WORLD TRADE
ORGANIZATIONWT/TPR/M/88/Add.1
8 January 2002
(02-0085)
Trade Policy Review Body
14 and 17 September 2001
TRADE POLICY REVIEW
UNITED STATES
Minutes of Meeting
Addendum
Chairperson:  H.E. Mr. Pekka Huhtaniemi (Finland)
This document contains the advance written questions and replies provided by the
U.S. Government and to other questions raised during the meeting.WT/TPR/M/88/Add.1
Page 3
ADVANCE WRITTEN QUESTIONS BY THE WTO MEMBERS
BANGLADESH
Chapter II, Section (2)(ii) Trade in services
With the objective of enhancing the participation of developing countries in global trade in
services, Article IV of GATS spells out specific commitments for developed Member states in three
areas:  (a) strengthening domestic services capacity of developing countries through providing access
to technology;  (b) improving access to distribution channels and information networks;  and(c) liberalization of market access in sectors and modes of supply of export interest to developing
countries. The above Article further lays down that special priority shall be given to LDC Members in
the implementation of the above.
Could the US delegation please throw some ligh t on the implementation status of Article IV of
GATS by the US, particularly the provisions of movement of natural persons?
Section (3)(iii) Uunilateral preferences
Under the TDA 2000, the U.S. has provided duty-free and quota-free market access for the
products of 72 countries, of which 35 belong to th e category of LDC.  Among the 49 LDCs designated
as such by the UN, 14 LDCs have been left out of the purview of this legislation.
Does the US have any plan of extending similar preferential treatment to the remaining
14 LDCs?
Chapter III, Section (1)(i)(d) Preferential tariff
The Secretariat Report notes that the United States grants unilateral preferential tariff
treatment to a number of countries under the AGOA, ATPA, CBTPA and GSP, which are aimed at
encouraging the exports from developing countries, particularly from least developed countries.
Moreover, over the last two years the U.S. has committed more than US$ 600 million towardsstrengthening the trade capacity of developing countries and economies in transition.  We welcome
the efforts of the U.S. towards the effective integration of developing countries in world trade.
However, it is noted (Table III.3) that while average preferential tariff on imports from LDCs under
GSP is nearly half of MFN tariff average, tariffs on imports of textiles and clothing; and footwear and
headgear from LDCs are substantially high.
Imports from LDCs into the US comprise mainly the products such as mineral oils
(Chapter-27 (44.26%));  woven ready-made garmen ts (Ch-62 (28.25%));  knitwear (Ch- 61 (14.18%));
headgear and parts (Ch-65 (2.13%))
1.  Although mineral oil from LDCs does enter duty free, MFN
duties on mineral oils are negligible.  However, other products of export interests of LDCs face high
tariffs in the US and are not subject to preferential treatment.
Do the U.S. authorities not consider that all LDCs should be provided duty free access under
GSP on products of their substantial interest?  If so, do the U.S. authorities have any plan to grant
preferential treatment to the products of specific  interests of LDCs, particularly in textiles and
clothing?
                                                     
1 Figures in the Parenthesis indicate the share of each category of products in total imports form LDCs
into the U.S. in 2000 and are based on USITC Trade Dataweb online information.WT/TPR/M/88/Add.1
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Section (ii) Anti-dumping, countervailing and safeguard action
How many anti-dumping and safeguard actions have been initiated by the U.S. against textile
and clothing exports from LDCs since 1 January, 19 95?  Given the special and differential treatment
provisions of the ATC, can LDCs and small su ppliers expect an exemption from anti-dumping and
safeguard actions in the future?
Section (1)(v) Standards, Technical Regulations and Sanitary Requirement
Article 9 of the SPS Agreement contains the commitment to provide technical assistance to
developing country Members, either bilaterally or through the appropriate international organizations,
in the areas of processing technologies, research and infrastructure, including in the establishment of
national regulatory bodies. Similarly, Article 11 of the TBT Agreement contains a provision for
providing technical assistance to developing country Members on the preparation of technical
regulations, establishment of national standardizin g bodies, and participation in the international
standardizing bodies.
Could the U.S. delegation please inform us  about the implementation status of these
commitments by the U.S.?
Section (3)(iii) Intellectual Property Rights
According to Article 66.2 of the TRIPS Agreement, developed Member countries are obliged
to provide incentives under their legislation to enterprises and institutions for the purpose of
promoting and encouraging the transfer of technology to LDCs.
Could the U.S. delegation please enlighten on the implementation status of this provision?
Chapter IV, Section (2) Textiles and Clothing
Decisions on measures in favour of Least-Developed Countries adopted at the Uruguay
Round Trade Negotiations provide that the specific needs of the Least-Developed Countries will be
taken into account facilitating the expansion of trading opportunities in favour of these countries.There is an apprehension that the final phasing out of the MFA after 31-12-2004 may adversely
impact textile and apparel exports of the LDCs.
Does the U.S. have any programme to adopt positive measures in favour of LDCs in the above
circumstances?
CANADA
WTO Secretariat Report (WT/TPR/S/88)
III. TRADE POLICIES AND PRACTISES BY MEASURE;  (1) Measures Directly
Affecting Imports;  (ii) Anti-dumping, countervai ling and safeguards actions; general question
There appears to be some overlap in product coverage between current safeguard
investigations and goods covered by anti-dumping orders or anti-dumping investigations.  What is the
opinion of the United States regarding the permissiveness of this so called stacking of measures?WT/TPR/M/88/Add.1
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(Paragraph 27)
According to para. 27, a new provision, relevant to U.S. anti-dumping and countervailing
legislation was enacted in October 2000:  the Continued Dumping and Subsidy Offset Act of 2000,
also known as the Byrd Amendment.  Did Congress pass the Bill partly because it determined that
dumping measures, as currently provided, may not be enough to provide appropriate relief to
domestic producers?  Please explain.
As the number of new users of anti-dumping legisl ation continues to grow, is the United States
not afraid that the so called Byrd Amendment could serve as an excuse for other WTO Members to put
in place similar measures?
How much assistance has been distributed by the U.S. Government under the Continued
Dumping and Subsidy Offset Act of 2000?  Does it intend to notify these disbursements under the
Agreement on Subsidies and Countervailing Measures?
III. TRADE POLICIES AND PRACTISES BY MEASURE;  (1) Measures Directly
Affecting Imports;  (v) Standards, techni cal regulations and sanitary;  paragraph 85
According to para. 85, a new strategy could increase the rate of transposition of ISO and IEC
standards in the United States, which has been described as low by several trading partners.
Approximately what percentage of United States  standards and technical regulations make use of
international standards?
In a May 24, 2001 press release of the Amer ican National Standards Institute (ANSI)
regarding the National Standards Strategy ("NIST  Grant Will Help Advance National Standards
Strategy" @ http://www.ansi.org/public/news/2001may/nist_grant.html), it appears that the primary
focus of the strategy will be the objective of promoting U.S. technology, standards and standards-
development processes internationally rather than on the goal of increased adoption and use of
existing international standards by U.S. standard ising bodies and agencies, including those developed
by the ISO and IEC.  Please explain how the National Standards Strategy will effectively address the
latter goal.
Please explain the relationship between the National Standards Strategy and policies and
procedures of regulatory agencies with respect to the use of international standards as a basis for
their technical regulations.
(Paragraph 86)
According to para. 86, the Department of Agricu lture has proposed new national standards for
organic products, as well as rules for the labelling ("grading") of imported meat.  With respect to the
issue of the labelling of imported meat, as an example, please explain the approach and criteria the
United States uses to ensure that a labelling requirement represents the least trade restrictive action.
(Paragraph 88)
According to para. 88, no notifications of proposed U.S. sub-national measures have been
received by the WTO related to the Technical Barriers to Trade (TBT) Agreement.  When does the
United States expect there to be a system in place to meet its obligations under the TBT Agreement
with respect to the notification of technical regulations?
Please explain how the U.S. Government intend s to notify technical regulations prepared or
adopted by local government bodies, in particular the level directly below the national level.WT/TPR/M/88/Add.1
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(Paragraph 89)
According to para 89, the United States supports reliance on the supplier's declaration of
conformity (with or without accreditation) and considers that national treatment could be achieved
though cooperative arrangements between national conformity assessment bodies, instead of focussing
on mutual recognition agreements (MRAs).  Please provide examples of cooperative arrangements
between national conformity assessment bodies, other than mutual recognition agreements or similar
arrangements, which would prevent and/or resolve technical trade barriers.
According to para. 91, the FDA has primary respons ibility for the safety of foods, with the
exception of meat, poultry, and certain egg products, which FSIS regulates.  Please explain how the
FDA is attempting to facilitate trade in these products.  Does the FDA intend to expand these
activities that help facilitate in the near or medium term?
(General question)
In regard to the adoption of international standa rds, the United States stated in its submission
under its 2000 APEC Individual Action Plan on Standards and Conformance that its government's
policy "is to adopt international standards whenever possible and appropriate".  Further, in
WT/TPR/M/56/Add.1, in response to Question 10.1, th e United States stated that "as a matter of
practice and law, U.S. standardizing bodies and agencies review existing standards and considerwhether international standards (if relevant ones exist) are appropriate and effective for meeting
domestic needs".  What review mechanisms exist for the United States to determine that its
standardising bodies and agencies are meeting its policy and legal requirements?
IV. DEVELOPMENTS IN SELECTED SECTORS;  (5) Maritime Transport and Related
Services;  (i) International shipping services;  paragraph 40
Para. 40 notes that international cargo under the preference system accounts for 29% of
international cargoes carried by U.S. flag vessels in FY 1997.  Cargo preference is made up ofagricultural, military, and exports of Alaskan crude oil.  Please provide a breakdown of the 29%
between agricultural, military, and crude oil.  Also, if possible, please provide more recent figures.
Are agricultural and military cargoes diminishing in recent years?
(Paragraph 42)
According to para. 42, subsidy outlays for the Maritime Security Program (MSP) were
US$38 million in 1997, while funding in 1999 was US$94.  Please explain the rationale for this sharp
increase from 1997 to 1999.
Para. 42 also states that funding of up to US$100 million is authorized through 2005 for MSP.
Does this mean US$100 million will be provided on an annual basis until 2005; or does this mean a
total of US$100 million is being provided over the six year period (from 2000-2005 inclusive)?  If it isthe latter, what is reason for the decrease in subsidy outlays?
IV. DEVELOPMENTS IN SELECTED SECTORS;  (7) Financial Services;  (i) The
Gramm-Leach-Bliley Act (GLB);  paragraph 70
Paragraph 70 in the Secretariat Report states that although broad banking is permitted by
the GLB Act introduced in 1999, U.S. banks continue  to have little freedom to own and be owned by
non-financial companies.  Does the United States foresee more liberalization of the banking sector to
permit banks to be owned and to own non-financial companies?WT/TPR/M/88/Add.1
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Has the structure of the financial services industry changed since the introduction of the GLB
Act?  If yes, please explain how.  What, if any , additional changes are expected over the next few
years?
(Paragraph 71)
According to para. 71, a U.S. bank wishing to affiliate with insurance or other financial
services companies must first set up a bank holding company under the Bank Holding Company Act;
foreign banks are not required to set up holding companies.  Please explain the differences between
the requirements imposed on U.S. and foreign banks,  and explain how the treatment accorded foreign
banks is equivalent to that accorded to U.S. banks.
IV. DEVELOPMENTS IN SELECTED SECTORS;  (7) Financial Services;  (ii) Banking
Services;  paragraph 80
According to para. 80, although financial services are highly liberalized, there are still a few
restrictions to foreign market access and national treatment in the financial sector.  For example, a
majority of directors of national banks must be U.S.  citizens; and approximately one half of the States
require all or the majority of the board of directors of depository financial institutions to be
U.S. citizens.  Are there intentions to remove these restrictions at either the national or state level?
(Paragraph 82)
Para. 82 states that a domestic bank subsidiary of a foreign firm is provided national treatment
based on its "home" State of incorporation.  It is our understanding that states remain free to
discriminate on the basis of state incorporation and therefore foreign institutions can encounter
discrimination  based on their home state of incorporation.  Is this understanding correct?  If not,
please explain.
IV. DEVELOPMENTS IN SELECTED SECTORS;  (8) Telecommunication Services;
(i) Licensing and Competition;  paragraph 110 and 118
What effect does Federal Communications Commission (FCC) deference to the Executive
Branch on matters of national security and law enforcement (paragraph 110) have on U.S.
commitments to allow foreign satell ite operators to provide satellite services to points in the U.S. from
gateways outside the U.S. (paragraph 118)?
(Paragraph 112)
In para 112, the U.S. provides examples to show that WTO Members are in practice able to
invest in the U.S. telecom services market despite the fact that existing legislation prohibits
investments greater than 20%.  Does the U.S. intend to legislate to reflect in law the "practical"
removal of barriers to investment by WTO Members, thus providing the full security of law to foreign
firms of WTO Member-countries?
IV. DEVELOPMENTS IN SELECTED SECTORS;  (9) Selected Professional Services;
(i) Accounting services regulation;  paragraph 133
According to para. 133, a set of joint reco mmendations by the NASBA and the AICPA,
sought to reduce some of the most significant barriers linked with the sector's decentralized regulatory
system.  The two bodies recommended, in particular, that licensed CPAs in public practice beauthorized to operate across State lines, in person or electronically, to service clients outside their
State of licensure.  This is just one example of measures that could be taken to increase inter-stateWT/TPR/M/88/Add.1
Page 8
mobility to eliminate the necessity of licencing in every state in many professions.  Have federal and
state governments announced their intention to im plement these recommendations?  If so, how many
state governments have announced their intentio n to enact legislation to implement the
recommendations?  Has the federal government drafted, or tabled a new Uniform Accountancy Act?
If no, when does the federal government anticipate drafting and tabling this legislation?
Does the U.S. Government plan to play a role in state regulatory reform not only in the
accounting profession but in other professions as well?
(Paragraph 134)
According to para. 134, the Securities and Exch ange Commission (SEC) launched an enquiry
in 1999 regarding the possible acceptance of financial statements of foreign private issuers that are
prepared using the standards promulgated by the International Accounting Standards Committee
("IASC").  We understand that the SEC issued a concept release entitled "International AccountingStandards" on 16 February 2000.  This release sought comments on the conditions under which the
SEC should accept financial statements of foreign private issuers that are prepared using the IASC
standards.   Has the SEC issued a further release or proposed rules on this issue?  If no, do they
intend to?
IV. DEVELOPMENTS IN SELECTED SECTORS;  (9) Selected Professional Services;
(ii) Developments regarding legal services;  paragraph 143
Para. 143 states that foreign law firms can establish subsidiaries in the United States.  Are
these law firms restricted to only providing advice on foreign and international legal issues or, ifthese law firms hire U.S. qualified lawyers, c an these law firms also advise on U.S. law issues?
Please explain.
ADDITIONAL QUESTIONS - NO REFERENCE TO SECRETARIAT REPORT
Is the U.S. giving consideration to the remova l of requirements that imported industrial
alcohol pass through U.S. registered distilled spirits plants to be eligible for an excise tax exemption?What steps is the U.S. taking to address this non-tariff barrier?
Canada understands that the U.S. Congress is proposing to extend the imposition of the
Merchandise Processing Fee (MPF) to 2011.  Of particular concern to us is that the current legislative
proposal would divert fee revenues away from customs clearance operations and would channel the
same to offset any shortfalls to the US Social Security Trust Fund.  What are the U.S. government’s
views in regard to the consistency of this pr oposal with U.S. international trade obligations?
SUPPLEMENTAL QUESTIONS & COMMENTS
WTO Secretariat Report (WT/TPR/S/88)
QUESTIONS
III. TRADE POLICIES AND PRACTICES BY MEASURE;  (1) Measures Directly
Affecting Imports;  (iv) Government Procurement;  paragraph 65
According to para 65, no statistical information has been provided by the United States to the
WTO under Article XIX:5 of the GPA. The GPA went into effect five years ago, and many members
have submitted at least some annual statistical reports.  When does the United States plan to submit its
statistics?WT/TPR/M/88/Add.1
Page 9
Please indicate the total value of GPA-covered procurement at the federal level and the total
value of procurement set-aside under the small and minority business set-aside programs that would
otherwise have been covered by the AGP?  Also, please indicate the same information for GPA-
covered procurement at the State level.
(Paragraph 66)
United States legislation and regulations require the provision of subcontracting plans for
United States small business in GPA-covered contracts.  Please explain how these provisions are
consistent with Article III of the GATT and with Article III (Non-discrimination) and Article XVI
(Offsets) of the WTO Agreement on Government Procurement.  Please address this issue both with
respect to:  1) foreign suppliers who are providing goods and services that are not of United States
origin;  and 2) foreign suppliers providing goods and services that are partially of United States
origin.
According to para 66, there is legislation at the State level for the implementation of the GPA
in 37 States in the United States.   Does the United States Federal Government monitor the adherence
and implementation of the GPA by these 37 States that are covered?
(Paragraph 68)
Para. 68 notes, “In some cases, where procurement in funded by federal money, States must
comply with certain federal statutory requirements.”  Please list these federal statutory requirements.
During FY 2000, what was the total value of procurements at the State level that were funded by
federal money?
(Paragraphs 74 to 80)
Paras. 74 through 80 provide information on the Buy America Act and set-aside schemes.
Set-aside provisions may have a significant impact on the scope and predictability of coverage under
the GPA.  During the 1996 TPR of the United States, Canada suggested that the United States give
further consideration to the elimination and circumscription of these exclusions and exemptions.
What progress has the United States made in elim inating or circumscribing exclusions to the GPA,
such as the small and minority set-aside programs?
(Paragraph 74)
Para. 74 notes the exceptions to the Buy Ameri can Act, specifically, "if it is determined that
domestic preference is inconsistent with the public interest; in case of U.S. non-availability of a supply
or material; or for reasonableness of cost."  What percentage of federal procurement contracts, for
which the Buy America Act applies, is affected by one of the three exemptions noted above?
(Paragraph 78)
According to para 78, for FY 2000, the valu e of contracts awarded through set-aside
programmes was 8% of total federal procurement awards.  It is also noted that the proportion has been
declining in recent years.  Has the proportion of contracts that have been set aside but would
otherwise have been covered by the GPA also declined?  What is the proportion and value of suchcontracts in comparison with total GPA-covered  procurement?
(Paragraph 80)
According to para. 80, the Small Business Competitiveness Demonstration Program, under
the Small Business Demonstration Program Act of 1988 has implemented a pilot programme toWT/TPR/M/88/Add.1
Page 10
evaluate the effect of removing set-asides for the procurement of goods included in ten Targeted
Industry Categories.  What are the ten targeted industries that  form the basis for this pilot program?
What is the forecasted timeline for completion of the pilot program and evaluation of results?
III. TRADE POLICIES AND PRACTICES BY MEASURE;  (1) Measures Directly
Affecting Imports;  (v) Standards, techni cal regulations and sanitary requirements;
Paragraph 88
Para. 88 refers to the lack of WTO notifications about proposed State technical regulations.
The para does not mention, however, that estimates of domestic support for agriculture try to include
State programs, but the data are based on a survey of States that was conducted in 1993.  Does the
U.S. propose to update the basis on which it notifies State support to agriculture?  Would it plan to
conduct an annual survey of the State departments of agriculture?
Will the United States notify to the WTO the federal grants to the states of $159 million in support
of agriculture promotion and "specialty agriculture" as part of the "emergency" support voted by
Congress earlier this year?  Please provide info rmation on the actual amounts and activities that
these funds are supporting.
III. TRADE POLICIES AND PRACTICES BY MEASURE;  (2) Export Measures;
(iv) Section 301 and Related Actions;  Paragraph 127
According to para. 127, "since the [Section 301 ] provision first entered U.S. trade law
in 1974, the USTR has initiated 119 such investigations; since January 1999, however, only four
Section 301 investigations have been initiated."  There were seven U.S.-initiated investigations
addressing Canadian wheat trade between 1990 and 1998.  While none of these seven investigations
has shown any evidence to indicate that wheat is traded unfairly, wheat was the subject of one of the
four Section 301 investigations initiated since 1999.  Please explain how the U.S. ensures that any
trade action that might be undertaken pursuant to a Section 301 investigation fully respects U.S. WTOobligations.
III. TRADE POLICIES AND PRACTICES BY MEASURE;  (3) Other Measures Affecting
Production and Trade;  (i) Government Support to Business;  Chart III.5
Chart III.5 shows the value of agricultural support rising in every year since 1995, even
without the "emergency payments" being factored in.  Please indicate what the proportion of market
returns was relative to FAIR Act payments and to total farm payments for the years since 1995.
Chart III.5 shows that a significant portion of fa rm support is in programs that fall in the
WTO’s "amber" category.  Given this trend, and considering the testimony by a wide variety of U.S.
agricultural groups to the House of Representatives Agriculture Committee in the first half of 2001
requesting additional spending beyond current levels, how does the U.S. assess the prospects for
spending in future years?
Does the U.S. Government anticipate that the nature of the programs in support of U.S.
agriculture will continue to move away from "green" towards "amber" programs?
IV. DEVELOPMENTS IN SELECTED SECTORS;  (9) Selected Professional Services;
paragraph 129
The horizontal commitments on mode 4 are only part of the existing temporary entry picture.
Please elaborate briefly on the existing U.S. measur es in immigration laws, regulations, procedures
or programs, not bound in the GATS schedule, that facilitate the temporary entry and stay for certain
types of foreign workers.WT/TPR/M/88/Add.1
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In para. 129, reference is made only to the category of intra-corporate transferees, including
specialists, some of who could be licensed professionals.  Please describe the other horizontal
commitment and any existing measures not in the GATS on specialty occupations, which could also
include certain professionals.
The commitment on specialty occupations is limited by a quota of 65,000 persons annually;
however, several years ago, Congress authorized annual increases over several years .  Please provide
details on that, and if possible, recent statistics on the number and type of entrants under the specialty
occupation category.
According to para 129, “in practice, foreign pr ofessional service suppliers may only enter the
United States to perform a professional service if employed by a company that is either established in
the United States or affiliated to one such company.”  It appears that this statement refers only to intra-
corporate transferees.  Please confirm that certain professionals under the specialty occupations
category (i.e. professionals who are independent or on contract) may also qualify for entry to the U.S.
to perform a professional service, subject to meeting other immigration requirements.
Comments on WTO Secretariat Report (WT/TPR/S/88)
I. RECENT ECONOMIC DEVELOPMENTS;  (1) Output, Employment and Prices;
paragraph 5
The GDP figures have been updated recently; and therefore those figures cited in paragraph 5
and in Table I.1, are no longer accurate.  For example, real GDP growth in 2000 should be 4.1%,
down from the previous figure of 5.0%.  The U.S. may wish to follow-up with the WTO Secretariat to
ensure that the Secretariat report includes the most updated figures.
I. RECENT ECONOMIC DEVELOPMENTS ;  (5) Outlook;  paragraph 35
The U.S. Administration forecast GDP growth of 2.4% in 2001 and 3.4% in 2002 seems to be
overly optimistic.  On August 16, the Administration’s forecast was reduced to 1.7% this year and
3.2% next year.  The U.S. may wish to follow-up with the WTO Secretariat to ensure that the
Secretariat report includes the most updated figures.
II. ECONOMIC ENVIRONMENT;  (5) Preferential and other Arrangements;
(i) Relations with Canada and Mexico;  paragraph 31
According to para. 31, two-way trade between the United States and Canada is about
US$1.1 billion daily.  This is the 1999 figure.  The updated 2000 figure from the U.S. Survey ofCurrent Business is US$1.23 billion.  Using a Canadian source, the corresponding figure is even
higher, at US$1.3 billion daily.   The U.S. may wish to follow-up with the WTO Secretariat to ensure
that the Secretariat report includes the most updated figures.
IV. DEVELOPMENTS IN SELECTED SECTORS;  (1) Agri-Food Activities;  paragraph 4
According to para. 4, imports of softwood lumber  from Canada, have been restrained by a
system similar to a tariff quota.  This section does not mention that imports of Canadian softwood
lumber into the United States have been affected by a 19.31% preliminary countervailing duty
determination from the U.S. Department of Commerce as of August 10, and further affected by a
positive preliminary critical circumstances determination made on the same date.  The Atlantic
provinces have been excluded from the investigation.  Canada is currently requesting WTO
consultations on these two determinations.  The U.S. should follow-up with the WTO Secretariat to
ensure that the Secretariat report includes, and accurately describes, these actions by the U.S.WT/TPR/M/88/Add.1
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U.S. Government Report (WT/TPR/G/88)
III. TRADE POLICY DEVELOPMENTS, 1999-2001;  (2) Regional Initiatives;  African
Growth and Opportunity Act (AGOA);  Paragraphs 52-58
What are the expected benefits to sub-Saharan African countries of the various market access
provisions in AGOA?  Does USTR anticipate substantial increases in exports from these countries not
least because many of the provisions are subject to the use of U.S.- produced raw materials?  What
are the anticipated impacts on employment and poverty reduction in sub-Saharan Africa?
ADDITIONAL QUESTIONS - NO REFERENCE TO SECRETARIAT REPORT
U.S. Marine Mammal Protection Act (MMPA)
Canada continues to agree with the 1999 U.S. Congressional Research Service report which
found that the Marine Mammal Protection Act (MMPA) appears to be inconsistent with the
U.S.' WTO obligations.  On the occasion of the last WTO Review of U.S. Trade Policy, the U.S.delegation, in a written response, cited in defense of the MMPA the fact that a waiver is available,
subject to certain conditions, to allow imports of marine mammal products.  However, due to the U.S.
certification of Canada under the Pelly Amendment in 1996, U.S. officials since that time have not
been allowed to consider any MMPA waiver request from Canada.  (1) Is this certification still in
effect?  (2) Please provide details of such waivers currently in effect under the MMPA allowing theimport of seal products, including:
– supplier countries holding the waivers;
– specific products covered by the waivers, by tariff item and by country;
– values and volumes of such products imported in the past three years;
– names of all countries which U.S. Gove rnment Departments are currently barred
from considering for the granting of a waiver under the MMPA;  and
– reasons for which those countries are barred from such consideration.
Agriculture
Since the last TPR of the United States, there has been an increasing trend by State
governments to propose or initiate measures, primarily in the agriculture sector, which are inconsistent
with U.S. international trade obligations, and have significant impacts on Canada's exports to the
United States (e.g. measures proposed in North Dakota and Montana).  Please explain what measures
the U.S. is taking to ensure compliance with its WTO obligations.
While it is not mentioned in the Secretariat Report, the U.S. Department of Agriculture is
developing proposals for the labelling of domestically-produced beef.  Will the criteria for the use of
any U.S.-produced beef be consistent with U.S. international trade obligations, including with respect
to rules of origin?
The U.S. Department of Agriculture announced in July 2000 that it would propose to
discontinue grading of imported meat.  Please indicate the status of this proposal.  How would the
proposal be consistent with U.S. WTO obligations?
In the current Farm Bill debate in the United States, the House of Representatives Agriculture
Committee has proposed replacing the current high levels of support for peanut production withcounter-cyclical payments and marketing loans / loan deficiency payments.   If these proposals were
to be accepted, please explain how they would alte r your trade regime with respect to the import andWT/TPR/M/88/Add.1
Page 13
export of peanuts.  Does the United States envisage any similar reform of its support applicable to
sugar?  Would such a reform also affect the intens e import restrictions and export incentives on sugar
and sugar-containing products?
