It’s Time to Turn Back the Clock on Unfair Foreign Trade Barriers

By October 28, 2015Shopfloor Policy, Trade

The NAM cataloged today some of the most onerous foreign unfair barriers faced by manufacturers in the United States in its submission to the Office of the U.S. Trade Representative as it prepares its National Trade Estimate Report on Foreign Trade Barriers (NTE). These barriers limit the ability of manufacturers in the United States to grow by exporting and making overseas sales and need to be addressed urgently to grow the U.S. manufacturing sector.

With 95 percent of the world’s consumers living outside the United States, overseas sales and exports provide an enormous opportunity for manufacturers to create and sustain jobs here at home. The opportunities are real: the World Trade Organization found that the trade flows of manufactured goods have grown from $4.9 trillion in 2000 to $12.8 trillion in 2014. As trade agreements have opened U.S. markets over the past several decades, U.S.-manufactured goods exports have grown enormously and reached a record high of $1.4 trillion in 2014.

Yet, trade barriers are on the rise around the world, limiting manufacturing growth abroad and costing jobs and economic opportunity. According to one recent study, governments have introduced more than 3,300 new protectionist measures since 2008, nearly all of which remain in force. At a time when economic growth in Asia is slowing or flat, growth in Europe is anemic and other leading emerging markets are struggling to stave off recession, these trade barriers only exacerbate these downward trends.

For manufacturers, the most concerning trade barriers are:

  • Import policies, including excessively high import tariffs, import licensing schemes, import bans and fees and taxes that unfairly discriminate against imported goods;
  • Investment barriers, such as prohibitions or limits on foreign investment in some sectors, investment screening mechanisms and equity caps and performance requirements;
  • Forced localization barriers, including measures designed to protect, favor or stimulate domestic industries, services providers and/or intellectual property at the expense of goods, services and/or intellectual property from other countries;
  • Lack of intellectual property enforcement, such as lax enforcement of counterfeiting and piracy, unwarranted requests from government entities for confidential information that should be protected as “trade secrets,” compulsory licensing, the arbitrary redefinition of patent utility and regulations that blatantly violate trademark rights;
  • Standards and technical regulations, including unique regulatory and technical standards and conformity assessment requirements that add significantly to the cost of manufacturing exports to countries around the world; and
  • Export restrictions, such as those that limit the export of strategic natural resources necessary for the production of a wide range of manufactured goods.

For example, even a country like Canada is failing to provide the basic protections for intellectual property rights. Canadian courts have redefined a longstanding “utility” requirement to create a new, burdensome and impermissible element of patentability through the application of a “promise doctrine” found nowhere else in the world. This doctrine has been applied to invalidate a stunning more than 20 patents on innovative medicines to the detriment of manufacturers in the United States.

Another example is Ecuador’s recent move to no longer accept U.S. Federal Motor Vehicle Safety Standards on 12 safety-related standards. This development hinders U.S. auto and truck makers’ ability to export competitively certain products from the United States, leading to less competition and fewer consumer options in Ecuador.

The countries identified in the NAM submission also include India, for a host of forced localization and discriminatory barriers and standards; Brazil, for its complicated and high-border barriers; Argentina, for ongoing import barriers; Colombia, for measures that undermine the protection of intellectual property and discriminate against imports of heavy trucks and spirits; and many others.

These are just some of the many barriers our companies are facing around the world.

To address and eliminate these barriers, the United States must leverage all available tools, including:

  • Securing ambitious, high-standard commitments in ongoing and future trade agreement negotiations;
  • Working to implement and bring into force the WTO Trade Facilitation Agreement, which will eliminate customs and other trade restrictions at the border;
  • Enforcing multilateral, regional and bilateral trade and investment agreements already in force, including by pursuing formal dispute settlement cases where appropriate; and
  • Sharpening current tools and considering commonsense updates to preference program eligibility criteria.

At a time when the global economy is performing well below expectations, it is critical that we get to work and unravel these growth-killing measures.

Ken Monahan

Ken Monahan

Director for International Trade Policy at National Association of Manufacturers
Ken Monahan is the Director for International Trade Policy at the National Association of Manufacturers (NAM), where he works with NAM member companies to develop and advocate the association’s positions and priorities on trade agreement negotiations, ensure enforcement of existing trade agreement commitments, and other issues including the World Trade Organization (WTO), miscellaneous tariff bills, data flows and privacy, conflict minerals, forced localization, and other bilateral country trade matters (e.g., Colombia, South Korea, and the European Union and its member states). Mr. Monahan has on-the-ground experience negotiating trade agreements, having worked at the U.S. Department of Commerce on the WTO Doha Round negotiations, the U.S.-Korea free trade agreement and other international trade matters.
Ken Monahan

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