United States Releases Annual Assessment of Foreign Trade Barriers

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White & Case LLPOn March 29, 2019, the Office of the United States Trade Representative (USTR) published its annual National Trade Estimate (NTE) Report on Foreign Trade Barriers, which "highlights significant foreign barriers to U.S. exports, U.S. foreign direct investment, and U.S. electronic commerce."1  This year's NTE report comes at an important time, as the Trump administration has been vocal about its view that current trading arrangements have permitted widespread unfair treatment of the United States, including by its largest trading partners.

The administration has shown that it is willing to address such issues through negotiation: for example, it has recently proposed formal negotiations with Japan and the EU, is in the midst of bilateral negotiations with China, and has completed a renegotiation of the North American Free Trade Agreement with Canada and Mexico. At the same time, the administration also has been willing to take aggressive unilateral actions in response to perceived unfair treatment, causing significant commercial disruptions and frictions in the global trading system.

These developments have generated significant interest in the administration's views and priorities with respect to the trade policies of the United States' major trading partners. This report aims to shed light on these issues by reviewing key developments in this year's NTE with respect to major US trading partners, namely China, Japan, the European Union, Canada, Mexico, Brazil, and Korea.

China

The 2019 NTE lists a multitude of longstanding US concerns about China's trade and industrial policies, which "seek to limit market access for imported goods, foreign manufacturers and foreign services suppliers, while offering substantial government guidance, resources and regulatory support to Chinese industries." It also identifies several new US concerns, and highlights the Trump administration's recent efforts to obtain the elimination of certain Chinese practices through the unilateral actions it has taken against China under Section 301 of the Trade Act of 1974. We discuss these issues below.

New developments in the 2019 NTE

The report highlights several new developments over the last year that are of concern to the United States, including the following:

  • E-Commerce. China's new E-Commerce Law, which entered into force in January 2019, allegedly "introduced provisions that weaken the ability of rights holders to protect their rights online and that make it more difficult for Chinese electronic commerce platforms to be liable for selling counterfeit and other infringing goods[.]"
  • Financial services. China recently finalized measures that remove equity caps relating to Chinese-owned banks, but "in practice, China has maintained restrictions that do not allow for significant non-Chinese competition in commercial banking activities." Foreign suppliers also allegedly have been unable to secure licenses to supply electronic payment services in China under a licensing process that China established in 2017 following an adverse WTO ruling, and have had similar difficulties with respect to internet-enabled payments services.
  • Agriculture. China's most recent WTO notification "showed that China had exceeded its de minimis level of domestic support for soybeans (in 2012, 2014 and 2015), cotton (from 2011 to 2016), corn (from 2013 to 2016), rapeseed (from 2011 to 2013) and sugar (2012)." The report also expands on prior criticism of China's sanitary and phytosanitary (SPS) restrictions on beef, pork, and poultry, and flags a new concern that China "has not approved longstanding market access requests for a variety of U.S. horticultural products[.]"
  • Audiovisual services. China's National Radio and Television Administration (NRTA) has issued a "problematic" draft measure that "would impose new restrictions in China's already highly restricted market for foreign creative content on over-the-air television, cable television and online audiovisual-content platforms."
  • Cosmetics regulations. China allegedly imposes "discriminatory testing and documentation requirements for imported cosmetics and personal care products" and does not recognize international standards for good manufacturing practices and product safety assessment.
  • Section 232 retaliation. The report also notes that China has imposed retaliatory tariffs in response to the US Section 232 measures on steel and aluminum, and that the United States is challenging this action in the WTO.

Investment, technology transfer, and intellectual property

Like previous iterations of the NTE, the report highlights several alleged barriers related to technology transfer, foreign investment, and intellectual property protection:

  • Investment restrictions and technology transfer. China "seeks to protect many domestic industries through a restrictive investment regime", and its investment restrictions are among a "variety of tools" that it uses to require or pressure US companies to transfer technologies and intellectual property to Chinese companies.
  • "Made in China 2025." China's "Made in China 2025" industrial plan aims "to replace foreign technologies, products and services with Chinese technologies, products and services in the China market through any means possible so as to equip Chinese companies to dominate international markets".
  • Intellectual property. China's intellectual property rights protection and enforcement regime "continue to present serious barriers to U.S. exports and investment", and there are "[s]erious inadequacies in the protection and enforcement of trade secrets".

