkok, Thailand, under their TIFA
to discuss their bilateral trade relationship. The United States discussed the
importance of reducing the U.S. deficit in its trade in goods with Thailand. Both
parties were also interested in discussing matters relating to pork market
access under the U.S. GSP and labor rights in Thailand. The United States
raised issues regarding agriculture, customs, IP protection and enforcement,
and labor.
[465]
Tunisia highlighted the
positive impact that the United States has had on Tunisia’s economy, noting
Tunisia’s special attention to its access to the U.S. GSP and its receipt of
U.S. technical assistance focused on franchising, public procurement, and
technology transfer. The United States also congratulated the Tunisian
government on its economic reforms, which the Tunisian government underscored
by highlighting its recent recognition by the World Bank’s
Doing Business
Report
as one of the best places to do business.
[467]
Uruguay
On June 13, 2019, the United
States and Uruguay convened the eighth meeting of the Bilateral Trade and
Investment Council in Washington, DC. Officials discussed issues such as trade
facilitation, regulatory trade barriers, investment and trade in services, IP
protection, and agricultural questions, including biotechnology.
[468]
This chapter summarizes developments related to U.S. free
trade agreements (FTAs) during 2019.
[469]
It describes trends in U.S. merchandise trade with FTA partners, highlights the
status of U.S. FTA negotiations during the year, and summarizes major
activities involving the North American Free Trade Agreement (NAFTA), the U.S.Korea
Free Trade Agreement (KORUS FTA), and other U.S. FTAs in force during 2019.
The United States was party to 14 FTAs involving a total of
20 U.S. trading partners as of December 31, 2019. Starting with the most
recent, the FTAs in force during 2019 were the U.S.-Panama Trade Promotion
Agreement (TPA) (entered into force in 2012); the U.S.-Colombia TPA (2012); the
U.S.-Korea FTA (2012); the U.S.-Peru TPA (2009); the U.S.-Oman FTA (2009); a
multiparty FTA with the countries of Central America and the Dominican Republic
(CAFTA-DR) that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, and Nicaragua (for which the agreement entered into force 2006–07)
and Costa Rica (2009); the U.S.-Bahrain FTA (2006); the U.S.-Morocco FTA
(2006); the U.S.-Australia FTA (2005); the U.S.-Chile FTA (2004); the
U.S.-Singapore FTA (2004); the U.S.-Jordan FTA (2001); NAFTA, with Canada and
Mexico (1994); and the U.S.-Israel FTA (1985).
Total two-way merchandise trade between the United States
and its 20 FTA partners was $1.6 trillion in 2019, accounting for 39.6 percent
of total U.S. merchandise trade with the world.
[470]
The value of
U.S. exports to FTA partners totaled $766.6 billion, a 2.0 percent decrease
from $782.3 billion in 2018. This rate of decrease was greater than the 1.2
percent rate of decrease for total U.S. exports to the world in 2019. U.S.
imports from FTA partners were valued at $874.9 billion in 2019, a 1.5 percent
increase from $861.8 billion in 2018. The U.S. merchandise trade deficit with
all FTA partners increased 36.2 percent to $108.3 billion in 2019, an increase that
substantially exceeded the 7.0 percent increase in this deficit in 2018 (tables
5.1
–
5.3).
U.S. trade with the two NAFTA countries (Canada and Mexico)
continued to contribute the most to overall U.S. trade with FTA partners. In
2019, these countries accounted for $1.2 trillion, or 74.7 percent, of total
U.S. merchandise trade with its FTA partners. From 2018 to 2019, the value of
U.S. exports to NAFTA countries decreased 2.9 percent ($16.5 billion) to $548.8
billion. U.S. imports from NAFTA countries rose 2.0 percent ($13.0 billion), to
$677.8 billion in 2019. As a result, the U.S. merchandise trade deficit with
its NAFTA partners increased by 29.5 percent to $129.1 billion in 2019.
U.S. merchandise trade with its non-NAFTA FTA partners was
valued at $415.0 billion in 2019, which was a 0.2 percent increase from 2018.
U.S. exports to these FTA partners increased 0.3 percent ($730 million), from $217.1
billion in 2018 to $217.9 billion in 2019. At the same time, U.S. imports from
these partners increased less than 0.1 percent ($105 million) from $197.0
billion in 2018 to $197.1 billion in 2019. U.S. exports increased more than
imports, causing the U.S. merchandise trade surplus with its non-NAFTA FTA
partners to increase 3.1 percent to $20.8 billion (tables 5.1–5.3).
Table 5.1
Total
U.S. merchandise exports to FTA partners, by FTA partner, 2017–19
FTA Partner
2017
2018
2019
2018–19
(Million $)
(Million $)
(Million $)
(% change)
NAFTA
525,980
565,211
548,756
-2.9
Canada
282,473
299,769
292,382
-2.5
Mexico
243,508
265,443
256,374
-3.5
Non-NAFTA
194,637
217,133
217,863
0.3
Israel
12,548
13,707
14,377
4.6
Jordan
1,921
1,581
1,474
-7.2
Chile
13,633
15,377
15,776
2.5
Singapore
29,649
32,747
31,550
-3.7
Australia
24,518
25,310
26,025
2.7
Morocco
2,218
3,011
3,479
13.4
Bahrain
898
2,042
1,408
-45.0
CAFTA-DR
a
30,586
32,715
32,750
0.1
Oman
1,984
2,415
1,938
-24.6
Peru
8,668
9,724
9,687
-0.3
South Korea
48,350
56,507
56,897
0.6
Colombia
13,375
15,158
14,780
-2.5
Panama
6,290
6,838
7,721
11.4
FTA
partner total
720,618
782,344
766,619
-2.0
Non-FTA partner
total
825,855
883,648
878,555
-0.6
Total U.S. exports
1,546,473
1,665,992
1,645,174
-1.2
FTA partner share of
total U.S. exports (percent)
46.6
47.0
46.6
-0.4
Source:
USITC DataWeb/USDOC (accessed February 14, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.6.
a
CAFTA-DR is a multiparty
FTA that includes the Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and Costa Rica, as well as the United States.
Table 5.2
U.S. general imports of merchandise from FTA
partners, by FTA partner, 2017–19
Source:
USITC
DataWeb/USDOC (accessed February 14, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.7.
a
CAFTA-DR is a multiparty
FTA that includes the Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and Costa Rica, as well as the United States.
Table 5.3
U.S. merchandise trade balance with FTA partners, by FTA partner, 2017–19
FTA Partner
2017
2018
2019
2018–19
(Million $)
(Million $)
(Million $)
(% change)
NAFTA
-85,874
-99,643
-129,079
-29.5
Canada
-16,578
-18,989
-27,346
-44.0
Mexico
-69,296
-80,654
-101,734
-26.1
Non-NAFTA
11,582
20,147
20,772
3.1
Israel
-9,394
-8,063
-5,130
36.4
Jordan
234
-232
-696
-200.0
Chile
3,082
3,989
5,382
34.9
Singapore
10,281
6,135
5,180
-15.6
Australia
14,469
15,187
15,171
-0.1
Morocco
982
1,458
1,898
30.2
Bahrain
-98
1,051
363
-65.5
CAFTA-DR
a
7,039
7,542
6,872
-8.9
Oman
918
1,140
778
-31.8
Peru
1,398
1,837
3,543
92.9
South Korea
-23,066
-17,690
-20,528
-16.0
Colombia
-112
1,375
670
-51.3
Panama
5,847
6,417
7,269
13.3
FTA
partner total
-74,292
-79,496
-108,307
-36.2
Non-FTA partner
total
-717,921
-793,851
-743,986
6.3
U.S. total trade balance
-792,213
-873,347
-852,293
2.4
Source:
USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.8.
a
CAFTA-DR is a
multiparty FTA that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Costa Rica, as well as the United States.
b
Negative percentage
changes indicate an increase in the U.S. trade deficit or a decrease in the
U.S. trade surplus. Positive percentage changes indicate a decrease in the
trade deficit or an increase in the trade surplus.
The value of U.S. imports entered under FTAs totaled $408.3
billion in 2019, accounting for nearly half (46.7 percent) of total U.S. merchandise
imports from FTA partners and for 16.3 percent of U.S. merchandise imports from
the world (tables 5.4–5.5).
[471]
The value of U.S. imports entered under FTAs in 2019
increased by less than 1 percent ($249 million, up from $408.0 billion in 2018).
FTA imports from Jordan grew 15.6 percent ($251 million), representing the
second-largest percentage increase. Imports from Bahrain under the FTA increased
by 18.1 percent ($92 million), representing the largest percentage increase;
however, they changed from a smaller baseline. Imports from South Korea
accounted for the greatest increase in value, rising by 9.2 percent ($3.1
billion to $36.4 billion). U.S. imports from
South
Korea
under KORUS increased most for cars, followed by refined petroleum products.
[472]
The increase
in U.S. imports of refined petroleum products from South Korea was the second-largest
increase in 2019 of refined petroleum imports, after those from Russia. Another
product for which U.S. imports from South Korea increased by a large amount was
plastics.
[473]
Imports from Mexico increased by 1.1 percent ($2.2 billion).
On the other hand, imports from Canada fell by 4.2 percent ($5.4 billion). In
total, combined U.S. imports from the NAFTA partners fell 1.0 percent ($3.2
billion). The largest decline in U.S. imports under any FTA was seen in imports
from Oman, which fell by 17.8 percent ($161 million).
Table 5.4
U.S. imports of merchandise for consumption entered
under FTA provisions, by FTA partner, 2017–19
FTA Partner
2017
2018
2019
2018–19
(Million $)
(Million $)
(Million $)
(% change)
NAFTA
313,644
329,799
326,623
-1.0
Canada
130,006
129,434
124,048
-4.2
Mexico
183,638
200,365
202,575
1.1
Non-NAFTA
72,722
78,246
81,671
4.4
Israel
2,738
2,882
2,882
0.0
Jordan
1,487
1,611
1,862
15.6
Chile
5,952
6,404
5,438
-15.1
Singapore
1,811
4,484
5,044
12.5
Australia
4,036
3,750
3,956
5.5
Morocco
205
238
257
8.0
Bahrain
583
510
602
18.1
CAFTA-DR
a
13,693
14,711
14,924
1.4
Oman
704
905
744
-17.8
Peru
3,301
3,694
3,534
-4.3
South Korea
33,147
33,280
36,354
9.2
Colombia
5,010
5,728
6,022
5.1
Panama
56
50
50
1.2
FTA
partner total
386,366
408,045
408,294
0.1
Non-FTA partner
total
1,939,796
2,142,896
2,093,749
-2.3
Total U.S. imports for
consumption
2,326,162
2,550,941
2,502,043
-1.9
Source: USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: An alternative presentation of
this table with additional data can be found in appendix tables
C.9
and
C.10.
a
CAFTA-DR is a multiparty FTA
that includes the Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and Costa Rica, as well as the United States.
Jordan remained the partner with the highest percentage of
imports entered under FTA provisions at 85.8 percent (table 5.5). Following
Jordan were Oman (64.2 percent), the CAFTA-DR countries (57.7 percent), and
Bahrain (57.6 percent). The NAFTA countries as a whole also had a high share of
the total imports for consumption, at 48.2 percent. The partners with the
smallest shares of total imports for consumption entered under FTA provisions
were Panama (11.2 percent), Israel (14.8 percent), and Morocco (16.3 percent).
Table 5.5
Share
of total U.S. merchandise imports for consumption entered under FTA provisions,
by FTA partner, 2017–19 (percent)
Source: USITC DataWeb/USDOC (accessed
May 9, 2019).
Note: An alternative presentation of
this table with additional data can be found in appendix table
C.11.
a
CAFTA-DR is a multiparty
FTA that includes the Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and Costa Rica, and the United States.
Following ministerial-level meetings in August 2018, the U.S. Trade
Representative (USTR) released a statement affirming both the United States’
and Japan’s commitments to promote trade between the two countries.
[474]
In October
2018, the President officially notified Congress of his intent to negotiate a
formal trade agreement with Japan.
[475]
The USTR’s negotiating objectives included improving the U.S. trade balance
with Japan, securing comprehensive market access for U.S. agricultural goods,
and securing commitments not to impose customs duties on digital products.
[476]
Negotiating
objectives also focused on obtaining more equitable trade and increasing
automotive jobs in the United States by addressing nontariff barriers to
imports of U.S. motor vehicles in Japan.
[477]
The first round of ministerial-level negotiations between USTR Lighthizer
and Japan’s Economic Revitalization Minister Toshimitsu Motegi took place on
April 15–16, 2019.
[478]
Both parties reached an agreement in principle regarding market access and
digital trade in August 2019 and announced final agreements in September 2019.
[479]
On October 7,
2019, in Washington, DC, the United States and Japan signed two separate
agreements: (1) the United States-Japan Trade Agreement (USJTA) and (2) the United
States-Japan Digital Trade Agreement (USJDTA).
[480]
On December 26, 2019, the President signed Proclamation 9974 implementing
the duty modifications agreed to in USJTA under his authority in section 103(a)
of the Bipartisan Congressional Trade Priorities and Accountability Act of
2015.
[481]
Section 103(a) authorizes the President to proclaim modifications in duties that
meet the requirements of section 103(a) without congressional approval.
[482]
Before signing
the agreements, in a letter sent to Congress on September 16, 2019, the
President stated that the United States would enter into USJDTA as an executive
agreement, which therefore also did not require congressional approval before
being implemented.
[483]
Both agreements took effect beginning January 1, 2020.
U.S.-Japan Trade Agreement
USJTA contains 11 articles, 2 annexes, and 6 side agreements covering
merchandise trade. Much of the tariff reductions and side agreements pertain to
agricultural products. The agreement does not contain provisions on other
industries referenced in the USTR’s specific negotiating objectives, such as
automotive. In a joint statement following the announcement of USJTA, President
Trump and Prime Minister Abe stated their intention to enter a new round of
negotiations to address other, unaddressed trade restrictions, including those
on services and investment, as well as other issues.
[484]
The U.S.-Japan
Trade Agreement highlights include two key areas: (1) tariff reduction,
elimination, and country-specific quotas for U.S. agriculture exports to Japan,
and (2) tariff reductions for Japanese industrial and agricultural products.
[485]
USJTA Provisions Affecting U.S. Agricultural Exports to
Japan
. In total, new tariff elimination and reduction measures under USJTA
cover $7.2 billion of U.S. food and agricultural exports to Japan.
[486]
As part of
USJTA, Japan agreed to end tariffs on an estimated $4.3 billion in agricultural
products, with $1.3 billion eliminated on January 1, 2020.
[487]
Tariffs on the
remaining goods are to be eliminated through staged tariff reduction.
As part of the trade agreement, the tariff rate on U.S. fresh and frozen
beef exports to Japan, valued at $2.0 billion in 2019, will be reduced from
38.5 percent to 9 percent between 2020 and 2035.
[488]
At the same
time, U.S. beef exports will be subject to an annual country-specific safeguard.
The safeguard will begin at 242,000 metric tons and will grow by 4,840 metric
tons per year, except for the years 2030–34, during which the safeguard limit
will grow by 2,420 metric tons per year.
[489]
In addition to beef exports, tariffs on U.S. exports of certain pork
products, such as muscle cuts and processed pork products, will be eliminated
through staged tariff reductions. Other fresh and frozen pork exports will be
subject to reductions in maximum gate price duties from 482 yen ($4.50) to 50
yen ($0.47) per kilogram by 2029.
[490]
In addition to the reductions in tariff rates for U.S. exports of pork
products, Japan will alter its pork safeguard mechanism with the United States
to mirror Japan’s arrangement with partner countries under the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
[491]
The United
States exported $1.5 billion in pork to Japan in 2019.
[492]
Other products, such as wheat, malt, processed cheese, whey products, and
sugars and starches, were granted preferential market access through the creation
of U.S.-specific quotas.
[493]
USJTA provides additional market access for U.S. exports of poultry and egg
products, dairy, and horticultural products, as well as grains and oilseeds,
through immediate and staged tariff reductions along with the creation of U.S.-specific
quotas.
[494]
The United States also agreed to modify its global World Trade
Organization (WTO) beef tariff-rate quota as part of USJTA. It is eliminating
its 200-ton specific quota allocation for beef imports from Japan while
increasing the quota allocation for beef imports from “other countries or
areas” to 65,005 metric tons. Doing so will allow Japan to compete with other
international beef producers that export to the United States under the “other
countries or areas” quota allocation.
[497]
U.S.-Japan Digital Trade Agreement
USJDTA is composed of 22 articles and a side letter covering interactive
computer services. The agreement’s highlights include two key areas: (1)
prohibitions on digital trade tariffs and restrictions of cross-border data
flows, and (2) agreements on protections for consumers.
Prohibitions on digital trade tariffs and
restrictions of cross-border data flows.
[498]
The agreement contains several prohibitions, subject
to certain general exceptions. For example, neither party to
USJDTA can impose customs duties on electronic submissions between the parties.
In addition, neither party may prohibit or restrict the electronic transfer of
information that is for the conduct of the business of a covered person or
enterprise, except as necessary to achieve a legitimate public policy objective.
Additionally, USJDTA prohibits either partner from requiring computing
facilities to be located in the partner country where business is being
conducted.
[499]
Likewise, neither party can require a person of the other party to transfer or
give access to source code of software owned by that person as a condition for
conducting business in its territory.
[500]
Protections for consumers.
As part of
USJTDA, each party is required to adopt or maintain consumer protection laws to
combat digital fraud.
[501]
Each party must also maintain a legal framework for protecting digital
consumers’ personal information.
[502]
Moreover, parties must give digital consumers protections against receiving
unsolicited commercial electronic messages.
[503]
On November 15, 2018, USTR announced a request for public
comment on a proposed U.S.-European Union (EU) trade agreement. As with the
U.S.-UK trade agreement, USTR invited comments on relevant barriers to trade,
economic costs of tariff removal to U.S. producers and consumers,
product-specific barriers, customs issues, and other nontariff barriers in
order to help it develop its negotiating objectives for a U.S.-EU trade
agreement.
[504]
A public hearing on these negotiating objectives was held on December 14, 2018,
with testimony provided by industry representatives from the agriculture,
biotechnology, manufacturing, and telecommunications and software sectors,
among others.
[505]
After considering public comments and hearing testimony, USTR published
negotiating objectives for a trade agreement with the EU in January 2019. USTR
identified regulatory compatibility to facilitate U.S. exports and services as
a goal, naming market access in the pharmaceutical, medical devices and
telecommunications sectors specifically.
[506]
Following the publication of U.S. negotiating objectives, EU
Trade Minister Cecilia Malmström and USTR Robert Lighthizer met for bilateral
discussions in Washington, DC, on January 8, January 10, and March 6, 2019,
meeting again in Paris on May 22, 2019.
[507]
In 2019, the two economies made progress towards reducing barriers to
transatlantic trade, especially in the areas of eliminating certain industrial
tariffs, strengthening cooperation on regulatory issues and standards, and
increasing U.S. exports of soybeans and liquid natural gas to the EU.
[508]
To implement certain elements of the July 25, 2018, joint
statement, the European Commission needed specific negotiating mandates to be
authorized by the European Council, which is composed of government ministers
from each EU member state.
[509]
In preparation for negotiations on industrial tariffs and on product conformity
assessment, on January 18, 2019, the European Commission submitted draft
negotiating mandates to the European Council for member state approval,
[510]
which was
needed before trade negotiations could begin.
[511]
On March 14,
2019, the European Parliament rejected a draft resolution to recommend the
opening of EU-U.S. trade negotiations on industrial tariffs and on product
conformity assessment. However, such rejections by Parliament are not binding.
On April 15, 2019, the European Council approved mandates for the European
Commission to open negotiations on the elimination of tariffs for industrial
goods and on conformity assessment.
[512]
Instances of bilateral cooperation on the issue of standards
and regulatory issues also occurred in 2019, led by discussions of regulatory
issues at technical-level meetings in Brussels on February 21–22, 2019, and in
Washington, DC, on May 5–6, 2019.
[513]
Progress was made in this area at the sectoral level as well. In July 2019, the
United States and the EU formally expanded the scope of a 1998 mutual
recognition agreement (MRA) for conformity assessment of industrial products to
include pharmaceutical inspections for human medicines. Under the expansion,
the United States and the EU now recognize drug inspections completed within
each other’s borders. The expansion was launched on November 1, 2017, with the
entry into force of a revised Annex to the MRA on good manufacturing practice
inspections and batch certification of human and veterinary medicines. Two
tasks remained for the U.S. Food and Drug Administration: (1) concluding
favorable capability assessments of the regulatory authorities in each EU
member state, and (2) determining that all were capable of conducting
inspections that meet with U.S. regulations. Once these tasks were completed,
the human medicines component of the MRA became fully operational.
[514]
On January 29, 2019, the European Commission recognized U.S.
soybeans certified under the U.S. Soybean Sustainability Assurance Protocol
(SSAP) as meeting the technical requirements for use in EU biofuel production.
[515]
With
recognition, certified U.S. soybeans can be used in EU biofuel production and
count toward EU renewable energy targets.
[516]
EU recognition of the U.S. SSAP scheme expires on July 1, 2021.
[517]
On May 2, 2019, the U.S.-EU Energy Council convened a
ministerial-level meeting in Brussels of U.S. and European representatives from
the liquid natural gas sector and government officials, including the U.S.
Ambassador to the EU, Gordon Sondland, and U.S. Secretary of Energy Rick Perry.
Discussions focused on promoting the use of U.S. liquid natural gas in the EU.
[518]
Between 2018
and 2019, liquid natural gas exports to the EU increased by 374.4 percent, from
$762.7 million to $3.6 billion.
[519]
On November 16, 2018, the USTR announced a request for
public comment on a proposed U.S.-UK trade agreement. To help in the
development of its negotiating objectives, USTR specifically invited comments
on relevant barriers to trade, the economic costs of tariff removal to U.S.
producers and consumers, product-specific barriers, customs issues, and other
nontariff barriers.
[520]
USTR held a public hearing on negotiating objectives for a U.S.-UK trade
agreement on January 29, 2019, with testimony of industry representatives from
the agriculture, biotechnology, manufacturing, pharmaceutical,
telecommunications and software sectors, among others.
[521]
After considering public comments and hearing testimony,
USTR published its negotiating objectives for a trade agreement with the UK in
February 2019.
[522]
The negotiating objectives are similar to those put forth for the potential
trade agreement with the EU. In both cases, USTR identified regulatory
compatibility to facilitate U.S. exports and services as a goal, naming market
access in the pharmaceutical, medical devices, and telecommunications sectors
specifically.
Although both U.S.-UK and U.S.-EU objectives set the
improper use of geographical indications as an important negotiating issue,
USTR listed objectives regarding intellectual property for U.S.-UK agreement
negotiations beyond those established for an agreement between the United
States and EU.
[523]
In the U.S.-UK objectives, a greater emphasis is placed on establishing a
transparent standard of protection—similar to that under U.S. law—which keeps
pace with developments in emerging technologies, and observance of
international treaties reflecting best practices for intellectual property
protection and enforcement.
[524]
Before its exit from the EU on January 31, 2020, the UK
could not enter into a new trade agreement with non-EU countries because the EU
has exclusive authority over its Common Commercial Policy, including its trade
policy.
[525]
However, during 2019, discussions between the UK and the United States on
strengthening bilateral trade and investment ties were held under two separate
forums: the U.S.-UK Trade and Investment Working Group, and the U.S.-UK Small
and Medium-sized Enterprise (SME) Dialogue.
The sixth meeting of the U.S.-UK Trade and Investment
Working Group took place on July 10–11, 2019, in London.
[526]
At this
meeting, the Working Group discussed the mutual recognition agreements signed
by the United States and the UK earlier in the year. These agreements set
policy for specific products that are currently covered in existing agreements
between the United States and the EU and were designed to ensure that trade between
the two partners was not disrupted when the UK left the EU. Separate mutual
recognition agreements for wine and spirits were signed on January 31, 2019,
with two more signed for pharmaceuticals and marine equipment on February 14,
2019.
[527]
In advance of the Working Group meeting, the UK Secretary of State for
International Trade, Liam Fox, and USTR Lighthizer also met on July 8, 2019, in
Washington to discuss the progress of the Working Group.
[528]
The fourth meeting of the U.S.-UK SME Dialogue was held in
Bristol, UK, on July 9, 2019. Topics discussed at the meeting included the
obstacles faced by SMEs engaging in bilateral U.S.-UK trade, opportunities for
enhancing services and digital trade through the use of emerging technologies,
and best business practices for U.S.- and UK-based SMEs working in the fields
of artificial intelligence, virtual reality, and mobile applications.
[529]
Further work in 2019, to encourage a dialogue among U.S. and
UK SMEs in the marine technology sector, took place under the auspices of the
U.S.-UK Trade and Investment Working Group. On April 8, 2019, in Southampton,
UK, the United States and the UK held an exchange on best practices among
marine technology SMEs. Participants in the exchange included SMEs, industry
experts, and government officials. Discussions focused on the public and
private support available to marine technology SMEs seeking access to U.S. and
UK markets, and the mutual recognition agreement on marine equipment that the
two countries signed in February.
[530]
Later in 2019, President Trump and UK Prime Minister Boris
Johnson met at the margins of the Group of Seven (G7) meeting in Biarritz,
France, to discuss opportunities to deepen the U.S.-UK trade relationship. To
this end, the two leaders issued a joint statement on August 25, 2019,
directing the Director of the U.S. National Economic Council Larry Kudlow and
UK Cabinet Secretary Mark Sedwill to form a Special Relationship Economic
Working Group. They stated that the group will develop “market-oriented
principles for economic growth” and increase cooperation between the two
economies on issues impacting the modern marketplace.
[531]
The United States, Mexico, and
Canada entered into negotiations for the United States-Mexico-Canada Agreement
(USMCA) on August 16, 2017, in Washington, DC. The two primary goals of the negotiations
were (1) to update NAFTA with modern provisions on digital trade, intellectual
property, cybersecurity, good regulatory practices, and treatment of
state-owned enterprises, and (2) to rebalance NAFTA in a way that makes it
easier to reduce the U.S. trade deficit with Canada and Mexico.
[532]
The
negotiations concluded on November 30, 2018, when the United States, Mexico,
and Canada signed the agreement in Buenos Aires, Argentina.
[533]
This section
provides a timeline of recent developments through April 2020.
The U.S. Trade
Representative and some members of Congress negotiate proposed changes to
USMCA to address ongoing congressional concerns.
Early 2019
Washington, DC
Mexico
ratifies USMCA.
June 2019
Mexico City
The United States, Mexico,
and Canada agree to a protocol of amendment to USMCA.
December 10, 2019
Washington, DC
The Mexican Senate
approves the amendments.
December 12,
2019
Mexico City
The United States, Mexico,
and Canada sign a protocol of amendment to USMCA; the updated text is
released. The President submits to Congress the proposed USMCA implementing
legislation, which also reflects the recent amendments.
December 13, 2019
Washington, DC
USMCA
legislation is passed by the House Ways and Means Committee.
December 17,
2019
Washington, DC
USMCA legislation is
passed by the full House.
December 19, 2019
Washington, DC
USMCA
legislation is passed by the Senate Finance Committee.
January 7,
2020
Washington, DC
USMCA legislation is
passed by the full Senate.
January 16, 2020
Washington, DC
The President
signs USMCA into law.
January 29,
2020
Washington, DC
The Parliament of Canada
concludes the final ratification of USMCA.
March 13, 2020
Ottawa, ON
Canada
notifies the United States and Mexico that it has completed its domestic
ratification process for USMCA.
USMCA was negotiated with Canada
and Mexico over the course of two years and signed by the three parties on
November 30, 2018 (table 5.6). Before its signing, it went through a year of
consultation and negotiations between the USTR and members of Congress. In
2019, in response to ongoing concerns from members of Congress, the
Administration and members of Congress negotiated changes to USMCA. After the
two sides reached a consensus on amendments in late 2019, USTR then negotiated amendments
with Canada and Mexico that were included in the USMCA Protocol of Amendment
signed by the United States, Mexico, and Canada on December 10, 2019. On
December 12, 2019, Mexico approved the amendments after having previously
ratified the signed USMCA in June 2019. The final text of USMCA was released by
USTR on December 13, 2019.
[534]
Shortly afterwards, the implementing legislation was passed by the House Ways
and Means Committee on December 17, 2019; by the full House on December 19,
2019 (by a vote of 385–41); by the Senate Finance Committee on January 7, 2020;
and by the full Senate on January 16, 2020 (by a vote of 89–10).
[535]
The President
signed USMCA into law on January 29, 2020.
[536]
A detailed summary of USMCA in comparison to NAFTA, from before the protocol of
amendment was signed, can be found in the Commission’s
Year in Trade 2018
report.
[537]
The 2019 Protocol of Amendment to
USMCA focuses on changes in five areas of the agreement: (1) dispute settlement;
(2) labor provisions; (3) environmental provisions; (4) intellectual property
rights (IPRs); and (5) motor vehicle rules of origin (ROOs):
[538]
On dispute
settlement, the revisions prevent parties from blocking
the establishment of a dispute settlement panel by ensuring the formation of a
panel in cases where a party refuses to participate in the selection of
panelists.
On labor, a new “rapid response” mechanism was introduced, which
provides for an independent three-person panel to request on-site verification
at “covered facilities” if denial of freedom of association and collective
bargaining rights is suspected.
[539]
In addition, a violation of worker rights is presumed to affect trade and
investment between the parties, unless otherwise demonstrated.
[540]
On environment, while the original text of the agreement required
parties to implement obligations under certain multilateral environmental
agreements (MEAs), the protocol added language similar to language in earlier
FTAs specifying that the parties shall “adopt, maintain, and implement laws,
regulations, and all other measures” to fulfill their obligations undertaken in
seven MEAs to which they are a party.
[541]
As with labor violations, an environmental violation is presumed to affect trade
and investment between the parties, unless otherwise demonstrated.
[542]
On IPRs, the amended agreement removes the obligation to have a
10-year period of data exclusivity for biologics, the period under which a “biosimilar”
cannot use clinical trials generated by the branded biologic drug to obtain
marketing approval.