The U.S. Administration is pursuing tariff reclassification of certain sugar syrups from an
unrestricted item into a tariff item with a highly restrictive tariff rate quota.  What are the anticipated
consequences of this tariff reclassification on trade?  When will the United States be notifying WTO
members about the reclassification of sugar syrups?
NEW ZEALAND
Tariffs
The contrast between the low average U.S. tariff an the tariff peaks in sectors such as
agriculture remain a feature of U.S. trade policy and appear to be an obvious contradiction to the
statements in favour of trade opened that are a feature of the U.S. Government report (G/I, paras. 1, 3and 4).  Table III.1 of the Secretariat report (S/III, page 25) also demonstrates that while a simple
average applied tariff rate on non-agricultural products fell from 5.7 percent in 1996 to 4.5 percent
in 2000, on agricultural products it actually rose slightly from 10 percent in 1996 to 10.4 percent in
2000 (with a peak of 10.7 percent in 1999).
The Secretariat notes that “sizeable tariff barriers” tend to be concentrated in a few “sensitive”
sectors, including agriculture, and that tariff escalation was particularly noticeable in food industries
where out-of-quota tariffs range to 350% and may act as import prohibitors (S/III, pages 22-26).
These barriers of course have a negative impact on higher-value-added exports, from developing and
developed countries.
In view of this, what it the U.S.’ justification for maintaining high tariff protection in sectors
such as agricultural and food products?
What programme does the US have for the reduction and eventual elimination of such tariffs?When does the US intend to reduce or eliminate tariff peaks?
Import Licensing
The Secretariat report notes that “Most products other than meat and poultry do not require a
prior determination of equivalence or an export certificate to enter the United States.” (S/III, para. 82,
page 47).  We would note, however that the U.S. has an explicit prohibition on the entry of plants,plant products and honey bees from all countries except for those recognised by the Code of Federal
Regulations.  We also understand that there is a substantial backlog of partially processed applications
for market access (in excess of 300) which are delaying the review of new application.  Furthermore,
even after the Animal and Plant Health Inspection Service has completed its Pest Risk Assessment
(PRA) process which includes public consultation, and determined there are less trade restrictivemeasures applicable, prohibitions ate still maintained for an extended period of time until the new
regulations can be proposed, published, further commented on, and republished as a final rule.  These
facts give rise to a number of questions:
What is the United States doing to address the backlog of applications for pest risk
assessments?WT/TPR/M/88/Add.1
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Can the United States explain why it is necessary to maintain measures more restrictive than
identified by their risk assessments for extended periods after such risk assessments have beenconsulted upon and finalised?
How does the United States justify the longstanding delay in resolving New Zealand’s request
for access to the United States for live honey bee and honey bee semen, when, in view of
New Zealand’s superior honey bee health status, there is no scientific basis for denying such access
on SPS grounds?
When will USDA publish the Proposed Rule and associated Risk Assessment for New Zealand
honey bees?
Export Credits
Despite the fact that the value of the sales supported by agricultural export credits fell between
1998 and 2000 (Secretariat Report paras. 107-108) we have continued concerns about thosegovernment financed export credits which act as a type of export subsidy.
Could the United States please advise what steps it is taking to mitigate the effect that the use
of government financed export credits and export guarantee programmes has on other exporters?
U.S. Dairy Policy
New Zealand welcomes the confirmation in the U.S. Government’s statement on the United
States Economic and Trade Environment that “open, competitive markets - both internationally and at
the border - have contributed to our economic efficiency and prosperity” (G/II, para. 25, p. 8).
However, certain U.S. industries, such as dairy,  with its complex systems of import licensing and
quota administration regulating dairy imports, dairy compacts, exports subsidies, price supports and
milk marketing orders, appear not to be so open and competitive.
How does the United States reconcile maintaining a highly protected dairy sector with its
commitment to “the maintenance of an open, comp etitive market at home” (G/I, para. 3, p. 5)?
In particular, what justification does the United States have for the continued use of export
subsidies under the DEIP, when these have a price distorting effects in an already depressed global
commodity market, and which are contradictory to th e U.S.’ declared objective of the elimination of
export subsidies in a new round of agriculture negotiations?
What measures are envisaged to reform the US dairy industry to make it more open and
competitive by submitting it to the same market disciplines as other industries?
Current draft legislation before the House seeks to place tariff rate quotas (TRQs) on milk
protein concentrate and casein (including caseinate) at severely restrictive levels is of concern to
New Zealand as it would contravene the bound rates and product descriptions in the United States’
WTO schedules.  The House Agriculture Committee’s new Farm Bill does nothing to reduce theU.S. Government’s subsidies for agriculture production.  The Bill, in fact, includes many worrying
aspects, such as increased spending on conservation programmes, greater provision for subsidising
exports, the re-instatement of production-linked income protection through a counter-cyclical payment
programme and extending the milk price support programme through to 2011.  Section 146 of the
draft Farm Bill would also expand the dairy “check off” levy to include all imported dairy product.
While these pieces of legislation are not yet law, they appear to contradict the United States’
statements in support of open markets and the direction of U.S. domestic agriculture policy.WT/TPR/M/88/Add.1
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How does the United States reconcile the draft legislation mentioned above with its
commitment to “the maintenance of an open, comp etitive market at home” (G/I, para. 3, p. 5)?
Food Aid
The Secretariat report notes the ongoing high level of US food aid and the negative correlation
between world cereal prices and volumes of US dona tions (S/III paras. 111 and 112, page 54).  While
the report also notes U.S. attempts to donate food aid in a way that limits disruption of commercial
sales in markets, we would question the ongoing high volumes of U.S. food aid, given the rationalewould appear to be disposal of surplus production which is caused by domestic support in the United
States, for example donations of Skim Milk Powder.
To what extent do USDA expect food aid dona tions to continue?  And at what volume?
Which markets are likely to be targeted?
Is USDA notifying these donations thro ugh the CSSD mechanism of the FAO?
Domestic Support
The Secretariat Report notes that “direct government assistance to the agri-food sector nearly
tripled during 1997 and 2000 and currently amounts to  over one half of net farm income.” (S/III,
para. 148, page 64).  In dollar terms, direct government payments to U.S. farmers increased from
around US$7.5 billion in fiscal year 1997 to a record US$28 billion in fiscal year 2000.  One of themain causes of this increase is the so-called “emergency assistance” programmes.  This would appear
to be in contradiction to US statements in support of “the maintenance of an open, competitive market
at home” (G/I, para. 3, p. 5) or its proposals to the mandated agriculture negotiations which have the
objective to “substantially reduce high levels of protection and trade-distorting support that
disadvantage competitive farmers, ranchers and processors and that distort international markets”
(G/III, para . 30, p. 9).
How will the United States address its dramatic increase in domestic support levels (much of
which is classified as Amber box) at a time when it is proposing that domestic support levels should
be cut?
How does the United States justify domestic support of historic magnitude (US$28 billion
direct and US$60 billion total), particularly as it is the United States itself that, in many cases,
accounts for a significant share of world agriculture output and has a direct effect on the volatility ofworld markets and prices?
What measures are the United States taking to reduce direct government assistance to the agri-
food sector?
Government Procurement
The Secretariat Report states that “the policy of the United States in respect to government
procurement is to grant national treatment to any coun try willing to grant reciprocal treatment” (S/III,
para. 73, page 45).  To our understanding New Zealand gives the United States national treatment
rights with respect to government procurement but does not receive the same treatment in return.
What criteria does the United States use to assess whether a country accords it national
treatment and therefore should be granted re ciprocity vis-a-vis government procurement?WT/TPR/M/88/Add.1
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Sanitary and Phytosanitary Measures
The concepts of equivalence, transparency and international harmonisation are three of the
foundations of the WTO SPS agreement (discussed at S/III, paras. 90-94, pages 42 and 43).  Can the
US provide specific comment on efforts being made by its Food and Drug Agency (FDA) to ensure
that both the statutes which it administers, as well as the associated regulations, policies and guides
explicity reflect the international commitment th e US government has made in this regard.
Specific comments would be especially appreciated with respect to:The consistency of the equivalence concept with the Federal Food Drug and Cosmetics Act,
noting that the FDA is yet to finalise and publish guidance in this area.
The consistency of both the amending process and standards contained within the Pasteurized
Milk Ordinance (PMO) and the National Shellfish Sanitation Program (NSSP) standards with the
above.
The assessment of risk and determination of the appropriate level of sanitary or phytosanitary
protection (ALOP) is another key concept of th e WTO SPS agreement.  Can the U.S. specifically
comment on:
How both risk assessment and the objective of minimising negative trade effects have been
mutually and consistently applied in the development and amendment of the PMO.
Why the measures mandated for products covered by the PMO are more trade restrictive than
those for similar products which can contain the same hazard profiles and which are either directly
consumed or made into products consumed by the same population.
THAILAND
Secretariat Report (WT/TPR/S/88)
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY;  (1) Recent Legislative
Activity:  page 13, paragraph 4
Please describe the preferences under the Trade and Development Act (TDA) of 2000 which
offers to Sub-Saharan African and Caribbean countries including the process of certifying beneficiary
countries.
(2) Participation in the WTO;  (V) Competition Policy:  page 17, paragraph 21
In the U.S. remarks delivered by Deputy U.S. Trade Representative Peter Allgeier at the WTO
General Council Meeting on 30 July 2001, it was stated that “With respect to competition policy, the
U.S. sees merit in a modest negotiating agenda of core competition principles of transparency, non-
discrimination, and procedural fairness.  We also can support consultative and capacity-building
efforts to help countries develop modern competition policies that promote efficient and dynamic
markets …”
Does this mean that the U.S. views now that th e WTO was the appropriate institution in which
to initiate the development or rules on competition in a multilateral context?
Is there any type of anti-competitive practi ces which is exempted from the U.S. Antitrust
Legislation?WT/TPR/M/88/Add.1
Page 17
(4) Investment Policies;  (i)  Foreign direct investment
On page 22, paragraph 46 Second sentence:  What are the “… other conditions to national
treatment …”?
Third sentence:  What is the meaning of  “… primary dealers in financial services”?
Last sentence:  Can one readily find the complete list of the selected services sectors which
are restricted and the related provisions/regulations?  If so, please specify.
On page 22, paragraph 47 Please explain the President’s decision-making process to
determine the need for a national security investigation.  Is the steps in the procedure transparent?
On page 22, paragraph 49 Do U.S. BITs also cover rights of host country and restrictive
business practices?
III. TRADE POLICIES AND PRACTICES BY MEASURE;  (1) Measures Directly
Affecting Imports
Page 25-27, paragraph 8-10
The U.S.’s fill rate of imported tobacco under the TRQ is only 48.8% and the out of quota
tariff rate is very high at the level of 350%.
Considering that global quota allocation could enhance the competition among suppliers and
thus improve the fill rate under TRQ, does U.S. have any  plan to improve the fill rate of tobacco TRQ
through a change of the present allocation method?
Page 49, paragraph 92
Please explain the process of an equivalent determination for poultry products and how a
country could be granted an equivalent status.
(2) Export Measures
(a) Export Subsidies:  Page 52, paragraph 105
Please specify the markets to which the U.S. exports the products under the Export
Enhancement Program (EEP).
(c) Food aid:  Page 54, paragraph 111
Please specify the countries to which the U.S. exports rice as food aid in the past five years.
NORWAY
II. DEVELOPMENT IN TRADE AND INVESTMENT POLICY(2) Participation in the WTO;  (iii) Electronic commerce
On the subject of electronic commerce, paragraph 14 gives a short presentation of what
seems to be an array of different taxation systems in different states within the United States. We will
not raise the issue of international harmonization of taxation of trade, which does not belong to thisWT/TPR/M/88/Add.1
Page 18
forum, but would like to express interest for our U.S. colleagues to share with us their experience with
the apparently wildly different systems within thei r own boundaries.  This could shed some interesting
light on the issue of when harmonization is needed  and when different systems can coexist without
creating distortions. ”
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Measures directly affecting imports;  (ii) Anti-dumping, countervailing and safeguards
actions
With regard to anti-dumping and countervailing duties, Norway is concerned with the
continued prevalence of these in U.S. Trade po licies.  The passage of the ”Continued Dumping
and Subsidy Offset Act” (”Byrd Amendment”) as part of the Agriculture Appropriations bill
for 2001 is particularly discouraging in that it opens for the possibility for financial gain from
bringing anti-dumping and countervailing duty cases.
Given the fact that the Byrd Amendment did not  have the support of a majority in Congress on
its own merit, Norway would like to ask the U.S. de legation what the chances are of a new bill being
promulgated that would repeal the Byrd Amendmen t, and whether the administration will push for
such a repeal or not?
(iv) Government procurement
According to  the GPA-agreement, Article XIII 4b), the contracting authority entity shall make
the award to the tenderer who has been determined to be fully capable of undertaking the contract
and whose tender is either the lowest tender or the tender which is determined to be the most
advantageous.
As far as the Norwegian Government understands, the Federal Acquisition Streamlining Act
of 1994 requires public authorities to use "past performance" as the second most important criteria,
after price.
Can the U.S. explain how “past performance”  is evaluated?  How do public authorities
ensure that the use of this criteria in practice does not lead to discrimination of foreign tenders?
IV. DEVELOPMENTS IN SELECTED SECTORS
(5) Maritime  transport and related services
According to available information, the U.S. cont rols the fourth largest fleet in the world
(01.01.2001: 855 vessels, 41.6 mill. dwt).  It would be of interest to have more information on the size
of the maritime sector in the US and the economic activity which this fleet create in terms of turn over
and employment on board and ashore.
In paragraph 37 it is stated that “virtually all U.S. international ocean-borne trade is carried
by foreign flag vessels”.  Does this imply that the impact of the US cargo preference schemes asdescribed in paragraph 40, and the subsidy scheme (amounting to USD 94 mill in 1999) as described
in paragraph 42 is negligible?  Would it be possible to give figures on the share of U.S. international
ocean-borne trade, which is carried by U.S. owned vessels under foreign flags?
As regards the Ocean Shipping Reform Act (OSRA 1998) described in paragraph 38, the
Federal Maritime Commission (FMC) is about to finish an ”Impact Study Report” covering the twofirst years of this act.  Finalization and presentation of the findings of the study has, however, beenWT/TPR/M/88/Add.1
Page 19
delayed, and will probably take place at a later stage.  Could the U.S. give an overview of the most
significant findings of the report, and indicate whet her any adjustments of the U.S. regulatory regime
covering the container liner industry can be expected?
With reference to paragraph 40, Norway and other countries have previously addressed the
reservation of exports of Alaskan crude oil to U.S. flagged vessels in the WTO context.  We maintain
the position that this reservation is not in the conformity with the standstill clause contained in
paragraph 7 in the Decision on negotiations on maritime transport services annexed to the GATSagreement.  We would be interested to have figures  on the volumes of this trade in terms of annual
export volume and number of shipments.
To the description of the Jones Act can be co mmented that a maritime bill is proceeding in
Congress that would, if enacted, enhance U.S. cabotage laws relating to cable laying and vessel
escort and towing operations.  Extending the scope of the Jones Act would be regrettable as seen froma Norwegian point of view, both as a matter of principle and because this particular bill can hurt
Norwegian interests in the US.  We would be  happy to be informed on the position of the
administration on these proposals which we by the way question whether are in accordance with the
standstill commitment contained in the Decision regarding maritime transport services made by the
Council for Trade in Services on 28 June 1996.
We would also be pleased to receive information on the revision of the Harbor Maintenance
Tax system, which is an issue that also has been dealt with in the WTO context.
(8) Telecommunication services;  (iii) Satellite services
Under Telecommunication Services, paragraph s 119-123 describe the opening of the
U.S. market to direct access to the INTELSAT satellite system, including access to INMARSAT
services.  Norway welcomes this development whic h was overdue.  The former U.S. restrictions have
impeded on the development of INTELSAT and IN MARSAT.  This has slowed down the worldwide
dissemination of the safety improvements in the transport sector that the system provides.
Paragraph 123 relates that some procedures are still pending before the liberalization can be applied
to INMARSAT.  We would therefore like to ask the American delegation to provide us with any further
information as to the ”initial public offering” wh ich apparently is the last remaining stumbling block.
CHILE
Anti-dumping
From the point of view of economic theory, wi thin a free trade area dumping is not possible
due to the fact that both countries become like different states in a same country;  i.e. if goods area
really "dumped" or sold below cost, they could be shipped back and be sold at the higher price of the
country of origin.  Therefore, antidumping measures are redundant in a free trade zone.  Taking intoconsideration that the United States is an active part of the negotiation of the Free Trade Area of the
Americas (FTAA) and is negotiating a Free Trade Agreement with Chile, will the United States
consider the elimination of antidumping mechanisms once the free trade areas are established?
Check-Off Programs
For the last years, the United States has be en enacting and implementing several Information,
Research and Promotion acts regarding some agricultural products by which it has imposed the
collection of mandatory assessments (internal taxes) to locally promote those products, leaving the
total control over the spending of the assessments to the domestic producers and creating someWT/TPR/M/88/Add.1
Page 20
considerable advantages in the internal treatment they receive as compared with producers from
abroad.
How would the United States explain its Check-Off Programs in terms of their consistency
concerning its international obligations under the WTO and its applicable agreements?
How would the United States justify the legitim acy of its Check-Off Programs under U.S. Law
considering the recent U.S. Supreme Court ruling on the subject? Specifically, How would the United
States explain the constitutionality of the m andatory assessments these programs impose for
promotion purposes?
Taking into consideration that the U.S. Supreme Court ruling is a mandatory rule of law for
every executive agency, among them the USDA, is the executive branch adopting and implementing
any measure to put the Check-Off Programs in conformity with this ruling?  And if so, what sort of
measures is the U.S. Government adopting and implementing and what are the Check-Off Programs
and subject matters within them that are being modified?
How can the United States explain the difference between promotion, information and
research under the U.S. Constitutional concept of Freedom of Speech so as to exclude the last twoareas from the imposition of voluntary assessments?
The Hass Avocado Promotion Research and Information Act (HAPRI)
Considering the US Supreme Court ruling in the Mushroom Check-Off Program case is a
mandatory law for the USDA and that the Implementing Order is not yet in force, is this Agency going
to limit the mandatory assessments only for inform ation and research activities leaving promotion
assessments as voluntary?
The HAPRI and the Proposed Order, through the assessment collection method, establishes a
difference between the timing and conditions of  collection.  While the domestic producers would be
allowed to pay the assessment within 30 days after the end of the month in which the sale or non-sale
transfer has been made, the importers, whether their avocados are sold or not, have to
unconditionally pay the assessment at the time of im portation into the United States. What is the
reason behind this?
Another aspect is the assessment refund system.  While the state associations, in fact, the
California Avocado Commission (C.A.C.), will receive 85% of the funds generated by all theassessments attributable to California’s total production of avocados, the importers associations will
only receive 85% of the funds generated by assessments paid by the members of these associations
without regard of the fact that almost 90% of the importers are Californian producers and that there
is no clear mechanism to compel any importer to join an importer association. What is the reason
behind this?
Why does the HAPRI not involve other domestically produced avocados such as Fuerte,
Zutano, Bacon, Pinckerton, etc., that are “like” Hass avocados and, in any case, are directly
competitive or substitutable products of the latter, and therefore affords protection to domestic
producers and discriminates exporters?
Sub-Federal Measures
According to the Uruguay Round Agreements  Implementing Act, Section 102, letter (b),
number (2), no State law, or the application of such a State law, may be declared invalid as to any
person or circumstance on the ground that the provision or application is inconsistent with any of theWT/TPR/M/88/Add.1
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Uruguay Round Agreements, except in an action brought by the United States for the purpose of
declaring such law or application invalid.
The foregoing rule recognizes the Federal Law “Preemption Doctrine” regarding State law
but does not implement an automat ic preemption mechanism.  Therefore, if another WTO member or
one of its constituents estimates a sub-federal measure to be in violation of a U.S. international trade
obligation, the national denies it any cause of actio n before a Federal Court.   The implementing law
only entitles the Government of the United States with such an action.
Furthermore, a report of a dispute settlement panel or the Appellate Body convened under the
DSU regarding the State law, or the law of any political subdivision thereof, is not considered as
binding under U.S. national law.
This preemption system, in practice, does not secure to WTO Members that the concessions
granted internationally will be effectively applied at the State level.
How does the United States intend to address this preemption mechanism so as to afford other
WTO Members the opportunity to effectively challenge the consistency of sub-federal measures?
Would the United States consider the possibility of addressing this issue by granting such an
opportunity, for example, if a report adopted under the DSU declares a sub-federal measure
inconsistent?
Merchandise Processing Fee
Could the United States explain the WTO consistency of levying a so-called Merchandise
Processing Fee to pay for the cost of the newly enacted Patients Protection Act?
Would the United States Consider this fee as tariff considering that it is paid at the border,
and if so how would this compromise the tariffs consolidated by the U.S before the WTO.
Would the United States agree that the proposed users fee, given the existing users fees, could
change the established market conditions and give greater protection to domestic producers?
Subsidies
Considering the latest supplemental subsidies to  US domestic agriculture recently signed into
law. In the opinion of the U.S., what is the level of  consistency with the WTO of this law, and does the
U.S. intend to notify the WTO?
How can the United States explain the consistency of the fact that part of the above mentioned
supplemental subsidies maybe be directed towards financing cases against trade partners including
accusations of subsidizing?
On various occasions the United States has proposed to lowering subsidies in all sectors and
has urged the European Community to do so itself. How can the United States justify the fact that
year after year it increments its subsidies towards its domestic industry, concentrating a great part in
the agricultural sector?
Tariffs
The application of specific duties affords greater protection to lower-value products, thereby
making it possible to stabilize domestic prices against fluctuations in the international prices of those
products.  If a country intensively exports agricultural products and their price falls, that country,WT/TPR/M/88/Add.1
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instead of being able to benefit from its greater competitiveness, finds that its exports to the United
States have become more expensive, since it has to pay a specific duty whose ad valorem equivalentvaries from approximately 40 to 232%, thus becoming an effective barrier to trade.  Does the United
States intend to stop applying specific duties within the near future?
JAPAN
(Report by the Government)
1. Liberalization of agricultural products (p. 5, para. 4, p. 6, para. 8 and p. 10, para. 31)
Food security should be achieved by adequately combining domestic production, import and
stock holding in accordance with agricultural situations of each country, and we think there is a
problem in the U.S.’ idea that only liberalization of agricultural products can ensure food security.  As
the U.S. President Bush said, “Can you image a country that was unable to grow enough food to feed
the people?” (excerpt from the transcript of the remarks by the President to future farmers of Americaon July 27th 2001 in Washinton D.C.), the U.S. recognises the importance of domestic production.
Moreover, although the Report says, “trade liberalization supports the protection of the environment”,
agriculture has a multifunctionality including protection of the environment and this cannot be
achieved only through trade liberalization.
2. Fisheries matters (p. 20, para. 85)
(1) The elimination of subsidies that contribute to over-fishing is shown as one of three important
areas where trade liberalization holds particular promise.  Could the United States inform us
of fisheries subsidies which contribute to over-fishing within any situation regardless of its
fisheries management?
(2) Although this is not mentioned in the Report, the United States recently prohibited the landing
of shark fins by foreign fishing boats, while commercial vessels are not prohibited to land
shark fins.  What is the reason for prohibiting the landing of shark fins by foreign fishingboats and treating them differently from other commercial vessels?
(Report by the Secretariat)
1. RECENT ECONOMIC DEVE LOPMENTS (p. 1, para. 1)
Economic growth in the United States decelerated as of the third quarter of 2000, and it is
predicted that the deceleration of growth will reach as low as 1.5% for the whole of 2001.  Negativeindicators, such as the fall in stock prices, are also more apparent .  How does the Government of the
United States view this situation?  What kind of policy measures does the Government of the United
States think should be adopted for supporting sustainable growth?  How does the Government of the
United States assess the economic impact of th e tax reductions and expansionary monetary policy
promoted by the Bush Administration?
2. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
(1) Trade promotion authority (p. 13, para. 2)
What, in the view of the Government of the Unit ed States, is the prospect of Trade Promotion
Authority being approved by Congress?  What kind of efforts have been made for achieving this goal?WT/TPR/M/88/Add.1
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(2) Electronic commerce (p. 15, para. 13)
What is the United States view on the im position of customs duties on digital products
delivered through the Internet?
(3) Agri-food trade negotiations
(a) New technologies (p. 14, para. 10)
What kinds of technologies are included in “new technologies” other than genetic
modification as indicated in the first sentence of the same paragraph?
(b) Biotechnology-related food (pp. 14-15, para. 10)
Last year, the export of a genetically modified  (GM) corn “Starlink”, whose safety as food
has not been approved in the United States, gave rise to public fear in many importing countries
including Japan.  The Government of the United States should take necessary measures for preventing
exports of not only GM foods whose safety has not been approved in the United States, but also of GMfoods/feeds for livestock which have not passed the safety assessment processes in importing
countries.
(c) Cartagena Protocol (p. 15, paras. 10-11)
(i) Since the United States is the largest producer and exporter of GMOs in the world, its
influence on international trade is quite significant, gi ven the fact that it has not ratified the Cartagena
Protocol .  Does the United States consider ratifying the Convention on Biological Diversity (CBD)
and the Cartagena Protocol in the future?  If not, why?
(ii) In case the Cartagena Protocol does take effect without ratification of the United States,  how
will the United States cope with the following issues concerning Article 24 on non-Parties?
● To conform with the advance informed agr eement procedures (AIA) by the importing
Parties based on the Protocol;
● To conclude bilateral or multilateral agreements with individual Parties;  and
● To contribute appropriate information to  the Biosafety Clearing-House (BCH) on
living modified organisms released in, or moved into or out of, areas within the
United States.
(4) Trade measures and MEAs (p. 16, para. 16)
It is stated in the Report that the Government of the United States considers that WTO
provisions are sufficient to accommodate trade restrictive measures contained in multilateral
environmental agreements (MEAs).  What conditions does the Government of the United States
consider necessary for trade restrictive measures contained in MEAs to be consistent with the WTO
provisions?  Please provide concrete examples of trade restrictive measures contained in MEAs that
are considered to be consistent with the WTO pr ovisions.  Does the Government of the United States
consider that relevant U.S. domestic laws fulfill such conditions?
(5) Competition in the WTO (p. 17, para. 21)
It is our understanding that the United States has recently become more open towards the
negotiations on competition policy.  However, it is stated in the paragraph 21 of the Report that the
United States "has also questioned whether the WTO was the appropriate institution in which toWT/TPR/M/88/Add.1
Page 24
initiate the development of rules on competiti on in a multilateral context at this time".  We would
appreciate having the U.S. current position on the matter.
(6) Labour standards and trade (pp. 17-18, paras. 22-25)
The California State Law (SB1888), which was amended in September 2000, prohibits the
purchase of any foreign goods and services produced by using such labour as forced labour, or from
the benefits of such labour as forced labour.  These provisions target only foreign goods and services,
and therefore are considered as constituting violation to Article 3 of the WTO GovernmentProcurement Agreement (i.e. National Treatment clause ). The Government of Japan requests that the
Government of the United States takes appropriate measures in order to bring these provisions into
consistency with the WTO Agreement.
