RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/88
15 August 2001
(01-3966)
Trade Policy Review Body
TRADE POLICY REVIEW
UNITED STATES
Report by the Secretariat
This report, prepared for the sixth Trade Policy Review of the United States, has
been drawn up by the WTO Secretariat on its own responsibility.  The
Secretariat has, as required by the Agreement establishing the Trade Policy
Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the
World Trade Organization), sought clarification from the Government of the
United States on its trade policies and practices.
Any technical questions arising from this report may be addressed to
Catherine Hennis-Pierre (tel:  739 5640) or Raymundo Valdés (tel:  739 5346).
Document WT/TPR/G/88 contains the policy statement submitted by the
Government of the United States
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on the United States.United States WT/TPR/S/88
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS xi
I. ECONOMIC AND POLICY DEVELOPMENTS xiII. MARKET ACCESS IN GOODS xii
(1) T
ARIFFS xii
(2) C ONTINGENCY MEASURES xiii
(3) O THER IMPORT MEASURES xiii
III. EXPORT MEASURES xiv
IV. OTHER POLICIES AFFECTING TRADE xivV. ACCESS CONDITIONS IN SERVICES xv
I. RECENT ECONOMIC DEVELOPMENTS 1
(1) O
UTPUT , EMPLOYMENT AND PRICES 1
(2) M ONETARY AND EXCHANGE RATE POLICIES 4
(3) F ISCAL POLICY 5
(4) B ALANCE OF PAYMENTS 6
(i) Merchandise trade 7(ii) Trade in services 8(iii) Foreign direct investment 10
(5) O
UTLOOK 11
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY 13
(1) R ECENT LEGISLATIVE ACTIVITY 13
(2) P ARTICIPATION IN THE WTO 14
(i) Agri-food trade negotiations 14(ii) Trade in services 15
(iii) Electronic commerce 15
(iv) Trade and the environment 16(v) Competition policy 17(vi) Trade and labour standards 17(vii) WTO dispute settlement 18
(3) P
REFERENTIAL AND OTHER ARRANGEMENTS 18
(i) Relations with Canada and Mexico 18
(ii) Bilateral agreements 20(iii) Unilateral preferences 20(iv) Developments in other fora 21
(4) I
NVESTMENT POLICIES 22
(i) Foreign direct investment 22
(ii) International investment policy 22
III. TRADE POLICIES AND PRACTICES BY MEASURE 24
(1) M EASURES DIRECTLY AFFECTING IMPORTS 24
(i) Tariffs and other charges affecting imports 24(ii) Anti-dumping, countervailing and safeguards actions 32WT/TPR/S/88 Trade Policy Review
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Page
(iii) Quantitative restrictions on imports 42
(iv) Government procurement 43(v) Standards, technical regulations and sanitary requirements 47
(2) E
XPORT MEASURES 52
(i) Measures related to agri-food exports 52
(ii) Activities of the Ex-Imbank and other credit agencies 54
(iii) Fiscal concessions in support of exports 57(iv) Section 301 and related actions 59(v) Export restrictions and controls 60
(3) O
THER MEASURES AFFECTING PRODUCTION AND TRADE 63
(i) Government support to business 63
(ii) Competition policies 70(iii) Intellectual property rights 74
IV. DEVELOPMENTS IN SELECTED SECTORS 85
(1) A
GRI-FOOD ACTIVITIES 85
(2) T EXTILES AND CLOTHING 85
(i) Restricted imports 87
(ii) Imports exempt from quotas 89(iii) Safeguards, disputes and other actions 91
(3) T
HE STEEL INDUSTRY 91
(4) THE SHIPBUILDING INDUSTRY 93
(5) M ARITIME TRANSPORT AND RELATED SERVICES 94
(i) International shipping services 94
(ii) Domestic shipping and other maritime services 96(iii) Ship repairs 96
(6) A
IR TRANSPORT SERVICES 97
(i) Recent developments 97
(ii) Further liberalization of air transport services 99
(iii) Conditions affecting foreign competition 100
(7) F INANCIAL SERVICES 101
(i) The Gramm-Leach-Bliley Act 101(ii) Banking services 103(iii) Securities services 105
(iv) Insurance services 106
(8) T
ELECOMMUNICATIONS SERVICES 111
(i) Licensing and competition 111(ii) International pricing arrangements 112(iii) Satellites services 114
(9) S
ELECTED PROFESSIONAL SERVICES 115
