The Office of the United States’ Trade Representative (USTR) today released a preliminary report outlining President Trump’s Trade Policy Agenda for 2017. It should be noted that this is a preliminary report prepared in order to comply with the statutory deadline for the report’s annual release March 1, but bearing in mind that President Trump’s nominee for USTR, experienced trade lawyer and former deputy USTR under former President Ronald Reagan, Robert Lighthizer, has not yet been confirmed by the Senate. As such, it has been noted in the report that a more detailed version will be published once the USTR has been confirmed and has had the opportunity to provide input in that report’s development.
As stated in the report, President Trump sees bipartisan support by the American people for a complete overhaul of US trade policy. In order to effect this, the report states that the overarching purpose of the Trumpian trade policy “will be to expand trade in a way that is freer and fairer for all Americans”.
To this effect, the report outlines four priorities identified by the Administration:
(1) defend U.S. national sovereignty over trade policy;
(2) strictly enforce U.S. trade laws;
(3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and
(4) negotiate new and better trade deals with countries in key markets around the world.”
Several preliminary things stand out from the report:
(1) The report highlighted that the US is not bound by WTO decisions and evinces a policy stance going forward not to accept any adverse rulings from the WTO. The paragraph below taken directly from the report is instructive:
“And, when the WTO adopts interpretations of WTO agreements that undermine the ability of the United States and other WTO Members to respond effectively to these real world unfair trade practices with remedies expressly allowed under WTO rules, those interpretations undermine confidence in the trading system. None of these outcomes is in the interest of the United States or a healthy global economy.”
This is coupled with what appears to be the Trump administration’s plans to make greater use of unilateral remedies.
US disregard for adverse WTO rulings is a troubling prospect for many reasons, but particularly for small island states’ enforcement of their trade interests. It should be noted that the Caribbean island state of Antigua & Barbuda is still awaiting compensation from the US, after many years, since winning the US-Gambling dispute. It remains to be seen whether this will ever be resolved.
(2) Based on the arguments made in this report, I think it likely that Trump’s team will advocate for changes to be made to the WTO’s dispute settlement mechanism for their own interest.
(3) The Administration has stated its intention to not only more aggressively go after countries the US deems to be “engaging in unfair trade practices”, but will also with equal zeal go after countries which do not sufficiently open their markets to US exports. As mentioned previously, the pursuit of countries’ trading practices which are perceived to be inimical to US interests is not new and has been US policy for years. The singling out of China in this regard came as no surprise.
(4) The Trump administration’s criterion for whether a trade agreement is bad or good appears to be based solely on whether the US has a trade (merchandise) deficit with the country in question. This is not just a facile way of assessing the merits of a trade agreement, but also ignores services trade and investment which in many cases the US has a surplus with its trading partners.
(5) While there are references to “free and fairer trade” throughout the report, I believe the term “zero sum” trade may be the more appropriate term to describe these proposals.
The full report may be viewed here.
Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.