“Strong Tools” for Enforcing Trade Agreements

In February, President Obama signed into law the “Trade Facilitation and Trade Enforcement Act of 2015”, which includes the first reauthorization of the U.S. Customs and Border Protection since its creation in 2003 under the Department of Homeland Security. In addition to customs reform, the new legislation provides “strong tools” for enforcing trade agreements and holding U.S. trading partners accountable for their obligations under the WTO and free trade agreements (FTAs). The bipartisan legislation amends the Trade Act of 1974 to provide requirements for the Administration’s identification of U.S. trade enforcement priorities, including consultations with Congress. This post examines the enforcement provisions in the new law.

Trade Enforcement Priorities: The legislation requires the Office of the U.S. Trade Representative (USTR), beginning in 2017, to establish trade enforcement priorities with respect to acts, policies and practices of foreign governments that raise concerns with respect to compliance with obligations under the WTO agreements or FTAs or otherwise create or maintain barriers to U.S. goods, services or investment. In setting its priorities, USTR is to focus on the foreign activities that would have the most significant potential to increase U.S. economic growth if they were eliminated and to consider factors such as:

  • the economic significance of the foreign acts, policies and practices;
  • the impact of the foreign government’s activities on maintaining and creating U.S. jobs and productive capacity;
  • major barriers and trade distorting practices described in the National Trade Estimate (NTE) (an annual report of foreign trade barriers);
  • a foreign government’s compliance with its obligations under the WTO and FTAs;
  • the implications of a foreign government’s procurement plans and policies; and
  • the international competitive position and export potential of U.S. products and services.

By July 31, 2017 and annually thereafter, USTR must report to the Senate Finance Committee and the House Ways and Means Committee on its trade enforcement priorities. It must then take appropriate action to address its enforcement priorities, by engaging with the foreign government to resolve the concerns or by initiating an investigation, negotiations of a bilateral agreement, or a WTO or FTA dispute settlement case.

The Act requires USTR to consult closely with the congressional trade committees in carrying out its trade enforcement responsibilities. The first consultations are required annually, before the end of May, with respect to the prioritization of acts, policies and practices.

The legislation also calls for USTR to hold semi-annual enforcement consultations with Congress – by January 31st and July 31st – with respect to its identification, prioritization, investigation and resolution of foreign acts, policies and practices. Those consultations are intended to take up strategies for addressing the offending foreign activities, such as the merits of a WTO dispute settlement case. They will also address ongoing enforcement actions — both those taken by the U.S. and those against the U.S., including potential implications for any U.S. law or regulation and enforcement resources and for U.S. stakeholders. The consultations will also provide an opportunity to consider the sufficiency of enforcement resources.

Congress also requires the Trade Representative to give it advance notice before initiation of any formal trade dispute by or against the U.S. In addition, USTR must notify and consult with the congressional committees before the circulation of a WTO or FTA dispute settlement panel report.

Trade Enforcement Center: To ensure that resources are devoted to enforcement activities, the new law establishes a permanent Interagency Center on Trade Implementation, Monitoring, and Enforcement in USTR. This codifies into law the Interagency Trade Enforcement Center (ITEC), which was established by Executive Order in 2012 to monitor and enforce trade agreements and remove barriers to American exports.

Trade Enforcement Fund: Finally, the new law provides funds for the enforcement activities. It authorizes a $15 million Trade Enforcement Trust Fund for USTR to use to enforce obligations under the WTO and FTAs, monitor foreign countries’ implementation of FTAs, support capacity-building for developing countries to implement FTA obligations, and investigate and respond to petitions for trade action.

Jean Heilman Grier

March 8, 2016