The Obameter

Create a new trade enforcement unit that will address China's trade practices

Standing up for American workers and businesses in the global marketplace, taking on China's unfair trade practices through a new trade enforcement unit to level the playing field.


Updates

Obama fulfills pledge with aggressive WTO actions

President Obama's promise to go after China's unfair trade practices is on track to be fulfilled.

Obama's pledge got an important boost after Congress codified a special trade enforcement unit to tackle potential violations of international trade.

In February 2012, Obama created the Interagency Trade Enforcement Center via executive order. It was designed to coordinate responses to potential violations of international trade agreements from the Office of the United States Trade Representative (USTR) and the departments of Agriculture, Commerce, Homeland Security, Justice, State and Treasury.

When we last looked at this promise, we noted that Obama had requested funding and support for the unit in his 2014 and 2015 budget proposals.

In early 2016, Obama signed the Trade Facilitation and Trade Enforcement Act of 2015 into law, permanently establishing the successor to the 2012 center: the Interagency Center on Trade Implementation, Monitoring and Enforcement. The legislation also authorized $15 million per year for trade enforcement efforts.

While the USTR and the center don't specify China in their missions, it has been the target of the bulk of U.S. trade enforcement actions.

"By and large, the Obama administration has made good on the promise," said Edward Alden, a senior fellow at the Council on Foreign Relations who studies U.S. trade policy. "There has absolutely been a significant ramping up of enforcement action under this administration, most of it directed at China."

The Obama administration has brought 19 cases before the World Trade Organization, 12 of them against China. The WTO has ruled against China in each of the six settled cases.

Date

Case

Current status

September 2016

Domestic support for agricultural products

Pending

July 2016

Export duties on raw materials

Pending

December 2015

Taxes on aircraft

Pending

February 2015

Export subsidies benefiting seven industries

China agreed to comply

September 2012

Export subsidies for cars and car parts

Pending

July 2012

Anti-dumping and countervailing duties on U.S. cars

Violations found

March 2012

Export restrictions on rare earths

China agreed to comply

September 2011

Anti-dumping and countervailing duties on U.S. poultry products

China agreed to comply

December 2010

Measures on wind equipment

Pending

September 2010

Countervailing and anti-dumping duties on U.S. steel

China agreed to comply

September 2010

Measures on electronic payment services

China agreed to comply

June 2009

Measures on raw materials exports

China agreed to comply

 

The Trans-Pacific Partnership trade deal is another tool of the Obama administration to put pressure on China. (President-elect Donald Trump has said he will pull out of the pact.)

China is not a member state, but experts say the deal should move China to conform to global trade norms. Alden pointed to the chapter on state-owned enterprises in particular. Among other things, TPP ensures that enforceable rules also apply to entities owned or controlled by governments.

"The only member nation that has them is Vietnam, and nobody really cares about Vietnam," he said. "This was intended to set down a marker for China."

Although Alden believes the administration could have been more aggressive in messaging about China's unfair trade practices, it has fulfilled its pledge overall.

We rate this Promise Kept.

Sources:

Office of the United States Trade Representative, "The President's TRADE AGENDA," accessed Dec. 13, 2016

Office of the United States Trade Representative, "23 U.S. Trade Enforcement Challenges at the WTO," accessed Dec. 13, 2016

PolitiFact, "President Barack Obama says his administration has nearly doubled rate of China trade cases," April 8, 2012

Email interview with the Office of the United States Trade Representative, Dec. 13, 2016

Interview with Edward Alden, senior fellow at the Council on Foreign Relations, Dec. 13, 2016

The unit has been created, but we're waiting on its results

During the 2012 presidential campaign, President Barack Obama promised to stand up "for American workers and businesses in the global marketplace, taking on China's unfair trade practices through a new trade enforcement unit to level the playing field."

By the time he made that promise, Obama had already used a Feb. 28, 2012, executive order to establish the Interagency Trade Enforcement Center, which would undertake "robust monitoring and enforcement of U.S. rights under international trade agreements, and enforcement of domestic trade laws."

The center is designed to coordinate responses to potential violations of international trade agreements among agencies such as the United States Trade Representative and the departments of Agriculture, Commerce, Homeland Security, Justice, State, and Treasury. It is also tasked with conducting outreach to U.S. workers, businesses, and others to identify unfair foreign trade practices.

So what are unfair trade practice?

Examples could be other countries' use of high tariffs, strict and often unclear regulatory rules, subsidies to state-owned businesses or intellectual property violations, in order to gain an advantage in trade deals, said Edward Alden, senior fellow at the Council on Foreign Relations who studies U.S. trade policy.

The new center, rather than creating an entirely new method of combating unfair trade policies, coordinates existing resources, said Paul Rosenthal, partner at the law firm Kelley Drye and a specialist in international trade law.

"It's a good thing, but it's not a dramatic thing that has resulted in dramatic changes," he added.

The office's web page says it's charged with "bringing a more aggressive, whole-of-government approach to addressing unfair trade practices around the world."

So the center exists, but what about follow through?

When President Barack Obama released his fiscal year 2015 budget proposal, he addressed the new trade-enforcement unit specifically. Obama's budget proposal included $15 million "to accelerate operations" of the Interagency Trade Enforcement Center.

We should note that most official documents relating to the center downplay one aspect of Obama's promise -- a focus on China. When the FAQ page addresses the question of China, for instance, it doesn't address China by name. Instead, the FAQ answer says the office's "purpose is to help ensure that all of our trading partners play by WTO rules and abide by their obligations."

However, the president's previous budget proposal, for fiscal year 2014, did single out China, saying the unit's purpose is "to aggressively challenge unfair trade practices and trade barriers around the world, including in China."

Because presidential budgets are wish lists that are subject to revision -- and often outright rejection -- by Congress, we are inclined to wait before rating this a Promise Kept. Giving us additional pause, the center has not posted a news release in almost a year.

On March 14, 2013, the office posted a release titled, "U.S. Trade Representative Kirk Seeks World Trade Organization Dispute Settlement on Indonesia's Import Restrictions on Horticultural and Animal Products." Prior to that, the center issued news releases on India's restrictions on United States solar exportsIndonesia's restrictions on horticultural and animal productsimport restrictions by Argentina, and, in September 2012, Chinese export subsidies on automobiles and auto parts.

So although the center is up and running, we'll withhold judgment until we see how Obama's budget proposal fares and whether the center generates more activity in the coming months. For now, we'll rate this promise In the Works.

Sources:

Barack Obama, fiscal year 2015 budget proposal, March 4, 2014

Barack Obama, "Executive Order -- Establishment of the Interagency Trade Enforcement Center," Feb. 28, 2012

Office of the U.S. Trade Representative, "ITEC Frequently Asked Questions," accessed March 6, 2014

International Trade Administration, budget estimates, fiscal year 2014

Office of the U.S. Trade Representative, "U.S. Trade Representative Kirk Seeks World Trade Organization Dispute Settlement on Indonesia's Import Restrictions on Horticultural and Animal Products," March 14, 2013

Interview with Edward Alden, senior fellow at the Council on Foreign Relations, March 4, 2014.

Interview with Paul Rosenthal, partner at Kelley Drye Law Firm, March 6, 2014.