The report notes that some of these issues were the subject of USTR's recent investigation of China under Section 301, based on which the United States "has imposed additional tariffs on $250 billion worth of Chinese imports". It further notes that China has responded to that action by imposing retaliatory tariffs on US goods. However, the report does not reference directly the ongoing bilateral negotiations between the United States and China regarding the issues raised in the Section 301 investigation and other issues.

Other alleged barriers

The report also describes a wide range of longstanding US concerns about China's trade policies and economic model that are not directly related to the recent Section 301 action:

  • Subsidies and excess capacity. China "continues to provide substantial subsidies to its domestic industries", and is "the world's leading offender in creating noneconomic capacity[.]"
  • Services and digital trade. Chinese regulators "use case-by-case approvals, discriminatory regulatory processes, informal bans on entry and expansion, overly burdensome licensing and operating requirements, and other means to frustrate the efforts of U.S. suppliers of services to achieve their full market potential in China." In addition, China maintains "restrictions on cross-border data flows and requirements to store and process data locally[.]"
  • Trade remedies. China's regulatory authorities "seem to be pursuing antidumping and countervailing duty investigations and imposing duties – even when necessary legal and factual support for the duties is absent – for the purpose of striking back at trading partners that have exercised their WTO rights against China."
  • Export restraints. China "continues to deploy a combination of export restraints, including export quotas, export licensing, minimum export prices, export duties and other restrictions[.]"
  • Agriculture. China remains "a difficult and unpredictable market for U.S. agricultural exporters, largely because of inconsistent enforcement of regulations and selective intervention in the market by China's regulatory authorities." China's regulators fail to "routinely follow science-based, international standards and guidelines."

Bilateral negotiations

As noted above, the report does not reference directly the ongoing bilateral negotiations between the United States and China, in which the United States is seeking Chinese commitments to eliminate not only the policies identified in the Section 301 investigation, but other alleged trade barriers discussed in the NTE. For example, the United States reportedly is seeking commitments from China related to digital trade, services (e.g., electronic payments, motion pictures, and cloud computing), and various agriculture issues (e.g., biotechnology approvals). However, the extent to which these issues will be addressed in a potential US-China agreement remains unclear, and other key trade frictions highlighted in the NTE undoubtedly will remain. The NTE notes that the Trump administration is pursuing other avenues to address such issues (e.g., by "working with the EU and Japan to identify further effective action and potential rules that could address problematic subsidies practices not currently covered by existing obligations.")

Japan

The report highlights a range of barriers to goods and services trade with Japan, including in areas such as agriculture and automotive trade that are likely to be central to forthcoming bilateral FTA negotiations. In addition to discussing longstanding issues identified in previous iterations of the NTE, this year's report introduces new sector-specific issues aligned with the Trump administration's stated trade priorities. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

USTR notes several new or exacerbated regulatory challenges that it sees as negatively impacting US companies' competitiveness relative to their Japanese counterparts, including: (i) changes to the reimbursement pricing system adversely affecting US medical devices and pharmaceuticals companies; (ii) newly-noted tariffs of 3.5 percent to 10 percent on certain fish and seafood products; (iii) new concerns relating to government procurement procedures, including that technical specifications are selected to exclude US products and services, or direct procurements towards a specific Japanese company; (iv) a potentially problematic geographical indications law; and (v) the denial of access to the electrical grid for US companies attempting to sell renewable energy. While these additions are relatively narrow in scope, the updated report does demonstrate a continued focus on incremental market access issues, both for goods and services, some of which could be addressed via a bilateral FTA.

