Remedies: The Trade Enforcement Digest, Issue #3

Remedies: The Trade Enforcement Digest, Issue #3

Welcome to
Remedies: The Trade Enforcement Digest,
a monthly newsletter brought to you by the Alliance for Trade Enforcement (AFTE).

AFTE is a coalition of trade associations and business groups that advocates for protecting American businesses and workers by enforcing U.S. trade agreements.

Alliance Announcements

  • On April 4, AFTE released a statement on the 2022 National Trade Estimate Report on Foreign Trade Barriers. AFTE commends the Administration’s recognition of several trade barriers that AFTE has previously highlighted, including through its NTE comments, in Brazil, Mexico, India, Indonesia, and other countries. You can read the full statement here.

  • On March 29, AFTE released a statement on the Biden administration’s Fiscal Year 2023 Budget proposal. AFTE encourages the administration to devote its additional trade-related resources to prioritizing enforcement and expanding market access for U.S. businesses. You can read the full statement here.

  • On March 18, AFTE released a statement criticizing the purported compromise among the United States, the European Union, India, and South Africa to waive intellectual property rights for Covid-19 vaccines. AFTE urges global leaders to uphold the TRIPS agreement and shift their focus to addressing the significant logistical challenges that remain in the global fight against Covid-19. You can read the full statement here.
  • On March 11, AFTE Executive Director Brian Pomper was featured in a podcast episode with Bob Bowman of SupplyChainBrain. During the episode, the two discuss Mexico’s failure to approve the vast majority of U.S. biotech products since 2018, in violation of USMCA. You can listen to the full episode here.

In the News

  • Last week, U.S. Trade Representative Katherine Tai testified before the House Ways and Means Committee and Senate Finance Committee regarding the Biden administration’s 2022 Trade Policy Agenda. In each hearing, Members of Congress pushed USTR to be more ambitious on trade and pursue more proactive, market-opening strategies. Members also requested stronger enforcement of free trade agreements beyond their labor obligations and expressed opposition to the TRIPS waiver. (House Ways and Means Committee, 3/30) (Senate Finance Committee, 3/31)
  • U.S. Trade Representative Katherine Tai released the 2022 National Trade Estimate Report on Foreign Trade Barriers, which highlights significant foreign barriers to U.S. trade and their impact on the value of U.S. exports. (USTR, 3/31)

  • The Biden administration’s Indo-Pacific Economic Framework — which will likely include the United States, Japan, Singapore, New Zealand, Vietnam, Indonesia, Malaysia, and Thailand — may launch as soon as April or May, according to Australian Trade Minister Dan Tehan. The details are not finalized yet, but Ambassador Tai discussed the deal with Singapore’s Minister for Transport S Iswaran this week and many stakeholders agree it must include enforceable trade provisions. (Bloomberg, 3/29) (USTR, 4/4)

  • U.S. Trade Representative Katherine Tai met with members of Congress, environmental NGOs, and industry stakeholders last Friday to discuss concerning developments in Mexico’s energy sector. The meeting readout noted the energy market’s non-competitive trajectory and the implications state consolidation would have on Mexico’s USMCA commitments. (USTR, 3/25)

  • Three members of the Senate Judiciary Committee, Senators Thom Tillis (R-NC), Tom Cotton (R-AK), and Marsha Blackburn (R-TN), sent a letter to Secretary of Commerce Gina Raimondo urging the Secretary of Commerce to take all steps possible to reverse the USTR’s support for the reported TRIPS waiver compromise. (U.S. Senate, 3/23)

  • The United States Patent and Trademark Office published a report detailing the positive economic impacts of IP-intensive industries. The report found that IP-intensive industries accounted for $7.8 trillion of the United States’ GDP and 44% of U.S. employment. In addition, workers in IP-intensive industries, on average, earn 60% higher wages than workers in other industries and are more likely to participate in employer-sponsored benefit plans. (USPTO, 3/17)

  • The U.S. Chamber of Commerce Global Innovation Policy Center Senior Vice President Patrick Kilbridge issued a statement condemning the reported TRIPS waiver compromise, arguing that dismantling IP rights will harm multiple U.S. industries. (U.S. Chamber of Commerce, 3/16)

  • The National Association of Manufacturers Vice President of International Economic Affairs Ken Monahan stressed strong concern over the impact the purported TRIPS agreement would have on manufacturing innovation and jobs. His messaging is in line with the Association’s consistent calls for effective solutions on trade, health and intellectual property. (National Association of Manufacturers, 3/16)

  • The United States, the European Union, South Africa, and India reportedly reached a compromise to support a proposal at the World Trade Organization to waive intellectual property protections for Covid-19 vaccines under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). (Politico Pro, 3/15)

  • A senior Mexican official grossly misrepresented Mexico’s USMCA compliance, claiming the country had fulfilled almost 90% of its obligations made under the agreement. (Inside U.S. Trade, 3/8)

Spotlight on Enforcement

(If you only focus on one enforcement issue this month, it should be this one.)

Since 2018, Indonesia has applied customs duties on information and communication technology (ICT) products, despite having made a binding commitment at the World Trade Organization (WTO) not to apply tariffs to such products.

The WTO’s Information Technology Agreement (ITA) governs the trade in ICT products, including the duty rate that ITA participants may apply to imports of covered products. The Agreement stipulates that all 82 participant countries must eliminate tariffs on all information technology products under its domain.

Over 50 Member countries agreed in 2015 to expand the Agreement to an additional 201 products. Yet while other Member countries are expanding free trade opportunities for ICT goods, Indonesia, which has been a Member of the Agreement since 1996, is flouting its trade commitments.

Indonesia’s assessment of customs duties on certain ICT products directly violates its responsibilities under the ITA. For example, the Agreement binds member countries to the zero-duty treatment of internet routers and switches under HTS Code 8517.62. Despite this commitment, Indonesia assesses a 10% duty on this product.

Indonesia’s behavior is antithetical to the spirit and letter of the ITA, which governs trade valued at over $103 trillion per year. Zero-duty treatment is meant to ensure transparent, secure, and predictable trade of the ICT goods that are essential to today’s economy. By refusing to abide by its WTO free trade commitments, Indonesia endangers the critical supply chain for advanced information technology.

This all comes at a time when the United States is looking to expand its trade ties in the Asia Pacific region. The Alliance for Trade Enforcement urges U.S. Trade Representative Tai to bring Indonesia into compliance with its WTO commitments and ensure the country ends its burdensome customs duties on ICT products.

These duties disadvantage American businesses and American workers. While U.S. ICT exports face taxes, many products exported from China and other Indo-Pacific countries get preferential duty treatment through ASEAN free trade agreements. This forces U.S. companies to work harder to participate in the same type of trade. Indonesia must end its customs duties on ICT products and abide by the rules of the WTO Information Technology Agreement.