Resolution of NTBs in Bilateral Trade Agreements – Lessons from the U.S.-Korea Free Trade Agreement and a Model for Market Access in the Twenty-First Century

Abstract

The incredible success of the World Trade Organization (WTO) and bilateral Free Trade Agreements in reducing tariffs has shifted the battle for market access in the twenty-first century. Countries that seek to protect their markets now must resort to non-tariff barriers (NTBs). Unfortunately for exporters, NTBs are elusive and it is difficult to prove the illegality of a measure within the confines of the standard dispute settlement system. This article draws upon lessons from the U.S.-Korea FTA (KORUS) and the current political climate and concludes that the United States must develop a new framework to address NTBs to trade within bilateral trade agreements. It is proposed that an NTB Resolution Mechanism be included within U.S. bilateral trade agreements. The NTB Resolution Mechanism should build on proposals at the WTO that require that NTBs be examined within 60 days and focus on the trade restrictiveness—and not the legality—of the measure. However, the Congressional Proposal to Open Korea’s Automotive Market makes it clear that the NTB Resolution Mechanism must have teeth to assure exporters that trade barriers will be addressed. One option is to include the Korea trade agreement’s “snap-back” provision within the NTB Resolution Mechanism. Next, the NTB Resolution Mechanism should allow for a private right of action. Exporters are concerned that the U.S. government may not take up their cause over discrete NTBs in otherwise complicated bilateral relationships. A private right of action would guarantee that all companies with market access problems are heard. Finally, a continuous monitoring platform should be created that documents NTBs. The platform would exist within U.S. bilateral trade agreements and would be built upon the principles of current structures that document trading difficulties. The platform would provide a formal channel to raise NTBs and ratchet up pressure to remove the barriers. The platform would also provide a channel to build evidence prior to engaging the NTB Resolution Mechanism. Market access is the issue that drives corporate support for liberalization of international trade. The United States must build structures within its trade agreements that can adequately address market access inhibitors like NTBs. Without these structures, agreements like KORUS will not be ratified by a Congress that is increasingly skeptical of liberalized trade, and the United States will fall further behind in global trade agreements.