[543]
On motor vehicle rules of origin, the addition of the requirement
that all steel manufacturing processes
[544]
must occur within North
America for steel to be considered originating, beginning at year seven of the
agreement.
Mexico’s Congress approved the
protocol of amendment on December 12, 2019. At the end of 2019, the revised
agreement was still pending approval by the United States and Canada.
[545]
However, as
mentioned above, at the beginning of 2020, it passed the U.S. Senate, and the President
signed it on January 29, 2020. On April 3, 2020, Canada notified the United
States and Mexico that it had completed its domestic ratification process, and
Mexico announced it was ready to implement the agreement. Mexico also submitted
a request to allow its automotive industry more time to comply.
[546]
NAFTA remained in effect until the
new agreement entered into force.
[547]
USMCA entered into force on July 1, 2020.
[548]
The North American Free Trade
Agreement (NAFTA) between the United States, Canada, and Mexico entered into
force on January 1, 1994. NAFTA was still in effect throughout 2019 and remained
in effect until it was superseded by USMCA on July 1, 2020.
An update on NAFTA activities is provided below for 2019.
The Commission for Labor
Cooperation (CLC), composed of a ministerial council and an administrative
secretariat, was established under the North American Agreement on Labor
Cooperation (NAALC). The NAALC is a side agreement to NAFTA that aims to
promote effective enforcement of domestic labor laws and to foster transparency
in administering them. The CLC is responsible for implementing the NAALC.
Each NAFTA partner has a national
administrative office (NAO) within its labor ministry that acts as the point of
contact for the other parties, the administrative secretariat, other government
agencies, and the public.
[549]
Another NAO function is to receive and respond to public communications on
labor law matters arising in other NAALC countries. The United States’ NAO is
the Office of Trade and Labor Affairs in the U.S. Department of Labor (USDOL).
Each NAO sets its own domestic procedures for reviewing and responding to
public communications. Since 2010, the NAOs have also undertaken the activities
of the secretariat, including carrying out the cooperative activities of the
CLC. These activities range from seminars and conferences to joint research
projects and technical assistance.
[550]
NAALC remains in force in 2019,
pending final ratification of USMCA, and then the labor provisions in USMCA
will replace it.
[551]
There were three submissions under review at the NAALC in 2019, the same number
as the previous two years.
[552]
One, filed in 2011, originated in the United States and involved Mexico. Two
originated in Canada; one, filed in 2011, involved Mexico, and the other, filed
in 2008, involved the United States.
[553]
On December 22, 2018, Mexico’s
Executive Branch submitted legislation to its Congress to amend Mexico’s
Federal Labor Law by implementing constitutional reforms to the labor justice
system enacted in February 2017. One of the reforms consists of transferring
the authority to adjudicate labor disputes from the current tripartite
Conciliation and Administrative Boards to new labor courts, while transferring
the registration of unions and collective bargaining agreements to a new
federal institution.
In early 2019, USTR Lighthizer
consulted with the Mexican government about reforming the final legislation in
order to improve labor standards, protect Mexican workers’ rights, and comply
with Mexico’s obligations under USMCA.
[554]
USMCA’s labor provisions have been incorporated into the text of the agreement,
including an annex that requires Mexico to overhaul its system of labor
justice, and they are fully enforceable. For example, under these new
provisions, workers will have the right to secret ballot votes to elect and
challenge union leadership and to improve new and existing collective
bargaining agreements.
[555]
For additional highlights of the labor provisions under USMCA, see the previous
section.
The Commission for Environmental
Cooperation (CEC) was established under Article 8 of the North American
Agreement on Environmental Cooperation (NAAEC). The NAAEC is a side agreement
to NAFTA that came into force at the same time as NAFTA; it was designed to
support NAFTA’s environmental goals, which are to protect and improve the
environment, support sustainable development, and increase cooperation in reaching
these goals.
[556]
The CEC was established to support cooperation among the parties to reach these
goals.
[557]
Articles 14 and 15 of NAAEC offer
citizens and nongovernmental organizations a mechanism to help enforce
environmental laws in the NAFTA countries. Article 14 governs allegations of
failures to effectively enforce environmental laws submitted for review by the
CEC. It sets out guidelines about criteria for submissions and for requesting a
response from the relevant NAFTA party regarding the submission. Article 15
outlines the CEC Secretariat’s obligations in considering the submissions and
the development of a factual record concerning the allegations raised in the
submissions.
[558]
At the end of 2019, five
submissions remained active under Articles 14 and 15. Two involved Canada, with
one submitted in 2017 and the other in 2018, and three involved Mexico, all
submitted in 2018 (table 5.7).
[559]
The
Secretariat posted a request for information relevant to the factual record
on its website.
Metrob
ú
s Reforma
SEM–18–002
February 2, 2018
Mexico
The Secretariat informed
Council (the governing body of the CEC) that the Secretariat considers that
the submission warrants development of a factual record.
Hydraulic Fracturing
in Nuevo Le
ó
n
SEM–18–003
October 3,
2018
Mexico
The
Secretariat determined that the submission met the criteria of Article 14(1)
and requested a response from the concerned government party in accordance
with Article 14(2).
City Park Project
SEM–19–002
April 4, 2019
Mexico
The Secretariat received a
response from the concerned government party and began considering whether to
recommend a factual record.
Radiation
Exposure in Los Altares
SEM–19–001
April 22, 2019
Mexico
The Secretariat
received a response from the concerned government party and began considering
whether to recommend a factual record.
a
Refers to the country
against which an allegation was filed.
For the quarter century that NAFTA
has been in force, the governments of Canada, Mexico, and the United States, in
collaboration with civil society organizations across North America, have
worked together through the CEC to advance shared environmental priorities. On
June 25, 2019, the 26
th
regular session of the CEC Council and Meeting of
the Joint Public Advisory Committee (JPAC) was held in Mexico City, Mexico. The
session focused on “Extreme Events and Building Disaster-Resilient Communities
in North America.”
[560]
In the context of the joint forum, extreme events are defined as floods,
drought, hurricanes, wildfires, and other extreme weather events presenting
risks to human and natural ecosystems in Canada, Mexico, and the United States.
The forum focused on how to collectively form a strategic partnership, create
collaborative networks, and identify the necessary socio-technological
innovations needed for early preparedness and effectiveness to diverse
communities confronted with or at risk of an extreme weather event.
The dispute settlement provisions
of NAFTA—found in NAFTA’s Chapter 11 (Investment) and 19 (Review and Dispute
Settlement in Antidumping/Countervailing Duty Matters)—cover a variety of
areas.
[561]
The sections below describe developments during 2019 in NAFTA Chapter 11
investor-state disputes and Chapter 19 binational reviews of final
determinations of antidumping and countervailing cases. The
interactive
dashboard
in appendix A presents an overview of developments in NAFTA
Chapter 19 dispute settlement cases to which the United States was a party in
2019.
NAFTA Chapter 11 Dispute Settlement Developments
Chapter 11 of NAFTA includes
provisions designed to protect cross-border investors and their investments. It
establishes a mechanism for settling investment dispute that seeks to assure a
“minimum standard of treatment” for investors of the parties.
[562]
An individual
investor who alleges that a NAFTA country has breached its investment
obligations under Chapter 11 may pursue arbitration through internationally
recognized channels.
[563]
A key feature of the Chapter 11 arbitral provisions is the enforceability in
domestic courts of final awards made by arbitration tribunals.
[564]
In 2019, there
were five active Chapter 11 cases filed against Canada by U.S. investors, and
four filed against Mexico by U.S. investors.
[565]
There was only one case filed against the United States.
[566]
NAFTA Chapter 19 Dispute Panel Reviews
Chapter 19 of NAFTA provides for a binational panel to
review final determinations made by national investigating authorities in
antidumping and countervailing duty cases.
[567]
Such a panel serves as an
alternative to judicial review by domestic courts and may be established at the
request of any involved NAFTA country.
[568]
At the end of 2019, the
NAFTA Secretariat listed one binational panel as active under Chapter 19 (table
5.8). The United States filed one case contesting Mexico’s determinations on
the antidumping duty administrative review for large residential washers. The
interactive
dashboard
in appendix A lists all chapter 19 panels with developments in
2019, including those that were terminated.
In 2019, U.S. officials met
with FTA partners for discussions on several matters, including labor and
environmental issues, enhancing trade and investment, and dispute settlement.
[569]
Highlights
of these consultations are presented below.
To date, the United States
has implemented 14 FTAs with a total of 20 countries, beginning in
1985.
Of the 14, 12 contain labor
provisions to protect worker rights and facilitate cooperation on labor issues,
and another includes such provisions in a supplemental agreement.
[570]
The USDOL’s
Bureau of International Labor Affairs (ILAB) monitors reports and submissions
made under the labor provisions of U.S. trade agreements.
[571]
Again,
12 of the 14 FTAs contain environmental provisions to facilitate
cooperation on environmental matters and ensure that domestic environmental
laws are effectively enforced, and another includes such provisions in a
supplemental agreement.
[572]
Highlights of the past year’s activities related to these labor and
environmental provisions are discussed below.
The U.S.-Australia Free Trade Agreement was signed on May
18, 2004, and entered into force on January 1, 2005.
[573]
On April
30, 2019, members of the United States-Australia FTA Joint Committee, including
those from USTR and the U.S. Departments of Commerce, Treasury, and State, met
with their Australian counterparts to discuss intellectual property,
investment, and digital trade issues.
[574]
In concert with the joint committee meeting, U.S. government representatives
and business leaders met in Sydney, Australia, to discuss ways to further
enhance Indo-Pacific economic engagement in the digital economy and
cybersecurity.
[575]
The dialogue highlighted the vital nature of a strong U.S.-Australia economic
relationship. In another example of the U.S.-Australia economic relationship,
the United States, Australia, and Japan announced multiple joint infrastructure
projects at the 2019 Indo-Pacific Business Forum in November 2019. These
projects included the Blue Dot Network, aimed at advancing standards for internationally
recognized, high-quality infrastructure standards, as well as a collection of
projects worth $400 million to bolster the Papua New Guinea Electrification
Partnership.
[576]
Finally, on November 18, 2019, the United States and
Australia signed a “first-of-its-kind” memorandum of understanding on best
practices for sustainable energy mineral resources.
[577]
This memorandum
of understanding was born out of the new Energy Resources Governance Initiative
launched by the U.S. Department of State on June 11, 2019, and convened with
partners at the United Nations General Assembly on September 26.
[578]
The U.S.-Bahrain Free Trade Agreement was signed September
14, 2004, and entered into force on August 1, 2006.
[579]
In 2019,
Bahrain continued to implement commitments established by the U.S.-Bahrain
Memorandum of Understanding on Trade in Food and Agriculture Products, signed
in 2018.
[580]
These commitments include Bahrain’s acceptance of existing U.S. export
certifications for food and agricultural products.
[581]
Labor
Throughout 2019,
representatives of the United States and Bahrain continued to discuss
various labor rights concerns which stemmed from consultations that began under
the U.S.-Bahrain FTA in 2013.
[582]
These labor rights concerns included combating child and forced labor, and U.S.
pressures for the government of Bahrain to follow up on its commitment to
establish a unit within the Ministry of Labor to ensure compliance by employers
with employment discrimination laws.
[583]
CAFTA-DR was signed on May
28, 2004, by El Salvador, Honduras, Nicaragua, Guatemala, and Costa Rica; it
was signed with the Dominican Republic in August 2004.
[584]
The CAFTA-DR
had entered into force with all parties by January 1, 2009.
[585]
Trade Facilitation for Agricultural Goods and Textiles
In 2019 several regulatory
developments occurred that had the potential to affect agricultural and textile
trade under CAFTA-DR. On May 16, 2019, at the urging of USTR and other U.S.
government agencies, Guatemala implemented a policy change allowing corrections
to CAFTA-DR certificates of origin (COOs).
[586]
Initially, the CAFTA-DR negotiators did not create a template or format for a
COO. This lack of standardization gave exporters and importers a level of
flexibility, but also caused confusion among customs officials, leading to
rejections and lengthy appeals processes. The 2019 policy change streamlined
the process by mandating that notification of a COO rejection must be made
using a standardized form, and that a COO may be corrected multiple times
within a reasonable time period.
[587]
Similar improvements in regulatory efficiency and enforcement of CAFTA-DR
tariff-rate quotas increased market access for U.S. dairy products in El
Salvador and Honduras, potatoes in Costa Rica, and rice products in Nicaragua
in 2019.
[588]
In addition, in the July 2019
Coordinator Committee meeting, the CAFTA-DR countries granted requests from
USTR and U.S. Department of Agriculture (USDA) that food additives approved by
the U.S. Food and Drug Administration be added to the Central American
Technical Regulation.
[589]
CAFTA-DR countries took further steps to lower technical barriers to
agriculture trade during the November 2019 Coordinator Committee meeting by
jointly establishing the Agricultural Review Commission. This body serves to
carry out the exchange of data and review of the agreement’s impact on member
countries’ agricultural trade.
In 2019, the U.S. Department of
Commerce (USDOC) implemented a trade facilitation program called “Central
America Customs, Border Management, and Supply Chains,” to provide technical
assistance to the governments of El Salvador, Guatemala, and Honduras.
[590]
Similarly,
USDOC Commercial Law Development Program and USTR jointly implemented an El
Salvadorian textile competitiveness program, and conducted workshops on
industry competitiveness in global and regional supply chains and CAFTA-DR benefit
fulfillment.
[591]
These changes served two of the 2019 priority issues set out by the CAFTA-DR
sanitary and phytosanitary (SPS) and technical barriers to trade (TBT)
committees, to clarify and expedite import procedures for U.S. products while
also increasing the utilization of CAFTA-DR benefits.
On September 17, 2019, the U.S.
International Trade Commission published its 10th and final report on the U.S.
Earned Import Allowance Program (EIAP) for Dominican Republic textiles, noting
that the program was terminated in 2018 due to insufficient outcomes. The
report stated that the program did not provide enough incentives to
significantly boost Dominican apparel exports to the U.S. market, thus
justifying the program’s termination on December 1, 2018.
[592]
Labor
In 2019, the United States
continued to promote labor rights by supporting projects under the CAFTA-DR
Labor Cooperation and Capacity Building Mechanism, the Global Labor Program
administered by the U.S. Agency for International Development, and the labor
violence prevention programs in Guatemala and Honduras sponsored by the U.S.
Department of State.
[593]
The Dominican Ministry of Labor also continued to work toward recommendations
given in a 2013 USDOL report on the Dominican sugar industry. This work included
hiring 60 new labor inspectors to conduct direct outreach to sugarcane cutters
at all three major Dominican sugar companies and pursuing efforts to teach
three inspectors Creole, the most common language among Haitian workers.
[594]
In addition,
the Ministry of Labor established child labor committees in sugar-producing
regions to better identify children at risk of exploitation. A 2019 USDOL
evaluation of the electronic case management system and training plan within
the Dominican Ministry of Labor yielded a work plan for a USDOL-funded $5
million technical assistance project aimed at improving working conditions and
addressing child labor in agriculture.
[595]
In July 2019, the government
of Honduras issued an implementing regulation for a 2017 labor inspection law;
in August 2019, it issued a child labor referral mechanism.
[596]
During the
year, USDOL conducted five missions to Honduras.
[597]
These new
regulations and the U.S. government missions grew out of the 2015 multiyear
Labor Rights Monitoring and Action Plan, which set out standards that the
government of Honduras must achieve to improve the application of its labor
laws.
[598]
In September 2019, El
Salvador reinstated the tripartite Higher Labor Council, which is responsible
for carrying out tripartite consultations on international labor standards.
[599]
In October
2019, the U.S. Federal Mediation and Conciliation Services led a USDOL-funded
training with labor inspection supervisors at the Guatemalan Ministry of Labor
and Social Welfare, which included monitoring compliance of CAFTA-DR labor
obligations. This evaluation revealed weaknesses in the functioning of
Guatemala’s labors laws and resulted in the establishment of the Office of the
Prosecutor for Crimes against Justice Operators and Trade Unionists by the
Guatemalan Attorney General’s Office in December 2019.
[600]
Environment
On November 13–14, 2019, the
Environmental Affairs Council convened in Miami, Florida, to discuss its
continued work toward commitments made under the CAFTA-DR Environment Chapter.
[601]
Key topics
under discussion included collaboration among law enforcement agencies and
institutions to combat wildlife trafficking, illegal logging, and marine
debris, and to improve waste collection and management.
[602]
The
Secretariat for Environmental Matters, an independent body, received two new
submissions from the public claiming a failure to effectively enforce a
CAFTA-DR party’s environmental laws. The new submissions included the first
ever submitted by participants of legal clinics, a milestone achieved in part
by the Secretariat’s widespread public education about this monitoring
mechanism.
[603]
The Secretariat has received 43 such submissions since it was established in
2007.
[604]
The U.S.-Chile Free Trade
Agreement was signed June 6, 2003, and entered into force on January 1, 2004.
[605]
In March
2018, the Chilean government published a decision to initiate a safeguard
investigation on imports of whole dry milk, nonfat dry milk, and Gouda cheese.
While the investigation did not specifically target the United States, U.S.
exports of such products to Chile represented the largest market share.
[606]
In January
2019, with the engagement of USTR and USDA, Chile issued a decision not to
impose safeguard tariffs on these products. USTR estimated that this exempted
the U.S. product from tariffs on milk powder valued at over $21 million and
certain cheese valued at over $34.4 million.
[607]
Labor
In 2019, the United States
established a cooperative dialogue under the FTA’s labor cooperation mechanism
to promote information sharing and best practices on labor issues. Under the
auspices of the dialogue, USTR and USDOL led technical exchanges with
representatives from the Chilean Ministries of Trade and Labor.
[608]
Chile
continued to make advances beyond those profiled in USDOL’s 2018 report of
findings on the worst forms of child labor by establishing a new National Child
Labor Survey and risk identification model in 2019, sponsored by USDOL with
International Labour Organization (ILO) funding.
[609]
The U.S.-Colombia Trade
Promotion Agreement (TPA) was signed November 22, 2006, and entered into force
on May 15, 2012.
[610]
On
January 1, 2019, the eighth annual set of tariff reductions took effect for
industrial products with a 10-year phaseout period.
[611]
Other tariffs
on agricultural products, including sensitive agricultural products, remained
(reflecting a 15- to 19-year phaseout period).
[612]
On June 30, 2019, after
years of U.S. engagement, Colombia terminated its “1x1” truck scrappage policy.
[613]
This policy
had stipulated that after March 2013, new freight trucks over a certain weight
could legally be registered by showing that a new freight truck would
essentially be replacing an old freight truck of equal capacity.
[614]
Buyers of new
trucks that did not fulfill the 1x1 policy instead had to pay a registration
fee equivalent to 15 percent of the truck’s value.
[615]
The
termination of the policy resulted in a significant increase in U.S. freight
truck exports.
[616]
In 2019, the U.S.-Colombia
Free Trade Commission (FTC)—the TPA’s central oversight body—concluded
technical work to update the agreement’s rules of origin. These rules now
reflect 2007, 2012, and 2017 revisions to the Harmonized System (HS)
nomenclature for tariff goods. The United States and Columbia formalized the
FTC decision in February 2020.
[617]
Labor
In 2019, the Colombian
government took steps to address issues raised in the USDOL’s 2017 TPA Labor
Chapter report and the 2011 Colombian Action Plan Related to Labor Rights. The
steps included prosecuting cases of homicides of unionists and advancing the
application of an electronic file management system that tracks labor code
violations.
[618]
In July 2019, USTR and USDOL representatives jointly visited Colombia to
discuss a continuing collaboration to enact the 2017 USDOL report
recommendations.
[619]
USDOL further supported Colombia’s labor rights development through $24 million
worth of technical assistance projects to end child labor, improve working
conditions for small-scale miners, and strengthen civil society in 2019.
[620]
Environment
In July 2019,
the United States and Colombia selected an Executive Director to head
the Secretariat for Environmental Enforcement Matters.
[621]
The
secretariat’s purpose is to receive and record submissions from the public
alleging that Colombia is failing to effectively enforce its environmental
laws. In the months afterward, the two countries held joint events in Colombia
to spread awareness of the Secretariat and its public submission mechanism.
[622]
In 2019, the
U.S. continued to provide capacity building support to illegal logging and
mining prohibition programs under the U.S.-Colombia Environmental Cooperation
Work Program.
[623]
The U.S.-Israel Free Trade
Agreement was signed April 22, 1985, and entered into force on September 1,
1985.
[624]
The
United States-Israel Joint Committee is the central oversight body for the
agreement, but it has not met since February 2016.
[625]
On March
11–15, 2019, the two countries held the second round of negotiations on a
successor agreement to the 2004 U.S.-Israel Agreement on Trade in Agricultural
Products.
[626]
The agreement, which provides preferential market access in agricultural
products, was originally scheduled to expire in December 2008, and has been
renewed annually in lieu of a new agreement. According to USTR, the 2004
agreement provides Israel with duty-free access to 90 percent of agricultural
tariff lines, whereas Israel provides the United States with duty-free access
to only 72 percent.
[627]
Regarding non-agricultural U.S.-Israel trade, Israel amended import procedures
for U.S. automobile exporters in 2019 by accepting the Federal Motor Vehicle
Safety Standards.
[628]
This decision allowed U.S.-manufactured vehicles to enter the country without
undergoing retrofits.
The U.S.-Jordan Free Trade
Agreement was signed October 24, 2000, entered into force on December 17, 2001,
and was fully implemented as of January 1, 2010.
[629]
At the
last Joint Committee meeting on July 17, 2019, the United States urged Jordan
to (1) lift a ban on U.S. genetically modified food products, (2) prioritize
international over EU industrial standards, (3) adopt EU geographical
indications, and (4) host a consultative FTA subcommittee meeting to address
government procurement commitments.
[630]
The
U.S. Qualifying Industrial Zone program allows products with a certain amount
of Israeli content to enter the United States duty free if manufactured in
Jordan (this duty-free treatment is also true of such products when made in
Egypt or in the West Bank and Gaza).
[631]
In 2019, U.S. imports from Jordan under the Qualifying Industrial Zone program
had declined from their 2018 level, to about 1.0 percent of all U.S. imports
from Jordan covered by the FTA.
[632]
Labor
In 2013, the United States
and Jordan signed the Implementation Plan Related to Working and Living
Conditions of Workers in Jordan which addresses concerns about working
conditions in Jordan’s garment factories. In May 2019, Jordan passed multiple
amendments to the labor law prohibiting gender-wage discrimination and created
accommodations for workers with children.
[633]
Throughout 2019, the Jordanian Ministry of Labour also solicited input from
stakeholders to finalize and publish a directive to combat sexual harassment
and anti-union attitudes in the workplace. Although opportunities for further
improvement remain, the Ministry of Labour has continued to work with the ILO’s
Better Work program to train 17 labor inspectors, create awareness of
international labor standards, and improve the transparency of garment factory
audits. In addition, the ministry expanded its internal “train-the-trainer”
program aimed at developing mediation and collective bargaining techniques.
[634]
The U.S.-Korea Free Trade Agreement (KORUS) was signed on
June 30, 2007, and entered into force on March 15, 2012.
[635]
In 2018, the
United States and South Korea negotiated modifications and amendments to the
original agreement. These amendments included extending the phaseout of U.S.
tariffs and the harmonization of standards and testing practices for certain
automotive products; changes to South Korean customs procedures; commitments by
South Korea on the nondiscriminatory treatment of pharmaceuticals;
clarification of the investor-state dispute settlement mechanism; new
provisions to increase the transparency of trade remedy procedures; a country
exemption for South Korea from the steel import tariffs imposed by Proclamation
9705; and preliminary changes to the treatment of rules of origin for South
Korean textiles.
[636]
Both parties signed these amendments to KORUS on September 14, 2018, in New
York City, and the modified agreement entered into force on January 1, 2019.
[637]
On March 14, 2019, at the
request of the USTR, the Commission instituted Investigation No. FTA-103-032,
U.S.-Korea
FTA: Advice on Modifications to Certain Textile and Apparel Rules of Origin
,
to provide advice on certain proposed modifications to the KORUS rules of
origin for certain textile and apparel goods.
[638]
On July 24,
2019, the Commission transmitted a report containing its advice to the
President. The Commission advised that the proposed modifications to KORUS’s
rules of origin are likely to have a negligible effect on U.S. imports and U.S.
exports, while potentially impacting the U.S. industry that produces some of
the affected articles.
[639]
Additional USTR engagement
with South Korea throughout 2019 resulted in the successful resolution of a
wide range of outstanding issues. These outcomes included South Korea (1)
lifting burdensome localization requirements for data and computer facilities;
(2) addressing specific nontariff barrier issues to improve opportunities for
U.S. auto manufacturers, as well as specific SPS barriers; and (3) resolving a
longstanding issue relating to inspections of U.S. exports by the South Korea
customs service to verify these exports’ origin so that they can qualify for
tariff preferences under KORUS.
[640]
Competition
On March 15, 2019, USTR requested its first-ever consultations
with South Korea under KORUS Chapter 16 on Competition-Related Matters. The
request involved U.S. concerns over competition hearings held by the Korea Fair
Trade Commission. With a mandate that includes promoting competition and
strengthening consumers’ rights, this body can conduct investigations of
companies and levy fines for violations and failure to cooperate with
investigators.
[641]
Since 2016, U.S. firms have raised concerns that Korea Fair Trade Commission’s
procedures do not comply with South Korea’s obligations under KORUS.
[642]
According to
these firms, the commission’s procedures inhibit the ability of companies to
adequately defend themselves during proceedings and hearings by denying them
the opportunity to review and rebut the evidence against them. The U.S.
government relayed these concerns during detailed discussions with officials
from the Korea Fair Trade Commission and the South Korean Ministry of Trade,
Industry, and Energy, beginning with the annual KORUS Joint Committee meeting in
January 2017.
[643]
In response to these concerns, South Korea sought to change
procedures governing access to evidence. These changes were set forth in
amendments to the Monopoly Regulations and Fair Trade Act, which was submitted
to the South Korean National Assembly in December 2018.
The United States did not find that these amendments
resolved its concerns, however, and submitted its consultation request as a
result.
[644]
USTR led formal consultations with South Korea on July 9, 2019, requesting
changes to protect business confidential information and other appropriate
materials from third-party disclosure while allowing South Korea to fulfill its
obligations under KORUS.
[645]
Environment
On September 19, 2019, USTR sought consultations with South
Korea under the Environment Chapter of KORUS with regard to illegal,
unreported, and unregulated (IUU) fishing and implementation of South Korea’s
commitments under KORUS to implement its obligations under the Commission for
the Conservation of Antarctic Marine Living Resources (CCAMLR).
This action followed the release of a
September 2019 report by the U.S. National Marine Fisheries Service of the
National Oceanic and Atmospheric Administration. The report stated that
following violations uncovered in 2017, South Korea had “fail[ed] to apply
sufficient sanctions to deter its vessels from engaging in fishing activities
that violate conservation and management measures adopted by” CCAMLR.
[646]
Consultations
were held in Seoul on October 17, 2019, with representatives from South Korea’s
Ministry of Trade, Industry, and Energy, Ministry of Ocean and Fisheries,
Ministry of Foreign Affairs, and Coast Guard in attendance.
Following consultations, the Korean National Assembly passed
amendments to South Korea’s Distant Water Fisheries Development Act on October
31, 2019.
[647]
These amendments enable the South Korean Ministry of Oceans and Fisheries to
apply administrative sanctions to South Korean vessels for violations of the
conservation and management measures of regional fisheries management
organizations, including CCAMLR.
[648]
An enforcement ordinance and implementation rules for the amendments had not
yet been enacted by the South Korean government at the end of 2019, however.
For more information on issue of IUU fishing in South Korea, see chapter 6.
The U.S.-Morocco Free Trade
Agreement was signed June 15, 2004, and entered into force on January 1, 2006.
[649]
The two
parties held their sixth meeting of the FTA Joint Committee on July 16, 2019,
with discussions centered on multiple agriculture and SPS issues, geographical
indications, intellectual property protection, and certain textile and apparel
cases.
[650]
Morocco and the United States continued to discuss the potential to strengthen
ties between U.S. and Moroccan textile and apparel firms throughout 2019.
[651]
Agriculture and Sanitary and Phytosanitary Measures
In June 2019, the United
States-Morocco FTA Agriculture and SPS Subcommittee meeting yielded an
agreement to improve access for U.S. wheat by increasing tenders and improving
the administration of the FTA’s wheat tariff-rate quota.
[652]
The
subcommittee meeting also led to productive technical discussions on food
safety and to the finalization of certificates allowing U.S. exports of bovine
genetics and egg products into Morocco.
[653]
On March 14, 2019, the Committee for the Implementation of Textile Agreements
received a request on behalf of a Moroccan swimwear firm to modify the rules of
origin for women’s and girls’ swimwear made from certain knit fabric.
[654]
According to
the request, the modification would “address availability of supply of certain
knit fabric in the territories of the Parties” by soliciting public comments on
the feasibility of the U.S. domestic industry supplying the fabric in a
commercial and timely manner.
[655]
Taken together, these changes improve market access for U.S. producers and
their products.
Labor
Following concerns
originally raised by the United States in 2014 under the agreement’s labor
provisions and again in the 2017 and 2019 Joint Committee meetings, Morocco
continued to carry out a new domestic worker law in 2019. This law extends
protection and benefits to domestic workers by setting a minimum wage, limiting
weekly working hours, setting a minimum age for employment, and providing for a
day of rest for workers.
[656]
USDOL supported these efforts via funding under the FTA labor cooperation
mechanism. Morocco also worked to implement recent reforms made under the 2016
Law on Trafficking in Human Beings. Such reforms, including the establishment
of an inter-ministerial anti-trafficking commission and efforts to combat child
labor, were topics of discussion during several 2019 visits between U.S. and
Moroccan officials.
[657]
The U.S.-Oman Free Trade
Agreement was signed January 19, 2006, and entered into force on January 1,
2009.
[658]
The United States-Oman Joint Committee, which oversees the agreement, has
discussed a broad range of trade issues, from efforts to increase trade and
investment to cooperation in strengthening labor rights and environmental
provisions.