Other alleged barriers

The report highlights several other alleged trade barriers, most of which have been discussed in prior versions of the NTE:

  • Tariffs. The Report focuses on Japan's high tariffs "that hinder U.S. exports of agricultural and other food products to its market," including on fish, grains, sugar, citrus, wine, dairy, and certain processed foods. USTR also notes high tariffs and tariff-rate quotas on US leather, footwear, and travel goods.
  • Nontariff barriers. Priority nontariff barriers to US imports include: a tariff-rate quota on imported rice; the requirement that wheat imports be routed through Japan's state trading entity; a restrictive beef special safeguard; a variable levy-like pork import regime; a low de minimis threshold for low-value imports; and unique standards and testing protocols for automobiles.
  • Technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) barriers. Alleged TBT and SPS issues include labelling requirements for food products processed in Japan, which could limit Japanese manufacturers' utilization of US ingredients; restrictions on food additives; cattle age limits for beef imports; and burdensome application requirements for maximum residue level approvals.
  • Services barriers. Certain sectors are heavily regulated and challenging for foreign service providers, including: express delivery; insurance and financial services; legal services; telecommunications services; and renewable energy services.
  • Anticompetitive practices. The report alleges underutilization of the Anti-Monopoly Act to deter cartel conduct and a lack of fairness and transparency in the Japan Fair Trade Commission's procedures.
  • Sector-specific issues. The report includes specific barriers to trade/investment in the following areas: automotive industry; medical devices and pharmaceuticals; nutritional supplements; cosmetics; and aerospace.

Bilateral negotiations

The Report notes that "[i]n September 2018, President Trump and Prime Minister Abe agreed to start negotiations for a U.S.-Japan Trade Agreement, and the Administration notified Congress on October 16, 2018, of its intent to start negotiations following the completion of relevant domestic procedures." As outlined in USTR's published negotiating objectives for the proposed agreement, released on December 21, 2018, the agreement is meant to be comprehensive, including trade in goods and services, investment, digital trade, intellectual property, regulatory practices, sanitary and phytosanitary measures, technical barriers to trade, state-owned enterprises, labor and environment, currency, and government procurement, among other areas. The priority concerns highlighted by USTR in its negotiating objectives in many cases overlap with those outlined in the the NTE report, including increased market access for automotive goods, pharmaceuticals/medical devices, and agriculture (for more details on the US negotiating objectives for the proposed US-Japan Trade Agreement, see the W&C trade alert dated January 9, 2019). However, the Trump administration has indicated that it may pursue negotiations with Japan "in stages", focusing on market access for goods (and particularly agricultural goods) during the first stage.

European Union

The report notes that the United States and the EU "share the largest economic relationship in the world", but claims that "U.S. exporters and investors nonetheless face persistent barriers to entering, maintaining, or expanding their presence in certain sectors of the EU market." The report focuses extensively on tariffs and alleged non-tariff barriers affecting US agricultural exports – an issue that the Trump administration is seeking to address through proposed bilateral trade negotiations with the EU. USTR claims that these and other barriers "have contributed to annual U.S. trade deficits with the EU". As the report notes, some of the listed barriers have been highlighted in the NTE for years, but many of the items listed are new. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

