Trump’s 2018 Trade Policy Agenda: Negotiating Agreements

On February 28, the U.S. Trade Representative (USTR) sent the President’s 2018 trade policy agenda to the Congress, in accordance with the 1974 Trade Act. The agenda sets out five major pillars for U.S. trade policy: supporting national security; strengthening the U.S. economy; negotiating better trade deals; aggressively enforcing U.S. trade laws; and reforming the World Trade Organization (WTO). This post examines the administration’s plans and progress in negotiating trade agreements.

In touting the administration’s “very ambitious negotiating agenda”, the report pointed to its current negotiations to improve the North American Free Trade Agreement (NAFTA) and the U.S.-Korea Free Trade Agreement (KORUS), as well as its plans for negotiating a trade agreement with the United Kingdom after it leaves the European Union. However, in its first year, the administration did not initiate negotiations of any new trade deal, nor does it appear to have any on its immediate horizon.

The report repeats the administration’s criticisms of NAFTA, but recognizes that “many Americans have benefited from it”, in particular in the agricultural sector and border communities. USTR cited two primary goals for the NAFTA renegotiations: to update it with modern provisions that represent a high standard 21st century agreement and to “rebalance” it, with a primary objective of reducing trade deficits with Canada and Mexico.

Regarding the negotiations to improve KORUS, USTR’s objectives include resolving outstanding implementation issues, where it considers that Korea has not adequately fulfilled its commitments, in areas such as labor, competition, customs, and pharmaceuticals and medical devices, or has introduced new measures that undermine KORUS’s benefits. It also seeks to rebalance KORUS commitments on tariffs in order “to maintain a general level of reciprocal and mutually advantageous commitments” and reduce and eliminate non-tariff barriers to exports of U.S.-made motor vehicles and parts.

As for negotiating new agreements, USTR details the administration’s efforts to expand trade and investment ties with Britain, the U.S.’s 7th largest goods trading partner and largest partner in services trade. A Trade and Investment Working Group, established in July 2017, is making preparations for an eventual negotiation of a trade agreement. The report anticipates that during a transitional period following Brexit – the UK’s withdrawal from the EU, the U.S. and the UK will be able to negotiate an agreement, even though they could not implement it until the end of the transition period. In the interim, a U.S. priority is “to respond to evolving issues in the UK-EU negotiations, which could potentially impact the American business community”.

While the report indicates that the administration will continue to prepare for other potential bilateral agreements, including in the Indo-Pacific and African regions, it does not identify any countries with which it may negotiate an agreement. USTR notes in the report that the U.S. is seeking a closer trade relationship with Japan, but does not point to any ongoing work to achieve it. Nor does the report address or repeat the President’s recent statement that he would consider re-entering the Trans-Pacific Partnership (TPP), if it were improved.

The report also stated that the Trump administration wants stronger economic ties with the EU, noting that it is continuing to analyze the proposed Transatlantic Trade and Investment Partnership (TTIP), undertaken by the prior administration. It commented, however, that the EU “has expressed little interest so far”.

To support the pursuit of new trade deals, USTR also confirmed that the President intends to ask Congress to extend the 2015 Trade Promotion Authority (TPA), often referred to as “fast track” authority. That authority provides for an “up or down” vote by Congress on new trade agreements, provided the administration has met TPA requirements. According to the report, based on discussions with congressional leaders, the administration believes that there is “strong support” for an extension until 2021. Current TPA authority expires at the end of June unless the President requests an extension before April 1.

Finally, the administration’s proposed review of trade agreements was not mentioned in its latest agenda. In its 2017 trade agenda, the Trump team noted its plans for a major review of all trade agreements. Subsequently, an April executive order directed the Secretary of Commerce and USTR to conduct comprehensive reviews of all bilateral, plurilateral and multilateral trade and investment agreements and report to the President by October 26, 2017. The new trade agenda makes no mention of the report, such as whether it was submitted or its conclusions or any recommendations.

Jean Heilman Grier

March 1, 2018

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