The Office of the U.S. Trade Representative (USTR) today released its 2017 National Trade Estimate Report on Foreign Trade Barriers (NTE).  USTR publishes the NTE annually to provide the President and Congress with “an inventory of the most important foreign barriers affecting U.S. exports of goods and services, foreign direct investment by U.S. Persons, and protection of intellectual property rights.”  This year’s NTE comes in the wake of statements from the Trump Administration that foreshadow potentially contentious negotiations between the United States and major trading partners.  On March 29, USTR sent a draft notice to the Senate Finance and House Ways and Means committees regarding the Administration’s objectives for renegotiating NAFTA.  And on March 30, President Trump commented on Twitter that his April 6-7 meetings with Chinese President Xi Jinping would be “very difficult” because of persistent U.S. trade deficits with China.

China: The NTE includes a list of Chinese industrial policies “that seek to limit market access for imported goods, foreign manufacturers and foreign service suppliers, while offering substantial government guidance, resources and regulatory support to Chinese industries.”  These range from information technology policies restricting purchases of foreign equipment and services for purported national security reasons, to subsidies for basic industries like steel and aluminum that have driven “massive excess capacity in China.”  Of particular concern is the ongoing implementation of the “Made in China 2025” policy, which promotes manufacturing in high-tech industries, as well as the application of advanced manufacturing technologies in traditional industries.  The U.S. Chamber of Commerce explains that Made in China 2025 “aims to leverage the power of the state to alter competitive dynamics in global markets” and that it “risks precipitating market inefficiencies and sparking overcapacity, globally.”  A recent report by the EU Chamber of Commerce in China similarly describes Made in China 2025 as “a large-scale import substitution plan aimed at nationalizing key industries, or at least severely curtailing the position of foreign businesses in them.”

NAFTA countries: The NTE emphasizes Canadian barriers to agricultural trade, including price discounts for Canadian dairy producers and import restrictions on U.S. grain exports to Canada.  It also notes concerns with Canadian subsidies to the aerospace sector, including nearly $300 million in assistance to airplane manufacturer Bombardier in February 2017.  With respect to Mexico, the NTE highlights problematic customs procedures like verifications of textile imports and licensing requirements for steel products that have restricted U.S. exports to Mexico.