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Enforce Trade Agreements

Trade agreements hold little value for American business if they aren't enforced. The U.S. Chamber has long pressed for consistent and vigorous enforcement of trade agreements entered into by the United States. This includes the wide-ranging body of rules of the World Trade Organization (WTO) as well as bilateral and regional trade agreements.

These agreements provide U.S. workers, farmers, and businesses with assured access to overseas markets on terms that are clear and predictable. In addition to addressing tariffs and non-tariff barriers at national borders, these agreements also provide important guarantees for U.S. businesses operating inside foreign markets. Trade agreements provide critical protections for intellectual property, guarantee the rights of U.S. companies to bid for government contracts, and ensure that U.S. service providers receive national treatment (i.e., the same rights and responsibilities granted local firms). U.S. officials should place the highest priority on fulfilling these guarantees.

The United States has the right and responsibility to press other governments to live up to their commitments under trade agreements. Where governments fail to do so, the first recourse should be to engage them in direct talks. If consultations fail to bring full compliance, dispute settlement procedures established under the WTO and other accords offer avenues to ensure proper enforcement of trade agreements.

After the WTO was created in 1995, its new Dispute Settlement Body was deluged with cases from around the globe. The United States was one of many governments that brought a host of cases to Geneva in the late 1990s. Citing the smaller number of cases the United States has brought to the WTO in recent years, some critics have argued that U.S. officials responsible for enforcement have neglected their duties.

However, it's clear the late 1990s presented a unique set of circumstances. Governments had prepared cases in anticipation of the launch of the WTO's novel dispute settlement procedures. Today, the growing body of WTO jurisprudence affords trade officials a better view of whether their complaints will be deemed to have merit in Geneva. Since bringing a case is slow, laborious, and expensive, fewer long-shot cases are being brought. By the same token, relatively obvious violations of WTO disciplines can be addressed in consultations or under the threat that a case will be filed in Geneva.

This doesn't mean that U.S. officials should be complacent. In recent years, for instance, the United States has brought several cases against Chinese trade practices, and this action has borne some fruit. Going forward, trade officials should not hesitate to bring cases against foreign governments when WTO trade rules lend support and when they can marshal the evidence.

Of course, enforcement cuts both ways. The United States has not always lived up to its own obligations under trade agreements. A dispute settlement panel under the WTO determined that the United States unfairly subsidizes its cotton farmers, and NAFTA dispute settlement panels have ruled that the United States is violating its obligation to allow Mexican trucks to operate within the United States. In the cotton case, retaliation by Brazil has been averted for the time being; in the case of U.S.-Mexico cross-border trucking, Mexican retaliation has cost the United States tens of thousands of jobs.

We have so much to gain from participation in the rules-based international trading system that we flaunt these rules at our peril. Since the WTO was created in 1995, the United States has won and lost cases before dispute settlement panels on a number of occasions. The United States has almost always amended its laws or changed its practices to conform to adverse rulings.

To pursue these long-term interests, it's critical that the United States continue to live by the rules of the international trading system. After all, our country did more than any other to write these rules, from the launch of the General Agreement on Tariffs and Trade in 1947 to the creation of the WTO in 1995. A host of studies shows the United States derives tremendous benefits from the open international trading system.

In fact, the United States should place a high priority on expanding the WTO's rules-based trading system. U.S. workers and companies would benefit by seeing major energy players, such as Russia and the countries of Central Asia, take on the obligations of membership in the WTO. They should accede as soon as they conclude negotiations to do so on terms that guarantee market access and the rule of law.

Finally, U.S. law also provides tools to address charges of unfair trading. The U.S. Chamber supports the judicious use of U.S. trade remedy law, which provides relief for U.S. producers facing competition from unfairly priced or subsidized imports. Such relief comes in the form of anti-dumping (AD) and countervailing duties (CVD).

However, trade officials should use trade remedies with caution. In recent years, foreign governments have increasingly employed the same kinds of AD and CVD duties as the United States—sometimes in a fast and loose way. Some argue the resulting proliferation of AD and CVD cases around the globe today is just as likely to undermine the competitive position of U.S. producers as such cases at home are to help (though the U.S. producers impacted are usually different).

This is why the U.S. Chamber has long argued that U.S. trade remedy law should be administered in a way that avoids any "unduly protectionist interpretation or implementation which would impair the healthy expansion of trade or invite damaging retaliation by other countries." In the same vein, U.S. officials should press foreign governments to provide greater transparency in how they use trade remedies against U.S. firms.

In the final analysis, U.S. trade remedy laws have two core purposes. First, they protect U.S. businesses from unfairly traded goods and services. Second, they are a tool to help open foreign markets to U.S. goods and services. Policymakers must use these laws judiciously, bearing in mind the need for a level playing field and the danger of eliciting retaliation. They must also bear in mind that it is politically impossible to secure public support for opening foreign markets (which necessarily entails opening the U.S. market) unless we ensure that foreign goods and services are entering the U.S. market fairly.

Chamber Recommendations

  • U.S. officials should place a high priority on enforcing trade agreements, and they should not hesitate to challenge clear violations of trade agreements by foreign governments as the trade rules and available evidence allow.
  • The United States must live up to its own obligations under the WTO and other agreements because the benefits of our compliance far outweigh the costs.
  • U.S. trade remedy law is an important tool to address unfair trade, but the rising use of antidumping and countervailing duties by our major trading partners means excessive reliance on these tools could impose real costs on U.S. business.