  • Digital services tax. The report notes that, in March 2018, the European Commission proposed a directive to levy an interim tax on certain types of digital services that would apply to companies with annual worldwide revenues exceeding €750 million ($849 million) and revenues within the EU exceeding €50 million ($57 million). The report acknowledges that the effort to reach agreement on an EU-wide digital services tax was later abandoned, but it highlights efforts by several EU member states to impose their own digital services taxes in 2019, including France, Italy, Spain, and the United Kingdom. The report warns that the United States "opposes proposals by any country to single out digital companies", and that US companies believe the proposed measures are discriminatory.
  • Geographical indications. The report escalates the United States' criticism of the EU's approach to recognition of geographical indications, stating that "[t]he United States does not believe that the EU should bargain for specific GI recognition in its bilateral trade agreements in return for market access, because such intellectual property rights should be evaluated independently on their merits, based on the unique circumstances of each country."
  • High-quality beef (HQB) quota. The report notes that the United States and the EU have engaged in negotiations to change the EU's HQB quota after the EU received a mandate to do so from the European Council in October 2018. The United States claims that its access to the EU beef market has been eroded because countries such as Argentina, Australia, and Canada have also been able to ship under the HQB quota, which was established in 2009 as a compromise solution to the US-EU beef hormone dispute.
  • Ruling on gene-edited crops. USTR notes that, in July 2018, the Court of Justice of the European Union ruled that gene-edited crops are subject to the same "onerous barriers" associated with EU regulations implemented under its GMO Directive and that the judgement "is anticipated to further exacerbate and expand existing agricultural trade barriers to innovative agricultural products."
  • Cybersecurity certification. The report states that the European Commission's September 2017 Cybersecurity Act proposal "proposes a voluntary EU-wide certification and labeling scheme for Internet of Things products and services" and that "some observers are concerned that the result could be a de facto mandatory approach to certification and labeling."
  • Platform Regulation. In April 2018, the European Commission proposed a new regulation on platform-to-business services and online search services. According to the report, US companies have raised concerns that the requirements could create market access barriers and potentially compromise trade secrets that are critical to their provision of such services.
  • Maximum residue levels (MRLs). In January 2019, the EU published regulations setting MRLs for several active substances at the limit of detection "ignoring U.S. comments requesting that they reconsider." The report asserts that the rules will affect crop protection products for tree nuts, wine grapes, berries, and other fruits, which in total represent over $3 billion in US exports to the EU.
  • Retaliatory tariffs. The report notes that the EU adopted tariffs ranging from 10 percent to 50 percent on a range of US products in retaliation against the United States' Section 232 tariffs on steel and aluminum. It further notes that the United States has challenged this action at the WTO.

Other alleged barriers

The report also highlights several longstanding US concerns regarding the EU's trade and investment policies:

  • SPS barriers. The report contains extensive criticism of the EU's approach to food safety regulation. It expresses concern that many EU measures "unnecessarily restrict trade without furthering their safety objectives because they are not based on scientific principles, maintained with sufficient scientific evidence, or applied only to the extent necessary." Among the many alleged barriers listed in the report are restrictions related to hormones in meat; agricultural biotechnology; pathogen reduction treatments; certification requirements limiting US agricultural exports such as fish, meat, dairy, eggs, processed products, and animal byproducts; certification requirements for bovine diseases; hazard-based cutoff criteria for agricultural chemicals; and pesticide maximum residue limits.
  • Agricultural tariffs. The report notes that the EU's agricultural tariffs average 10.8 percent, compared to its average non-agricultural tariff rate of 4.2 percent.
  • Customs barrier. The report expresses concern that the EU does not administer its laws through a single customs administration, which allegedly leads to non-uniformity of administration.
  • Technical barriers to trade. Among the many alleged TBT issues flagged in the report are the EU regulations concerning the production, marketing, and use of chemicals – known as Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH); elements of the EU Cosmetics Regulation and the EU Renewable Energy Directive; country of origin labelling (COOL) requirements; and nutritional labelling regulations.
  • Subsidies. The report flags various financial transactions and equity arrangements throughout the EU, which it states, "raise questions as to the role of state funding or subsidizing private or quasi-private organizations, including in the manufacture of civil aircraft." The report also discusses the US case brought at the WTO concerning Member State subsidies provided to Airbus.
  • Intellectual property. Concerns include the EU's "overbroad" protection of geographical indications; legislative developments relating to the draft Directive on Copyright; trademark issues and implementation of the EU's trademark directive; and implementation of a directive on trade secrets.
  • Services barriers. The report highlights numerous alleged barriers relating to the supply of telecommunications services, audiovisual media services, satellite and cable services, legal services, accounting and auditing services; and pharmacies.
  • Digital trade barriers. The report states that the EU's General Data Protection Regulation (GDPR) "restricts the transfer of the personal data of EU citizens outside of the EU", and that the United States remains concerned that the implementation and administration of the GDPR "create disproportionate barriers to trade." It notes that the United States has received a determination of partial adequacy from the EU in the form of the Privacy Shield Framework, but warns that legal challenges in the EU "continue to create uncertainty around the transfer of data for US and other foreign companies."

