WTO Trade Report on U.S. Sees Little Change in Import Policies Since 2010, but Movement on Exports

Imports & Exports Both Grow, but Imports Grow Faster

While U.S. imports and exports have both grown since the financial crisis, import growth outpaced export growth, widening the merchandise trade deficit, the WTO said. Imports grew 16 percent to reach $2.236 billion, and exports also grew 16 percent to reach $1.497 billion, the report said. Services trade, on the other hand, has shown a strong and growing trade surplus in recent years and has had an important impact on the current account balance, it said. U.S. commercial services exports grew 9.2 percent in 2011, while imports grew 6.9 percent, thus the trade in services surplus widened to $186 billion.

Americas remain most important for exports. Strong growth in merchandise exports continued for the second year in a row, with 16 percent growth in 2011 and increases in all major export categories, the WTO said. Exports to Latin American and the Middle East markets grew faster, at 21 percent each. However, Middle East destinations still account for a very small share of U.S. exports (4%), whereas Latin America is the second largest regional market, accounting for 25 percent of U.S. merchandise exports. The largest single export market continues to be Canada, which accounted for 19 percent of 2011 U.S. merchandise exports, said the report. The Americas remains the most important export region, accounting for 43.5 percent of merchandise exports, followed by Asia (27.9%) and Europe (21.4%).

China biggest source of merchandise imports. The situation of imports is similar to that of exports in that merchandise imports exhibited strong growth for the second year after the recession at 16 percent in 2011, the report said. Imports in all major categories were higher in 2011 than in 2010. Imports from the Middle East grew the most rapidly in 2011, climbing by 40 percent but again from very low base of five percent of total U.S. merchandise imports. Similar to the growth in exports, U.S. imports from Latin American grew slightly more than the average, at 21 percent in 2011, it said. China is the dominant supplier of merchandise to the U.S. market, accounting for 18 percent of total U.S. merchandise imports in 2011, followed by the EU (16.6%) and Canada (14.1%).

Import Policy ‘Relatively Static’ Since 2010; ‘Cumbersome’ Rules of Origin

On customs-related issues, the U.S. continues to move forward on a number of trade facilitating initiatives that were passed into legislation several years ago, but have been delayed or not yet been fully implemented, such as scanning of maritime containers and air cargo, the report said. The full impact of these policies is not yet clear, said the WTO.

Long-standing laws and regulations on rules of origin and marking requirements remain virtually unchanged, although their complexity and application remain unnecessarily cumbersome with the possibility of several different rules being applicable across sectors and final outcome being dependent on a number of factors, the WTO said.

The U.S. also imposes a number of fees or charges on imports that vary depending on the source, value, and type of import; these include the merchandise processing fee, COBRA fees, harbor maintenance tax, agriculture fees, and excise taxes. On customs valuation, the situation has remained virtually unchanged since 2010, with no new legislation or procedures, and the position is similar for import licensing, the WTO said.

Beyond the basic importing topics of classification, valuation, and origin and marking, CBP is responsible for a number of initiatives to facilitate trade, better secure U.S. borders, and enforce U.S. laws and regulations. These include:

C-TPAT. Through the C-TPAT partnership more than 50% of U.S. imports are covered by C-TPAT partnership trade. CBP is also working towards signing mutual recognition arrangements with a “number of foreign governments in order to link international industry partnerships together globally,” the WTO said.

ACE. ACE will provide a single centralized portal and access point for the trade community to interact with CBP. Currently, ACE is being implemented in phases and already includes provisions for individual account management, periodic payment capabilities, e-manifests, entry summary filing, and trade data sharing. More than 17,000 ACE accounts were in operation in 2011, the WTO said.

CSI. The Container Security Initiative was launched in the aftermath of the 9/11 terrorist attacks in order to address the threat to border security posed by the use of maritime container shipments. CSI is now in operation in 58 ports world-wide and pre screens over 80% of maritime container cargo destined for the U.S., the report said.

Korea FTA Will Have ‘Substantial Impact’; Effect of Colombia & Panama FTAs Smaller

At the end of 2011, the U.S. had 11 bilateral or regional free trade agreements in force with 17 countries, which accounted for 16.4 percent of total U.S. imports, the WTO said. The majority of imports from FTA partners receive benefits, with 90 percent or more of trade entering duty-free from partner countries, with the exception of the two most recent free-trade agreements, with Oman and Peru, which entered into force in 2009, the WTO said. U.S. FTA trade is dominated by NAFTA partners, which accounted for 91 percent of total imports under FTAs, and 77 percent of exports to FTA partners in 2011, the WTO said. For the first time, in 2011, Mexican imports under NAFTA preferences surpassed Canadian imports, it said.

Korea FTA will have ‘substantial impact.’ The free trade agreement with Korea is expected have a substantial impact on U.S. trade, and longer term impact on U.S. GDP and investment, as Korea is the United States' seventh largest trading partner. The effects of the agreements with Colombia and Panama are expected to be much smaller. Most imports from Colombia and Panama already benefit from unilateral preference programs or MFN duty-free entry, and they rank 25th and 52nd as trading partners. In terms of trade, the Republic of Korea is expected to quickly become the United States' second largest FTA partner after NAFTA.

Preferential trade growing. Preferential trade also accounts for an important and growing percentage of U.S. trade; in 2011, 20.1% of U.S. imports were under preferential regimes, reciprocal preferences accounted for 16.4% and unilateral preferences for 3.7%, the WTO said.

AD/CV Developments

At the end of 2011, the U.S. had 237 AD measures in force, the WTO said. This number remained relatively stable during 2008-11 with an average of 241 measures. In 2011, China was the subject of the most AD orders with 38 percent, followed by the EU countries with ten percent, and Taiwan with seven percent. The number of AD orders relating to imports from China has increased steadily, in line with increased imports from China, the report said, while the number relating to imports from EU member states has fallen. The other six countries (Taiwan, India, Japan, Korea, Brazil, and Mexico) accounting for the next highest numbers of AD orders imposed have generally seen their number of orders remain stable over the past four years, it said.

Meanwhile, 92% of countervailing duty investigations initiated during the past five years involved imports from Asian countries, in particular China the report said. This reflects a decision of the Department of Commerce to apply CV measures to non-market economy countries (NMEs).

In terms of sectors affected by AD investigations, the metals industry accounted for 41 percent of all investigations, followed by chemicals and plastics with 21 percent, and machinery and electrical equipment with 13 percent, the report said. CV measures have been concentrated in the metals sector since 2008, with 20 cases, it said.

U.S. an ‘Active’ WTO Member

According to the report, the U.S. is active in all aspects of WTO work, including the on-going negotiations, regular Committee work, reporting and monitoring, development aspects, accessions, and in the dispute settlement arena. Between Jan. 1, 2010, and June 30, 2012, the U.S. submitted 22 proposals or communications to the negotiating groups; the majority of these concerned the Negotiating Group on Market Access, the report said. During the same period, the U.S. was a respondent in eight dispute settlement cases, was a complainant in seven cases, and participated as a third party in seven panel proceedings, it said. The U.S. was involved in seven appeals processes and involved in three implementation or arbitration matters.

The U.S. also contributes to improving the transparency of the WTO, its trade rules, and creating a clear and effective system by providing information through the WTO notification process and promoting the use of open and transparent meetings and hearings, the report said. Of the 11 panels that have permitted open hearings at the request of the parties to the dispute, the U.S. was involved as a complainant or respondent in nine. Similarly, the U.S. was an appellant or appellee in seven of the public hearings that have been held by the Appellate Body, the report said. The U.S. was a party in both instances where an Arbitrator held open hearings, the WTO said.