Details of WTO’s Review of U.S. Trade Policy

WTO Recommendations

Among other things, the WTO recommends the following:

Reduce U.S. support for agriculture. Overall, support for agriculture in the U.S., as a percentage of the value of production, remains low compared with other developed countries. Of the support that remains, most is linked to prices and/or production. However, the large size of the agriculture sector means that the absolute amount of support is considerable, varies from one year to another depending on prices, and can affect world markets. The WTO recommends reducing U.S. support for agriculture.

Increase access to U.S market while promoting exports. The Administration’s export promotion plans should be complemented by continued reduction in remaining restrictions on market access and other distorting measures, including remaining barriers to services trade and investment.

Pursue trade liberalization on MFN basis. The WTO adds that pursuing trade liberalization on a most-favored-nation (MFN) basis (i.e., a multilateral basis) could provide the U.S. with the added advantage of helping reduce the future risks of protectionist measures at home and abroad, and reaffirm the U.S. leadership role that has been a crucial element in advancing the objectives of the multilateral trading system since its inception.

WTO Review of U.S. During 2008-2010

The WTO described the U.S. economy and trade measures taken during the period of review (2008-2010) as follows:

Imports dropped almost 35% in 2009. Between the third quarter of 2008 and the second quarter of 2009, imports of goods decreased almost 35%. Exports of goods also declined, albeit at a slower pace, reflecting the slowdown in global demand. With imports falling more rapidly than exports, the U.S. current account deficit narrowed sharply, from a peak of 6% of GDP in 2006 to slightly less than 3% of GDP in 2009.

Protectionism generally avoided. The WTO says that the U.S. trade and investment regimes are among the most open in the world and remained so throughout the period under review. The U.S. also largely resisted pressures to respond to the global economic recession by tightening restrictions on imports.

Tariffs still averaged 4.8%. Border measures such as tariffs and quantitative restrictions remained broadly unchanged since the previous review of the U.S, illustrating the overall stability of its trade regime. At 4.8%, the simple average applied MFN tariff is the same as in late 2007, when the recession started.

Import restrictions mostly for health, safety. The U.S. abolished quotas on imports of several categories of textiles and apparel from China in December 2008. Remaining quantitative restrictions and controls on imports are maintained to protect health, safety, or the environment, or for foreign policy purposes. These restrictions include a new ban on imports of plants taken in violation of foreign laws (i.e, the Lacey Act).

Fewer AD measures, tripled CV measures. While antidumping (AD) investigation initiations in 2008-09 remained well below the peak of 2007, the share of investigations that result in final AD orders increased since then. In addition, a 2007 decision by the U.S. to reverse its long-standing decision not to apply countervailing duties (CVD) on China meant that CVD investigations almost tripled between 2004-06 and 2007-09. CVD final orders also increased from 31 in 2007 to 41 in December 2009.

Slow-down in FTAs. There was a marked slowdown in the pace of negotiating free-trade agreements (FTAs) by the U.S. during the review period. FTAs with three countries became effective: Costa Rica (part of the Dominican Republic-Central America FTA); Oman; and Peru. The U.S. has FTAs in force with 17 countries.

Safeguard on China tires. The limited changes made during the period under review to trade border measures related mostly to contingency measures. In September 2009, the President made a determination under safeguard legislation to apply additional duties on tire imports from China for three years.

Increase in domestic preferences. There were sizable loan agreements with two domestic car manufacturers. Furthermore, domestic preferences were incorporated into the $787 billion fiscal stimulus package of early 2009 to ensure that the manufacture of iron, steel, and manufactured goods used as construction materials in public projects funded with stimulus dollars is performed in the U.S.

10+2, CPSIA, etc. The report also discusses major regulatory changes that took place during the period of review, such as: (i) “10+2” advance information requirements for cargo arriving in the U.S. by vessel; (ii) the Consumer Product Safety Improvement Act of 2008 which introduced regulatory and enforcement measures for consumer products; (iii) the 2008 Farm Bill which maintained, with some changes, most of the policies in the 2002 Act with some new programs and adjustments to payment rates.

(See ITT’s Online Archives or 09/30/10 news, 10093035, for initial BP summary announcing the Trade Policy Review.)