In a Congressionally-mandated report on U.S. trade policy released on March 1 , the Trump administration emphasized U.S. sovereignty in determining trade policy, promised to use trade remedy laws assertively to counter unfair trading practices, pledged to aggressively put pressure on countries to eliminate barriers to U.S. exports, and committed to reviewing the U.S. approach to trade agreements.

The Trump Administration’s 2017 Trade Policy Agenda (Agenda) makes the case for “freer and fairer trade” as articulated by candidate Trump during his campaign for the presidency, noting that other governments often fail to follow the international rules adequately and fail to administer their trade actions in a transparent manner. Although the Agenda does not provide much detail, it does state that a fuller version of the administration’s trade policy priorities will be released once President Trump’s new U.S. Trade Representative is confirmed.

The Agenda’s overarching message reflects messages heard on the campaign trail and during the confirmation hearing of U.S. Commerce Secretary Wilbur Ross. It states that U.S. trade policy will be designed to “increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports.”

The reference to agriculture in the Agenda is likely a White House acknowledgement of concerns raised by Members of Congress from agriculture-exporting states that the Trump Administration had overlooked the importance of U.S. agriculture exports when highlighting trade deficits and the “job-killing” aspects of trade.  

America First

Defending the United States’ national interest in the realm of trade policy is a recurring theme in the Agenda, which begins by declaring the Administration’s commitment to prioritize U.S. sovereignty over trade policy and its own trade objectives.

The Agenda sets out the basis in domestic law that adverse WTO decisions do not change U.S. law unless the U.S. Government decides to implement modifications administratively or through legislation. However, under WTO rules, WTO members may be authorized to take retaliatory measures – usually in the form of increased tariffs on American exports – if the United States does not bring a policy into conformity with WTO findings in a timely manner.

 

Aggressive Trade Remedy Laws will be in Play

The Agenda makes clear that U.S. trade remedy laws will take a front seat in the Administration’s efforts to level the playing field for U.S. companies. This is not surprising: this stance was part of candidate Trump’s “economic nationalism” on the campaign trail, and the Administration’s pick for USTR, Robert Lighthizer, is known for his track record on steel antidumping cases and for recommending trade remedy actions against China if necessary to safeguard U.S. trade interests.

The Agenda highlights potential U.S. actions to be taken under Section 201 of the Trade Act of 1974 (safeguards), which allows the President to provide relief in response to a surge in imports, and Section 301 of the same act, which allows the United States to impose trade sanctions against countries that violate trade agreements or engage in unfair trade practices. In addition to “leveling the playing field,” these provisions also will be used as policy levers to encourage countries to “adopt more market-friendly policies.”

Section 201 was last invoked by President George W. Bush in 2002. Tariffs were imposed on foreign steel in a response to an alleged import surge. Section 301 has not been used unilaterally for more than 20 years (since 1995) as the U.S. committed to raising Section 301 issues first through the WTO’s dispute settlement process when those issues are covered under WTO agreements. 

However, recent press reports on, and op-eds by the Administration have covered or alluded to additional legal mechanisms (such as Section 122 import surcharges, Section 232 national security safeguards (under Trade Expansion Act of 1962), and even action under the Trading with the Enemy Act or International Emergency Economic Powers Act) that permit unilateral U.S. action for national emergency and security purposes. The Agenda appears to lay the legal groundwork for justifying actions independent of the WTO should the U.S. find it necessary to do so. 

Rebalancing and Leveling the Playing Field

On opening up foreign markets to U.S. exports, the Agenda declares that the Trump Administration will take an “aggressive” approach to eliminating barriers to U.S. exports, using “all possible leverage,” including the principle of reciprocity, applying limits on trade or investment on countries that refuse to open their markets (e.g., limiting U.S. market access to levels provided by U.S. trading partners).

Foreign trade barriers mentioned include foreign subsidies, currency interventions, theft of intellectual property, unfair competitive behavior by state-owned enterprises, violation of labor laws, use of forced labor, and technical barriers to trade – more loosely defined in media reports as burdensome or unnecessary regulations. Examples raised in the Agenda included theft of trade secrets, restricting the flow of digital data and services, and limiting competition in the services sector.

Hint on Next Steps for Bilateral Trade Deals?

The Agenda is critical of current U.S. trading arrangements, including the North American Free Trade Agreement (NAFTA) and the U.S.-Korea Free Trade Agreement. It cites trade deficits and other economic figures and attributes poor U.S. economic performance to trade developments, such as China’s accession to the WTO, which was also raised in the President’s February 28 address to the joint session of Congress, suggesting that China will be a major focus of scrutiny and action.

In response, the Agenda states that the Administration will review the U.S. approach to trade agreements and will likely seek bilateral, rather than multilateral agreements going forward. It states that by withdrawing from TPP, the Trump Administration has “paved the way for potential bilateral talks with the remaining TPP countries,” signaling that it may seek bilateral deals with Japan, Canada, and Mexico (whose leaders President Trump or his cabinet officials have met with recently on a variety of issues, including trade).

While the Agenda goes on to note that “the President has begun his consultations with Congress on the ways in which future trade agreements can work for all Americans more effectively than they have in the past,” detailed consultations with Congress on new bilateral agreements will also need to await the confirmation of a USTR (trade lawyer Stephen Vaughn has been named acting USTR and General Counsel, the former until the USTR, presumably Lighthizer, is confirmed). Notably absent was any reference to “key allies” (such as the U.K.) as candidates for future bilateral trade agreements, although both sides are acting as though this is a given.

A more detailed trade policy agenda will be released once a USTR has been confirmed. In the meantime, the trade policy agenda as previewed in the report released March 1 confirms signals and statements made by the President and his key advisors to date. The Trump administration is signaling that it is prepared to take a more aggressive approach to unfair trade practices being pursued by U.S. trading partners. 

The Agenda signals that the White House will seek to use the leverage of the U.S. market wherever possible to increase market-opening that benefits U.S. exports, while reworking existing and future U.S. trade agreements to achieve economic outcomes focused solely on U.S. workers, farmers, ranchers and businesses.