Manager, Regulatory and Legislative Affairs, FBB Federal Relations/Lindsay Hart LLP
Of Counsel, FBB Federal Relations/Lindsay Hart LLP
In his January address to the World Economic Forum in Davos, Switzerland, President Trump delivered his thesis on American trade policy:
We support free trade but it needs to be fair and it needs to be reciprocal because in the end unfair trade undermines us all. The United States will no longer turn a blind eye to unfair economic practices including massive intellectual property theft…We will enforce our trade laws and restore integrity to our trading systems. Only by insisting on fair and reciprocal trade can we create a system that works not just for the U.S., but for all nations (POLITICO, January 26, 2018).
With over one year in office, the Trump administration has firmly established rhetoric of protectionism and enforcement of international trade rules. He has also signaled a willingness to engage in renegotiation of trade agreements (Korea-US, NAFTA, Trans-Pacific Partnership [TPP]) (See BPP December, 2017), if the international community can agree to policy that does not disadvantage U.S. interests. Here we analyze recent and upcoming trade policy developments and predict a two-pronged approach, new enforcement measures and stronger protections in future negotiated agreements, for the U.S. government’s involvement in brand protection in 2018.
Enforcement Case Decisions Announced
In January, President Trump implemented 30 percent tariffs on imported solar panels and 20 percent tariffs on a quota of imported washing machines (followed by a 50 percent tariff on any machines exceeding the quota) – the first major trade enforcement and protection actions for the administration.* These cases were reviewed after complaints from U.S. manufacturers that the foreign manufacturers (primarily from China) were subsidizing their products to export to the United States and undercutting American competition.
So how do these new enforcement cases relate to brand protection? The decision on these two products indicates the administration’s position on brand enforcement that may extend to IP protections against counterfeits and cements its position to aggressively advocate for American companies and brands. The initial actions are viewed as a sign of the administration’s broader willingness to defend American interests.
The administration is expected to soon release a decision on its Section 301 review of China’s forced technology transfers and intellectual property theft. As we discussed in the September, 2017 Edition of the BPP, the review could lead to the U.S. threat or imposition of sanctions on China should China’s policy not change. The investigation had been initially delayed due to the U.S. need for a geopolitical ally in China during rising tensions last fall with North Korea, but it is being readdressed now with an expected release this spring.
The Office of the U.S. Trade Representative (USTR) also recently released its 2017 Review of Out-of-Cycle Markets, an annual report drawing attention to physical and online marketplaces known for their lax intellectual property enforcement. Alibaba, the owner of the well-known Chinese online retailer Taobao, has been outspoken in its displeasure of Taobao’s inclusion this year and released a point-by-point rebuttal of the USTR report. Alibaba disparaged the report’s credibility, stating that as “a result of the rise of trade protectionism, Alibaba has been turned into a scapegoat by the USTR to win points in a highly-politicized environment.”
New Standard for Free Trade Agreement Negotiation
According to the OECD, the United States exported $130.4 billion in services related to global intellectual property in 2014, the most in the world. As such, IP issues weigh heavily in international trade agreement negotiation. Last year, the United States withdrew from the fully negotiated TPP agreement among 12 countries in Asia and the Americas. The remaining 11 countries went on to negotiate a new agreement among themselves, which apparently suspends many IP-related provisions from the original agreement (Bloomberg, January 15, 2018). While President Trump signaled in January a willingness to re-engage with TPP-member countries on an agreement, it would take time to ensure that a new agreement maintains the initial commitment to IP protections that the U.S. government had secured during negotiation rounds in 2016.
The upcoming months will be crucial to President Trump’s agenda as he seeks to navigate the delicate balance of enforcement and free trade as outlined in his Davos speech. Will new enforcement measures be met with international retaliation? Or will they serve as a spur to renegotiate more rules-based free-trade agreements with clearly defined brand protection objectives and consequences?
*Subsequent to writing of this column, the Trump administration also announced tariffs on imports of steel and aluminum.
I want to personally thank Abigail Struxness and Peter Friedmann of FBB Federal Relations for its time and dedication to the BPP. They have been with us since the beginning, when we launched The Brand Protection Professional in September of 2016, and never failed to research, gather and report on the important legislative updates of concern to our BP community. With FBB’s need to focus on their primary business, we are looking for new contributors for the Legislative Update column. If interested, please contact me at firstname.lastname@example.org.
Thanks again, Abigail and Peter!
THE BRAND PROTECTION PROFESSIONAL | MARCH 2018 | VOLUME 3 NUMBER 1
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