US strengthens its trade enforcement apparatus, atleast on paper

The United States created an Interagency Trade Enforcement Center by a Presidential order on 28th February 2012 which essentially had this mandate:

"Sec. 3. Mission and Functions. The Center shall:

(a) serve as the primary forum within the Federal Government for USTR and other agencies to coordinate enforcement of U.S. trade rights under international trade agreements and enforcement of domestic trade laws;

(b) coordinate among USTR, other agencies with trade related responsibilities, and the U.S. Intelligence Community the exchange of information related to potential violations of international trade agreements by our foreign trade partners; and

(c) conduct outreach to U.S. workers, businesses, and other interested persons to foster greater participation in the identification and reduction or elimination of foreign trade barriers and unfair foreign trade practices."

The underlying rationale of the new Authority was clearly stated,

" Robust monitoring and enforcement of U.S. rights under international trade agreements, and enforcement of domestic trade laws, are crucial to expanding exports and ensuring U.S. workers, businesses, ranchers, and farmers are able to compete on a level playing field with foreign trade partners. To strengthen our capacity to monitor and enforce U.S. trade rights and domestic trade laws, and thereby enhance market access for U.S. exporters, executive departments and agencies (agencies) must coordinate and augment their efforts to identify and reduce or eliminate foreign trade barriers and unfair foreign trade practices to ensure that U.S. workers, businesses, ranchers, and farmers receive the maximum benefit from our international trade agreements and under domestic trade laws."

USTR Ambassador Kirk justified the creation of the new agency thus:

“This new trade enforcement unit will better enable USTR and the Department of Commerce to join forces - with the support and collaboration of partner agencies like Agriculture, Homeland Security, Justice, State, Treasury and the Intelligence Community - to ensure that America’s trading partners play by the rules. It will help American workers and businesses compete and win on a fair global playing field.”

Prestowitz in this piece in the Foreign Policy while analysing the new Authority's mandate was doubtful if this was the right policy to pursue since he felt that the US needed a Competitiveness strategy to enhance US competitiveness rather than an enforcement strategy.

"But the question at this point has become whether the laws and the deals really can be enforced in any meaningful way. Of course, anti-dumping investigations can be undertaken and duties imposed and subsidies can be countervailed if proven to be doing damage. But these kinds of actions have a very narrow focus, proceed at the pace of molasses in winter, take enormous time and energy, and always occur after most of the damage has already been done. This kind of enforcement is not useless, but it is not likely to change behavior or the nature of the economic interaction. Broader cases against industrial and other policies that effectively nullify the concessions and undertakings of trade agreements can be filed in the WTO and probably should be. But the WTO rules are not always clear cut and in any case are not well tested in many areas, nullification and impairment being one of them. Moreover, a flood of actions in the WTO against a country like China will be seen as a hostile action and is likely to engender tensions with Beijing that could be quite uncomfortable. This will make the US. and other Governments hesitate to act decisively. Most importantly, the rules are often vague and subject to interpretation. Many of the most powerful policies and practices that hinder market access or that distort markets, such things as implicit investment guarantees in key industries or control of distributors by major producers are not clearly illegal and, in any case, are tools that are being used by various U.S. states or that the United States might want to use in the future."

Housed at USTR, the center will include trade lawyers, researchers, economic analysts and foreign-based personnel.This is seen as a major attempt by the United States to address trade agreement violations, especially in the context of China. The establishment of the center is closely linked to the US policy of driving exports, protecting domestic industry interests as well as ensuring reduction of trade barriers to US industry outside. This is a classic case where the "State" is taking a proactive step in protecting its domestic industry interests within and outside. Will the creation of this Center lead to an increase in WTO cases filed by the US against its trading partners? The creation of the Center is a lesson for other countries to put domestic interests in the forefront while engaging with the outside world in international trade. Pursuing domestic interests, within the context of international trade rules, need not necessarily be viewed as "protectionist". The only caveat to that is that the standards one applies to the outside world should be also followed in letter and spirit.Credibility in actions is as important as protecting one's interests.