The Office of the U.S. Trade Representative recently issued its 2014 National Trade Estimate Report on Foreign Trade Barriers (“NTE”). This annual report highlights the most important foreign trade barriers to U.S. exports of goods and services, foreign direct investment in the United States, and protection of intellectual property rights. According to the USTR, there continues to be an increasing trend among the United States’ trading partners to impose “localization barriers to trade,” which are measures designed to protect, favor or stimulate domestic industries, service providers or intellectual property at the expense of imported goods, services or foreign-owned or developed intellectual property. U.S. companies doing business abroad should take steps to determine whether their U.S. exports may be subject to any potential trade barriers in the various markets.
A summary of the key new trade barriers identified by USTR includes the following:
- Nigeria – Effective October 2013, a 70 percent tariff is being applied to imports of fully assembled vehicles. In addition, increased levies and duties are being applied on certain agricultural goods, which have significantly raised the effective rates on wheat grain (from 5 percent to 20 percent), wheat flour (from 35 percent to 100 percent), brown rice (from 5 percent to 35 percent), and milled rice (from 30 percent to 80 percent). Effective tariff rates of 60 percent and 80 percent are currently being applied on raw sugar and refined sugar imports, respectively.
- Ghana – In November 2013, Ghana implemented local content requirements for the oil and gas sector with regard to local private equity participation, procurement of supplies, equipment, and provision of services, and mandatory local private equity participation in upstream activities.
- South Africa – As a result of the South Africa-EU trade agreement that took effect in 2011, U.S. goods face higher tariffs by as much as 10 to 15 percent than goods from the EU’s countries. Key categories of products at to which the U.S. faces higher tariffs include cosmetics, distilled spirits, chocolate and confectionary products, plastics, textiles, trucks and parts, fiber optic cable, agricultural equipment, and arms and ammunition.
- Russia – Questionable customs and regulatory practices are continuing to be employed that have adversely affected a variety of U.S. exports, including alcoholic products, audio visual products, consumer electronics, meat and poultry, and automobiles, among others. Russia continues to adopt localization policies in sectors such as telecommunications, navigation technology, and pharmaceuticals, and the Russian business environment remains difficult for investors. The USTR noted that all trade and investment engagements have been suspended as a result of Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity.
- Colombia – In March 2013, a one-for-one scrapping requirement based on the cargo capacity of old trucks was imposed as a condition for the sale and registration of new freight trucks. As a result, numerous U.S. freight trucks valued at approximately $113 million and imported in 2013 cannot be sold due to insufficient supply of old trucks to be scrapped and excessive prices requested for those old trucks.
- Canada – In 2013, Canada changed the way import duties were being applied to certain commercial food preparations such that cheese components of those products are now subject to prohibitively high tariff rates.
- Mexico – Effective January 27, 2014, new licensing procedures were established for the import of certain steel products. Although the new system is supposed to issue licenses automatically, industry representatives have reported long delays in the review and issuance of licenses.
- India – In October 2013, India introduced new, expanded local-content requirements in its national solar policy, which the United States challenged in dispute settlement at the WTO in February 2014.
- Indonesia -- In early 2014, two new laws were passed that will provide Indonesia with the legal framework for implementing sweeping, trade-restrictive measures. Indonesia will have two years to implement the new measures. Indonesia’s non-automatic import licensing requirements continue to serve as serious impediments to trade in various agricultural products, such as fruits, vegetables, flowers, dried fruits and vegetables, juices, cattle, beef, poultry, and other animal products. On May 8, 2014, U.S. Trade Representative Michael Froman announced that the United States is requesting new World Trade Organization dispute settlement consultations with Indonesia to address Indonesia’s import licensing restrictions.
- Malaysia – In January 2014, Indonesia announced its new National Automotive Policy, which maintains the country’s non-transparent import permit and gazette pricing system, excise duties that disproportionately affect imported vehicles, and special tax reductions for vehicles with Malaysian-manufactured components.
- Vietnam – In 2013, new restrictions on digital commerce were implemented, including limitations on online advertising, and stringent licensing requirements on internet service providers. Vietnam is also considering imposing licensing and registration requirements on providers of information technology services, such as restrictions on cross-border supply of cloud computing and data center services.
A copy of the 2014 NTE Report is available here.