Today, U.S. Trade Representative Ron Kirk issued the annual National Trade Estimate (NTE) report to Congress which describes significant barriers to U.S. trade and investment plus the actions USTR and others in the U.S. government are taking to address them. Click here to go to the report. Again this year, USTR has issued, along with the NTE, parallel reports on Technical Barriers to Trade (TBTs) and Sanitary and Phytosanitary (SPS) Barriers.  The National Association of Manufacturers welcomes the identification of these barriers and urges the USTR to go on to seeking their elimination. 

Manufacturers are adversely affected by non-tariff barriers including  standards and conformity assessment issues around the world.  They can add significantly to the cost of an export, often a multiple of the tariff rate that is charged.  For example, a report on the impact of non-tariff barriers in Asia found that they can have a tariff equivalent ranging from 11.7% to 58.5% in one country and ranging from 6.3% to 60.5% in another! 

The NAM recognizes that not all non-tariff trade barriers are illegal under international trade rules.  However, when the U.S. negotiates a trade agreement, it has the opportunity to seek the elimination of many of these non-tariff barriers…just as it has done in the pending Korea, Colombia and Panama Free Trade Agreements.  So if we want to get serious about tackling non-tariff barriers, the United States must pass these three FTAs and negotiate more.

 To tackle the barriers you have got to get into the game.

Stephen Jacobs is director of international business policy at the National Association of Manufacturers.

Missing from U.S. Trade Rep Ron Kirk’s admirable speech Thursday (see posts here and here) expressing the Obama Administration support of expanded trade was any mention of the Mexican truck controversy, i.e., the NAFTA-violating provision in the stimulus bill that effectively ended a cross-border trucking program. In response, Mexico slapped duties on 90-plus U.S. products, especially consumer and agricultural products. Here’s the latest consequence, as reported in the Green Bay Press-Gazette, “Mexican tariffs impede paper company exports.”

You can only address so many issues in a speech, and in any case, Kirk’s remarks emphasizing the importance of enforcing trade agreements were relevant. The United States should indeed aggressively address violations of trade agreements through established processes and authorities. As a country that generally embraces trade, those procedures will tend to favor the United States.

But not always. We see that California Gov. Arnold Schwarzenegger is trumpeting yet another market-distorting, cost-adding environmental regulation, the low-carbon fuels standard. As AP reports, the Governor expressed utopiangastic pleasure at the California Air Resources Board’s decision:

Gov. Arnold Schwarzenegger said the rule would “reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure.”

Sure. Just like all the other excessive environmental rules adopted over the past decade in California. And how’s California doing?

• Los Angeles Times, “California unemployment rate reaches 11.2%“
• The Desert sun, “State leads nation in March layoffs“
• The Daily Sound, “Economists: things could be worse in SB County“

Then there is the trade angle. The state regulations have an obvious and disproportionate impact on fuels derived from Alberta’s oilsands, which require additional energy to process. From The Los Angeles Times: “Canada’s consul general in San Francisco charged that the rule discriminates against oil from Alberta tar sands. ”

Canada is the No. 1 supplier of foreign crude to the United States, and now California is declaring its own (non-tariff) trade (barrier) war against those imports. But just because they’re not tariffs or quotas doesn’t make the regulations any less a servant of the protectionist cause — especially since they represent unilateral state action.

And what form might retaliation take, a year or two down the road? The new Mexican tariffs hammered California farm products. That could look like a smart strategy to the Canadians.