USTR Releases Proposed Budget for 2023

On April 1, 2022, the Office of the US Trade Representative (“USTR”) submitted its Budget Justification for Fiscal Year 2023 to Congress. The document details the funding requirement for the USTR and how that money will be allocated. More importantly, it sets out USTR’s “strategic objectives, accomplishments, and measurements for success for the upcoming fiscal year.”¹ USTR is requesting $76.54 million, an increase of $6.54 million from its Fiscal Year 2022 budget.

In its Budget Justification, USTR argues that its funding “must enable USTR to harness US trade relationships to help the [Biden] Administration revitalize the economy.” According to the proposal, one of the “[t]wo main trade concerns for President Biden [is] confronting China[.]”² Specifically, the proposal states that the United States is “negotiating with allies to set global trading rules to counter China’s growing influence of unfair trading practices[.]”³ Key issues include “overcapacity, subsidization, disciplines on China’s state-owned enterprises, and cyber theft.”⁴

USTR set out six goals for Fiscal Year 2023, two of which are of particular relevance to US-China trade relations:

1. Opening foreign markets and combatting unfair trade. Objectives under this goal include “[p]ursu[ing] strengthened enforcement to ensure that China lives up to its existing trade obligations,” and “address[ing] gaps that exist in international trade rules . . . and address[ing] widespread human rights abuses of the Chinese Government’s forced labor program in the Xinjiang Uyghur Autonomous Region and elsewhere,” as alleged by the US.⁵ USTR says it will target China’s “state-led policies and practices” and will use “a full range of trade tools to ensure that China treats US companies and US exports fairly.”⁶ In addition, USTR will continue to work with, and enhance its engagement with, “like-minded trading partners,” including Japan, the EU, the UK, Canada, and Australia, to address Chinese trade policies and practices that the United States finds problematic, including non-market policies and practices.⁷ USTR also plans to “[s]eek fundamental changes to China’s state-led and non-market trade regime” and will continue to push China to “adopt international best practices.”⁸ In addition, while China is not specifically mentioned, USTR states that it will continue to “engag[e] with key trading partners in the Asia-Pacific region . . . sub-Saharan Africa, [and] the Middle East and North Africa,” with an aim at “promoting US services and investment objectives [and] strengthening protections and enforcement of intellectual property rights,”⁹ and that it plans to promote its objectives through the Asia-Pacific Economic Cooperation (“APEC”).¹⁰

Other objectives under this goal include “opening foreign markets to US manufactured goods, agricultural products, and services” and “building world-class products for export to foreign markets;” using USTR and other government resources to “break down foreign trade barriers and promote fair trade;” “defend[ing] US producers by enforcing global agricultural trade rules and promoting the adoption of science and risk-based sanitary and phytosanitary measures;” and reforming the WTO by, among other initiatives, pushing for WTO rules that “combat non-market policies and practices.”¹¹

2. Fully enforcing US trade laws, monitoring compliance with agreements, and using all available tools to hold other countries accountable. Similar to the first goal, this goal targets, among other issues, unfair trade practices in non-market economies, protecting US intellectual property rights, and forced labor and exploitative labor conditions.¹² It also targets “gaps that exist in international trade rules on subsidies [and] state enterprise competition.”¹³ Other objectives include enforcing US rights under trade agreements and “promot[ing] the acceptance of international standards developed in the United States and acceptance of the results of US conformity assessment bodies.”¹⁴ In addition, USTR aims to “[c]ollaborate with allies and like-minded countries to address global distortions created by industrial overcapacity in sectors ranging from steel and aluminum to fiber optics, solar, and other.”¹⁵

Among the many measures by which USTR states it will accomplish its objectives under the second goal, the USTR states that it will continue to implement responsive actions, “as appropriate,” in connection with the Section 301 investigation of China, and “press China to address its excess capacity in industrial sectors, particularly steel and aluminum[.]” USTR also states that it will target China’s WTO obligations—specifically, holding “China fully accountable for strict adherence to” those obligations—through various WTO mechanisms. USTR also singles out the Memorandum of Understanding addressing the importation and distribution of films for theatrical release in China, saying it will monitor and ensure China’s “full compliance” and seek “meaningful compensation in the United States.”¹⁶

While not focused on China, USTR’s third goal (developing and implementing innovative policies to advance the President’s trade agenda) is still relevant to the US-China trade relationship. Under this goal, USTR’s focus includes the global health and economic recovery from COVID-19, improvement of labor and environmental standards, and supporting public health improvements. As such, objectives include securing the United States’ “long-term supply chain resiliency for equipment and supplies critical to” public health; creating a worker-centered trade policy that targets, among other issues, force labor and exploitative labor conditions, as well as increased global supply chain transparency and accountability; and “[l]everag[ing] . . . trade relationship to” address climate change.¹⁷ Among other measures, USTR states that it will “advance trade facilitation for reverse supply chain products and intermediaries” and promote the United States’ climate priorities through its membership in APEC.¹⁸

USTR’s three other goals for next fiscal year are 1) Developing equitable trade policy through inclusive processes; 2) Effectively communicating the President’s trade agenda; and 3) Achieving organizational excellence as a model employer. These goals are mostly domestically focused, but USTR does plan to “[i]dentify and explore opportunities for trade policy and practices, especially in emerging sectors where the United States has the potential to be competitive,” to expand US-based jobs.¹⁹

The Budget Justification also includes USTR’s Annual Performance Report for Fiscal Year 2021, and sets out how the requested budget will be allocated among various costs.

To learn more, you can find a copy of the Budget Justification here.

¹ https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/april/ustr-releases-fiscal-year-2023-congressional-budget-justification

² https://ustr.gov/sites/default/files/USTR FY 2023 Congressional Budget Justification_Final.pdf, p.1.

³ Id.

⁴ Id. 

⁵ Id. at 14.

⁶ Id.

⁷ Id. at 15.

⁸ Id.

⁹ Id. at 13-15.

¹⁰ Id. at 20.

¹¹ Id. at 13.

¹² Id. at 23.

¹³ Id.

¹⁴ Id.

¹⁵ Id. at 24.

¹⁶ Id. at 25.

¹⁷ Id. at 30.

¹⁸ Id. at 31.

¹⁹ Id. at 32.