Trade Barriers, Market Access Issues, Dumping and Foreign Government Subsidy
We know that exporting expands a company’s customer base, it helps a company ride out a downturn in the domestic market and we know exporting companies are more profitable sooner and have greater longevity than those that don’t export – but what happens when trade is not fair.
Most companies are familiar with our agency, the U.S. Commercial Service, that assists U.S. companies with their international business development efforts to grow U.S. exports, but we do have two sister U.S. Department of Commerce International Trade Administration agencies that additionally help to enhance the global competitiveness of U.S. industry.
Our Industry and Analysis unit devises and implements international trade, investment and export promotion strategies that strengthen industry through trade and assist the U.S. Trade Representative by representing and advocating on behalf of U.S. industry interests in trade negotiations. Our Enforcement and Compliance safeguards and enhances the competitive strength of U.S. industries against unfair trade through the enforcement of U.S. anti-dumping duty (AD) and countervailing duty (CVD) trade laws and ensures compliance with trade agreements negotiated on behalf of U.S. industries. Enforcement and Compliance promotes the creation and maintenance of U.S. jobs and economic growth by supporting the negotiation of international trade agreements to open foreign markets.
It is our Enforcement and Compliance group that U.S. companies should turn to when encountering an unfair trade practice. An unfair trade practice can come in many forms; it could be a foreign government regulation is restricting or barring your U.S. export into their country or it can simply be that a foreign government is not living up to its trade agreements. When talking about these types of trade issues, it can be a complicated subject matters so we need to define some terms. So let’s start with defining what a trade barrier is – it is broadly defined as a foreign government policy, practice or procedure that unfairly or unnecessarily restricts U.S. exports. Common types of barriers could be put into four categories:
- Problems at the Border: Classification and Customs Barriers, Licenses/Certification, High Tariffs.
- Doing Business Behind the Border: Barriers to Services, Barriers to Investment, Concerns about Curruption.
- Product Requirements and Protections: Technical Barrier to Trade, Sanitary and Phytosanitary Barrier, Intellectual Property Rights Protection Problems.
- Government-Directed Practices: Discrimination in Government Procurement, Unfair Competition from State-Owned Enterprises.
Trade barriers are addressed through Enforcement and Compliance’s Trade Agreements Negotiations and Compliance (TANC) office in which they put forth a systematic effort to monitor and seek foreign government compliance with trade agreement obligations.
They want to reduce, remove and prevent trade barriers and they start by listening to industry’s needs and concerns – that means, you have to let them know when you encounter issues. TANC first seeks to identify and monitor trade barriers, then looks to analyze that data. They then develop a strategy and approach in which they assemble an International Trade Administration-wide team to address the specific issues identified. They will then additionally expand their outreach to other U.S. government agencies, international organizations and trade partners to put together the right team to address resolving a specific barrier.
If you are experiencing difficulties protecting and/or enforcing your copyrights, trademarks or patents in a foreign country, if you find that a foreign government’s procurement process is being conducted in a way that is favoring a particular supplier or if you have encountered a complicated, non-transparent import licensing procedure being used to impede or restrict access to a foreign market, or simple that a foreign country is not living up to their negotiated trade agreement terms, these are all trade barriers that the TANC office seeks to resolve for a U.S. company.
Now, let’s tackle trade remedies – what are they and why are they necessary? Trade remedy investigations are an internationally approved mechanism to remedy the distorting effects of unfair trade. The unfair trade can distort the normal course of business and adversely affect farmers, businesses and workers and this is why trade remedies play an important role in maintaining the level playing field necessary for a properly functioning global trading system. The two main trade remedies are U.S Anti-Dumping (AD) and Countervailing Duty (CVD) laws that counter unfair foreign pricing (AD) and/or government subsidies (CVD) that may distort the free flow of goods and adversely affect business in the U.S. market.
AD and CVD laws seek to address unfair trade practice defined as:
Dumping: When a foreign producer injures a U.S. industry by selling a product in the U.S. at a price below that producer’s own sales price or cost of production in the country of origin (home market).
Countervailable Subsidy: When a foreign government injures a U.S. industry by providing financial assistance to benefit the production, manufacture or exportation of goods through, e.g., direct cash payments, credits against taxes, and loans at terms that do not reflect market conditions.
If you find you are losing business to imports sold at unfairly low prices or that foreign subsidized imports into the U.S. are undercutting your sales and wrecking your bottom line, then you need to talk to the Petition Counseling and Analysis Unit (PCAU) at 202-482-1255 or at Petition.Counseling@trade.gov. At no cost to your company, they can:
Identify what options are available
Explain the use of AD/CVD laws
Clarify the process to petition the U.S. Government to initiate an investigation
Guide you step-by-step in compiling the information required to initiate an investigation
Review any information you have to facilitate the successful filing of a petition.
Whether you are a 10-employee company or a 10,000-employee company, the petition counseling is free of charge and the unit’s experts have counseled a wide variety of industries and assisted hundreds of small-to-medium-sized businesses in fighting unfair trade. All counseling provided is strictly confidential and it is not necessary to be represented by a lawyer when filing a petition. Among other things, those who file the petition must demonstrate industry support, which is something that can be discussed during the initial counseling.
When our Enforcement and Compliance unit conducts U.S. trade remedy proceedings, they are conducted according to strict rules to ensure that our practice conforms with U.S. law, World Trade Organization (WTO) standards and sets an example for the conduct of cases against our exporters by foreign governments. Determinations are objectively determined solely on the factual evidence on record. The determinations are 1) subject to review by independent courts 2) Investigations are initiated based on reliable factual evidence 3) A highly transparent, comprehensive case record is accessible to all parties and the public via online case record.
Because the U.S.’s trade remedy protocols have been an example of global good citizenship, many other foreign governments have modeled their own trade remedies programs after the U.S. system. So if you find yourself reading this article and thinking, well what do I do if a foreign government puts my company under investigation for unfair trade practices in their foreign market – who do I turn to for help? Don’t panic but do act quickly as our Trade Remedy Compliance staff should be your first call (202-482-3415) or email (TRCS@trade.gov) as they can help you to better understand what you will be facing, point out deadlines you won’t want to miss, and provide support to help ensure that the foreign government conducts the investigation fairly and according to international rules.
The International Trade Administration plays an important role in helping U.S. businesses, especially small-to-medium-sized companies who enter and compete in global markets through export counseling and customized solutions, from how to get products through customs to commercial diplomacy, to breaking down trade barriers.
With all of these resources at your disposal, keep in mind, if we don’t hear from you, we can’t help you grow your exports or address a trade problem we do not know about – so please, even if you are unsure if what you are encountering is a true trade barrier or not, don’t hesitate to call your local U.S. Commercial Service International Trade Administration office for assistance at 412-644-2800 for assistance.