Trump Signs Executive Orders to Review FTA Violations, Create Office of Trade and Manufacturing Policy
President Donald Trump issued executive orders to address violations and abuses of U.S. free trade agreements (here) and to create the White House Office of Trade and Manufacturing Policy (here) on April 29. The FTA executive order tasks Commerce Secretary Wilbur Ross and the U.S. trade representative with submitting performance reviews of all trade agreements to which the U.S. is a party. The order also directs examinations of all trade relations with World Trade Organization members with which the U.S. doesn’t have FTAs but has significant trade deficits in goods. Every performance review will cover “violations or abuses” of any U.S. FTA, investment agreement, “WTO rule governing any trade relation under the WTO,” or trade preference program hurting U.S. workers. The order also instructs the reviews to document any “unfair treatment by trade and investment partners” having similar effects.
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The performance reviews must also describe “lawful and appropriate actions” to remedy or correct any deficiencies identified through the reviews. The performance reviews’ findings will help guide U.S. trade policy and negotiations, the order says. “The Secretary of Commerce, the USTR, and other heads of executive departments and agencies, as appropriate, shall take every appropriate and lawful action to address violations of trade law, abuses of trade law, or instances of unfair treatment,” the order says.
“We must try to deal with the things we can control,” Ross said during a press briefing announcing the FTA executive order last week (here). “And to some degree we have some control over our trade arrangements.” Ross pointed out that most of the countries linked with the U.S.’s top 10 trade deficits are merely WTO participants and not members to any U.S. FTA. Ross said that the U.S. maintains very low tariffs compared with other countries, adding that that gives the U.S. low leverage to conclude new FTAs. He also decried the WTO’s most-favored nation system, which he said hinders reciprocity in cases where countries retain uneven trade barriers over the U.S. Further, the WTO doesn’t deal effectively with non-tariff barriers, IP rights, the digital economy and dispute resolution, Ross said.
He complained about the composition of many WTO dispute panels. “Given the composition of the WTO panels, often we’re defeated when people come and appeal it,” Ross said. “Because if the people on the panel are mostly people who are doing the same thing as what you’re complaining about, it’s a little bit hard to get them to vote for you.” Ross also accused the WTO of being institutionally biased toward exporters rather than those hurt by unfair imports. “So that gives you a little flavor for where this study may be heading,” he said. A WTO spokesman said the organization is “aware” of Ross’s remarks.
Cato Institute trade analyst Simon Lester defended the WTO in a blog post (here). Lester cited WTO dispute statistics showing the U.S. mostly wins when it bring complaints and loses when it is on the receiving end of complaints, like every other WTO member. “I'm confident the WTO will survive this, but it will be an interesting next couple of years,” Lester said.
As for the other executive order signed April 29, the Office of Trade and Manufacturing Policy's mission is “to defend and serve American workers and domestic manufacturers while advising the President on policies to increase economic growth, decrease the trade deficit, and strengthen the United States manufacturing and defense industrial bases,” the order states. The office will advise the president on “innovative strategies” and “promote trade policies consistent with the President’s stated goals.” The office will provide liaison between the White House and the Commerce Department, undertaking special trade-related projects as requested by the president, the order says. The office is also tasked with helping to improve the performance of executive branch domestic procurement and hiring policies, “including through the implementation of the policies described" in the administration's recent "Buy American and Hire American” executive order (see 1704190025).