The Law also obliges contractors to verify that foreign-made products furnished to the State
are not produced with the use of such labour as forced labour.  While the Smoot-Hawley Act of 1930prohibits the import of products produced with the use of such labour as forced labour under penal
sanctions, contractors are additionally obliged by the State law to verify after customs clearance that
such labour has not been used.  Such dual obligation has caused an excessive burden to foreign
suppliers.  We would appreciate if the Government of the United States would explain the reason for
this matter.
(7) Softwood lumber dispute between the United States and Canada (p. 19, paras. 32, p. 35,
para. 38 and p. 43, para. 63)
(a) The United States. is continuing anti-dumping and countervailing duty investigation with
respect to certain lumber products from Canada since April 2001.  We have heard that the
Canadian government requested a WTO consulta tion with the U.S. Department of Commerce
regarding its preliminary decision of 19.31% countervailing duty against Canadian softwood
lumber.  What are the consequences like?
(b) We are aware that the agreement between the United States and Canada whereby the
Canadian government agreed to restrict the export of softwood lumbers to the United States
expired last March.  We regard this agreement as “export moderation” mentioned in
Article 11.1(b) of the Agreement on Safeguards and request that any measures of this kind
will not be reintroduced.  We would appreciate having the U.S. comment on this request.
(8) Bilateral free trade agreements (p. 19, para. 32 and p. 35, para. 38)
(a) Please explain the U.S. position on the relationship between the multilateral trading system
established by the WTO agreements and bilateral free trade agreements.
(b) When does the Government of the United States expect the Congress to ratify the U.S.-Jordan
FTA?
(c) If the U.S.-Chile FTA is concluded, does it mean expansion of the NAFTA, seeing as there
already exists a Canada-Chile FTA and a Mexi co-Chile FTA? Please explain the U.S.
position on the relationship between the U.S.-Chile FTA and the FTAA.
(d) According to Article 24 of the GATT, “a free-tr ade area should be to facilitate trade between
the constituent territories and not to raise barrie rs to the trade of other contracting parties with
such territories”.  Japan considers that, in the free trade agreements, the provisions on trade
restrictive measures, such as safeguards and anti-dumping measures, should be appliedWT/TPR/M/88/Add.1
Page 25
without discrimination to the parties and the non-parties.  In this regard, please explain the
U.S. view on how the provisions on the safe guards and anti-dumping measures, as parts of
trade restrictive measures, should be treated in the free trade agreements?
(9) Investment
(a) "Exon-Florio" provision (p. 22, para. 47)
Transparency and predictability in government regulations are important factors for
enterprises when making decisions on their investment.  These factors are also pre-requisites in orderfor competitive enterprises to do their business in a fair environment.  The Government of Japan has
concern over the “Exon-Florio” Provision in terms of  the legal stability of completed transactions as
well as in terms of ensuring the due process.  In the application of the “Exon-Florio” Provision, the
Government of Japan requests the Government of the United States to refrain from expanding
excessively the concept of "national security", and to ensure the maximum transparency and fairnessin the entire process, i.e. from the notice to the CFIUS (Committee on Foreign Investment in the
United States) up to the final decision by the Presid ent.  We would appreciate the U.S. view on our
comment.
(b) International investment policy (p. 22, para. 48)
Improvement of the climate for foreign direct investment should be promoted multilaterally as
well as bilaterally.  In this connection, it is important to include the negotiations on multilateral
investment rules in the new round.  It is our understanding that the United States has recently become
open to the idea of multilateral investment rules.  Please explain the current position of the United
States.
(c) Bilateral investment agreement (p. 22, para. 49)
With regard to the 4 reports mentioned in Table II.1, including the U.S-Japan Joint Report on
Investment and the Joint Status Report on U.S.-Japan initiative on Deregulation and CompetitionPolicy, these are simply compilations of voluntary measures taken respectively by the Governments of
the United States and Japan and are not “agreements” as stated therein. Despite that the Government
of Japan pointed out this same mistake in the previous U.S. Trade Policy Review meeting, it is
regrettable that this year’s Report continues to repeat the erroneous description.  Japan’s voluntary
measures are applied on the basis of non-discriminatory treatment to competitive foreign goods andservices and are completely different from the measures contained in the so-called bilateral investment
agreements.  The Government of Japan requests the USTR to rectify the description of its annual
review reports as appropriate.
(10) Tariff
(a) Tariff rates of trucks (motor vehicles for the transport of goods) (p. 24, para. 1)
The United States imposes high tariff rates, such as 25%, on most trucks (HS 8704).  In
comparison with Japan, which sets its tariff rates at 0% on the same items, the U.S. figure remains
considerably high.  Japan would also like to know why the United States imposes tariff rates on trucks
10 times higher than on passenger vehicles (of which the bound rate is at 2.5%).  According to the
Minutes of the 1999 Trade Policy Review, the United States stated that it had initiated the necessarydomestic procedures in its reply to a similar questi on.  Japan would like to know the current situation
of the above case, and further would like to request elimination of this tariff peak.  Please provide the
U.S. view on the matter.WT/TPR/M/88/Add.1
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(b) (p. 25, para. 5)
The Report says, “Sizeable tariff barriers tend to  be concentrated mainly in agricultural, food,
and tobacco products;  tariffs reach ad-valorem or ad-valorem equivalent rates of 350% for tobacco,
164% for peanuts, and 132% for peanut butter (out-of-quota tariff rates).”  Could the United States
provide the reason for maintaining such a high tariff on these products and does the United States
have future plans to improve this?
(c) (p. 25, para. 7)
The authorities of the United States stated that the current applied and bound rates are
identical.  It would, therefore, appear that the United  States is in no hurry to complete the modification
process of its Schedule for the purpose of introducing the HS96 changes.   What is the situation of
negotiations with countries having made reservations on U.S. Schedule changes?
(11) Tariff quotas (p. 26, paras. 8-12)
(a)
We hear that the United States is examining a bill to amend tariff lines and apply tariff quotas,
in order to control the rapidly increased import of Milk Protein Concentrates (MPC) into the United
States.  We don’t think this is coherent with the U.S. proposal, which insists on developing disciplines
for importing countries in order not to administrate their TRQs for the purpose of hampering trade.What does the United States think of this matter?
(b) (para. 9)
The Report says, “In general, access to tariff quotas is provided on a first-come first-served
basis. Exceptions include certain dairy products and sugar. Certain dairy products require import
licences and for sugar, export certificates are issued.”   What is the reason for the exceptions provide
regarding certain dairy products and sugar?  Could the United States provide more concrete ways by
which the TRQ is administrated for these products?
(c) (para. 10)
It is pointed out that some quotas including beef, dairy product and peanuts were allocated to
selected countries.  What are the standards for selecting these countries? Also, what is the past record
as to the imports of these products?
(d) (para. 12)
The Report says, “tariff quotas for products such as olives, dried cream, certain cotton articles,
low-fat chocolate crumb, and mixed condiments and seasoning were not used at all or filled at very
low levels.”  Is there any reason for this null or very low fill rate besides supply- demand conditions?
(e)
What is a reason to maintain tariff quotas that were not used at all or filled with at very low
levels, for example, olives, dried cream, certain cotton articles?WT/TPR/M/88/Add.1
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3. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Anti-dumping
(a) Anti-dumping measures (p. 32, paras. 24-26)
Anti-dumping measures, if abused, would harm sound international trade, and likely to
increase protectionism in the world, including potential countermeasures by targeted exporting
countries.  The United States is one of the major users of anti-dumping measures. It has taken
243 anti-dumping measures, such as anti-dumping duties and price undertakings, as of the end of
December 2000.  There have been a number of cases brought against the United States concerning its
anti-dumping measures or regulations under the WTO dispute settlement system. One of those is
“Certain Hot-Rolled Steel Products from Japan”, and the other is “Anti-Dumping Act of 1916” which
involved the U.S. anti-dumping law itself. In both cases, the United States measures or a law were
found to be inconsistent with the WTO Agreements.  Many other U.S. measures are also alleged to bein violation of WTO agreements and subject to review before the WTO.  The Government of Japan
requests that the United States implement immediately the recommendations and rulings of the DSB,
and take anti-dumping measures fairly and consistently with its obligations under the WTO
agreements.  We would like to have reply from the United States to the above.
(b) Anti-Dumping Act of 1916 (p. 32, para. 24)
Japan and the EC claimed the Anti-Dumping Act of 1916 to be inconsistent with the WTO
agreements, and the Reports of the Panel and the Appellate Body affirmed the position of Japan and
the EC. Following the adoption of the reports by the DSB in September 2000, the Government of the
United States requested Japan and the EC to extend “a reasonable period of time” for implementation,
and, after consultations, both Japan and the EC accepted its extension under certain conditions.
However, there still remain a number of lawsuits under the Act pending before the U.S. domestic
courts, for which the defending companies are confronted with heavy legal costs.  The Government ofJapan requests, therefore, that the Government of the United States comply with the DSB
recommendations immediately.  Please explai n the U.S. prospect of the implementation.
(c) Section 129(c)(i) of the Uruguay Round Agreement Act (p. 33, para. 26)
Japan currently participates as a third-party in the panel proceedings that examines the
consistency of Section 129(c)(i) with the WTO Agreement, and would like to request the UnitedStates to clarify on the following points:
(i) The wording of Section 129(c)(i) obliges the administering authority to apply the
determinations concerning title VII of the Tariff Act of 1930 only on or after the dates
specified under Section 129(c)(i) (A) and (B).  Has this obligation been followed by
the administering authority without any exception?
(ii) Is there any way that the administering authority can deviate from this obligation
provided in this provision?
(d) Byrd Amendment (p. 33, paras. 27-30)
Japan, together with the EC and seven other countries, has requested the establishment of a
panel to examine the so-called Byrd Amendment.  The Panel was established on August 23rd.  Canada
and Mexico have also requested establishment of a Panel, and was established on September 10th.
Japan notes that even in the United States itself, government officials, including the former President
of the United States and the former Trade Representative, have expressed concerns over the adverseWT/TPR/M/88/Add.1
Page 28
influence of this legislation.  Japan believes that the Byrd Amendment should be repealed as soon as
possible.  Please explain the U.S. views on the Japan’s comment.
(e) Certain hot-rolled steel products (p. 35, para. 37)
Japan brought a claim against the United States before the WTO dispute settlement system
stating that the anti-dumping investigations conducted by the U.S. authorities on certain hot-rolled
steel products from Japan are inconsistent with the WTO agreements.  The report of the Appellate
Body generally supports Japan’s arguments and concludes that DOC’s methodology for calculatingthe anti-dumping margin, as well as USITC’s methodology for determining injury are not in
accordance with the WTO agreements.  The Report was adopted by the DSB on August 23, 2001.
The Government of Japan requests, therefore, the Government of the United States to comply
promptly with the DSB recommendations, by amending the regulations concerned, as well as by
immediately improving the methodologies used by the DOC and the USITC.   What is the U.S.
position on the matter?
(2) Countervailing duty (p. 38, para. 45)
According to the Report, in cases under countervailing duty investigation, suspension
agreements are sometimes negotiated with the exporters of the exporting country and some of them
take the form of voluntary limits on exports by those exporters.  It is Japan’s view that Article 18.1(b)of the Agreement on Subsidies and Countervailing Measures does not permit such voluntary limits for
exports by Members.  Please explain the U.S. view on this.
(3) Safeguards (p. 42, para. 60)
(a) Application among FTA members (pp. 40-42, paras. 53-60)
In past disputes concerning safeguard measures, including those cases where the United States
has been a party, panels and the Appellate Body alike have found the non-application of safeguard
measures among FTA members to be inconsistent with the WTO rules (e.g. the U.S. - Wheat Glutencase, or the Argentina – Footwear case).  Bearing this in mind:
(i) does the United States intend to continue to include the non-application element in
future FTAs as the United States has been actively pursuing the conclusion of FTAs
on regional and bilateral basis?  If so, how will it ensure WTO consistency of these
non-application provisions?;
(ii) para. 53 of the Report describes the criteria as to when the NAFTA countries are
excluded from safeguard measures.  In light of the Wheat-Gluten case, which found
the discriminatory application of the U.S. safeguard measure as WTO-inconsistent,
has the United States changed its safeguard investigation method or non-application
criteria?
(b) Injury determinations (pp. 40-42, paras. 53-60)
With regard to the causation requirement, the Appellate Body pointed out in the U.S. Lamb
Meat case the necessity to separate and distinguish the injurious effects of the dumped imports from
the injurious effects of other factors.  This approach was reaffirmed by the Appellate Body in the
U.S. – Anti-Dumping Measures on certain Hot-Rolled Steel Products case.  Japan would expect thatthe United States takes into full account these WTO rulings in its future 201 cases, including the up-
coming steel products’ cases.  Please explain the U.S. view on this point.WT/TPR/M/88/Add.1
Page 29
(c) Steel products (p. 42, para. 60)
In addition to the anti-dumping and countervailing duty measures, the USTR requested in
June 2001 an investigation under Section 201 of the Trade Act of 1974 on a wide-range of steel
products.  Given the fact that 4 previous measures under Section 201 have been brought to the Dispute
Settlement Body by WTO Members, extra care should be taken to ensure the WTO consistency of this
investigation.  Please explain the U.S. view on this.  Furthermore,  how does the United States foresee
treating products already subject to antidumping or countervailing duty measures?
(4) Quantitative restrictions on imports (p. 42, para. 61)
It is said that the United States is maintaining bans on imports from certain countries for
foreign policy purposes.  Could the United States provide the details of the bans (e.g. banned products
and countries)?
(5) Government procurement
(a) WTO Agreement on Government Procurement (GPA) (p. 43, para. 66)
The GPA is applied to only 37 States.  Is there a substantial difference between the 37 States
and other states in their government procurement policies/practices?
(b) Construction Industry Payment Protection Act (p. 44, para. 69)
Has the large amount of bond required by th e Construction Industry Payment Protection Act
increased the burden of main contractors?  Considering that, in general, procuring entity’s payment
to main contractor is made on a monthly basis based on the progress of the work, in which case would
the penal sum that is as high as 100 % of the contra ct price be necessary to protect sub-contractors
and suppliers?
(c) The Buy American Act (p. 45, paras. 74-75)
(i) From the viewpoint of fully applying the principle of non-discriminatory treatment in
government procurement, the Government of Japan requests the Government of the United States toabolish Buy American Act, which accords a favourable treatment to U.S. products, for the Federal
Government procurement not covered by the GPA, in order to ensure equal business opportunities for
both the United States and foreign enterprises.  As for local government procurement, the Government
of Japan requests the Government of the United States to take necessary measures as the Federal
Government to ensure the principle of non-discriminatory treatment and equal business opportuniesfor both the U.S. and foreign enterprises.
The Government of Japan also requests the Government of the United States to abolish the
provisions which require the use of U.S. products as a condition for receiving a grant from the Federal
Government in such projects as mass transit and highway construction. The U.S. view on this matter
would be appreciated.
(ii) Does the Federal Government have a list showing all the Buy-In-State regulations enforced in
some States?  If so, has it been published? (p. xiv, para. 24)WT/TPR/M/88/Add.1
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(6) Standards and technical regulations
(a) Meat and poultry (p. 47, para. 82)
The Report says, “Most products other than meat and poultry do not require determination of
equivalence or an export certificate to enter the U.S.”   Could the United States explain the reason why
these measures are applied only for meat and poultry?
(b) Standards required by private insurance companies (p. 47, para. 83)
Japan would like to know what kinds of standards are required by private insurance
companies to qualify for product liability and health insurance, as well as to what kind of goods such
standards apply?  We would also like to know u pon which laws, etc., these requirements are based.
(c) New National Standards Strategy (p. 47, para. 85)
Please explain the effects of the new National Standards Strategy, which started in
September 2000, including that on the rate of the transposition of international standards intodomestic standards.
(d) Organic products (p. 48, para. 86)
The Report says, “The Department of Agriculture has proposed new national standards for
organic products, as well as rules for the labeling ("grading") of imported meat.”  Could the United
States explain the outline for these new standards and rules?
(e) Sub-federal technical regulations (p. 48, para. 88)
As for sub-federal technical regulations, the Government of Japan requests the Government of
the United States to take appropriate action, in accordance with Article 3 of the TBT Agreement,
including notification of such regulations to the WTO.
(7) Sanitary and phytosanitary (SPS) measures (p. 49, para. 93)
Japan has regained FMD free status since 26
th of September, 2000 by OIE.
We have already provided the report on the eradication of FMD and the on-site investigation
conducted by USDA officers have been concluded, ne vertheless we have not received the permission
to re-export meat and meat products derived fr om cloven-hoofed animal to the United States.
Therefore, we would like to know when the ban for the export of the said items will be lifted.
(8) Pelly Amendment (p. 51, para. 101)
Under the Pelly Amendment, the Government of the United States shall certify the fact that
nationals of a foreign country are conducting fishing operations, which diminish the effectiveness of
the international fishery conservation program, or are engaging in trade or takings, which diminish the
effectiveness of any international program for endangered or threatened species.  The Amendment,
followed by the certification, allows the Government to use trade sanctions (import prohibition)
against that foreign country to the extent that such prohibition is sanctioned by the GATT.
Last September, the Government of the United States certified against Japan's Whale
Research Program.  Although the Government of the United States announced last December that theyWT/TPR/M/88/Add.1
Page 31
would not take any immediate trade sanctions at that time, they are still continuing to suggest the
possibility of imposing of trade sanctions on Japan.
The Government of Japan considers that it is clearly against the principles of the WTO for one
country to use such unilateral trade sanctions against another nation in order to achieve its own special
objectives.  The Government of Japan, therefore, requests the Government of the United States to
restrain itself and to act in a careful manner with regard to this issue.
The Government of Japan also considers it inappropriate to certify against Japan's Whale
Research Program under the Pelly Amendment seeing as this our program is based on Article VIII of
the IWC and a scientific necessity.
(9) Export subsidies (p. 52, para. 104-106)
Although the funding level of export subsidies based on the Export Enhancement Programme
(EEP) is decreasing, the Dairy Export Incentive Progra m (DEIP) is utilized actively as was previously.
The United States says, “the stated purpose of the program is to enable the U.S. exporters to meet
prices that are being subsidized by other governments into the world markets”.  Does the United States
consider that the program would act as a negative influence on the prices of agricultural products
worldwide, since the government can grant export subsidies freely when exporting to specificcountries?
(10) Export credit guarantee (p. 53, paras. 107-110)
Japan is continuously concerned with this program's trade distorting effect, because it tends to
make U.S. agricultural products advantageous while competing with other exporting countries.  The
Commodity Credit Corporation (CCC) collects claims in case of default.   Does the United States
consider that this program comprises a characteristic similarly to the circumvention of export
subsidies?  It is also a serious problem when the program makes it possible to export specific
agricultural products to selected markets, where financing resources are provided by the CCC, and
also when enhancing a strategic export promotion.
(11) Section 301 of the Trade Act of 1974 (p. 59, paras. 127-128)
(a) Although the Super 301 will expire at end of this year, Section 301 of the Trade Act of 1974
will, itself, remain in effect.  Japan requests the United States to apply Section 301 in an appropriatemanner in order to abide by its obligations set out in the WTO agreements, as per the findings of the
Panel Report regarding the same matter.   What is the U.S. opinion?
(b) Japan is concerned about the consistency of the so-called “Carousel” amendment with the
WTO agreements, since it requires the Government of the United States to periodically revise the list
of products subject to the suspension of WTO concessions, thereby affecting the stability and thepredictability of trade.  The amendment is a subjec t of the consultations between the U.S. and the EC,
and Japan is carefully monitoring the development of these consultations.  Please explain the U.S.
view on this.
(12) 1995 measures by the Government of Japa n and the Government of the United States
regarding autos and auto parts (p. 60, para. 130)
The “Measures” mentioned herein are taken not only by the Japanese Government, but by
each government respectively and are not international agreements.  This fact should be accurately
reflected in the Report.WT/TPR/M/88/Add.1
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The Japanese Government did not only remark that the “Measures” adopted in 1995 had
outlived its significance, but also proposed last year an idea of establishing a new bilateral dialoguemechanism designed to better respond to today’s rapid advance of globalization and the development
of information technology.  When the discussion between Japan and the United States on the auto and
auto parts issues is mentioned, the proposal made by the Japanese side should be described accurately.
(13) Export restrictions and controls (p. 60, paras. 131-133)
(a) As an example of export restrictions, the Report says “For example, exports of unprocessed
timber originating from non-federal public lands in the western continental United States are
prohibited.”  It should be corrected to “For example, exports of unprocessed timber originating from
federal and state-owned forests, which are located on the west-hand side of the 100° West Longitude
in the continental United States are prohibited.”
Japan thinks that this measure is rather an export quantitative restriction for protecting
domestic sawmillers as, first of all, protection of spotted owls must be done through regulating
logging and not by export bans.  Secondly, only export restrictions have been introduced, whereas no
regulations have been established for the domestic transactions of logs.  Moreover, the United States
strongly requests its exports of timber products to Japan, therefore, Japan would like to request the
United States to remedy this measure in accordance with the WTO Agreement once again as werequested at the last Trade Policy Review of the United States.
(b) The Report says "The U.S. maintains export restrictions and controls for (i) national security,
(ii) and foreign policy reasons, (iii) or to prevent situations of short supply."  Although we hear that
agricultural products are not included in the “Control List” of restricted and controlled products, will
the possibility of including these agricultural products in the “Control List” arise, if export restrictions
and controls for (ii) or (iii) are undertaken?
For the trading of commodities such as agricultural products, international prices depend
significantly on the actions taken by the exporting countries.  If the agricultural products are subject to
export restrictions and controls, the exporting countries are free to impose export restrictions and
controls.  This system raises not only a trade distorting effect, but also difficulty on food security,
which impedes stable food supply to the importing countries.
(14) Sanctions Acts (pp. 62-63, paras. 134-138)
Sanction measures based on the Iran and Libya Sanctions Act of 1996 (ILSA) and the Cuban
Liberty and Democratic Solidarity Act of 1996 (Helms-Burton Act) could constitute an extraterritorial
application of domestic laws, which is not permissible under general international law, and may thus
be considered as problematic in relation to the WTO Agreement.  The Government of Japan requests
the Government of the United States to be prudent  when implementing these Acts in order to ensure
consistency with international law.  In particular, the Government of the United States should refrain
from applying sanctions to companies from third countries.
Despite repeated appeals from many WTO members, including Japan, it is regrettable that the
ILSA was renewed in August with such problems remaining unresolved.  We strongly urge the
Government of the United States to implement the Act with due prudence while, at the same time,maintaining consistency with international law.  What is the U.S. opinion on the above?WT/TPR/M/88/Add.1
Page 33
(15) Domestic support of agricultural products
(a) Federal Agricultural Improvement and Refo rm Act of 1996 (FAIR Act) and its successor
legislation (para. 147, p. 64)
In the debate of the successor legislation, resurrection of the Deficiency Payment System
abolished by the FAIR Act is proposed by the Parliament .  How does the United States evaluate the
“abolishment of the Deficiency Payment System” by the FAIR Act, which caused invocation of
Emergency Farm Relief?
(b) Emergency farm relief policy (p. 67, para. 152)
The United States has implemented a farm relief policy four times .  What is the political
background as well as the direction aimed by this emergency farm relief policy.
(c) Emergency market loss payments (p. 67, para. 153)
In the U.S. notification to the WTO on domestic support measures for the period
of October1998-September 1999, the Emergency Market Loss Payments (ELPs) is notified as a non-
product-specific AMS.   Could the United States explain the meaning of non-product-specificity?
(d) Domestic support measures of dairy products (p. 68, para. 157)
The United States proposes in the comprehensive proposal (G/AG/NG/W/15) that domestic
supports should be non-exemptive, if they have none or least distortive effects on trade or production.On the other hand, the United States took a measure to increase the purchasing price of butter last
May.   How does the United States consider the coherence between this measure and the U.S. proposal
on domestic support?
(e) Two-tier price support program of peanuts (p. 69, para. 158)
Since this program provides a high support rate on peanuts for domestic food use and a much
lower rate for peanuts grown for export or for crushing, we consider it similar to the special milk
system in Canada, which was ruled adversely by the WTO Panel and Appellate Body.   Could the
United States show us where it stands in this issue?
(16) Competition policies
(a) Competition laws (pp. 70-71, paras. 165-168)
Japan has already abolished or limited the scope of numerous exemptions from the application
of its Anti-monopoly Act.  Likewise, Japan would like to urge the United States to reduce the numberof exemptions applied under the U.S. Anti-trust laws, both at federal and state levels.  Please explain
the rationale of the exemptions applied in the area of agriculture, referred to in para. 166.
(b) Enforcement of competition law (pp. 71-74, paras. 169-176)
It is the understanding of Japan that the policy of the U.S. Department of Justice applies U.S.
Anti-trust laws to even those practices performed outside the United States.  However, it is more thanlikely that the application, or any related enforcement activities, can be considered as an extra-
territorial application of the U.S. Anti-trust laws, or even as infringement of the sovereignty, of a
foreign country, both of which are not permitted according to international law.  Japan hopes,
therefore, that the U.S. will enforce its Anti-trust laws with both deliberation and care.  Japan isWT/TPR/M/88/Add.1
Page 34
interested in knowing how successful the United States is in the collecting fines that are imposed on
foreign companies or foreign nationals.  What is the percentage of the fines imposed that are actually
collected?  Does the United States have any intention of taking action to collect unpaid fines?
(17) Intellectual property rights
(a) Bilateral and regional intellectual property agreements (p. 74, para. 179)
The Government of Japan has faithfully implemented the "Japanese Actions to be taken by the
Patent Office", confirmed by the Japan Patent Office (JPO) and the United States Patent andTrademark Office (USPTO) in the Framework Talks.  However, the United States has never entirely
implemented the introduction of an early publicati on system without exceptions, nor the improvement
of re-examination.  Japan strongly requests the United States to implement these items completely and
promptly.  Please explain the U.S. view on this.
(b) “First-to-Invent” system (p. 75, para. 180)
The United States is the only country to use the "first-to-invent” system, which, with regard to
the patent system, makes the United Stats rather unique.  This system, however, lacks certainty and
predictability in the sense that a patentee’s status can be overturned by the appearance of the prior
inventor afterwards.  This will provide extra burden to inventors who are required to prepare and keep
documentary evidence to prove the date of invention.  Many countries, including Japan, have pointedout that this issue creates a barrier for foreign companies when trying to penetrate the U.S. business
community.  Although the practice of maintaining the first-to-invent system is not necessarily against
the TRIPS Agreement, Japan again requests the United States to adopt the first-to-file system and also
to improve all aspects of the patent systems that restrict trade in the United States.  This is due to the
necessity of maintaining a transparent and stable system, as well as reducing the burdens borne by
users through the difference in systems.  Please explain the U.S. view on this.