(i) Accounting services regulation 116
(ii) Developments regarding legal services 117
REFERENCES 119
APPENDIX TABLES 123United States WT/TPR/S/88
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CHARTS
Page
I. RECENT ECONOMIC DEVELOPMENTS
I.1 Imports and exports of services through cross-border and through majority-owned affiliates 9
1995-1999
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Tariff escalation for selected manufactured products, 2000 26
III.2 Anti-dumping duty orders in effect on 31 December 2000 36III.3 Countervailing duty orders in effect on 31 December 2000 37
III.4 Trends of food aid shipments and cereal prices, 1993-2000 55
III.5 Direct government payments, 1990-2000 65III.6 CCC Net outlays for selected commodities, 1997-2000 66III.7 Estimates of support to agriculture by the largest OECD agricultural exporters 67
TABLES
I. RECENT ECONOMIC DEVELOPMENTS
I.1 Selected macroeconomic indicators, 1996-01 2
I.2 Selected monetary and exchange rate indicators, 1996-01 5I.3 Selected fiscal indicators 6
I.4 Current and capital accounts, 1995-00 7
I.5 Major indicators of U.S. direct investment abroad (USDIA) and foreign direct investment 11
in the United States (FDIUS), by selected country and sector
I.6 U.S. economic projections for 2001-2011 (calendar year) 12
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
II.1 List of trade and investment agreements concluded since 1999 (and date of signature), March 2001 23
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Structure of applied MFN tariffs in the United States 25
III.2 Imports of products covered by tariff quotas, 1998-99 27III.3 Tariffs according to U.S. preferential agreements, 2000 30III.4 Anti-dumping investigations, 1980-00 34
III.5 Countervailing duty investigations, 1980-00 36
III.6 Suspension agreements in effect on 31 December 2000 39III.7 Five-year sunset review status, 1 July 1998-25 April 2001 40III.8 Ex-Imbank activities 56
III.9 Section 301 cases initiated or active from 1999-00 59III.10 Selected countries identified under Section 301 and related reports, 1999-00 61
III.11 Expenditure under selected agricultural support programmes (other than directly to exports) 68
May 2001
III.12 Antitrust statistics and case results, 1991-00 (fiscal years) 72III.13 Summary of mergers reported and actions taken (fiscal years 1990-99) 73III.14 Royalties and licence fees, 1995-00 74III.15 Summary of patent examining activities, 1995-00 (As of 30 September of each fiscal year) 76
III.16 U.S. patent applications by non-U.S. residents, and patents issued ten main countries, 77
FY 1997-00
III.17 Summary of trademark examining activities, 1995-00 (As of 30 September of each fiscal year) 79WT/TPR/S/88 Trade Policy Review
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IV DEVELOPMENTS IN SELECTED SERVICES SECTORS
IV.1 Imports for consumption (customs value) of textiles and clothing under selected import regimes 86
IV.2 Value of U.S. imports of textiles and clothing covered by the four phases of integration 88
of the ATC, by origin 2000
IV.3 Main indicators of the U.S. steel industry, 1997-00 92
IV.4 U.S. steel imports by country, volume and value, 1999-01 93
IV.5 Selected measures affecting services suppliers, November 2000 109
APPENDIX TABLES
I. RECENT ECONOMIC DEVELOPMENTS
AI.1 US imports (c.i.f.) by commodity, 1995-00 125
AI.2 US exports and re-exports (f.o.b.) by commodity, 1995-00 126AI.3 US imports (c.i.f.) by trading partner, 1995-00 127
A1.4 US exports and re-exports (f.o.b.) by trading partner, 1995-00 128
AI.5 Private services trade by type, 1998-00 129
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
AII.1 Status of dispute-related WTO matters involving the United States, January 1999-March 2001 130United States WT/TPR/S/88
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ACRONYMS
AFL American Federation of Labour
AGOA African Growth and Opportunity Act