[659]
The U.S.-Oman Joint Committee did not meet in 2019.
Labor
Throughout
2019, Oman continued to implement the two-year Decent Work Country Program in
cooperation with the ILO. This program centered on the key pillars of social
protection; employment, skills, and entrepreneurship; and international labor
standards and governance.
[660]
In its 2019 report
Findings on the Worst Forms of Child Labor
, USDOL
identified Oman’s work to eliminate extreme forms of child labor and strengthen
legal frameworks and enforcement measures as main areas of advancement.
[661]
The U.S.-Panama Trade
Promotion Agreement was signed June 28, 2007, and entered into force on October
31, 2012.
[662]
On
January 1, 2019, the eighth round of tariff reductions under the agreement took
place. The United States-Panama Free Trade Commission is the central oversight
body for the agreement; it last met in 2017.
[663]
On March 26, 2019, the Department of Commerce (USDOC) invited the general
public and other federal agencies to comment on proposed requests before the
Committee for the Implementation of Textile Agreements.
[664]
Labor
The two countries met in
September 2019 to discuss various issues concerning labor law enforcement, with
a dedicated focus on child labor and inspection laws.
[665]
Environment
The United States and Panama
remained engaged on issues of environmental protection and monitoring
throughout 2019. The independent Secretariat for Environmental Enforcement
Matters received two submissions during this reporting period alleging that
Panama had violated its environmental laws regarding the development and
approval of environmental management plans for the Bay of Panama and Gulf of
Montijo wetland areas.
[666]
Following the receipt of these submissions, the government of Panama published
an environmental management plan for the Gulf of Montijo wetland areas and
established a technical committee to oversee the Bay of Panama environmental
management plan. The United States also continued to support capacity-building
efforts under the 2018–22 United States-Panama Environmental Cooperation
Commission Work Program.
[667]
The U.S.-Peru Trade
Promotion Agreement (TPA) was signed April 12, 2006, and entered into
force on February 1, 2009.
[668]
All
remaining tariff reductions, which cover only agricultural products, are set to
be complete by 2026. The U.S.-Peru Free Trade Commission oversees the agreement
and its implementation and is slated to meet in 2020.
Labor
In 2019, both the United
States and Peru continued to follow up on the issues highlighted in a 2016
USDOL report. The report raised concern over Peru’s approach toward labor law
adoption, maintenance, and enforcement, with a focus on laws related to
nontraditional exports and the use of temporary contracts in the textile and
agriculture industries.
[669]
In April 2019, representatives of USTR and USDOL traveled to Peru to further
discuss and review progress made to address the reported concerns.
[670]
In addition to
the visit, USDOL sponsored programming aimed at building labor law enforcement
by engaging civil society. Peru also announced the opening of two new offices
of the federal labor inspectorate (Superintendencia Nacional de Fiscalización
Laboral), as well as a larger budget and workforce in 2019.
[671]
Environment
On January 4, 2019, the
United States requested the “first ever” consultations under the Environment
Chapter of the TPA.
[672]
The U.S. request came in response to Peru’s decision to make the Agency for the
Supervision of Forest Resources and Wildlife (OSINFOR) a subordinate
organization of the Ministry of Environment.
[673]
The Environment Chapter (Forestry Annex) requires that OSINFOR be an “independent
and separate agency.” On April 9, 2019, following several technical
consultations and a senior-level Environmental Affairs Council meeting, the
Peruvian government reversed its decision to make OSINFOR a subordinate
organization of the Ministry of Environment.
[674]
On February 21, 2019, the
two countries jointly held the eighth meeting of the Environmental Affairs
Council (EAC), in part to support the OSINFOR consultations and in part to
review progress made under other TPA environment chapter obligations.
[675]
The
independent Secretariat for Environmental Enforcement Matters received four
submissions by December 2019, alleging that Peru had violated its environmental
laws related to (1) the regulation of sulfur levels in diesel fuel, (2) the
position of OSINFOR within the Peruvian government, (3) federal road building
in border areas, and (4) the Convention on Wetlands of International
Importance.
[676]
During 2019, the Committee
on Sanitary and Phytosanitary Matters met to discuss issues including Peru’s
longstanding ban on the use of biotechnology for farming, and progress on
logging issues under the TPA’s Annex on Forest Sector Governance.
[677]
This annex
outlines specific standards that must be met to improve forest sector
governance and deter illegal logging and illegal trade in timber and wildlife.
On July 26, 2019, the United States blocked future timber imports from a
Peruvian exporter on behalf of the Interagency Committee on Trade in Timber
Products from Peru, after the exporter’s supply chain was found to contain
illegally harvested timber.
[678]
The U.S.-Singapore Free
Trade Agreement was signed May 6, 2003, and entered into force on January 1,
2004.
[679]
On
March 19–21, 2019, the two governments convened an FTA Joint Committee meeting
to discuss issues ranging from digital trade to SPS measures, agriculture, and
geographical indications.
[680]
Shortly thereafter, the United States and Singapore signed a memorandum of
understanding (MOU) on March 21, 2019, to increase cooperation on
infrastructure development.
[681]
The MOU promotes “information sharing, deal facilitation, structuring and
capacity building initiatives in sectors of mutual interest such as energy,
natural resource management, water, waste, transportation, and urban
development.”
[682]
This chapter reviews U.S. bilateral trade relations with the
United States’ top trading partners in 2019: the European Union (EU),
[683]
Mexico,
Canada, China, Japan, South Korea, India, and Taiwan (ordered according to the
value of their two-way merchandise trade with the United States). For each
trading partner, the chapter summarizes U.S. bilateral trade, including trade
in both merchandise and private services, and reports the major developments in
bilateral trade policies and programs during 2019.
[684]
In 2019, the EU, viewed as a single entity, remained the
United States’ largest trading partner in terms of two-way trade, accounting
for 20.6 percent of total U.S. merchandise trade.
[685]
U.S.
merchandise trade with the EU increased by 5.8 percent from $805.3 billion in
2018 to $851.7 billion in 2019. At the same time, the U.S. merchandise trade
deficit with the EU increased by $9.2 billion to $177.7 billion. The rise in
the bilateral merchandise trade deficit can be attributed to a $18.6 billion
increase in U.S. exports combined with a $27.8 billion increase in imports from
2018 to 2019 (figure 6.1).
The EU remained the largest destination market for U.S.
merchandise exports in 2019, accounting for 20.5 percent of U.S. exports to the
world. U.S. merchandise exports to the EU increased from $318.4 billion in 2018
to $337.0 billion in 2019, a 5.9 percent increase. The top U.S. exports to the
EU during the year were civil aircraft and parts ($43.7 billion), crude
petroleum ($20.4 billion), and nonmonetary gold ($11.4 billion).
The EU surpassed China to become the largest source market
of U.S. merchandise imports in 2019, accounting for 20.6 percent of U.S.
imports from the world. U.S. merchandise imports from the EU rose from $486.9
billion in 2018 to $514.7 billion in 2019, a 5.7 percent increase. The top U.S.
imports from the EU during the year were medicaments ($32.6 billion), passenger
vehicles with gasoline engines between 1.5 and 3 liters ($28.5 billion), and
immunological products ($17.2 billion).
The EU remained the United States’ largest services trading
partner in 2019, representing $475.4 billion or 34.1 percent of two-way U.S.
cross-border services trade. U.S. cross-border service exports to the EU
increased by $12.0 billion, or 4.7 percent, to $265.6 billion in 2019, while
U.S. cross-border service imports from the EU increased by $11.2 billion, or
5.6 percent, to $209.8 billion. As a result, the U.S. surplus in services trade
with the EU grew by 1.4 percent to $55.7 billion from $55.0 billion the year
before (figure 6.2).
The United States’ largest services exports to the EU in
2019 included other business services ($76.0 billion), charges for intellectual
property (IP) use ($49.3 billion),
[686]
and travel services ($42.4 billion). Telecommunications, computer, and
information services was the fastest-growing services export sector, increasing
by 16.2 percent from 2018. Major U.S. services imports from the EU were travel
services ($50.2 billion), other business services ($47.1 billion), and
transport services ($39.4 billion). Telecommunications, computer, and
information services was the fastest-growing services import sector, increasing
by 9.7 percent from 2018. In terms of two-way trade, the largest sectoral
surpluses between the United States and the EU were in other business services
and charges for IP use, reaching $28.8 billion and $24.4 billion respectively.
The largest U.S. deficits were in transport services and travel services at
$11.8 billion and $7.8 billion, respectively.
Figure 6.1
U.S. merchandise trade with the EU, 2015–19
Source: USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11
.
Figure 6.2
U.S. cross-border trade in total services with the EU,
2015–19
Source: USDOC, BEA, International
Services, tables 2.2 and 2.3, and International Transactions, table 3.2, March
19, 2020.
Note: Data for 2019 are preliminary. Because
some data have been suppressed to protect firms’ confidential information,
services trade with the EU are reported in terms of total trade, which includes
government sales and purchases of goods and services. Underlying data for this
table can be found in appendix table
B.13.
The United States and the EU continued to work towards a
trade agreement in 2019, continuing progress on goals set under the joint
statement issued by President Donald Trump and European Commission President
Jean-Claude Juncker on July 25, 2018.
[687]
The year began with United States releasing negotiating objectives for a U.S.-EU
trade agreement in January.
[688]
The EU also met with the United States and Japan on January 9 and May 23, 2019,
in two trilateral ministerial meetings concerning non-market-oriented policies
of third countries.
[689]
The meetings were a continuation of discussions following the release of a May
2018 joint scoping paper and statements on state-influenced market-distorting
behaviors, especially as they pertain to forced technology transfer and to
overcapacity and uncompetitive markets.
[690]
Several other recurring bilateral meetings were held between
the two economies in 2019 as well. The second joint meeting under the Bilateral
Agreement on Prudential Measures Regarding Insurance and Reinsurance (the
U.S.–EU Covered Agreement) was held on April 2, 2019, in Washington, DC.
Participants discussed progress on the implementation of the agreement, which
was signed by the United States and EU in 2017.
[691]
The third
annual review of the U.S.–EU Privacy Shield framework was hosted by the U.S.
Department of Commerce on September 12–13, 2019, in Washington, DC. Discussions
between government officials, civil society stakeholders, and companies
participating in the Privacy Shield focused on commercial data protection and
national security data access. (Further Privacy Shield developments are
discussed in greater detail later in this chapter.) Business delegations from
the United States and the EU attended the 10th workshop for small and
medium-sized enterprises (SMEs), which was held under the aegis of the
Transatlantic Economic Council in Little Rock, Arkansas, on September 18–19,
2019.
[692]
The year also saw important new developments related to two
long-running World Trade Organization (WTO) disputes—cases in which the United
States successfully challenged the EU and launched related investigations under
section 301 of the Trade Act of 1974 to impose increased duties on EU goods.
The United States and the EU agreed on a new market access arrangement for U.S.
high-quality beef in 2019, the latest action stemming from a 1996 WTO dispute
concerning various meat hormone directives of the EU (DS26).
[693]
On July 15,
2019, the European Council approved an agreement with the United States to
modify the EU tariff-rate quota (TRQ) on imports of high-quality beef. Under
the new TRQ regime, 18,500 metric tons of U.S. beef exports will receive
duty-free access to the EU market annually, with the quota growing to 35,000
metric tons over a seven-year phase-in period.
[694]
The agreement
was adopted by the European Parliament on November 28, 2019.
[695]
The Office of
the U.S. Trade Representative (USTR), in light of the successful negotiations,
subsequently concluded its section 301 proceedings on the matter and determined
not to reinstate previous tariff actions against the EU, effective January 1,
2020.
[696]
The United States also received WTO authorization to apply tariffs on imports
from the EU as a countermeasure to the negative effects from subsidies in the
large civil aircraft industry (DS316), and did so in October 2019 following a
section 301 investigation by USTR (discussed in greater detail below).
EU automotive exports to the United States were at issue in
2019 as part of an investigation initiated by the U.S. Department of Commerce
(USDOC) under section 232 of the Trade Expansion Act. The investigation was
instituted on May 23, 2018, to determine the effects on national security of
imports of automobiles, including cars, SUVs, vans and light trucks, and
automobile parts.
[697]
The Secretary of Commerce submitted a confidential report on the investigation
to the President on February 17, 2019, finding that U.S.-owned automotive
research and development and manufacturing are vital to national security, and
that U.S. imports of autos and auto parts should be reduced to improve domestic
conditions of competition for U.S. producers. On May 17, 2019, the President
issued a proclamation directing the USTR to pursue negotiations to obtain agreements
with EU, Japan, and other trading partners would address the threatened
impairment of U.S. national security with respect to imported automobiles and
certain automobile parts.
[698]
The UK continued to prepare for its exit from the EU
(“Brexit”) in 2019, with the text of a withdrawal agreement approved by members
of the UK House of Commons on December 19, 2019.
[699]
Earlier in
the year, the United States continued with its plans to negotiate a U.S.-UK
Trade Agreement, as announced in October 2018. USTR held a hearing on the
matter on January 29, 2019, and, after considering public submissions and
hearing testimony, released its negotiating objectives for an agreement in
February 2019.
[700]
The United States also signed four mutual recognition agreements with the UK in
January and February 2019 regarding products currently covered in existing
agreements between the United States and the EU.
[701]
These
agreements—which cover trade in wine, spirits, telecommunications equipment,
pharmaceuticals, and marine equipment—were designed to ensure that trade is not
disrupted when the UK leaves the EU, and will take effect on January 1, 2021,
when U.S.–EU trade agreements no longer apply to the UK.
[702]
More
information on U.S.-UK trade agreement negotiations is available in chapter 2
of this report.
Subsidies on Large Civil Aircraft
On June 5, 2019, arbitration
proceedings resumed in a WTO dispute brought by the EU against the United
States also concerning subsidies to large civil aircraft (DS353). The WTO’s Dispute
Settlement Body (DSB) adopted the Appellate Body report, which found that
state-level tax incentive programs constituted subsidies to Boeing, a U.S.
producer of large civil aircraft. Arbitration proceedings, which were suspended
on November 28, 2012, resumed in 2019 at the request of the EU.
[703]
A separate WTO
dispute (DS316) brought by the United States against the EU concerning
subsidies to the European large civil aircraft industry (a case also referred
to as “Airbus subsidies”) was also active in 2019.
[704]
The DSB, which
had adopted the decision that the EU and certain member states gave Airbus
subsidized financing which resulted in lost sales and displaced exports of U.S.
civil aircraft, granted the United States authorization to retaliate on $7.5
billion in annual trade value on October 14, 2019.
[705]
For more
information on WTO disputes, see chapter 3 of this report.
On the issue of EU subsidies to the large civil aircraft
industry, USTR initiated an investigation under section 301 of the U.S. Trade
Act of 1974 on April 12, 2019, after finding that consultations with the EU through
these WTO proceedings had not resolved the issue. In its notice, USTR proposed
determinations that the EU and other member states had denied the rights of the
United States under the WTO Agreement on Subsidies and Countervailing Measures,
and had failed to implement the recommendations of the DSB regarding subsidies.
[706]
The
investigation culminated in the application of duties ranging from 10 to 25
percent on $7.5 billion of U.S. imports from the EU of certain food, alcohol,
machinery, and textile and apparel products, effective October 18, 2019.
[707]
Later in the
year, USTR determined it would adjust the list of products subject to duties
and the duty rates for certain products based on public comments submitted
during a review of its October 18 action. All new duty rates determined as part
of the review took effect by March 18, 2020.
[708]
For more information
on this section 301 investigation, see chapter 2.
Digital Services Taxes
In March 2018, the European Commission proposed a directive
to establish an interim EU-wide tax on digital services.
[709]
Under the
directive, companies exceeding a threshold global revenue of €750 million
($817.5 million) and a threshold EU revenue of €50 million ($54.5 million)
would be subject to a 3 percent tax on revenue generated from EU user
engagement with digital advertising and with goods and services marketplaces,
as well as from the transmission of data collected on users within the EU.
[710]
The proposed
directive was abandoned on March 12, 2019, however, when several member states
voiced reservations at a meeting of the Economic and Financial Affairs Council
of the European Council.
[711]
Following the rejection of the European Commission
directive, some EU member states passed digital services tax (DST) legislation at
the national government level, with several others announcing or introducing
legislation with similar tax measures.
[712]
Of these member states, France was the first to collect a DST, requiring
companies to submit payment by November 25, 2019, on taxes levied retroactively
on revenues back to January 1, 2019.
[713]
Under the French law, companies exceeding a threshold global revenue of €750
million ($817.5 million) and a threshold revenue of €25 million ($27.3 million)
from France are subject to a 3 percent tax on revenue generated from sales of
targeted digital advertising, online marketplaces, and the sale of private data
for targeted advertising.
On July 10, 2019, USTR initiated an investigation of the
French law under section 301 of the Trade Act of 1974. The investigation
focused on whether the DST discriminated against U.S. companies or was
unreasonable as tax policy due to its retroactivity, its application on revenue
rather than income, its application to revenues of companies without a
permanent establishment in France, and its purpose of penalizing particular
technology companies. For more information on this investigation and its
findings, please see chapter 2 of this report.
USTR issued its conclusions from the investigation in a
report on December 2, 2019, finding that the DST was “unreasonable or
discriminatory and burdens or restricts U.S. commerce.” On December 6, 2019,
USTR proposed duties of up to 100 percent on approximately $2.4 billion of
imports of food, beverage, cosmetics, and other products from France. These
duties were still only proposals by yearend 2019, with USTR requesting public
comment on the appropriate action to respond to the DST and convening a hearing
on the matter in early 2020.
[714]
Elsewhere in the EU, Austria and Italy each adopted
legislation on DSTs in late 2019, with both tax measures entering into force on
January 1, 2020.
[715]
Many EU member states with current or pending legislation on this issue have
noted that they would repeal or suspend their national-level DSTs once an international
solution is reached.
[716]
The work of the Organisation for Economic Co-operation and Development (OECD)
on digital taxation through its Inclusive Framework on Base Erosion and Profit
Sharing project is expected to produce a solution by the end of 2020.
[717]
Data Privacy in the EU Digital Market
The EU’s General Data Protection Regulation (GDPR) entered
its second year of implementation in 2019. GDPR establishes strict privacy
rights for individuals as regards the processing, collection, dissemination,
erasure, and portability of their personal data.
[718]
Because GDPR
reaches beyond the boundaries of the EU, companies that handle personal data of
EU data subjects fall under EU legal jurisdiction with respect to obeying GDPR
rules, regardless of the companies’ physical location.
[719]
Violators may
be fined up to 4 percent of their annual global firm revenue.
[720]
National supervisory authorities of member states began
investigating GDPR complaints as soon as the legislation was enacted on May 25,
2018, issuing fines to companies with observed violations as early as June
2018.
[721]
In its report on GDPR implementation, delivered on February 26, 2019, the
European Data Protection Board noted that €55,995,871 ($61,035,500) in fines
had been imposed for GDPR violations since the legislation was enacted.
[722]
A single fine
of €50 million ($54.5 million) imposed on a large U.S. technology company
comprised 89.3 percent of this total.
[723]
In calendar year 2019, two of the three highest public fines for GDPR
violations were imposed on U.S. companies.
[724]
The United States also took actions in 2019 to protect the
data privacy of EU data subjects under the U.S.–EU Privacy Shield framework.
The Privacy Shield establishes the process by which companies can transfer
consumer data from EU countries to the United States in compliance with EU law.
[725]
Discussions at
the third annual review of the Privacy Shield framework, held September 2019 in
Washington, DC, highlighted the progress U.S. government and businesses have
made thus far. An additional 1,000 companies made legally enforceable pledges
to protect data transferred from the EU in accordance with the Privacy Shield
Principles between the second and third annual reviews, with over 5,000
businesses doing so since the framework’s implementation in August 2016.
[726]
In keeping with its commitments on enforcement, the United
States appointed Under Secretary of State for Economic Growth, Energy, and the
Environment Keith Krach to serve as ombudsperson to address potential Privacy
Shield disputes in June 2019.
[727]
In addition, the Federal Trade Commission—the U.S. government agency that
enforces the commitments of companies under the framework—brought actions
against several U.S. companies falsely claiming Privacy Shield certification in
2019.
[728]
As of early December, the Federal Trade Commission had brought 21 enforcement
actions since the framework was established.
[729]
In 2019, Mexico replaced China as the United States’ largest
single-country trading partner in terms of two-way trade, accounting for 14.8
percent of total U.S. merchandise trade. U.S. merchandise trade with Mexico
increased by 0.5 percent from $611.5 billion to $614.5 billion in 2019. At the
same time, the U.S. merchandise trade deficit with Mexico increased by $21.1
billion to $101.7 billion. The increase in the bilateral merchandise trade
deficit can be attributed to a $9.0 billion decrease in U.S. exports combined
with a $12.0 billion increase in imports (figure 6.3).
Mexico remained the second-largest single-country
destination for U.S. merchandise exports in 2019, accounting for 15.6 percent
of global U.S. exports. U.S. merchandise exports to Mexico fell from $265.4
billion in 2018 to $256.4 billion in 2019, a 3.4 percent decrease. The top U.S.
exports to Mexico during the year were light oils ($15.2 billion), refined
petroleum products ($11.8 billion), and computer parts and accessories ($11.1
billion).
Mexico remained the second-largest single-country producer
of U.S. merchandise imports in 2019, accounting for 14.3 percent of global U.S.
imports. U.S. merchandise imports from Mexico grew from $346.1 billion in 2018
to $358.1 billion in 2019, a 3.5 percent increase. The top U.S. imports from
Mexico during the year were computers ($25.2 billion), passenger vehicles with
gasoline engines between 1.5 and 3L ($22.8 billion), and light trucks ($16.9
billion).
In 2019, cross-border private services trade with Mexico
totaled $60.6 billion, or 4.3 percent of total U.S. private services trade.
U.S. cross-border service exports to Mexico remained unchanged at $33.4 billion
in 2019, while U.S. cross-border service imports from Mexico increased by $1.6
billion, or 6.0 percent, to $27.2 billion. As a result, the U.S. surplus in
services trade with Mexico fell by 20.0 percent, or $1.5 billion, to $6.2
billion (figure 6.4).
The United States’ largest services exports in 2019 included
travel services ($17.2 billion) and transport services ($4.0 billion).
Insurance services were the fastest-growing service exports, increasing by 22.8
percent from 2018. Major U.S. services imports from Mexico were travel services
($18.3 billion), transport services ($3.6 billion), and other business services
($2.4 billion). Insurance services was the fastest-growing services import,
increasing by 185.7 percent from a low of $7 million in 2018 and reaching $20
million in 2019. The largest sectoral surpluses between the United States and
Mexico were in charges for IP use and financial services, which reached $2.7
billion and $1.3 billion, respectively. The United States’ largest deficit was in
travel services, at $1.1 billion.
Figure 6.3
U.S. merchandise trade with Mexico, 2015–19
Source: USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.4
U.S. cross-border trade in private services with Mexico,
2015–19
Source: USDOC, BEA, International
Services, tables 2.2 and 2.3, and International Transactions table 3.2, March
19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
Most of the trade relationship between Mexico and the United States has
been governed by the North American Free Trade Agreement (NAFTA) since the
agreement entered into force on January 1, 1994.
On August 16, 2017, the United States,
Canada, and Mexico began negotiations to modernize NAFTA. On November 30, 2018,
the United States, Canada, and Mexico signed the United States-Mexico-Canada
Agreement (USMCA).
[730]
A protocol of amendment to USMCA was negotiated during 2019. These amendments
are described in the USMCA section in chapter 5 of this report. The amended version
of USMCA was signed on December 10, 2019, and has been ratified by all three
countries, most recently by Canada on March 13, 2020. The amended agreement
entered into force on July 1, 2020.
[731]
Annex 23-A of USMCA, signed in 2018, had committed Mexico to enact
legislation regarding its labor laws. On May 1, 2019, Mexico’s president signed
into law a labor reform bill. Major changes include offering workers the right
to vote for union representatives by secret ballot, establishing the right to
join unions of choice, and creating an independent court to resolve disputes
and register contracts.
[732]
Section 232 Steel and Aluminum Tariffs
On June 1, 2018, Mexico’s exemption from 25 percent and 10
percent tariffs on steel and aluminum, respectively, expired; these had been
implemented by the United States following investigations under section 232 of
the Trade Expansion Act of 1962 (section 232).
[733]
In response to
the expiration of these tariff exemptions, the Mexican government imposed
duties ranging from 5 percent to 25 percent on U.S. imports under 71 Harmonized
System (HS) tariff codes on June 5, 2018.
[734]
Additionally, Mexico challenged the U.S. measures by filing a complaint under
the WTO dispute settlement provisions and requested consultation with the
United States concerning certain measures imposed by the United States to
allegedly adjust imports of steel and aluminum into the United States.
[735]
Following negotiations with Mexico and Canada, on May 17,
2019, the United States announced an agreement to remove the section 232
tariffs for steel and aluminum imports from those countries and the removal of
all retaliatory tariffs imposed on American goods by those countries.
[736]
On May 28,
2019, Mexico and the United States notified the Dispute Settlement Body (DSB)
of the WTO that they had reached a mutually agreed solution, which consisted of
the United States’ elimination of certain duties on steel and aluminum products
from Mexico.
[737]
Modern Borders
In 2019, the United States and Mexico continued to make
progress on cross-border infrastructure improvements, under a joint effort to
enhance trade and trade facilitation established in April 2017 in Mexico City
between officials in U.S. Customs and Border Protection and Mexico’s Tax
Administration.
[738]
The pilot programs to improve cargo inspections in the Mariposa Port of Entry
in Nogales, Arizona, and the Otay Mesa Cargo Facility in San Diego County,
California, which promoted infrastructure improvement in ports of entry, were a
success.
[739]
In 2018, the U.S. General Services Administration (GSA) continued to modernize
and expand infrastructure in ports of entry. This included doubling the number
of pedestrian processing facilities in Otay Mesa, the creation of privately owned
vehicle inspection facilities, and the expansion of port facilities for
commercial inspections as part of Phase 1 improvements at the Calexico Land
Port.
[740]
In 2019, GSA received appropriations for phase 2 for
continued expansion and improvements of existing infrastructure at the Calexico
West Land Port of Entry. This phase includes the construction of six additional
northbound inspection lanes for noncommercial vehicles, with canopies and
inspection booths; a new administration building; and an employee parking
structure.
[741]
Other ports of entry completed either modernization and expansion phases or
their entire project in 2019. The San Ysidro Land Port of Entry concluded its
modernization and expansion project on December 17, 2019, for example.
Constructed in three phases, this 10-year project replaced the port’s 1970
infrastructure to include 63 vehicle inspection booths over 34 lanes, two
pedestrian inspection facilities, and expanded inspection facilities for southbound
and northbound secondary vehicles.
[742]
In 2019, Canada remained the United States’ second-largest
single-country trading partner in terms of two-way trade, accounting for 14.8
percent of total U.S. merchandise trade. U.S. merchandise trade with Canada
decreased by 1.0 percent from $618.5 billion to $612.1 billion in 2019. At the
same time, the U.S. merchandise trade deficit with Canada increased by $8.4
billion to $27.3 billion. The increase in the bilateral merchandise trade
deficit can be attributed to a $7.4 billion decrease in U.S. exports combined
with a $0.9 billion increase in imports (figure 6.5).
Canada remained the largest single-country destination for
U.S. merchandise exports in 2019, accounting for 17.8 percent of global U.S.
exports. U.S. merchandise exports to Canada declined from $299.8 billion in
2018 to $292.4 billion in 2019, a 2.5 percent decrease. The top U.S. exports to
Canada during the year were crude petroleum ($10.1 billion), civil aircraft and
parts ($9.4 billion), and light trucks ($9.4 billion).
Canada remained the third-largest single-country source of
U.S. merchandise imports in 2019, accounting for 12.8 percent of global U.S.
imports. U.S. merchandise imports from Canada rose from $318.8 billion in 2018
to $319.7 billion in 2019, a 0.3 percent increase. The top U.S. imports from
Canada during the year were crude petroleum ($62.7 billion), passenger vehicles
with gasoline engines exceeding 3L ($14.5 billion), and passenger vehicles with
gasoline engines between 1.5 and 3L ($14.4 billion).
In 2019, U.S. cross-border private services trade with
Canada totaled $101.5 billion, or 7.3 percent of total U.S. private services
trade. U.S. cross-border service exports to Canada increased by $0.6 billion,
or 1.0 percent, to $64.3 billion in 2019, while U.S. cross-border service
imports from Canada increased by $1.6 billion, or 4.5 percent, to $37.2
billion. As a result, the U.S. surplus in services trade with Canada fell 3.5
percent to $27.0 billion from $28.0 billion the year before (figure 6.6).
The United States’ largest services exports in 2019 included
travel services ($18.0 billion), other business services ($14.1 billion), and
charges for IP use ($8.6 billion). Insurance services were the fastest-growing
service exports, rising by 11.7 percent from 2018. Major U.S. services imports
from Canada were other business services ($9.6 billion), travel services ($9.4
billion), and transport services ($5.5 billion). Maintenance and repair
services were the fastest-growing services import, increasing by 13.2 percent
from 2018. The largest sectoral surpluses between the United States and Canada
were in travel services and charges for IP use, reaching $8.6 billion and $6.2
billion, respectively. The largest U.S. deficits were in telecommunications,
computer, and information services ($6 million) and maintenance and repair
services ($5 million).
Figure 6.5
U.S. merchandise trade with Canada, 2015–19
Source: USITC DataWeb/USDOC
(accessed February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.6
U.S. cross-border trade in private services with Canada,
2015–19
Source: USDOC, BEA,
International Services, tables 2.2 and 2.3, and International Transactions
table 3.2, March 19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
After the United States-Mexico-Canada Agreement (USMCA) was
signed in November 2018, various steps in the domestic ratification process in
each country took place throughout 2019. A protocol of amendment was signed by
the three parties on December 10, 2019. On March 13, 2020, Canada’s Parliament
ratified the revised USMCA text. The amended agreement entered into force on
July 1, 2020. For more details about USMCA, see chapter 5.
