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This Week In Trade

Obama's Budget Proposal, Trade Enforcement Efforts In The Spotlight

Posted: February 13, 2012

New efforts by the Obama administration to bolster trade enforcement, including through the president's FY 2013 budget proposal, are in the forefront of trade developments in Washington this week.

On enforcement, President Obama's FY 2013 budget proposal requests $26 million for a new Interagency Trade Enforcement Center (ITEC), which the White House says will boost its efforts to fight unfair trade practices. This budget proposal comes on the heels of Obama's emphasis on trade enforcement in his State of the Union address.

Beyond the new budget proposal, which was released today, there are several other enforcement-related events on the agenda. USTR General Counsel Tim Reif is meeting European Union officials in Brussels and Geneva this week to discuss “trade enforcement issues,” according to USTR.

As the United States and EU last week unveiled a new negotiated settlement to their longstanding disputes over the U.S. use of zeroing, the key remaining U.S.-EU dispute is the fight over subsidies to Airbus and Boeing for the development of large civil aircraft. The next step in the WTO dispute over subsidies to Airbus is for the U.S. to request a compliance panel to determine whether the EU has removed the subsidies faulted by the WTO. The next step in the Boeing dispute is for the Appellate Body to release its report, which is expected to occur by the end of March.

USTR's chief agricultural negotiator, Islam Siddiqui, is also scheduled to meet with EU officials in Brussels on Feb. 16 to discuss U.S. beef exports to the EU. The EU starting granting additional access to U.S. exporters after the U.S. successfully challenged EU import restrictions on beef under the WTO.

Under a 2009 bilateral memorandum of understanding, the EU is to increase of its tariff-rate quota (TRQ) for imports of hormone-free U.S. beef by August 2012. But the U.S. believes it cannot fill the quota unless the EU approves the use of lactic acidas an antimicrobial wash for beef, which is still being debated by EU member states.

EU member states may be more willing to approve the use of lactic acid if the U.S. Department of Agriculture (USDA) approves a long-delayed proposed rule that would open up the U.S. market to beef imports from the EU and other trading partners. In a regulatory agenda update, USDA now says that rule will be forthcoming next month.

Beyond U.S.-EU bilateral issues, there also remains a question on whether the U.S. and EU will jointly challenge China’s export restraints on rare earth minerals in the wake of their success in challenging Chinese restrictions on other raw materials key to steel production and other manufacturing.

U.S. objections to Chinese restrictions on rare earth minerals could come up in the context of the Xi visit to Washington this week. In advance of that visit, White House officials have said the administration plans to stress the need for China to act on trade and investment matters in accordance with international rules and norms.

According to business sources, this means the two sides could be discussing a range of activities this week, including forced technology transfer, theft of trade secrets and intellectual property theft.

Also on the enforcement front, U.S. stakeholders last Friday filed their comments to USTR for the next 2012 Special 301 Report on intellectual property rights infringement in foreign countries. Foreign governments have until Feb. 17 to respond, and the report is due out on or about April 30.

Of special note may be how strongly U.S. stakeholders lambast Russian IPR enforcement, given that Russia is now poised to join the WTO, and how strongly they criticize IPR protections in Canada, which is now interested in joining the Trans-Pacific Partnership (TPP) negotiations.

Last December, the Canadian government requested comments from Canadian stakeholders on whether Canada should seek to join the TPP talks. Those comments are due tomorrow (Feb. 14).