The Hindu Business Line : EU highlights defects in US trade policy

The sticky issues
While the US has made extensive use of WTO window, it has not renounced the possibility of taking unilateral trade measures.
It retains a spate of significant duties and tariff peaks in various sectors despite the Uruguay Round agreement.
The non-tariff barriers being put up by the US range from regulatory inconsistencies across the Atlantic to complex issues such as sanitary and phytosanitary measures and import prohibitions.
The adoption by the US Congress of the Farm Bill increases significantly the trade-distorting effect of US farm subsidies.

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New Delhi Feb. 18 Developed and developing countries may have locked horns on contentious issues of farm subsidies and obstacles to market access under the Doha Round of multilateral trade talks. But on these twin issues, trade majors - the United States and the European Union (EU) - have to traverse a lot of ground between them if the latest report of the EU on US trade barriers is anything to go by.

The Brussels-based European Commission has highlighted the tendency of the US for extraterritoriality and unilateralism, tariff and non-tariff barriers, import prohibitions, cumbersome and arbitrary sanitary and phytosanitary measures, trade defence instruments, heavy farm subsidies, re-export restrictions, investment-related measures, obstacles to services exports and non-compliance of intellectual property rights. The EU said that it would work in partnership with the US to break down barriers to trade on both sides of the Atlantic through the Transatlantic Economic Initiative launched in 2005, which would be on the agenda of the forthcoming EU-US summit.

Trade policy analysts, however, contend that the EU report on the US trade barriers reveal how the world's trade majors have to ensure free trade between them before they begin to discipline other trading partners since the EU has highlighted glaring omissions in US trade policy.

The EU report said that while the US has made extensive use of WTO window, including its dispute settlement system, it has not renounced the possibility of taking unilateral trade measures. The most recent example is the US continued suspension of obligations in the EC Hormones dispute and persisting import duties, despite the EU's removal of inconsistent measures.

On US tariff barriers, it said despite the substantial tariff cut and elimination agreed in the Uruguay Round, the US retains a spate of significant duties and tariff peaks in various sectors including food products, textiles, footwear, leather goods, jewellery and costume jewellery, ceramics, glass, trucks and railway cars.

The EU further points out that while tariffs on optical fibre cables were eliminated under the Information Technology Agreement (ITA), the US does not wish to do so the same for optical fibres where substantial protection persists.

Tubes for computer monitors are also excluded, it said adding that US attempts to broaden the scope and coverage of products in the form of ITA II have so far failed.

On non-tariff barriers being put up by the US, they range from regulatory inconsistencies across the Atlantic to complex issues such as sanitary and phytosanitary measures, state-level impediments and import prohibitions. It said the complexity of US regulatory system could signify an important structural impediment to market access as in the case of pharmaceutical approval.

Regulatory Barriers

The American Automobile Labeling Act, documentary and labeling requirements for textiles as well as restrictions concerning the distribution and marketing of wines and spirits refer to regulatory barriers in the form of labeling requirements. The EU contends that the implementation of the food-related provisions of the Public Health Security and Bioterrorism Preparedness and Response

Act of 2002 (Bioterrorism Act) puts severe burdens on trade in food and food products to the US. It said EU exports face a number of additional customs impediments, such as import user fees and excessive invoicing requirements on importers, which add to costs in an analogous way to tariffs.

The methodology and application of US trade defence instruments has been challenged frequently and successfully in the WTO such as the laws, regulations and methodology for calculating dumping margins (zeroing). As a result, the US Department of Commerce published its intention to comply with the WTO ruling against zeroing, by changing the methodology itself. But it has subsequently delayed implementation until February 22, 2007.

Besides, US has until April 9, 2007, to implement the WTO ruling in 31 specific cases in which the zeroing methodology has been applied. The EU report said the adoption by the US Congress of the Farm Security and Rural Investment Act of 2002 (Farm Bill) increases significantly the trade-distorting effect of US farm subsidies.

Closely related to the Farm Bill are the commodity loan programmes with marketing loan provisions for crops such as wheat, rice, corn, soybeans and other oilseeds.

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