11 March 2019
USTR Highlights Mainland Chinese Policies, Other Concerns in Annual Trade Policy Agenda
The Office of the U.S. Trade Representative announced on 1 March the release of the Trump administration’s third annual trade policy agenda. The agenda claims that the administration inherited a “deeply flawed global trading system that put U.S. companies and workers at an unfair disadvantage and discouraged true market competition.” In response, the administration has employed trade policies that use the United States’ “leverage as the world’s largest market … [to] create better conditions for U.S. workers and encourage more efficient global markets.” The result, the agenda states, has been growth in U.S. manufacturing, imports, exports and employment.
The administration thus intends to continue these policies in 2019, including by:
- continuing to press mainland China to address long-standing trade irritants;
- seeking congressional approval of the U.S.-Mexico-Canada Agreement;
- continuing to push trading partners for policy changes that will address U.S. trade deficits with those countries;
- preserving the innovation and technology that remain vital to the U.S. economy and national defence (a possible reference to the on-going Section 232 investigation of automobiles and auto parts and possible 232 investigations of other products);
- defending the right of the United States to determine its national security interests (e.g., in World Trade Organisation litigation challenging the Section 232 safeguards on steel and aluminium);
- launching trade negotiations with the European Union, Japan and the United Kingdom;
- deepening trade with Kenya through a trade and investment working group; and
- enforcing U.S. laws and trading rights, including by methods such as formal WTO challenges and possible additional actions under Section 301 or other statutory authorities.
Among other things, the agenda indicates that the United States has continued its efforts to expand trade with Hong Kong and highlights how Hong Kong fully opened its market to all U.S. beef and beef products in 2014. Issues of concern remain in other areas, however, including a copyright system that has not been updated and that ostensibly leaves Hong Kong vulnerable to digital copyright piracy and concerns that Hong Kong’s Code of Marketing and Quality of Formula Milk and Related Products and Food Products for Infants and Young Children may become mandatory in practice if compliance is required by Hong Kong Hospital Authority tenders.
The mainland China section of the trade policy agenda links to a separate 183-page previously released document that reviews mainland China’s compliance with its WTO commitments. USTR voices numerous complaints about mainland China elsewhere in the trade policy agenda, however, including how the global trading system has been tilted towards non-marking economies like mainland China and how non-market policies by mainland China and others have led to global overcapacity in key industries such as steel and aluminium.
The agenda also mentions efforts by Beijing to obtain valuable U.S. intellectual property by using a wide variety of unfair and market-distorting tactics, such as joint venture requirements and other foreign investment restrictions and discriminatory regulations that bar U.S. owners from receiving market-rate returns. Moreover, the report states that mainland China had also implemented outbound foreign investment programmes to obtain U.S. intellectual property through the acquisition of targeted U.S. companies and conducted repeated cyber intrusions into U.S. commercial networks, despite pledges to the contrary, in order to obtain business confidential information and other sensitive data of U.S. companies. According to USTR, mainland China’s attacks on U.S. innovation “represented a severe threat to the U.S. economy and the future prosperity of all Americans.”