AICPA American Institute of Certified Public Accountants
AIPA American Inventors Protection ActALERT Accelerated Licensure Evaluation and Review TechniquesAMS Aggregate Measurement of Support
ANSI American National Standards Institute
APEC Asia-Pacific Economic CooperationAPHIS Animal and Plant Health Inspection ServiceATAP Agreement on Trade in Agricultural Products
ATO Air Traffic Organization
ATPA Andean Trade Preference ActBEA Bureau of Economic AnalysisBSE Bovine Spongiform Encephalopathy
BTA WTO Basic Telecommunications Agreement
BXA Bureau of Export AdministrationCARP Copyright Arbitration Royalty PanelCBERA Caribbean Basin Economic Recovery Act
CBI Caribbean Basin Initiative
CBTPA Caribbean Basin Trade Partnership ActCCC Commodity Credit CorporationCCF Capital Construction Fund
CCL Commerce Control List
CIO Congress of Industrial OrganizationCPA Certified public accountantCRS Computer reservation systemDEIP Dairy Export Incentive Programme
DOJ Department of Justice
DOT Department of TransportationEEP Export Enhancement ProgramELP Emergency market loss payments
EPA Environmental Protection Agency
Eximbank Export-Import Bank of the United StatesFAA Federal Aviation AdministrationFAIR Act Federal Agriculture Improvement and Reform Act
FAS Foreign Agricultural Service
FASB Financial Accounting Standards BoardFCC Federal Communications CommissionFDA Food and Drug Administration
FFP Food, feed or processing
FHC Financial holding companyWT/TPR/S/88 Trade Policy Review
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FLG Foreign legal consultant
FMC Federal Maritime CommissionFMD Foot and Mouth Disease
FOMC Federal Open Market Committee
FTAA Free-trade area of the AmericasFTC Federal Trade CommissionGAAP Generally accepted accounting principlesGLB Act Gramm-Leach-Bliley Act
GMO Genetically modified organism
GSA General Services AdministrationGSP Generalized System of PreferencesHSR Act Hart-Scott-Rodino Antitrust Improvements Act
IASC International Accounting Standards Committee
IATA International Air Transport AssociationICSID International Center for the Settlement of the Investment DisputesIDCP International Dolphin Conservation Program
IEC International Electrotechnical Commission
IIB Institute of International BankersILSA Iran and Libya Sanctions ActINMARSAT International Maritime Satellite System
INTELSAT International Telecommunications Satellite Organization
ISO International Organization for StandardizationISP International Settlements PolicyISPs Internet service providers
LDP Loan Deficiency Payments
LMO Living modified organismMARAD Maritime Administration of the Department of TransportationMAT Maritime shipping, commercial aviation, space launching and freight
MEA Multilateral Environmental Agreement
MMPA Marine Mammal Protection ActMSP Maritime Security ProgramNAALC North American Agreement on Labour Cooperation
NAFTA North American Free-Trade Agreement
NAIC National Association of Insurance CommissionersNASA National Aeronautics and Space AdministrationNASBA National Association of State Boards of AccountancyNASDA National Association of State Development Agencies
NATO North Atlantic Treaty Organization
NIST National Institute of Standards and TechnologyOCC Office of the Comptroller of the CurrencyOECD Organization for Economic Cooperation and Development
OFAC Office of Foreign Asset Control
OSA Open skies agreementsUnited States WT/TPR/S/88
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OSRA Ocean Shipping Reform Act
OTEXA Office of Textiles and ApparelPCT Patent Cooperation Treaty
PFC Production Flexibility Contract
PL Public LawPNTR Permanent Normal Trade RelationsPSE Producer Support EstimateSCGP Supplier Credit Guarantee Programme
SCP Standing Committee on the Law of Patents
SEC Securities and Exchange CommissionSSA Sub-Saharan AfricanTCAA Trans-Atlantic Common Aviation Area
