A Current Snapshot Of Our International Trade Policy

Monday, May 3, 2010 - 01:00

Editor: Please tell our readers about your professional background and your current legal practice.

Brightbill: While practicing at Wiley Rein for almost 15 years, I have represented clients on all aspects of international trade law, including trade litigation and trade policy. This includes import trade remedies (such as antidumping law, countervailing duty law and safeguards investigations), global trade policy and trade negotiations, international arbitration, export controls (compliance and licensing), climate change policy, customs matters and international e-commerce issues. I also am an adjunct professor of International Trade Law and Regulation at the Georgetown University Law Center.

Editor: Please tell us about the current domestic import and export landscape, especially trade policy. How do you advise clients on this frequently changing area of the law?

Brightbill: The primary import issue we advise our clients about is identifying and offering solutions when their industries are being harmed by unfairly traded imports. There has been strong growth in this area since 2007, when the Commerce Department decided to apply the countervailing duty laws (or subsidy laws) to China. Chinese government subsidies are a major source of harm to many U.S. industries.

With regard to trade policy, we assist our clients in working with the Commerce Department, Congress, the administration, and the U.S. Trade Representative's office. Our clients are monitoring the WTO negotiations, which have been continuing since the Doha Development Round was launched in 2001. We have a number of clients who are very interested in opening markets through the WTO negotiations and who are interested in making changes to the WTO agreements that would allow them to use the trade laws more effectively. The WTO talks, and trade policy in general, have been on hold recently, but with Ambassador Kirk now in a position to move forward, we expect the Obama administration will begin to put a greater emphasis on WTO and other trade negotiations. We also see opportunities to pass trade and Customs legislation in Congress in the near term.

Our clients also need assistance on a variety of export control and international compliance issues. With regard to export controls, the administration has just recently proposed a dramatic overhaul of our export control and encryption laws and regulations. Our clients are also seeking help on a variety of international compliance issues, particularly with regard to the Foreign Corrupt Practices Act (FCPA), the representation of U.S. and foreign companies before the Committee on Foreign Investment in the United States (CFIUS) on foreign investment matters, anti-money laundering, and OFAC and Treasury regulations regarding compliance with economic sanctions.

Editor: How are the current economic conditions affecting your clients involved in international trade? How has it affected the nature of your practice?

Brightbill: We have major clients in the steel industry and in manufacturing industries, and the downturn there has been particularly severe. Because of trade concerns about China, India, and others, many of them are looking to use the trade law remedies to give themselves an opportunity to compete. However, it can also be a difficult time to bring trade cases when these companies are losing money, laying off workers and being harmed by dumped or subsidized imports. Fortunately, our trade practice has managed to stay busy. Even with the global recession, international trade hasn't stopped, and our clients still need to be engaged.

Editor: Have international trade policies under the Obama administration differed markedly from the policies of the Bush administration? Are they currently addressing international trade regulatory complications?

Brightbill: The Bush administration enjoyed what is known as trade promotion authority (previously known as fast track authority ), where free trade agreements could be negotiated subject only to an up-or-down vote (without amendment) by Congress. This produced a series of new free trade agreements and regional trade agreements in addition to the WTO talks.

The Obama administration has not yet requested trade promotion authority, and it has indicated that it wants not only to negotiate free trade agreements but to enforce the existing agreements. Our clients welcome this emphasis on enforcing existing agreements rather than simply negotiating new ones.

Given the global recession, the administration has also placed a high priority on using trade policy to promote jobs and employment. The administration hopes to double U.S. exports in the next five years, which is a commendable goal. However, it could be difficult to reach unless there is a committed effort to use all the policy tools available, including trade policy, to make that happen.

For example, one important aspect of the problem is China's undervaluation of its currency. There is now a consensus among lawmakers and economists that China's currency is undervalued, by anywhere from 25 to 40 percent, and that this policy enhances China's exports, while harming exporters and manufacturers in the United States and other countries. The Administration and Congress will have to address this fundamental currency imbalance in the near future, quite possibly through the use of our trade laws.

Editor: What about imports?

Brightbill: The United States already has an extremely open market and extremely low tariffs on manufactured goods. We also have a transparent process for how the trade laws work and how the customs laws work. The administration can best support U.S. companies and industries by working to ensure that other countries also have open and transparent trade law regimes, so that they are not merely reducing their tariffs on goods while simultaneously enacting new kinds of barriers and restrictions.

