15 April 2009

Compliance to New International Trade Rules

This article is excerpted from the 15 April 2009 edition of “WorldTrade\Interactive”.

After the historic presidential and congressional elections last fall it was obvious that U.S. trade policy would change. The question then was how it would change, and while we still don’t have all the answers, some things are becoming clear. One is that despite the rhetoric on the campaign trail, the Obama administration and the Democratic majority in Congress have recognized that remaining open to international trade is vital part to the effort to restore the health of the U.S. economy. But another thing that has become evident is that this openness has a price, and that price is enforcement.

It should be noted that enforcement--ensuring that U.S. rights under bilateral and multilateral trade agreements, as well as U.S. trade laws and regulations, are upheld--is not a partisan issue. It had become associated with Democrats as they railed against a Bush administration trade policy that they believed focused more on negotiating new trade pacts than policing existing ones. In fact a number of Republicans are also of the view that the U.S. has not sufficiently stood up to its competitors. The ongoing economic recession, which--rightfully or not--is seen in some quarters as having been exacerbated by open market and free trade policies, has only magnified these concerns.

Administration and congressional officials have also been careful to emphasize that enforcement is not the same as protectionism; it is not a tool for erecting more barriers. Instead, it is aimed at helping restore the support for open trade that has waned in recent years. While according to one senior law maker the “consensus to advance international trade is frayed” and “our faith in the international trading system is badly shaken,” it is critical to ensure that rules are being respected. Countries should be able to do so without being accused of “protectionism,” which one member of the House who oversees trade issues argued is associated with measures like tariffs, quotas and non-tariff barriers to imports and exports. Ensuring that the rights of threatened industries are upheld, on the other hand, can help speed an economic recovery and thus help reestablish popular support for global commerce.

Because U.S. trade agreements, laws and regulations are so broad in scope, efforts to enforce them will be as well. Businesses are therefore finding themselves in an environment where their global supply chains are being scrutinized like never before on everything from product safety to cargo container security to environmental practices.

With this in mind, let’s take a look at some of the issues where enforcement efforts are likely to be especially targeted in the months ahead.