Section 232 Steel and Aluminum Tariffs
On June 1, 2018, Canada’s exemption from a 25 percent tariff
on steel and a 10 percent tariff on aluminum expired; these tariffs were
implemented by the United States following investigations under section 232 of
the Trade Expansion Act of 1962 (section 232).
[743]
In July 2018,
Canada imposed countermeasures in the form of tariffs on approximately $13
billion worth of U.S. exports of steel, aluminum, and other products.
[744]
Upon the request of the United States, a WTO panel was
established to examine these countermeasures on January 25, 2019.
[745]
In subsequent
months, Canada repealed some of the measures at issue. On April 30, 2019,
Canada unilaterally excluded certain recreation boats from its countermeasures
to address negative impacts felt by the Canadian marine industry.
[746]
On May 17,
2019, the United States announced an agreement with Canada and Mexico to remove
section 232 tariffs on steel and aluminum, and Canada agreed to remove the
countermeasures in return.
[747]
With this agreement, the United States and Canada terminated all pending
litigation at the WTO, and on May 27, 2019, agreed to monitor aluminum and
steel trade between the two countries.
[748]
Softwood Lumber
In 2016, the U.S. lumber industry petitioned the Commission
and USDOC for trade remedy investigations on imports of softwood lumber from
Canada.
[749]
In 2017 USDOC and Commission investigations resulted in the imposition of
antidumping and countervailing duty duties on softwood lumber from Canada.
[750]
Subsequently,
Canada requested panel reviews of these determinations in 2017 and 2018 under
chapter 19 of NAFTA.
[751]
Canada also filed disputes under the WTO Dispute Settlement Understanding
regarding U.S. softwood lumber antidumping and countervailing duty measures in
2017. After consultations failed to resolve the disputes, the WTO Dispute
Settlement Body (DSB) established panels in both disputes in 2018 at the
request of Canada. On June 4, 2019, Canada notified the DSB of its decision to
appeal the panel’s findings.
[752]
In the case of USITC Injury Determination in the matter of
Softwood Lumber from Canada (USA–CDA–2018–1904–03), the NAFTA dispute
settlement panel convened a hearing in Washington, DC, on May 7, 2019. The
panel issued its interim decision and order to remand (return for further
consideration) the findings of the Commission on September 4, 2019.
[753]
The Commission
filed its remand determinations in December 2019, and Canadian parties filed
their comments on the remand in early February 2020.
[754]
For additional
information, see chapter 3, “Reports in Which the United States Was the
Respondent,” and table 3.2 of this report.
Wine, Beer, and Spirits
According to USTR, market access barriers in several
Canadian provinces have hampered exports of U.S. wine and spirits to Canada for
many years. Among these were measures governing the sale of wine in grocery
stores maintained by the provincial liquor board in British Columbia that
appear to provide advantages to British Columbian wine through an exclusive
retail sales channel not available to imported wines. Consequently, the United
States requested WTO dispute-settlement consultations with Canada in two
disputes in 2017.
[755]
On November 30, 2018, addressing the U.S. dispute in the
WTO, Canada committed to ensure that British Columbia would stop its practice
of allowing only local wines to be stocked in supermarkets by no later than
November 1, 2019. In July 2019, the government of British Columbia made changes
to its regulations, which now permit the sale of imported wine on grocery store
shelves alongside British Columbian wine.
[756]
Agriculture
The United States and several other countries raised the
issue of Canada’s supply management system for dairy, poultry, and egg products
in Canada’s trade policy review at the WTO.
[757]
However, under USMCA, the United States gained increased access to Canada’s
dairy, poultry, and egg product markets in return for increased access for
Canada to U.S. markets for dairy products, peanuts, and some sugar products.
[758]
USMCA requires
Canada to change certain aspects of its milk pricing policy, which had
decreased exports of U.S. dairy ingredients to Canada and increased Canada’s
exports of skim milk powder.
[759]
USTR Special 301 Watch List
On April 25, 2019, USTR removed Canada from its Special 301
priority watch list. In doing so, USTR cited provisions in USMCA which
addressed issues of border and law enforcement with respect to counterfeit or
pirated goods, patents and pricing for pharmaceuticals, copyright protections,
and transparency about geographical indications that had been raised in the
2018
Special 301 Report.
[760]
In 2019, China fell from its leading position to become the
United States’ third-largest single-country trading partner in terms of two-way
trade, accounting for 13.5 percent of total U.S. merchandise trade. U.S.
merchandise trade with China decreased by 15.3 percent in 2019, falling from
$659.8 billion to $558.9 billion. At the same time, the U.S. merchandise trade
deficit with China shrank by 17.6 percent, or $73.9 billion, to $345.6 billion.
The reduction in the bilateral merchandise trade deficit can be attributed to a
$13.5 billion decrease in U.S. exports combined with a $87.5 billion decrease
in imports (figure 6.7).
China remained the third-largest single-country destination
for U.S. merchandise exports in 2019, accounting for 6.5 percent of global U.S.
exports. U.S. merchandise exports to China dropped from $120.1 billion in 2018
to $106.6 billion in 2019, an 11.3 percent decrease. The top U.S. exports to
China during the year were civil aircraft and parts ($10.5 billion), soybeans
($8.0 billion), and processors and controllers ($6.5 billion). The decrease in
U.S. merchandise exports to China in 2019 was principally attributable to an escalation
of trade tensions. The largest decreases were due to the lower volume of some
of the top U.S. merchandise exports to China, including civilian aircraft and
parts, as well as petroleum products.
China remained the largest single-country source of U.S.
merchandise imports in 2019, accounting for 18.1 percent of global U.S.
imports. U.S. merchandise imports from China decreased from $539.7 billion in
2018 to $452.2 billion in 2019, a 16.2 percent decrease. The top U.S. imports
from China during the year were cellphones ($38.8 billion), portable computers
and tablets ($37.4 billion), and telecommunications equipment ($16.9 billion). The
decrease in U.S. merchandise imports from China, also resulting from mounting
trade tensions, were mainly attributable to a fall in computer parts as well as
wireless phones and their parts.
In 2019, U.S. cross-border private services trade with China
totaled $74.9 billion, or 5.4 percent of total U.S. private services trade.
U.S. cross-border service exports to China fell by $0.4 billion, or 0.8
percent, to $56.3 billion in 2019, while U.S. cross-border service imports from
China rose by $0.4 billion, or 2.2 percent, to $18.7 billion. As a result, the
U.S. surplus in services trade with China decreased 2.2 percent to $37.6
billion from $38.4 billion the year before (figure 6.8).
The United States’ largest services exports in 2019 included
travel services ($31.1 billion), charges for IP use ($9.2 billion), and
transport services ($5.2 billion). Telecommunications, computer, and
information services was the fastest-growing service export sector, increasing
by 11.6 percent from 2018. Major U.S. services imports from China were other
business services ($6.1 billion), transport services ($4.9 billion), and travel
services ($4.4 billion). Charges for IP use was the fastest-growing services
import, increasing by 30.9 percent from 2018. The largest sectoral surpluses
between the United States and China were in travel services and charges for IP
use, reaching $26.7 billion and $8.2 billion respectively. The largest U.S. deficits
were in other business services and insurance services, at $2.6 billion and
$0.3 billion respectively.
Figure 6.7
U.S. merchandise trade with China, 2015–19
Source: USITC DataWeb/USDOC (accessed
February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.8
U.S. cross-border trade in private services with China,
2015–19
Source: USDOC, BEA, International
Services, tables 2.2 and 2.3, and International Transactions table 3.2, March
19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
Since China’s accession to the WTO in 2001, the United
States has filed 23 WTO disputes against the country.
[762]
China has
filed a total of 23 WTO disputes since its accession, 16 of which have been
against the United States.
[763]
While the United States did not file any new WTO disputes against China in
2019, there were a few developments related to ongoing disputes.
On March 18, 2018, the United States filed a dispute against
China concerning certain measures pertaining to the protection of intellectual
property rights (IPRs).
[764]
That dispute was filed following the release of USTR’s
Findings of the
Investigation into China’s Acts, Policies, and Practices related to Technology
Transfer, Intellectual Property, and Innovation under Section 301 of the Trade
Act of 1974.
[765]
In its complaint, the United States claimed
that certain
measures by China appear to be inconsistent with Articles 3.28.1(a) and (b) and
28.2 of the TRIPS Agreement.
[766]
More specifically, the United States claimed that
China
breached WTO rules in ways that harmed the intellectual property rights of U.S.
companies and innovators.
[767]
At the request of the United
States, a panel was established and composed, and
in June 2019, with the
agreement of China, the United States requested that the panel suspend its proceedings
until the end of 2019. The panel granted the request and granted additional
requests to suspend through May 2020.
[768]
On January 25, 2019, the WTO composed a different dispute
settlement panel concerning additional duties imposed by China on certain U.S.
products.
[769]
Two WTO dispute panel reports were issued during 2019 with
respect to the United States and China. On February 28, 2019, the WTO dispute
settlement panel found that China had provided price supports to its domestic
producers of wheat, indica rice, and japonica rice beyond commitments agreed
upon under WTO rules.
[770]
According to USTR, China’s market price
support policy artificially raised Chinese prices for grains above market
levels, creating incentives for increased Chinese production of agricultural
products and reduced imports.
[771]
On April 18, 2019, a WTO dispute settlement panel found that China’s
tariff-rate quotas (TRQs) were not administered in a way that was consistent
with China’s obligations under WTO to be transparent, predictable, and fair.
[772]
On July 16, 2019, the WTO’s Appellate Body released a report
stating that the manner in which the United States calculated countervailing
duties for China through third-country markets was inconsistent with
obligations set forth in the Agreement on
Subsidies and Countervailing Measures.
[773]
The panel, however, “rejected China's claims against the USDOC's findings
(i) that there was ‘market distortion’ justifying the use
of
an out-of-country benchmark in the benefit calculation; (ii)
that there was sufficient evidence of financial contributions by public bodies
and of specificity to justify the initiation of countervailing duty
investigations; and (iii) on the use of ‘adverse facts available.’”
[774]
According to USTR, the WTO’s finding showed
that the United States has proven that “China uses Chinese SOEs [state-owned
enterprises] to subsidize and distort its economy.”
[775]
A series of high-level bilateral consultations took place in
2019 between the United States and China. These bilateral consultations took
the place of more formal discussions that previously fell under the umbrella of
the U.S.-China Joint Commission on Commerce and Trade, the U.S.-China Strategic
Economic Dialogue (SED), the U.S.-China Strategic and Economic Dialogue
(S&ED), and the U.S.-China Comprehensive Economic Dialogue, which the
Administration had established in April 2017.
[776]
USTR recently
described such formal forums as “largely ineffective.”
[777]
The high-level U.S.-China bilateral consultations that did
take place in 2019 mostly focused on issues related to escalated tariff
conditions. On January 7–9, 2019, a U.S. delegation headed by Deputy USTR
Jeffrey Gerrish and senior officials from the White House and five U.S. Departments—Agriculture,
Commerce, Energy, State, and Treasury—visited counterparts in China’s Foreign
Ministry and other institutions to discuss evolving bilateral trade conditions.
[778]
Chief among
those issues were those related to structural reforms in China, including IP
protections, technology transfer issues, cyber theft of trade secrets for
commercial purposes, and nontariff barriers. Other major points of discussion included
a need for ongoing verification and effective enforcement in any agreement, as
well as China’s pledge to purchase substantial amounts of agricultural,
energy-related, and manufactured goods from the United States.
[779]
On September 20,
2019, deputy-level negotiations from both countries continued in Washington,
DC, and were followed by a principals-level meeting in October.
[780]
On December 13, 2019, USTR announced that the United States
and China had reached a “Phase One” trade deal.
[781]
According to
USTR, the agreement requires China to undertake reform in the areas of
intellectual property, technology transfer, agriculture, financial services,
and currency. Meanwhile, the United States agreed to modify its section 301
tariff actions in a “significant” way.
[782]
Nevertheless, USTR stated that the United States will maintain a 25 percent
tariffs on about $250 billion of Chinese imports and a 7.5 percent tariff on
about $120 billion in Chinese imports.
[783]
Tariff Escalations
U.S.-China trade relations remained strained in 2019, as
reflected by a continued escalation of tariffs from both countries in that
year. Bilateral trade relations began eroding roughly in August 2017, after the
U.S. President issued a memorandum directing USTR to conduct a section 301
investigation to determine whether any of China’s laws, policies, practices, or
actions were unreasonable or discriminatory and might harm American IPRs,
innovation, or technology development.
[784]
USTR initiated a section 301 investigation on August 18, 2017, focusing on
whether several Chinese practices were unreasonable or discriminatory to U.S.
commerce.
[785]
Specifically, that investigation examined China’s use of foreign
ownership restrictions and technology regulations, its facilitation of
investment in and acquisition of U.S. companies by Chinese companies, and its
support of theft from and intrusions into computer networks of U.S. companies.
[786]
When it issued its finding on March 22, 2018, USTR set forth
four key conclusions—namely, that China had not made fundamental structural
changes to strengthen its system of IP protection and enforcement, had not
fully opened its market to foreign investment, had not allowed the market to
play a decisive role in allocating resources, and had not refrained from
government interference in private sector decisions about technology transfer.
[787]
While China’s
Ministry of Commerce claimed that the United States’ section 301 investigation
was a “clear violation of the basic WTO principle of most-favored-nation
treatment,” referring to its right to treatment as a most-favored nation under
WTO membership, USTR claimed that such conditions resulted from China’s failure to make
long-term structural changes—changes that China has committed to but has
not successfully implemented.
[788]
Based on the findings of its section 301 investigation, and
under the direction of the President, USTR imposed a series of tariffs on China
in 2018 that were countered by the Chinese government’s imposition of
additional tariffs on U.S. products, at least in part. The tariff increases by
the United States, which have thus far been imposed on a variety of lists of
Chinese imports between 2018 and 2019, have also been subject to an exclusion
process coordinated by USTR.
[789]
In a continued escalation of these trade actions, on May 9,
2019, USTR announced an intention to increase its ad valorem tariffs from 10
percent to 25 percent on “List 3” of Chinese imported products following
public comment and a hearing.
[790]
The goods on the list corresponded to approximately $200 billion (in annual
trade values) in U.S. imports from China.
[791]
On May 17, 2019, the United States announced an intention to
impose an additional tariff on a “List 4” set of Chinese imports. This entailed
an increase in tariffs on about $300 billion in goods (in annual trade values),
and consisted of products not currently covered by other actions in the section
301 investigation.
[792]
Tariffs for these “List 4” goods were separated into two groups with different
effective dates: goods in “List 4a” had a September 1, 2019, implementation
date, and goods in “List 4b” had a December 15, 2019, implementation date.
[793]
USTR also
developed an exclusion process for the imported goods in List 4a, with a
deadline for submitting requests of January 31, 2020.
[794]
While the
tariff rates for these imports were changed a few times in 2019, on December
18, 2019, they were indefinitely suspended for List 4b goods, and on January
22, 2020, they were reduced to 7.5 percent for List 4a goods.
[795]
Currency Manipulation
On August 5, 2019, under the provisions of the Omnibus Trade
and Competitiveness Act of 1988 (1988 Act), the U.S. Department of the Treasury
(Treasury) designated China a “currency manipulator.”
[796]
According to
the authorizing statute, Treasury analyzes the exchange policies of major U.S.
trading partners and “consider[s] whether countries manipulate the rate of
exchange between their currency and the United States dollar for purposes of
preventing effective balance of payments adjustments or gaining unfair
competitive advantage in international trade.”
[797]
According to
the provisions of the 1988 Act, if manipulation is found to have been carried
out by any U.S. trading partners that have material global current account
surpluses and significant bilateral trade surpluses with the United States,
Treasury would initiate negotiations with that country bilaterally or in
consultation with the International Monetary Fund (IMF), to remedy the
condition.
[798]
Treasury did not find China to be manipulating its currency
under the provisions set forth in a more recent law, the Trade Facilitation and
Trade Enforcement Act of 2015. According to the newer provisions, a U.S.
trading partner would be considered a currency manipulator if it maintains a
significant bilateral trade surplus with the United States, possesses a
material currency account surplus, and engages in persistent one-sided
interventions in foreign exchange markets.
[799]
As Treasury found that only one of the necessary three criteria were met for a
“currency manipulator” designation to be applied to China (regarding the size
of its bilateral merchandise trade surplus with the United States), it did not
designate China as a currency manipulator in its May 2019 report.
[800]
Given the terms of the Phase One agreement that was
negotiated in late 2019 and early 2020 (see below for more details), Treasury
determined that China should no longer be designated a currency manipulator.
[801]
Treasury
explained that China has made enforceable commitments to refrain from
competitive devaluations and has agreed to publish information related to
exchange rate fluctuations and its external balances.
[802]
The U.S.–China
Economic and Trade “Phase One” Agreement
On December 13, 2019, the United States and China reached a
“Phase One” Economic and Trade Agreement.
[803]
According to USTR, the agreement requires China to undertake structural and
other types of reforms as they relate to intellectual property,
[804]
technology
transfers, agriculture, financial services, and currency and foreign exchange.
[805]
Additionally,
according to USTR, the agreement includes commitments from China to import
various U.S. goods and services over the next two years in a total amount that
exceeds China’s annual level of imports for those goods and services in 2017 by
no less than $200 billion, and establish a strong dispute resolution system
with the United States to ensure prompt and effective implementation and
enforcement.
[806]
In return, the United States agreed to modify its section 301 tariff actions in
a “significant” way.
[807]
The Phase One Economic and Trade Agreement entered into
force on February 14, 2020. By that time, USTR and USDA stated that progress
was under way.
[808]
Specifically, USTR stated that China had started to take measures to lift
restrictions on U.S. fresh chipping potatoes, poultry products, pet foods
containing ruminant materials, seafood, feed additives, and other agricultural
products.
[809]
By March 2020, USTR also stated that China had started to take measures to lift
its import restrictions on U.S. beef, pork, distillers dried grains with
solubles, and other agricultural exports.
[810]
In early 2020, USTR also stated that it was forming a new Bilateral Evaluation
and Dispute Resolution Office to monitor China’s implementation of its Phase
One Agreement commitments and interact with its counterpart agency in China.
[811]
Short–Term
Agricultural Relief Programs
In July 2019, USDA announced the details of its $16 billion
support package for American farmers who have been adversely affected by deteriorating
trade conditions.
[812]
Similar to the 2018 trade aid support measures that amounted to $12 billion,
the 2019 program consists of three complementary programs: the Market
Facilitation Program (MFP), the Agricultural Trade Promotion Program (ATP), and
the Food Purchase and Distribution Program (FPDP).
Administered by USDA’s Farm Service Agency, the MFP was
designed to compensate American farmers who have been directly impacted by tariff-related
countermeasures, resulting in the loss of traditional exports.
[813]
Direct
payments of up to $14.5 billion were allocated for the 2019 MFP program,
compared to up to $10 billion in 2018.
[814]
A second agricultural relief program, ATP, was also tasked with helping U.S.
farmers find new export markets, but administered by the USDA’s Foreign
Agricultural Service. Its 2019 budget was $100 million, which was halved from
$200 million in 2018.
[815]
Finally, the FPDP, administered through USDA’s Agricultural
Marketing Services, was established to purchase surplus commodities that were
not exported due to the deterioration of trade conditions in 2019. Fruits,
vegetables, certain processed foods, beef, pork, lamb, poultry, and milk were
the eligible commodities, and were purchased and redistributed to food banks,
schools, and other institutions supporting low-income individuals.
[816]
The 2019 FPDP
was budgeted $1.4 billion for these purposes, which was up from $1.2 billion
the year before.
[817]
In 2019, Japan remained the United States’ fourth-largest
single-country trading partner in terms of two-way trade, accounting for 5.3
percent of total U.S. merchandise trade. U.S. merchandise trade with Japan
increased by 0.3 percent from $217.7 billion to $218.3 billion in 2019. At the
same time, the U.S. merchandise trade deficit with Japan increased by $1.8
billion to $69.0 billion. The increase in the bilateral merchandise trade
deficit can be attributed to a $0.5 billion decrease in U.S. exports, combined
with a $1.2 billion increase in imports (figure 6.9).
Japan remained the fourth-largest single-country destination
for U.S. merchandise exports in 2019, accounting for 4.5 percent of global U.S.
exports. U.S. merchandise exports to Japan dipped from $75.2 billion in 2018 to
$74.7 billion in 2019, an 0.8 percent decrease. The top U.S. exports to Japan
during the year were civil aircraft and parts ($7.5 billion), liquefied propane
($4.3 billion), and corn ($2.0 billion).
Japan was also the fourth-largest single-country source of
U.S. merchandise imports in 2019, accounting for 5.8 percent of global U.S.
imports. U.S. merchandise imports from Japan rose slightly from $142.4 billion
in 2018 to $143.6 billion in 2019, a 0.9 percent increase. The top U.S. imports
from Japan during the year were passenger vehicles with gasoline engines
between 1.5 and 3L ($24.6 billion), passenger vehicles with gasoline engines
exceeding 3L ($8.8 billion), and parts for airplanes or helicopters ($4.0
billion).
The United States' largest services exports to Japan in 2019
included travel services ($10.6 billion), transport services ($9.8 billion),
and other business services ($8.6 billion). Insurance services was the
fastest-growing service export, increasing by 42.1 percent from 2018. Major U.S.
services imports from Japan were charges for IP use ($11.4 billion), transport
services ($9.6 billion), and travel services ($4.0 billion). Maintenance and
repair services was the fastest-growing services import in 2019, increasing by
99.0 percent from 2018, from $100 million to $199 million. The largest sectoral
surpluses between the United States and Japan were in travel services and other
business services, reaching $6.6 billion and $5.0 billion, respectively. The
largest U.S. deficit was in charges for IP use at $4.4 billion.
Figure 6.9
U.S. merchandise trade with Japan, 2015–19
Source: USITC
DataWeb/USDOC (accessed February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.10
U.S. cross-border trade in private services with Japan,
2015–19
Source: USDOC, BEA,
International Services, tables 2.2 and 2.3, and International Transactions table
3.2, March 19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
In 2019, the United States-Japan Trade Agreement (USJTA) was
negotiated, drafted, and completed. In a joint statement, the two countries announced
the elimination or reduction of tariffs on “certain agricultural and industrial
products,” stating that these actions will “enhance bilateral trade in a
robust, stable and mutually beneficial manner.”
[818]
The United
States and Japan signed USJTA along with the United States-Japan Digital Trade
Agreement (USJDTA) on October 7, 2019.
[819]
In line with USTR’s objectives
seeking to negotiate trade agreements with Japan in stages, the United States
intends to enter into new negotiations (stage two).
[820]
Areas for
future negotiations include customs duties and other trade restrictions,
barriers to trade in services and investment, and other issues affecting both
nations that can lead to mutually beneficial trade.
[821]
For further
detail on USJTA and USJDTA, see chapter 5.
In May 2019, USDOC presented its section 232 national
security investigation of imports of automobiles and automotive parts under the
Trade Expansion Act of 1962 to the President.
[822]
Following the
investigation, the President proclaimed motor vehicle and parts imports,
particularly from Japan and the EU, a threat to U.S. national security.
[823]
USJTA does not
include any commitments on motor vehicles, which are planned for stage two of
the negotiations.
The United States, along with Japan and the EU, also worked
to advance issues related to non-market economic policies negatively affecting
fair trade. Furthermore, several trade developments related to agricultural
products, passenger motor vehicles, and supercomputers occurred between Japan
and the United States in 2019, which are discussed below.
[824]
Agricultural Products
The most relevant U.S.-Japan agricultural trade development
was the ratification of USJTA.
[825]
USJTA eliminated Japanese tariffs on approximately $4.3 billion in U.S.
agricultural products.
[826]
Additionally, Japan agreed to have country-specific safeguards for U.S. beef
exports as well as alter its pork safeguard mechanisms to match those in the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Other benefits for U.S agriculture include U.S.-specific quotas for products
such as wheat, malt, and processed cheese, among others. Overall, over 90
percent of U.S. food and agricultural products imported into Japan are either
duty-free or receive preferential tariff access. For further detail on USJTA
and its benefits to agriculture, see chapter 5.
On May 17, 2019, U.S. beef of all ages gained access to
Japan’s $3.5 billion meat import market.
[827]
In previous years, Japan maintained age-based restrictions due to concerns
about bovine spongiform encephalopathy (BSE), popularly known as mad cow
disease. This elimination of beef restrictions came after a removal of
safeguards was negotiated in 2018 on U.S. sheep and goat meat exports to Japan.
[828]
The new policy
marked the first time since 2003 that all beef products regardless of age were
allowed access to the Japanese market. In 2019, Japan imported 47.6 percent of
its bovine animal meats from Australia and 40.5 percent from the United States.
[829]
U.S. exports
of bovine animal meats to Japan totaled $1.5 billion (22.6 percent of U.S. beef
exports).
[830]
Several market access issues continued to affect U.S.
agricultural exports to Japan in 2019. Japan continues to operate a TRQ of
682,200 metric tons for imported rice. USTR maintains that Japan’s rice TRQ
inhibits U.S. rice producers from accessing final consumers in Japan. USTR has
also identified Japan’s state-operated wheat import system and its “gate price
mechanism” for pork as ongoing barriers to U.S. agricultural exports.
[831]
With the
implementation of USJTA, the pork gate price mechanism has been reduced but not
eliminated.
[832]
Supercomputers
In 2019, Japan revised its “Procedures to Introduce
Supercomputers,” which apply to public-sector supercomputer procurement. The
revision updates the procurement standards to reflect technological advances in
computing capacity, raising the threshold beyond which special procurement
procedures apply from 50 teraflops to 2 petaflops.
[833]
Additionally,
the government of Japan expressed an intent to continually update the
procedures and to increase computing capacity thresholds on December 23, 2020
and 2021.
[834]
The revision achieved one of the goals set by the United States in the 2018
U.S.-Japan Economic Dialogue’s trade and investment pillar.
[835]
Non-market Economic Policy
In 2019, USTR Lighthizer met with Japanese Minister of
Economy, Trade, and Industry Hiroshige Seko and EU Trade Commissioner Cecilia
Malmström, hosting two trilateral ministerial-level meetings to address
non-market issues negatively affecting trade. These meetings were the third and
fourth such gatherings convened among the three trade ministers following the
release of a joint scoping paper in May 2018. In the paper, all parties agreed
to “deepen and accelerate” discussions on possible new WTO rules for industrial
subsidies and state-owned enterprises, with a view toward future negotiations.
At the January 2019 meeting in Washington, DC, the parties
continued talks on their shared objectives, discussing the intensification of
exchange of information and identifying additional criteria that indicate
market-oriented conditions. They also pushed for cooperation on enforcement,
rule development, national security provisions, and export controls due to
forced technology transfers. The ministers also agreed to intensify engagement
with other trading partners.
[836]
At the May 2019 meeting in Paris, the parties continued
discussions on their shared objectives, with an emphasis on state enterprises
and industrial subsidies. The participants expressed a growing concern about
“the development of State Enterprises into national champions, disrupting
market-oriented trade, and directing State Enterprises to dominate global
markets.” The ministers affirmed their commitment to engage in deeper
discussions on enforcement and rulemaking as instruments to address these
issues. At the same time, they welcomed the progress on the work done in the
topic of industrial subsidies. The ministers directed their respective staffs
to continue text-based work on transparency, benchmarking, and identification
of harmful subsidies. They also proposed continued outreach to key WTO members
in order to address industrial subsidies through stronger rules.
[837]
In 2019, South Korea remained the United States’
sixth-largest single-country trading partner in terms of two-way trade,
accounting for 3.2 percent of total U.S. merchandise trade with the world. U.S.
merchandise trade with South Korea increased by 2.8 percent from $130.7 billion
to $134.3 billion in 2019. At the same time, the U.S. merchandise trade deficit
with South Korea increased by $2.8 billion to $20.5 billion in 2019. The growth
in the bilateral merchandise trade deficit can be attributed to a $0.4 billion
increase in U.S. exports combined with a $3.2 billion increase in imports from
the previous year (figure 6.11).
South Korea remained the seventh-largest single-country
destination for U.S. merchandise exports in 2019, accounting for 3.5 percent of
global U.S. exports. U.S. merchandise exports to South Korea increased from
$56.5 billion in 2018 to $56.9 billion in 2019, an 0.7 percent increase. U.S.
exports of crude petroleum, the top export to South Korea for the past two
years, increased by $3.5 billion (60.3 percent) from 2018, reaching $9.3
billion in 2019. Other top U.S. exports to South Korea during the year included
processors and controllers ($2.5 billion), and civil aircraft and parts ($2.2
billion).
South Korea remained the sixth-largest single-country source
market of U.S. merchandise imports in 2019, accounting for 3.1 percent of global
U.S. imports. U.S. merchandise imports from South Korea grew from $74.2 billion
in 2018 to $77.4 billion in 2019, a 4.4 percent increase. The top U.S. imports
from South Korea during the year were passenger vehicles with gasoline engines
between 1.5 and 3 liters ($9.6 billion), followed by computer parts and
accessories ($4.2 billion), and cellphones ($3.7 billion).
In 2019 U.S. cross-border private services trade with South
Korea totaled $33.2 billion, representing 2.4 percent of total U.S. private services
trade. U.S. cross-border service exports to South Korea increased by $1.0
billion, or 4.8 percent, to $22.9 billion in 2019, while U.S. cross-border
service imports from South Korea increased by $0.4 billion, or 4.3 percent, to
$10.3 billion. As a result, the U.S. surplus in services trade with South Korea
grew by 5.2 percent to $12.7 billion from $12.0 billion the year before (figure
6.12).
The United States’ largest services exports in 2019 included
travel services ($9.5 billion), charges for IP use ($4.1 billion), and other
business services ($3.3 billion). Other business services was the
fastest-growing services export sector in 2019, increasing by 102.7 percent
from 2018. Major U.S. services imports from South Korea were transport services
($6.5 billion), travel services ($1.5 billion), and other business services
($1.1 billion). Telecommunications, computer, and information services was the
fastest-growing services import, increasing by 353.5 percent from 2018. The
largest sectoral surpluses between the United States and South Korea were in
travel services and charges for IP use in 2019, reaching $8.0 billion and $3.5
billion respectively. The largest U.S. deficit with South Korea in 2019 was in
cross-border services trade in the transport services sector, at $3.8 billion.
