Alliance Announcements

• On September 16, the Mexico Daily Post featured comments from AFTE, the National Association of Manufacturers, the American Petroleum Institute, and the U.S. Chamber of Commerce applauding USTR’s request for dispute settlement consultations with Mexico under the USMCA over the country’s energy policy violations.
• Several members of AFTE sent letters to key leaders in the Biden-Harris administration opposing the potential expansion of the TRIPS waiver, including the U.S. Chamber of Commerce, the U.S. Council for International Business, and BIO.
• On September 12, AFTE Executive Director Brian Pomper was quoted in a FreightWaves story on the discriminatory policies that prevent U.S. firms from fully participating in Mexico’s financial technology sector.

In the News

• WTO Hosts Public Forum in Switzerland: The WTO hosted an event in Geneva to demonstrate how the bolstering of trade rules can lead to a more inclusive, sustainable, and resilient world economy. The forum included three subthemes: leveraging technology for an inclusive recovery; delivering a trade agenda for a sustainable future; and framing the future of trade. (WTO, 9/30)
• USTR Ambassador Tai Attends G20 Trade, Investment, and Industry Ministerial Meeting: Ambassador Katherine Tai convened a discussion with six trade ministers on the sidelines of the G20 Trade, Investment and Industry Ministerial Meeting in Bali, Indonesia. She spoke with representatives from Argentina, Brazil, Cambodia, India, Indonesia, and South Africa about advancing WTO dispute settlement reform. (USTR, 9/21)
• USTR Leads Meeting with ASEAN in Cambodia: USTR Ambassador Katherine Tai and the Kingdom of Cambodia’s Minister of Commerce H.E. PAN Sorasak co-chaired consultations with their counterparts in Association of Southeast Asian Nations (ASEAN) Member States. During the meeting, held in Siem Reap, Cambodia, the ministers noted the importance of continued global cooperation in the post-Covid-19 economic recovery. They also discussed ways to implement the U.S.-ASEAN Economic Futures and agreed to work towards sustainable energy and regulatory practices. (ASEAN, 9/18)
• Officials Convene for U.S.-Mexico High-Level Economic Dialogue: Senior government officials from the United States and Mexico convened in Mexico City to participate in the U.S.-Mexico High-Level Economic Dialogue (HLED). The HLED remains focused on four pillars: Building Back Together; Promoting Sustainable Economic and Social Development in Southern Mexico and Central America; Securing the Tools for Future Prosperity; Investing in Our People. (USTR, 9/12)
• India Opts Out of IPEF Trade Pillar: India announced that it will not join the trade pillar of the 14-member Indo-Pacific Economic Framework (IPEF). India’s Commerce and Industry Minister Piyush Goyal cited issues with lack of consensus on potentially binding commitments required on “environment, labor, digital trade, and public procurement.” Minister Goyal noted that India would hold off on formally joining until the final contours of the framework emerge. (The Hindu, 9/10)
• New Trade Data Shows United States Trade Deficit Fell in July 2022: According to the U.S. Bureau of Economic Analysis, the trade deficit fell from $80.9 billion in June to $70.6 billion in July. Exports increased by $0.5 billion while imports decreased by $9.7 billion. (BEA, 9/7)
• Senate Finance Committee Unanimously Approves Doug McKalip for USTR’s Chief Agricultural Negotiator: By a vote of 27-0, the United States Senate Finance Committee unanimously approved Doug McKalip’s nomination to serve as the USTR’s Chief Agricultural Negotiator. McKalip’s nomination now heads to the full Senate for confirmation. (USTR, 9/7)
• USTR Ambassador Tai Meets with Korea’s Minister for Trade Ahn Dukgeun: USTR Ambassador Katherine Tai met with Korea’s Minister for Trade Ahn Dukgeun ahead of the first in-person Ministerial meeting in Los Angeles, CA. The ministers discussed a host of trade challenges related to supply chains and environmental protection efforts. They also noted the importance of strengthened partnership and cooperation in APEC and G-20. (USTR, 9/7)

Spotlight on Enforcement

In early September, U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo hosted the first in-person ministerial meeting for the Indo-Pacific Economic Framework (IPEF), a prospective trade bloc that will encompass 14 nations accounting for 40% of the global economy.

After two days of talks, they announced negotiation objectives grouped into four pillars: Trade, Supply Chain, Clean Economy, and Fair Economy. However, the Biden-Harris administration has indicated that it will not seek to include market access provisions — such as reduced or zero-tariff commerce — in the trade pillar.

This omission will severely limit the scope and enforceability of the IPEF. Offering tariff concessions would entice countries to accept robust intellectual property protections and other provisions that benefit American companies and workers. It would also provide a useful cudgel to deter potential violations down the line.

Like any trade agreement, IPEF will only succeed if the parties consider themselves bound by its provisions and have an effective means of settling disagreements.

Such dispute resolution frameworks could take several forms. The most prominent model is the World Trade Organization’s dispute settlement process, which is based on detailed rules, agreed upon by the members in advance, and carried out by objective decision-makers through transparent procedures. Since 1995, over 600 disputes have been brought to the WTO and over 350 rulings have been issued. Importantly, the WTO agreements have “teeth.” If a panel determines that a member state is failing to comply with the terms of an agreement and has not withdrawn the offending measure, complaining members may retaliate against the member by withholding benefits (typically in the form of increased tariffs).

The United States-Mexico-Canada Agreement also offers a successful model. Though the agreement has only been in force for two years, the dispute resolution process appears to be functioning effectively and seems to have buy-in from the three parties, which have each participated in state-to-state disputes under the new procedures.

The success of the IPEF will likely rest on its enforcement mechanisms. AFTE strongly recommends the adoption of market access commitments, which will allow the parties to implement a dispute resolution process with actionable penalties.