United States Advances Trade Policy With EU, Japan, South Korea
On the sidelines of the United Nations General Assembly in New York last week, U.S. Trade Representative Robert Lighthizer, European Union Commissioner for Trade Cecilia Malmström, and Japanese Minister of Economy, Trade, and Industry Hiroshige Seko met to discuss trade policy. After the meeting, the three leaders released a joint statement that outlined efforts to address non-market oriented policies in third countries, subsidies and state-owned entities, technology transfer, digital trade, and World Trade Organization (WTO) reform.
Lighthizer, Malmström, and Seko agreed to:
- Continue discussions to identify and share information on potential non-market oriented policies and practices, as well as to “deepen discussions” on enforcement and rule-making to address these issues.
- Boost information exchange and best practices on investment screening, in ways that relate to the recent U.S. passage of the Foreign Investment Risk Review Modernization Act (FIRRMA) and Export Control Reform Act (ECRA).
- Devise concrete plans to co-sponsor a proposal on transparency and notification aimed at combating domestic industrial subsidies at the next meeting of the WTO Council on Trade in Goods, which is set for November 2018).
- Promote best practices and increase efficiencies across WTO committees
- Reaffirm joint work to “maintain the effectiveness of existing WTO disciplines,” with each side working internally through the end of 2018 with a goal of launching negotiations on more effective subsidy rules.
- Conduct deeper discussions on ways to strengthen rules on industrial subsidies and state-owned enterprises (SOEs), with specific discussion on ways to address behaviors such as state-owned bank lending, preferential input pricing, and subsidies that boost industrial overcapacity.
- Work to advance the timely launch of negotiations of a new agreement on several issues, including the Global Forum on Steel Excess Capacity.
Later in the week, President Donald Trump and Japanese Prime Minister Shinzo Abe announced that they will start talks on a bilateral trade agreement. A joint statement said the United States wants more access to the Japanese auto market. In exchange, President Trump agreed to hold off placing tariffs on Japanese autos.
Also last week: President Trump signed a revised free trade agreement with South Korea that eased limits on U.S. auto sales in the country. The majority of the original trade pact remains intact, but in addition to guaranteeing the United States more access to South Korean auto market, the revised agreement:
- Requires South Korea to address issues with onerous and costly customs procedures that have hindered United States exports.
- Ends steel tariffs on South Korean imports, but limits steel imports from South Korea into the United States to a product-specific quota equal to 70 percent of that country’s average annual import volume from 2015 through 2017.
- Creates an understanding with South Korea to avoid competitive devaluation practices that provide an unfair competitive advantage. The understanding includes strong commitments on exchange rate practices, robust transparency, and reporting.