. /.  WORLD TRADE  
ORGANIZATION  WT/L/548 
4 December 2003 
 (03-6445) 
General Council 
15, 16 and 18 December 2003 Original:   English 
 
 
 
UNITED STATES – FORMER TRUST TERRITORY OF THE PACIFIC ISLANDS 
 
Report of the Government of the United States under the Decision of 14 October 19961 
  
 The following communication, dated 2 De cember 2003, has been received from the 
Permanent Mission of the United States.   
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1. Introduction 
1. On 14 October 1996, the United States was grante d a renewal of the wa iver (WT/L/183) from 
its obligations under paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit the 
United States Government to provide preferential treat ment for eligible imports into the United States 
from the Marshall, Caroline and Mariana Islands (oth er than Guam), formerly part of the Trust 
Territory of the Pacific Islands (TTPI).  Th is waiver was extended until 31 December 2006. 
2. Under the terms of this waiver, the United States is required to  submit to the General Council 
an annual report on the implementation of the trade -related provisions of the programme with a view 
to facilitating the annual review pr ovided for in paragraph 4 of Artic le IX of the WTO Agreement.  
This report covers the calendar year 2002.  Trade data has been provided for calendar year 2001, the 
most recent year for which full-year data is available. 
2. Preferential Treatment for the Former Tr ust Territory of the Pacific Islands 
3. With the entry into force in 1986 of the Covenant establishing the Commonwealth of the 
Northern Mariana Islands, and the Compacts of Fr ee Association with the United States for the 
Republic of the Marshall Islands, th e Federated States of Micronesia, and in 1994 of the Compact of 
Free Association with the United States for the Re public of Palau, the Trusteeship of the Pacific 
Islands, established on 2 April 1947, was terminated.  United States law provides for the continuation 
of the preferential trade treatment granted these islands under the Trusteeship.  These preferences are 
similar to historical preferences the United St ates provides the US Virgin Islands, Guam and 
American Samoa, which were US possessions on 1 Ju ly 1939 and which are included in Annex D to 
Article I of the GATT 1994.  The primary purpose of this preference system has been to promote the 
expansion of trade and the economic development of the beneficiaries in a manner consistent with the 
objectives of the GATT and with the trade, financ ial and development needs of the beneficiary 
countries. 
4. Under General Note 3(a)(iv) and 10 of the Harmonized Tariff Schedule of the United States, 
duty-free treatment is accorded to all products of the former TTPI, with some exceptions.  Watches 
                                                     
 
1 WT/L/183. WT/L/548 
Page 2  
 
and watch movements, and certain fishery products  are subject to quantity limitations, and buttons, 
certain textile, apparel, footwear and luggage products are subject to duty in some or all of the former 
TTPI.  Duty-free treatment is only accorded to the in-quota quantit y of the agricultural products 
subject to a tariff-rate quota.   
3. Performance 
5. A very small volume of production and trade is involved in this progra mme.  Taken together, 
US imports from the Republic of the Marshall Islands,  the Republic of Palau, the Federated States of 
Micronesia and the Commonwealth of the Northern Mariana Islands total ab out US$900 million or 
about one-tenth of one per cent of US imports:  abou t 20 per cent is eligible for tariff preferences.  
However, the United States is an important market  for these islands, as the destination of nearly 50 
per cent of total exports. 
6. The Commonwealth of the Mariana Islands, with  a far larger economy than its three island 
neighbours, is far and away the largest exporter, res ponsible for almost 95 per cent of total exports to 
the United States from the former TTPI.  The Federated States of Micronesia and the Republic of Palau were the next largest exporters in 2002, followed by the Republic of the Marshall Islands. 
7. The following table provides summary information on US imports from the former Trust 
Territory of the Pacific Islands for 1993-2002. 
 
Table 1  
 
US Imports from the Former Trust Territory of the Pacific  Islands
 
 
(Values in millions of dollars) 
 
Source 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
 
Total US Imports 
 581 663 744 795 871 1,013 
1,085 1,059 967 856
Republic of the Marshall Islands  
 1 18 1 1474 1 0  569
Federated States of Micronesia  
 14 13 13 11 12 13 10 14 21 15
Republic of Palau  
 1 3 6 9 13 14 16 14 15 15
Commonwealth of the Northern 
Mariana Islands 308 332 428 556 799 980 1,049 1,026 925 817
 
 
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