Figure 6.11
U.S. merchandise trade with South Korea, 2015–19
Source: USITC DataWeb/USDOC
(accessed February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.12
U.S. cross-border trade in private services with South
Korea, 2015–19
Source: USDOC, BEA, International
Services, tables 2.2 and 2.3, and International Transactions, table 3.2, March
19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
South Korea and the United States saw developments in their
trade relationship in 2019 in bilateral and multilateral settings. Amendments
to the United States-Korea Free Trade Agreement (KORUS) went into effect on
January 1, 2019, modifying several tariff and nontariff measures impacting
trade between the two economies. Modifications enacted in the amendments
included extending the phaseout of U.S. tariffs and the harmonization of
standards and testing practices for certain automotive products, changing South
Korean customs procedures for verifying U.S.-originating exports, and ensuring implementation
of South Korean commitments on the nondiscriminatory treatment of
pharmaceuticals. The amendments also included language to clarify the
investor-state dispute settlement mechanism, increase the transparency of trade
remedy procedures, and modify the treatment of rules of origin for South Korean
textiles. Later in the year, two additional developments took place under KORUS
as USTR requested consultations with South Korea under the agreement’s
Environment and Competition chapters. This request marked the first time that
the United States had ever sought consultations under either KORUS chapter.
[838]
In both cases,
South Korea’s National Assembly responded by proposing legislation to address
the concerns at issue in the consultations.
[839]
For more information, see the KORUS section in chapter 5.
On September 23, 2019, South Korean Trade, Industry and
Energy Minister Sung Yun-mo signed an agreement in New York committing South
Korea’s state-run natural gas company, KOGAS, to import 1.58 million tons of
liquid natural gas from the United States over 18 years.
[840]
South Korean
President Moon Jae-in and President Trump announced the agreement in remarks at
a bilateral meeting in New York held on the same day.
[841]
Three different WTO disputes involving the United States and
South Korea were active in 2019. The dispute regarding U.S. antidumping
measures on certain oil country tubular goods from South Korea (DS488) saw
developments in July and August 2019, when South Korea proposed suspension of
concessions and the United States objected to South Korea’s proposed levels.
The matter was referred to arbitration by the DSB on August 9, 2019.
[842]
Two of the three active 2019 U.S.-South Korea WTO disputes
involve South Korea as the complainant on the issue of U.S. imports of large
residential washers (LRWs). In the dispute regarding U.S. antidumping and
countervailing measures on LRWs from South Korea (DS464), the WTO arbitrator
circulated its decision to members on February 8, 2019. The arbitrator
determined that South Korea could impose suspension of concessions on the
United States of up to $84.8 million with respect to U.S. noncompliance with
earlier DSB recommendations and rulings on LRWs from South Korea. The United
States completed implementation of the DSB’s recommendation concerning this
dispute on May 6, 2019, when antidumping and countervailing duty orders on South
Korean washers were revoked by USDOC.
[843]
In a separate dispute regarding the United States’ safeguard actions in
response to the imports of LRWs (DS546), a panel was composed on July 1, 2019,
with delivery of a final report expected in early 2021.
[844]
Market Access for U.S. Rice
On November 11, 2019, the WTO concluded its verification of
South Korea’s market access treatment for rice, which is administered by a
tariff-rate quota (TRQ) of 5 percent on in-quota and 513 percent on out-of-quota
imported rice. Under the TRQ, 408,700 tons enter at the in-quota rate, and of
this, 388,700 tons are allocated specifically to imports from Australia, China,
Thailand, the United States, and Vietnam. The agreement on South Korea’s market
access treatment for rice also provides enhanced disciplines related to the
administration of the U.S.-specific quota, which is set at 132,304 tons of rice
annually. The agreement entered into force on January 1, 2020.
[845]
The WTO verification process was initiated on January 1,
2015, when South Korea introduced a new regime for its rice imports,
eliminating its previous import quotas.
[846]
In place of the quotas, South Korea instituted “tariffication” (a WTO
obligation to convert quantitative restrictions to tariffs), established a
global TRQ, and eliminated country-specific quotas for its rice imports.
[847]
The United
States, however, along with Australia, China, Thailand, and Vietnam, notified
objections to the modified South Korean tariff schedule for rice, voicing
questions in various WTO committees over the institution of the high out-of-quota
duty rate of the new TRQ and updates to country-specific market access.
[848]
In response,
South Korea consulted with the governments of the objecting countries, holding
bilateral talks to address their concerns on these issues.
[849]
South Korea was the fourth-largest destination market for
U.S. rice in 2019, receiving $135.1 million of U.S. rice exports.
[850]
From 2017 to
2019, the United States was among the three largest sources of rice to South
Korea.
[851]
Commercial Fishing Activities
For the first time since 2013, South Korea was listed for
reported illegal, unreported, and unregulated (IUU) fishing activities in the
U.S. National Marine Fisheries’ biennial report to Congress.
[852]
According to
the September 2019 report, South Korea “failed to apply sufficient sanctions to
deter its vessels” from engaging in IUU fishing in an incident involving the
illegal harvest of toothfish in December 2017. Such actions violated
Conservation Measure 31-02 of the Convention for the Conservation of Antarctic
Marine Living Resources (CCAMLR), which both South Korea and the United States
have adopted under KORUS.
[853]
USTR sought consultations with the South Korean government
on this issue under the Environment Chapter of KORUS on September 19, 2019.
[854]
Consultations
were held in Seoul on October 17, 2019, with representatives from South Korea’s
Ministry of Trade, Industry, and Energy, Ministry of Ocean and Fisheries,
Ministry of Foreign Affairs, and South Korean Coast Guard attending.
Following the consultations, the South Korean
National Assembly passed several amendments to South Korea’s Distant Water
Fisheries Act on November 1, 2019. These amendments enable the South Korean
Minister of Oceans and Fisheries to apply administrative sanctions against
offending South Korean vessels for actions not in conformity with conservation
and management measures of regional fisheries management organizations,
including CCAMLR.
[855]
In 2019, the United States imported $32.5 million of
toothfish, also known as Chilean sea bass, from South Korea. South Korea was
among the two largest sources of toothfish to the United States from 2017 to
2019, with 15.3 percent of all U.S. toothfish imports in 2019 coming from South
Korea.
[856]
Oil-related Exports
South Korea has become one of the
United States’ biggest customers for crude petroleum, due to both rising U.S.
crude exports and actions by the United States and its trading partners.
From
2018 to 2019, U.S. crude petroleum exports to South Korea nearly doubled in
quantity and increased by 60.3 percent in value, with the United States
exporting 155.6 million barrels in 2019 to South Korea, compared to 88.3
million barrels in 2018. As a destination market for U.S. crude petroleum
exports, South Korea was second only to Canada in terms of export value in
2019. Compared to 2017, when South Korea imported $1.1 billion of crude petroleum
from the United States and was the fifth-most-common destination for U.S. oil
exports, the value of 2019 U.S. crude petroleum exports to South Korea
represent a 730.2 percent increase.
Rising U.S. crude petroleum exports to South Korea are part
of a larger U.S. national trend. U.S. crude petroleum exports have increased
globally since 2015, when a 40-year U.S. government ban on most exports of
crude petroleum to countries other than Canada was lifted. Recently, this
uptick in exports has been driven by higher U.S. production and an incompatibility
between the type of oil produced by the United States and the type of oil which
U.S. refineries are configured to process. Another factor was the completion of
efficiency-enhancing modifications to the U.S. oil-exporting infrastructure
along the Gulf Coast in 2018.
As a destination market, South Korea has both the
infrastructure and demand to receive this increase in U.S. petroleum exports.
Three of the 10 largest refineries in the world are located in South Korea, and
recent capacity additions for manufacturing petrochemical inputs have increased
demand for light sweet crude in South Korean refineries.
[857]
South Korea’s
status as a major U.S. crude petroleum export destination has also been driven
by a decline in Chinese imports of U.S. crude petroleum beginning in the second
half of 2018. China was the largest destination market in Asia for U.S. crude
petroleum in the first half of 2018, but it stopped importing crude petroleum
from the United States from August to October 2018 due to actions related to
the section 301 trade dispute.
[858]
Although Chinese imports of U.S. crude petroleum resumed in November 2018, the
reduction of U.S. crude petroleum exports to China continued into 2019, with
South Korea receiving the majority of the increase of U.S. crude exports bound
for Asia in the second half of 2018 through 2019.
[859]
In 2019, India was the United States’ ninth-largest
single-country trading partner in terms of two–way trade, a position it has
maintained since 2016. Merchandise trade with India accounted for 2.2 percent
of total U.S. merchandise trade during 2019. U.S. merchandise trade with India
increased by 5.1 percent in 2019, rising from $87.5 billion to $91.9 billion.
Concurrently, the U.S. merchandise trade deficit with India expanded by 13.0
percent, or $2.7 billion, to $23.1 billion. This $2.7 billion growth in the
bilateral merchandise trade deficit can be attributed to a $0.9 billion
increase in U.S. exports, fully negated by a $3.6 billion increase in imports
(figure 6.13).
India remained the 12th-largest single-country destination
for U.S. merchandise exports in 2019, accounting for 2.1 percent of global U.S.
exports. U.S. merchandise exports to India rose from $33.5 billion in 2018 to
$34.4 billion in 2019, a 2.7 percent increase. Leading U.S. exports to India
during the year were crude petroleum ($5.6 billion), nonindustrial diamonds
($4.3 billion), and nonmonetary gold ($1.5 billion).
India also remained the 10th-largest single-country source
of U.S. merchandise imports in 2019, accounting for 2.3 percent of global U.S.
imports. U.S. merchandise imports from India grew from $53.9 billion in 2018 to
$57.5 billion in 2019, a 6.6 percent increase. The top U.S. imports from India
during the year were nonindustrial diamonds ($8.0 billion), medicaments ($6.2
billion), and frozen shrimps and prawns ($2.1 billion).
In 2019 U.S. cross-border services trade with India totaled
$56.7 billion, or 4.1 percent of total U.S. services trade. U.S. cross-border
service exports to India increased by $1.2 billion (or 4.9 percent) to $26.4
billion in 2019, while U.S. cross-border service imports from India
simultaneously increased by $0.7 billion (or 2.4 percent) to $30.3 billion. As
a result, the U.S. services trade deficit with India decreased 11.6 percent to
$3.9 billion from $4.4 billion the year before (figure 6.14).
The United States’ largest services exports in 2019 included
travel services ($15.1 billion), charges for IP use ($3.5 billion), and other
business services ($1.8 billion). The category “other business services” was
the fastest-growing service export, increasing by 22.5 percent from 2018. Major
U.S. services imports from India were telecommunications, computer, and
information services ($16.0 billion), other business services ($8.2 billion),
and travel services ($3.3 billion). Charges for IP use was the fastest-growing
services import sector, increasing by 18.1 percent from 2018. The largest
sectoral surpluses between the United States and India were in travel services and
charges for IP use, reaching $11.8 billion and $2.0 billion respectively. The
largest U.S. services trade deficits were in two areas—telecommunications,
computer, and information services, and other business services—at $14.7
billion and $6.4 billion, respectively.
Figure 6.13
U.S. merchandise trade with India, 2015–19
Source: USITC DataWeb/USDOC (accessed February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.14
U.S. cross–border trade in total services with India, 2015–19
Source: USDOC, BEA, International
Services, tables 2.2 and 2.3, and International Transactions table 3.2, March
19, 2020.
Note: Data for 2019 are preliminary. Because
some data have been suppressed to protect firms’ confidential information,
services trade with India are reported in terms of total trade, which includes
government sales and purchases of goods and services. Underlying data for this
table can be found in appendix table
B.13.
In 2019, there were several significant events in U.S.-India
trade relations. Among the important developments were the revocation of
India’s Generalized System of Preferences (GSP) designation, Indian retaliatory
tariffs, and further United States WTO counternotifications. These topics are
discussed in detail below.
There were five active WTO dispute settlement proceedings
involving the United States and India in 2019. Three of these cases involved
the United States responding to complaints by India concerning U.S. measures on
imports of steel and aluminum, domestic content requirements in the renewable
energy sector, and imposition of countervailing duties on certain hot-rolled
carbon steel flat products. Two of the cases involved India responding to
complaints by the United States concerning (1) India’s imposition of additional
duties on certain U.S. products and (2) India’s provision of export subsidies
to Indian producers of steel products, pharmaceuticals, chemicals, information
technology products, textiles, and apparel.
In January 2019, the WTO composed a panel in response to a
request by India to investigate if the United States had imposed measures to
adjust imports of steel and aluminum. A WTO report on this matter is expected
by autumn 2020.
[860]
The WTO also released a panel report following a request by
India to investigate multiple U.S. state-level measures requiring domestic
content and subsidies in the renewable energy sector, including measures
involving solar, wind, and ethanol. In June 2019, this WTO panel reported that
all these U.S. domestic content measures were inconsistent with the General
Agreement on Tariffs and Trade (GATT) 1994, as the measures offer an advantage
to the use of domestic products and therefore give less favorable treatment to
like imported products. In August 2019, the United States appealed the
decision.
[861]
A WTO compliance panel report released in November 2019 also
found that the United States had undertaken measures deemed inconsistent and
noncompliant with the recommendations and rulings of the Dispute Settlement
Body regarding the United States’ imposition of countervailing duties on
certain hot-rolled carbon steel flat products from India. In December 2019, the
United States appealed the decision.
[862]
In 2019, there were two WTO cases involving India as the
respondent with the United States as the complainant, as noted above. In July
2019, the United States requested dispute settlement consultations with India
regarding India’s imposition of additional duties on 28 different industrial
and agricultural products originating from the United States, worth
approximately $1.4 billion. The additional duties were imposed by India in
response to the United States’ imposition of tariffs on imported steel and
aluminum in 2018 under section 232 of the Trade Expansion Act of 1962 (section
232). A panel was established in October 2019 and composed in January 2020. A
report is forthcoming.
[863]
In October 2019, a WTO panel ruled that India had provided
prohibited export subsidies to Indian producers, with the United States
establishing the existence of financial benefits conferred upon Indian
suppliers, contingent upon export performance. The panel found that India
provided export subsidies worth over $7 billion annually to Indian exporters of
steel products, pharmaceuticals, chemicals, information technology products,
textiles, and apparel, all of which adversely affected U.S. manufacturers and
workers.
[864]
The panel recommended that India withdraw the prohibited subsidies; India appealed
the ruling in November 2019.
[865]
Furthermore, following the issuance of the Unites States’
first-ever counternotification at the WTO regarding India’s price support for
wheat, rice, and cotton in 2018, the United States issued additional
counternotifications in February 2019 regarding India’s market price support
for chickpeas, pigeon peas, black matpe, mung beans, and lentils.
[866]
The United
States argued that India substantially underreported its market price support
for these products and exceeded its allowable WTO levels of trade-distorting support.
[867]
India rebutted
these charges at the WTO Committee on Agriculture, stating that the United States’
counternotification was based on incomplete and inaccurate information. Some
members of the WTO Committee on Agriculture agreed that further examination of
India’s notification processes was warranted.
[868]
Termination of GSP Country Eligibility and Retaliation
Following a review of India’s eligibility for benefits under
the GSP begun in 2018, the United States terminated India’s designation on March
4, 2019, effective on June 5, 2019. USTR found that India had implemented
multiple barriers to trade, thereby negatively impacting U.S. commerce. USTR
found that India had failed to provide the United States with equitable and
reasonable access to numerous market sectors, a necessary criterion for
eligibility under the GSP program.
[869]
India responded to the revocation of GSP eligibility by
issuing retaliatory tariffs on 28 U.S. products, broadly targeting agricultural
products but impacting the steel and chemical sectors as well.
[870]
These tariffs
hit U.S. almond and apple exporters particularly hard, with India being the
destination for more than half of all U.S. almond exports and being the
second-largest destination for U.S. apples in 2018.
[871]
In total,
these tariffs affect approximately $1.3 billion worth of exports, with almonds
and apples making up $609 million and $96 million of this total, respectively.
[872]
Intellectual Property
India remained on USTR’s Priority Watch List in the
2019 Special 301 Report
due to a failure to address long-standing issues concerning weak
protection and enforcement of IPRs. U.S. companies have raised complaints
regarding India’s narrow patentability standards, the potential threat of
compulsory licensing and patent revocations, and overly broad criteria for
issuing and revoking such licenses under the India Patents Act. USTR reports
that issues involving Indian patents are notably burdensome, involving costly
and time-consuming patent opposition battles, excessive delays in receiving
patent approvals, and excessive reporting requirements. USTR further notes that
India especially lacks an effective system for protecting against unfair
commercial use of products from the pharmaceutical and agricultural chemical
sectors. USTR additionally reports that high levels of piracy and counterfeit
sales are pervasive across all sectors.
[873]
The report noted that while India took actions to improve
its IPR protection, such as acceding to the World Intellectual Property
Organization’s (WIPO) Internet Treaties and the Nice Agreement, it also took
steps backward.
[874]
India has placed further restrictions on information transparency about
state-issued manufacturing licenses. The licensing
system fails to notify interested parties of marketing approvals, thereby
reducing the efficacy of early resolution of potential patent disputes.
USTR’s
2019 Out-of-Cycle Review of Notorious Markets
Report
identified several online or physical marketplaces of concern in
India that reportedly engage in or facilitate commercial-scale copyright piracy
and trademark counterfeiting. In particular, the report noted markets in India
for counterfeit apparel and footwear, electronic items, cosmetics, and pirated
software and media.
[875]
In 2019, Taiwan climbed in the rankings to become the United
States’ 10th-largest single-country trading partner in terms of two-way trade,
accounting for 2.1 percent of total U.S. merchandise trade. U.S. merchandise
trade with Taiwan increased by 12.0 percent from $76.3 billion to $85.5 billion
in 2019. At the same time, the U.S. merchandise trade deficit with Taiwan
increased by 51.6 percent, or $7.8 billion, to $23.0 billion. The growth in the
bilateral merchandise trade deficit can be attributed to a $0.6 billion
increase in U.S. exports combined with a $8.5 billion increase in imports
(figure 6.15).
Taiwan became the 14th-largest single-country destination
for U.S. merchandise exports in 2019, accounting for 1.9 percent of global U.S.
exports. U.S. merchandise exports to Taiwan rose from $30.6 billion in 2018 to
$31.2 billion in 2019, a 2.2 percent increase. The top U.S. exports to Taiwan
during the year were crude petroleum ($3.5 billion), machines for semiconductor
boules or wafer manufacturing ($2.8 billion), and civil aircraft and parts
($2.5 billion).
Taiwan remained the 13th-largest single-country source of
U.S. merchandise imports in 2019, accounting for 2.2 percent of global U.S.
imports. U.S. merchandise imports from Taiwan grew from $45.8 billion in 2018
to $54.3 billion in 2019, an 18.6 percent increase. The top U.S. imports from
Taiwan during the year were computer parts and accessories ($4.6 billion),
telecommunications equipment ($3.2 billion), and computers ($3.0 billion).
In 2019, U.S. cross-border private services exports to
Taiwan totaled $18.2 billion, or 1.3 percent of total U.S. private services
trade. U.S. cross-border service exports to Taiwan increased by $0.6 billion,
or 6.5 percent, to $10.2 billion in 2019, while U.S. cross-border service
imports from Taiwan decreased by $0.2 billion, or 2.4 percent, to $8.0 billion.
As a result, the U.S. surplus in services trade with Taiwan rose 59.7 percent
to $2.2 billion from $1.4 billion the year before (figure 6.16).
The United States’ largest services exports to Taiwan in
2019 included charges for IP use ($2.8 billion), transport services ($2.4
billion), and travel services ($2.2 billion). Financial services was the
fastest-growing service export, increasing by 31.1 percent from 2018, reaching
$772 million in 2019. Major U.S. services imports from Taiwan were transport
services ($5.7 billion), travel services ($1.2 billion), and other business
services ($0.7 billion). Transport services was the only service category that
did not experience a decline in imports from 2018, remaining unchanged at $5.7
billion. The largest sectoral surpluses between the United States and Taiwan were
in charges for IP use and in maintenance and repair services, reaching $2.7
billion and $1.2 billion, respectively. The largest U.S. deficits were in
transport services and other business services, at $3.3 billion and $0.1
billion, respectively.
Figure 6.15
Source: USITC
DataWeb/USDOC (accessed February 14, 2020).
Note: Underlying data for this table
can be found in appendix table
B.11.
Figure 6.16
U.S. cross-border trade in private services with Taiwan,
2015–19
Source: USDOC, BEA,
International Services, tables 2.2 and 2.3, and International Transactions
table 3.2, March 19, 2020.
Note: Data for 2019 are preliminary.
Underlying data for this table can be found in appendix table
B.13.
The U.S.-Taiwan Trade and Investment Framework Agreement
(TIFA), signed in 1994, continues to serve as the primary channel for
discussions between the United States and Taiwan on enhancing bilateral trade
and investment. The TIFA Council last met formally in 2016, but bilateral
discussions were held in September 2018 to discuss agricultural trade barriers,
technical barriers to trade, improving bilateral investment, and IP issues,
among others.
[876]
During an April 2019 meeting with David Meale, Deputy
Assistant Secretary for Trade Policy and Negotiations for the U.S. Department
of State, Taiwan’s President Tsai Ing-wen reaffirmed her interest in
resuming TIFA Council meetings to secure a bilateral trade agreement with the
United States.
[877]
In March 2020 the U.S. President signed the Taiwan Allies International
Protection and Enhancement Initiative (TAIPEI) Act of 2019, which calls for
both sides to initiate talks to establish a free trade agreement.
[878]
Furthermore,
the U.S. Senate introduced the Taiwan Assurance Act in 2019, although it has
not yet been voted on; this act encourages USTR to resume the TIFA meetings
with Taiwan to secure a bilateral trade agreement.
[879]
Despite the
lack of official TIFA Council meetings in 2019, both sides continued to raise
concerns regarding agricultural trade barriers, IP theft, and pharmaceutical
patents through trade missions and USTR’s trade policy agenda. In addition,
there were several trade and investment policy developments which furthered
objectives of the TIFA framework.
Intellectual Property Rights Protection
USTR recognized Taiwan in its 2019 Special 301 report as
making progress in strengthening its policies for protecting trade secrets. The
report noted that Taiwan had worked with stakeholders to organize campaigns to
educate students about IP infringement and held organized training sessions for
several government sectors to discuss IP rights, piracy, and illegal “camcording.”
[880]
In line with the TIFA, Taiwan
implemented an amendment in 2019 to its Pharmaceutical Affairs Act which
creates a patent linkage registration system. Under this system, producers of
newly approved drugs can list any patent protecting their products and assert
those against generic drug applicants, a system that can support early
resolution of patent disputes.
[881]
The patent registration system also includes patents for biologic medications.
[882]
USTR continued to encourage Taiwan to better enforce the
Copyright Act by increasing prosecution of online piracy cases, including those
involving pirated reading materials from education institutions, and
prosecuting cases of stream-ripping, in which streamed online content is
illegally downloaded. USTR also called for Taiwan to enact legislation
requiring internet service providers to block access to websites committing
copyright infringement and for Taiwan to consider internet piracy a “public
crime” in order to enable prosecution.
[883]
According to USTR, Taiwan
continues to address reforms as part of the Digital Anti-Piracy Working Plan
that it agreed to with the United States in 2018. These reforms include
encouraging only dissemination of education materials that do not infringe on
copyright and, in July 2019, signing a voluntary cooperation agreement with the
UK-based Digital Market Association to expand efforts to publicize infringing
websites and discourage advertising on such sites.
[884]
Investment
Lowering barriers to investment has been another focus of
this TIFA. Taiwan currently limits investment into certain sectors, including
agriculture; some manufacturing, including chemicals; and some services, such
as water, sewage, public education, childcare, and healthcare. Taiwan’s cabinet
approved a draft bill in January 2019 to amend the Statute for Investment by
Foreign Nationals to remove pre-investment approval requirements for
investments in Taiwan of less than $1 million by foreign nationals and Taiwan
nationals.
[885]
The SelectUSA Investment Summit, hosted by the U.S.
Department of Commerce to encourage foreign direct investment (FDI) into the
United States, occurred June 10–12, 2019. The summit was attended by 112
delegates from Taiwan. Delegates represented the advanced manufacturing,
biotechnology, electricity and petrochemical, electronics, and steel
industries, among others.
[886]
U.S. FDI stock in Taiwan was $17.5 billion in 2018 (latest available data), a
2.9 percent increase from 2017.
[887]
Taiwan’s FDI stock in the United States was $14.1 billion in 2018 (latest
available data).
Agricultural Products
The United States continued to press Taiwan in 2019 to
remove certain barriers hindering U.S. exports of agricultural products to
Taiwan, including U.S. pork, beef, and rice. The United States also continued
to press Taiwan to remove its import ban against U.S. pork products and some
beef produced using the feed additive ractopamine.
[888]
A USDA
delegation met with Taiwanese officials as part of
a trade mission in April 2019, during which the issue of ractopamine in meat
products was discussed. The delegation was accompanied by trade representatives
from 49 agribusiness and industry associations.
[889]
Another important agricultural development involved Taiwan’s
Organic Agriculture Promotion Act. Passed by the Legislative Yuan (Taiwan’s
legislature) in 2017, this law took effect in May 2019. It has the aim of
regulating the production, marketing, testing, and labeling of organic
products, and also applies to imported products. The act empowers Taiwan to
revoke the recognition of imported organic products if the source country does
not recognize Taiwan’s own organic program for the same product. This provision
aims to promote growth of Taiwan’s exports of its organic products.
[890]
In September 2019, Taiwan signed a letter of intent to buy
$3.6 billion worth of U.S. agriculture products between 2020 and 2021,
including $1.1 billion of corn, $1.1 billion of soybeans, $960 million of beef
products, and $576 million in wheat products.
[891]
This demand
helps replace lost demand from China, as the products Taiwan intends to
purchase were subject to tariffs by China in response to the U.S. China 301
tariffs.
[892]
Other Technical Barriers
In 2019 there were several other developments regarding
technical barriers faced by U.S. exporters to Taiwan that have been raised in
previous TIFA meetings. These included labeling and certification requirements
for genetically engineered foods and feed, as well as cosmetic products,
chemical substances, and organic products.
The United States continued to raise concerns about Taiwan
implementing a proposed amendment to Taiwan’s Act Governing Food and Safety Sanitation.
The amendment would require importers and producers of genetically engineered
products to put in place systems to be able to trace such products and to
maintain system records for five years. USTR claimed the proposed requirements
create additional costs for global supply chains, for food safety reasons that
the United States claims are not backed by science.
[893]
Taiwan also began in 2019 to implement amendments to the Act
for Cosmetics Hygiene Safety Administration (Cosmetic Act). U.S. stakeholders
had reservations about measures included in the amendments, such as a new
requirement that product information files, which are a legally required
product label for cosmetics in Taiwan, received a signature from a product
safety evaluator. Stakeholders also raised concerns over a requirement that
certain good manufacturing practices guidelines be followed.
[894]
In January 2019, Taiwan’s President enacted amendments to
Taiwan’s Toxic and Concerned Chemical Substances Control Act. U.S. stakeholders
expressed concerns about the thresholds set by the amendments for handling
volume and chemical concentrations. The amendments also impose more stringent
requirements to apply for protection of confidential business information.
[895]
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Table B.3
U.S.
trade in private services with major bilateral trading partners, 2019 (million
dollars)
European Union
Canada
China
Mexico
Japan
South Korea
India
Taiwan
Services
imports
250,177
a
37,560
18,742
27,350
35,984
12,833
30,300
a
8,045
Services exports
326,252
a
64,700
56,666
33,843
48,699
23,148
26,424
a
10,504
Source:
USDOC, BEA, Interactive data, International Transactions, Services, & IIP,
International Transactions, tables 1.2 and 1.3
(accessed April 14, 2020.)
a
Services trade from the EU for 2016–19 and India for 2019 are overstated
because the data include government goods and services not included elsewhere
(n.i.e.).
Table B.7
U.S.
cross-border trade in private services with the world, 2017–18
2017
2018
2019
Export
779.3
805.7
823.7
Import
521.8
544.3
571.3
Trade balance
257.5
261.4
252.4
Source: USDOC, BEA, Interactive data,
International Transactions, Services, and International Investment Position,
International Transactions, Table 3.1, “U.S. International Trade in Services” (accessed
March 19, 2020).
Note: Data for 2019 are preliminary.
Corresponds to Figure
1.7.
a
Services imports from the EU for 2016–19 and India for 2019 are overstated
because the data include government goods and services not included elsewhere
(n.i.e.).
Table B.8
Top
10 U.S. export and import markets for private services, by share, 2019
U.S. exports
Share of exports
U.S. imports
Share of imports
(Billion $)
(%)
(Billion $)
(%)
European Union
265.6
a
32.2
a
209.8
a
25.5
a
Canada
64.3
7.8
37.2
4.5
Mexico
33.4
4.1
27.2
3.3
China
56.3
6.8
18.7
2.3
Japan
48.1
5.8
31.3
3.8
South
Korea
23.0
2.8
10.3
1.2
India
26.4
a
3.2
a
30.3
a
3.7
a
Singapore
22.6
2.7
9.7
1.2
Taiwan
10.2
1.2
8.0
1.0
Brazil
26.1
3.2
6.1
0.7
All others
247.8
30.1
182.6
22.2
Total
823.7
100.0
571.3
100.0
Source: USDOC, BEA, Interactive data,
International Transactions, Services, and International Investment Position,
International Transactions, table 1.3, “U.S. International Transactions,
Expanded Detail by Area and Country” (accessed March 19, 2020).
Note: U.S. trade with the EU and
India includes government goods and services. Data are preliminary. Corresponds
to figures
1.8
and
1.9.
a
Services trade from the EU for 2016–19 and India for 2019 are overstated
because the data include government goods and services not included elsewhere
(n.i.e.).