Notably, the report does not mention the Trump administration's October 16, 2018 notification to Congress regarding the administration's intention to enter into trade negotiations with the EU. That notification followed a joint statement of July 25, 2018 in which President Trump and European Commission President Jean-Claude Juncker agreed to begin preliminary discussions on a "joint agenda" of bilateral trade initiatives, including a potential negotiation to liberalize US-EU trade in non-automotive industrial goods and services. Those negotiations have stalled, however, due to the United States' subsequent insistence that proposed agreement cover tariff and non-tariff barriers affecting US agricultural exports to the EU. The EU has insisted that agricultural issues be excluded from the proposed agreement, but they clearly remain a top priority for the Trump administration, as this year's NTE report indicates.

Canada

The 2019 NTE report highlights a range of alleged barriers to goods and services trade with Canada, most of which have been raised in prior iterations of the NTE. It also includes a new discussion of the proposed US-Mexico-Canada Agreement (USMCA), which the Trump administration claims will reduce some of the barriers to trade with Canada highlighted in the NTE report. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

This year's report includes a new discussion of the USMCA, which USTR claims will "modernize and rebalance" US trade relations with Canada. It notes, for example, that Canada agreed under the USMCA "to eliminate milk classes 6 and 7, discriminatory grading of US wheat, and British Columbia's discriminatory treatment of US wine in grocery stores." The Agreement also "includes obligations to strengthen enforcement against counterfeiting and piracy, camcording of movies, satellite and cable signal theft, transparency with respect to new geographical indications, and copyright protection and enforcement in the digital environment." In addition, the USMCA "will ensure that Canada eliminates its rule prohibiting simultaneous substitution of advertising for the Super Bowl."

The report also focuses on Canadian tariffs ranging from 10 percent to 25 percent on various products imported from the US, which Canada imposed in July 2018 in retaliation against the United States' Section 232 tariffs on steel and aluminum. The report says that the United States "will take all necessary action" to protect US interests, and includes discussion of the related WTO case brought by the United States against Canada.

Other alleged barriers

Aside from the discussion of the USMCA and Canada's retaliatory tariffs, the United States' trade priorities with respect to Canada remain largely unchanged from previous iterations of the NTE:

  • Nontariff barriers. Priority nontariff barriers include: agricultural supply management systems to regulate the dairy, chicken, turkey, and egg industries; Canada's use of milk classes; restrictions on US grain exports; Ministerial exemptions for bulk imports of fresh fruits and vegetables; customs barriers (personal duty exemptions and the de minimis threshold); and limitations on importation of alcohol.
  • TBT and SPS barriers. Alleged TBT and SPS barriers include regulations on compositional standards for cheese; front-of-packaging labelling requirements for pre-packaged foods; and restrictions on US seeds exports.
  • Subsidies. The report alleges that Canada has provided subsidies to companies in its aerospace sector.
  • Government procurement. The report expresses concern that the reaction by the Government of Canada to Boeing's recent trade remedy action against Canada's Bombardier may place US companies at a disadvantage when bidding on future Canadian defence procurement projects.
  • Intellectual property rights protection. Canada was downgraded to the Priority Watch List in USTR's Special 301 Report in 2018 for allegedly failing to resolve "longstanding deficiencies" in the protection and enforcement of intellectual property rights, including with respect to medicines and pirated and counterfeit goods.
  • Services, digital trade, and e-commerce. Certain sectors allegedly are heavily regulated and challenging for foreign service providers, including telecommunications services, radio-television broadcasting (due to requirements for Canadian content in broadcasting), and financial services. The Report states that the US government will closely monitor the "Creative Canada" initiative to ensure it is implemented in a manner that does not constitute a barrier to digital trade.