(c) "Submarine patents" (p. 75, para. 180)
The early publication system in the United States provides exceptions whereby patent
applications filed in the United States, but not filed overseas, or matters included in a patent
application filed in the United States, but not included in the corresponding application filed overseas,
cannot be laid open at the request of the applicant.  It is, therefore, possible for a patent application to
become a "Submarine Patent".  Without knowing whether or not another application is already on filefor the same invention, this system creates serious social and economic loss due to investments in
R&D.
Any pending applications, already filed with the USPTO at the time of the amendment of the
law, continue to benefit from the former patent terms (i.e. a 17-year patent term from the date of the
patent grant). There is, therefore, still the possibility that additional submarine patents occur.
Japan strongly requests the United States to implement fully and promptly what has already
been confirmed under the Framework Talks: i.e. by abolishing the exceptions from the early U.S.
publication system, and by publishing all applications except those not pending, or those not able to be
laid open, after a period of 18 months from the earliest filing date.  Please explain the U.S. view on
this.WT/TPR/M/88/Add.1
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(d) Extension of the patent term (p. 75, paras. 180 and 182)
USPTO provides that patent protection may be extended to compensate for any amount of
processing delays and USPTO-caused delays.  This extended patent term is guaranteed for at least a
17-year patent term.  The Government of Japan would like to point out that there is a possibility of
deliberate delays being caused, and that under the U.S. current conditions of not having an adequate
early publication system, there would be other opportunities of creating a submarine patent through
the extension of patent terms. Please explain the U.S. view on this.
(e) Priority in the Paris Convention (In re Hilmer) (p. 75, para. 181)
The "Hilmer" doctrine exists in the United States.  Foreign applicants usually file applications,
first in their own country and subsequently in the United States, thereby claiming priority under the
Paris Convention.  Due to the "Hilmer" doctrine, such foreign applicants cannot prevent the patent
grant from conflicting with applications filed before the actual filing date of any subsequentapplications in the United States, even during the priority period, and thereby may suffer
disadvantage.
This is against Article 4B of the Paris Convention, which stresses that acts by a third-party in
the priority period "cannot give rise to any third-party right of personal possession".  This is also
inconsistent with Article 2.1 of the TRIPS Agreement which requires compliance with Article 4 of theParis Convention.  Please explain the U.S. view on this.
(f) Unity of invention (p. 76, para. 185)
The Government of Japan understands that the USPTO has been implementing a public
comment procedure and is trying to harmonize its patent system with the international system of
Patent Law.  However, with regard to the unity of invention, under the current U.S. patent system, the
scope of inventions that can be included in a single application is, according to what we have been
requested so far, narrower than that under the systems of the JPO and the European Patent Office(EPO).  Thus, a patentee is obliged to submit mult iple applications, thereby increasing the burden.
The Government of Japan wishes to repeat its request to the Government of the United States to adopt
the same criterion for its unity of invention as that of Japan and Europe.  The U.S. view on the matter
would be appreciated.
(g) Special 301 (p. 77, para. 189 and pp. 82-83, paras. 210-213)
There is serious concern over Special 301 provisions, regarding its compatibility with the
WTO agreements, as pointed out previously in 3.(11).  Please comment on this.
(h) Trademarks (Section 211 of the U.S. Omnibus Appropriations Act of 1988) (p. 79, para. 198)
The panel report [WT/DS/76/R] circulated in August this year points out that
Section 211(a)(2) of the U.S. Omnibus Appropriations Act of 1988 is not consistent with Article 42 ofthe TRIPS Agreement.  There is concern over this Section 211 of the U.S. Omnibus Appropriations Act
of 1988, involving the registration, renewal or enforcement in the U.S. of a trade mark, trade names
and commercial names associated with confiscated assets in Cuba, regarding its compatibility with
the provisions of National Treatment and the Most Favored Nation of the TRIPS Agreement.  Thus,
the Government of Japan would like to ask the Government of the United States for promptimprovement and to provide its view on the matt er.  Please explain the U.S. view on this.WT/TPR/M/88/Add.1
Page 36
(i) Protection of the rights of authors, performers, etc (p.80, para.200)
(i) Japan requests the United States to take the necessary procedures in order to accede as soon as
possible to the International Convention for Protection of Performers, Producers of Phonograms and
Broadcasting Organizations (Rome Convention, 1961), which has already been ratified and acceded to
by many developed countries, including Japan and the member states of the EC, in order to improve
the protection of performers’ rights, etc.
Japan would also like to request the United States to bring into conformity its protection of the
moral rights of authors with the obligations set out under the Berne Convention for the Protection of
Literary and Artistic Works, to which the United States became a party in 1989.  Please explain the
U.S. view on the matter.
(ii) The right of “making available” is independently stipulated in Art. 8 of WCT and Art. 10. and
Art. 14 of WPPT.  Even though the Government of the United States has ratified these two treaties,there is no independent provision for the right in the U.S. Copyright Act.   How does the Government
of the United States protect “the right of making available” in the U.S. Copyright Act?  Please
identify the relevant provisions in the U.S. Copyright Act and explain why those provisions are
sufficient enough to meet the obligations under WCT & WPPT.
(iii) According to Art. 14 of the TRIPS Agreement and Art. 6 of WPPT, performers are accorded
the exclusive right of authorization for their live performances.  However, Art. 1101 of the
U.S. Copyright Act does not provide any protection for live performances other than musical ones,
whereas it might violate Art. 14 of the TRIPS Agreement and Art. 6 of WPPT.  If the Government of
the United States believe that the U.S. Copyright Act meets the obligations under the TRIPS
Agreement and WPPT, please identify the relevant provisions in the U.S. Copyright Act and explain
why those provisions are sufficient enough.
(iv) The moral rights of authors and performers are protected under Art. 6bis. of the Bern
Convention and Art. 5 of WPPT.  However, Art. 106 A of the U.S. Copyright Act does not provide
any protection for the moral rights other than those of authors of a “work of visual art”, which might
violate Art. 6bis. of Berne Convention and Art. 5 of WPPT.  If the Government of the United States
believes that it satisfies the obligations under Berne Convention and WPPT, please identify the
relevant provisions in the U.S. Copyright Act and other laws, if any, and explain why those provisionsare sufficient enough.
(v) How does the U.S. Copyright Act protect the rights of broadcasting organizations, since the
Government of the United States has the obligation to ensure the protection of these rights according
to Art. 14 of the TRIPS Agreement?  Please identify the relevant provisions in the Copyright Act and
other laws, if any, and explain why those provisions are sufficient enough to meet the obligation under
Art. 14 of the TRIPS Agreement.
(vi) Does the U.S. Copyright Act provide the exc lusive right of rental to the authors of
“cinematographic works”, since the Government of the United States has the obligation to ensure the
protection of these rights according to Art. 11 of the TRIPS Agreement and Art. 7 of WCT?  If the
Government of the United States believes that “the widespread copying of the works materiallyimpairing the exclusive right of reproduction” will not take place even without the right of rental,
please explain why.WT/TPR/M/88/Add.1
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(j) U.S. Copyright Act Section 110(5) (Imp lementation of DS160) (p. 81, para. 208)
Regarding the Panel of United States-Section 110(5) of the U.S. Copyright Act (DS160), the
United States must implement the recommendations of the Dispute Settlement Body by the end of this
year, or on the date when the current session of the U.S. Congress adjourns, whichever comes earlier.
We note that the article in question has not yet been amended.  As the U.S. accepted the
recommendations, it should amend, as soon as possible, the related article of the Copyright Law in
order to be in compliance with the obligations under the TRIPS Agreement.  Please explain theplanned schedule for revising the Copyright Law.
(k) Section 337 of the Tariff Act of 1930 (pp. 83-84, paras. 214-216)
Import restriction on goods which violate intellectual property rights may be justified under
Article 20 (b) of the GATT with certain conditions .  At the time of the GATT, however, a panel report
was adopted (November, 1989) wherein it was mentioned that Section 337 of the Tariff Act of 1930cannot be considered as an exception under the GATT.  Following this adoption, there were some
improvements on Section 337 due to the amendments implemented through the UR Agreement Act
of 1994.  However, today there still exists the possibility of unfair treatment on imported goods.  As of
January, 2000, the EC requested consultations on the matter in the WTO, and Japan and Canada
joined as third parties.  This dispute is still in the consultation phase and the Government of Japan willcontinue to closely monitor the process.
Please explain the recent practice regarding the period of time between the initiation by the
USITC of an investigation and its completion. What  is the U.S. view on this matter, taking into
consideration its conformity with the WTO agreemen ts, such as GATT Art. 3(4) and TRIPS Art. 41(2)?
4. DEVELOPMENTS IN SELECTED SECTORS
(1) Steel (pp. 91-92, paras. 27-30)
Protectionist bills in the steel sector have been introduced in the U.S. Congress which include
a bill that aims to relax the criteria to impose safeguard measures and a bill that calls for import quotas
programs. Also in June, 2001, Bush administration initiated investigation based on Section 201 at the
request of the U.S. steel industry.  Apparently, these are increased tendency toward protectionism in
the U.S. steel sector.  The Government of Japan considers the multilateral initiative by President Bush
aiming at reducing inefficient excessive capacities and market distorted subsidies in the steelindustries to be useful.  However, in light of the fact that the true issue lies in improving
competitiveness of the U.S. steel industry, we are of the view that what is important is to proceed with
structural reforms rather than depend on protectionist measures.  We expect that U.S. authorities will
understand this situation accurately and pursue their Section 201 investigation in a fair and impartial
manner, without any political distortions and consistent with the WTO Agreement on Safeguards.  Wewould appreciate the U.S. views on this matter.
(2) Maritime-transportation
(a) The Merchant Maritime Act of 1920 (pp. 93 and 96, paras. 31 and 43)
The Merchant Maritime Act of 1920 prescribes that ships for coastal shipping services are
required to be built in the United States.  Although this issue was dealt with in the review processpursuant to the paragraph 3.(b) of the GATT 1994, Japan regrets that sufficient explanation by the
United States, on whether the conditions which created the need for the exemption still prevail, wasWT/TPR/M/88/Add.1
Page 38
not provided, and would expect an appropriate review next time.  Please provide the U.S. view on this
point.
(b) Maritime transport and related service (p. 94, para. 36)
(i) Japan is of the view that before resumi ng the Negotiations on Maritime Transport, any
retaliatory action taken by the FMC can become consistent with the DSU.  Please provide the U.S.
view on this point.
(ii) Regarding FMC’s sanctions in 1997 that imposed fees against Japanese ocean carriers on the
grounds of allegations with regard to Japan’s port practices, Japan would like to stress again its view
that the sanctions violate the MFN and national treatment clause of the Treaty of Friendship,
Commerce and Navigation between the U.S. and Japan.  The sanctions were suspended in 1997, and
withdrawn in May 1999 as a result of bilateral talk s.  The description in this paragraph is not
appropriate, because it can be construed as “pending”.
Despite the situation of the port transport sector in Japan remarkably improved2, there still
remains the “action” by the revised order dated 9 August 2001 that requires the United States, Japan
and third countries’ carriers to file reports.
In this regard, Japan would like to point out that the revised order imposes submission of
documents beyond the carriers’ responsibilities such as copies of any cabinet order, ministerialordinance or notification implementing or interpreting the revised Port Transportation Business Law.
We would like to seek the U.S. views on this matter.
(c) Cargo preference measure (p. 95, para. 40)
At the last review, the United States replied “take note” to the comment by Japan regarding
the abolishment of the Cargo Preference Measures and the disclosure of information concerning
cargoes subject to cargo preference requirements and those actually carried on US-flag vessels.  Please
give details on progress of the U.S. consideration on the abolishment of the above Measures, as wellas on the disclosure of the information concerned.
(d) MSP (pp. 95-96, paras. 41-42)(i) There are 3 classes of shipping company: “trusts”, who own U.S.-f lag vessels; “U.S.-owned
ship-management companies”, who charter those vessels; and “foreign-owned carriers”, such as APL,
Maersk-Sea-Land, who time-charter those vessels.   Which of these 3 classes can directly benefit from
MSP subsidies?
In this regard, please indicate to which class the following words used in this report belong.
1) “U.S. shipping companies” on 5
th line in paragraph 36, p. 94
2) “U.S. companies” on 3rd line in paragraph 37, p. 94
                                                     
2 The improved situation is as follows:
As for “the previous consultation system”, its procedure has been facilitated significantly since shipping
companies and port transporters reached an agreement in October 1997.
Japan amended the Port Transportation Business Law and abolished the economic needs test requirement at
the major 12 ports (Chiba, Tokyo, Yokohama, Kawasaki, Shimizu, Nagoya, Yokkaichi, Osaka, Kobe,Shimonoseki, Kitakyushu and Hakata) last year, as a re sult there actually appeared  to be new participations
in the port transport business.
  Port terminal services have steadily progressed toward 24-hour/day operation.WT/TPR/M/88/Add.1
Page 39
3) “U.S.-flag vessel operators” on 2nd line in paragraph 42, p. 96
(ii) Please provide the results so far of vessels commandeered under the MSP scheme.  It appears
that the MSP has the same effect as direct support measures for maritime industries, since despite
aiming at national securities, subsidies are supplied for the time corresponding to ordinal commercial
operation and consequently distort free and fair competition.  Please provide the U.S. view on thispoint. (p. 96, para. 42).
(e) Foreign vessels for cruises (p. 96, para. 44)
The paragraph mentions that, “[r]ecently, a number of legislative proposals have been made
for a relaxation of restrictions on the use of foreign vessels for cruises in the United States”.  Pleaseexplain the prospect of enacting such legislations.
(f) Longshore work by crew (p. 96, para. 45)
Please provide:1) the list of countries permitted to carry out longshore work by the crews of vessels registered in
and owned by the nationals of those some countries on the basis of reciprocity;
2) the names of organization referred to in the wording “[t]he authorities” in the first line.
(3) Financial services
(a) Discriminatory measures against foreign banks in obtaining the status of financial holding
companies (p. 103, para. 75)
In order for banks to enter securities business through affiliates, it is necessary for such banks
to obtain the status of Financial Holding Companies (FHCs), based on the Gramm-Leach-Bliley-Actenacted in November 1999.  In this regard, whereas U.S. banks may "automatically" become FHCs as
long as they meet certain requirements, it is provided that 'foreign banks are required to meet the same
level of necessary capital requirement as U.S. banks affiliated to the FHCs’.  Japan thinks that this
gives too much discretion to the FRB in making th e 'well capitalized' judgement.  Therefore, Japan
requests the United States to clarify the criteria of FRB’s judgement regarding this ‘well-capitalized’
requirement.
Also, when making judgements on capital adequacy, the FRB seems to consider whether or
not foreign banks rely on public funds for their capital.  However, this practice does not conform to
the principle of the Basle Accord, which does not discriminate capital according to the nature of the
shareholders.  Accordingly, Japan requests the United States to eliminate unfavourable treatment offoreign banks’ branches on the ground of reliance on public funds.   What are the U.S. views on these
points?
(b) Discriminatory measures against foreign banks in raising funds within the United States
(p. 104, para. 79)
When a foreign bank raises funds within the United States, it is necessary to deposit a certain
amount of collateral with the authorities as a guarantee.  Under the New York State Banking Law, for
instance, the authorities demand bonds of high liquidity as eligible collateral, mainly CDs and CPs.
This causes a substantial opportunity cost in co mplying with the requirement, since a much higher
return could be expected if invested in other assets.  There are also other problems such as the heavy
burden related to administrative procedures and price fluctuation risk of the collateral bonds.
Furthermore, according to a research conducted by the Institute of International Bankers (IIB), United
States and Canada are the only countries among over 40 countries surveyed, that oblige 'fundWT/TPR/M/88/Add.1
Page 40
collateral posting by foreign banks' as business guarantee.  Therefore, Japan requests that 'fund
collateral posting by foreign banks' be abolished, or if not possible, qualifications for eligiblecollateral should be expanded to include, for example, standard loan assets in order to provide
flexibility for foreign banks.   What are the U.S. views on these points?
(c) Regulations under the Investment Company Act of 1940 (p. 105, para. 88)
According to the Investment Company Act of 1940, an 'investment company,' which is
defined as a company that holds more than 40% of its assets in the form of investment securities andengages primarily in securities investment, is subjec t to regulations such as registration and disclosure
requirement under the supervision of the SEC.  In this context, it should be noted that there are many
cases where Japanese companies that have a large amount of cross-holding stocks by their business
practice, are recognized as ‘investment companies’ under the Act, and therefore required to comply
with relevant regulations.  Although there are exemption clauses in the Act, Article 3 (b) 2 thatstipulates companies applying for such exemption should be declared by the SEC to be primarily
engaged in other businesses, this gives a room for discretion by the SEC.  Japan therefore requests the
United States to clarify and relax the criteria of SEC decisions under Article 3 (b) 2, by introducing
objective criteria such as the composition of their sales or profit dependency ratio based on financial
statements.   What are the U.S. views on this point?
(d) Different insurance regulatory regimes in States (pp. 106-107, paras. 92-97)
Since regimes of insurance supervision and regulation differ from one State to another, in
order for insurance companies to engage in inter-st ate business, they need to apply for a license in
each State, as well as to comply with supervisor y regulations set by each State’s authorities.  While
Japan takes note of the NAIC’s effort to achieve uniformity among States’ regulatory regimes, it
requests further deregulation regarding inter-state insurance business.  What are the U.S. views on this
point?
(e) Discriminatory measures against foreign insurers
Japan requests the elimination of discriminatory regulations as mentioned below.   What are
the U.S. views on these points?
(i) Requirements for foreign insurers to trust funds or to submit a letter of credit issued by
primary insurers in reinsurance business. (p. 108, para. 100)
When a foreign insurer without a branch in the United States underwrites reinsurance products
in the United States, it is required either to have a trust account or to submit L/C by the original
underwriter. Japan requests the elimination of this system, since it discriminates against foreign
insurers.
(ii) Compulsory trust of assets for foreign insurers (p. 108, para. 99)
Branches of foreign insurance companies are required to trust a larger amount of assets than
their liabilities in American banks or trust companie s.  Since this system prevents foreign insurance
companies from making investment with flexibility, and they thus may miss investment opportunities,
Japan requests the elimination of this system, since it discriminates against foreign insurers.
(iii) Tax on cross-border insurance transaction (p. 110, para. 102)
When a foreign insurer undertakes to cover risks within the United States, it is liable to a
federal tax whose rate is 4% of premiums for non-life insurance and 1% of premiums for lifeWT/TPR/M/88/Add.1
Page 41
insurance and reinsurance. Japan requests the elimination of this system, since it discriminates against
foreign insurers.
(iv) Citizenship requirement for foreign insurance companies (p. 108, paras. 88-89)
Many States’ regulatory authorities impose on foreign insurance companies the requirement
that all or part of their board members should be U.S. citizens.  Japan requests the elimination of this
system, since it discriminates against foreign insurance companies.
(4) Telecommunications services
(a) Harmonisation of state-level regulations (p. 111, para. 107)
Telecommunications services are regulated at both federal and state level.  Japan is concerned
that each State not only has different procedures, but also has different terms and conditions for
certification and that applicants must adapt themselves to the regulations at federal level, as well as
those of each State, where they wish to provide services.  Such differences have caused seriousburdens upon those operators.  The Government of the United States should, therefore, resolve the
current situation, which could constitute a market entry barrier for carriers wishing to enter the U.S.
telecommunications market, and should take a positive position towards harmonising the state-level
regulations in response to the trend of liberalisation and internationalisation of the telecommunications
business.  Does the Government of the United States have a plan to standardise application forms,
and contents and forms for licenses' report?   If so, please explain its outline and current status.
(b) Implementation of Section 1377 of the Om nibus Trade and Competitiveness Act of 1988
(p. 111, para. 108)
The Government of the United States should re frain from adopting the approach of exercising
pressure upon trading partners by using the threat of resorting to unilateral sanctions under
Section 1377 of the Omnibus Trade and Competitiv eness Act of 1988.  Please comment on this point.
(c) Regulations on "dominant carriers"(p. 111, para. 109)
A foreign carrier providing international telecommunications services, which has "market
power" in its own market, is more regulated than ot her carriers.  Such regulations have no rationale
and may result in unjustified discriminatory treatment against foreign carriers.  These regulations may
also have the effect of unfairly restricting foreign direct investment.  Applied according to U.S.
domestic law, these regulations, which have no basis under the WTO Agreement, may be inconsistentand should therefore be revised.  What is the U.S. view on the matter?
(d) Certification and licensing criteria for foreig n carriers' entry into the U.S. telecommunications
market (p. 112, para. 110)
Regarding the certification and licensing criter ia for foreign carriers' entry into the U.S.
telecommunications market, the Government of the United States retains discretionary criteriaconcerning the "public interest" factors, such as "trade concerns" and "foreign policy", and a "very
high risk to competition".  The existence of such criteria is regarded by foreign carriers, including
those from Japan, as a concern lasting into the future.  The Government of Japan considers that the
criteria of "trade concerns" and "foreign policy" should be abolished as these could be invoked for
refusing the issuance of a certification or license for reasons irrelevant to the telecommunicationspolicy.  Please explain the position of the Government of the United States in this regard.  The
Government of Japan further considers that the Government of the United States should clarify andWT/TPR/M/88/Add.1
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publish some guidelines under which the criteria of a "very high risk to competition" would be
invoked.  Is there any plan to do so?  If not, then why?
(e) Restriction of foreign investment on the licensing of radio stations (p. 112, para. 111)
The Government of Japan abolished the restriction of foreign investment on the licensing of
radio stations for the purpose of conducting telecommunications activities, and thus, has been
requesting the Government of the United States to take the same action on the restriction of foreigninvestment stipulated in Section 310 of the Comm unications Act 1934.  In addition, the Fourth Joint
Status Report on the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy states
that, "[t]he United States Government will continue a dialogue on this issue with the Government of
Japan".  On the other hand, however, the Report states that, "[t]here are no plans to abolish the
restrictions on direct ownership of a common carrier radio license".  Please explain the position of theGovernment of the United States with regard to these restrictions. In particular, please explain the
grounds for maintaining the restrictions on direct investment, despite the fact that indirect investment
itself has been fully liberalised.
(f) Inter-state access charge
Regarding the inter-state access charge, the Government of Japan has been requesting the
Government of the United States to establish the legal foundation for the LRIC model adopted in the
U.S. Please provide information on the progress in this regard.  In addition, the Government of Japan
recognises that different methods, such as the "Bill and Keep" method, are being considered.  Please
also explain about any progress regarding such consideration.
(6) Professional services
(a) Accounting services regulation (p. 117, paras. 134-135)
(i) We understand that the SEC intends to accept financial statements from foreign private issuers
which are already prepared by using the International Accounting Standards for the purpose of raising
funds in the United States.  Please confirm our understanding.
(ii) What level of reconciliation would the SEC require when permitting the use of IAS in the
United States?
(iii) What is the schedule for accepting IAS in the United States?
(b) Acceptance of Foreign Legal Consultants (FLC) (p. 118, paras. 141-142)
(i) It is stated in the para.141 that “nine jurisdic tions require in-state offices for licensing, and 16
jurisdictions maintain in-state or U.S. residency requirements,” please specify those states which
maintain such regulations.
(ii) In the United States, 23 States, as well as the District of Columbia, have regulations regarding
foreign legal consultants (FLC).  The period of practising experience which is required to be eligible
as a FLC under these regulations varies from 3 to 5 years among those States and the District.  For thepurpose of promoting international business, all States should accept foreign qualified lawyers as
FLCs and should reduce the period of the practising experience requirement down to three years.  It
would be appreciated if the Government of the United States would explain the results of its
consultations with the American Bar Association regarding the acceptance of foreign qualified
lawyers.WT/TPR/M/88/Add.1
Page 43
5. MISCELLANEOUS
(1) Re-export control
The U.S. Export Administration Regulations mandate firms located outside the U.S. to obtain
authorisation from the Government of the United States when it is necessary to re-export certain
goods.  Such a requirement apparently constitutes an extraterritorial application of the U.S. laws and
thus should be abolished.  Furthermore, until it s abolishment, the following transitional measures
should be taken into consideration:
(i) in light of the fact it is difficult that for non-U.S. companies to obtain information on re-export
regulations, the United States should strengthen its efforts to publicise such information, and
in case where a company cannot be expected to  know a specific requirement, it must not be
held liable;
(ii) the United States should publicise as a guideline the methodology used by the DOC when
calculating the ratio of software and technology incorporated in a product;
(iii) companies should be allowed to resort to a de minimus level, according to their own
judgement, by making use of the above guidelines.
(2) Metric system (SI Unit)
Considering the impact of the U.S. market on the world, the Government of Japan strongly
requests that the metric system (the SI Unit), which is a global standard, be adopted more broadly by
the Government of the United States and American businesses.  We note that the United States did
indeed commit itself to this issue in the 2nd annual report of the SII (Structural Impediments
Initiative) in 1992.  We would appreciate receiving the U.S. view on this matter.
HONG KONG, CHINA
Textiles (WT/TPR/S/88, pp. 87-88, paras. 10-13 & Table IV.2)
We note with great disappointment that insofar as the US ATC integration programme is
concerned, phasing out of the bulk of textile quotas has been left until 2005.  In the case of HKC, as
much as 84% of the value of our imports into the U.S. in 2000 will not be liberalized until 2005.
Where the U.S. integration programme may have complied with the letter of the ATC, it has fallen far
short of honouring its spirit.  Being the world's leading importer of textiles and clothing, does the
U.S. Government have any plan to further liberalize the textile and clothing sector before 2005 bymaking use of the flexibility available under Articles 2.10 and 2.15 of the ATC?  If so, what are the
details?
To prepare for the eventual integration of the textiles and clothing sector into GATT 1994,
Article 1.5 of the Agreement on Textiles and Clothing provides that members should allow for
continuous autonomous industrial adjustment and increased competition in their markets.   Can the
U.S. share with members the measures it has put in place to implement this particular provision,
particularly in view of the fact that the vast majority of its textiles and clothing imports will not be
liberalised until 2005?
Up till now, the U.S. Government has yet to announce the details of the outstanding
implementation arrangements, including the visa requirement for integrated products.  Bearing inmind that commencement of Stage 3 integration is only three months down the road, could the
U.S. Government announce such arrangements, includ ing confirming that the visa arrangement forWT/TPR/M/88/Add.1
Page 44
products integrated under Stage 3 will be eliminated with effect from 2002, as was the case with
Stage 2?
Anti-Dumping (WT/TPR/S/88, p. 34, para. 32)
We note  that the number of anti-dumping investigations initiated per year by the U.S. has
increased from an average of 37 cases in 1987-1997 to an average of 42 cases in 1998-2000.  What is
the U.S.’ comment on this rising trend?  Does the U .S. envisage this trend to continue in the coming
years?  If so, what might be the reasons?
We also observe that of those anti-dumping investigations initiated in 1998-2000 for which a
determination had been made, almost 40% resulted in no provisional measure being imposed, either
because of a finding of no injury by the International Trade Commission or of a preliminary finding of
no dumping by the International Trade Administration.  This is a cause for concern as investigations
without clear and objective justifications would result in trade harassment to exporters and hamperfree trade.   What are the measures in place to prevent unjustified investigations from launching?
