WTO Trade Policy Review of the United States
Day 2 Statement
Statement by Ambassador Michael Punke
Deputy U.S. Trade Representative and U.S. Permanent Representative to the WTO
21 December 2016
Madam Chair, Ambassador Blockert, and fellow Permanent Representatives and delegates;
Thank you for joining us again today for the continuation of this 13th Trade Policy Review of the United States. And many thanks to all of you for your very active participation during the first day of this review on Monday.
As mentioned in our opening statement on Monday, the United States regards this review as a valuable opportunity to listen to, and to learn from, other Members, and to take on board various perspectives on our nation’s trade policies. Our experience on Monday confirmed the usefulness of that process. We appreciate the observations offered by nearly 60 Members, and the constructive spirit in which they were articulated.
As is the case with all Members experiencing this process, we of course fully expect criticism to be part of the picture of our TPR. And while we are not always able to respond as immediately or as fully as some of our partners would like, and while sometimes we disagree strongly with certain assertions or the premise of some comments, hearing from all of you makes a difference in the way we think about formulating our trade policies. We are also appreciative for the acknowledgment from so many of the fact that the United States maintains one of the most open economies in the world.
We hope that the massive effort we devoted to responding in writing to your many advance questions will prove useful. This morning I’d like to respond briefly to a few of the more consistent themes we heard on Monday. What follows will not be a comprehensive response to every intervention or question, but I hope to provide some elaboration on our written responses to questions posed by Members.
Let me note at the outset how gratified the United States is that we heard such consistent acknowledgments and expressions of appreciation for the commitment of the U.S. to the WTO, and for the importance of our leadership in this institution. This recognition means a great deal to Ambassador Froman and to all of us who work on trade policy as it relates to the WTO. The United States is proud of the role we have played in creating a rules-based trading system that promotes enduring values and that has lifted hundreds of millions out of poverty.
We were very interested to hear many Members acknowledge, in their statements, the important role of plurilateral work in helping to advance prospects for a vibrant WTO. In particular, several Members expressed a strong desire to keep working to conclude, successfully, the Environmental Goods Agreement and Trade in Services Agreement, goals that we share. We find these statements very encouraging. In our view, the sentiments expressed on Monday reflect the spirit of pragmatic multilateralism that is critical to the future success and vibrancy of this institution.
As we look ahead to potential outcomes for MC-11, the place where we see the most optimistic outlook is an ambitious outcome from the fish plurilateral discussions, and we took encouragement from the frequent references to this issue on Monday. Those working on it are committed to achieving a high standard agreement by MC-11, and we look forward to continuing towards that objective.
Let me now turn briefly to a few specific themes raised on Monday.
Many of you asked the United States during this review about when we will submit our 2014 Domestic Support notification. I am happy to report that we will submit the notification to the WTO later this week. While the full notification will be posted on the WTO website, I can share with you today that our total AMS for 2014 is $3.8 billion, which is about $3 billion less than 2013 and significantly below our AMS ceiling of $19.1 billion. We look forward to answering all of your questions in detail at the March 2017 WTO Committee on Agriculture meeting.
Frankly, we were surprised to hear some question our record on transparency in the context of our 2014 Domestic Support notification. I will not claim we have a perfect record – no Member can. But fair-minded partners must distinguish between the circumstances driving the precise timing of our notification, and the propensity of others—including some who commented on this Monday—to be years overdue on their notifications, without even the pretense of explanation.
The U.S. domestic support notification for 2014 covers the period 2014-15. In some cases, payments were made in 2016 and final data are not available until mid-year or later. For example, we submitted our crop year 2013 notification in fall 2015. The complexity of the United States’ DS:1 notification is unmatched. It includes more than 80 different commodities for which the value of production must be obtained. There are close to 50 measures notified in the green box alone, some of which are new or modified, as described in the United States’ DS:2 notification.