Mexico

The 2019 NTE report discusses several alleged trade barriers that US providers of goods and services face in Mexico, including customs issues, non-tariff barriers, and challenges related to intellectual property rights protection. Some of the alleged barriers are new, whereas others reflect longstanding US concerns and have been included in prior iterations of the NTE. The report also includes a new discussion of the proposed US-Mexico-Canada Agreement, which USTR claims will "rebalance" US trade with Mexico. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

  • EU-Mexico FTA and Geographical Indication. The report notes that "in April 2018, Mexico and the European Union (EU) came to an agreement in principle on a free trade agreement in which Mexico agreed to protect 340 names for foodstuffs, wines, and beers." The United States is "highly concerned about Mexico negotiating product-specific IP outcomes as a condition of market access from the EU, and reiterates the importance of each individual IP right being evaluated on its individual merit in Mexico."
  • Import Licensing. The report criticizes Mexico's decision to suspend its alternative scheme for issuing steel import licenses in December 2018, which it claims has resulted in confusion and concerns for steel exporters and Mexican customers.
  • Telecommunications. The United States is concerned that, due to a proposed regulatory revision, certain US information and communications technology exports will no longer be exempt from Mexican testing requirements, and that Mexico will no longer recognize the results of conformity assessment procedures from the United States.
  • Oil auctions. The report notes that President Lopez Obrador has "cancelled oil auctions for three years", but has reassured companies that contracts awarded under the previous Mexican administration as part of Mexico's 2013 energy reform will be respected.
  • Section 232 retaliation. The report notes that Mexico has imposed tariffs ranging from 7 to 25 percent in response to the United States' steel and aluminum tariffs under Section 232, and that the United States has challenged this action at the WTO.
  • USMCA. The report claims that the proposed USMCA will "modernize and rebalance" US trade relations with Mexico. It asserts, for example, that the agreement "reduces incentives to outsource by providing strong labor and environmental protections, innovative rules of origin, and revised investment provisions." The Agreement also "locks in Mexico's telecommunications and energy reforms", "brings labor and environment obligations into the core text of the agreement and makes them fully enforceable", "cracks down on data localization measures", and "includes obligations to strengthen enforcement against counterfeiting and piracy, camcording of movies, satellite and cable signal theft, transparency with respect to new geographical indications, and copyright protection and enforcement in the digital environment."

Other alleged barriers

The report highlights several other alleged barriers to US goods and services trade with Mexico, many of which have been raised by the United States in prior editions of the NTE:

  • Customs Barriers. US exporters continue to express concerns about Mexican customs administrative procedures, including insufficient prior notification of procedural changes, inconsistent interpretation of regulatory requirements at different border posts, and uneven enforcement of Mexican standards and labeling rules.
  • Non-Tariff Barriers (NTBs). US concerns include certain energy efficiency labeling requirements and unique testing requirements that are different from requirements in the United States or elsewhere. The US spirits industry also has raised concerns regarding ageing requirements, minimum and maximum limits for various components, alcohol content limits, as well as minimum spirit content requirements for certain labels.
  • SPS Measures. The report criticizes certain Mexican restrictions regarding the importation of potatoes and stone fruit from the United States.
  • Intellectual property. The report cites "obstacles to U.S. trade in intellectual property-intensive goods and services", including "the wide availability of pirated and counterfeit goods, via both physical and virtual markets."
  • Services and investment. The report highlights several alleged barriers facing US providers of telecommunications services, despite Mexico's reform of the sector in 2013 and 2014, as well as audiovisual services. Moreover, despite energy reforms enacted by Mexico in 2013, certain barriers to investment in the oil and hydrocarbons sectors allegedly remain (e.g., local content requirements). Other sectors, such as ground transportation services and transportation infrastructure, (such as airport management), are closed to foreign participation.

Brazil

The 2019 NTE report highlights a range of alleged barriers maintained by Brazil, including with respect to digital trade, tariffs and other restrictions (e.g., on ethanol imports), restrictions in the services sector, and intellectual property protection. Most of these issues have been discussed in prior iterations of the NTE. However, this year's report also discusses several recent instances in which Brazil has reduced barriers to US exports, in the view of the Trump administration. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

This year's report highlights the following new developments with respect to Brazil:

  • Barriers to digital trade. USTR notes that Brazil in August 2018 adopted a measure on the protection of personal data that "will apply to any processing of the personal data of Brazilians done by people or entities, regardless of the type of means, the country where the data is located, or the headquarters of the entity." USTR categorized this measure as a "data localization requirement".
  • Wheat TRQ. USTR notes that, "[a]s an outcome of the meeting between President Trump and President Bolsonaro on March 19, 2019," Brazil announced it will implement a 750,000 metric ton (MT) duty-free MFN tariff-rate quota (TRQ) tariff-rate quota on wheat imports. Brazil previously has applied the MERCOSUR Common External Tariff (CET) of 10 percent tariff on imported wheat from non-MERCOSUR trading partners, including the United States.
  • Pork. The report states that "U.S. fresh, frozen, and further processed pork products are ineligible for import into Brazil", but notes that "[i]n the Joint Statement following the meeting between President Trump and President Bolsonaro on March 19, 2019, the leaders announced agreement on science-based conditions to allow for the importation of U.S. pork to Brazil."

