America First just got another jolt of support in a new report from the Office of the United States Trade Representative.
“President Trump has been clear: his Administration will aggressively enforce U.S. trade laws and defend American workers from harmful trade barriers to promote free and fair trade that benefits all Americans,” USTR said.
In the report, USTR goes country by country, covering 58 nations and outlining how shifts in their policies or actions are impacting U.S. trade or hindering the flow of American exports.
Some of the standout barriers that could affect the U.S. apparel market are coming from Kenya, India and, of course, China.
Last June, Kenya doubled its duty rate on used clothing to 35 percent in hopes of eliminating imports of used clothing and footwear altogether in three years.
“According to the Secondary Materials and Recycled Textiles Association, a U.S. industry association, shutting this market would negatively impact U.S. exports representing thousands of U.S. jobs,” USTR noted in the report.
India has been on the Priority Watch List because of its weak protection and enforcement of intellectual property rights, and USTR said the country has yet to make any significant reforms to achieve its own innovation and investment goals.
“Overall, the incremental positive steps forward were far overshadowed by intransigence on longstanding IPR concerns and alarming new developments,” USTR said.
On the positive side, India no longer requires an importer’s name and address be sewn into bulk packaging, which means lower costs and fewer delays for U.S. exporters.
Turning to China, USTR had a lot more to say in its report.
For one, certain policies in China and financial support in manufacturing sectors have contributed to “massive excess capacity.” This excess capacity, according to USTR, has resulted in over-production and increased exports that have hurt U.S. producers and workers both in the U.S. and in third country markets where U.S. goods compete with Chinese goods.
“This excess capacity has led to lower global prices and a glut of supply that undermine the viability of even the most competitive manufacturers,” USTR said.
China also has ways of making sure foreign technology is transferred to China. Companies that don’t own their intellectual property in China or do a lot of R&D in China, or that don’t manufacture goods in China are at times denied financial or regulatory incentives.
And, as USTR went on, “China also reportedly conditions foreign investment approvals on technology transfers to Chinese entities; mandates adverse licensing terms on foreign IP licensors; uses the anti-monopoly laws to extract technology on unreasonable terms; and subsidizes acquisitions of foreign high-technology firms to bring technology to the Chinese parent companies.”
What’s more, according to the report, “gaps and inconsistencies” in China’s intellectual property rights protections have allowed Chinese companies to get their hands on foreign IP.
“Misappropriation of trade secrets allegedly for the benefit of Chinese companies has occurred both within China and outside of China,” USTR noted. Online piracy has also been an ongoing problem with China, one that e-commerce giant Alibaba has spent a lot of time in the news for.
It’s the localization in these countries that’s not working for the U.S.
“In recent years, the United States has observed a growing trend among our trading partners to impose localization barriers to trade—measures designed to protect, favor, or stimulate domestic industries, service providers, or intellectual property at the expense of imported goods, services or foreign-owned or developed intellectual property,” USTR noted.
These moves, according to USTR, have the potential to unreasonably differentiate between domestic and foreign products and suppliers, which means they can distort trade to the disadvantage of U.S. manufacturers.
“For these reasons, it has been longstanding U.S. trade policy to advocate strongly against localization barriers and encourage trading partners to pursue policy approaches that help their economic growth and competitiveness without discriminating against imported goods and services.”
How U.S. trade policy will shape up remains to be seen, but President Trump’s latest executive orders are intended to help revive American manufacturing and protect the country from anything that creates unfair competition for American workers.