Table B.9
Products
at issue in active section 337 investigation proceedings, 2019
Table B.10
Share
of Trade Adjustment Assistance for Workers (TAA) petitions certified by
industry sector in FY 2019
Industry
Share of total (%)
Manufacturing
53.1
Professional,
scientific, and technical services
14.3
Finance and insurance
9.0
Information
8.3
Administrative and support and waste management and remediation
services
4.6
Wholesale
trade
4.5
Other
6.3
Total
100.0
Source: USDOL, ETA, email message to USITC staff, March 4,
2020. “Other” includes all industry sectors where less than 30
TAA petitions
were certified in FY 2019.
Table B.13
U.S.
private cross-border services trade with selected major trading partners and
the world, 2015–19 (billion dollars)
Country/region
Trade flow
2015
2016
2017
2018
2019
European Union
Exports
229.1
235.0
a
244.3
a
253.6
a
265.6
a
Imports
174.2
179.6
a
192.6
a
198.6
a
209.8
a
Services trade balance
54.9
55.5
a
51.7
a
55.0
a
55.7
a
Mexico
Exports
31.0
30.9
32.1
33.4
33.4
Imports
22.8
24.0
25.4
25.7
27.2
Services trade balance
8.3
6.9
6.7
7.7
6.2
Canada
Exports
54.3
54.0
57.8
63.6
64.3
Imports
29.0
30.4
32.9
35.6
37.2
Services trade balance
25.4
23.6
24.9
28.0
27.0
China
Exports
48.5
53.9
55.6
56.7
56.3
Imports
14.9
16.1
17.3
18.3
18.7
Services trade balance
33.6
37.8
38.2
38.4
37.6
Japan
Exports
44.8
44.4
45.2
44.4
48.1
Imports
26.1
27.7
29.0
30.4
31.3
Services trade balance
18.7
16.7
16.2
14.0
16.8
South
Korea
Exports
20.6
21.4
23.5
21.9
23.0
Imports
8.7
8.8
9.2
9.9
10.3
Services trade balance
11.9
12.7
14.3
12.0
12.7
India
Exports
18.5
20.6
23.6
25.2
26.4
a
Imports
24.7
26.2
28.2
29.6
30.3
a
Services trade balance
-6.1
-5.6
-4.6
-4.4
-3.9
a
Taiwan
Exports
11.9
11.2
9.4
9.6
10.2
Imports
7.6
7.7
8.0
8.2
8.0
Services trade balance
4.3
3.6
1.4
1.4
2.2
World
Exports
735.2
739.7
779.3
805.7
823.7
Imports
470.4
490.1
521.8
544.3
571.3
Services trade balance
264.8
249.5
257.5
261.4
252.4
Source:
USDOC, BEA, Interactive data, International Transactions, Services, & IIP,
International Transactions, "Table 1.2 U.S. International Trade in
Services," and "Table 1.3 U.S. International Transactions,"
expanded detail by area and country (accessed March 19, 2020).
a
Services trade from the EU for 2016–19 and India for 2019 are overstated
because the data include government goods and services not included elsewhere
(n.i.e.).
Table B.14
U.S.
private cross-border services trade with major trading partners and the world,
2019
Country/region
U.S. exports
U.S. imports
Share of total exports
Share of total imports
(Billion $)
(Billion $)
(%)
(%)
European
Union
265.6
a
209.8
a
32.2
a
36.7
a
Mexico
33.4
27.2
4.1
4.8
Canada
64.3
37.2
7.8
6.5
China
56.3
18.7
6.8
3.3
Japan
48.1
31.3
5.8
5.5
South Korea
23.0
10.3
2.8
1.8
India
26.4
a
30.3
a
3.2
a
5.3
a
Taiwan
10.2
8.0
1.2
1.4
All
others
296.5
198.2
36.0
34.7
World
823.7
571.0
100.0
100.0
Source:
USDOC BEA, Interactive data, International Transactions, Services, & IIP,
International
Transactions, "Table 1.2 U.S. International Trade in Services," and
"Table 1.3 U.S. International Transactions," March 19, 2020.
Note: Because of rounding, figures
may not add up to 100 percent. Data are preliminary. Corresponds to figures
1.8
and
1.9.
a
Services trade from the
EU for 2016–19 and India for 2019 are overstated because the data include
government goods and services not included elsewhere (n.i.e.).
Table C.1
U.S.
imports for consumption from GSP beneficiaries, 2017–19
2017
2018
2019
GSP imports
from LDBDCs (million $)
a
104
142
182
GSP imports from
non-LDBDCs (million $)
b
21,504
23,695
20,686
Subtotal,
GSP imports (million $)
c
21,608
23,837
20,869
All other imports
(million $)
192,881
213,464
213,814
Total imports
from GSP beneficiaries (million $)
214,488
237,301
234,682
GSP imports
from LDBDCs (percent)
a
0.0
0.1
0.1
GSP imports from
non-LDBDCs (percent)
b
10.0
10.0
8.8
Subtotal,
GSP imports (percent)
c
10.1
10.0
8.9
All other imports (percent)
89.9
90.0
91.1
Total
imports from GSP beneficiaries (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained on the USITC DataWeb.
Note: Because of rounding, figures
may not add to totals shown. LDBDC = least-developed beneficiary developing
country. Corresponds to table
2.6.
a
Eligible products from least-developed beneficiary developing countries (LDBDCs)-
are those for which the rate of duty of “free” appears in the special rate
column of the HTS, followed by the symbol “A+” in parentheses. The symbol “A+”
indicates that all LDBDCs (and only LDBDCs) are eligible for duty-free
treatment with respect to all articles listed in the designated provisions.
b
Non-LDBDC-eligible products are those for which a rate of duty of “free”
appears in the special rate column of the HTS, followed by the symbols “A” or
“A*” in parentheses. The symbol “A” indicates that all beneficiary countries
are eligible for duty-free treatment with respect to all articles listed in the
designated provisions. The symbol “A*” indicates that certain beneficiary
countries (specified in general note 4(d) of the HTS) are not eligible for
duty-free treatment with respect to any article listed in the designated provision.
c
Not all products are eligible for GSP.
Table C.2
U.S.
imports for consumption from Nepal, 2017–19
2017
2018
2019
Imports under
NTPP (thousand $)
2,368
3,127
3,061
Imports under GSP (thousand
$)
8,567
9,256
12,783
Subtotal, imports
under NTPP and GSP (thousand $)
10,935
12,383
15,844
All other imports
(thousand $)
80,746
86,143
75,028
Total
imports, Nepal (thousand $)
91,681
98,526
90,872
Imports under
NTPP (percent)
2.6
3.2
3.4
Imports under GSP
(percent)
9.3
9.4
14.1
Subtotal, imports
under NTPP and GSP (percent)
11.9
12.6
17.4
All other imports
(percent)
88.1
87.4
82.6
Total
imports, Nepal (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
Note: Eligible products under the Nepal
Trade Preference Program (NTPP) are those for which a rate of duty of “free”
appears in the special rate column of the HTS, followed by the symbol “NP” in
parentheses. The symbol “NP” indicates that Nepal is eligible for duty-free
treatment with respect to all articles listed in the designated provisions.
Includes imports for which preferential tariff treatment was claimed for
NTPP-eligible goods by U.S. importers under GSP, for HTS rate lines with
special duty symbols “A,” “A*,” or “A+.” Corresponds to table
2.7.
Table C.3
U.S.
imports for consumption from AGOA beneficiaries, 2017–19
2017
2018
2019
Imports under
AGOA, excluding GSP (million $)
12,235
10,791
7,328
Imports under GSP, AGOA
eligible (million $)
1,314
1,234
1,072
Imports
under AGOA (million $)
a
13,550
12,025
8,400
All other imports
(million $)
11,319
12,499
12,363
Total
imports from AGOA countries (million $)
24,868
24,524
20,763
Imports under
AGOA, excluding GSP (percent)
49.2
44.0
35.3
Imports under GSP, AGOA
eligible (percent)
5.3
5.0
5.2
Imports
under AGOA (percent)
a
54.5
49.0
40.5
All other imports
(percent)
45.5
51.0
59.5
Total
imports from AGOA countries (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
a
Eligible
products under the African Growth and Opportunity Act (AGOA) are those for
which a rate of duty of “free” appears in the special rate column of the HTS,
followed by the symbol “D” in parentheses. The symbol “D” indicates that all
AGOA beneficiaries are eligible for duty-free treatment with respect to all
articles listed in the designated provisions. In addition, provisions of
subchapters II and XIX of chapter 98 of the HTS set forth specific categories
of AGOA-eligible products, under the terms of separate country designations
enumerated in subchapter notes. Includes imports for which preferential tariff
treatment was claimed for AGOA-eligible goods by U.S. importers under GSP, for
HTS rate lines with special duty symbols “A,” “A*” (unless the AGOA beneficiary
country is excluded), or “A+.”
Table C.4
U.S.
imports for consumption from CBERA countries, 2017–19
2017
2018
2019
Imports under
CBTPA (million $)
a
344
344
410
Imports under CBERA,
excluding CBTPA (million $)
b
617
687
241
Imports
under CBERA/CBTPA (million $)
960
1,031
651
All other imports
(million $)
4,840
4,989
4,908
Total
imports from CBERA countries (million $)
5,800
6,020
5,559
Imports under
CBTPA (percent)
a
5.9
5.7
7.4
Imports under CBERA,
excluding CBTPA (percent)
b
10.6
11.4
4.3
Imports
under CBERA/CBTPA (percent)
16.6
17.1
11.7
All other imports
(percent)
83.4
82.9
88.3
Total
imports from CBERA countries (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
Note: The data
for U.S. imports under the Caribbean Basin Economic Recovery Act (CBERA)
include U.S. imports under CBERA as amended by both U.S.-Caribbean Basin Trade
Partnership Act (CBTPA) and the Haitian Hemispheric Opportunity through
Partnership Encouragement (HOPE) HOPE and Haiti Economic Lift Program (HELP)
Acts. In previous Year in Trade reports, trade data under the HOPE and HELP
Acts were reported and analyzed separately only in the “Haiti Initiatives”
section. Thus, numbers from the previous report are not comparable to the
numbers in the table above. USITC staff have tracked U.S. Census data for
textile and apparel imports under HOPE/HELP at the shipment level. These data
are cross-checked against aggregate figures from USDOC’S Office of Textiles and
Apparel (OTEXA), which is part of the International Trade Administration, to
ensure an accurate reporting of HOPE/HELP utilization rates. Corresponds to
table
2.9.
a
CBTPA-eligible
products are those for which a special duty rate appears in the special rate
column of the HTS, followed by the symbol “R” in parentheses. The symbol “R”
indicates that all CBTPA beneficiary countries are eligible for special
duty-rate treatment with respect to all articles listed in the designated
provisions. In addition, subchapters II and XX of chapter 98 set forth
provisions covering specific products eligible for duty-free entry, under
separate country designations enumerated in those subchapters (and including
former CBTPA beneficiaries El Salvador, Guatemala, Honduras, Nicaragua, the
Dominican Republic, Costa Rica, and Panama).
b
CBERA
(excluding CBTPA)-eligible products are those for which a special duty rate
appears in the special rate column of the HTS, followed by the symbols “E” or
“E*” in parentheses. The symbol “E” indicates that all beneficiary countries
are eligible for special duty rate treatment with respect to all articles
listed in the designated provisions. The symbol “E*” indicates that certain
articles, under general note 7(d) of the HTS, are not eligible for special duty
treatment with respect to any article listed in the designated provision.
Table C.5
U.S. imports of apparel for consumption from Haiti,
2017–19
2017
2018
2019
CBERA/CBTPA
(million $)
277
254
255
HOPE and HELP Acts
(million $)
577
642
720
Apparel
imports under a trade preference program (million $)
854
896
975
Total apparel imports
from Haiti excluding trade preference program
(million $)
8
28
31
Total
apparel imports from Haiti (million $)
862
924
1,006
CBERA/CBTPA (percent)
32.1
27.5
25.3
HOPE and HELP Acts
(percent)
66.9
69.5
71.6
Apparel
imports under a trade preference program (percent)
99.0
97.0
96.9
Total apparel imports
from Haiti excluding trade preference program (percent)
1.0
3.0
3.1
Total
apparel imports from Haiti (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
Note: These data reflect detailed U.S.
general import data under trade preference programs sorted by category and
published by the Office of Textiles and Apparel at USDOC (accessed April 8,
2019, and March 13, 2020). Corresponds to table
2.10.
Table C.6
U.S.
merchandise exports to FTA partners, by FTA partner, 2017–19
FTA partner
2017
2018
2019
(Million $)
(Million $)
(Million $)
Canada
282,473
299,769
292,382
Mexico
243,508
265,443
256,374
NAFTA
525,980
565,211
548,756
Israel
12,548
13,707
14,377
Jordan
1,921
1,581
1,474
Chile
13,633
15,377
15,776
Singapore
29,649
32,747
31,550
Australia
24,518
25,310
26,025
Morocco
2,218
3,011
3,479
Bahrain
898
2,042
1,408
CAFTA-DR
a
30,586
32,715
32,750
Oman
1,984
2,415
1,938
Peru
8,668
9,724
9,687
South Korea
48,350
56,507
56,897
Colombia
13,375
15,158
14,780
Panama
6,290
6,838
7,721
Non-NAFTA partners
194,637
217,133
217,863
FTA
partners total
720,618
782,344
766,619
All other exports
total
825,856
883,648
878,555
Total
U.S. exports
1,546,473
1,665,992
1,645,174
FTA partner share of U.S. exports (percent)
46.6
47.0
46.6
Non-FTA partner share of U.S. exports (percent)
53.4
53.0
53.4
Total U.S. exports (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
a
The Dominican Republic-Central
America-United States Free Trade Agreement (CAFTA-DR) is a multiparty FTA that
includes the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua,
and Costa Rica, as well as the United States.
Table C.7
U.S.
merchandise imports with free trade agreement (FTA) partners, by FTA partner,
2017–19
FTA partner
2017
2018
2019
(Million $)
(Million $)
(Million $)
Canada
299,050
318,757
319,728
Mexico
312,804
346,097
358,108
NAFTA
611,854
664,854
677,835
Israel
21,941
21,770
19,507
Jordan
1,687
1,814
2,170
Chile
10,550
11,387
10,394
Singapore
19,368
26,612
26,370
Australia
10,049
10,123
10,854
Morocco
1,237
1,553
1,581
Bahrain
996
991
1,045
CAFTA-DR
a
23,548
25,172
25,878
Oman
1,066
1,275
1,160
Peru
7,270
7,888
6,145
South Korea
71,416
74,197
77,426
Colombia
13,486
13,783
14,111
Panama
442
421
452
Non-NAFTA partners
183,056
196,986
197,091
FTA partners
794,910
861,840
874,926
All other imports
1,543,776
1,677,499
1,622,542
Total imports
2,338,686
2,539,339
2,497,468
FTA partner
share of U.S. imports (percent)
34.0
33.9
35.0
Non-FTA partner share of
U.S. imports (percent)
66.0
66.1
65.0
Total U.S.
imports (percent)
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
a
The Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) is a
multiparty FTA that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Costa Rica, as well as the United States.
Table C.8
U.S.
merchandise trade balance with FTA partners, by FTA partner, 2017–19
FTA Partner
2017
2018
2019
(Million $)
(Million $)
(Million $)
Canada
-16,578
-18,989
-27,346
Mexico
-69,296
-80,654
-101,734
NAFTA
-85,874
-99,643
-129,079
Israel
-9,394
-8,063
-5,130
Jordan
234
-232
-696
Chile
3,082
3,989
5,382
Singapore
10,281
6,135
5,180
Australia
14,469
15,187
15,171
Morocco
982
1,458
1,898
Bahrain
-98
1,051
363
CAFTA-DR
a
7,039
7,542
6,872
Oman
918
1,140
778
Peru
1,398
1,837
3,543
South Korea
-23,066
-17,690
-20,528
Colombia
-112
1,375
670
Panama
5,847
6,417
7,269
Non-NAFTA partners
11,582
20,147
20,772
FTA
partners
-74,292
-79,496
-108,307
All other trade
balance
-717,920
-793,851
-743,986
Total
trade balance
-792,213
-873,347
-852,293
Source: Official USDOC trade
statistics as maintained by USITC.
a
The Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) is a
multiparty FTA that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Costa Rica, as well as the United States.
a
The Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) is a
multiparty FTA that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Costa Rica, as well as the United States.
Table C.10
Share
of total U.S. imports for consumption under FTA provisions, by FTA partner,
2017–19
FTA partner
2017
2018
2019
(%)
(%)
(%)
Canada
5.6
5.1
5.0
Mexico
7.9
7.9
8.1
Subtotal, NAFTA
13.5
12.9
13.1
Israel
0.1
0.1
0.1
Jordan
0.1
0.1
0.1
Chile
0.3
0.3
0.2
Singapore
0.1
0.2
0.2
Australia
0.2
0.1
0.2
Morocco
0.0
0.0
0.0
Bahrain
0.0
0.0
0.0
CAFTA-DR
a
0.6
0.6
0.6
Oman
0.0
0.0
0.0
Peru
0.1
0.1
0.1
South Korea
1.4
1.3
1.5
Colombia
0.2
0.2
0.2
Panama
0.0
0.0
0.0
Other FTA partners
3.1
3.1
3.3
Subtotal,
FTA partners
16.6
16.0
16.3
All other imports
83.4
84.0
83.7
Total imports
100.0
100.0
100.0
Source: Official USDOC trade
statistics as maintained by USITC.
a
The Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) is a
multiparty FTA that includes the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Costa Rica, as well as the United States.
a
CAFTA-DR is a multiparty
FTA that includes the Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and Costa Rica, as well as the United States.
[1]
This year, the merchandise data used in this report are available through a
supplemental trade dataset accompanying the report at publication.
[2]
The eight largest U.S. trading partners are the European Union, Canada, China,
Mexico, Japan, Republic of Korea (South Korea), India, and Taiwan (see the
interactive
dashboard
at appendix A).
[4]
The figures for services trade are based on data for cross-border trade in
private services, which exclude government sales and purchases of goods and
services not included elsewhere (n.i.e.). The sole exceptions are the European
Union (EU) and India: U.S. services trade flows from the EU and India include
government goods and services n.i.e. According to the Bureau of Economic
Analysis (BEA) of the U.S. Department of Commerce (USDOC), trade data from
EU-based and Indian government services providers are “suppressed to avoid the
disclosure of data of individual companies.” USDOC, BEA, International Services
Data, table 2.3, “U.S. Trade in Services, by Country or Affiliation and by Type
of Service, European Union,” October 15, 2019. Exports and imports of
government services primarily consist of services supplied in support of
operations by the U.S. military and embassies abroad. USITC,
Recent Trends in
U.S. Services Trade, 2019 Annual Report
, September 2019, 9.
[7]
USMCA entered into force on July 1, 2020. NAFTA preferences cannot be claimed
on or after July 1, 2020. U.S. Customs and Border Protection, “
U.S.-Mexico-Canada
Agreement (USMCA)
” (accessed July 2, 2020).
[8]
Brexit—a portmanteau of “British exit”—refers to the United Kingdom’s
withdrawal from the European Union in response to a 2016 referendum on EU
membership in which the majority of the electorate voted to leave the European
Union.
[10]
U.S. trade in services from the EU are overstated
because the data include government goods and services not included elsewhere.
[11]
All three countries have approved the agreement and the protocol; USMCA entered
into force on July 1, 2020.
[12]
Exec. Order No. 11846 of March 27, 1975, Administration of the Trade Agreements
Program, 40 Fed. Reg. 14291, 3 C.F.R., 1971–1975 Comp., 971. Section 163(a)(2)
of the Trade Act of 1974 states that the President’s report is to cover the
following: “(A) new trade negotiations; (B) changes made in duties and
nontariff barriers and other distortions of trade of the United States; (C)
reciprocal concessions obtained; (D) changes in trade agreements (including the
incorporation therein of actions taken for import relief and compensation
provided therefor); (E) the extension or withdrawal of nondiscriminatory
treatment by the United States with respect to the products of foreign
countries; (F) the extension, modification, withdrawal, suspension, or
limitation of preferential treatment to exports of developing countries; (G)
the results of actions to obtain the removal of foreign trade restrictions
(including discriminatory restrictions) against United States exports and the
removal of foreign practices which discriminate against United States service
industries (including transportation and tourism) and investment; (H) the
measures being taken to seek the removal of other significant foreign import
restrictions; (I) each of the referrals made under section 2171(d)(1)(B) of
this title and any action taken with respect to such referral; and (J) other
information relating to the trade agreements program and to the agreements
entered into thereunder.”
[13]
“Total exports” measures the total physical movement of goods out of the United
States to foreign countries, whether such goods are exported from the U.S.
customs territory or from a U.S. Customs bonded warehouse or a U.S. foreign
trade zone. The total exports measure is the sum of domestic exports and
“foreign exports” (also known as re-exports). “General imports” measures the
total physical arrivals of merchandise from foreign countries, whether such
merchandise enters the U.S. customs territory immediately or is entered into
bonded warehouses or foreign trade zones under U.S. Customs custody. These two
measures—total exports and general imports—are the broadest measures of U.S.
merchandise trade reported by the U.S. Census Bureau, and they are used by the
U.S. Department of Commerce’s Bureau of Economic Analysis, with adjustments, to
report on U.S. trade flows in official government balance of payment
statistics. These are also the measures most commonly used internationally.
[14]
For more information about measures of U.S. merchandise exports and imports,
see the “Trade Measure Definitions” section of USITC,
Shifts
in U.S. Merchandise Trade, 2015
, September 2016.
[15]
Merchandise trade data used in this
report can be accessed using DataWeb, the Commission’s trade data querying tool
(https://dataweb.usitc.gov).
Due to annual data revisions, data obtained from
DataWeb may not always match the data presented in this report, even when these
data are queried in the same year that the report is published.
[17]
Real GDP is a measure of the value of the goods and services produced by the
nation’s economy less the value of the goods and services used up in
production, adjusted for price changes.
[28]
Data on the advanced economies are presented by the IMF but not shown in figure
1.2. IMF,
World
Economic Outlook
, April 2020, Table 1.1. The IMF divides the world into
two groups: advanced and emerging economies. There are 39 advanced economies
and 155 emerging economies. Both groups are listed in IMF,
World
Economic Outlook
, October 2019, 127–30.
[30]
IMF,
World
Economic Outlook
, April 2020, Table 1.1. As noted earlier, the IMF
divides the world into two groups: advanced and emerging economies. There are
39 advanced economies and 155 emerging economies. Both groups are listed in
IMF,
World
Economic Outlook
, October 2019, 127–30.
[36]
The slower growth rate is for combined trade in goods and services. See IMF,
World
Economic Outlook
, April 2020, Table 1.1. The IMF divides the world into
two groups: advanced and emerging economies. There are 39 advanced economies
and 155 emerging economies. Both groups are listed in IMF,
World
Economic Outlook
, October 2019, 127–30.
[37]
The current account includes goods and services trade, as well as income and
transfers. The EU ran a current account surplus equivalent to 2.0 percent of its
GDP in 2019, with its largest economy, Germany, running a surplus of 7.0
percent. In East Asia, China ran a current account surplus equivalent to 1.0
percent of its GDP, Hong Kong 5.5 percent, Japan 3.3 percent, South Korea 3.2
percent, and Taiwan 11.4 percent. In North America, the United States ran a
current account deficit of 2.5 percent of GDP, Canada 1.9 percent, and Mexico
1.2 percent. Data for the United States from USDOC, BEA, “
National
Income and Product Accounts
” tables 1.1 and 1.1.5 (accessed March 26, 2020).
Data for other countries are from IMF,
World
Economic Outlook Database
, October 2019.
[38]
The broad dollar index is a weighted average of the foreign exchange values of
the U.S. dollar against the currencies of a large group of major U.S. trading
partners. In this study, dollar appreciation is measured as the increase in the
broad dollar index from January 2019 to December 2019. Federal Reserve System,
“
Real
Trade Weighted U.S. Dollar Index: Broad
” (accessed March 17, 2020).
[39]
These comparisons are for the entire year; some currencies showed fluctuations
during the year.
[41]
Source: Official trade statistics of USDOC as maintained by USITC (accessed
February 14, 2020). The trade data in this section are reported as total
exports and general imports. Both measures may include products that have been
imported into the United States and then re-exported without any further U.S.
manufacturing. See USITC, “A Note on Trade Statistics,” August 22, 2014.
[42]
Source: Official trade statistics of USDOC as maintained by USITC (accessed
February 14, 2020).
[43]
Source: Official trade statistics of USDOC as maintained by USITC (accessed
February 14, 2020).
[44]
These merchandise sectors are defined by the Commission. Each USITC digest
sector encompasses a number of 8-digit subheadings in the
Harmonized Tariff Schedule of
the United States
(HTS)
,
which
classifies tradable goods.
The sectors are listed and defined in
USITC, “
Frequently
Asked Questions
,”
Shifts in U.S. Merchandise Trade, 2018
, December
2019. “Special provisions” is not considered a merchandise sector; it
represents trade under HTS chapters 98 and 99. Exports in this “special
provisions” category primarily represent goods that have been returned with no
value added abroad and articles that have been repaired. Imports in this
category primarily represent goods that have been returned with no value added
abroad, goods that have been repaired, and low-value imports.
[47]
In 2019, re-exports were 15.2 percent of all U.S. total exports. For
electronics products exports, about 73 percent of the decline in total exports
in 2019 was a decline in re-exports.
[48]
“Special provisions” is not considered a merchandise sector; it represents
trade under HTS chapters 98 and 99. Exports in this category are primarily
low-value goods and articles that have been repaired.
[49]
USITC DataWeb/USDOC, HTS 8800.00 (accessed March 4, 2020).
[50]
USITC DataWeb/USDOC, Light oils: HTS 2710.12 (accessed March 4, 2020). Light
oils are classified in HTS 2710.12; petroleum other than crude, in HTS 2710.19;
nonmonetary gold, in HTS 7108.12
[51]
USITC DataWeb/USDOC, Crude petroleum: HTS 2709.00 (accessed March 4, 2020).
Midsize passenger vehicles are classified in USITC DataWeb/USDOC, HTS 8703.23
(accessed March 4, 2020). Counted broadly, passenger motor vehicles were the
largest U.S. import product in value
,
valued at $200.8 billion in 2019.
USITC DataWeb/USDOC (accessed March 20, 2020). “Passenger motor vehicles”
includes the following 15 HTS 6-digit lines: 8703.21, 8703.22, 8703.23,
8703.24, 8703.31, 8703.32, 8703.33, 8703.40, 8703.50, 8703.60, 8703.70,
8703.80. 8703.90, 8704.21, and 8704.31. Medicaments are classified in HTS
3004.90; cellphones: HTS 8517.12; portable computers, in HTS 8471.30. USITC
DataWeb/USDOC (accessed March 4, 2020).
[52]
The category “Special Provisions” represents trade under HTS chapters 98 and
99. Imports in this category are primarily goods that have been returned with
no value added abroad, goods that have been repaired, and low-value imports.
[53]
USITC DataWeb/USDOC, HTS 2709.00 (accessed March 4, 2020).
[54]
USITC DataWeb/USDOC, HTS 8517.62 (accessed March 4, 2020).
[55]
Immunological products are classified in HTS 3002.15; medicaments, in HTS
3004.90. USITC DataWeb/USDOC (accessed March 4, 2020).
[56]
For data on U.S. trade with the top 15 single-country U.S. trading partners,
including the EU member states listed separately, see the
interactive
dashboard
at appendix A.
[57]
U.S. trade with its FTA partners is discussed in chapter 5.
[58]
Imports for consumption (sometimes called “special
imports”) are merchandise that has physically cleared through Customs, either
entering consumption channels immediately or entering for consumption after
withdrawal from bonded warehouses or FTZs under Customs custody.
F
or more information about measures of U.S.
merchandise exports and imports, see the “Trade Measure Definitions 2018”
section of USITC,
Shifts
in U.S. Merchandise Trade, 2018
, December 2019.
[59]
U.S. imports under preferential trade programs are discussed in chapter 2.
“Haiti initiatives” refer to the Haitian Hemisphere Opportunity through
Partnership Encouragement Act of 2006 and 2008 (HOPE Acts), and the Haiti
Economic Lift Program of 2010 (HELP Act).
[60]
USDOC, BEA, International Transactions data, “
Table 3.1.
U.S. International Trade in Services
,” accessed March 19, 2020. U.S.
cross-border trade in private services excludes data on trade in government
goods and services. The General Agreement on Trade in Services (GATS) outlines
four types of services trade, including cross-border trade (mode 1),
consumption abroad (mode 2), commercial presence (mode 3), and presence of
natural persons (mode 4). The data presented in this section correspond to
modes 1, 2, and 4. Data on foreign affiliate transactions, which correspond to
mode 3 services trade, are not covered in this report. For more information on
the four modes of supply under GATS, see WTO, “Services: Basic Purpose and
Concepts,”
GATS
Training Module
(accessed March 26, 2020). For a detailed analysis of
U.S. services trade, see the Commission’s annual
Recent
Trends in U.S. Services Trade
report series.
[61]
Travel services comprise purchases of goods and services by U.S. residents
traveling abroad (U.S. imports of travel services) and by foreign travelers in
the United States (U.S. exports of travel services). These goods and services
include food, lodging, recreation, gifts, entertainment, local transportation
in the country of travel, and other items incidental to business or personal
travel by a foreign visitor. USDOC, BEA, “
U.S.
International Trade in Goods and Services, January 2020: Additional Information
,”
March 6, 2020.
[62]
Other business services include research and development, legal, accounting,
management consulting, managerial, public relations, advertising, market
research, architectural, engineering, construction, audiovisual, waste
treatment, operation leasing, trade-related, and other business services. U.S.
exports of charges for the use of intellectual property “not included
elsewhere” (n.i.e.) include “charges for the use of proprietary rights, such as
patents, trademarks, and copyrights, and charges for licenses to use,
reproduce, distribute, and sell or purchase intellectual property.” U.S. exports
of financial services include “financial intermediary and auxiliary services,
except insurance services.” USDOC, BEA, “
U.S.