The above commitments from Brazil regarding the wheat TRQ and US pork imports were first announced in a joint statement from President Trump and new Brazilian President Jair Bolsonaro in March. During the March visit, Brazilian Minister of Economy Paulo Guedes indicated that Brazil is interested in holding further discussions with the United States on liberalizing bilateral trade, though this possibility is not mentioned in the NTE report.

Other alleged barriers

In addition to the above issues, the report highlights the following alleged barriers to US trade with Brazil, most of which have been discussed in prior iterations of the NTE:

  • Import tariffs. The report questions Brazil´s use of MERCOSUR´s CET flexibilities to raise or lower import tariffs, particularly on industrial products, to protect domestic industries from import competition and to manage prices and supply. It states that the lack of predictability with regard to tariff rates makes it difficult for US exporters to forecast the cost of doing business with Brazil.
  • Ethanol tariff-rate quota (TRQ). The report strongly objects to Brazil´s implementation of a TRQ on ethanol imports in September 2017, which ended reciprocal duty-free trade in ethanol between the world's largest ethanol consumers and producers.
  • Non-automatic import licenses. The report lists US exporters' complaints about Brazil´s non-automatic import license procedures in several sensitive sectors, such as agricultural commodities, pharmaceuticals, footwear, textiles and apparel, and automobiles and automotive parts.
  • Conformity assessment requirements. The report highlights complaints about conformity assessment procedures for telecommunications products and equipment, toys and medical devices.
  • Wine and spirits. US industry remains concerned about certain requirements that restrict importation of US wine and spirits, such as requirements on labeling of sugar content, restrictions on the use of certain food additives applied to spirit-based beverages, use of certain grape varieties allowed for production of fine wine, and use of certain pesticides.
  • Tax incentives for the automotive sector. On November 8, 2018, Brazil implemented a new tax incentive program, known as "Rota 2030", for the improvement of energy efficiency and car safety in the automotive sector. This program replaced "Inovar-Auto", a program that the WTO ruled inconsistent with Brazil´s WTO obligations in January 2019. The NTE Report questions whether the new program only benefits domestic manufacturers and does not apply to automobile importers.
  • Subsidies. The Report details some positive developments that have taken place with regard to government subsidies, although some US concerns remain on certain programs, including the proviosion of preferential loans that are conditioned on the use of local content. According to the Report, the US will closely monitor Brazil´s agricultural domestic support programs for cotton, corn, rice, soybeans and wheat in meetings of the WTO Committee on Agriculture.
  • Intellectual property. Brazil remained on USTR's Special 301 Watch List in 2018. Major US concerns relate to, inter alia, high levels of counterfeiting and piracy online and offline; weak IP enforcement at the tri-border region between Argentina, Brazil and Paraguay; delays in the review of patent and trademark applications; and lack of pharmaceutical test data protection.
  • Services barrier. Certain services sectors are heavily regulated and challenging for foreign service providers, including audiovisual services; express delivery; insurance and financial services; and telecommunications services.

Korea

The report details several new and longstanding US concerns regarding alleged trade barriers maintained by Korea, including with respect to agriculture, digital trade, and services. However, this year's report also touts recent "modifications and amendments" to the United States-Korea Free Trade Agreement (KORUS) that entered into force in January 2019, which in the view of the Trump administration will benefit US exporters particularly in the automotive sector. We discuss the most significant issues highlighted in the report below.

