New Strategy Needed to Address Foreign Price Controls, Other Localization Barriers

Manufacturers and workers in the United States are competing to win in the global economy. Battling substantial and growing market-distorting practices by other countries that tilt the playing field in their favor is but one of many challenges. These types of practices harm manufacturers and workers here in the United States not only by creating protected foreign markets that spur unfair trade by our competitors but also by blocking access by U.S. exports to the 95 percent of consumers living outside U.S. borders.

The National Association of Manufacturers (NAM) has long been a leading voice calling on U.S. and foreign government officials to address unfair trade practices and barriers. In its October 2016 submission to the Office of the U.S. Trade Representative for its National Trade Estimate Report (NTE), the NAM urged the U.S. government and other stakeholders to address a wide variety of foreign trade barriers faced by manufacturers in the United States in nearly 50 countries and regions. Unsurprisingly, Brazil, China, India, Indonesia and Russia lead the way as challenging markets with high barriers for manufacturers in the United States. These practices come in a variety of forms, including import and export restrictions, weak intellectual property enforcement, investment caps, technical barriers to trade and a wide array of localization barriers that explicitly or implicitly discriminate directly against foreign manufacturers, products, intellectual property or data.

As recently noted by President Donald Trump, one illustrative example of foreign localization that harms not only manufacturers in the United States but also U.S. consumers is the use of foreign price controls. Over many years, many foreign governments have shrunk the market for U.S. exports of innovative health products by instituting strict price caps in their government-run health systems. Their targets have largely been innovative pharmaceutical, medical devices and other health products that exist thanks to American ingenuity, research and development and strong U.S. intellectual property protections. Localization measures such as price controls chill the innovative life cycle, harming the U.S. economy, jobs and the patients who are waiting for the next generation of cutting-edge cures. While successive U.S. administrations have recognized and sought to curb these unfair localization barriers, including through recognition in the Medicare Modernization Act of 2003, more concrete action is needed to not just identify but also to address and stop the proliferation of foreign price controls.

As the Trump administration charts its path for trade policy that seeks to grow manufacturing and innovation in the United States in part through eliminating market-distorting actions overseas, the NAM strongly encourages the U.S. government to address foreign price controls and other localization barriers as a priority, including through the release of its annual trade barriers report slated by March 31.

It is time for a new strategy on these issues that will create a more fair and level playing field globally to grow the competitiveness of manufacturing in the United States. Such a strategy must include a robust enforcement agenda and ensure that new and ongoing trade negotiations reward the value of innovation. At a time when the global economy is performing well below expectations, now is the time to tear down the barriers that are holding back manufacturing in the United States from growing opportunities around the world for the benefit of jobs and growth here at home.

Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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