TDA Trade and Development Act
TIFA Trade and Investment Framework AgreementTLT Trade Mark Law TreatyTLTIA Trade Mark Law Treaty Implementation Act
TMEP Trade Mark Manual of Examining Procedures
TSE Total Subsidy EquivalentUNICTRAL United Nations  Center for International Trade and LawUSDA U.S. Department of Agriculture
USITC U.S. International Trade Commission
USPTO U.S. Patent and Trade Mark OfficeUSTR U.S. Trade RepresentativeVRA Voluntary Restraint Agreement
WAMLAP Wool and mohair loss assistance programme
WCT WIPO Copyright TreatyWPPT WIPO Performances and Phonograms TreatyUnited States WT/TPR/S/88
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SUMMARY OBSERVATIONS
1. The United States maintains one of the
world’s most open and transparent trade and
investment regimes, although in a few
important areas significant barriers to market
access persist.  These directly affect globaltrade as the United States is both the world’s
largest single economy and trader.  Reducing
such remaining barriers would be in line with
traditional U.S. support for liberalization and
pro-competitive policies, further increasingthe otherwise high efficiency of its economy,
and benefitting domestic consumers and
taxpayers.  It would also lessen distortions in
global markets, frictions with trading partners
and strengthen the multilateral trading system.These considerations are particularly
poignant in the face of the present global
economic downturn and possible protectionist
pressures that might result.
2. Since the previous U.S. Review in July
1999, U.S. trade policies and practices have
remained mostly unchanged.  Modificationscarried out during the period include market-
access improvements granted to certain
developing countries and the consolidation of
domestic financial regulations.  Also since
1999, government payments to agri-foodproducers have risen while the share of steel
products in all anti-dumping, countervailing
and safeguard measures has increased.
Significant barriers to foreign competition
have remained in areas like textiles andclothing, transport and some services sectors.
The new Administration’s response to these
policy challenges will be important to global
trade and welfare.
I. ECONOMIC AND POLICY
DEVELOPMENTS
3. Since its last Review, U.S. monetary
and fiscal policies have been relaxed to
address the recent significant slowdown in
economic growth, which had fallen to an
annual rate of around 1% by mid-2001, from
5% in 2000.  This slowdown was led bydeclines in inventories and exports.  Consumer
expenditure has remained strong but importshave fallen considerably.  The six interest
rate cuts made in the first half of 2001 are
being accompanied by tax cuts estimated at
US$1.35 trillion over an 11-year period, made
possible, to a large extent, by the budget
surpluses of recent years.  Although inflationhas picked up, it does not appear a significant
issue at this time.
4. The U.S. current account deficit has
widened over the review period to 4.5% of
GDP in 2000, financed by capital inflows,particularly investment inflows.  These inflows
have been a factor in the continued nominal
strength of the U.S. dollar.  Although this is
placing pressure on domestic industries, rapid
productivity gains over much of the pastdecade have, by and large, allowed firms to
remain competitive vis-à-vis foreign
producers.
5. A number of steel producers filed for
bankruptcy in the early stages of the economic
downturn.  Responding to a perceived crisis
in the industry, the President announced inJune 2001 a policy initiative that includes the
initiation of a safeguard investigation (see
below);  it also foresees negotiations with
trading partners to eliminate global excess
capacity and to agree on rules to govern steeltrade, with a view to eliminating subsidies.
This initiative echoes the multilateral
consensus sought a decade ago under the
GATT.
