USTR Releases 2004 Trade Barriers Report amid Clamor for Action
(Trade officials rebut Democrats' demands for several WTO cases)

1 April 2004

Source: Office of International Information Programs, U.S. Department of State.

Bush administration officials released their annual report on foreign trade barriers and rebutted demands from congressional Democrats to bring specific World Trade Organization (WTO) dispute-settlement cases against a number of countries' practices.

The 2004 National Trade Estimate (NTE) Report on Foreign Trade Barriers, a 502-page description of obstacles to U.S. exports and investment in 58 countries and regions, was released April 1. The full report can be viewed at http://www.ustr.gov/reports/nte/2004/index.htm.

In a teleconference about the report, U.S. trade officials, who asked not to be identified, said that negotiating and consulting, not filing WTO trade cases, generally are preferable for resolving trade disputes.

By April 30 the Office of the U.S. Trade Representative (USTR) is required by the Special 301 provision of U.S. trade law to announce any actions it plans to take, based on the NTE report, against failures by trading partners to protect copyrights, patents and other intellectual property. Similarly, under Section 1377, USTR must identify any actions it will take against violations of telecommunications agreements.

Years ago the Super 301 provision and subsequent Clinton administration executive orders required USTR to identify other trade barriers for taking actions, but they have long lapsed.

The NTE report mentions the controversial Chinese practice of pegging its currency exchange rate to the U.S. dollar but does not define that practice as a trade barrier. It says that the Bush administration has urged China to move toward a flexible, market-based exchange rate regime and to reduce controls on capital flows.

"Serious engagement with China on this issue will continue in 2004," the NTE says, with little elaboration.

Yet a U.S. official cautioned that the administration had not achieved a unified position concerning the trade-related effects of the Chinese exchange rate regime. He directed further questions to the Treasury Department, the agency charged with exchange-rate policy.

The Chinese exchange rate regime was not among the practices for which leading Democrats were demanding WTO cases. The demands were issued in an April 1 letter from 13 members of the House of Representatives.

One administration official said he was puzzled by the Democrats' demands because the U.S. industries concerned have not requested WTO action.

The Democrats listed the following practices as warranting challenge in the WTO:

-- limits by China on "trading rights" to allow imports and on "distribution rights" to sell those imports in China;
-- China's imposition of China-only technology product standards;
-- European Union's subsidies to Airbus;
-- imposition by India of non-tariff barriers, including unjustified and excessive testing requirements, on textiles and other products;
-- failure by India to protect trademarks and to halt copyright piracy;
-- currency manipulation by Japan; and
-- imposition by Japan and South Korea of non-tariff barriers against autos and auto parts.

The Democrats' letter and related material can be viewed at http://www.house.gov/apps/list/press/wm31_democrats/040401bush_admin_remove_unfair_trade.html.

Read the text of the USTR press release here.