In recent years, manufacturers have witnessed a growing and worrisome trend among our trading partners to impose localization measures designed to protect, favor, or stimulate domestic industries and technologies at the expense of imported goods or services. These localization barriers to trade (LBTs) differ in two ways from prior measures favoring domestic goods or services.
First, they are more complex and sophisticated; for example, some LBTs now require the localization of intellectual property and servers for data storage. Second, they are more expansive in that major LBTs were at one point associated mostly with China, but now are cropping up in countries all over the world, distorting markets and undermining business opportunities for manufacturers in the United States.
Manufacturers welcome the U.S. government’s work to develop and execute a more robust approach to address these growing market access challenges, including the recent announcement of the new interagency Task Force on Localization Barriers to Trade. A coordinated approach within the U.S. government to combating LBTs with other like-minded governments is vital to push back effectively on these anti-competitive practices, including using multilateral venues like the World Trade Organization (WTO) and the Asia-Pacific Economic Cooperation (APEC) forum, as well as through the Trans-Pacific Partnership and investment treaty negotiations.
LBTs include measures that link market access to local intellectual property development, domestic input and product requirements, local product design and data storage requirements, and other performance requirements that distort trade and competitive market conditions. These barriers affect manufacturers in a broad range of sectors and effectively close markets to many manufacturers in the United States and their exports. While these practices may seem appealing to some governments in the short term, they serve only to distort the domestic economy, including by undermining the country’s overall investment climate, decreasing efficiencies, stifling innovation, increasing costs and limiting access to competitive inputs overseas.
Manufacturers welcome the Administration’s renewed efforts to address these barriers and look forward to making concrete progress to promote market liberalization and foster global economic growth.
Jessica Lemos is director of international trade policy, National Association of Manufacturers.