By Lucy Craymer in Hong Kong and Josh Zumbrun in Washington
The White House push to confront rivals over trade has spread
beyond the world's biggest economies like China and Europe to
include poorer countries that also see the U.S. as a critical
market for their goods.
Since President Donald Trump took office 18 months ago, the U.S.
Trade Representative has launched wide-ranging reviews of the
eligibility of less-developed countries for a federal government
program that lowers tariffs for thousands of the products they
export to the U.S.
Most recently the Trump administration targeted Turkey for
revocation of tariff-free exports to the U.S., part of a growing
dispute between the two nations. Thailand, Indonesia and India have
also been put on notice that they could lose some duty-free
privileges. The number of countries on that list is likely to
increase in the months ahead as the U.S. expands plans for reviews
of trade with less developed economies beyond Asia, which is its
focus now.
The tool the administration has used to pressure these nations
is a program known as the U.S. Generalized System of Preferences,
or GSP, initiated in 1976 to aid the economic development of poor
countries by granting them duty-free treatment on a selection of
thousands of goods, from vehicle parts to jewelry. It currently
provides favorable treatment to 121 countries, ranging from Fiji to
Ecuador.
The USTR has always had legal authority to review a country's
eligibility for the program. In recent decades its reviews almost
always involved petitions from outside groups like trade
associations or labor unions and tended to focus on issues like
child labor or human rights.
Beginning in October the administration began a new "proactive
process" -- in the words of U.S. Trade Representative Robert
Lighthizer -- of reviewing eligibility for the program, with an eye
toward achieving "a level playing field for American businesses,"
according to a statement released by the USTR last year.
The first round of this assessment focused on 25 Asian and
Pacific countries. Assessments of Eastern Europe, the Middle East
and Africa will begin this autumn.
So far no countries have had their eligibility for participation
in the program revoked under the new review program.
The USTR has raised questions about whether these U.S. trade
partners provide "equitable and reasonable market access" to their
own economies, citing trade and investment barriers as the concern.
"Market access" hadn't formed the basis for reviewing a country's
GSP status in recent years. A USTR official said this rationale
hadn't been listed as a concern in outside petitions that called
for reviews.
Deborah Elms, executive director at the Asian Trade Center in
Singapore, said the U.S. is using the reviews to cajole countries
into negotiating bilateral trade agreements or making other
concessions. For many countries, "there is quite a bit at stake"
simply because the U.S. is such a large market for so many goods,
she noted.
Less than 1% of all U.S. imports came in under the program's
favorable treatment in 2016: about $19 billion of a total $2.2
trillion in imports. Though small from the U.S. perspective, the
sums are significant for poorer nations. Advocates of the program
say it is worth giving lower-income countries a pass on some trade
issues to help them develop.
The new approach on the GSP program fits with President Trump's
focus on bilateral trade imbalances. It is not the first time the
administration has revived largely unused trade powers to apply
pressure. The administration's tariffs on steel and aluminum, and
on washing machines and solar panels, for example, both relied on
provisions of trade law that had been unused for over a decade.
"There has been this trend toward 'How can we make this [trade]
more reciprocal?'" said Kimberly Elliott, a visiting fellow at the
Center for Global Development in Washington.
The most recent review hit Turkey in early August, with USTR
saying it had concerns that Turkey wasn't providing U.S. exporters
fair market access, pointing to Turkish tariffs on U.S. goods. The
review came as the U.S. sought to ratchet up pressure on Turkey,
both because of its trade moves and because of a dispute over an
American pastor who has been detained in Turkey.
"We hope that Turkey will work with us to address the concerns
that led to this new review of their duty-free access to the United
States," Deputy U.S. Trade Representative Jeffrey Gerrish said in a
release on the issue earlier this month.
Washington also imposed steel and aluminum tariffs on Turkey
earlier this year. Turkey retaliated with proportionate tariffs on
U.S. exports such as rice, tobacco and autos. On Friday, Mr. Trump
said he would double U.S. steel and aluminum tariffs on Turkey as
its currency tumbled.
In May, the U.S. government said it would review Thailand's
eligibility following a petition from the U.S. National Pork
Producers Council, which had complained that Thailand rarely grants
licenses for American pork imports.
For more than a decade, Bangkok banned imports of pork
containing the hormone Ractopamine, which many U.S. farmers feed to
pigs, and charged high inspection fees for shipments that claim to
be free of the drug.
Swine federations from six Thai provinces in May responded to
the U.S. concerns in an open letter to President Trump, urging his
administration to stop pressing Thailand to accept U.S. pork while
the country's domestic market was overflowing with supply.
"This will bring unimaginable disaster to Thai pig farmers,"
they said in the letter.
A decision on Thailand's GSP status is pending.
Anan Tridechapong, a spokesman for the Swine Raisers Association
of Thailand, said that small pig farmers were already struggling
due to the Thai market's low prices. If shipments from the U.S.
were allowed, it would make it even harder, he said.
In 2017, Thailand exported about $4.2 billion of goods under the
GSP program, around 13% of its total exports, to the U.S.
Indonesia, meanwhile, has been accused of implementing an array
of trade and investment barriers that had "serious negative
effects" on U.S. business, USTR said in April. About $2 billion of
Indonesia's $20 billion in exports came in under the program in
2017, including machinery and chemicals.
In late July, a team of senior Indonesian government officials
including Trade Minister Enggartiasto Lukita traveled to Washington
to plead the country's case for remaining within the program. A
decision is pending. The Indonesian Trade Ministry didn't respond
to requests for comment.
India's eligibility in the program is also being reviewed
because of market-access concerns. The U.S. dairy industry and the
U.S. medical device industry say they face trade barriers. About
$5.6 billion of India's $49 billion in exports come to the U.S.
through the program.
Write to Lucy Craymer at Lucy.Craymer@wsj.com and Josh Zumbrun
at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
August 12, 2018 10:14 ET (14:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.