In short, the U.S. remains committed to timely and transparent notification of farm programs to the WTO. We would note that many other WTO Members have not yet notified for 2014, or haven’t submitted new notifications in several years. And here I am only talking about agriculture-specific notifications. We have repeatedly raised in the CTG and other committees the alarming lack of notifications by other Members in areas such as RTAs, customs valuation, and fisheries subsidies.
Another question was raised regarding the United States’ ability to implement the Nairobi Ministerial Decision on export competition, including export credits. The Farm Act of 2014 does not affect the ability of the United States to implement the Nairobi decision. The United States has been operating in accordance with the elements of the Nairobi decision since prior to December 2015 and will continue to do so.
Some Members made observations about the duration of U.S. antidumping orders. I would remind Members that, under U.S. law, sunset reviews are administrative and evidentiary processes that depend importantly on the participation of respondents. We have observed numerous instances in which respondents in U.S. antidumping proceedings simply fail to participate in sunset reviews and have their orders continued, while those that do participate increase the likelihood of a different result. Therefore, rather than brand all orders with a duration in excess of some arbitrary threshold as “unfair,” Members concerned about the duration of antidumping orders may wish to look for ways to remind interested stakeholders of the importance of active participation in the sunset review process.
More generally, a number of Members raised concerns about increased usage of U.S. trade remedy procedures during the period under review.
From our perspective, these Members confound the remedy with a deeper and more worrying problem that the remedy aims to address. Injurious dumping and subsidization—and the effects that the increasing prevalence of these practices have on the trading system—is a problem we all should be concerned about. Investigating and remedying these trade-distorting practices is specifically provided for under WTO rules, and the United States has continued to exercise this right in accordance with our WTO obligations. Under U.S. law, antidumping and countervailing duty investigations are initiated in response to a petition filed by domestic industry. The decision then to impose a measure is based on a factual determination of whether injurious dumping or countervailable subsidization exists. The determinations are made based on the gathered evidence pursuant to a transparent process, and are frequently tested in U.S. courts and in the WTO dispute settlement system.
To speak frankly, support in the United States for any future trade liberalization agenda will be on highly unstable ground if injurious dumping and subsidization are not met with effective and enforceable remedies, as provided for in existing agreements. Moreover, we note that increases in AD/CVD cases in recent years are far from a U.S.-only phenomenon, but a common trend among many WTO Members. It is important to put the recent increases in context. U.S. initiations of antidumping investigations during the 2014-15 period represented 13% of all such initiations, and this is very close to the U.S. average of 11% since the WTO was established. Here again, perspective matters. While the U.S. accounted for 13% of all initiations during the period, nearly 30% of all such investigations were initiated in response to trade from one Member – a large country in Asia. To the extent Members are concerned about the trends they observe, they should consider what is actually causing the trend. Systemic issues that create, sustain, and worsen excess capacity have brought on a global crisis in steel, aluminum and other industries, stemming in part from trade-distorting and market-distorting government policies and actions, including subsidization. The United States would welcome a reversal of the trends that have been noted by Members, because it would signal that some fruit had come from efforts to get to the root of the problem, such as the efforts of the G20 and interested OECD members in the context of the Global Forum on Steel Excess Capacity.
We took careful note of interventions and questions from a number of Members regarding the Buy America provisions under U.S. law. We believe it might be helpful to remind our partners of several facts. $320 billion of U.S. federal and sub-federal government procurement are open to foreign competition under the combination of our GPA and FTA commitments. The value of these opportunities is significantly higher than the market access provided by most other GPA parties and our trade partners, including those who raised concern with Buy America on Monday. Further, Buy America provisions are fully consistent with our GPA and FTA commitments.
The United States is a strong proponent of the GPA, which advances several shared values—such as good governance, transparency, and predictability—while providing – on a reciprocal basis – commercially meaningful market access opportunities. To date, only 19 Parties covering 47 Members have joined the agreement. We strongly encourage other Members to pursue accession. The revised GPA includes provisions to assist developing countries in their accession efforts, and we stand ready to work with those interested in harnessing the opportunities and benefits offered by the GPA.
