August 2011 ITU
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- Swift Response by ITA Team Secures Open Market in Taiwan
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Swift Response by ITA Team Secures Open Market in Taiwan
Air Products’ SanFu facility in Hsinchu, Taiwan. The U.S. company, a leading producer of industrial gases in Taiwan, benefitted from help offered by the International Trade Administration’s Trade Agreements Compliance Program. (Photo courtesy Air Products)
The International Trade Administration engages with Taiwanese authorities to overcome shipping restrictions for a U.S. exporter.
by Steve Williams
For U.S. companies seeking to access international markets, expanding overseas often provides numerous benefits, including increased sales and an expanded global reach. However, trade barriers imposed by foreign governments can present significant obstacles or even prevent businesses from entering export markets entirely.
That experience recently occurred to Air Products, a U.S. exporter of specialty gas in Allentown, Pennsylvania. For more than 25 years, this medium-sized company has provided high-purity specialty gases to high-tech manufacturers in the semiconductor, flat panel display, and photovoltaic industries. Since 2001, Air Products has been shipping high-purity nitrous oxide, helium, and hydrogen in bulk quantities to Taiwan in high-pressure tube trailers that are built to U.S. Department of Transportation (DOT) standards.
Potential Loss of Sales
The WTO Agreement on Technical Barriers to Trade
Standards-related obstacles to trade are the nontariff barriers (NTBs) most frequently reported to the ITA by U.S. exporters. The World Trade Organization’s Agreement on Technical Barriers to Trade (TBT), which was first introduced in 1979 under the General Agreement on Tariffs and Trade, and later amended and annexed to the agreement that established the WTO in 1994, is an international agreement applicable to all WTO members. It seeks to ensure that governmental product standards and conformity assessment procedures—including labeling, packaging, testing, and certification requirements—do not create unnecessary obstacles to trade, and therefore are not more trade-restrictive than necessary. Through the agreement, WTO members are also committed to heightened transparency requirements, meaning that they will notify other members of such standards-related measures and will allow comment on them at an early stage of development.
The effect on trade from regulatory-related NTBs can be quite harmful. Governments can use standards-related measures as effective and efficient means to protect health, consumer safety, and the environment. But when they are overly burdensome, discriminatory, or otherwise inappropriate, such measures reduce competition, stifle innovation, and create technical barriers to trade.
The International Trade Administration’s Trade Agreements Compliance Program is an instrumental part of the U.S. government’s systematic effort to monitor, investigate, and ensure foreign government compliance with international trade agreements and other market access obligations. Since 2000, the program has addressed more than 600 foreign standards–related trade issues. Thus far in 2011, the program has initiated 39 standards-related trade barrier investigations, 11 of them on behalf of small and medium-sized enterprises, and has successfully reduced or removed 17 obstacles to U.S. exporters and workers.
The program provides a one-stop trade complaint center that makes it easy for U.S. firms to obtain U.S. government assistance in reducing or eliminating foreign trade barriers that obstruct their market access abroad. To access the complaint center, visit the Trade Compliance Center website and “Report a Trade Barrier,” or call the Trade Information Center, tel.: 1-800-USA-TRAD(E) (1-800-872-8723), and ask for trade barrier assistance.
The company’s difficulties began in early 2009, when authorities in Taiwan temporarily halted a shipment of gases secured in tube trailers by claiming that the trailers were no longer acceptable for transporting the specialty gases within Taiwan. Taiwan would only allow bulk gases shipped in trailers that complied with a unique Japanese national standard. This decision would lock Air Products out of its lucrative market in Taiwan with a potential loss of $50 million in annual sales.
“Taiwan’s mandatory technical requirements unnecessarily limited U.S. access to this market,” noted Joe Wereszynski, an international trade specialist with the International Trade Administration (ITA) who worked on this issue. “Many other countries accept the U.S. DOT standards and consider these standards as conforming to a high level of safety.”
Engagement and World Trade Organization Leverage
Wereszynski and Simon Kim, another international trade specialist in ITA, were briefed on the situation by officials at the American Institute in Taiwan and were asked if ITA could assist in resolving the problem. To Department of Commerce officials, the problem seemed like a possible technical barrier to trade, a type of situation addressed in trade agreements of the World Trade Organization (WTO) that lay out obligations that all WTO members must comply with. They concluded that one of the agreements, the WTO’s Agreement on Technical Barriers to Trade, could be used as a framework for discussion.
This agreement, which Taiwan is obliged to comply with as a WTO member, requires that a WTO member’s product mandatory standards, also called technical regulations, be no more restrictive of trade than necessary to achieve the government’s legitimate purpose and that positive consideration be given by the government to accepting the mandatory product standards of other WTO members, provided the standards adequately fulfill the safety objectives of their own regulation.
Within one month, Wereszynski, Kim, a team of other experts from ITA’s Trade Agreements Compliance Program, and representatives of other U.S. government agencies worked with Air Products to develop an action plan for resolving the barrier. They then met with Taiwan’s authorities, reminded them of Taiwan’s obligation under the WTO’s Agreement on Technical Barriers to Trade to avoid overly trade-restrictive technical regulations, and asked Taiwan to consider a more trade-facilitative alternative. They also engaged Taiwan’s regulatory authorities in the discussions by raising the implications of their regulatory policy on trade and by posing questions to see if Taiwan’s tube trailer requirements might be made consistent with the provisions of the WTO agreement.
In addition, Ira Kasoff, then deputy assistant secretary for Asia in the Department of Commerce, also addressed the issue with Taiwan’s authorities during a trip to Taipei in April 2009.
Regained Market Access
Several weeks later, Taiwan officially accepted both the U.S. DOT and Japanese standards for the transport of gas. As a result, Air Products regained market access in one of its most important foreign markets.
The provisions of the WTO agreement were crucial in resolving this matter. “It provided additional leverage in urging the authorities in Taiwan to formally accept the DOT–approved tube trailers as they had in the past,” noted Wereszynski.
The swift response from the team at the Department of Commerce helped to prevent major disruptions to Air Products’ business and to successfully remove this trade barrier. Now all U.S. exporters of tube trailers built to DOT standards have access to Taiwan’s market.
According to John E. McGlade, chair, president, and chief executive officer of Air Products, in a letter to the Department of Commerce, the role of the ITA team was crucial to this successful effort. “Without the expert advocacy skill of [ITA’s] staff, it certainly appears that this business opportunity may have been denied us.… We appreciate [ITA’s] assistance in protecting our business opportunities.”
Trade policy advocacy is among the key strategies deployed by ITA to expand and defend market access for U.S. goods and services overseas. According to Michael Camuñez, assistant secretary for market access and compliance, “We employ such trade policy advocacy to resolve trade barriers and leverage our bilateral and multilateral trade agreements. This government-to-government action helps ensure that our trading partners live up to their commitments and was particularly effective in this instance.”
Steve Williams is a team lead for operations in the International Trade Administration’s Market Access and Compliance unit. Joe Wereszynski, an international trade specialist in International Trade Administration’s Trade Compliance Center, and Lisette Bez, an International Trade Administration intern, collaborated in the writing of this report.
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