Published
April 09, 2024
The United States Trade Representative's (USTR) decision to sharply narrow the aperture of its annual National Trade Estimate (NTE) Report on Foreign Trade Barriers has drawn more attention to this year’s edition, issued in late March. However, some of USTR’s comments on their “new approach” call for closer examination.
USTR has signaled that it deleted many foreign trade barriers that it had criticized as recently as a year ago because it respects “the sovereign right” of foreign governments “to regulate for legitimate public policy reasons.”
The idea that foreign governments closing their markets to U.S. exports or discriminating against American companies deserves USTR’s respect has certainly drawn raised eyebrows around Washington.
However, many of these barriers are, in fact, violations of commitments that foreign governments have made in trade agreements with the United States. USTR appears to claim it has free rein to ignore those commitments, but many of them have the force of law as congressionally approved trade agreements. It is USTR’s responsibility to enforce them.
U.S. trade agreements—from the various trade agreements of the World Trade Organization (WTO) to the U.S. free-trade agreements in force with 20 countries—have force domestically because legislation implementing them into U.S. law was approved by Congress. The function of the Administration is to administer these laws and to enforce them.
Enforcement of trade agreements is a priority that has long enjoyed bipartisan support. “Enforcement, enforcement, enforcement!” was the regularly repeated summary of USMCA priorities voiced by House Ways and Means Committee Chairman Richard Neal in 2019, when Katherine Tai served as his chief trade counsel—and no doubt agreed with him.
Consider:
- USTR dropped from this year’s NTE its past criticism of the EU’s Digital Markets Act (DMA), which singles out U.S. firms for discriminatory treatment. The EU is bound by WTO rules prohibiting measures that afford de facto discrimination even when the measure provides “formally identical” treatment. This was a sovereign commitment by the EU. USTR may not like it, but that’s the legal obligation, and the DMA should be in the NTE.
- USTR dropped from this year’s NTE its past criticism of Korea’s lack of transparency and due process in the conduct of competition policy. The Korea-U.S. FTA (KORUS) has a chapter outlining these obligations. That was a sovereign commitment by the Korean government. USTR may not like it, but that’s the legal obligation, and it should be in the NTE.
- Further, Politico notes that the 2024 NTE report “appears to mention foreign local content requirements only four times, compared with 84 times in the previous report. Such provisions hurt American exporters in overseas markets by giving preference to local suppliers.” WTO rules significantly limit such measures, as USTR previously acknowledged. USTR may not like it, but that’s the legal obligation, and these barriers should be in the NTE.
- In addition, USTR also scaled back references to sanitary and phytosanitary (SPS) measures and technical trade barriers (TBT). These areas are key in reducing market access barriers that U.S. agriculture and manufacturing exporters confront.
The NTE addresses “significant” foreign trade barriers, including many that do not violate trade agreements, but the ones that do violate trade agreements deserve special attention. Enforcement of trade agreements is part of USTR’s core mission, and it has an obligation not just to list these violations in the NTE but to prioritize appropriate enforcement action.
About the authors
John G. Murphy
John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.
