WASHINGTON — This week, U.S. Sens. Bob Casey, D-Pa., Sherrod Brown, D-Ohio, and Elizabeth Warren, D-Mass., are introducing legislation to reduce the United States’ dependency on foreign supply chains and non-market economies.
The senators are introducing the Market Economy Sourcing Act, which would limit non-market economies (NME) from free-riding on future United States trade agreements. This legislation would establish a supplemental rule of origin — used to determine if products are eligible for duty-free or reduced duties under free trade agreement rules — to limit the content from non-market economies that can be included in FTA qualifying goods. The senators also sent a letter to U.S. Trade Representative (USTR) Katherine Tai, urging her to take action under her own authority to curb this issue and to highlight the need to address content from non-market economies in our critical U.S. supply chains, and procurement.
“It is vital to U.S. trade interests that we engage with economies that play fair and respect market principles. For too long, China and other non-market economies have been able to free-ride on our trade agreements, hurting working Americans and our supply chain security,” said Casey. “I believe USTR Tai can take this type of action on her own authority. I hope Ambassador Tai will consider incorporating both strong rules of origin and supplemental rules of origin related to content from non-market economies in any future trade agreement, as well as a full review of existing rules of origin, across the board. By limiting the ability of non-market economies to free ride on trade agreements and procurement agreements, this measure will help ensure we are promoting trade and supply chains from like-minded democracies and allies and that our trade laws support market principles and fair competition in the global economy.”
The Market Economy Sourcing Act would establish a limit on the amount of content that can come from non-market economies, shifting dependence away from NMEs, like China. On average, half of content under existing rules of origin can come from countries outside of those participating in a trade agreement. This means a significant share of content for goods receiving preferential market access under a trade agreement can come from communist countries, like China. The Market Economy Sourcing Act proposes a phase-out period to reduce these countries’ involvement.