Trans-Pacific Partnership, Russia permanent normalized trade relations, and China trade are among key elements of 2012 Trade Policy Agenda

USTR released President Obama’s annual Trade Policy Agenda for the year on March 1, 2012. USTR is the primary agency responsible for preparation of the Trade Policy Agenda and coordinates its delivery to Congress by March 1 annually. Not surprisingly, U.S. manufacturers are front and center in many of the initiatives covered by the 2012 Trade Policy Agenda. We summarize key elements below.

Trans-Pacific Partnership

The Trade Policy Agenda highlights ongoing negotiations to conclude a Trans-Pacific Partnership (“TPP”) between the United States and Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. A fundamental goal of the TPP process is to expand opportunities for American job growth and increased exports throughout the Pacific region. The Trade Policy Agenda also suggests that additional countries may join the TPP negotiations, including Canada, Mexico, the Philippines, and Japan. TPP is intended to go beyond prior trade agreements and include provisions regarding production and distribution chains, greater regulatory harmonization between TPP countries, and assistance to small- and medium-sized enterprises.

Bellwethers for TPP progress in 2012 may include efforts by the Obama Administration to seek necessary Trade Promotion Authority from Congress, and the success or failure of expanding the number of participants in TPP negotiations beyond those already underway by the United States and the eight other original participants.

Russia World Trade Organization Membership

Negotiations regarding Russia’s World Trade Organization (“WTO”) membership concluded in 2011. A fundamental component of the Trade Policy Agenda for 2012 will be for the Obama Administration to work with Congress to end application of the so-called Jackson-Vanik Amendment, and to authorize President Obama to extend permanent normal trade relations (“PNTR”) to Russia. The Jackson-Vanik amendment imposes conditions on providing most favored nation tariff treatment to Russia, and its cessation is seen as a necessary first step to PNTR legislation and full WTO relations between the United States and Russia. The legislative process could be complicated by geo-political factors, such as the ongoing crisis in Syria. Whether the necessary approvals are secured in Congress by the time Russia is expected to formally accede to the WTO this summer remains an open question.

China Trade

The Trade Policy Agenda also devotes significant attention to the U.S.-China trade relationship. The USTR reaffirmed the policy of holding China accountable to its WTO commitments and emphasized the recent WTO victory concerning Chinese raw materials export restraints and another pending WTO case regarding Chinese export restraints on rare earth metals. In addition, the Trade Policy Agenda reaffirmed the availability of a China-specific transitional safeguard mechanism, known in the United States as Section 421, “to limit increasing imports from China that disrupt or threaten to disrupt” U.S. markets where “China does not agree to take action to remedy or prevent the disruption or threatened disruption.” This remedial tool is available to the United States until December 11, 2013, and import duties imposed by President Obama in a case involving certain passenger vehicles and light truck tires was upheld by WTO dispute panels in 2010 and 2011.