New developments in the 2019 NTE

  • KORUS improvements in the auto sector. The report notes that, as part of the recent renegotiation of KORUS, Korea has agreed to take a number of actions that will facilitate US automotive exports. These include (1) doubling from 25,000 to 50,000 the number of US-origin vehicles per manufacturer per year that may be imported and sold in Korea that meet US safety standards in lieu of Korean safety requirements; (2) expanding the "eco-credit cap" from 14 grams to 17.9 grams, which is identical to the US cap; and (3) harmonizing emission requirements and testing standards for gasoline engine vehicles with US EPA requirements and standards, thereby allowing vehicles exported to Korea to show compliance with Korea's gasoline emissions standards using the same tests they conduct to show compliance in the United States.
  • Dispute over competition policy enforcement. The report states that US firms have raised concerns that the Korea Fair Trade Commission (KFTC) "has targeted foreign companies with aggressive enforcement efforts" and that the agency's procedures violate Korea's KORUS obligations because they inhibit the ability of companies to adequately defend themselves during investigatory proceedings and hearings. The report claims that recent proposed amendments to Korea's Monopoly Regulation and Fair Trade Act do not "meaningfully" address these concerns, and notes that, as a result, the United States on March 15 "requested the first ever consultations with the Republic of Korea under the chapter on Competition-Related Matters of [KORUS]."
  • Origin verification. The report notes that, in the context of the 2018 KORUS agreement amendment discussions, Korea agreed to "specific systemic changes to its origin verification procedures", which have previously been a concern for US companies.
  • E-commerce. The report includes a new claim that certain Korean measures limit foreign electronic commerce suppliers from selling products and services denominated in local currency, the Korean won, and that "[b]y requiring firms seeking to offer won-denominated products and services to register as payment gateways to be able to process such transactions, Korea effectively limits cross-border distribution services, since Korea requires a local entity to hold the payment gateway registration."
  • SPS restrictions on horticultural products. The United States is seeking to resolve alleged SPS barriers that limit export of a variety of horticultural products to Korea.
  • Pharmaceutical pricing. The report claims that, although amendments made in December 2018 removed "discriminatory elements" of Korea's premium pricing system for pharmaceuticals, they also narrowed the program's scope "in a manner that may dramatically limit the ability of any company, foreign or domestic, to qualify for premium pricing."

Other alleged barriers

  • Digital trade and e-commerce. The report highlights a range of alleged data localization requirements and other restrictions, including "restrictions on the export of location-based data"; "stringent requirements on service providers seeking to transfer customer data outside Korea"; protections for personal data that "appear to discriminate against any suppliers reliant on foreign data storage and processing"; "facilities localization requirements with respect to payment gateway services"; and policies that "have the effect of favoring local cloud computing providers suppliers to the detriment of foreign service suppliers."
  • TBT issues. The report expresses concerns about Korea's regime for registering and evaluating chemicals under the Registration and Evaluation of Chemicals (K-REACH) Act, including alleged lack of guidance on its implementation, insufficient time for companies to implement the requirements, and lack of protection for confidential business information.
  • SPS issues. Korea's regulatory system for agricultural biotechnology "continues to present challenges to U.S. agricultural exports." In addition, while the United States and Korea in 2008 reached a bilateral agreement to fully reopen Korea's market to US beef and beef products, as a transitional measure such products imported into Korea must be derived from animals less than 30 months of age. The report also claims that certain beef products are still prohibited for importation. Other alleged market access challenges are cited regarding fruit, potatoes, and Korea's use of maximum residue limits.
  • Government procurement. According to the report, the Korean government requires network equipment procured by government agencies to undergo additional verification in Korea by Korean government authorities, even if the products received certification under the Common Criteria Recognition Arrangement outside Korea.
  • Services barriers. The report highlights alleged barriers to the provision of audiovisual services, including screen and broadcast quotas for foreign content, as well as financial services, franchising services, and telecommunications services.
  • Investment. According to the report, US investors have on occasion raised concerns about "possible discrimination and lack of transparency" in investment-related regulatory decisions in Korea, including decisions by tax authorities. The report also flags sector-specific investment restrictions related to television broadcasting, agriculture and power generation.

Click here to download PDF.

1 The 2019 NTE report and related documents can be viewed here

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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