6. The President has reiterated the U.S.
commitment to an open, transparent and
effective system of international trade
disciplines and procedures, and has committed
support for a new multilateral round of
negotiations.  The President also announcedthe 2001 International Trade Agenda, seeking,
inter alia, improved market opportunities for
U.S. exports and investment, including
agriculture, services and intellectual property.
The Agenda contains a "Labor and
Environmental Toolbox" of actions that could
be taken to promote labour and environmentalobjectives.WT/TPR/S/88 Trade Policy Review
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7. In the current WTO mandated
agricultural negotiations, the United States
has proposed long-term agricultural trade
liberalization, in particular by reducing tariffs
and expanding tariff quotas, eliminating
export subsidies and reducing trade-distortingdomestic support.  Also, as the world's largest
producer and exporter of foods containing
genetically modified organisms, the United
States has expressed concern about trade
restrictions on these products.
8. In the ongoing services negotiations,
the United States has proposed the further
liberalization of 11 sectors under the GATS;
and presented a proposal on the movement of
natural persons.  The United States supports aglobal electronic commerce framework free of
customs duties, and is debating with partners
the issue of domestic taxation of these
services.
9. In addition to WTO negotiations, the
U.S. trade agenda includes negotiations for a
Free-Trade Area of the Americas Agreementand for bilateral free trade agreements (FTAs)
with Chile, Jordan and Singapore.  FTAs are
already in force with Canada, Israel and
Mexico that provide for qualifying imports to
enter the U.S. market mostly duty-free and, inthe case of textiles and clothing, quota-free.
Reflecting these preferences and their
geographic proximity, Canada and Mexico are
now the United States’ two largest trading
partners.
10. To help implement the
Administration’s trade initiatives, the
President is seeking Trade Promotion
Authority, a successor to "fast-track"
authority.  U.S. trading partners are likely toattach great significance to the outcome of
these efforts.
II. MARKET ACCESS IN GOODS
(1) T
ARIFFS
11. The United States accords MFN tariff
treatment to all but six countries, including a
WTO Member (Cuba).  Legislation has beenpassed granting China unconditional MFN
status upon its accession to the WTO, thereby
terminating the process of annual renewal of
China's MFN treatment.  Denial of MFN
treatment may impose significant costs on a
trading partner, as the United States retainssubstantial differences between MFN and non-
MFN tariffs.
12. Most imports either enter the United
States duty free or are subject to low tariffs,
all except two of which are bound.  In 2000,the average MFN rate stood at 5.4% for
all goods, 10.6% for agri-food products
and 4.5% for non-agricultural products.
Nearly one third of all tariff rates are zero.
Non-ad valorem rates represent nearly 13% oftariff lines;  the ad valorem equivalents of the
U.S. specific and compound rates average
11.5% and mask relatively high levels of
protection.  The highest tariffs apply mainly to
imports of agri-food and tobacco products, as
well as clothing, textiles and footwear.  In
these industries tariffs tend to increase withthe degree of processing.
13. Tariff quotas apply to imports of beef,
dairy products, sugar and some sugar
products, peanuts, tobacco and cotton.  The
simple average in-quota MFN tariff rate for2000 was 9%, while the corresponding out-of-
quota averaged 53%.  Out-of-quota tariffs,
ranging up to 350%, may act as import
prohibitions.  Some in-quota volumes,
including beef, dairy products, and peanuts,are reserved for selected countries.
14. The United States extends tariff
preferences unilaterally to certain Andean,
African and Caribbean countries, as well as
under its Generalized System of Preferences.These preferences can be made conditional to
policy changes in the beneficiary countries in
areas such as protection of labour rights and
of intellectual property.