International Trade in Goods and Services, January 2020: Additional Information
,”
March 6, 2020.
[63]
Telecommunications services include “the broadcast or transmission of sound,
images, data, or other information by electronic means,” while computer
services include “hardware- and software-related services and data processing
services,” as well as sales of custom software, licenses to use noncustomized
software, and any electronically delivered software. Information services
include news agencies, database services, and web search portals. USDOC, BEA, “
U.S.
International Trade in Goods and Services, January 2020: Additional Information
,”
March 6, 2020.
[70]
19 U.S.C. §§ 2251-2254.
Under the section 201 of the
Trade Act of 1974, if the Commission determines that an article is being
imported into the United States in such increased quantities as to be a
substantial cause of serious injury or threat of serious injury to a domestic
industry producing an article like or directly competitive with the imported
article, it recommends to the President relief that would remedy the injury and
facilitate industry adjustment to import competition. The President makes the
final decision concerning whether to provide relief and the type and duration
of relief. Relief is temporary and for the purpose of providing time for the
industry to adjust to import competition. Relief may take the form of increased
tariffs, tariff-rate quotas, quotas, adjustment measures (including trade
adjustment assistance), and negotiation of agreements with foreign countries.
In making its determination, the Commission is not required to find an unfair
trade practice. USITC, “
Global
and Special Safeguard Investigations
”
(accessed August 14, 2019).
[73]
Proclamation 9694, published in the
Federal
Register
of January 25, 2018 (83 Fed. Reg. 3553). Proclamation 9693,
published in the
Federal Register
of January 25, 2018 (83
Fed. Reg. 3541).
[76]
19 U.S.C. § 2254(a)(4). In his request for advice, the U.S. Trade
Representative specifically asked that the Commission provide advice to the
President regarding the probable economic effect of increasing the level of the
tariff-rate quota applicable to CSPV cells from the current 2.5 gigawatts (GW)
to 4, 5, or 6 GW, without other changes to the remedy.
[84]
Ad valorem duties or tariffs are taxes that are levied as a percentage of the
value of the imported goods. 64 Fed. Reg. 40638 (July 27, 1999), 19 U.S.C. § 2481(3);
WTO, “
Dispute
Settlement: DS26; European Communities—Measures Concerning Meat and Meat
Products
” (accessed April 1, 2020).
A tariff-rate quota (TRQ) is a
trade restriction that typically imposes a relatively low “in-quota” tariff on
imports until the quota level (sometimes an annual allocation) is met. Any
imports beyond the quota level are subject to a higher over-quota tariff.
[86]
Article VI of the U.S.-EU Beef MOU defines “high-quality beef.” All beef sold
in the EU, including high-quality beef imports, must be produced without the
use of growth-promoting hormones. U.S.-EU Beef MOU, Art. II(1).
[87]
These duties were scheduled to be suspended upon entry into phase 2 of the MOU.
However, a 2010 decision of the United States Court of Appeals for the Federal
Circuit had affirmed an earlier decision of the U.S. Court of International
Trade that the 1999 duties terminated as a matter of law after eight years due
to a lack of written request for continuation of the action; therefore, the
Trade Representative determined to terminate the remaining additional duties in
advance of the August 2012 second phase start date. 76 Fed. Reg. 30987 (May 27,
2011);
Gilda Industries, Inc.
v.
United States,
622
F.3d 1358 (Fed. Cir. 2010).
[102]
84 Fed. Reg. 68286 (December 13, 2019); USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, March 2020, 46. Section 306
of the Trade Act of 1974 requires USTR to monitor a trading partner’s
compliance with measures that are the basis for resolving an investigation
under section 301. USTR may apply sanctions if a country fails to implement
such measures satisfactorily and may remove sanctions when it finds the
measures to be satisfactorily implemented.
[111]
These include reciprocal goods of the affected industry in accordance with
section 306(b)(2) of the Trade Act of 1974. 84 Fed. Reg. 54245 (October 9,
2019); 84 Fed. Reg. 55998 (October 18, 2019).
[112]
84 Fed. Reg. 67992 (December 12, 2019). Based on its review of public comments,
USTR determined to increase duties on certain large civil aircraft from 10 to
15 percent, and to change the composition of the list of products subject to
additional duties of 25 percent. All new duty rates took effect by March 18,
2020. 85 Fed. Reg. 10204 (February 21, 2020). The final list was later modified
on to correct a ministerial error. 85 Fed. Reg. 14518 (March 12, 2020).
[114]
Certain services that would otherwise be covered under these categories,
including digital interfaces for the delivery of digital content,” are
excluded. 84 Fed. Reg. 34042 (July 16, 2019). The U.S.-EU (USD-euro)
exchange rate on June 9, 2020 is 1 to 0.8856, respectively.
Market Insider, “
Currencies
” (accessed June 9, 2019).
[121]
A public hearing on the proposed tariff action was held on January 7 and 8,
2020, with representatives from the food, beverage, and other sectors in
attendance. USTR, “
Section
301 Hearing on Proposed Action to France's Digital Services Tax
,” January
7, 2020; USTR, “
Section
301 Hearing on Proposed Action to France's Digital Services Tax
,” January
8, 2020. On July 10, 2020, USTR determined that it would take action on section
301 investigation findings in the form of additional duties of 25 percent on
approximately $1.3 billion of imports from France. The 21 products covered
under this action include certain cosmetics, soap, handbags, and beauty
products. Duties are set to be applied at the end of a 180-day suspension
period on January 6, 2021. 85 Fed. Reg. 43292 (July 16, 2020).
[140]
USTR,
2020 Trade Policy Agenda and 2019 Annual
Report
, February 2020, 44.
[141]
The Special 301 law is set forth in section 182 of the Trade Act of 1974, as
amended (19 U.S.C. § 2242). “Persons who rely on IPR protection” means persons
involved in “(A) the creation, production or licensing of works of authorship .
. . that are copyrighted, or (B) the manufacture of products that are patented
or for which there are process patents.” Section 182(d)(1) of the Trade Act of
1974, as amended (19 U.S.C. § 2242(d)(1)).
[142]
A “mask work” is a “series of related images, however fixed or encoded—(A)
having or representing the predetermined, three-dimensional pattern of
metallic, insulating, or semiconductor material present or removed from the
layers of a semiconductor chip product; and (B) in which series the relation of
the images to one another is that each image has the pattern of the surface of
one form of the semiconductor chip product.” Section 182(d)(2) of the Trade Act
of 1974, as amended (19 U.S.C. § 2242(d)(2)). Section 901(a)(2) of the
Semiconductor Chip Protection Act (17 U.S.C. § 901(a)(2)) defines “mask work.”
[143]
Section 182(d)(3) of the Trade Act of 1974, as amended (19 U.S.C. §
2242(d)(3)).
[144]
Section 182(d)(4) of the Trade Act of 1974, as amended (19 U.S.C. §
2242(d)(4)).
[145]
Section 182(a)(2) of the Trade Act of 1974, as amended (19 U.S.C. §
2242(a)(2)).
[146]
Section 182(b)(1) of the Trade Act of 1974, as amended (19 U.S.C. §
2242(b)(1)).
[147]
Section 182(b)(1) of the Trade Act of 1974, as amended (19 U.S.C. §
2242(b)(1)).
[148]
Section 302(b)(2)(A) of the Trade Act of 1974, as amended (19 U.S.C. §
2412(b)(2)(A)). Section 302(b)(2)(B) of the Trade Act of 1974, as amended (19
U.S.C. § 2412(b)(2)(B)).
[150]
Section 610(b) of the Trade Facilitation and Trade Enforcement Act of 2015
(P.L. 114-125) (19 U.S.C. 2242(g)), as amended (accessed March 30, 2020).
[154]
The countries on the 2019 watch list were Barbados, Bolivia, Brazil, Bulgaria,
Canada, Colombia, Costa Rica, the Dominican Republic, Ecuador, Egypt, Greece,
Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland,
Turkey, Turkmenistan, Uzbekistan, and Vietnam. USTR,
2019
Special 301 Report
, April 2019, 10.
[156]
USTR,
2019
Special 301 Report
, April 2019, 6. For more information on IPR in China
and India, see Section II, Country Reports. Accessed March 30, 2020.
[162]
BitTorrent is a “peer-to-peer protocol designed to transfer files.” BitTorrent,
“
Download
”
(accessed May 20, 2020). Cyberlockers are "web services that allow a user
to upload and store files on dedicated, always-on servers, and then share those
files with other users through a URL.” Marx, “
Storage
Wars
,
” 2013; USTR,
2020
Special 301 Report
, April 2020.
[168]
19 U.S.C. § 1677b(c). Some examples of factors of production include hours of
labor required, quantity of raw materials employed, amount of energy and other
utilities consumed, and representative capital cost, including depreciation. 19
U.S.C. § 1677b(c)(3).
[172]
Data reported here and in the following two sections (“Countervailing Duty
Investigations” and “Reviews of Outstanding Antidumping and Countervailing Duty
Orders/Suspension Agreements”) reflect the total number of investigations. In
other Commission reports, these data are grouped by product because the same
investigative team and all of the parties participate in a single grouped
proceeding, and the Commission generally produces one report and issues one
opinion containing its separate determinations for each investigation.
[173]
An antidumping investigation may be suspended if exporters accounting for
substantially all of the imports of the merchandise under investigation agree
either to eliminate the dumping or to cease exports of the merchandise to the
United States within six months. In extraordinary circumstances, an
investigation may be suspended if exporters agree to revise prices to
completely eliminate the injurious effect of exports of the merchandise in
question to the United States. If USDOC determines that the suspension
agreement has been violated, it may terminate the agreement and the original
suspended investigation would resume, unless a party had already requested
continuation of the original investigation following completion of the
suspension agreement. In the latter case, an antidumping duty order would be
imposed if the suspension agreement is terminated. See 19 U.S.C. § 1673c.
[174]
A subsidy is defined as a financial benefit given by an authority (a government
of a country or any public entity within the territory of the country) to a
person, in which the authority either (1) provides a financial contribution,
(2) provides any form of income or price support within the meaning of Article
XVI of the General Agreement on Tariffs and Trade 1994, or (3) makes a payment
to a funding mechanism to provide a financial contribution, or entrusts or
directs a private entity to make a financial contribution, if providing the
contribution would normally be vested in the government and the practice does
not differ in substance from practices normally followed by governments. See 19
U.S.C. § 1677(5)(B).
[175]
A countervailing duty investigation may be suspended if the government of the
subsidizing country or exporters accounting for substantially all of the
imports of the merchandise under investigation agree to eliminate the subsidy,
to completely offset the net subsidy, or to cease exports of the merchandise to
the United States within six months. In extraordinary circumstances, an
investigation may be suspended if the government of the subsidizing country or
exporters agrees to completely eliminate the injurious effect of exports of the
merchandise in question to the United States. A suspended investigation is
resumed, assuming it had not previously been continued after issuance of the
suspension agreement, if USDOC determines that the suspension agreement has
been violated. See 19 U.S.C. § 1671c.
[177]
19 U.S.C. § 3538; see also the Statement of Administrative Action submitted to
Congress in connection with the Uruguay Round Agreements Act, 353.
[178]
As noted in last year’s
Year in Trade
report, on March 29, 2018 India
requested the establishment of a WTO compliance panel in
United States—Countervailing Measures on Certain
Hot-Rolled Carbon Steel Flat Products from India
(DS436)
.
The compliance
panel circulated its panel report on November 15, 2019. The compliance panel
rejected the majority of India’s claims that the United States failed to bring
its countervailing duty determination and injury determination into compliance.
USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, March 2020, 83.
As noted in last year’s Year in Trade report, on
September 26, 2016, the DSB adopted the panel and Appellate
Body reports in
United States—Anti-Dumping and Countervailing Measures on
Large Residential Washers from Korea
(DS464).
On December 18, 2017, USDOC initiated a section 129
proceeding at USTR’s request, and completed that proceeding on June 4, 2018,
with the issuance of a final determination in which USDOC revised certain
aspects of its original determination.
On May 6, 2019, USDOC published a
notice in the
Federal Registe
r announcing the revocation of the
antidumping and countervailing duty orders on imports of large residential
washers from South Korea. The United States represented to the DSB that, with
this action, the United States has completed implementation of the DSB
recommendations concerning those antidumping and countervailing duty orders. 84
Fed. Reg. 19763 (May 6, 2019); WTO, “
United
States—Anti-dumping and Countervailing Measures on Large Residential Washers
from Korea
,” June 14, 2019.
[179]
19 U.S.C. § 1337. Section 337 also applies to articles that are made, produced,
processed, or mined under, or by means of, a process covered by the claims of a
valid and enforceable United States patent. 19 U.S.C. § 1337(a)(1)(B)(ii).
[180]
Other unfair methods of competition and unfair acts have included common-law
trademark infringement, trademark dilution, trade dress infringement, false
advertising, false designation of origin, and antitrust violations. Unfair
practices that involve the importation of dumped or subsidized merchandise must
be pursued under antidumping or countervailing duty provisions, not under
section 337.
[182]
19 U.S.C. § 1337(j). Although the statute reserves the review for the
President, since 2005 this function has been officially delegated to the USTR;
70 Fed. Reg. 43251 (July 26, 2005). Section 337 investigations at the
Commission are conducted before an administrative law judge (ALJ) in accordance
with the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. The ALJ conducts
an evidentiary hearing and makes an initial determination, which is transmitted
to the Commission for review. If the Commission finds a violation, it must
determine the appropriate remedy, the amount of any bond to be collected while
its determination is under review by USTR, and whether public-interest
considerations preclude issuing a remedy.
[183]
A rescission proceeding is a proceeding to determine whether or not to rescind (cancel)
a previously issued remedial order. A remand is a situation in which the U.S.
Court of Appeals for the Federal Circuit has directed the Commission to conduct
additional proceedings with respect to a previously concluded investigation.
[197]
As summarized in Proclamation 9888, 84 Fed. Reg.
23433 (May 21, 2019).
[198]
Protected foreign markets like the EU and Japan were highlighted as
exacerbating the negative effects of imports in the President’s proclamation,
as they limit entry of U.S. automotive exports, which prevents U.S. producers
“from developing alternative sources of revenue for R&D in the face of
declining domestic sales.”
Proclamation 9888, 84 Fed.
Reg. 23433 (May 21, 2019).
[208]
In a memorandum issued on February 27, 2020, the
President stated that the Secretary of Commerce had transmitted his report on
November 29, 2019, in which the Secretary advised the President of his finding
that titanium sponge is being imported into the United States in such
quantities and under such conditions as to threaten to impair the national
security. The Secretary stated that imports account for 68 percent of U.S.
consumption of titanium sponge, that low-priced imports of titanium sponge and
titanium scrap depress the price of U.S. titanium sponge, and that if the
remaining domestic facility ceases operation, the United States will have no
active domestic capacity to produce titanium sponge for national defense and
critical infrastructure needs. The Secretary also found that 94.4 percent of
titanium sponge imports in 2018 were from Japan.
The President concurred
in the Secretary’s finding. He also agreed with the Secretary’s recommendation
that actions to adjust imports under section 232 not be taken at this time,
because measures other than the adjustment of imports are more likely to be
effective to address the threatened impairment of the national security. Based
on that recommendation, the President directed the Secretary of Defense and Secretary
of Commerce to form a working group, including heads of other agencies, and
invite their counterpart agencies in Japan to participate in discussions in
order to agree upon measures to ensure access to titanium sponge in the United
States for use for national defense and critical industries in an emergency.
The President also directed the Secretary of Defense to take all appropriate
action, including using delegated authorities under the Defense Production Act
and seeking new appropriations as necessary, to increase access to titanium
sponge for national defense and critical industries. White House, “
Memorandum
on the Effect of Titanium Sponge Imports on the National Security
,” February 27, 2020.
[209]
The Trade Adjustment Assistance (TAA) program was first established by the
Trade Expansion Act of 1962 (Pub. L. 87-793) and subsequently expanded and
reauthorized numerous times. For more background on its history, see Guth and
Lee, “A Brief History,” January 2017. For recent history, see previous annual
Year
in Trade
reports.
[210]
Pub. L. 114-27, sect. 403. TAARA of 2015 contains sunset provisions similar to
those in the Trade Adjustment Assistance Extension Act (TAAEA) of 2011, which
took effect in 2014. Beginning July 1, 2021, the TAA program is scheduled to
revert to a more limited set of eligibility and benefit provisions that are
similar to the Reversion 2014 provisions (e.g., services firms will no longer
be eligible for the program). These provisions are scheduled to remain in place
for one year; the authorization is set to expire after June 30, 2022, on which
date the program is scheduled to begin to be phased out. CRS
,
Trade Adjustment Assistance
for Workers and the TAA Reauthorization Act of 2015
,
August 14,
2018, 13.
[211]
The Trade Preferences Extension Act (TPEA) of 2015 reauthorized the TAA for
Farmers Program for FY 2015 through FY 2021.
[216]
Trade Readjustment Allowances (TRAs) provide income support to eligible workers
who participate in training. Reemployment TAA provides a wage supplement to
eligible workers age 50 or older when they accept new employment at a lower
wage. USDOL, ETA, “
TAA
Program Benefits and Services under the 2015 Amendments
” (accessed April 9,
2020).
[234]
“Petroleum oils” refers to HTS 2709.00, petroleum oils and oils from bituminous
minerals, crude; “passenger motor vehicles” refers to HTS 8703.23, passenger
motor vehicles with spark-ignition internal combustion reciprocating piston
engine, cylinder capacity over 1,500 cc but not over 3,000 cc.
[235]
Imports of methanol (HTS 290511) from Trinidad and Tobago fell to $367.5
million in 2019, down from $462.7 million in 2018. Imports of methanol that
qualify for duty-free status under CBERA (HTS 2905112000) fell to $0 in 2019,
down from $270.9 million in 2018. IHS Markit Global Trade Atlas database, (accessed
May 12, 2020).
[236]
The program is authorized by Title V of the Trade Act of 1974, as amended, 19
U.S.C. § 2461 et seq. The list of current GSP beneficiaries can be found on the
USTR’s
website
.
[238]
19 U.S.C. 2465. The President’s authority to provide duty-free treatment under
the GSP program was last reauthorized on March 23, 2018, with retroactive
coverage from January 1, 2018. The renewal also made technical modifications to
procedures for competitive need limits
(CNLs) and waivers.
[241]
As of March 2020, there are eight ongoing country practice petitions under
review by the GSP subcommittee. See USTR, “
Generalized
System of Preferences (GSP)
” (accessed March 31, 2020).
[243]
19 U.S.C. § 2462(e). New thresholds are determined at the start of the World
Bank’s fiscal year in July and remain fixed for 12 months, regardless of
subsequent revisions to estimates. As of July 1, 2019, the new threshold for
high-income classification was $12,375. World Bank, “
GDP Per Capita
(Current US$)
” (accessed March 27, 2020).
[244]
CNLs do not apply to least-developed beneficiary developing countries (LDBDCs)
or to developing countries that are beneficiaries of the African Growth and
Opportunity Act (AGOA).
[250]
As defined by the GSP statute, a waiver may be given when total U.S. imports
from all countries of a product are “de minimis” (a threshold value beneath
which an import is entered with no duty). Like the dollar-value CNLs, the de
minimis level is adjusted each year, in increments of $500,000. The de minimis
level in 2019 was $24.5 million.
[265]
USTR,
2019
Trade Policy Agenda and 2018 Annual Report
, March 2019, 37; 81 Fed. Reg.
92499 (December 20, 2016). Nepal is an LDBDC under GSP. In 2018, it imported
products under 129 of the over 5,000 HTS 8-digit tariff lines under which it is
eligible to receive duty-free treatment under GSP.
[266]
The cost or value of the materials produced in either Nepal or the United
States, plus the direct cost of processing performed in Nepal or the United
States, must total at least 35 percent of the appraised customs value of the
product at the time of entry.
[268]
AGOA eligibility criteria are set forth in section 104 of AGOA (19 U.S.C. §
3703) and section 502 of the Trade Act of 1974 (19 U.S.C. § 2463). Countries
must be GSP eligible as well as AGOA eligible in order to receive AGOA’s trade
benefits. The (non-apparel) rules of origin under GSP (and AGOA) are set forth
in section 503 of the Trade Act of 1974 (19 U.S.C. § 2463 (a)(2)) and are
reflected in HTS general notes 4 and 16. See also Section 111(b) of AGOA (19
U.S.C. § 2463 (c)(2)(D)). As noted earlier, the GSP program imposes
quantitative ceilings called competitive need limitations (CNLs) on GSP
benefits for all tariff items and beneficiary developing countries. Under
certain circumstances, these ceilings may be waived. U.S. Customs, “
Generalized
System of Preferences (GSP)
” (accessed March 18, 2020).
[269]
Section 113 of AGOA (19 U.S.C. § 3722). See HTS chapter 98, subchapter XIX, for
applicable provisions.
[270]
The Trade Preferences Extension Act of 2015 extended the expiration date of
AGOA from September 30, 2015, to September 30, 2025.
[271]
USITC,
The Year
in Trade 2018
,
October 2019, 88. In 2019, the following 39 SSA
countries were designated as beneficiary AGOA countries: Angola, Benin,
Botswana, Burkina Faso, Cabo Verde, Cameroon, Central African Republic, Chad,
Comoros, Côte d’Ivoire, Djibouti, Ethiopia, Eswatini (formerly Swaziland),
Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia,
Madagascar, Malawi, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria,
Republic of the Congo, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leone,
South Africa, Tanzania, Togo, Uganda, and Zambia.
[272]
Twenty-seven SSA countries were eligible for AGOA textile and apparel benefits
for all or part of 2019. They were Benin, Botswana, Burkina Faso, Cameroon,
Cabo Verde, Chad, Côte d’Ivoire, Eswatini (formerly Swaziland), Ethiopia,
Ghana, Guinea, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mauritius,
Mozambique, Namibia, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania,
Togo, Uganda, and Zambia. AGOA benefits for Mali were reinstated in 2014.
However, textile and apparel benefits will not be reinstated for any of these
countries until the country reapplies for its visa arrangement. Meanwhile,
Cameroon’s AGOA benefits were terminated effective January 1, 2020. See
Presidential Proclamation 9974, December 26, 2019. USDOC, OTEXA, “Preferences:
Country Eligibility, Apparel Eligibility, and Textile Eligibility (Category 0
and Category 9)” (accessed March 18, 2020).
[273]
USDOC, OTEXA, “Preferences: Country Eligibility, Apparel Eligibility, and
Textile Eligibility (Category 0 and Category 9)” (accessed March 18, 2020).
[275]
Cameroon’s AGOA eligibility was terminated mainly because it has been
determined that the country engages in gross violations of internationally
recognized human rights. These violations include extrajudicial killings,
arbitrary and unlawful detention, and torture. USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, February 2020, 104;
Presidential Proclamation to take Certain Actions under the African Growth and
Opportunity Act and for Other Purposes, December 26, 2019.
[276]
Crude petroleum refers to products classified under HTS 2709.00. Refine
petroleum products refers to products classified under HTS 2710.12. Passenger
motor vehicles here refers to products classified under HTS 8703.23.
[277]
USITC DataWeb/USDOC (accessed March 20, 2019).
[278]
USITC DataWeb/USDOC (accessed March 20, 2019).
[280]
The U.S. “normal trade relations” (NTR) rates for crude petroleum imports are fairly
low, ranging from 5.3 cents to 10.5 cents per barrel. This low duty rate means
that benefits from AGOA preferences for U.S. imports of crude petroleum from
SSA are relatively small, and some traders may not find the benefits to be worth
the additional paperwork. USITC DataWeb/USDOC, HTS heading 2709 (accessed March
20, 2020).
[281]
USITC DataWeb/USDOC (accessed March 20, 2020). Apparel products refers to
products classified under HTS chapters 61 and 62; passenger motor vehicles here
refer to products classified under HTS 8703.23.
[282]
Total U.S. imports of motor vehicles from the world were fairly flat from 2018
to 2019 ($102.8 billion in both years), but U.S. imports from Japan increased
by almost $1 billion ($23.6 billion in 2018 and $24.6 billion in 2019); those from
Canada, by $1.5 billion (from $12.9 billion to $14.4 billion). IHS Markit
Global Trade Atlas database, (accessed March 20, 2020).
[287]
During the 2018 AGOA Forum, U.S. Trade Representative Robert Lighthizer
announced the administration’s intention to negotiate a model free trade
agreement with an SSA country, and indicated that the administration’s thinking
involves three core goals: (1) pursue a bilateral agreement with a willing
partner; (2) ensure that this agreement is crafted so that it can serve as a
model that can be rolled out to other willing partners in SSA in the future;
and (3) ensure that the model agreement will reinforce regional and continental
integration in Africa. USTR, “Statement of USTR Robert Lighthizer at the
Opening Plenary of the 2018 U.S.-Sub-Saharan Africa Trade and Economic
Cooperation Forum (AGOA Forum),” July 11, 2018. On February 6, 2020, President
Trump announced the United States intends to initiate trade agreement
negotiations with Kenya following a meeting at the White House with Kenyan
President Uhuru Kenyatta. USTR,
2020
Trade Policy Agenda and 2019 Annual Report
,
February 2020, 35.
[289]
For a more detailed description of CBERA, including country and product
eligibility, see USITC,
Caribbean
Basin Economic Recovery Act, 24th Report
, September 2019. CBERA
beneficiaries at the end of 2019 were Antigua and Barbuda, Aruba, The Bahamas,
Barbados, Belize, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica,
Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the
Grenadines, Trinidad and Tobago, and the British Virgin Islands.
[290]
Textiles and apparel that were not subject to textile agreements in 1983 are
eligible for duty-free entry under the original CBERA provisions, which do not
have an expiration date. This category includes only textiles and apparel of
silk or non-cotton vegetable fibers, mainly linen and ramie. Textile and apparel
goods of cotton, wool, or manmade fibers (“original MFA goods”) are not
eligible under the original CBERA. “MFA” stands for the now-expired Multi-Fibre
Arrangement.
[291]
Legislation introduced in the House of Representatives on February 6, 2019
(H.R. 991), and in the Senate on September 12, 2019 (S.2473), would extend
CBTPA preferences until September 30, 2030.
[292]
NTR rates of duty, also known as most-favored-nation (MFN) rates, are accorded
to countries having NTR status in the United States and do not allow
discrimination between trading partners.
[293]
Certain preferential treatment provisions have been extended to September 30,
2020. These provisions relate to import-sensitive textile and apparel articles
from CBERA countries and to textile and apparel articles imported under special
rules for Haiti (see section on Haiti below). The extension occurred on May 24,
2010, when the President signed the Haiti Economic Lift Program Act of 2010,
Pub. L. 111-171, § 3.
[294]
Countries eligible for CBTPA preferences at the end of 2019 were Barbados,
Belize, Curaçao, Guyana, Haiti, Jamaica, Saint Lucia, and Trinidad and Tobago.
[295]
77 Fed. Reg. 61816 (October 11, 2012); 75 Fed. Reg. 17198 (April 5, 2010).
Until 2010, Curaçao and Sint Maarten were members of the now-dissolved
Netherlands Antilles.
[297]
Pub. L. 109-432,
§
5001 et seq., the Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006, 19 U.S.C.
§
2703a; Pub. L. 110-234,
§
15401 et seq., the Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2008. There were no U.S. imports of wiring harness
automotive components (HTS 8544.30 and 9820.85.44) from Haiti during 2007–19.
[298]
Pub. L. 111-171,
§
2,
Haiti Economic Lift Program Act of 2010. For more information on this program,
see USITC,
The
Year in Trade 2011
, July 2012, 2-22 to 2-23, and USITC,
The Year in
Trade 2010
, July 2011, 2-21 to 2-22.
[299]
Pub. L. 114-27,
§
301,
Extension of Preferential Duty Treatment Program for Haiti.
[300]
In 2019, nearly 87 percent by value of the U.S. imports of apparel from Haiti
were of knit garments (HTS chapter 61) and 13 percent were of woven or non-knit
garments (HTS chapter 62). USITC DataWeb/USDOC (accessed March 19, 2019).
[301]
In November 2018, North Carolina-based Culp, Inc., requested a ruling for
country of origin and trade preference eligibility under Haiti HOPE/HELP from
U.S. Customs and Border Protection (CBP) for a mattress cover and pillow
covers. These made-up textile articles, being wholly assembled in Haiti and
imported directly from Haiti are eligible for duty-free treatment under
HOPE/HELP subheading 9820.63.05. CBP ruling N301907, December 18, 2019.
[302]
The WTO is based on a “multilateral” agreement whose rules and commitments
apply to all its members. WTO members may also negotiate smaller “plurilateral”
agreements whose rules and commitments apply only to the members that have
signed it.
[320]
USTR,
2020
Trade Policy Agenda and 2019 Annual Report
,
February, 2020, 172. USTR listed Algeria,
Andorra, Azerbaijan, The Bahamas, Belarus, Bhutan, Bosnia and Herzegovina,
Comoros, Equatorial Guinea, Ethiopia, Iran, Iraq, Lebanon, Libya, São Tome and
Príncipe, Serbia, Somalia, South Sudan, Sudan, Syria, Timor-Leste, and
Uzbekistan as countries with Accession Working Parties.
[323]
The Trade Facilitation Agreement Facility (Facility) was created to help ensure
that developing and least-developed WTO members receive the full benefits of
the Trade Facilitation Agreement. The Facility helps developing and LDC members
to assess and fulfill specific needs in implementing the Trade Facilitation
Agreement. WTO, “
Trade
Facilitation Agreement Facility—About the Facility
” (accessed February 28,
2020).
[325]
WTO members are allowed to benefit from special and differential treatment by
implementing the agreement at their own pace. The A, B, and C notifications
indicate when the member will carry out each trade facilitation measure—A is
for immediate implementation, B for implementation after a transitional period,
and C for implementation with assistance and support for capacity building.
