Protecting American Workers & Businesses: The Obama Administration’s Trade Enforcement Record
“I have made rigorous trade enforcement a central pillar of U.S. trade policy, and we have moved aggressively to protect American workers and to improve labor laws and working conditions with tradingpartners across the globe.”
President Barack Obama, 5/19/2015
Today, President Obama is signing the bipartisan Trade Facilitation and Trade Enforcement Act of 2015 into law. Often referred to as “customs” legislation, it strengthens our tools for holding trading partners and foreign industries accountable on their obligations to trade fairly and openly. This legislation represents an ambitious upgrade in our government’s trade enforcement capabilities. From day one, the President and his Administration have set out to build a far more capable enforcement system, and the result has been a record of trade enforcement victories that are helping to level the playing field for American workers, businesses, farmers, and ranchers.
The Administration has enlisted all of the relevant agencies and used all the tools at its disposal to identify, monitor, enforce, and resolve the full range of international trade issues, so that American workers and businesses receive the benefits they are due under our trade and in- vestment agreements. Those tools include pre-dispute engagement, which aims to push trading partners and industries to meet their obligations without having to resort to dispute settlement or other formal proceedings. However, if partners fail to live up to their obligations, formal dispute settlement mechanisms established under broad, multilateral agreements such as the World Trade Organization (WTO), as well as regional and bilateral free trade agreements, can help hold trading partners accountable. Domestic trade laws also provide mechanisms for U.S. industry to seek remedies to level the playing field for imports dumped by foreign companies or unfairly subsidized by foreign governments. For every case we bring, there are many multiples that are re-solved before coming to a public declaration of formal dispute proceedings. But where countries or foreign industries are competing unfairly, we have not hesitated to act aggressively to protect American workers and businesses, leveling the playing field for Made-in-America products. To date, this strong enforcement record includes:
• Aggressively Pursuing—and Winning—Cases at the World Trade Organization (WTO): Since 2009, the Obama Administration has brought 20 enforcement cases at the World Trade Organization (WTO)—more than any other WTO member—achieving removal of bar- riers and increased export opportunities worth billions of dollars to American workers and firms. This includes 11 complaints against China, substantially higher than the prior Adminis- tration. And the United States has won every one of these cases that has been decided—with wins against China on products from poultry to autos to high-quality steel. The Adminis- tration also took the first-ever safeguard action under Section 421 of the Trade Act of 1974 against China to protect jobs in the domestic tire manufacturing industry and then success- fully defended that action at the WTO. In addition to our record of success in complaints against China, we’ve also won consequential cases against the EU for $18 billion in illegal aircraft subsidies; against India to end its illegal ban on U.S. poultry and other agricultural products; against Argentina for import licensing affecting almost all U.S. exports; and against the Philippines for taxes on distilled spirits.
• Levying Anti-Dumping and Countervailing Duty Penalties on Foreign Industries and Trading Partners at the Highest Rate in 14 Years, Particularly Important to the Steel Industry: The United States is currently enforcing 325 antidumping (AD) and countervailing duty (CVD) orders and initiated 62 investigations in Fiscal Year 2015, which is the largest number of investigations initiated in 14 years. Commerce and CBP are enforcing 149 AD/CVD orders against foreign steel, representing nearly half of all cases.
• Making Labor Rights Enforcement a Priority: The Obama Administration has also made unprecedented efforts to address labor rights, bringing the first ever labor case under a free trade agreement (FTA)—against Guatemala—and undertaking initiatives with our FTA part- ner countries to strengthen workers’ rights in Honduras, Colombia, Panama, Bahrain, Jordan, Burma, Bangladesh, and others.
• Coordinating Efforts Across the Administration and Institutionalizing that Coordination: The President created the Interagency Trade Enforcement Center (ITEC) by Executive Order in 2012, which brings together researchers, analytical resources, and expertise from across the Federal Government into one organization, significantly enhancing the capability of the United States to investigate foreign trade practices that are potentially unfair to American industry and American workers. The Trade Enforcement Act that the President is signing into law today will permanently establish the successor to ITEC, the Interagency Center on Trade Implementation, Monitoring, and Enforcement. The ITEC has provided crucial investigative and analytical resources for WTO disputes brought against China and other trading partners, including export subsidies provided by China to its auto and auto parts manufacturers and to a variety of industries in so-called “Demonstration Bases.”
• Passing the Customs Bill to Strengthen Trade Enforcement Authority: The Trade Enforcement Act that the President is signing today will provide critical tools for the Administration to hold its trading partners accountable. The bill strengthens the ability of Customs and Bor- der Protection (CBP) to combat foreign companies trying to evade the duties that have been imposed on them for violations of U.S. trade laws and their international obligations; includes new tools to enhance engagement with countries that do not adequately and effectively protect intellectual property rights; helps prevent the flow of counterfeit goods into the United States; authorizes a first-ever $15 million Trade Enforcement Trust Fund; and provides new, unprecedented tools to address unfair currency practices.
• Stepping up Customs and Border Protection Inspections: Today, in addition to the Trade Enforcement Act signing, CBP also announced that it has stepped up its reviews of steel imports, while requiring that all entry documents and duties be provided on certain shipments before cargo is released by CBP into the United States, referred to as “live entry.” For Fiscal Year 2016, the President signed into law a 10 percent increase in trade enforcement funding for the Department of Commerce, which will be used to hire 38 new staff members to sup- port the AD/CVD and trade compliance workload. Commerce will also hire five new staff members to support trade agreements compliance work.
• Increasing Funding for Trade Enforcement: The Administration is seeking robust funding for trade enforcement. The 2017 President’s Budget requests $606 million for CBP trade administration activities and 3,816 FTE to implement this work. This includes the salaries of CBP trade and revenue staff within the Office of Field Operations, ten Centers of Excellence and Expertise for centralized processing and industry engagement, trade enforcement policy and program activities within the Office of International Trade, and the development and deploy- ment of the Automated Commercial Environment (ACE). Together, these investments com- bine effective risk segmentation, enhanced targeting, and expanded shipper vetting to allow CBP to focus scarce law enforcement resources on the relatively small number of shipments that have potential to cause harm. In addition, the President’s Budget funds the Department of Commerce’s International Trade Administration’s Enforcement and Compliance Program at $84 million, a $4.5 million increase over the 2016 enacted level. This includes 347 FTE who work to take prompt and aggressive action against unfair foreign trade practices and foreign government-imposed trade barriers. The President’s Budget annualizes the 38 posi- tions established by the 2016 Consolidated Appropriations Act, adding 12 FTE to address the urgent need for additional staffing caused by the sustained and significant increase in AD/ CVD cases. At the Department of State/USAID, the Administration requests $45 million in the President’s Budget to help less developed trading partners meet the high standards that our agreements require.
In the final year of the Administration, we are continuing to build on the Administration’s enforcement record. This paper outlines a number of steps we are taking.