Given the high portion of investigations not resu lting in provisional measures, would the U.S.
consider further measures to ensure that utmost caution is exercised before investigations are
launched, so as to prevent them from being abused?
Some independent studies in the U.S. (re. Brink Lindsey of CATO) pointed out that the
number of AD measures in force against U.S.  goods during 1996-2000 was 41% higher than that
during 1991-95.  The number of AD cases have indeed increased quite dramatically after the
conclusion of the UR Agreements.   What is the assessment by the U.S. on the impact of such surge of
AD actions on its industries?  Is there a case calling for tightening of relevant disciplines so as to
prevent potential gain from trade liberalization be further hampered?
Standards and Technical Regulations  (WT/TPR/S/88, p. 48, para. 88)
We note that technical regulations may be established at sub-federal level. However, no
notification of such measures has been received by the WTO.  We consider that sub-federal technicalrequirements could also have substantial effect on other WTO Members.  We would like to know
whether the U.S. has, for transparency purpose, any plan to notify such proposed measures to WTO if
they do not follow international standards or if international standards are yet to be developed.
Regional Trade Agreements (WT/TPR/G/88, p. 11, para. 40)
We note that the U.S. sees that regional agreements can become models for future multilateral
liberalization in new areas, for example, environment and labour standards etc.  However, it appears
that there is still controversy within the U.S., notabl y in the U.S. Congress, over the inclusion of these
new areas in regional initiatives/agreements.  A prominent example is the U.S.-Jordan Free TradeAgreement, which is yet to be ratified by the U.S. Congress.  We would like to know the U.S.' latest
stance on these new areas in the context of its future regional initiatives/agreements.
Competition Policy (WT/TPR/S/88, pp. 73-74, para. 176)
We note that the Department of Justice regularly expresses its view on the appropriateness of
antitrust exemptions, and seeks the elimination of antitrust exemptions where warranted.  We are
interested to know more details in this regard, including the reasons for maintaining the existingantitrust exemptions as well as the amount and nature of the antitrust exemptions that have been
eliminated in recent years.WT/TPR/M/88/Add.1
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Intellectual Property Rights (WT/TPR/S/88, p. 74, para. 178)
We note that under U.S. legislation, parallel imports of goods containing protected intellectual
property, in the form of patents, copyrights, or indu strial designs, may be prevented entry by the right
holder of the goods and stopped at the border by Customs.  We would appreciate details of the
circumstances under which parallel-imported goods would be barred from importation and the reasons
behind.
Agriculture (WT/TPR/G/88, p. 9, para. 30)
It is noted that the U.S. proposals for the mandated negotiations on Agriculture include the
progressive elimination of export subsidies over a fixed period of time.  We are interested in the
current level of export subsidies the U.S. provides for its agricultural sector, and further details on thepace and timeframe of its proposal in the agricultural negotiations to eliminate export subsidies.
Maritime Transport (WT/TPR/S/88, p. 96, para. 43)
We are concerned that the Jones Act limits cargo and domestic passenger service between
ports in the U.S. to ships that are registered under the U.S. flag, U.S. crewed, and built in the U.S.
That poses a major barrier for market access to the U.S. market.  Could the U.S. explain whether the
conditions which created the need for such protection still prevail; and if so, provide the details ofsuch conditions?
Air Transport Services (WT/TPR/88, p. 99, para. 57)
We note that the U.S. maintains MFN exemptions  with regard to the selling and marketing of
air transportation services as well as the operation and regulation of computer reservation system
(CRS).   Would the U.S. withdraw its exemptions upon expiry of 10 years in accordance with the
relevant GATS provisions?
Financial Services (WT/TPR/S/88. p. 104, para. 83)
We note that there is an uneven penetration of foreign banking branches into the U.S. market.
It is mentioned in the report that some States rest rict the issuance of licences for branches or agency
and some restrict the opening of representative offices by foreign banks.  We are interested to knowmore information of those restrictions.
(WT/TPR/S/88, p. 105, para. 88)
The Investment Company Act of 1940 prohibits foreign investment companies from publicly
offering their shares in the U.S. unless an order is so issued by the Securities and Exchange
Commission after looking into the circumstances of individual cases.  That seems to have posed
obstacles for market access of foreign investment funds.  As a result, few foreign funds are registered
in the U.S.  Would the U.S. review the procedures and re quirement for the registration of foreign
funds?
(WT/TPR/S/88, p. 108, para. 98)
Foreign direct investment can enter the U.S. insurance market either by acquisition of a
licensed insurance company or by establishing a subsidiary or a branch.  However, it is noted that
quite a number of States disallow the establishment of a subsidiary or branch by non-US insurers.  We
would like to know whether there is any plan to remove these impediments.WT/TPR/M/88/Add.1
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Professional Services (WT/TPR/ S/88, pp. 115-116, paras. 125-129)
The absence of uniform regulatory regimes and requirements among States constitutes
barriers to the entry of foreign services suppliers.  We would like to know if the U.S. has any plan to
ensure harmonisation of regulations among States in this respect.
REPUBLIC OF KOREA
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
p. 16 (para. 15)
Paragraph 15 of page 16 of the Secretariat’s report indicates that the U.S. has demanded the
reduction of environmentally harmful and trade distorting fisheries subsidies.  However, the recent
reports of OECD and FAO did not find any objectiv e evidences on the relationship between fisheries
subsidies and fisheries resources.  What is the basis for the U.S. to argue that fisheries subsidies are
environmentally harmful?
*OECD(2000): Government Financial Transfers and Resource Sustainability
FAO(2001): Report on the Export Consultation on Economic Incentives and Responsible
Fisheries
III. TRADE POLICIES AND PRACTICES BY MEASURE
p. 24 (para. 3-4)
Excluding the ad valorem equivalents (AVEs), the US’s average applied MFN rate was 4.6%
in 2000, but the average of AVEs was estimated at 11.5% and specific and compound duties
accounted for 75 of the 100 highest rates in the same year.   What are the objectives pursued in
maintaining the specific and compound duties?  Does the U.S. have any plan to reduce the number of
products subject to those duties?
p. 25 (Table III.1)
Table III.1 shows that items subject to tariff peaks with tariffs over 15% account for 7.0%
in 2000.  This level is higher than that of other developed countries.  What is the U.S. plan to reduce
items subject to tariff peaks in the future?
p. 25 (para. 6)
In the U.S., tariff escalation, which arises when tariffs increase with the degree of processing,
is particularly noticeable in the food, beverages, tobacco, textiles, clothing and leather industries.Does the U.S. Government intend to ease or eliminate these tariff-rate structures?
p. 31 (paras. 20-21)
The Harbor Maintenance Tax (HMT), introduced in 1986, was levied by the U.S. Customs
Service on the value of imports and domestic cargo shipped through U.S. ports until 1998, when the
U.S. Supreme Court ruled that the portion of the HMT levied on exported cargo violated the ExportClause of the Constitution.
a) The continuous levying of the HMT on imports, while domestic cargo has been exempted,
could appear to be a violation of GA TT 1994 Article III (National Treatment).   Does the U.S. have
any plan to eliminate the HMT on imports?  WT/TPR/M/88/Add.1
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b) The U.S. Administration is considering replacing the remaining portions of the HMT as well
as the previous export portion with a cost-based Harbor Maintenance Fee.  Korea is concerned thatthis new fee could violate GATT 1994 Article VIII 1.(a) as it could be charged for purposes unrelated
to the actual use of port services such as the development of new ports.   Can the U.S. provide a
detailed explanation on the planned Harbor Maintenance Fee?
pp. 33-34 (paras. 27-30)
The U.S. enacted the Continued Dumping and Subsidy Offset Act of 2000 in October 2000.
The Act, also known as the Byrd Amendment, incl udes provisions for allocating the proceeds of anti-
dumping and countervailing duty orders to the domestic producers who are petitioners.
This allocation constitutes a violation of the Anti-Dumping Agreement and Agreement on
Subsidies and Countervailing Measures because it provides additional remedy not allowed under thesaid WTO Agreements.  What is the U.S. view on this matter?
It is our deep concern that such a measure would lead to proliferation of petitions for anti-
dumping and countervailing measures and the disruption of the multilateral trading system.  Does the
U.S. Government have any intention to amend the Ac t to make it consistent with WTO Agreements?
p. 42 (para. 60)
In June 2001, the USTR requested the USITC to initiate an investigation of injuries to the
steel industry under Section 201 of the 1974 Trade Act.  Following this request, the USITC initiated a
Steel Global Safeguard Investigation.
a) It appears that the current difficulties faced by the U.S. steel industry are not caused by
imports from foreign countries, but mainly by structural problems experienced by this industry.  In
this sense, it would seem necessary for the U.S. Go vernment to review first the restructuring of the
U.S. steel industry instead of introducing safeguard measures.   What is the U.S. view on this matter?
b) Safeguard measures taken under Section 201 of the Trade Act would most likely encourage
rise of protectionism in world trade and adversely affect the launch of a New Round at the Doha
Ministerial Conference.  Bearing this in mind,  does the U.S. have any intention to consider not taking
safeguard measures?
Government Procurement
p. 43 (para. 65)
No statistical information had been provided up to May 2001 by the United States to the WTO
under Article XIX:5 of GPA.
a) What is the main reason not to provide information?
b) What percentage of the total amount of th e U.S. government procurement is open to GPA
signatories?  What percentage of U.S. government procurement do foreign companies represent?
pp. 44-45 (para. 71)
The U.S. GSA maintains a negative list of suppliers, domestic and foreign, which must be
excluded from federal procurement.  What are the criteria used when drawing this list?  How can
listed suppliers be excluded from the list?WT/TPR/M/88/Add.1
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Articles 210.21 (d)(2)(i) and (ii) of the National School Lunch Act, which were revised
in 1998 but are not explicitly mentioned in the Secretariat’s report, stipulate that “the Department ofAgriculture shall require that a school food authority purchase, to maximum extent practicable,
domestic commodities or products.”  This language contrasts with the language used in the pre-1998
NSLA which simply stipulated that DOA should provide only domestic agricultural products to those
school authorities.  Such procurement of domestic agricultural products by DOA for those
programmes is exempted from national treatment obligations of GPA, as mentioned in Annex 1.1 of
the U.S. GPA schedule.  However, if the U.S. Government obliges school food authorities to buy only
domestic commodities, this raises question as to whether the new NSLA violates GATT 1994
Article III.  What is the U.S. view on this matter?
pp. 48-49 (para. 89)
In order to reduce technical trade barriers, the United States considers that national treatment
could be achieved through cooperative arrangements between national conformity assessment bodies,
instead of focusing on mutual recognition agreements (MRAs).   What does “cooperative
arrangements between national conformity assess ment bodies” mean in detail, and what is the
difference with mutual recognition agreement?
p. 49 (para. 90)
Although the U.S. Government permitted the import of Korean mandarin oranges in
August 1995, five major producing states (California, Louisiana, Texas, Florida and Arizona) still
prohibit the import of this product due to concerns related to the citrus canker disease.  However, the
phytosanitary concerns were effectively addressed through a risk assessment process completed in
June 2001.  Therefore, the U.S. needs to revise federal regulation (7 CFR 319.28) as soon as possible
so that the aforementioned states open their markets to Korean mandarin oranges.   Korea would
appreciate it if the U.S. could express its views on this issue.
p. 82 (para. 211)
The USTR places trading partners on the Special 301 Priority Watch List in case these
countries are considered “to deny adequate and effective protection of intellectual property rights” or
“fair and equitable market access to U.S. artists and industries that rely upon intellectual property
protection”.   What is the definition of “adequate and effective” and “fair and equitable”?  Does the
U.S. have any objective criteria?  Couldn’t the U.S., by  using such classification, run the risk of being
too arbitrary?
IV. DEVELOPMENT IN SELECTED SECTORS
p. 93 (para. 31)
The Jones Act prohibits the commercial use of foreign-built ships on domestic routes.  The
U.S. argues that such protection is needed to maintain a naval capacity for national security reasons.
However, a number of WTO Members express doubts whether such a rationale is still valid.  Does the
U.S. plan to review the Jones Act?
p. 95 (para. 40)
The U.S. maintains cargo preference requirements which provide substantial support to the
U.S. maritime industry.  The government-generated cargoes, military cargoes, cargoes generated by
Eximbank loans and the Alaskan crude oil “must be carried on U.S. flag-vessels, unless a waiver isWT/TPR/M/88/Add.1
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granted by MARAD”.  This U.S. cargo preference system is not consistent with the principles of free
and fair competition, and, in particular, the pr inciple of national treatment embodied in GATS
Article XVII.  Considering these concerns, does the U.S. intend to eliminate this preference system?
p. 103 (para. 77)
Paragraph 77 of page 103 of the Secretariat’s report says that:  “U.S. branches of foreign
banks are involved primarily in wholesale banking, and seldom in retail banking;  this may reflect the
fact that, with very limited exceptions, no foreign bank branch or agency may accept or maintain retaildeposits of less than US$100,000.”
a) What are the detailed requirements to accept retail deposits of less than US$100,000 by a
foreign bank branch in the U.S.?
b) Is there any plan to ease or eliminate the restraint for foreign bank branches in banking
services?
EUROPEAN UNION
Report by the Government (WT/TPR/G/88)
I. THE UNITED  STATES IN THE  MULTILATERAL SYSTEM
(para. 4) The Report states that “Agricultural export subsidies impose especially unfair burdens on
farmers in the poorest countries."   Could the U.S. please explain the continued use of export
enhancing instruments, such as export credits, P.L. 480 and the EEP, in the light of such a statement
and in the light of the comprehensive framework proposal submitted to the WTO Committee on
Agriculture?
II. THE UNITED STATES ECONOMIC AND TRADE ENVIRONMENT
(para. 16) The Report states that it is implem enting its UR commitments on time and in full.  Could
the U.S. please elaborate on the delays in notifying the domestic support levels for 1998 to the WTO
Secretariat?
III. TRADE  POLICY  DEVELOPMENTS, 1999-2001
(1) WTO A
GREEMENTS AND INITIATIVES
(ii) Built-in-Agenda Negotiations in Agriculture and Services
(para. 30) The Report states that the U.S. comprehensive framework proposal “sets out clear,
attainable goals for far-reaching, ambitious reforms”. In the light of the continued need for additionalsubsidies for U.S. farmers and exporters, and the discussion on which U.S. policies should be
classified as Amber Box, is the U.S. ready to stand by proposals which would seem particularly
difficult for its own agricultural production base?
(para. 31) The U.S. proposes to eliminate the current three classifications of domestic support and
replace them by trade distorting and non-trade distorting support.  However, it is clear that the 1996Farm Bill, combined with almost assured annual emergency payments, has led to surplus production
in some cases.  This has led to increased government use of export measures.  These would also
include food aid programs, whereby the aid consists of commodities rather than financial aid to buy
the necessary commodities on the world market.  In fact, disposing of surplus stocks is a statedWT/TPR/M/88/Add.1
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objective of U.S. food aid. Aside from the implied need for Blue Box policies, this unintended effect
of surplus stocks on world markets caused by current farm legislation should be taken into account.  Is
the U.S. preparing a new Farm Bill that takes the effects on international trade of domestic support
fully into account?  Are countercyclical payments also viewed as having an impact on international
trade?
(2) R EGIONAL INITIATIVES
Free Trade Area of the Americas (FTAA)
(paras. 44, 45)  Could the Government please explain its views on the relationship between the ongoing
FTAA negotiations and a New Round of WTO negotiations?
Asia Pacific Economic Partnership (APEC)
(para. 47)  Could the Government inform what will be the impact of the APEC work programme on
trade in services on GATS negotiations?
The Caribbean Basin Initiative (CBI) and the AGOA
(para. 60)  The Report states that “The United States intends to request any WTO waivers which may
be necessary for the enhanced benefits of the CBTPA.”   Can the U.S. specify its intentions in this
regard?  What is the situation with regard to the AGOA (paras. 52-58), where no reference is made to
any waiver requests?
(3) B ILATERAL INITIATIVES
(paras. 64, 66)  To what extent do the bilateral FTA negotiations with Chile and Singapore address
trade in services?  What are the U.S. objectives?
(5) L EGISLATIVE AGENDA
(para. 74)  What are the services aspects of the bilateral Trade Agreements with Jordan, Viet Nam and
Laos?
(7) E NVIRONMENTAL ISSUES
(para. 83)  How does the U.S. see the role of international, as opposed to purely national,
environmental policies in complementing international trade?
(para. 85)  The EU shares the U.S.’ belief that it is important to identify and pursue area where trade
liberalisation holds particular promise for yielding both trade and environmental benefits.  An
area which the EU considers worth examining in this  respect is that of energy subsidies, including
pricing and taxation systems which effectively amount to subsidisation by avoiding that the trueenvironmental costs of energy use are reflected in the price of energy.  To what extent does the U.S.
share this view and is open to examine and review its own policies in this area?
(para. 87) The U.S. has stated that it will conduct an environmental review of the negotiations on
services and agriculture;  why has the U.S. chosen to carry out only an environmental review as
opposed to a broader review taking into account all three pillars of sustainable development?WT/TPR/M/88/Add.1
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Secretariat Report (WT/TPR/S/88)
SUMMARY OBSERVATIONS
(para. 35)  Could the U.S. please provide more informat ion on the liberalisation of services they have
undertaken beyond U.S. commitments under the GATS?
(para. 41)  The Report states that the U.S. Federal system reserves the governance of professions to
individual U.S. States.   Does this principle not also apply to other services sectors (see U.S. GATS
schedules)?  Which measures in the sense of Article 1 para 3 of the GATS will the U.S. take forongoing GATS negotiations to ensure the observance and improvement of U.S. obligations and
commitments by regional and local governments and authorities and non-governmental bodies within
U.S. territory?
I. RECENT ECONOMIC DEVELOPMENTS
(4) B
ALANCE OF PAYMENTS
(ii) Trade in services
(para. 29)  With regard to Table AI.5, would it be possible to have a breakdown of Business,
professional, and technical services?
(paras. 31-33)  Could the U.S. please provide some more co mplete analysis on the development of their
trade through commercial presence, in particular on the main sectors on the import side?
(iii) Foreign direct investment
(paras. 34, 35)  Could the U.S. provide some more detailed information on the shares of services in
outbound and inbound U.S. FDI, distribution by countries and sectors, and their reasons?
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
(4) I NVESTMENT POLICIES
(i) Foreign direct investment
(para. 46)  Could the U.S. give some more information on the rationale for its restrictions on foreign
ownership in domestic air and maritime transportation, and several activities in the energy sector
(e.g. oil and gas pipelines), leases to develop mineral resources on federal lands, telecommunicationservices, and primary dealers in financial services, as well as restrictions at the State level in
insurance.  Are there foreign ownership restrictions in other services sectors?  Are there any policies
to address such investment and trade restrictions, including in a cross-sectoral fashion?  And what
are the other existing restrictions to foreign ownership in the non-services sectors, i.e. in agricultural
and manufacturing industries.  In this regard, it woul d be relevant to know what are the particular
restricting measures adopted, at the sub-federal level, by each State.
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) M
EASURES DIRECTLY AFFECTING IMPORTS
(i) Tariffs and other charges affecting imports
Under the Information Technology Agreement,  a complete elimination of tariffs for
information technology products was envisaged by the year 2000.  Despite this, optical fibres andWT/TPR/M/88/Add.1
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tubes for computer monitors are still subjected to tariffs.   Could the U.S. please indicate when it
intends to include these information technology products within the scope of the Information
Technology Agreement?
(b) MFN tariff rates
(para. 5) The Report concludes that "Sizeable ta riff barriers tend to be concentrated in a few
‘sensitive’ sectors, which are often also of particular interest to exporters from developing countries."
Could the U.S. please indicate to what extent it  intends to address the further liberalisation of
sensitive sectors in the New Round of Trade negotiations?  Also, could the U.S. clarify the extent to
which it grants its duty-and quota-free access for products from least-developed countries and further
measures which may be envisaged to implement this commitment?
(c) Tariff quotas
(para. 8) The division of quotas for certain cheeses into Tokyo Round quantities and Uruguay Round
quantities, complicates license applications by trader s, and should be eliminated.  A single quota for
each cheese group would be more transparent, comprehensible and accessible (and is particularly
needed for the NSPF (not specifically provided for) group).  Could the U.S. confirm that it will
introduce such a system and take notice of the Ap ril 2001 study by the USDA's Economic Research
Service which identified inefficiencies in current quota administration?
(ii) Anti-dumping, countervailing and safeguards actions
(paras. 31-49) We note that the Secretariat report places much emphasis on the use of anti-dumping
measures by the U.S.  Could the U.S. please indicate the st age of the investigation at which
suspension agreements were negotiated and in particular whether this was before or after
injury/causation had been established?
(iv) Government procurement
(para. 65)  Could the U.S. please confirm whether or not any special conditions are offered to small
businesses, as implied by the Preference Programme  referred to in the Federal Procurement Report?
(a) Institutional and legal framework
(para. 68) The Burma/Massachusetts dispute in the WTO has lapsed.  Nevertheless, the EC remains
concerned about the wider issue of sub-federal selective purchasing measures, which continue to exist.
What measures is the U.S. preparing to ensure that Supreme Court judgement on Burma/
Massachusetts case is being respected, and what consultation is going on with sub-federal entities in
relation to both the GPA review and the transparency exercise?
(para. 69) A number of changes to the Federal Acquisition Regulation (FAR) have been introduced
since 1999 related to the bidding process.  Could the U.S. provide the WTO Secretariat with more
details?
New legislation also includes the Construction Industry Payment Protection Act of 1999.
Could the U.S. authorities explain how it might affect procurement?
(para. 71) Federal government agencies may use positive list of U.S. suppliers that include also
potential EU suppliers.  On the grounds of which documents or certifications can EU companies be
included in this positive list?WT/TPR/M/88/Add.1
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What are the criteria used by the General Services Administration (GSA) to draw up a
negative list of non eligible suppliers?  What are the information sources used to exclude non U.S.suppliers in general and EU companies in particular.
(para. 74) The Buy American Act (BAA) and other similar rules cover a number of discriminatory
measures which apply to government-funded purchas es.  These exceptions have trade distorting
effects on a free and efficient market, reducing the opportunities for EU exports, but also discouraging
US bidders from using European products or services.  Is the U.S. prepared to review and roll back
“Buy American” restrictions in the context of further negotiations?
(para. 78) The PRO-Net is an interesting tool for tendering opportunities.  Is the Small Business
Administration (SBA) intending to open this register to small foreign companies?
(para. 81) The U.S. maintains sanctions against some EU member states under Title VII of the 1988
Omnibus Trade and Competitiveness Act.  The sanctions were imposed following the adoption of theEC’s “Utilities Directive” in 1993 on the grounds that it discriminated against US suppliers.  Now that
the EC telecoms sector has been liberalised (the Directive is to be amended accordingly),  what is the
rationale for continuing these sanctions?  Could the United States indicate when it will lift them? As
soon as the US takes steps to repeal the sanctions, the EC will lift its own countermeasures.
(v) Standards, technical regulations and sanitary requirements
(a) Standards and technical regulations
In many areas state and local authorities are free to set their own technical regulations, even
when federal regulations exist.  This leads in  some cases to a very complicated regulatory
environment.  At the same time the National Technology Transfer and Advancement Act (NTTAA)
of 1995 aims at promoting the use of voluntary standards by federal agencies and to co-ordinate their
standards activities.  Therefore, firstly, we would be interested to know if the U.S. is considering
extending the NTTAA to state and local authorities, and if not, what co-ordination activities do takeplace to ensure that Article 3 of WTO/TBT Agreement is implem ented?  Secondly, does the NTTAA
require federal agencies to review international standards when developing regulations?  If not, how
is the application of Article 2(4) of the WTO/TBT Agreement ensured by federal agencies?  And
thirdly, if a federal agency does not examine an existing international standard as a basis for a
technical regulation, would this constitute an infringement of the Administrative Procedures Act, withregard to failure to consider reasonable alternatives or failure to explain reasons for rejecting them?
In certain sectors, for example pressure vessels and in relation to building codes, private
sector standards bodies basically develop the technical regulations which are used by state and local
authorities in their regulations.  Could the U.S. please explain how transparency and public comment
is ensured since the Administrative Procedures Act does not apply to state and local authorities?
Electrical and electronic equipment amounts to 6% of total EU export to the U.S.  However,
this trade is impeded by obstacles such as U.S. standards diverging from the international standard
(IEC) and onerous conformity assessment requirements. Although the Occupational Safety and Health
Administration (OSHA) regulations (29 CFR 1910) do no t explicitly rule out international standards
as a basis for the testing and certification to be done by NRTLs, so far only U.S. standards (UL and
ASTM standards mostly) are accepted by OSHA.  In addition, the Annex on Electrical Safety to the
EU-U.S. Mutual Recognition Agreement (MRA), negotiated in accordance with Article 6 Of the
WTO/TBT Agreement, is not yet implemented correctly on the U.S. side.  Under the MRA, European
designated laboratories should certify equipment according to U.S. regulations.  However, OSHA
continues to deny European authorities the right to designate European laboratories to operate underWT/TPR/M/88/Add.1
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the Annex on Electrical Safety.  The behaviour of this Agency renders void the signature of the MRA
by the US Government.  1) Has OSHA examined the technical content of relevant ISO and IEC
standards to ensure that they, or their relevant parts, are not an appropriate or effective means of
fulfilling the legitimate objectives set in US la w?  If not, how does OSHA, as a central government
body, intend to ensure that Article 2(4) of the WTO/TBT Agreement is adhered to in terms of its
regulations?  2) Can the U.S. give any indication that it will follow the practice adopted by most other
countries in the world with regard to reverting to suppliers self-declaration instead of third partycertification for electrical and electronic products?  3) Will the U.S. also confirm that it will comply
fully with the provisions of the MRA?
The EU has previously asserted that U.S. track record in implementing ISO and IEC standard
is poor.  Previous questions from other WTO Members have related to the rate of U.S. transposition of
international standards as national standards.  The U.S. has responded that the U.S. Government didnot collect comprehensive data on the number of standards in existence and that there is no data that
would support the assertion of a poor transposition rate.  We would like to know what data exists to
support a high transposition rate of ISO and IEC standards as U.S. national standards?  Does ANSI
and/or its accredited standards development organisation have such data and what are the results?
(para. 85) The Secretariat report states that ANSI has developed a “National Standards Strategy for the
United States” and that this new strategy could increase the rate of transposition of ISO and IEC
standards in the U.S.  However, the transposition of ISO and IEC standards and the withdrawal of
conflicting national standards seems to play a subordinate or even non-existing role in the strategy.
The strategy paper itself states in its strategic vision that for only some technology sectors ISO and
IEC are the preferred organisations within which to achieve one global standard.  Could the
Government inform us what co mmitments and/or obligations, if any, do the standards bodies
accredited by ANSI and ANSI itself have to transpose ISO and IEC standards as U.S. nationalstandards and withdraw conflicting national standards, in particular when the U.S. has actively
participated in their development?  Furthermore, please indicate for which sectors are ISO and IEC
the preferred organisations?  And why are ISO and IEC not suitable for other sectors?