15. Significant benefits are likely to
accrue to countries in sub-Saharan Africa and
the Caribbean from the U.S. Trade andDevelopment Act (TDA) of 2000, which
contains both the African Growth andUnited States WT/TPR/S/88
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Opportunity Act, and the Caribbean Basin
Trade Partnership Act expanding the
Caribbean Basin Initiative.  Under the TDA,
textile and clothing imports from beneficiary
countries enter the United States duty-free and
quota-free, subject to content requirements onU.S.-produced inputs.  This provision should
ensure that U.S. input producers also benefit
from the arrangement, possibly at the expense
of lower-cost third-country suppliers.
(2) C
ONTINGENCY MEASURES
16. The United States continues to make
active use of anti-dumping (AD) and
countervailing (CV) measures.  The initiation
of AD investigations increased between 1998
and 2000, as did the number of new dutyorders.  Initiations of investigations may have
a chilling effect on trade, with preliminary
duties applied in most cases.  A large
percentage of investigations in the past two
years involved steel-related products.  A
number of suspension agreements have been
reached in recent years;  those with non-WTOMembers involve voluntary quantity restraints
and minimum prices.
17. The United States applied four
safeguard measures in the period 1998-2000,
involving agricultural or steel-relatedproducts.  A global safeguard investigation
covering certain steel products was initiated in
June 2001;  any ensuing measure would add
to the protection already afforded through AD
and CV orders.  Export restraints wereapplied to shipments of softwood lumber from
Canada until March 2001.
18. The Continued Dumping and Subsidy
Offset Act ("Byrd" Amendment), passed in
2000, requires proceeds from AD and CVduties to be distributed to affected U.S.
producers.  On passage of the Act, the
President noted that it would "provide select
U.S. industries with a subsidy above and
beyond the protection level needed to
counteract foreign subsidies, while providing
no comparable subsidy to other U.S. industriesor to U.S. consumers, who are forced to pay
higher prices on industrial inputs or consumergoods as a result of the anti-dumping and
countervailing duties".
19. Some of its trading partners question
in the WTO the methods used by the United
States to determine dumping and injury.  They
have also challenged the four safeguardmeasures applied since 1998 by the United
States, which has led to the revision of
relevant U.S. regulations.  In addition, both
the Byrd Amendment and the Anti-dumping
Act of 1916 have been brought before theWTO dispute- settlement mechanism.
Contingency measures generate uncertainty
for exporters, as well as considerable legal
costs in defending against them.
(3) O
THER IMPORT MEASURES
20. Quantitative import restrictions in the
United States are imposed mainly under the
provisions of the Agreement on Textiles and
Clothing.  Quotas apply to over half of
clothing imports and 32% of textile imports.
Over 1,000 quotas are applied to 45 countries,
including 37 WTO Members.  These measuresare combined with relatively high MFN tariffs.
21. Under the provisions of the Jones Act,
U.S. shipbuilders are the sole suppliers of
ships servicing U.S. domestic routes, resulting
in a de facto ban on imports of foreign-builtships for such purposes.
22. The United States maintains import
prohibitions for sanitary and phytosanitary
reasons, including as a response to risks posed
by Bovine Spongiform Encephalopathy (BSE)and Foot and Mouth disease (FMD).  In
February 2001, imports of beef and beef
products from Brazil were temporarily
suspended on concerns of BSE.  Since
March 2001, all used farm equipment fromFMD affected countries is denied entry into
the United States.
23. U.S. import restrictions enforce
domestic environmental provisions governing
the use of marine resources.  Thus an embargo
continues on tuna imports from countries the
United State deems not to be in complianceWT/TPR/S/88 Trade Policy Review
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with the International Dolphin Conservation
Program.  An import ban also applies to
shrimp harvested with technology that may
adversely affect certain sea turtles.
24. The United States maintains measures
that restrict foreign participation in publicprocurement.  Under the Buy American Act,
government agencies may in principle only
purchase supplies and construction materials
defined as "domestic end-products"
(manufactured in the United States with morethan 50% of U.S. components).  In addition, a
number of programmes seek to foster the
ability of small business to compete for federal
contracts.  Also, various set-aside schemes are
in place;  contracts awarded through theseschemes amounted to 8% of all federal
procurement awards in 2000.  These measures
are complemented in some States by Buy-In-
State regulations.
