International Trade-Related Executive Orders

Dear Friends,

What an interesting time to be working in international trade! 

We are writing to make sure you saw the Executive Orders President Trump issued over the past few days on international trade issues.  All of the Executive Orders are available here.

The Presidential Executive Order Addressing Trade Agreement Violations and Abuses was signed on April 29, 2017.  It directs the Secretary of Commerce and the United States Trade Representative to conduct “comprehensive performance reviews” of all international trade and investment agreements the United States is a party to, as well as trade relations with those WTO member countries with which the United States does not have a trade agreement, but does have a significant trade deficit in goods. The goal of these reviews is to (i) identify violations or abuses by our trading partners, (ii) trade or investment agreements that have not created new U.S. jobs, had favorable effects on our trade balance, increased U.S. exports, etc., and (iii) make recommendations to address the issues identified in (i) and (ii). 

Based on statements President Trump has made to date, we expect that NAFTA as it relates to trade with Mexico, the Korea-U.S. Free Trade Agreement, the WTO Government Procurement Agreement and others to receive negative marks under the standards to be used in the performance reviews.  What will be more interesting are the recommendations that are made to address those perceived shortcomings (e.g., revising rules of origin, withdrawing from agreements, etc.).  The performance reviews must be submitted to the President by October 26, 2017.

The Presidential Executive Order on Establishment of Office of Trade and Manufacturing Policy was also signed on April 29, 2017.  It creates a new Office of Trade and Manufacturing Policy (OTMP) within the White House.  The stated mission of the OTMP “is to defend and serve American workers and domestic manufacturers while advising the President on policies to increase economic growth, decrease the trade deficit, and strengthen the United States manufacturing and defense industrial bases.”

These Executive Orders encapsulate much of the President’s trade policy, which is focused on (1) seeking to identify and remedy unfair trading practices, and (2) reducing the trade-in-goods deficits the United States has with other countries.  Companies should be viewing these Executive Orders as a creating an opportunity to engage with the Administration to help shape the recommendations for addressing the problems that they perceive exist with trade.

We are assisting numerous clients navigate these issues.  If you would like to discuss your specific situation and what you should be doing further, just let us know.

Best regards,
Ted

Buy American, Hire American

Dear Friends,

President Trump is expected to sign an Executive Order today in furtherance of his “Buy American, Hire American” agenda.  The agenda, which includes pushing Congress for a $1 trillion infrastructure spending bill to help fix roads, bridges, tunnels, airports, etc. (which has not materialized, thus far), seeks to ensure that government procurement dollars are spent in accordance with existing ‘Buy America’ legislation (i.e., legislation that requires, or gives preference to, U.S.-qualified products in U.S. government-funded procurements).  It also seeks to ensure that this legislation is properly enforced.

As any company who participates directly or indirectly in the government procurement market knows, this can be a confusing area.  There is no one “Buy America” standard across the federal government.  Often, just figuring out which standard (e.g., the Buy American Act of 1933, the Trade Agreements Act of 1979, the Surface Transportation Assistance Act of 1982, etc.) applies can be quite an ordeal, particularly if you are further down the chain – you supply a customer who supplies the government.  The good news is that, for those companies that have invested in figuring this out (or at least figuring out the piece that impacts them), there is quite an opportunity here.  As today’s Executive Order demonstrates there is going to be a renewed focus on acquiring qualifying articles, which means people can expect more scrutiny of their certifications.  That is also the potential bad news – this is an area where procurement officers have historically had a great deal of discretion and audits are relatively rare.  Given the Trump Administration’s interest in this issue, we expect that to change (i.e., a lot more scrutiny of the certifications).

If you are selling directly or indirectly to the government, then we recommend that you review your processes for ensuring that your “Buy America” certifications are accurate and auditable (i.e., make sure you are retaining the right supporting documentation).  Companies that are confident in their programs are expected to have a distinct advantage in this space for the foreseeable future.

We hope this is helpful.  If you have any questions about these issues, please let us know.  We have a great deal of experience in this area helping companies set up compliance programs, advising on compliance, obtaining final determinations of origin and defending enforcement actions.  We’d be happy to answer any questions you may have.

Best regards,
Ted