Editor: What effect has the economic stimulus legislation had on your clients? Have the "Buy America" provisions of the stimulus legislation impacted our clients?

Brightbill: The stimulus package has affected many of our clients, particularly those in the steel and manufacturing industries. The infrastructure projects funded by the American Recovery and Reinvestment Act (ARRA) are very important for spurring demand for roads, bridges and public works at a time when demand has just dropped to almost nothing.

The "Buy America" provisions are also important. Our trade practice has been very busy advising clients on the "Buy America" provisions. Our clients have a range of views on "Buy America": Some are very supportive of wanting to use the stimulus provisions to create more jobs in the United States. However, many of our clients are also multi-national companies, and the "Buy America" rules can be a real challenge. Because these rules are extremely complex, our goal is to help our clients understand what the "Buy America" requirements are and what they cover. It is extremely difficult to navigate these regulations without assistance.

Editor: How do you think our current regulatory regime is perceived internationally, especially in light of the "Buy America" program? Are we considered protectionists? Does that affect our export activity?

Brightbill: The United States and the Obama administration continue to support free trade, so long as it is also fair trade. It is important for us to emphasize that when the United States uses the trade laws to address unfair trade practices such as dumping and subsidies, it is doing so in a manner consistent with our obligations under the WTO and international law.

In fact, while there has been a lot of criticism of "Buy America," the administration went out of its way to state in the ARRA that these "Buy America" provisions would only be applied in a manner consistent with WTO and international law.

Editor: Could you give us some of the key WTO decisions that may impact your clients in the near future?

Brightbill: The WTO dispute settlement process was created only about fifteen years ago, and it already has become a very powerful tool in resolving international trade disputes. These cases are becoming more complex and are covering more difficult questions of trade law. There are at least three cases that are very important in the near term.

First, the United States has just brought a challenge against China regarding restrictions placed on its raw material exports. This affects many different U.S. manufacturing industries that rely on access to these raw materials in their own production. The decision will be critical in terms of ensuring that countries do not distort international trade by controlling access to raw materials.

Second, China has challenged the United States' application of the countervailing duty laws to China while simultaneously applying our antidumping laws to them. China alleges that because of the way the Commerce Department calculates duties on non-market economies, this is a double penalty against China - simultaneously applying the dumping law and the countervailing duty law.

Third are the pending subsidies decisions in the Boeing and Airbus cases, addressing whether the United States and the European Union have subsidized the growth of their aerospace industries. These are very complex and high-profile cases, and regardless of how the WTO decides them, a separate negotiated solution may also be required.

Editor: How do you recommend we draw the line between encouraging the free flow of people, products and intellectual property on the one hand and domestic security on the other?

Brightbill: The whole goal of international trade negotiations at the WTO and in free trade agreements is to eliminate trade barriers and allow countries to increase exports and to increase the flow of trade for the betterment of all economies. At the same time, national security is crucially important. On the export front, this means the United States has to take whatever measures it can to ensure that military goods and technology don't go into the wrong country or fall into the wrong hands. On the import front, this means that U.S. Customs and Border Protection needs to have appropriate inspection and safeguards on all inbound shipments. One of the challenges for this administration is to find ways to have the free flow of goods and yet have those security checks and balances in place that are very essential to our national security.

On the subject of intellectual property rights, another goal of the WTO has been to ensure that all countries protect intellectual property, pursuant to the WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement. The TRIPS agreement was the first to establish that all countries must have patent protection, trademark protection, and copyright protection, but then those rights must be balanced against the needs that developing countries have, such as for pharmaceuticals that can help address public health emergencies.

These are just a few examples of how trade issues tend to touch on other fundamental priorities and values, such as peace and national security and public health, and so the work of international trade is becoming more complex as we see how trade fits in with these other goals and values that we have as a society.

Editor: Would you comment on the use of alternative dispute resolution in international disputes? Have you counseled your clients to pursue arbitration, mediation and/or conciliation?

Brightbill: In the international realm, one primary vehicle for ADR is arbitration under bilateral investment treaties (BITs). There are more than 2,500 of these bilateral investment treaties in place, to ensure that investments made in a country will be protected and that a government can't take the value of that investment away. A growing area of our practice at Wiley Rein is to represent investors in these arbitration disputes.

Please email the author at tbrightbill@wileyrein.com with questions about this article.