No. 18 — May 5, 2000

 

Weekly Review

NOTES

Mention Super 301 or Title VII to trade policymakers in Tokyo, Brussels or the capital of another major U.S. business partner and they will talk about Washington attempting an end run on international trade rules. However, if any government has cause for complaint this year about the White House's deployment of these tools to open foreign markets to U.S. goods and services, it is authorities in several second-tier economies. Moreover, their criticism, to the extent that it exists, is muted because the enforcement actions that the Clinton administration plans to initiate as a result of its 2000 review of other countries' trade regimes and compliance with multilateral and bilateral trade agreements will be handled by the World Trade Organization.

As in 1999, when the Super 301 (unfair foreign trade practices) and the Title VII (discriminatory government procurement procedures) provisions of the 1988 Omnibus Trade and Competitiveness Act were put back on the books for a three-year run (see JEI Report No. 18B, May 7, 1999), U.S. Trade Representative Charlene Barshefsky announced May 1 that ensuring U.S. trading partners' follow-through on the nearly 300 market-opening pacts negotiated by the Clinton trade team since 1993 would take precedence this year over identifying Super 301 "priority foreign country practices" or actionable public-sector purchasing policies under Title VII. To this end, the United States will tap the WTO's dispute-settlement mechanism in the hope of ending customs valuation practices in Brazil and Romania that American officials believe violate international trade agreements and eliminating allegedly WTO-incompatible motor vehicle investment measures in India and the Philippines. Washington also plans to pursue action in the WTO against what it claims are intellectual property rights violations by Argentina, Brazil and Denmark. The latter moves are the result of the administration's 2000 review under the so-called Special 301 provisions of the 1974 Trade Act.

The absence of Japan from the list of WTO enforcement actions is not at all surprising, even though for many trade watchers around the world, that country is synonymous with Super 301 and closely linked to Title VII. Washington's many quarrels with Tokyo over compliance with its trade obligations involve bilateral market access deals rather than WTO and other multinational agreements, the focus of the Super 301, Title VII and Special 301 exercises this year and last.

Neither is the abbreviated number of transpacific trade arrangements that the Clinton administration cited as candidates for possible future enforcement action totally unexpected (see JEI Report No. 16B, April 21, 2000). The only products or services making the Super 301 "watch list" cut were flat glass, a decidedly pro forma choice (see JEI Report No. 47B, December 17, 1999), and motor vehicles and parts, an obvious but apparently last-minute inclusion (see JEI Report No. 42B, November 6, 1998). Similarly, Tokyo's public works procurement practices (see JEI Report No. 3B, January 21, 2000) were the lone entry on the Title VII warning sheet.

Cynics might argue that the White House went easy on Japan in both the 1999 and the 2000 Super 301/Title VII cycles because U.S. trade negotiators are tired of butting heads with an increasingly intransigent Japanese bureaucracy. The burnout factor could have been influenced the decisionmaking process. More likely, however, administration strategists were unwilling to promote any action that might undermine their current Japan economic policy priorities. At the top of that agenda is a strong, domestic demand-led recovery of the limping Japanese economy — a development that would benefit U.S. exporters of goods and services across the board. Equally important in the near term is the need to reach agreement with Tokyo on the interconnection fees that Nippon Telegraph and Telephone Corp.'s two regional operating units charge their rivals and to wrap up other details standing in the way of the release of the final report on regulatory reform under the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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