III. EXPORT MEASURES
25. A central objective of U.S. trade
policy is to expand markets for U.S. exporters.Instruments to achieve this aim include trade
statutes such as the Section 301 family of laws
– to address foreign measures deemed to affect
negatively U.S. exports or impair U.S. rights
under trade agreements – and exportassistance measures.
26. Section 301 has been used sparingly
since 1999.  Moreover, its use is closely tied to
multilateral dispute settlement, at least for
WTO members and in areas subject to WTOrules and disciplines.  Nevertheless,
investigations continued to be launched and
"reports" and "lists" published of countries
considered to be at fault.  The United States
also monitors foreign compliance withintellectual property agreements through
Special 301 investigations.  In the 2001
review, 51 countries were considered to deny
adequate protection of intellectual property or
fair market access to U.S. right holders.  To
determine infringement of U.S. intellectual
property rights, Section 337 investigations arealso conducted.27. The United States applied trade
sanctions against the European Union in the
wake of favourable WTO panels decisions in
disputes concerning bananas, and beef treated
with hormones.  Subsequently, the United
States enacted the "Carousel Amendment" tothe Trade Act of 1974 to allow periodical
changes in the list of products subject to trade
sanctions in case of non-compliance with
rulings made under multilateral rules.  This
has brought to the fore the question of theeffectiveness of trade sanctions as an
instrument to resolve trade disputes.
28. The United States has strongly
advocated reductions in subsidies affecting
competition in international markets.Accordingly, notified U.S. federal export
subsidies have declined (however, little
information is available on sub-federal
assistance programmes).  In agriculture,
notified export subsidies have been limited to
the dairy sector.  Moreover government export
financing schemes are relied upon for acomparatively low share of exports;  although
reduced, subsidized export credit guarantees
continue to support agri-food exports.  Large
volumes of food aid are designed to enhance
food security in the developing world, whilststabilizing U.S. farm income by disposing of
surplus stocks.
29. The export incentives resulting from
the U.S. tax exemptions on certain "foreign
trade" income of foreign sales corporationshas been under dispute in the WTO, and has
raised the debate about the role of Members'
taxation regimes in support of trade and
investment.
IV. OTHER POLICIES AFFECTING
TRADE
30. Trade restrictions imposed by the
United States for national security and foreign
policy reasons may be a source of concern for
some trading partners, particularly because of
the unilateral nature of certain such measures.
Trade sanctions are enforced against nearly30 foreign countries for various reasons (e.g.
arms proliferation, terrorism and workerUnited States WT/TPR/S/88
Page xv
rights).  Congress is considering reforms to
sanctions policy and to export controls.
31. Given the size of the U.S. economy,
subsidies and other assistance to domestic
producers can appreciably impact world
markets.  The U.S. agri-food sector is thelargest recipient of government outlays.  These
nearly tripled between 1997 and 2000,
exceeding the decline in the value of
agricultural output.  In 2000, nearly
US$30 billion was made available in directpayments to farmers and ranchers.  As a
result, direct payments amount to over one
half of net farm income.  In addition,
subsidized crop insurance programmes have
been expanded.  Assistance to non-agricultural sectors, notably fisheries, lumber
and timber, aeronautics and shipbuilding, is
provided mainly in the form of tax incentives.
32. In 1999 and 2000, U.S. competition
policy enforcement efforts led to the
imposition of record fines against
international price-fixing cartels.  The UnitedStates views the relationship between trade
and competition policy as of increasing
importance, but questions whether the WTO is,
at this time, the appropriate institution in
which to develop multilateral competitionrules.