(para. 89) The Secretariat Report states that in relation to standards the U.S. conformity assessment
system largely rests on supplier’s self declaration.  However, most of the larger standardsorganisations (UL, ASTM, ASME etc.) provide third party product certification and marking schemes
for a large number of sectors as well.  It seems that these schemes have a very large impact on market
access almost to the point of constituting de facto technical regulations.  Even state and local
authorities will refer not only to the standards of these organisations but also to their approvals and/or
markings as a perquisite for approval, use and/or installation.  Could the U.S. please indicate us the
sectors covered by “voluntary” third party marking schemes?  And inform to what extent and in
which sectors federal, state and local authorities rely on private certification and marking schemes in
relation to their regulations?
(b) Sanitary and phytosanitary (SPS) measures
Procedures exist at both at Federal and State level, for the approval of wine labels.  Names
and descriptive material that may pass off U.S. wine as possessing characteristics or qualities of EU
wine are often approved, undermining the reputation of the EU product and displacing potential sales.
Can the U.S. give assurances that the approval proce dures will be improved so that this will not occur
in the future?
(para. 91) The "Code of Federal Regulations of 1996, Title 7, Subtitle B, Ch.III, §319-56-2r" provide
for a pre-clearance inspection programme of apples and pears with the aim of guaranteeing, prior to
shipment, that consignments are free from certain specified insect pests and from “other insect pests
that do not exist in the U.S. or that are not widespread in the U.S.”  Operating on the basis of an openWT/TPR/M/88/Add.1
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list of unspecified pests is not scientific and is contra ry to the spirit of transparency as provided for in
the International Plant Protection Convention and to the requirement of pest risk analysis andtransparency laid down in the WTO Sanitary and Phytosanitary Agreement (SPS).  The system
increases costs and has had a negative effect on EU exports of apples and pears to the U.S.  We would
like to know if the U.S. has intentions to re-evaluate the procedure with a mind to following more
closely the International Plant Protection Convention and the WTO SPS?
In addition, the EU is concerned about some sp ecific market access issues not referred to in
the report.   Could the U.S. therefore please further elaborate on the following:
Registration, documentation and customs procedures
The invoice requirements for exporting certain products to the U.S. far exceed normal
customs declaration and tariff procedures and are unnecessary since U.S. Customs can demand all
relevant supplementary documents and information during clearance.  This practice is costly and actsas a significant barrier to small and new competitors, particularly those in diversified high-value and
small quantity markets.
As U.S. Customs refuses to recognise the EC as a country of origin, EU firms are forced to
incur additional expense by providing supplementary documentation and following further
procedures.
Customs formalities for imports of textiles, clothing and footwear to the U.S. require the
provision of particularly detailed information which in some cases include confidential processing
methods.  These requirements lead to additional costs.   Much of this information would appear to be
irrelevant for customs or statistical purposes.
The liquidation period presently stands at 210 days which, according to importers, may be
extended for the most insignificant of  reasons.  This is particularly cumbersome for articles of apparel
such as fashion items that must be sold within tw o to three months and be marketed immediately.  As
a result, the retailer is often unable to re-deliver the goods upon request by U.S. Customs and is
therefore liable to an excessive penalty of 100% of the value of the goods.
State level impediment to trade
Some States still persist in having rules that: prevent cross-state retail sales of wines and
spirits; prohibit EU exporters from distributing, rebottling, or retailing their own wine.  Thesemeasures are a severe impediment to the free circulation of alcoholic beverages originating from the
time of prohibition.
Wine originating from the EU cannot be imported until the labelling is approved by the
Bureau of Alcohol and Firearms, for which a fee is charged.  It may be argued that cost recovery
justifies the ATF fee but there can be no excuse for the subsequent fees imposed on a state level.Furthermore, U.S. wine sold in its state of origin does not encounter the ATF fee.
The Merchandise Processing Fee (MPF) is levied on all imported merchandise (with certain
exceptions) including that entered under Schedule 8, Special Classifications, of the Tariff Schedules of
the U.S. As of 1 January 1995, this fee amounts to 0.21% ad valorem  on formal entries with a
maximum of US$485.  The MPF was originally set to expire in 1990 but is currently set to run until30 September 2003.  We are concerned that additional amendments would be made extending the time
beyond this date.WT/TPR/M/88/Add.1
Page 56
The Luxury Tax is an excise tax imposed on cars valued above an arbitrary threshold,
currently around US$36,000. The tax has a higher incidence on imported cars than on U.S. producedcars;  the EU has a total market share of only 6% but bears nearly 70% of revenue generated by the
tax.  The EU would appreciate it if the US could confirm that this tax will be eliminated as planned
in 2003.
Quotas
Each year, the U.S. fixes the total allowable level of foreign fishing (TALFF) and accordingly
makes allocations to foreign fishing fleets.  Mackerel migrating off the East coast is the only stock
currently identified as being in surplus in the U.S. Exclusive Economic Zone.  However, the U.S.
authorities have set a zero TALFF since 1990 for th is stock, following pressure from its domestic
industry.  The EU believes that this line neither corresponds to the provisions and intentions of the
Magnuson-Stevens Fishery Conservation and Manageme nt Act or to the provisions of Article 62 of
the UN Convention on the Law of the Sea.
(2) E
XPORT MEASURES
Are there any measures or programmes specifically designed to support U.S. services exports,
or is information available to what extent general export measures benefit services exports?
(i) Measures related to agri-food exporters
(a) Export subsidies
(para. 105)  Could the U.S. clarify the purpose of its export subsidy regime which operates for certain
grains and rice?  Whilst the stated purpose of the regime is to “enable U.S. exporters to meet prices
that are being subsidised by other governments into the world market”, para. 102 notes the central
objective of U.S. trade policy is to “open markets to U.S. exporters” to which end export assistance
measures are utilised.
(para. 106) The EU is concerned to note that the la test WTO notification by the U.S. shows values for
export subsidies and subsidised export volumes exceeding those specified in the U.S. Schedule of
WTO commitments for dairy products.  What is the justification for U.S. export subsidies and
subsidised export volumes exceeding those specified in the US schedule of WTO commitments for
dairy products?
(b) Export finance, insurance, and guarantees(para. 108)  Does the U.S. intend to share its estimates of total budgetary outlays for 1990-2000 under
subsidised export credits and guarantee programs with the Secretariat?
(para. 110)  Other forms of export enhancements are the use of credit facilities which have been
recognised as trade distorting.  Discussions in th e OECD are ongoing with a view to establishing an
acceptable Agreement on the use of credits as an export enhancement tool.  U.S. suggest that the useof export credits can be beneficial in that importing countries might otherwise lack financial
“liquidity”.  However, in the recent OECD report “An Analysis of Officially Supported Export Credits
in Agriculture” it is suggested that export credits might actually create demand under certain
circumstances.  It notes in particular that “the U.S.  export credits are calculated to be almost twice as
distorting on a per unit basis as any other countries’ and, given the USA’s relatively large programme,account for the majority of the distortions in world markets caused by officially supported export
credits.”WT/TPR/M/88/Add.1
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(c) Food aid
(para. 111)  The report notes that the U.S. is the largest food aid supplier in the world and that food aid
volumes are “negatively correlated” with world cereals prices, i.e. when prices are high, food aid
shipments go down.  Part of the stated purpose of the U.S. food aid programme is to “stabilise U.S.
farm incomes by disposing of surplus stock.”  In effect therefore, the use of food aid could be
construed as another form of subsidy.
(v) Export restrictions and controls
(para. 137) Title III of the Helms-Burton Act allows U.S. citizens to file lawsuits for damages against
foreign companies investing in confiscated U.S.  (including Cuban-American) property in Cuba.
Title IV requires the U.S. Administration to refuse entry to the U.S. to the key executives and
shareholders of such companies.  The EU is of the view that these measures are contrary to US
obligations under the WTO Agreements, in particular the GATT (General Agreement on Tariffs andTrade) and GATS (General Agreement on Trade in Services).  Recently, the U.S. suspended Title III
for an additional six months but its commitment to grant a waiver on Title IV has not yet been
honoured.  Does the U.S. intend to introduce a permanent solution to this problem?
(para. 138) The U.S. has recently extended the provisions of the Iran and Libya Sanctions Act (ILSA)
for another period of five years.   Could the U.S. give any indication that the EC's objections to the
U.S. Congress in response to this extension will be considered seriously and give any indication as to
the likelihood of the extension being withdrawn or reduced?
(para. 138) The Iran Non-proliferation Act, 2000 provides for discretionary sanctions against foreign
companies that transfer to Iran goods, services and technology listed under the international export
control regimes, as well as any other item prohibited for export to Iran under U.S. export control
regulations, as potentially contributing to the development of weapons of mass destruction.  The EC
sees the adoption of this Act as a sign of failure to comply with the U.S. commitment to resist thepassage of extraterritorial sanction legislation.  Will the U.S. confirm that the promise made by
President Clinton (to work with Congress in order to seek to rationalise the reporting requirements on
transfers deemed legal under applicable foreign laws and consistent with the multilateral export
control regimes) will be honoured under the current administration?
(3) O
THER MEASURES AFFECTING PRODUCTION AND TRADE
(i) Government support to business
(b) Assistance to the agri-food sector
(para. 162) Risk management policy:  It is said that these insurance programs have been notified to the
WTO as Amber Box, under de minimis  provisions.   Could the U.S. please specify whether this
includes the crop insurance premiums as well, or just the coverage against non-catastrophic eventssuch as price declines?
IV. DEVELOPMENTS IN SELECTED SECTORS
(3) T
HE STEEL INDUSTRY
(paras. 27-30)  Given the importance of the steel industry in U.S. trade policy, the EU would like to
have seen discussion of a wider variety of factors that may contribute to the industry’s problems.  Forexample, whilst imports are emphasised as the main c ause of difficulties, other factors such as lack of
cost competitiveness have not been mentioned.WT/TPR/M/88/Add.1
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(5) M ARITIME TRANSPORTS AND RELATED SERVICES
(i) International shipping services
(para. 40)  Could the U.S. please give updated figures conc erning the value/volume of the international
cargo carried out under each of the cargo preference instruments mentioned?
(paras. 43-44)  No foreign-built vessel can be documented and registered for dredging, towing or
salvaging in the U.S. despite the fact that part of the U.S. fleet needs renewing and many U.S. ports
are in need of dredging.   Could the U.S. confirm whether there are any initiatives to relax these
restrictions?
(para. 48) Progress on the U.S. Administration’s efforts to obtain implementing legislation for the
OECD Shipbuilding Agreement is unclear.   Could the U.S. give an indication of how close it is to
achieving this?
(6) A IR TRANSPORT SERVICES
(i) Recent developments
(para. 52) It is stated in the report that, by including beyond rights (or the “fifth freedom”), the Open
Skies agreements have “greatly enhanced” market access for U.S. carriers and their foreign
counterparts in the geographic areas covered.  How many foreign carriers are currently taking
advantage of their rights under such agreements to  fly fifth freedom flights in between the U.S. and
other Open Skies countries, which countries are these airlines from and which routes do they operate?
(para. 53) In the context of the “multilateral” Open Skies agreement, the U.S. has sought to maintain a
tight control on foreign investments by U.S. carriers – why is it not considered beneficial or
appropriate for U.S. companies to make internationa l investments in the aviation sector in the same
way that they do in other industries?
(para. 53)  Under what exact circumstances would the U .S. Government make use of the provision in
the "multilateral" Open Skies agreement that allows it to cancel the traffic rights of an airline basedin one of the parties, but controlled by American nationals?
(para. 56)  Given that in several EU/U.S. transatlantic markets, the market share of carriers, in
particular U.S. carriers, from outside the principle alliance appears to have fallen considerably, is
there evidence to show that the combination of an Open Skies agreement and anti-trust immunity for
an alliance maintains enough choice in those markets for time sensitive passengers?
(ii) Further liberalization of air transport services
(para. 57)  Are there any plans to bring air transport into the NAFTA agreement and thereby adopt a
more liberal regime on a regional basis?
(para. 57)  There appears to be little envisaged by the US in the way of further liberalisation of air
transport services.  Given the general benefits of liberalisation and increased competition in all serviceindustries, in particular for consumers,  does the U.S. see any scope at all for further liberalising
measures providing for market access by foreign carriers into the U.S. market or relaxation of foreign
investment rules?WT/TPR/M/88/Add.1
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(iii) Conditions affecting foreign competition
(a) Foreign ownership and cabotage
(para. 62)  The U.S. rules on "wet" leasing prevent any lease of non-U.S. registered aircraft by
U.S. carriers.  No Community-registered aircraft wi th Community flight crew can thus be leased to
U.S. companies.  Does the U.S. Administration intend to eliminate this restriction as a result of
further GATS negotiations?
(b) Airport and other services(para. 68) There is concern on the FAA re-authorisation bill (AIR-21) of April 2000, which directs the
Administrator to establish an aircraft repair and maintenance advisory panel, and also directs the
Secretary of Transportation to request informatio n from foreign air carriers in order to assess
balance of trade issues.  How is the U.S. Administration going to ensure that this bill does not conflict
with the GATS-specific commitments undertaken by the U.S. regarding aircraft repair andmaintenance services?
(7) F
INANCIAL SERVICES
(ii) Banking services
Interstate branching by de novo establishment is still limited (in 17 States).  Could the U.S.
please inform if other States plan to allow it?  What are the reasons for their reluctance?  Does thefederal State contemplate to do any thing to prompt them to do so?
Many banks are concerned over the requirement of the Office of the Comptroller of the
currency and of some State banking supervisors to maintain ‘asset pledges’ in addition to the paid-up
capital they maintain in their home country.   Do the U.S. have any plans to ensure the elimination of
this requirement?
(iii) Security services
The market is de facto almost closed for foreign investment funds willing to offer their shares.
What is the rationale of this policy?  Is any remedy contemplated?
There is concern over the impracticability to establish s branch in the U.S. by foreign
securities firms in broker-dealer activities, since registration as a broker-dealer means that the foreign
firm establishing the branch has to register and become itself subject to SEC regulations.  Is there
anything contemplated to eliminate this barrier?
A market access restriction not mentioned in the Report pertains to foreign electronic
securities markets providing to remote access faciliti es (‘screens’) to brokers-dealers in the U.S., so
that they can those markets on a remote basis.  Could the U.S. explain the rationale of this policy?  Is
any remedy contemplated?
(iv) Insurance services
Many States have no mechanism for licensing initial entry of non-U.S. insurance companies.
What is contemplated to remedy this problem?WT/TPR/M/88/Add.1
Page 60
A branch of a foreign company may write premiums based only on its U.S. situs capital,
whereas all its assets in the world are subject to liability to policyholders.  How does the U.S. explain
the contradiction between those two rules?
Some States have regulations that imply direct discrimination for foreign for foreign firms,
such as the requirement to buy reinsurance from State-licensed companies, or the need of companies
that specialise in the ‘surplus lines’ market to  be ‘white-listed’ by the National Association of
Insurance Commissioners.  Could the U.S. please clarify how it in tends to bring such legislation into
line with its international obligations?
Given the slow pace of harmonisation of legislation between States, what are the subjects that
the Federal State contemplates to pre-empt to ease the process?
(8) T ELECOMMUNICATIONS SERVICES
(para. 108) In 1997, the Federal Communications Commission adopted two rulings to implement
U.S. commitments in the Basic Telecoms Agreem ent.  However, despite some improvements, it
retained the very unclear “public interest” criteria which can be invoked to deny a licence to a foreign
operator for various motives, such as “trade concerns”, “foreign policy concerns” and “very high risk
to competition”.  Can the U.S. give any assurances that the "public interest" criteria will be revoked,
or at least clarified?
(i) Licensing and competition
Also foreign investors in the communications sector still face a degree of uncertainty and
lengthy procedures (in particular, the uncertainty of leaving the implementation of U.S. commitments
to suppress restrictions to indirect investment to FCC waivers, in the absence of any specific
legislation in this regard).   Could the U.S. confirm that it is willing to introduce more certainty in
procedures relating to foreign investment in the U.S. communications sector?
(para. 112) The report notes that it took more than seven months for a European company to get
approval.  This is much longer than what happens in the EU for a similar case.  The report does not
mention in that respect that the company had to go  through two procedures in parallel (those of the
FCC and the DOJ) and that the second one was much quicker to assess the same issues.  Do the
U.S. authorities have any plans to suppress duplication and speed up the process?
(para. 112) The report also does not mention that the U.S. Congress considered during the year 2000
legislation that would have severely limited the ability of foreign govt-owned companies to invest in
U.S. telecommunications companies.  In particular, one piece of legislation would have, if adopted,
constituted a clear violation of U.S. commitments  in the WTO on foreign investment and would have
affected the interests of European companies.  Su ch initiatives are affecting the climate for foreign
investment in the sector and bringing uncertainty to the procedures above-mentioned, in contradictionwith the objectives of the WTO.
(ii) International pricing arrangements
(b) International Internet charging arrangements
(para. 115)  Could the U.S. please explain how it defines a “public telecommunications service”?WT/TPR/M/88/Add.1
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(iii) Satellite services
The EU notes that it takes a long time for foreign operators to get an unconditional license:
what does the U.S. intend to do to remedy this situat ion which tilts the balance in favour of U.S.-based
operators?
(para. 120) The ORBIT act imposes criteria on entry into the U.S. market of Inmarsat and New Skies,
in particular statutory privatisation criteria which the FCC must apply in order to determine whether to
grant market access to these entities.  However, since these criteria apply to no other competitor,
foreign or domestic and could lead the FCC to limit these entities’ access to the U.S. market (thuspreventing an increase in the number of players in the market), could the U.S. explain how this
conforms with the intent of the Act to promote competition?  Also, one criterion for allowing market
entry by these entities conditions market access on the place of registration of the company
3 even for
WTO members’ territories : can the U.S. explains how this conforms with its WTO obligations on
market access, Most Favoured Nation (MFN) and National Treatment?
(paras. 122, 123) New Skies and Inmarsat are EU-based companies.  According to the U.S.
commitments in the WTO, market access should not be limited for companies constituted and
registered in an EU member state (thus intending to provide a cross-border service to the U.S.) or for
companies constituted in the U.S. that European companies own or control in the sense of the GATS
(thus having a commercial presence in the U.S.).  Can the U.S. explain thus why it takes so long for
those companies to get full and unconditional market access in the U.S.?  What is the rationale of
requiring these companies to conduct IPOs and how does it conform to the U.S. WTO obligations?  Inparticular, why is there a need for a «substantial dilution of Intelsat signatories» as mentioned in
paragraph 122 and how is it consistent with U.S. WTO obligations?
A number of issues have not been addressed in the section:
Following a U.S. decision to allocate to second generation systems the frequency bands which
had been identified for third generation systems by the ITU, there is a lack of availability offrequencies in the U.S. that restricts access of 3G mobile communication systems to the U.S. market.
Could the U.S. explain the efforts and progress it has made in ensuring future availability of
frequencies for foreign 3G mobile communication systems in the U.S.?
Can the U.S. explain how current universal serv ice is defined and financed?  In particular can
it give assurances that foreign consumers are not subsidising universal service obligations in theU.S.?
For digital terrestrial television, the US has mandated an exclusive transmission standard in
the U.S. (the ATSC developed in the U.S.), which prevents a technology (DVB-T) developed in
Europe and being adopted in several countries around the world from entering into the U.S. market.
Can the U.S. explain why it does not let the mark et choose which technology is working best?
                                                     
3 "Any successor entity or separated entity shall be subject to the jurisdiction of a nation or nations that:
(A) have effective laws and regulations that secure competition in telecommunications services;
(B) are signatories of the World Trade Organization Basic Telecommunications Services Agreement;
and
(C) have a schedule of commitments in such Agreement that includes non-discriminatory market access
to their satellite markets."WT/TPR/M/88/Add.1
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(9) S ELECTED PROFESSIONAL SERVICES
As a general remark, the EU would like to expr ess its regrets that the report could not include
the sub-sectors of construction, engineering and com puter and management consulting services, which
account for large shares of the U.S. trade in services, as indicated by table AI-5.
The Report discusses at length the problem of regulation of professions at the state level
which severely impacts on the ability of foreign (and domestic) professionals to supply their services
across the U.S.   What does the U.S. envisage to remedy this?
Additional questions on behalf of the European Union
Report by the Government (WT/TPR/G/88)
III. TRADE POLICY DEVELOPMENTS, 1999-2001
(2) R EGIONAL INITIATIVES
Based on an agreement in 1991 (Rose Garten Agreement), the U.S. has entered in discussions
with the Mercosur countries with a view to  launch negotiations in a 4+1 format.  Could the U.S.
please inform about:  (a) the nature and state of play of these discussions, (b) the objective and
timeframes of the negotiations, (c) whether a free trade area between the Mercosur countries and the
U.S. is foreseen or among US intentions; and/or wh ether sectoral liberalisation is foreseen or among
U.S. intentions, (d) its relation to the FTAA negotiations.
Report by the Secretariat (WT/TPR/S/88)
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) M EASURES DIRECTLY AFFECTING IMPORTS
(v) Standards, technical regulations and sanitary requirements
The EC is operating a policy of regionalism where restrictions are applied in zones affected by
certain animal diseases, with free movement of animals and products outside the affected zones.
Furthermore, the same principle as an effective means of controlling animal disease has now been
incorporated into the U.S. Tariff Act 1930 by the NAFTA and is part of the WTO SPS Agreement.
However, U.S. import administrative rules concerni ng Foot and Mouth Disease (FMD), Rinderpest and
other relevant diseases have still not been amended to reflect this change in legislation, despite a clear
commitment in the EU-U.S. Agreement on Applicati on of the Third Country Meat Directive, reached
in 1992.  Imports into the U.S. of uncooked meat pr oducts such as San Daniele ham, German sausage,
Ardennes ham, are still the subject to a long-standing prohibition despite the fact that meat products
may come from disease free regions and that the processing involved should render any risk
negligible.  Could the U.S. could further elaborate on how  it intends to meet its international
obligations concerning regionalisation?
(3) O THER MEASURES AFFECTING PRODUCTION AND TRADE
(iii) Intellectual property rights
The U.S. is party to the Berne Convention for the Protection of Literary and Artistic Works
(1971).  However, despite the unequivocal obligation to make “moral rights” available for authors, the
U.S. has never introduced such rights and has repeatedly announced that it has no intention to do so inWT/TPR/M/88/Add.1
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the future.  Whilst U.S. authors continue to benefit fully from moral rights in the EU, the converse is
not.  Could the U.S. please indicate if it intends to grant the same treatment to other Berne
Convention members as is granted to itself?
Advertising low price perfumes imitating famous European brands and thus benefiting from
the well-known reputation of the European brands is not prohibited.  This practice may violate the
Paris Convention for the Protection of Industrial Prope rty, as incorporated into the TRIPs Agreement.
Does the U.S. have any plans to assure its compliance with the Paris Convention?
Under U.S. law (28 US Code Section 1498) a patent owner may not enjoin or recover
damages on the basis of his patent for infringements due to the manufacture or use of goods by or for
the U.S. government authorities.  This practice is  apparently extremely widespread in all government
departments.  Could the U.S. please explain if it considers that this practice is in conformity with the
TRIPs Agreement that introduces a requirement to inform promptly a right holder about government
use of his patent?
MALAYSIA
1) The U.S. economy has been experiencing an economic slowdown since the third quarter
of 2000.  This is of concern to trading partners.  What measures are the U.S. undertaking to
counteract the effects of the downturn and to return  the U.S. to more sustainable rates of growth,
other than a more relaxed monetary policy?
2) The U.S. tariff regime, while having generally low ad valorem duties, continues to exhibit
high specific duties as well as tariff escalation in sectors of export interest to developing countries.
This has been in force for some time.  Is the U.S. undertaking a review of these rates, particularly in
light of possible new negotiations on tariffs and in line with U.S. commitment to an open market
policy (U.S. Government report, para. 15).
3) The U.S. has made active use of anti-dumping and countervailing measures, particularly in the
last two years.  The large number of investigati ons involving steel-related products have been the
main cause of this increase.  In addition, the U.S. has also initiated safeguard actions into steel-related
products.   Does not such actions reflect an over-protectionist reaction by the U.S. against normal
competitive market-driven pricing norms in an environment of over-supply and constitute a misuse of
WTO contingency measures?
4) There have been concerns expressed over U.S. unilateral trade measures that are not WTO
consistent.  In particular, we note especially the extension to the Iran-Libya Sanction Act.  How does
such Acts reconcile with U.S. obligations under the WTO?
SWITZERLAND
Summary ObservationsIV. OTHER POLICIES AFFECTING TRADE
§32  The Government report remains silent on the current position regarding negotiations on a
multilateral competition agreement under the auspices of the WTO, while the Secretariat's report
mentions that the US questions whether the WTO is, at this time the appropriate institution to develop
such rules.  What is the position of the new Administration on that issue?WT/TPR/M/88/Add.1
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WT/TPR/S/88
III. TRADE POLICIES AND PRACTICES BY MEASURE(1) Measures Directly Affecting Imports
(i) Tariffs and other charges affecting imports
§17  Preferential tariffs: In paragraph 17 the Secretariat notes that "the average tariffs under unilateral
U.S. preference schemes tend to be significantly lower than the average MFN rate but still
substantially higher than the average under the FTAs that the United States has concluded".
Initiatives have been taken recently by some members to improve the market access
opportunities of the LDCs.  Do the USA foresee to improve also the market access opportunities for
the LDCs, for instance to grant them th e same preference as under the FTAs?
According to our information the U.S. International Trade commission was working last year
on ways to simplify the tariff schedule, the national list of import product categories and sub-categories.  Could the U.S. delegation provide information as to which steps have been taken so far?
What have been the ITC recommendations for simplify ing the tariff schedule and have they been put in
force?
(iv) Government procurement
§65  When do the United States foresee to submit statistical information to the WTO under Art. XIX:5
of the GPA ?
§65  What is the relative share of the main tender procedures for Annex 1, 2 and 3 entities:  open,
selective and limited?  For limited tendering pro cedure, what is the importance of follow-up
purchases (Art. XV, d)?
§70  How do the proposed U.S. modifications to the GPA achieve the same level of transparency and
of competition as the present regime?  How do the new information technologies and forms of
contracts impact on tendering procedures and offers?
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
(2) Participation in the WTO
(i) Agri-food trade negotiations
§10  The U.S. did not ratify the CBD (Convention on Biodiversity).   Could the U.S. explain the
reasons for this non ratification?
(ii) Trade in services
§12  Do the United States intend to submit further negotiating proposal in the services sector?  If this
is the case, in which sectors?WT/TPR/M/88/Add.1
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III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Measures directly affecting imports(v) Standards, technical regulations and sanitary requirements
§82  The U.S. applies many complex technical regulations to a large number of products, for health
and safety purposes.  In this context, could you confirm whether the sale of irradiated food is subject
to a mandatory declaration?
If so, does the U.S. consider irradiation to be a production and processing method which alters the
nature/character of the product in the light of Article III GATT ("like product")?
If so, what is the difference, in terms of human health implic ations, between irradiated and non-
irradiated food?
If not, does the U.S. consider irradiation to be d ifferent, again in the light of Article III GATT, from
other production methods such as biotechnological methods?
