Takeaways from the 2023 Trade Policy Agenda and 2022 Annual Report

On March 1, 2023, the Office of the United States Trade Representative (“USTR”) issued the Biden Administration’s 2023 Trade Policy Agenda (“Agenda”) and 2022 Annual Report (“Report”). The Report was submitted to the Congress pursuant to Section 163 of the Trade Act of 1974, as amended. The Report’s 211 pages, plus three annexes, detail the Administration’s ongoing trade priorities and summarize trade activities in 2022, including trade agreements and negotiations, trade enforcement activities, other trade activities, and updates on work at the World Trade Organization.

Worker-Centered Trade Policy. A major emphasis of President Biden’s trade agenda, since he took office over two years ago, was to focus on workers. The Report cites the effective enforcement of the United States-Mexico-Canada Agreement (“USMCA”), which includes the new rapid response mechanism (“RRM”) to allow the United States to investigate and take action against specific facilities in Mexico for denying workers’ rights to freedom of association, as evidence of substantive progress. According to the Report, from March 2022 through February 2023, the mechanism secured rights for workers at four different facilities in Mexico. It is worth noting that, as part of Mexico’s labor reform undertaken in connection with the implementation of the USMCA, by May 1, 2023, all existing collective bargaining agreements in Mexico must be voted on by workers or be deemed automatically expired. The RRM could see additional activity in 2023 coming out of these votes.

Combatting Forced Labor. In addition to the USMCA, the Report also points to the Administration’s efforts in developing a trade strategy and toolkit to combat forced labor. This includes multilateral and bilateral discussions to use trade policy to address forced labor and child labor in global supply chains. The Report further highlights the implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”) to demonstrate the Administration’s commitment to combat forced labor in the Xinjiang Uyghur Autonomous Region of China by requiring cooperation from the private sector.

China. “Re-Aligning the U.S.-China Trade Relationship” remains an important issue on the Administration’s trade agenda. The Report cites unfair, anticompetitive, and distortive practices undertaken by China as harming workers and businesses in the United States and its allies and partners. These practices include limited market access, restrictions on the ability for foreign companies to do business in China, illicit means to secure foreign intellectual property and technology, and failure to provide basic labor rights. The CHIPS and Science Act, the Inflation Reduction Act, as well as engagement with similarly situated partners and allies, are all mentioned as part of the strategy to confront China. Continued implementation and enforcement of the UFLPA will also be key to the Administration’s strategy.

Supply Chain Resiliency and Trade. Supply chain resilience is identified in the Report as a critical component of the Administration’s trade agenda, particularly with the continued effects of the pandemic, Russia’s invasion of Ukraine, and the concentration of supply chains in China, which contribute to significant vulnerabilities. The Report recalls four priority product areas coming out of a comprehensive review of the U.S. supply chain pursuant to Executive Order 14017 in 2021: semiconductors, large capacity batteries, critical minerals and materials, and pharmaceuticals and active pharmaceutical ingredients. Toward this end, the USTR is actively engaging and coordinating with trade partners to address supply chain resilience in these priority areas. For example, the United States concluded a mutual recognition agreement negotiation in 2022 on pharmaceutical good manufacturing practices with Switzerland, which allows regulators in both countries to share documents related to inspections of pharmaceutical manufacturing facilities.

Engaging with Key Trade Partners. The Biden Administration outlines its work with key trading partners to promote the goals that are outlined in the Report. The Indo-Pacific Economic Framework for Prosperity (IPEF), launched in May 2022, is at the forefront of the Administration’s strategy to support the interests of the United States and allies in the region. As the host of the Asia-Pacific Economic Cooperation (APEC) in 2023, the Administration is focusing on supply chain resiliency, sustainability, and inclusivity as major themes for discussion. This year, the Administration is also expected to move forward with the initiative to launch the Americas Partnership for Economic Prosperity (APEP). The Report singles out the European Union, Taiwan, Kenya, India, Japan, Korea, Singapore, the United Kingdom and the African Continental Free Trade Area as bilateral partners for further engagement to promote trade based on fair competition and labor practices, supply chain resiliency, environmental sustainability, and additional topics including digital trade, small and medium sized enterprises, and trade facilitation.

Digital Trade. On the same day that the Biden Administration released the Report, it also released a new National Cybersecurity Strategy. Though the Report does not focus on privacy or cybersecurity, its emphasis on digital and inclusive trade and the same-day release of the National Cybersecurity Strategy underscore the importance of these policies working together. For instance, the Report explains that the internet and other digital technologies strengthen the U.S. economy by allowing the United States to export services delivered remotely over information and communication technology (“ICT”) networks. At the same time, the Report explains that the USTR’s approach to digital trade must incorporate security concerns, recognizing the importance of a secure digital and physical infrastructure.

While the Report focuses on digital trade as a means to push the United States and global economies forward, the National Cybersecurity Strategy emphasizes the Administration’s growing use of trade agreements to pursue cybersecurity goals. The Report and the National Cybersecurity Strategy evidence the Biden Administration’s attention to bilateral and multilateral trade agreements that may advance digital goals, as well as strengthen cybersecurity capacity and create better transparency, predictability, and efficiency to do business in foreign markets. Collectively, these policies seek to create a more inclusive and secure trade regime, advancing U.S. interests at home and across the global community. For additional insights about the National Cybersecurity Strategy, please see our related client alert. 

Additional elements of 2023 Agenda and Annual Report. The document speaks to additional priorities of the Biden Administration, including the linkage between trade and “accelerating decarbonization and promoting sustainable environmental practices.” It highlights use of trade enforcement mechanisms, engagement with and reform of the World Trade Organization, and efforts it describes to advance equitable, inclusive and durable trade policy and expand stakeholder engagement.  

At Crowell & Moring, our attorneys and consultants at Crowell & Moring International continue to work on these and many other trade issues on behalf of our clients and will monitor additional developments throughout the year.

We would like to thank Kate Growley, Crowell & Moring International LLC's Director, for assisting us with this alert.