. /.WORLD TRADE
ORGANIZATIONWT/L/418
18 September 2001
(01-4396)
General Council
10 October 2001Original:  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 10 September 2001, 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 granted a renewal of the waiver (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 tr eatment 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).  This 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 trad e-related provisions of the programme with a view
to facilitating the annual review provided for in  paragraph 4 of Article IX of the WTO Agreement.
This report covers the calendar year 2001.  Trade data has been provided for calendar year 2000, the
most recent year for which full-year data is available.
2. Preferential Treatment for the Former Trust Territory of the Pacific Islands
3. With the entry into force in 1986 of the Cove nant establishing the Commonwealth of the
Northern Mariana Islands, and the Compacts of Free Association with the United States for the
Republic of the Marshall Islands, the Federated States of Micronesia, and in 1994 of the Compact of
Free Association with the United States for the Republic of Palau, the Trusteeship of the Pacific
Islands, established on 2 April 1947, was terminated.  United States law provides for the continuationof the preferential trade treatment granted these islands under the Trusteeship.  These preferences are
similar to historical preferences the United States provides the US Virgin Islands, Guam and
American Samoa, which were US possessions on 1 July 1939 and which are included in Annex D to
Article I of the GATT 1994. The primary purpose of th is preference system has been to promote the
expansion of trade and the economic development of the beneficiaries in a manner consistent with theobjectives of the GATT and with the trade, financial and development needs of the beneficiary
countries.
4. Under General Note 3(a)(iv) 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
                                                     
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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 quantity 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 programme.  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 about US$1.1 billion or
about one-tenth of one per cent of US imports:  about 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, responsible for almost 97 per cent of total exports to
the United States from the former TTPI. The Republic of Palau and the Federated States of
Micronesia were the second largest exporters in 2000,  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 1993-2000.
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
Total US Imports 581 663 744 795 871 1,013 1,085 1,059
Republic of the Marshall Islands 11 8 13 4 7 6 10 5
Federated States of Micronesia 14 13 13 11 12 13 10 14
Republic of Palau 1 3 6 9  13 14  16  14
Commonwealth of the Northern
Mariana Islands308 332 428 556 799 980 1,049 1,026
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