We heard many comments on Day 1 and received many questions from Members regarding a recently published final rule of our National Oceanic and Atmospheric Administration (NOAA) that is part of the broader U.S. Seafood Import Monitoring Program. This Program seeks to combat illegal, unreported, and unregulated (IUU) fishing and seafood fraud, regardless of where the seafood was produced. The Program establishes certain permitting, data reporting, and record-keeping requirements regarding certain priority fish and fish products identified as being particularly vulnerable to IUU fishing and/or seafood fraud in order to help authorities verify that such products meet U.S. standards if sold in the United States. As such requirements are already in place for U.S.-produced seafood, this most recent rulemaking only addresses imports. However, in the few examples where U.S.-produced seafood are not already subject to such requirements, those requirements will not apply to imports. This is why the requirements for imported shrimp and abalone will not take effect on the same time frame as requirements for the other imported “priority” species.
Subject to the availability of resources, NOAA and the broader U.S. Government intend to provide assistance to exporting nations and to domestic imports to support compliance with the requirements of the rule, including providing assistance to build capacity to: (1) undertake effective fisheries management; (2) strengthen fisheries governance structures and enforcement bodies to combat IUU fishing and seafood fraud; and (3) to establish, maintain, or support systems to enable export shipments of fish and fish products to be traced back to the point of harvest.
We also heard on Monday that the United States is called upon to comply with the Nairobi Decision with respect to preferential rules of origin applicable to imports from LDCs under non-reciprocal preferential trade arrangements. This Decision requires preference-granting Members to inform the Committee on Rules of Origin of the measures being taken to implement the Decision. The United States will inform the Committee in the coming days that it is implementing the Decision. In this regard, it is important not to overstate what was carefully negotiated and agreed upon in Nairobi. While it was recognized that the LDCs seek consideration of use of value of non-originating materials to confer origin when preference programs are under review, the Decision made explicitly clear that “Preference-granting Members applying another method may continue to use it.”
I would like to acknowledge, especially, the numerous statements of appreciation from developing country Members regarding U.S. preference programs, particularly the reauthorization of our GSP and AGOA programs, the extension of benefits for Haiti under the HOPE program, and tariff preferences extended to Nepal to help its recovery. In fact, the United States is pleased to announce that last week President Obama issued a proclamation to implement the tariff preferences for Nepal. The proclamation also modifies the harmonized tariff schedule to reflect the United States’ decision to reinstate the Central African Republic as a beneficiary under AGOA. In this room on Monday, we were rightfully reminded that the needs and competitiveness of developing countries, including the least advantaged among us, vary widely, and that a one-size fits all approach will not benefit all. U.S. preference programs, including our non-reciprocal preferences under AGOA, reflect that reality.
I have tried in this statement to touch on some of the themes that were most consistent in the written questions and verbal interventions made during this review. I recognize that I have not been able to touch on the many dozens of issues raised by Members. I would like to reassure the Membership that the United States has taken careful note of every single question and issue raised during this TPR, including, to name just a few, trade facilitation measures, intellectual property rights, and a range of issues related to the regulation of telecommunications, financial, transport, and other services sectors.
Madam Chair, the United States approaches the end of this review with a certain measure of relief, which is a sentiment I’m sure all Members can appreciate. The TPR is a rigorous and demanding process. It is an enormous amount of work for big and small Members alike. It is also immeasurably worthwhile, and represents one of the most valuable innovations of this important institution.
I’d like to close by extending the warm thanks of all of our team – including the hundreds of colleagues across the scope of our government in Washington – who participated in responding to your questions. We deeply appreciate the serious engagement of all of you, and we are grateful for the role of the Secretariat, the Chair, and our discussant in shepherding us through this process.