(2) Export Measures
(i) Measures related to agri-food exports
§103  It is mentioned in §103 that in the 1999-2000 period, there was a reduction in the use of export
subsidies and of export credit guarantees.  However, in the same period, there was a large increase in
food aid volumes, and domestic support to producers went up as well.  Given the fact that the U.S. isthe world's largest food aid supplier, accounting for 64% (by volume) of food aid delivered in 2000
(para. 111), and that volumes of food aid and world cereal prices are negatively correlated, developing
countries could be induced to further benefit from the food aid instead of developing their own cereal
production.  How does the U.S. view this assumption?
§110  Please comment on the statement that export credit guarantee programmes «may relate to trade
distortion in third country markets»?
(iii) Fiscal concessions in support of exports
§120  FTZ is centred on oil refining, the production of pharmaceuticals, office equipment, high-
technology merchandise, and the automobile sector.  Are there no agri-food products being processed
in the FTZ?
(3) Other Measures Affecting Production and Trade
(i) Government support to business
§147  What are the main changes expected from the new FAIR act?
§148  Direct government assistance nearly tripled between 1997 and 2000.  This is mainly due to
natural disasters and falling prices for agricultural products.  It allowed to maintain the net farm
income above its lowest level since 1983.  Does this amount of emergency assistance depend more on
the natural disasters or on falling prices?  Is the emergency assistance being used as compensationfor the price fall?WT/TPR/M/88/Add.1
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IV. DEVELOPMENTS IN SELECTED SECTORS
(5) Maritime transport and related services
What are the objectives of the United States in the current GATS 2000 negotiations on maritime
transport services?
(6) Air transport services
Would the United States support a clarification by the Council for Trade in Services of the effective
scope of the GATS Air Transport Services in the cont ext of the current review of this Annex?  What is
the United States' view on the possible extension of the coverage of the GATS Air Transport Annex?
INDIA
I. MARKET ACCESS ISSUES
1. In paragraph 1 of the Summary Observations, the Secretariat has observed that in a few
important areas significant barriers to market access persist. It has suggested that reducing suchremaining barriers would not only increase the othe rwise high efficiency of the U.S. economy and
benefit its domestic consumers and taxpayers but also lessen distortions in global markets, frictions
with the trading partners and strengthen the multilateral trading system. We would like to hear the
response of the U.S. delegation to these observations.
2. In paragraph 2 thereof, the Secretariat has observed that “significant barriers to foreign
competition have remained in areas like textiles and clothing, transport and some services sectors.
The new Administration’s response to these policy challenges will be important to global trade and
welfare”.  Given the fact that sectors such as agriculture and textiles and clothing that are the mainstay
of most of the economies of developing countries , we would like to hear the response of the U.S.
delegation to the Secretariat observations.
3. In paragraph 12 of its observations, the Secretariat report observes that ‘the highest tariffs
apply mainly to imports of agro-food and tobacco products, as well as clothing, textiles and footwear.In these industries, tariffs tend to increase with the degree of processing’.  All these items are of
importance to developing countries and increased tariffs on processed items act as a barrier to value-
added exports by developing countries to the U.S.  We would request the U.S. delegation to respond to
these observations.
4. It is understood that the U.S. is imposing quota restrictions on plastic woven sacks and bags
and fabrics made out of polyethylene or polypropylene on the grounds that they are classified as
textile articles (under chapter 63) and are consumer items.  However, it is pointed out that these items
are only used for industrial application like packing PP Fibre, multifilament yarn, sand, salt, seeds,
chemicals, etc.  Further, it may be noted that th ese items are being exported to Europe without any
quota restriction.  We would, therefore, request the U.S. delegation to clarify the rationale forcontinuing quota restrictions on these items.
5. It is noted that despite a low average MFN rate for all goods, significant tariff peaks and
escalations exist in the U.S., especially for the products of interest to developing countries like India.
The highest tariffs apply mainly to imports of ag ri-food, tobacco, clothing, textile and footwear.  Non
ad valorem  rates, representing nearly 13% of tariff lines, mask relatively high levels of protection.
We would request the U.S. authorities to address this problem and eliminate these tariff peaks.WT/TPR/M/88/Add.1
Page 67
II. ISSUES CONCERNING AGRICULTURE
6. Dairy products :  It has been represented that the export subsidy given by the USA on
Skimmed Milk Powder (SMP) is around US$900 per metric tonne, which works out to about 60% of
the international price of SMP. The average subsidy on dairy products mainly on SMP by the U.S.
Department of Agriculture during 1999-2000 worked out  to US$1,101 per metric tonne.  Such a heavy
subsidy results in the fall in international prices of dairy products, which, in turn, when imported in
India tend to destabilise the prices and adversely affect the dairy farmers of the country.  We wouldrequest the U.S. authorities to consider phasing out all direct and indirect subsidies in this sector.
7. TRQ on Tobacco :  It is understood that the base period for working out total quota for
tobacco import was taken as 1992-1994.  We would like to know from the U.S. delegation the basis
for selecting this base period.  We would also like to know the major suppliers under the existing TRQ
regime, the fill rate of the Quota and the methodology of reallocation of unfilled TRQ.  Despite thefact that India is the world’s second largest producer of tobacco and has one of the largest shares in the
export of FCV tobacco, its present quota for export to U.S. is very small. India seeks to have a TRQ of
at least 10,000 tonnes per annum.  Taking into account these factors, we would request the U.S.
authorities to consider allocating unfilled TRQs to the developing countries like India.
8. Need for increase in sugar quota :  India’s quota for export of sugar to the U.S. has remained
at around 0.8% of the total quota since 1982.  One of the criteria for allocation of quotas to various
countries is the share of the individual countries in  the total import into the U.S. market during the
period 1975-81.  The economic situation has changed considerably since then and in several countries,
the production capacity and marketable surplus have increased whereas for the others, though they
have high quota available, their own production a nd consumption of sugar hardly leaves them with
any marketable surplus.  We would therefore request the U.S. authorities to change their quota
allocation policy with a view to allocating a higher  quota to some countries commensurate with their
production and export potential.  We would also reques t the U.S. to review its sugar policy in view of
the U.S. International Trade Commission’s estimate that repeal of the Federal Sugar Programme
would add nearly US$1bn to national welfare and cut domestic sugar prices by 8.6%.
III. ISSUES CONCERNING TEXTILES AND CLOTHING
9. Integration of textile sector under ATC by U.S. :  It is noted that the 1
st and 2nd stage
integration and the schedule finalised for the 3rd stage integration makes it clear that the U.S. has
implemented the provisions of ATC in letter but not in spirit.  The main apparel items, that are going
to be integrated in the 3rd stage, are gloves, men’s and women’s nightwears, underwears, hosiery, silk
and silk blended garments.  80% of trade in textiles and clothing covered by bilateral restraints would
still remain to be integrated by 1 January 2005.  For apparel, the final percentage to be integratedwould be even higher, at 89%.  Fo r India, as Floor Coverings and Silk Garments are already exempted
and outside quotas, at the end of the tenth year, 96.64% of India’s apparel trade would remain to be
integrated.  Similarly, 95.83% of India’s yarn trad e and 98.88% of fabric trade would also remain to
be integrated.  In view of the fact that so far the integration by U.S. has not really been progressive in
nature, we would request the U.S. to accelerate the integration process in keeping with the spirit of theATC Agreement and also given the fact that these products are of great interest to the developing
countries.
10. Changes in the U.S. Rules of Origin :  As was also highlighted in the last TPR of the U.S.,
the revised U.S. Rules of Origin on textiles which entered into force on July 1, 1996 have adversely
affected the exports by its trading partners.  It has also resulted in a situation of double jeopardy asIndian exports to the European Union are debited to our fabric quota for the EU and if they are
converted into made ups such as bed sheets or scarves, and exported to the U.S., the U.S. would debitWT/TPR/M/88/Add.1
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India’s textile quota again, thus leading to India’s quota being debited twice for the same exports.  It is
observed that such unilateral changes in the Rules of Origin are in violation of Articles 2.4 and 4.2 ofthe Agreement on Textiles and Clothing and of Arti cle 2 of the Agreement on Rules of Origin.  The
problem has been further exacerbated as, consequent upon the agreement with the EU, the U.S.
amended its Rules of Origin as notified through Trade and Development Act, 2000 under which origin
of dyed silk fabric would be the country where the silk fabric is dyed and printed.  However,
strangely, this rule does not apply in the case of fabric containing more than 16% cotton.  Such anarbitrary rule of origin has adversely affected the market access of cotton producing countries.  We
would request the U.S. authorities to take steps to rectify this situation.
11. Holding up of consignments of ‘India Items’ :  Under the provisions of the Indo-U.S. Textile
Agreement, ‘India Items’ are exempt from quot a restrictions.  The Development Commissioner
(Handicrafts), is the authority designated by Government of India for certification of ‘India Item’consignments.  However, lately, there has been an increase in the number of held up consignments at
various ports as it has been reported that the U.S. customs often disregard the certification issued by
the DC (Handicrafts).  As exporters have to clear their consignments to meet the delivery schedules,
such consignments are often cleared under the visa waiver provisions by issuing visa in the re-
classified categories.  This results in debiting of quotas.  The Agreement does not permit unilateralmodification of definitions contained in the Agreemen t. Hence, we would request the U.S. authorities
to reconsider the matter and honour th e certification by the DC (Handicrafts)
12. Tariffs on garments :  The tariff rate on garments in the U.S. is between 17.5% and 22.5%
with an average tariff rate of 18.3%.  We would request the U.S. to consider reduction in such peak
tariff rates.
13. Differential Treatment to cotton producing countries under ATC :  As per Article 1.3 of
the ATC, the cotton producing countries were to be given a special treatment.  However, no additionalquota access has been granted to cotton producing countries like India.  We would request the U.S. to
take positive action in this regard.
14. Subsidies in textile industry :  It is learnt that the U.S. has been giving large amounts of
direct and indirect subsidies to the cotton farmers.   According to a study commissioned by one of our
NGOs, the Consumer Unity and Trust Society (CUTS), Jaipur, the direct and indirect subsidy given to
the U.S. cotton farmer is US$2.5 for each pound of cotton.  This is based on the calculation of total
subsidy bill (excluding exclusive exports subsid ies) in 1997 amounting to around US$1.6 billion.  We
would request the US authorities to consider pl ans for reducing the extent of this subsidy.
15. Continuation of visa requirements for integrated products :  In certain categories like
369 (O), visa continued to be issued even though this item was integrated in 1995.  It is reported thatin actual practice, all restricted and non-restricted items to the U.S. require visa.  Similarly, the U.S.
customs is insisting on visa for export of jute bags, which are not covered under quota.  This is a
restrictive measure and increases the transaction cost and adds to administrative burden.  We would
request the U.S. authorities to address this issue.  We would also request the U.S. delegation to clarify
whether, with the elimination of quotas, the U.S. would do away with such procedural
requirements/documentation formalities like issuance of visas, certification aimed at prevention of
circumvention of quota or trans shipments etc.
16. High conversion factor for socks :  Presently, a high conversion factor is being applied by the
concerned U.S. authorities in respect of socks for debiting quotas under Cat. 332 Group -II.  The CITA
is correlating the conversion factor for Cat. 332 with HS No. 61.15, which covers, besides socks,items like Panty Hose, Tights and Stockings.  In this situation, a high conversion factor of 3.80 SME
per dozen pairs gets applied to socks, resulting in higher debittance of quotas under Cat. 332 Group II.WT/TPR/M/88/Add.1
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The technical study conducted by the Office of the Textile Commissioner has shown that the average
requirement for manufacturing 1 dozen pair of socks is about 1.22 Sq. mtr.  Hence, it would be seenthat the U.S. is applying disproportionately higher conversion factor as compared to the actual
consumption norm. We would request the US authorities to correct the situation.
IV. ISSUES CONCERNING SERVICES
17. In Paragraph 41 of its summary observations. the Secretariat has observed that ‘in the case
of professional services, the US federal system reserves the governance of professions toindividual states, each state has its own licensing regulations and licensing board to administer the
regulations.  …….  The absence of a uniform national regulatory regime, and divergent market access
conditions across States complicate inter-State supply and foreign market access’.  We would like to
hear the response from the U.S. delegation. Further, we would like to know if the Federal Government
could give some guidance to the States in the matter of having certain minimum uniform nationalregulatory regime for professional services.
18. Problem relating to social security taxe s for Indian professionals working in USA :  It is
noted that Indian professionals employed in I ndia and deputed temporarily in USA for rendering
software consultancy and development services are being made to pay social security taxes under
Federal Insurance Contribution Act (FICA) (12.4% ), MEDICARE (2.9%) and Federal Unemployment
Tax Act (FUTA) (6.2%).  This works out to a total of 21.5% of the total wages.  It has been pointed
out that since the Indian employees are only depute d for a temporary period and the services rendered
by them are only sporadic and temporary in nature, this deputation does not constitute any form of
‘employment’ for the purpose of levy of Social Security Taxes by the U.S.  The Indian professionals
continue to get their wages in India in Indian rupees and they are only paid ‘away from home’ living
expenses in USA within the per diem rates published by the U.S. Internal Revenue Service.  At the
same time, their provident fund contributions and other social security taxes are also deducted atsource in India.  Moreover, according to the U.S. laws, a person has to work in USA for 40 quarters or
10 years to claim any social security benefit wher eas the maximum period of stay allowed under H-1B
visa (under which the professionals mostly work in  USA) is 6 years.  As such, the Indian software
professionals pay social security in USA for which they neither get any refund nor any benefit.  Given
the genuineness of the problems, we would request the U.S. authorities to remove this anomaly.
19. Wage parity :  The U.S. Department of Labour has stipulated Wage Parity on foreign skilled
manpower working in the U.S. for sh ort-term duration.  However Indian software professionals, who
go to the U.S. for short duration, are paid salaries in India.  The company concerned also spends the
amount on the airfare of these professionals.  It is therefore noted that insistence on wage parity by the
U.S. is to be seen as a kind of non-tariff barrier.  With a view to facilitating better movement ofprofessionals, it would be appropriate that wage parity is not insisted upon in the H-1B category visas.
We would request the U.S. authorities to consider removal of this stipulation.  We would also request
the U.S. authorities to put in place more transparent procedures for locational changes during the
validity period of H1-B visas.
20. Locational Issues of H-1B visas :  An Indian professional going to U.S. on H-1B visa is
allowed to work only in a particular State of th e U.S.  If during the maximum six years-period for
which the H-1B visa is valid, a professional has to go to another State on account of change of
assignment, he is required to take specific permission from the U.S. INS for change of location.  It has
been represented that this procedure is a time consuming one and thus acts as a non-tariff barrier.  We
would suggest to the U.S. authorities to consider  making the H1-B visa valid for working throughout
the US and in any State of the U.S. without any requirement for a specific permission to move from
one State to another.WT/TPR/M/88/Add.1
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21. Increase in world-wide H-1B visa cap: It is learnt that the U.S. continues to suffer from
domestic shortage of IT professionals.  According to Information Technology Association of America(ITAA), the U.S. faces a shortage of 300,000 IT professionals in the next three years.  It would be
highly appreciated if we could be informed of the steps being taken by the U.S. in order to meet this
shortfall.  We would also request the U.S. authorit ies to consider increasing the visa cap for H-1B for
the next three years.
V. SPS/TBT MEASURES
22. Import alert on Fresh, Frozen and Cooked shrimp from India :  The U.S. FDA has been
operating an Automatic Import Alert (automatic detention and testing) in respect of Indian Fresh
(Raw) and Frozen Shrimps since 1979.  In 1995, the FDA extended the Automatic Import Alert to
cover cooked shrimp export from India.  Some Indian exporters are exempt from such Automatic
Import Alert and are only subject to random checks.  It may be noted that the processing technology inIndia has been upgraded with modern facilities , and 103 processing establishments have been
approved by the European Commission for exports to the European Union.  Many other processors
exporting to the U.S. have implemented HACCP (H azard Analysis and Critical Control Points)
principles.  We would request the U.S. FDA to consider according similar approval after inspection of
the exporting units.  Taking into consideration the developments in the Indian seafood industry, wewould also request the FDA to lift the import restrictions such as detention of Indian shrimps imposed
vide Import Alert IA#1635.  Further, it is noted that while the U.S. FDA publishes the details of
detained consignments and give wide publicity, it does not publish the results of examination
subsequently.  We feel that this is not fair as such publicity concerning detained consignments would
create a bad impression concerning the exporters in question in the minds of the U.S. seafood
importers.  We would therefore request the U.S. authorities to consider giving adequate publicity
concerning clearance given to such detained goods upon physical, chemical and bacteriologicalexamination.
23. Ban on mango exports to U.S. :  It has been reported that the U.S. has imposed a ban on
import of Indian mangoes on account of the problem of stone weevil and occurrence of oriental fruit
fly.  This was in spite of the fact that the problem was restricted to a small belt of the mango
producing area and was being addressed through new technologies for detection (like x-rayradiography technique) and control (like Hot Water Dip Treatment, Integrated Pest Management
System and Vapour Heat Treatment).  In such circumstances, we would request the U.S. authorities to
lift the continued ban on import of mangoes from India.
24. Strict and burdensome sanitary and phytosanitary requirements :  All imports of fresh
fruits and vegetables into the U.S. require clearance by the U.S. Department of Agriculture.  Suchclearance is often given only after extensive tests and inspection of the areas where the items have
been grown.  The U.S. requirements are sometimes quite unreasonable and take excessively longer
time.  We would request the U.S. authorities to cons ider this matter and take steps to streamline the
procedure.
25. Meat and milk products :  It has been represented that the U.S. does not allow import of meat
and milk products from India on the ground of presence of foot and mouth disease in the
animals.  Since it has now been proved that these are now free from BSE (Bovine Spongiform
Encephalopathy)/ scrapple, it is requested that the ban in question may be removed.
26. Ban on bidi import on the basis of non-trade related issues :  The US Customs Department
issued temporary orders in the latter half of 1999 suspending imports of ‘Ganesh’ brand bidis into the
U.S., on the ground that the concerned Indian Bidi manufacturer was employing forced child labour inWT/TPR/M/88/Add.1
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the manufacture of bidis.  India expresses its strong concern at raising such trade barriers which are
not WTO-consistent.  We would request the U.S. authorities to lift the ban in question.
27. Caution label on natural rubber gloves :  The U.S. law requires natural rubber gloves to
carry caution label that the natural rubber latex can give allergic reaction in some individuals.  We
would request the U.S. to clarify the basis of imposition of such a standard and provide details of the
data collected in this regard.
VI. PREFERENTIAL ARRANGEMENTS INCLUDING THE GSP SCHEME
28. In paragraph 14 of its summary observations, referring to the unilateral extension of
preferences under the U.S. GSP scheme, the Secretariat has observed that ‘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’.  The GSP scheme is a non-reciprocal scheme of incentives granted
to developing countries without any conditions attached and as such India strongly opposes anylinkage of GSP benefits to non-trade issues such as labour rights.  We would like to hear the response
of the U.S. delegation.
29. In paragraph 15 of its summary observations, the Secretariat referring to the U.S. Trade and
Development Act (TDA) of 2000 that includes both the African Growth and Opportunity Act and the
Caribbean Basin Trade Partnership Act has pointed out that textile and clothing imports frombeneficiary countries in sub-Saharan Africa and th e Caribbean would enter the U.S. market duty-free
and quota-free subject to content requirements on U.S. produced-inputs.  According to the Secretariat,
this requirement would ‘ensure that U.S. input producers also benefit from the arrangement, possibly
at the expense of lower-cost third-country suppliers’.  We would like to hear the response of the U.S.
delegation to these observations.  We would also like to know whether all the Acts referred to in this
paragraph have been notified to the WTO.  If yes, the details of the notification may be given.  If not,
the reasons thereof and the likely time-frame by which the notification would be made may beindicated. Since AGOA is neither ge neralised nor non-reciprocal, it cannot be dealt with under the
‘Enabling Clause’.  The U.S. delegation is requested for information on when they propose to
approach the CTG and the General Council with a waiver request.
30. Problem of classification of  Elastic Rubber Tape (ERT) :  It has been brought to our notice
that under the provisions of the new Caribbean Basin Trade Partnership Act (CBTPA), a very narrowdefinition has been adopted for Elastic Strips to qualify as Finding and Trimmings, namely, that they
should be less than one inch in width and should be used only in production of brassieres.  Further, the
Indian exporters are finding their market access of Elastic Rubber Tapers (ERT) to the USA severely
affected on account of a provision in the CBTPA that the quota and duty preference on the garment
would be allowed in the U.S. provided that not mo re than 25% of the value of the garment is made
from foreign “Findings and Trims”.  We would like to have a clarification from the U.S. authorities on
the reasoning behind adoption of such a narrow definition for ERTs and on the difficulties being faced
in classifying Elastic Rubber Tape (ERT) similar to Narrow Woven Elastic/Spandex and giving
protection and preference to ERT as given to Narrow Woven Elastic/Spandex?
31. Denial of GSP benefit to industrial leather gloves :  It has been brought to our notice that as
specified under chapter 42 of the U.S. Customs Tariff, articles of leather of different types are eligible
for concessional/duty free import under the U.S. GSP Scheme.  However, in the guidebook published
by the office of USTR, work-gloves (HSN Code 4203.29) are not included in the list of articles
eligible for GSP.  We would request the U.S. authorities to clarify the reasons for such a specific
exclusion and also to consider inclusion of work-gloves in the list of items eligible under its GSPscheme.WT/TPR/M/88/Add.1
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32. Preferential Agreements :  In the process of conferring access to Preferential Trading
Agreement (PTA) members, the opportunities for other members in the given market are adverselyaffected.  Very often, preferential quota given to members of a PTA is counted as a part of the MFN
tariff quota, and thereby limits export opportunities available to the MFN trading partners.  For
example, the total tariff quota of the USA for refined sugar was 22,000 tonnes in 1998.  Under the
provision of pre-allocated bilateral quota, an FTA partner received a quota of 2954 tonnes, and got an
additional quota of 25,000 tonnes under the NAFTA.  Hence, channelisation of regional/bilateral tariffquota through tariff quota seeks to limit the market access opportunity of non-PTA members of the
WTO. We would request the US authorities to reconsider the matter.
VII. ANTI-DUMPING
33. Constructive remedy clause :  We would request the U.S. delegation to confirm that in
the various anti dumping investigations initiated by the U.S. against imports from developingcountries, efforts have been made to explore constructive remedies as required under Article 15 of the
Anti-Dumping Agreement and that the special situation of developing country members is given
special regard?  We would like to know whether there is an in-built mechanism in the U.S.
anti-dumping law for giving effect to the provisions contained in Article 15 of the Anti Dumping
Agreement.
VIII. INTELLECTUAL PROPERTY RIGHTS
34. Intellectual Property Rights Violation :  It has been noted that the piracy of Indian video
films and music CDs and cassettes is on the rise and as a result, the Indian entertainment (film and
music) industry is being deprived of royalties.  We would request the U.S. authorities to ensure stricter
enforcement of Intellectual property rights for Indian music CDs and cassettes?
IX. DRUG APPROVAL PROCEDURES
35. Pharmaceutical drug approval procedures :  Such procedures pose difficulties for non-U.S.
based firms, including those from India as the U.S. Food and Drug Administration has to approve any
new medicinal product before it can be put on sale.  It has been represented that for non-U.S.
medicinal products, this procedure takes significantly longer than for those developed locally.  We
would request the U.S. authorities to look into the matter and ensure that non-U.S. based firms are not
placed at a disadvantage.
X. ISSUES CONCERNING STEEL
36. Proposed Steel Revitalisation Act, 2001 :  It is understood that this act has been designed to
provide certain safeguards to the U.S. steel industry by empowering the U.S. President to take
necessary steps by imposing quotas, tariff surcharges, negotiated and forcible voluntary restraint
agreements or other measures on steel import in USA.  It is further learnt that the aim of this act would
be to ensure that the imports of iron and steel products into USA during any month do not exceed the
average tonnage of each such product imported m onthly into the USA during the 36 month period
preceding July 1997 and that the share of domestic consumption of such imported steel products does
not exceed the average monthly share of domestic consumption of that steel product in the past 36
months.  We request the U.S. to explain the rationale for this Act and its consistency with the WTOrules.
37. Steel Import Notification and Monitoring Programme :  It is learnt that this programme
shall include a requirement that any person importing a product classified under chapter 72 or 73 of
Harmonised Tariff Schedule of the USA has to obtain an Import Notification Certificate before suchWT/TPR/M/88/Add.1
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products entered the US.  The application for import certification would have to contain importer’s
name and address, country of origin, port of entr y, description of goods, quantity and CIF value of
goods to be imported etc.  It is also learnt that the import certificate would be valid only for 30 days.
We would request the U.S. authorities to explain the rationale for such a requirement which, given the
limited period of validity of the Certificate, would act as a non-tariff barrier.
38. Multilateral initiative on steel :  On June 4, 2001, the U.S. President in a statement on
multilateral initiative on steel, has indicated intention to initiate discussions to eliminate the excesscapacity of steel in the world, to eliminate subsidies and to make rules of trade as per U.S. trade laws.
In paragraph 5 of its Report, the Secretariat has also referred to this initiative concerning negotiations
on elimination of global excess capacity of steel and development of rules to govern steel trade.  We
would like to hear from the U.S. delegation more details regarding this initiative including the present
stage and also on how inefficient production capacity would be defined.  We would also like to knowthe compatibility of this initiative with WTO obligations.
XI. UNILATERAL MEASURES
39. In paragraph 30 of its summary observations, the Secretariat report observes that ‘trade
restrictions imposed by the United States for national security and foreign policy reasons may be a
source of concerns for some trading partners, particularly, because of the unilateral nature of certainsuch measures.  …  Congress is considering reforms to sanctions policy and to export controls’.  We
are interested to know the details of the re forms being considered by the U.S. Congress.
40. Unilateral actions under U.S. Trade Legislation :  The U.S. still retains the option to resort
to unilateral trade measures, for example, through sanctions such as under Super 301 and Special 301
provisions of the 1974 U.S. Trade Act.  These are based on solely U.S. evaluation of a country’s
laws/administrative practice.  India has been placed under the Priority Watch List for Special 301.  It
has been brought out in the WTO Secretariat Report (WT/TPR/S/88 dt. 15
th August, 2001-Page 52)
that Section 301 laws have been used sparingly since 1999.  Even though it has been noted that the
action under these laws is linked to the WTO’s Dispute Settlement Understanding, we feel that the
threat of unilateralism still remains.  We would therefore request the U.S. authorities to completely
stop taking recourse to these provisions in the future.
41. Extra territorial application of provisions of U.S. laws : Extra territorial application of
provision of US laws hamper international trade with the US. We would request the U.S. authorities to
refrain from applying such laws.
XII. GOVERNMENT PROCUREMENT
42. Buy America Act :  It is noted that this act covers a number of discriminatory measures,
which apply to government-funded purchases.  It has been pointed out that some of its provisionsprohibit public sector bodies from purchasing goods and services from foreign sources;  some
establish local content requirements while some others still extend preferential price terms to domestic
suppliers.  Products covered by this law include the manhole covers, rings, frames, catch basin frames
and grates etc.  We would like to know if the U.S. Government has any proposal to modify this law so
as to improve market access for developing countries.  Furthermore, it is noted that affirmative actionfor small business and minority protection schemes are also being widely employed in many U.S.
