The 2018 report, which provides a 500-page compilation of policies in other countries that U.S. commercial interests claim are “trade barriers,” is remarkably similar to Obama-era editions of this congressionally-mandated annual report.
Yes, it was shocking that the Obama administration issued a report that labeled countries’ public health and environmental policies, food-labelling laws, and even religious standards as significant trade barriers. Sadly, this aspect of the report is not surprising for the new administration.
But attacks in the report on other countries’ policies that reflect the new administration’s approach can only be explained by the reality that too many career trade-policy staff are rutted in pro-status-quo groupthink.
Exhibit A: A key administration demand in the North American Free Trade Agreement (NAFTA) renegotiations is to cut investor-state dispute settlement (ISDS). Administration officials have made clear that ISDS is considered a problem because it makes it less risky and costly to outsource jobs and because it undermines sovereignty. The ISDS system empowers foreign investors and corporations to skirt domestic courts and attack domestic policies by going before tribunals of three corporate lawyers to adjudicate claims. These extra-judicial international arbitration tribunals can order unlimited compensation be paid to investors by a host country’s taxpayers.
Yet this year’s report identifies as a barrier Mexico’s hydrocarbons law because it requires foreign companies to use the domestic court system in Mexico to arbitrate certain government disputes – rather than allowing foreign firms to use unaccountable international tribunals.
Along the same lines, the Trump administration is seeking to roll back NAFTA terms that require the waiver of Buy American and other domestic preference programs. But the report attacks Quebec’s requirement that 60 percent of the goods used in wind energy projects be sourced domestically as this “could pose hurdles for U.S. companies in the renewable energy sector in Canada.”
Jumping from NAFTA to other news headlines, another barrier listed is the European Union’s new privacy law. According to the report, the policy adds “new requirements for accountability, data governance, and notification of a data breach,” which may “increase administrative costs and burdens” for U.S. companies operating in Europe. Funny thing is that U.S. megacorporation Facebook, facing attacks on its lax safeguards, just announced it is adopting the European standard for its operations worldwide.
It bears noting that once again even public health policies designed to improve maternal and infant health are attacked as trade barriers in the report. That includes Malaysia’s proposed revisions to “its existing Code of Ethics for the Marketing of Infant Foods and Related Products” that would restrict corporate marketing practices aimed at toddlers and young children. Also, the report criticizes Hong Kong’s recent regulations governing the marketing of infant formula. Although acknowledging that the regulations are based on “World Health Organization guidance and purportedly voluntary,” the report parrots the food industry’s concern that Hong Kong’s new policies might become mandatory.
Other eyebrow-raising trade barriers? The report criticizes Malaysia – a predominantly Muslim country – for having certain restrictions on the importation of alcohol, and Brunei – another predominantly Muslim country – for requiring that non-halal foods be sold in specially designated rooms.
It remains to be seen whether future National Trade Estimate reports by the Trump administration will be consistent with the administration’s stated positions or the deep-state “trade-think” of decades of Democratic and Republican administrations past will prevail. Either way, we will be watching closely.