WTO, General Council, “
Agenda
Item 2: Implementation of the Bali, Nairobi and Buenos Aires
Outcomes––Statement by the Chairman––Thursday, 15 October 2019
,” October
19, 2019, par. 1.16.
[331]
Switzerland’s accession to the GPA 2012 was pending as of July 1, 2019,
affecting the number of parties in the count. Another 32 WTO members attend
committee meetings as observers, with 10 of these observers in the process of
accession. WTO,
Report
(2019) of the Committee on Government Procurement
, December 4, 2019.
[336]
For the most recent list of the participants, see WTO, Committee of
Participants on the Expansion of Trade in Information Technology Products,
“Status
of Implementation—Note by the Secretariat—Revision
,” October 10, 2018. The
difference between the number of participants and the number of WTO members is
that the 28 member states of the EU as well as Liechtenstein are included in
the list of WTO members. In the list of participants, only the European Union
(on behalf of all of the EU member states) and Switzerland (on behalf of the
customs union of Switzerland and Liechtenstein) are included.
[344]
The standstill section contains guidance on proposed subsidies outside those
explicitly prohibited under the agreement. The proposal from New Zealand,
Iceland, and Pakistan under this section states that no member of the agreement
shall introduce new or enhance existing subsidies that would contribute to
overfishing or overcapacity.
[388]
OECD, “
Our Global
Reach
” (accessed January 27, 2020). The 37 OECD member countries are
Australia, Austria, Belgium, Canada, Chile, Colombia, the Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,
Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands,
New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, South Korea, Spain,
Sweden, Switzerland, Turkey, the UK, and the United States.
[390]
The 2030 Agenda for Sustainable Development includes 17 goals and 169 tasks
related to sustainable development to be achieved by 2030. It was adopted by
the United Nations and the OECD in September 2015.
[391]
The OECD Working Party No. 1 on Tax Conventions and Related Questions has been
tasked with addressing the dispute between the United States and France on
digital services taxes. The OECD plans to suggest a digital services tax (DST)
rate rule in 2020. For more information, see chapter 6, “Digital Services
Taxes.”
[398]
OECD, “
OECD
Global Forum on Trade 2019
,” November 18, 2019. The Osaka track was launched
via the “Osaka Declaration on the Digital Economy” at the G20 summit in Osaka,
Japan, in 2019. The Osaka track is meant to promote international rulemaking on
trade-related aspects of electronic commerce at the WTO. The signatories of the
declaration are Argentina, Australia, Brazil, Canada, China, Chile, the
European Union (EU), France, Germany, Italy, Japan, Mexico, the Netherlands,
Russia, Saudi Arabia, Senegal, Singapore, South Korea, Spain, Thailand,
Turkey, the United Kingdom, the United States, and Vietnam. WTO, “
Azevêdo
Joins Prime Minister Abe
,
” June 28, 2019.
[408]
OECD,
Addressing
the Challenges of the Digital Economy, Action 1—2015 Final Report
,
2015, 3, 78–84. Among the measures recommended to address digital taxation
issues were modifications to the definition of a “permanent establishment” to
exclude establishments that are “preparatory or auxiliary” in character, and to
include local subsidiaries with a substantive role in local sales; revisions to
the transfer pricing guidelines to ensure appropriate returns to companies; and
the establishment of a definition of controlled foreign company income that
subjects income typically earned in the digital economy to taxation in the
jurisdiction of the ultimate parent company. OECD,
Addressing
the Challenges of the Digital Economy, Action 1—2015 Final Report
,
2015, 12.
[422]
In 2019, the 33 GFSEC member economies were Argentina, Australia, Austria,
Belgium, Brazil, Canada, China, the EU, Finland, France, Germany, Greece,
Hungary, India, Indonesia, Italy, Japan, Luxembourg, Mexico, Netherlands,
Norway, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea,
Spain, Sweden, Switzerland, Turkey, the UK, and the United States. Global Forum
on Steel Excess Capacity, “
Chair’s Report
,”
October 26, 2019, 110.
[423]
The representative from China expressed the view that GFSEC has achieved its
goal and should expire at the end of 2019. GFSEC Ministerial Meeting, “
Statement
of the Chair
,” October 26, 2019.
[425]
In 2019, the 21 APEC member economies were Australia; Brunei Darussalam
(Brunei); Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Malaysia;
Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia;
Singapore; South Korea; Taiwan; Thailand; the United States; and Vietnam. For
further details, see APEC, “
About
APEC
” (accessed March 2, 2020).
[429]
Other three committees are the Senior Officials’ Meeting Committee on Economic
and Technical Cooperation, Economic Committee, and Budget and Management
Committee. APEC, “
Working
Level
” (accessed March 31, 2020).
[436]
In 2019, the CTI oversaw 11 subgroups: Automotive Dialogue; Business Mobility
Group; Chemical Dialogue; Electronic Commerce Steering Group (which was
restructured into the Digital Economy Steering Group in 2019); Group on
Services; Intellectual Property Experts Group; Investment Experts Group; Life
Science Innovation Forum; Market Access Group; Sub-Committee on Customs
Procedures; and Sub-Committee on Standards and Conformance. APEC,
APEC
Committee on Trade and Investment 2019
, December 2019, 1.
[459]
A “single window” system is a trade facilitation concept that allows key public
and private sector trade documents, licenses, permits, payments, and other
sources of necessary information to be exchanged via a single entry point. Such
a system facilitates and streamlines business procedures, increasing
operational efficiency.
[466]
A geographical indication (GI) is a name or sign used on products that have a
specific geographical origin and possess qualities or a reputation due to that
origin. World Intellectual Property Organization, “
Geographical Indications
”
(accessed May 17, 2020).
[469]
The term “free trade agreements” includes free trade agreements (FTAs) and
trade promotion agreements (TPAs).
[470]
As described in chapter 1, U.S. total merchandise trade with FTA partners is
based on total exports and general imports. Only imports entering under trade
preference programs and FTAs are based on imports for consumption.
[471]
Not all products imported from FTA partners are eligible for FTA treatment or,
if eligible, take advantage of their eligibility.
[472]
“Cars” are defined here as general imports under HTS tariff line 8703. “Refined
petroleum products” are defined here as general imports under the HTS 4-digit
tariff line 2710. USITC DataWeb/USDOC (accessed April 15, 2020).
[473]
“Plastics” are defined here as general imports under the HTS 4-digit tariff
line 3921. USITC DataWeb/USDOC (accessed April 15, 2020).
[489]
The country-specific safeguard allows Japan to impose additional tariffs on
imports of beef from the United States that exceed the annual quota. By 2035,
the U.S.-specific quota for beef will be 302,700 metric tons. USTR,
U.S.-Japan
Trade Agreement
,
Annex 1,
Sub-section IV, September 2020.
[490]
Japan uses a “gate price system” for importing pork. Imports of pork below a
specific per-unit price are subject to additional tariffs. As of May 17, 2020,
the exchange rate between yen and U.S. dollars was 107.1 yen per dollar.
Bloomberg, “
USD-JPY
X Rate
” (accessed May 17, 2020).
[523]
A geographical indication (GI) is a name or sign used on products that have a
specific geographical origin and possess qualities or a reputation due to that
origin. World Intellectual Property Organization, “
Geographical Indications
”
(accessed May 17, 2020).
[525]
After the UK’s exit from the EU, the UK will enter an 11-month transition
period where the UK can still be covered by EU-third country trade agreements.
After the transition period ends, EU trade agreements will no longer apply to
the UK. Any third-country trade agreements that the UK signs before the end of
its transition period will take effect on January 1, 2021. Government of the
UK, “
UK
Trade Agreements With Non-EU Countries
,” January 29, 2020.
[539]
A “covered facility” is defined as a facility that (1) produces a good or
supplies a service traded between the parties or (2) produces a good or
supplies a service that competes in the territory of a party with the other party’s
good or service. Violations could result in (a) suspension of preferential
tariffs for goods manufactured at the covered facility; (b) penalties on goods
manufactured at or services provided by the covered facility; or (c) the denial
of entry of such goods if a covered facility has received prior denial of rights
determinations on at least two occasions. USTR,
Protocol
of Amendment to the US
MCA
, Article
31-A.10: Remedies; Article 31-A.15, Definitions.
[540]
Protocol of Amendment to the USMCA, Chapter 31, Annex 31-A, “United
States-Mexico Facility-Specific Rapid Response Labor Mechanism.”
[541]
These seven MEAs were specified in the May 10,
2007 Agreement (‘‘the May 10th Agreement’’), negotiated between House Democrats
and the George W. Bush Administration, in connection with trade agreements with
Peru, Colombia, Panama and South Korea. See USTR, “
Bipartisan Trade Deal
,” May 2007; USTR, “
Peru TPA—Final Text
” (accessed July 10, 2020); H.R.
Rep No. 116-358
,
7 (2019).
[544]
According to the Protocol, “such processes include the initial melting and
mixing and continues through the coating stage.” Protocol of Amendment to the
USMCA, Article 6.1 of the Appendix to Annex 4-B to Chapter 4 (Rules of Origin).
[546]
Industry associations representing Mexico’s automobile industry submitted a
letter to the Mexican government in February 2020, asking for the regional
content rules for the automobile industry in the USMCA to be implemented in
2021 rather than mid-2020, when the agreement was scheduled to enter into
force. Automotive News Canada, “
Mexico's
Auto Industry Seeks Delay of USMCA Content Rules,
”
March 26, 2020
.
[547]
USITC,
The Year in Trade 2018
, October 2019; NAFTA, Article 2205; USTR, “
United States-Mexico-Canada Agreement
” (accessed June 12, 2019). Mexico ratified USMCA on
June 19, 2019, after the Senate of Mexico approved the agreement on June 19,
2019.
Senado de la República,
“Aprueba Senado T-MEC; es un mensaje para la estabilidad económica de México”
[Senate approves USMCA: a signal of Mexico’s economic stability], June 19,
2019.
[548]
See Proclamation 10053 of June 29, 2020, To Take
Certain Actions under the United States-Mexico-Canada Agreement Implementation
Act and for Other Purposes, July 1, 2020 (85 Fed. Reg. 39821).
[559]
The agreement text states: “Any submission made
pursuant to Article 14 of the NAAEC and not concluded as of entry into force of
this Agreement shall continue in accordance with the procedures established
under Articles 14 and 15 of the NAAEC, unless the
Council decides otherwise.” Environmental Cooperation Agreement (ECA),
ECA,
Part Two, Article 2:4.
ECA was signed in December 2018. EPA, “
EPA's
Role in the North American Commission for Environmental Cooperation (CEC)
”
(accessed July 22, 2020). In parallel with USMCA, the United States, Mexico,
and Canada will implement a new ECA, which also updates and supersedes NAAEC
and modernizes and enhances the effectiveness of environmental cooperation
between the three parties. USTR,
2020
Trade Policy Agenda and 2019 Annual Report
,
March 2020, “Agreements
and Negotiations”
1. In the text of USMCA, Canada,
the United States, and Mexico each affirmed their commitment to undertake
cooperative environmental activities under ECA. USMCA,
Chapter
24, Environment, Article 24.25: 3
. Parallel provisions to NAAEC Articles 14
and 15 are now included in the text of USMCA (Articles 24.27 and 24.28). USMCA
provides that submissions are to be filed and reviewed by the Commission for
Environmental Cooperation Secretariat. ECA includes provisions for the
Secretariat’s operation.
[563]
USITC,
The Year
in Trade 2018
, October 2019. Internationally recognized arbitral
mechanisms include the International Centre for the Settlement of Investment
Disputes (ICSID) at the World Bank, ICSID’s Additional Facility Rules, and the
rules of the United Nations Commission on International Trade Law (UNCITRAL).
NAFTA Secretariat, “
Overview
of the Dispute Settlement Provisions
” (accessed April 15, 2020). See also
NAFTA, Article 1130.
[567]
For a dispute arising under Chapter 19, a binational panel is made up of five
representatives selected from the rosters of the parties involved in the
dispute. (Rosters are lists of individuals from which panelists are appointed
to settle disputes. Members of these rosters are of good character, high
standing, and good repute and have been chosen strictly on the basis of their
objectivity, reliability, sound judgment, and general familiarity with
international trade law.) From its roster, each party appoints two members,
with the fifth selected from one of the two countries involved in the dispute.
NAFTA Secretariat, “
Overview
of the Dispute Settlement Provisions
” (accessed March 4, 2020).
[569]
The presentation of developments on labor and environment issues under separate
subsections is patterned after the coverage of FTAs under the USTR annual
reports. See, for example, USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, February 2020. When no 2019
developments of note occurred under an FTA on a particular issue, the
subsection is not presented.
[570]
This supplemental agreement to NAFTA is the NAALC. USDOL, ILAB,
North American
Agreement on Labor Cooperation
(accessed February 13, 2020). All U.S. FTAs
include labor provisions except the U.S.-Israel FTA—the United States’ first
FTA, which entered into force in 1985. See earlier in this chapter for
developments concerning the NAFTA and its successor agreement. USDOL, “
Trade Negotiation and Enforcement
”
(accessed April 8, 2020).
[642]
USTR,
2016
National Trade Estimate
, March 2016, 282. Under Article 16.1.3 of the
KORUS Competition Chapter, parties must ensure that respondents in an
administrative hearing “have a reasonable opportunity to . . . review and rebut
the evidence and any other collected information on which the determination may
be based.” Government of the United States and Government of Korea,
Chapter
16: Competition-Related Matters
(accessed February 11, 2020).
[646]
Under Article 20.2 of the KORUS Environment Chapter, each party to the
agreement “shall adopt, maintain, and implement laws, regulations, and all
other measures to fulfill its obligations under the multilateral environment
agreements listed in Annex 20-A.” The Commission for the Conservation of
Antarctic Marine Living Resources is one of the seven multilateral agreements
listed in this annex. Government of the United States and Government of Korea,
Chapter
20: Environment
(accessed February 11, 2020); USTR, “
USTR
Environment Consultations under the KORUS
,” September 19, 2019; NMFS, NOAA,
2019
Report to Congress
, September 2019, 29–30.
[683]
In 2019, the United Kingdom (UK) continued to prepare for its exit from the EU,
which became official on January 31, 2020. The UK is therefore included in the
section on U.S.-EU trade.
[684]
The figures for services trade are based on data for cross-border trade in
private services, which exclude government sales and purchases of goods and
services not included elsewhere (n.i.e.). The sole exceptions are the EU and
India: U.S. services trade flows from the EU and India include government goods
and services n.i.e. According to the Bureau of Economic Analysis (BEA) of the
U.S. Department of Commerce (USDOC), trade data from EU-based and India
government services providers are “suppressed to avoid the disclosure of data
of individual companies.” USDOC, BEA, International Services Data, table 2.3,
“U.S. Trade in Services, by Country or Affiliation and by Type of Service,
European Union,” October 15, 2019. Exports and imports of government services
primarily consist of services supplied in support of operations by the U.S.
military and embassies abroad. USITC,
Recent Trends in
U.S. Services Trade, 2019 Annual Report
, September 2019, 9.
[685]
Three EU member states were among the top 10 U.S. single-country trading
partners in terms of two-way trade in 2019: Germany ranked fifth, the UK
seventh, and France eighth.
[686]
Charges for the use of IP n.i.e. include (1) charges for the
use of proprietary rights (such as patents; trademarks; copyrights; industrial
processes and designs, including trade secrets; and franchises) that can arise
from research and development as well as from marketing, and (2) charges for
licenses to reproduce or distribute (or both) IP embodied in produced originals
or prototypes (such as copyrights on books and manuscripts, computer software,
cinematographic works, and sound recordings) and related rights (such as for
live performances and television, cable, or satellite broadcast). USDOC, BEA,
U.S. International Economic Accounts:
Concepts and Methods
,
September 2014,
10
–12.
[687]
For more information on these developments, see
chapter 5 of this report.
[697]
83 Fed. Reg. 24735 (May 30, 2018). A public hearing was held as part of the
investigation on July 19, 2018, with EU government official stating that EU
automotive exports to the United States do not threaten or impair the U.S. auto
industry or national security. USTR, “
National
Security Investigation of Imports of Automobiles and Automotive Parts
,”
July 19, 2018, 187–90.
[698]
84 Fed. Reg. 23433 (May 21, 2019). Protected foreign markets like the EU and
Japan were highlighted as exacerbating the negative effects of imports in the
President’s proclamation, as they limit entry of U.S. automotive exports, which
prevents U.S. producers “from developing alternative sources of revenue for
R&D in the face of declining domestic sales.”
[699]
The text of the agreement was further debated by the UK Committee of the Whole
House of Commons from January 7–8, 2020. The House of Lords began reviewing the
text on January 13, and, after some debate, accepted the text of the bill with
no amendments on January 22. The bill received Royal Assent the following day,
becoming law on January 23, 2020. UK Parliament, “
Brexit
Bill Has Passed its Commons Stages
,” January 9, 2020; UK Parliament, “
European
Union Bill Returns to the Lords
,” January 23, 2020.
[702]
The UK formally exited the EU on January 31, 2020. Following the formal exit,
the UK entered an 11-month transition period during which it is still covered
by EU-third country trade agreements. After the transition period ends, EU
trade agreements will no longer apply to the UK and any third-country trade agreements
signed by the UK before the end of the transition period will take effect.
Government of the UK, “
UK
trade agreements with non-EU countries
,” January 29, 2020.
[704]
Airbus is an aerospace corporation headquartered in the Netherlands with its
main office in France. Launch aid is the “provision of financing for design and
development to Airbus companies” from the EU and various member states. See
https://www.airbus.com/contact-us.html
for more information on Airbus. For a full history of this dispute, see WTO, “
Dispute
Settlement: DS316
; United States– Measures
Affecting Trade in Large Civil Aircraft—Second Complaint
” (accessed March
25, 2020).
[707]
The applied duties were commensurate with the amount decided in proceedings of
the WTO arbitrator in DS316. 84 Fed. Reg. 54245 (October 9, 2019); 84 Fed. Reg.
55998 (October 18, 2019).
[708]
Specifically, USTR
determined to increase duties on new aircraft exceeding
30,000 kg from 10 to 15 percent, and to adjust the composition of the list of
products subject to additional duties of 25 percent to include the same
products from different countries of origin, and new products in its March 2020
action.
[710]
As of May 19, 2020, the euro-U.S. dollar exchange rate was 1.09 dollars per
euro. Bloomberg, “
EUR-USD X-Rate
”
(accessed May 18, 2020).
[711]
USTR,
2019
National Trade Estimate Report
,
March 2018. The group decided that the leadership of the Economic and
Financial Affairs Council would prepare the EU position on digital taxes for
international discussions on the subject at the Organisation for Economic
Cooperation and Development (OECD). EU Council, “
Outcome
of the Council Meeting
,” 7368/19, March 12, 2019.
[712]
Nearly all of the digital services taxes introduced by EU member states follow
the same structure as the proposed European Commission directive, with some
variation across countries in the type of services covered, the global and
national revenue thresholds, and the overall tax rate. For more information on
published country-specific digital services tax legislation, see USTR,
2019
National Trade Estimate Report
, March 2018, 211–12, and USTR,
2020
National Trade Estimate Report
, March 2020, 212–13.
[713]
For more information on the French DST, see chapters 2 and 4.
[714]
On July 10, 2020, USTR determined that it would take action on section 301 investigation
findings in the form of additional duties of 25 percent on approximately $1.3
billion of imports from France. The 21 products covered under this action
include certain cosmetics, soap, handbags, and beauty products. Duties are set
to be applied at the end of a 180-day suspension period on January 6, 2021. 85
Fed. Reg. 43292 (July 16, 2020).
[715]
Law Library of Congress, “
Digital Tax for Large
Internet Companies
,”
November 6, 2019 citing Austrian Federal Law Gazette,
Digital Tax Act 2020
(in German), October 22, 2019;
Government of Italy, Official Gazette of the Italian Republic,
Budget Law 2020 (Law
no.160/2019)
,
(in Italian), December 30, 2019. The Italian Digital Services Tax was first
introduced in the Italian 2019 Budget Law published in December 2018, but the
law did not take effect in 2019 because no implementing rules were published.
USTR,
2019 National Trade
Estimate
, March
2018, 212. On June 5, 2020, USTR initiated a section 301 investigation with
respect to digital services taxes adopted or under consideration by Austria,
Brazil, the Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey and
the United Kingdom. Public comments in connection with these investigations
were due July 15, 2020. 85 Fed. Reg. 34709 (June 5, 2020).
[716]
OECD, “Summary Record of the 108th
Meeting of Working Party 1,” June 17, 2019.
[717]
OECD,
Programme of Work
, May 2019, 5. For more information,
see the OECD section in chapter 4 of this report.
[719]
An EU data subject is anyone whose personal data are located in the EU,
regardless of the residence, citizenship, or physical location of the data
subject.
[725]
Privacy Shield Framework, “
Privacy Shield Overview
”
(accessed July 9, 2020). Due to a July 2020 Court of Justice of the European
Union judgement, “the EU-U.S. Privacy Shield Framework is no longer a valid
mechanism to comply with EU data protection requirements when transferring
personal data from the European Union to the United States.” Privacy Shield
Framework, “
Privacy
Shield Overview
” (accessed August 17, 2020).
[750]
Antidumping and countervailing duties are the result of a positive
determination in a series of investigations by USDOC and the Commission into
whether an imported product is sold in the United States at less than fair
value (dumped) or its production is subsidized by a foreign government
(countervailing) and is causing material injury to the domestic industry. and
USITC, “
Softwood
Lumber from Canada Injures U.S. Industry
,” December 7, 2017; 82 Fed. Reg.
61587, December 28, 2017.
[764]
WTO, “
Dispute
Settlement: DS542
; China—Certain Measures
Concerning the Protection of Intellectual Property Rights
” (accessed
March 2, 2020).
[765]
Consultations were requested on March 23, 2018, one day after the release of
the USTR report. WTO, “Dispute Settlement: DS542; China—Certain Measures
Concerning the Protection of Intellectual Property Rights” (accessed March 2,
2020). USTR,
Findings
of the Investigation into China’s Acts
,
Policies, and Practices Related to Technology Transfer, Intellectual Property,
and Innovation Under Section 301 of the Trade Act of 1974
,
March 22, 2018.
[776]
The U.S.–China Strategic and Economic Dialogue (S&ED) was known as the SED
from 2006 to 2009.
[777]
USTR,
2018
Report to Congress on China’s WTO Compliance
, February 2019, 21. In
November 2018, institutions such as the U.S.-China Economic and Security Review
Commission noted that high-level institutional bilateral discussions were far
less structured in 2018, and even called into question the future of such
forums. See U.S.-China Economic and Security Review Commission,
2018 Report to
Congress
, November 2018, 93.
[789]
The exclusion process allows stakeholders to request that specific products be
excluded from the additional duties. USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, February 2020. For
additional information on the tariff escalation on the first two lists of
imports from China in 2018, see USITC,
The Year in Trade
2018
,
October 2019
.
[790]
List 3 was the third tranche of tariffs imposed on imports of goods from China,
following List 1 and List 2, which were announced in June and August 2018.
USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, February 2020, 44.
[793]
USTR,
2020 Trade Policy Agenda and 2019 Annual
Report
, February 2020, 44.
[794]
USTR,
2020 Trade Policy Agenda and 2019 Annual
Report
, February 2020, 44.
[795]
USTR,
2020
Trade Policy Agenda and 2019 Annual Report
, February 2020, 44; 84 Fed.
Reg. 69447 (December 18, 2019); 85 Fed. Reg. 3741 (January 22, 2020). The
reduction of the rate of additional duties on products of China covered by List
4A from 15 percent to 7.5 percent took effect on February 14, 2020.
[796]
U.S. Treasury, “
Treasury
Designates China as a Currency Manipulator
,” August 5, 2019; Authorizing
Statute of the Omnibus Trade and Competitiveness Act of 1988 (H.R. 3), § 3004,
“International Negotiations on Exchange Rate and Economic Policies.”
“Authorizing statute” is not part of the name of the statute.
[797]
Authorizing Statute of the Omnibus Trade and Competitiveness Act of 1988 (H.R.
3), § 3004, “International Negotiations on Exchange Rate and Economic Policies.”
.
[798]
Authorizing Statute of the Omnibus Trade and Competitiveness Act of 1988 (H.R.
3), § 3004, “International Negotiations on Exchange Rate and Economic
Policies.”
[799]
19 U.S.C. § 4421, Trade Facilitation and Trade Enforcement Act of 2015, § 701.
[804]
IPR reforms—especially in the areas of trademarks, trade secrets, and
geographical indicators in the pharmaceutical and other sectors—are to include
enforcement measures against pirated and counterfeit products. With regard to
changes to technology transfer practices, China agreed to cease its practice of
compelling foreign firms to transfer their technology in exchange for market
access, administrative approvals, and other advantages. According to USTR,
reductions in trade barriers in key sectors, including agriculture and
financial services, will lead to dramatic growth of U.S. agricultural exports
to China and a reduction of longstanding barriers to China’s banking,
insurance, securities, and credit rating services. With regard to currency
devaluations, USTR indicated that the agreement would include greater
transparency in foreign exchange operations and mechanisms to ensure
accountability.
USTR, “
Economic
and Trade Agreement between the United States of America and the People’s
Republic of China: Fact Sheet
,” January 15, 2020.
[829]
IHS Markit, Global Trade Atlas database, HS subheadings 0201 and 0202 (accessed
March 18, 2020).
[830]
IHS Markit, Global Trade Atlas database, HS subheadings 0201 and 0202 (accessed
March 18, 2020).
[831]
Japan uses a “gate price system” for managing imports of pork. Imports of pork
below a specific per-unit price are subject to additional tariffs under this
system.
[833]
“Flops” are “floating point operations per second,” a measure of computing
capacity. A teraflop is 1 trillion floating point operations per second, while
a petaflop is 1 quadrillion floating-point operations per second.
[842]
WTO, ”
Dispute
Settlement: DS488
; United States—Anti-Dumping
Measures on Certain Oil Country Tubular Goods from Korea
” (accessed
February 20, 2020).
[847]
Before January 1, 2015, South Korea’s rice imports entered under a minimum
market access arrangement set during the Uruguay Round and subsequently extended
for 10 years in 2005. During the Uruguay Round, South Korea negotiated an
exception to the tariffication of its rice imports in exchange for increasing
its annual rice import quota. Under the extension of South Korea’s
tariffication exception negotiated in 2005, South Korea agreed to increase its
total annual rice imports over a 10-year period and to establish
country-specific quotas of rice imports from China, Thailand, Australia, and
the United States. USTR,
2016
National Trade Estimate Report
, March 2016, 276–7.
[850]
USITC DataWeb/USDOC, HS subheadings 1006.20, and 1006.30 (accessed February 20,
2020).
[851]
IHS Markit, Global Trade Atlas, HS subheadings 1006.20 and 1006.30 (accessed
February 21, 2020).
[852]
Mexico and Ecuador were also listed for illegal, unreported and unregulated (IUU)
fishing activities in the 2019 report. NMFS, NOAA,
Improving
International Fisheries Management
, September 2019. In 2013, South
Korea was listed for reported IUU fishing in the U.S. National Marine
Fisheries’ report to Congress for that year. In response to this designation,
South Korea revised its legal and regulatory system with respect to its
deep-water fishing fleet, and was de-listed from the National Oceanic and
Atmospheric Administration (NOAA) 2015 report on illegal and unreported fishing
practices as result. Included in the revisions to South Korea’s regulatory
framework on IUU fishing was the passage of the Distant Water Fisheries Act,
the creation of a vessel monitoring center, mandatory use of vessel monitoring
tracking systems for deepwater fleets, increased inspections, and stricter
penalties for violations. USTR,
2016
Trade Policy Agenda and 2015 Annual Report
, March 2016, 154.
[858]
Around this time, China had temporarily included U.S. crude on a list of goods
potentially subject to an increase in import tariffs as part of the U.S.-China
section 301 dispute, and the spread between U.S. crude oil futures prices and
the international crude oil Brent benchmark narrowed. Both these events caused
a slowdown in the Chinese purchase of U.S. crude. EIA, “
This
Week in Petroleum
,” March 20, 2019. Crude petroleum was ultimately not
included in the final lists of products subject to Chinese tariffs enacted in
2018. Yap, “
China’s
Tariff Turnaround: U.S. Crude Oil
,” August 9, 2018; EIA, “
The U.S. Exported
2 Million Barrels per Day
,” April 15, 2019. See for USDOC, ITA, “
Current
Foreign Retaliatory Actions
” (accessed March 23, 2020) for links to the
lists issued by the Chinese government.
[866]
WTO rules require member countries to notify the Agriculture Committee on the
levels of agricultural subsidization. Members can submit counternotifications
claiming other members have under-reported agricultural production subsidies to
the Agriculture Committee. WTO, “
Counter-notification
of India’s Farm Subsidy Spending
,” June 12, 2018.
[874]
WIPO administers the “WIPO Copyright Treaty” and “WIPO Performances Phonogram
Treaty,” which are known together as the Internet Treaties. These treaties set
down international guidelines for preventing illegal access and use of creative
works on the internet. The Nice agreement establishes a classification of goods
and services for the purposes of registering trademarks and service marks.
WIPO, “
WIPO
Internet Treaties
” (accessed June 8, 2020); WIPO, “
Nice
Agreement
” (accessed June 8, 2020).
[878]
Public Law 116-135 (March 26, 2020); S.1678—116
th
Congress (2019–2020).
[879]
The U.S. House of Representatives passed a similar bill, the “Taiwan Assurance
Act,” which focuses on strengthening U.S.-Taiwan military ties; it is similar
to the Senate version, but does not advocate for a bilateral trade agreement.
Biologic medications include a wide variety of products derived from human,
animal, or microorganisms by using biotechnology. The bill was introduced in
the Senate on March 26, 2019, and referred in the Senate on May 8, 2019. No
further action has been taken on the bill. H.R.2002–
Taiwan
Assurance Act of 2019
(2019); S.878–
Taiwan
Assurance Act of 2019
(2019).
[880]
“Camcording” is the
practice of using a video camera to illegally record a film playing in a
cinema.
U
STR,
2019
Special 301 Report
,
April 2019, 32.
