Bridges Weekly Trade News Digest • Volume 13 • Number 27 • 22nd July 2009

US Trade Rep Vows Strict Enforcement of Trade Rules

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Washington is about to get tougher on countries that violate trade agreements, Ron Kirk, the Obama administration’s top trade official, said in a major policy speech last week. Speaking to a crowd gathered in a steel plant in the industrial city of Pittsburgh on 16 July, Kirk announced several new enforcement initiatives and pledged to “to identify and solve problems at the source.”

“Enforcement cannot be an afterthought. It needs to be a centrepiece of trade policy,” he said.

The speech comes amid growing calls from trade unions and some lawmakers for the Obama administration to step up its efforts to protect US workers from foreign competition. Several members of the President’s own Democratic Party have been especially vocal about the need for the government to fight for American jobs in light of the ongoing economic slump. Kirk’s speech seemed to be aimed directly at those critics.

“I can tell you with no reservations: the Obama administration is both willing and able to enforce our trade agreements,” Kirk told the crowd. “American workers deserve no less.”

Kirk, whose official title is US Trade Representative, said that the US has done well with its enforcement efforts on telecommunications trade and intellectual property rights, and that Washington plans to apply similar approaches in two other areas: health and safety standards - known as sanitary and phytosanitary (SPS) measures in trade parlance - and technical barriers to trade, or TBT.

This means that Washington will likely take a ‘name and shame’ approach to encourage countries to honour their SPS and TBT obligations. The US has used a similar strategy, known as Special 301, to call out those governments whose intellectual property laws are ‘of concern’ to Washington. Kirk described this programme “one of our biggest, strongest enforcement tools.”

Thus, countries that banned imports of US pork in the wake of the recent H1N1 ‘swine flu’ outbreak could soon see their names on a similar list, Kirk said. Washington and other pork exporters like Canada and Mexico maintain that such embargoes cannot be justified on health grounds, a position that has been supported by several intergovernmental organisations (see Bridges Weekly, 1 July 2008, http://ictsd.net/i/news/bridgesweekly/49943/).

Touching on a flashpoint issue for many Democrats, Kirk promised to take swift action against potential violations of labour laws in countries that trade with the US.

“We will engage governments of countries that violate the rules, to restore workers’ rights quickly. If those governments can’t seem to fix their labour problems, we will help them find a way. And if they won’t fix their labour problems, we will exercise our legal options,” he said.

US lawmakers’ concerns over workers’ rights have been the primary stumbling block to the Senate’s ratification of a free trade deal with Colombia that was signed by the leaders of both countries in 2006. But Kirk has insisted that his office is still working with the Colombian government to resolve outstanding concerns. He has said the same of the similar negotiated-but-not-ratified agreements with Panama and South Korea.

The US will also continue using ‘trade remedies’ like anti-dumping and anti-subsidy actions to ensure that domestic industries do not have to compete with under-priced imports, Kirk added. And, when necessary, Washington will bring legal challenges against those governments that do not fulfil their obligations on trade, he said, although he noted that “legal remedies are never our first choice.”

Kirk also stressed that stronger trade enforcement will require close co-ordination across US government agencies. To that end, the Office of the USTR will work more closely with the Departments of State, Agriculture, Labour, Treasury and Commerce in pursuing trade offenders, Kirk said.

Speech draws mixed reactions

The strong words from the USTR were warmly welcomed by representatives of US industry, which has taken a hit in recent months.

“This emphasis…on enforcing trade agreements, on enforcing countervailing duty, anti-dumping laws, that’s extremely important for us,” John Surma, the CEO of US Steel Corps, told reporters after Kirk’s speech. “Enough or not, it’s hard to say, but we’re very delighted with the direction,” he said.

But other business interests hinted that there might be some traces of hypocrisy in Washington’s newly toughened stance.

“Enforcement cuts both ways,” the pro-business US Chamber of Commerce said in a statement. “The United States has not always lived up to its own commitments under trade agreements…Retaliatory tariffs have already cost thousands of American jobs. Keeping our own trade commitments gives us credibility when we call on others to keep their own.”

Reactions on Capitol Hill were mixed. Senators Max Baucus and Debbie Stabenow, both Democrats, praised the USTR’s tougher stance, but Senator Sherrod Brown, a traditional trade sceptic, called for more thorough reform.

“We should not confuse a key part of the USTR’s job - trade enforcement - with a new direction in trade policy,” Brown, a Democrat, said in a statement. “Our trade strategy is broken.”

Brown’s comments echo recent calls from lawmakers in the House of Representatives, who say they want the administration to review, and perhaps re-think, Washington’s stance on trade. The Trade Reform, Accountability, Development and Employment (TRADE) Act, which was introduced in the House at the end of June, calls for just such analysis. The draft legislation “would mandate trade pact reviews, establish standards, protect workers, and help restore congressional oversight of future trade agreements,” according to a statement from the office of Congressman Michael Michaud, a leading proponent of the bill. So far the bill has attracted 115 co-sponsors, the vast majority of whom are Democrats.

From an international perspective, Kirk’s Pittsburgh speech may shed a bit more light on the Obama administration’s views on trade. More than six months into the Obama presidency, many US trading partners are still complaining that the new administration has yet to take any concrete action on trade, especially at the multilateral level. But more clarity could be coming in the next few months. Obama is expected to deliver a major speech on trade soon, perhaps also in Pittsburgh, when the G20 group of major world economic powers meets for its summit in the western Pennsylvania city in September.

ICTSD reporting; “US trade enforcement strategy a good start-US Steel,” REUTERS, 16 July 2009.