USTR publishes proposed budget for 2023 – International trade and investment

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On April 1, 2022, the Office of the United States Trade Representative (“USTR”) submitted its fiscal year 2023 budget justification to Congress. The document details USTR’s funding needs and how that money will be allocated. More importantly, it sets out the USTR’s “strategic goals, accomplishments, and measures of success for the coming fiscal year.”1 USTR is requesting $76.54 million, an increase of $6.54 million from its fiscal year 2022 budget.

In its budget justification, the USTR argues that its funding “must enable the USTR to leverage U.S. commercial relationships to assist the [Biden] The administration is revitalizing the economy.” According to the proposal, one of the “[t]Two top business concerns for President Biden [is] against China[.]”2 Specifically, the proposal states that the United States “negotiate with allies to establish global trade rules to counter China’s growing influence over unfair trade practices.”[.]”3 Key issues include “overcapacity, subsidies, disciplines on Chinese state-owned enterprises, and cyber theft.”4

The USTR has set six goals for fiscal year 2023, two of which are particularly relevant to the U.S.-China trade relationship:

1. Opening of foreign markets and fight against unfair trade. Objectives under this objective include “[p]ursu[ing] strengthening enforcement to ensure that China meets its existing trade obligations” and “[ing] gaps in international trade rules. . . and address[ing] the widespread human rights abuses of the Chinese government’s forced labor program in the Xinjiang Uyghur Autonomous Region and elsewhere,” as alleged by the United States.5 USTR says it will target China’s ‘state-directed policies and practices’ and use ‘a full range of trade tools to ensure China treats US companies and US exports fairly “.6 In addition, the USTR will continue to work and strengthen its engagement with “like-minded trading partners” including Japan, EU, UK, Canada and Australia to address policies and Chinese trade practices that the United States finds problematic, including non-market policies and practices.seven The USTR also plans to “[s]make fundamental changes to China’s state-led, non-market trading regime” and will continue to push China to “adopt international best practices”.8 In addition, although China is not specifically mentioned, the USTR states that it will continue to “commit[e] with key trading partners in the Asia-Pacific region. . . Sub-Saharan Africa, [and] the Middle East and North Africa”, in order to “promote American services and investment objectives [and] strengthen the protection and enforcement of intellectual property rights,”9 and that it plans to promote its objectives through the Asia-Pacific Economic Cooperation (“APEC”).ten

Other goals under this goal include “opening foreign markets to American manufactured goods, agricultural products, and services” and “creating world-class products for export to foreign markets”; using the USTR and other government resources to “remove foreign trade barriers and promote fair trade”; “defend[ing] US producers by enforcing global agricultural trade rules and promoting the adoption of science-based and risk-based sanitary and phytosanitary measures; and reforming the WTO, among other initiatives, pushing for WTO rules that “combat non-trade policies and practices.”11

2. Fully enforce U.S. trade laws, monitor compliance with agreements, and use all available tools to hold other countries accountable. Similar to the first objective, this objective targets, among others, unfair trade practices in non-market economies, the protection of intellectual property rights in the United States, forced labor and exploitative working conditions.12 It also targets “the gaps that exist in international trade rules on subsidies [and] competition from state enterprises.13 Other goals include enforcing U.S. rights under trade agreements and “promoting[ing]acceptance of international standards developed in the United States and acceptance of the results of United States conformity assessment bodies.”14 In addition, the USTR aims to “[c]Work with allies and like-minded countries to address global distortions created by industrial overcapacity in sectors ranging from steel and aluminum to fiber optics, solar and others. »15

Among the many measures by which the USTR says it will achieve its goals under the second goal, the USTR says it will continue to implement responsive actions, “as appropriate,” under the China’s Section 301 investigation, and “urges China to address excess capacity in industrial sectors, particularly steel and aluminum[.]The USTR also says it will target China’s WTO obligations — in particular, holding “China fully accountable for strict compliance” with those obligations — through various WTO mechanisms. WTO in China, saying it will monitor and ensure China’s “full compliance” and seek “meaningful compensation from the United States.”16

Although not focused on China, the USTR’s third goal (developing and implementing innovative policies to advance the President’s trade agenda) is still relevant to the trade relationship between the United States and China. Under this goal, the USTR focuses on global health and economic recovery from COVID-19, improving labor and environmental standards, and supporting improvements in public health. As such, the goals include securing the “long-term resilience of the United States’ supply chain for equipment and supplies essential to” public health; create a worker-centric trade policy that targets, among other things, forced labor and abusive working conditions, as well as increased global supply chain transparency and accountability; and “[l]still[ing] . . . commercial relationship to “fight against climate change.17 Among other measures, the USTR says it will “promote trade facilitation for reverse supply chain products and intermediaries” and promote U.S. climate priorities through its membership in APEC.18

The USTR’s other three objectives for the next fiscal year are: 1) Develop fair trade policy through inclusive processes; 2) Effectively communicate the President’s business agenda; and 3) Achieve organizational excellence as a model employer. These goals are primarily country-focused, but the USTR plans to “[i]identify and explore opportunities for business policy and practice, particularly in emerging sectors where the United States has the potential to be competitive,” to grow U.S.-based jobs.19

The budget justification also includes the USTR’s annual performance report for fiscal year 2021 and indicates how the requested budget will be allocated among the various costs.

To learn more, you can find a copy of the budget justification here.

Footnotes

1 https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/april/ustr-releases-fiscal-year-2023-congressional-budget-justification

2 https://ustr.gov/sites/default/files/USTR FY 2023 Congressional Budget Justification_Final.pdf, p.1.

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