Largely overlooked amid the furor that exploded following President Trump’s surprise announcement that he would soon be imposing hefty new tariffs on foreign-made steel and aluminum, the administration’s second annual Trade Policy Agenda that was released late last month takes a tough line, stressing the strong links between trade and national security. To that end, the agenda advocates for the “aggressive” enforcement of U.S. trade laws, argues that the mandate of the World Trade Organization should be curtailed, and expresses an abiding belief in the U.S. government’s right to forcefully respond to what it deems “unfair” global trade practices.
In a statement, U.S. Trade Representative Robert Lighthizer once again emphasizes the administration’s intent to continue using its economic leverage in pressuring other countries to open markets and work with “like-minded” countries to negotiate new free trade agreements and tackle global trading problems, including those involving Beijing.
The report praises President Trump for creating what USTR calls a “new era” in trade policy that is based on fulfilling campaign promises such as withdrawing the United States from the Trans-Pacific Partnership, renegotiating the North American Free Trade Agreement and enforcing U.S. trade laws. Other presidents, politicians and candidates “have long promised” those things before, USTR says, “and for a long time, very little changed.”
According to USTR Lighthizer, the administration's trade policy is based on “five major pillars”: supporting U.S. national security, strengthening the U.S. economy, negotiating better trade deals, aggressively enforcing U.S. trade laws, and reforming the multilateral system.
Trade Policy that Supports National Security Policy
The U.S. Trade Representative attempts to put the administration’s approach to trade policy, and its focus on the U.S. national interest, into historical context by citing President George Washington’s farewell address, in which he “warned his fellow citizens that when it comes to trade negotiations, ‘There can be no greater error than to expect, or calculate upon, real favors from nation to nation.’” The document goes on to note that the nation’s first leader also advised that trade agreements should be “temporary,” and “abandoned or varied, as experience and circumstances shall dictate.” According to USTR Lighthizer, “these statements laid the groundwork for an American trade policy that is pragmatic, flexible, and steadfastly focused on our national interest.”
“Countries that are committed to market-based outcomes and that are willing to provide the United States with reciprocal opportunities in their home markets will find a true friend and ally in the Trump Administration,” the document states. “Countries that refuse to give us reciprocal treatment or who engage in other unfair trading practices will find that we know how to defend our interests.”
Strengthening the American Economy
The administration contends that its “fair and reciprocal trade” combined with ongoing deregulation efforts will build on the economic momentum provided by the landmark tax reform bill that was signed into law last December, which reduced the top statutory corporate tax rate from 35% to 21% and converted the United States from a worldwide tax system to a territorial tax system. These changes align the U.S. with its major trading partners, the report states, and “will lead to more efficient markets and make it easier for American workers and companies to succeed.”
Negotiating Trade Deals that Work for All Americans
The report highlights ongoing efforts to renegotiate NAFTA to “get a better deal for American workers and to improve the U.S. trade balance” and to make improvements to the U.S.-Korea free trade agreement that will “improve U.S. export opportunities and facilitate more balanced, two-way trade,” particularly for motor vehicles and parts.
The USTR mentions plans to negotiate new trade agreements but provides few details, referencing only “ongoing efforts” to pursue a possible post-Brexit deal with the United Kingdom and to prepare for “potential bilateral negotiations in the Indo-Pacific and African regions.”
To facilitate that process, ahead of an April 1st deadline, the administration has made it known that it will be seeking an extension from Congress to the Trade Promotion Authority legislation until 2021 and aggressively use that authority to negotiate or revise trade agreements so they are fair, balanced and support American prosperity. “Based on our discussions with congressional leaders, we believe that there is strong support for such an extension, which would mean that fast-track authority will remain in place until 2021,” Lighthizer said in the report.
Enforcing and Defending U.S. Trade Laws
The report details the present array of trade enforcement tools currently being employed by the administration or under consideration, including Section 301 investigation of Chinese policies related to forced technology transfer and alleged intellectual property theft, the Section 201 safeguards recently imposed on solar panels and washing machines, and the section 232 national security investigations of steel and aluminum imports. The report also touts a near 60% increase in the number of new anti-dumping and countervailing duty investigations, including the first such probe self-initiated by the Department of Commerce in more than 25 years (that was eventually dismissed).
Strengthening the Multilateral Trading System
Regarding the World Trade Organization, which the report acknowledges is “an important institution” the USTR is critical of its dispute settlement function, which “has appropriated to itself powers that the WTO members never intended to give it” and is thus “undermining our country’s ability to act in its national interest.” Although the report states that the U.S. is willing to work with other WTO members to address these concerns, press reports indicate that the administration has done little to detail its objections or propose potential solutions.
Instead of constraining market distorting countries like China, the WTO has in some cases given them an unfair advantage over the United States and other market based economies,” the USTR complains. “Instead of promoting more efficient markets, the WTO has been used by some Members as a bulwark in defense of market access barriers, dumping, subsidies, and other market distorting practices.”
And while the document attempts to assure “like-minded” countries that the administration remains “eager” to work with them, the administration makes it clear that it will not feel hindered by WTO rules when defending America’s interests.
“The United States will not allow the WTO – or any other multilateral organization – to prevent us from taking actions that are essential to the economic well-being of the American people,” the agenda states. “At the same time, as we showed in last year’s WTO Ministerial, we remain eager to work with like-minded countries to build a global economic system that will lead to higher living standards here and around the world.”
U.S. Trade Representative Robert Lighthizer will be testifying before the House Ways & Means and Senate Finance committees this week and is expected be grilled on this year’s agenda amid what many fear could be a looming global trade war.