33. Concerning the protection of
intellectual property, the American Inventors
Protection Act of 1999 aims to reduce patent-
processing delays, while the TechnologyTransfer Commercialization Act of 2000
includes provisions for a federal agency to
grant licences for federally owned inventions
only to licensees agreeing to manufacture
substantially the licence-related productswithin the United States.  New legislation to
restructure and extend the scope of the
compulsory licensing of the transmission and
broadcasting of television through satellite
was also introduced in 2000.
34. Competition policy considerations are
playing an increasingly visible role in tradeand investment matters in the United States
and elsewhere, and raise complex questionsabout the interaction of different policy
instruments.  Thus government assistance to
industries could run counter to basic pro-
competitive principles, as could the
inappropriate application of contingency
measures.  Indeed, as noted by the U.S.authorities, the use of the Byrd Amendment
would jeopardize consumer interests.  Similar
negative effects can arise when U.S.
rightholders prevent the parallel importation
of patented or copyright goods.
V. ACCESS CONDITIONS IN
SERVICES
35. Services are by far the largest
contributor to output in the U.S. economy.
The provision of services through foreigncommercial presence has continued to expand
in the United States, partly on account of
initiatives in the WTO to facilitate market
access through that mode of supply.  Recent
steps to remove domestic restrictions to
international trade in the services sector go
beyond commitments undertaken by the UnitedStates in the WTO and should improve
efficiency in the domestic economy.
36. In financial services, the entry into
force in 1999 of the Gramm-Leach-Bliley
(GLB) Financial Modernization Services Acthas further advanced the gradual
consolidation of U.S. financial regulation, and
definitively breaks from the restrictions
imposed under the 1933 Glass-Steagall Act on
affiliations between banks and securities firms.It should allow financial companies to realize
greater economies of scale and scope.  The
GLB does not alter the walls between banking
and commerce.
37. The United States maintains a policy
of national treatment towards foreign banks.
In other financial-services sectors, domestic
regulations may complicate foreign market
access, with public interest and investor
protection as the rationale.  In the insurance
sector, sub-federal regulation limits
competition from suppliers based in other U.S.States and a fortiori from abroad, unless theyWT/TPR/S/88 Trade Policy Review
Page xvi
establish a commercial presence in each State
where they wish to conduct business.
38. Maritime transport continues to rank
among the most protected sectors of the U.S.
economy.  Nevertheless, the recent Ocean
Shipping Reform Act enhanced competition inU.S. international shipping, accelerating the
shift away from rate-setting conferences.  The
U.S. international maritime transport market
is generally open to foreign competition,
although international cargoes carried byU.S.-flag vessels benefit from substantial
government assistance.  The current
Administration supports cabotage laws that
reserve domestic routes to U.S. operators.
39. The U.S. air transport industry, one of
the world's most efficient, relies mainly on
bilateral Open Skies Agreements to liberalize
trade.  Viewed by the United States as a cost-
efficient way for carriers to enter new markets,
several such agreements were signed over the
last two years.  These agreements, however,
do not fully liberalize the markets they cover;in particular, foreign ownership and control of
U.S. carriers remain restricted and the
provision of domestic air services is permitted
only to U.S. carriers.
40. The U.S. telecommunications sector is
the world's largest, and one of the most open
and competitive.  Since 1999, developmentsinclude new international pricing rules and
regulations designed to allow for more
competitive domestic and international
telecommunications services; and the further
privatization of satellite services.
41. In the case of professional services,
the U.S. federal system reserves the
governance of professions to individual states;
each state has its own licensing regulations
and licensing board to administer the
regulations.  In accounting, legal and mostother professions few changes have taken
place since 1999 affecting the conditions for
national and international firms to operate
across State lines.  The absence of a uniform
national regulatory regime, and divergentmarket access conditions across States
complicate inter-State supply and foreign
market access.  Meanwhile, the growing
demand for integrated services from multi-
disciplinary practices has underpinned
debates about revising rules regarding
auditors' independence, fee-sharingpartnerships between lawyers and accountants
and the use of International Accounting
Standards.