States.  Under the “Berry Amendment”, the concept of national security has been used to restrict
purchases by the Department of Defence to U.S. sources.  We would like to know if the U.S. has any
proposal to improve market access for its trading partners in this regard.WT/TPR/M/88/Add.1
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AUSTRALIA
U.S. Farm Bill
Can the United States confirm its commitment in future farm legislation to a movement of
domestic support mechanisms away from "amber" into  the "green" box as was the original intent of
the FAIR Act?
Agricultural Domestic Support Arrangements
We note that since 1998 Congress has approved annual multi-billion dollar payments to
farmers in the form of additional Agricultural Market Transition Act (AMTA) payments, as a response
to low commodity prices.  The United States has recognised that these payments were linked to
commodity prices.  In June 2001 the United States notified US$10.4 billion in payments for
the 1998/99 marketing year as trade-distorting "amber" box payments to the WTO.  When will the
United States notify the WTO that the payments made in 1999, 2000 and this year were "amber" boxpayments?
Food Aid
While food aid for genuine humanitarian assistance is widely supported, food aid donations
can be contentious and the United States has been criticised by its export competitors for many
donations.  In its food aid decision-making, does the United States take account of exports by a
recipient country of the commodity in questions, gi ven the requirement that the recipient country does
not export the same or like commodity during the supply and use period?
Sugar
We note that access to the U.S. market for raw sugar, governed by a tariff rate quota, is now at
near record low levels, and in the current year only just exceeds the U.S.' WTO minimum access
commitment.  We note also that the differential between the world market price for sugar and the U.S.
price is now at near record levels, with the U.S. price nearly three times the world market price.  Thesugar programme is continuing to send the wrong ma rket signals to U.S. producers who are expanding
production at a time of low world prices.  Given that the sugar programme has moved into surplus
(with the Government not only stockpiling, but al so selling sugar back to its own producers and
requiring them no to produce), what plans does the United States have to bring the sugar programme
back into balance, to make it more liberal and market oriented and to progressively liberalise marketaccess?
When will the United States be rectifying its Harmonised Tariff Schedule to take account of
the long acknowledged necessary polarity adjustment for raw sugar?  (The polarity adjustment would
mean the base tariff equivalent to be applied to raw sugar imports entering the United States under the
second tier of the tariff rate quota would be 17 cents per pound instead of 18 cents per pound.)
Non-tariff Measures (NTM)
We note the finding in the June 1999 OECD Economic Outlook "Trends in Market Openness"
that, notwithstanding improvement over recent years.  NTMs still have a high frequency in the U.S.
(16.8% of tariff lines, against 19.1% for the EU and 10.7% for Japan).  How does the U.S. propose to
further decrease the incidence of NTMs in its market?WT/TPR/M/88/Add.1
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Government Procurement
The U.S. Government procurement market is severely restricted by bilateral and plurilateral
trade agreements and by the Buy-America Act.  What measures does the U.S. envisage adopting to
improve access to, and increase the competit iveness of this important market segment?
Safeguards Legislation
Given that the WTO Safeguards Agreement already provides for the application of temporary
trade restrictions in certain specific circumstances and that legislative proposals before the U.S.Congress would significantly lower the U.S. domestic legal standard for obtaining import relief, what
plans does the United States have for preventing Section 201 of the 1974 Trade Act from being used
by U.S. industries faced with unsubsidised import competition to avoid making competitive
adjustments?
Intellectual Property
Could the U.S. outline its intentions to fully comply with the rulings and recommendations of
the DSB in the "United States – Section 110(5) Copyright Act" case (WT/DS160/R)?
In light of compensation discussions with the European Communities arising from the U.S.'
failure to comply within the reasonable period of time, Australia seeks assurances from the United
States that any compensation arrangements will be ex tended to Australian rightholders, in accordance
with the U.S. obligations under the WTO Covered Agreements.
Services
What measures or reforms does the U.S. envisage to ensure that state-level regulation
(e.g. skill and residency requirements) does not create unnecessary impediments to market access for
business and professional service providers, particularly in accountancy, law, engineering and
architecture?
Maritime Services
U.S. laws governing coastal shipping, the 1920 Merchant Marine Act and the 1885 Passenger
Services Act, effectively preclude foreign involvement in the U.S. maritime sector.  How does the U.S.
intend to liberalize the unusually restrictive laws on the provision of maritime services?
BRAZIL
GOODS
1. In its report, the United States affirms that NAFTA agreements “can become models for
future multilateral liberalization in new areas, such as agriculture, services, investment, and
environmental and labour standards” (page 11, §40).  In view of the fact that to be eligible for NAFTA
preferences it is necessary to fulfil strict rules of origin, NAFTA is seen as highly distortive to
commerce.  Therefore, how can agreements such as NAFTA contribute to freer trade?
2. The Enabling Clause (Decision of 28 November 1979) establishes, in its Article 5, that
“The developed countries do not expect reciprocity for commitments made by them in trade
negotiations to reduce or remove tariffs and other barriers to the trade of developing countries, i.e. the
developed countries do not expect the developing countries, in the course of trade negotiations, to
make contributions which are inconsistent with their individual development, financial and tradeWT/TPR/M/88/Add.1
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needs”.  Developed contracting parties shall therefore not seek, neither shall less-developed
contracting parties be required to make, concessions that are inconsistent with the latter'sdevelopment, financial and trade needs”.  However, as mentioned in the Secretariat Report, the United
States have been conditioning the concession of preferences under agreements such as GSP, CBTPA
and AGOA to adherence to labour and envi ronmental standards,  among others.  How are these
requirements consistent with the Enabling Clause?
3. In the Secretariat Report, it is stated that despite the relative openness of the U.S. economy,
“sizeable tariff barriers tend to be concentrated in a few "sensitive" sectors, which are often also of
particular interest to exporters from developing countries.  These sectors involve mainly agricultural,
food, and tobacco products, as well as textiles and footwear; tariffs reach ad valorem  or ad valorem
equivalent rates of 350% for tobacco, 164% for peanuts, and 132% for peanut butter (out-of-quota
tariff rates)” (page 25, §5).  How is that feature consistent with the stated objective of “extending the
benefits of trade liberalization to the developing world and fostering their further integration into the
multilateral trading system”?   (Government Report, page 6, §6)
4. The Secretariat Report identifies the presence of important tariff escalation and tariff peaks in
U.S. tariffs (pages 25-26).  Please describe what are the main sectors protected by these instruments
and the possible effects on other countries.
5. Could an explanation be provided as to why th e U.S. has not consolidated two lines covering
crude petroleum?  What is the applied rate for these tariff lines?  Does the United States have plans to
consolidate these tariff lines?
6. According to the WTO IDB, the U.S. Tariff has 4.2% of total of tariff lines consolidated in
terms of non  ad valorem  rates, applying mainly to agricultural products, footwear, textiles and base
metals (Secretariat Report, page 24).  Given the known distortive effect of specific and compound
tariffs, what are the views of the United States, in case of a new WTO round, on the possibility of
consolidating only ad valorem tariffs?
7. What are the views of United States on tariff quotas and on their administration methods?
8. According to the Secretariat Report, in 1999, the United States imposed Special Safeguards on
certain products, including fresh and frozen beef, sweetened milk, milk fats and oils, milk based
drinks, cheeses, sugar and peanuts (page 29, §13).  Could more information be provided on this issue
(i.e. the level of safeguard duties on these products)?
9. Please provide detailed explanati on of  the "Carousel Amendment".
Government procurement issues
10. Secretariat Report, para. 71, page 44. Is there a possibility for potential foreign suppliers from
countries that are not party to the GPA to be included in the positive lists of suppliers used by federalgovernment agencies to invite for bidding process?  If affirmative, how should those suppliers proceed
to be included?  Which are the requirements to be qualified in those lists?  Would suppliers from
countries part of other commercial agreements in which the U.S. is signatory have a preferential
treatment in this regard?
11. Secretariat Report, pages 45-46.  What is the criteria used to characterize a small business?
It is mentioned, in paragraph 76, that small business are excluded from the GPA.  What is the reason
for this exclusion?WT/TPR/M/88/Add.1
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12. Secretariat Report, para. 77.  The HUB Zone (Historically Under-utilized Business Zone)
foresees preferential treatment to qualified small business located in historically under-utilizedbusiness zones.  What characterizes an HUB zone?
13. Regarding the principle of national treatment th at may exist in other commercial agreements
of which the U.S. is a Party, do small business from countries Parties in those agreements have equal
treatment (with preferential access cond itions) in U.S. government procurement?
14. Is there any other entity, besides the Department of Defense, excluded from entities coverage
in commercial agreements of which the U.S. is a Party?
15. Regarding government procurement, are there federal government entities that cannot start
an international bidding process?  Which are they?
16. Is the Built Operate Transfer (BOT) included in the coverage of commercial agreements, such
as GPA, NAFTA and others?
17. Which are the offsets allowed in the US bidding process?
18. Are there any eco-labeling or eco-audit offsets in the U.S. government procurement
regulations and laws in the central and sub-central level that may be used in government
procurement? If affirmative, please indicate its legal provisions and examples of their use.
19. Are there any social clause requirements in the U.S. government procurement regulations and
laws in the central and sub-central level that may be  used in government procurement?  If affirmative,
please indicate its legal provisions and examples of their use.
20. What is the application of the reciprocity principle in government procurement agreements
maintained by the U.S.?  Please mention examples regarding entities coverage within the scope of
NAFTA.
Contingency measures
21. The Secretariat Report draws attention to the fact that “the application by the United States of
anti-dumping, countervailing and safeguard measures has been one of the main sources of complaint
by its trading partners:  seven U.S. anti-dumping and countervailing measures in effect since 1995
have been challenged under the WTO” (Secretariat Report, page 18, §27).  As the United States
affirms that “the fundamental features of U.S. trade policy continue to be the maintenance of an open,
competitive market at home, compliance with WTO obligations… ”(Government Report, page 5), why
have there been so many challenges to US trade policies?
22. How does the Continued Dumping and Subsidy Offset Act of 2000, also known as the
Byrd Amendment, which is due to come into effect on 1 October 2001, alter the existing legislation on
anti-dumping and countervailing duties?  Was an asse ssment made on how the new legislation would
affect trade in iron, steel and orange juice?
23. Secretariat Report, page 33, paras. 27-30.  With regard to the Byrd Ammendment, please
explain how the provisions of that legislation are consistent with WTO rules, particularly the
provisions of the Agreement on Subsidies and Countervailing Measures.
24. Secretariat Report, pages 37 and 38, paras. 42-43.  Please explain in detail how the U.S.
Government has implemented in its legislation the recommendations of the AB (in WT/DS138/AB/R)
concerning the “change-of-ownership” methodology in countervailing duty investigations.WT/TPR/M/88/Add.1
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25. Secretariat Report, page 92, para. 30.  The U.S. Government stated that the U.S. steel industry
has been affected by foreign government intervention, which has resulted in excess capacity andinefficient production.  How can it be argued that the problems of competitiveness of the U.S. steel
industry are caused by foreign production given that the U.S. Government has taken an array of
measures in the last two decades to eliminate or minimize the alleged distortions in its internal
market?   The voluntary restraint agreements of the 1980’s and the various antidumping investigations
and countervailing actions of the last decade and even more recently are the concrete examples of theactions taken by the U.S. Government to protect the sector.
26. Secretariat Report, page 92, para. 30.  Please explain the arguments underlying the statement
that there is inefficiency in the global production of steel.
27. Secretariat Report, page 92, para. 30.  With regard to item “a” which refers to the U.S.
initiative to negotiate with trading partners seeking the elimination of global excess capacity, please
explain how the U.S. intends to proceed with this action in a manner consistent with WTO rules?
28. Secretariat Report, page 92, para. 30.  With regard to item “b” which refers to negotiations on
international rules to govern steel trade with a vi ew to eliminating subsidies.  Given that the ASCM
already sets out the adoption of measures aimed at eliminating the negative effects of these practices
in the market of the importing country, what is the rationale for negotiating new rules specifically for
the steel sector?  What could be the consequences of such an initiative, tailored to cater to the
interests of one single sector of the U.S. economy, for the multilateral trading system?
29. Secretariat Report, page 92, para. 30.  With regard to item “c”, it is stated that the ITC
initiated a Section 201 safeguard investigation of injury to the U.S. steel industry.  How does the US
government explain the “overlap of measures” due to the fact that already there are several
antidumping duties and countervailing measures in forc e for the steel sector with a view to neutralize
the alleged injury to domestic industry?   Moreover, the adoption of a safeguard measure implies that
there is lack of competitiveness in the domestic indu stry.  Therefore, if the U.S. authorities recognize
that the country’s steel sector needs this kind of measure in order to eliminate serious injury and
facilitate the adjustment of the domestic industry to international competition, please explain how
causality can be established according to the prov isions of the Anti-dumping and ASCM Agreements?
Agriculture and SPS Issues
30. What is, and how does the FAIR Act affect the net income of American farmers?
31. Secretariat Report, Summary Observations, para. 22.  The U.S. Government has, for alleged
sanitary and phytosanitary reasons, prohibited imports of meat from Brazil originating from areas
declared free from Foot and Mouth Disease by the International Office of Epizootics.  In light of the
concept of pest-or disease-free areas enshrined in the IOE, please explain what is the rationale for
maintaining these measures when the exporting country complies with all the other sanitary and
phytosanitary requirements?
32. Secretariat Report, page 69, paras. 160-161.  What is the U.S. government’s assessment of the
effects of the Loan Deficiency Payments on international prices, particularly in the case of soy beans?
TBT issues
33. Concerning para. 83 (page 47) which are the measures adopted by the U.S. Government in
order to comply with Article 3 of the TBT Agreement with respect to the use of standards such as
those mentioned in this paragraph?WT/TPR/M/88/Add.1
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34. Regarding para. 84, which are the measures adopted by the U.S. Government aiming at
assuring that the technical requirements embodied in technical regulations are in accordance with
existing international standards?  Is there any effort to change those technical regulations that are
older than the TBT Agreement?
35. Concerning para. 85 and considering that the U.S. is the most represented country in
international standards bodies (such as ISO), which are the measures adopted by the U.S.
Governments for:
a. helping ANSI and U.S. Standardizing Bodies to improve the use of international
standards in order to avoid practical technical barriers to U.S. market access by
foreign suppliers?
b. adopting these international standards, or relevant parts of them, as a basis for
technical regulations (both in case of new and revised ones)?
36. Regarding para. 89, considering that the “U.S. co nformity assessment system is unique in that
conformity assessment in the area of standards largely rests on supplier’s self-declaration, and is to a
large extent enforced through product-liability laws” and also the positions expressed by
U.S. representatives at the WTO TBT Committee during last years proposing a wider use of
declaration as a cheaper and time-saving way for conformity assessment, which are the rules foracceptation of such declarations from foreign suppliers?
INTELECTUAL PROPERTY
37. With regard to para. 180 (page 75), in what cases and how can a patent protection be
extended?  Please explain.
38. Concerning para. 181, please indicate if there is any case of compulsory license of patents
under Section 203, 204 or 209 of Chapter 18, Part II, Title 35 of the U.S. Code.  If not, please explain
how it would be implemented?
39. Regarding para. 199 (page 80), please give more details about the meaning of the sentence
“(…) registration at the Copyright Office is not required before an infringement suit can be brought
(…)” referring to non-U.S. works.
40. Please give more details about compulsory license for making phono records of published
musical works, as indicated in para. 203 of page 80.
41. Concerning para. 208 (page 81), please describe how Section 110(05) of Title of the
U.S. Copyright Act now implements Article 13 of the Trips Agreement.
SERVICES
42. para. 58.  In the context of the review of the GATS Annex on Air Transport Services there are
U.S. statements regarding the opportunity of adding new services under the coverage of the GATS.  Inthe view of the U.S., which are the services that could/would be part of this coverage, since document
S/C/M/50 do not clarify this point?
43. para. 66.  Could more information be provided on the Federal Aviation Administration
AIR-21, adopted in April 2000, mainly regarding questions as aircraft repair and maintenance
advisory panel and request of information to assess balance of trade issues vis-à-vis the U.S.commitments on aircraft repair and maintenance services?WT/TPR/M/88/Add.1
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44. para. 127.  Is there any ongoing negotiation under GATS Article VII.4 (Recognition)?
45. para. 133.  The recommendations that licensed certified public accountants (CPAs) in public
practice be authorized to operate across State lines, in person or electronically, to service clients
outside their State of licensure require the passage of a new Uniform Accountancy Act.  What is the
current status of this measure?
46. Which States have adopted the current Uniform Accountancy Act?
47. para. 137.  The proposal to liberalize trade in accounting services in WTO negotiations lists
obstacles identified in this sector.  As some of these obstacles exist in the U.S., particularly with
regard to U.S. citizenship requirements (Alabama and North Carolina), does the U.S. plan to eliminate
those in the negotiations?
48. para. 139.  Regarding the U.S. negotiating proposal in the WTO on legal services, please
provide examples of the measures sought from trading partners in the current negotiations that areschedulable under Articles XVI and XVII of the GATS.
49. para. 142.  In 1993 the American Bar Association adopted a proposed Model Rule for the
Licensing of Foreign Legal Consultants to encourage the States to liberalize regulations concerning
foreign lawyers in a standardized manner.  Until 1999 twelve States had adopted it.  Have other States
adopted the Model Rule?   If so, was the adoption integral or did it suffer any modifications?
50. Has there been any progress on the July 1998 joint recommendations for the recognition of
foreign legal consultants in the NAFTA context? (WT/TPR/S/56 p. 216)
51. What is the current status of the negotiations on mutual recognition regarding professional
services with the European Union?   The WT/TPR/S/56 document acknowledges the possibility of
establishing mutual recognition agreements in “other services”.  Which are they?  (WT/TPR/S/56
p. 213)
52. Article V of the GATS establishes that bilateral or regional agreements liberalizing trade in
services must have substantial sectoral coverage. In  order to meet this condition, agreements should
not provide for the “a priori” exclusion of any mode of supply.  How does the U.S. find the NAFTA
Services Chapter to be consistent with that condition?
53. para. 14, page 15.  Please provide in more detail a definition of the term “substantial nexus”
and how it is assessed for purposes of taxation.
54. para. 128, page 115.  Please clarify whether and how the U.S. negotiating proposal on mode 4
(S/CSS/W/29) includes regulation at the sub-federal levels.
Electronic Commerce issues
55. How does the U.S. analyze the issue of taxation in electronic commerce?  Does the U.S. fully
agree with the views raised in OECD documents such as, for instance, the Taxation FrameworkConditions?   
56. Does the U.S. maintain the position stated  in document S/C/W/81, that “software” is
classified as a service under computer and related services of the W/120 under CPC 842 (software
implementation services)?WT/TPR/M/88/Add.1
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57. Does the U.S consider that, addressing electronic transmissions as its similar tangible goods
might have trade-distortive effects?  Is it possible that electronic commerce brings negative outcomesto traditional exporters of equivalent physical products?
58. The U.S. Technology Transfer Commercialization Act of 2000 includes provisions for a
federal agency to grant licenses for federally owned inventions only to licensees agreeing to
manufacture substantially the license-related products within the United States (WT/TPR/S/88 § 183).
Electronic Commerce is supposed to have positive effects on competition, for instance, by allowingSME’s to have access to the global market and by possibly reducing the economic gap between
Developed and Developing Countries sin ce location is no longer important.  In this sense, is the
working requirement embodied in the condition of  manufacturing substantially license-related
products within the U.S. compatible with articles 7 and 27(1) of the TRIPS Agreement?  Is it possible
that US legislation such as this Act hinder transfer and dissemination of technology and, thus, harmthe benefits of e-commerce for the developing countries?
59. The U.S. has highlighted its regional initiatives toward liberalization in its document
WT/TPR/G/88 (§44).  How is the U.S. approach in those fora – such as NAFTA, FTAA and the
Transatlantic Economic Partnership (TEP), on matters related to Electronic Commerce?
Agriculture
60. Secretariat Report, para. 154, page 68.  Please explain in more detail how PFC and ELP
affect agricultural investment and production.
61. Secretariat Report, para. 1, page 85.  The report states that the U.S. has justified the large
amounts of government support to the agri-food sector by its inherent volatility and by the support and
protection afforded to agri-food by its main trading partners.  Please explain the role played by these
programmes in the sectors volatility, particularly with regard to the recent decreases in international
prices of agri-food products.  Additionally, please clarify what would be the volatility withoutrecourse to these programmes.
COSTA RICA
SECRETARIAT REPORT (WT/TPR/S/88)
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Measures directly affecting imports
(i) Tariffs and other charges affecting imports
(a) MFN tariff rates
Paragraph 5
According to this paragraph, the United States maintains sizeable tariff barriers in respect of
products which are frequently of particular interest to developing country exporters .
What degree of readiness is there on the part of the United States to reduce tariff
commitments in these sensitive sect ors, within the framework of a possible new round of multilateral
negotiations?WT/TPR/M/88/Add.1
Page 82
Paragraph 6
United States tariffs show a high degree of tariff escalation, as indicated in this paragraph.
How would the United States envision the future in this area if there is a trend towards greater value
added in the exports of developing countries?
(d) The Harbour Maintenance Tax (HMT)
Paragraphs 20 and 21
We should like to be given more details concerning the application of the harbour
maintenance tax of 0.125% which the U.S. Customs Service is entrusted with collecting.  What is the
basis for calculating the tax in the case of imports?  How is the tax calculated for cargo shipments
within the United States?   According to the report, the tax has not been applied to exported cargo
since 1998.  What is the reason for that situation?  What changes are planned to resolve the issue of
the non-application of the tax?  When and how are such changes expected to come into effect?
(ii) Anti-dumping, countervailing and safeguard actions
(b) Anti-dumping and countervailing measures
Legislation and administration
Paragraph 25
Could you explain in more detail the reference to "… deleting the "not likely" standard and
incorporating the "necessary" standard of the Anti-Dumping Agreement"?
Paragraph 26
This paragraph refers to a claim by Canada.  Could you indicate what decision was taken in
this respect?
Paragraph 28
The implementation of countervailing measures and anti-dumping measures should in theory
have the effect of eliminating injury to the industry of the importing country and is justified as long assubsidization and dumping continue to be practiced.  If market prices do not return to "fair" levels
after the implementation of such measures, this would be thought to be due to miscalculation of the
measures applied.  Could it be that the "Byrd Amendment" is being justified by the possibility of
miscalculation, by the investigating agency, of the amounts of anti-dumping and countervailing
measures?
Anti-dumping investigations
Paragraph 31
Owing to the size of the United States economy, subsidies and other measures of assistance to
domestic producers have substantial effects on the world economy.  How can it justifiably be claimed
that the direct payments made by the Government to farmers do not constitute an instrument ofartificial competitiveness vis-à-vis other competitors, when such payments represent more than half of
farmers' income?WT/TPR/M/88/Add.1
Page 83
Countervailing duty investigations
Paragraph 40
This paragraph indicates that many countervailing duty investigations were initiated with
parallel anti-dumping investigations.  Could you indicate what percen tage of these investigations
ended with the imposition of anti-dumping measur es and what percentage with the imposition of
countervailing measures?
Paragraph 41
This paragraph refers to the fact that 73% of countervailing measures were applied to steel
products.  What countries were targeted by these measures?
Paragraph 43
Where the pre-sale and post-sale entities are different legal persons, is consideration
even then given to the possibility that the post-sale entity is receiving a subsidy pursuant tothe change-of-ownership transaction?
(c) Safeguards
Paragraph 56
This paragraph refers to the fact that some procedural aspects have been challenged.  The
institution that carries out these procedures is the same one which deals with similar aspects ofanti-dumping and subsidy investigations.  Were any of the challenges on these matters also made in
respect of anti-dumping or subsidy investigations?
(v) Standards, technical regulations and sanitary requirements
(a) Standards and technical regulations
Paragraph 88
This paragraph refers to the existence of technical regulations established at sub-federal level.
In particular, it is mentioned by way of example that, in the state of Idaho, food products containingforeign eggs must bear the indication " foreign eggs used in this product ".  In accordance with the
provisions of Article 2.2 of the WTO Agreement on Technical Barriers to Trade, what legitimate
objective would be pursued by technical regulations of this kind?  Are there any other similar
technical labelling requirements at federal or sub-federal level in the United States which call for
products to be differentiated according to the origin of their constituent ingredients?
(b) Sanitary and phytosanitary (SPS) measures
Paragraph 91
Please explain what scientific principles justify the prohibition on entry into your country of
plants exceeding 18 inches in length, in accordance with the provisions of Section 319.37-2(b)point 6(i) of the Code of Federal Regulations (Title 7, Agriculture, parts 300 to 399)?
What criteria were used by the sanitary authorities of the United States to determine the
appropriate level of protection in this case, in accordance with Article 5.5 of the WTO Agreement on
the Application of Sanitary and Phytosanitary Measures?WT/TPR/M/88/Add.1
Page 84
Have the United States sanitary authorities considered the possibility of implementing
alternatives to the measures applied to plants exceeding 18 inches in length, which would be lesstrade-distorting and at the same time make it possible to establish the same appropriate level of
protection?
(iii) Other measures affecting production and trade
Intellectual property rights
1. Please explain in detail how your legislati on implements Article 61 of the TRIPS Agreement.
2. Please describe the criminal procedures and penal ties contained in your legislation, including
penalties of imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the
level of penalties applied for crimes of a corresponding gravity.
II. DEVELOPMENTS IN SELECTED SECTORS
(ii) Textiles and clothing
In the case of the United States, the integration of the most sensitive textile products and the
elimination of the majority of quotas will take plac e at the end of the ten-year period provided for in
the WTO Agreement on Textiles and Clothing.  Is the Administration thinking of promoting greater
liberalization in this sector over the next four years, with a view to preparing for the integration of
textiles into the GATT rules, scheduled for 2005?  What other measures might the United States be
considering for implementation in connection with this topic?WT/TPR/M/88/Add.1
Page 85
REPLIES PROVIDED BY THE U.S. GOVERNMENT
PART 11. Economic Environment
(Japan)  (page 1, para.1)  Economic growth in the United States decelerated as of the third quarter of
2000, and it is predicted that the deceleration of growth will reach as low as 1.5% for the whole of
2001.  Negative indicators, such as the fall in stock prices, are also more apparent.  How does the
Government of the United States view this sit uation?  What kind of policy measures does the
Government of the United States think should be adopted for supporting sustainable growth? How
does the Government of the United States assess the economic impact of the tax reductions and
expansionary monetary policy promoted by the Bush Administration?
(Malaysia) The U.S. economy has been experiencing an economic slowdown since the third quarter of
2000.  This is of concern to trading partners.  What measures are the U.S. undertaking to counteractthe effects of the downturn and to return the US to more sustainable rates of growth, other than a
more relaxed monetary policy?
Answer   (For both questions)
The current slowdown of the U.S. economy reflects several quarters of reductions in business
inventories and declines in non-residential business investment.  On an annualized the rate, the U.S.GDP rose at just 0.2 percent in this year’s second quarter. The Administration, however, expects a
pick up in economic activity in the second half of the year, supported by the fiscal stimulus of the
recent tax cut and the Federal Reserve’s reductions in interest rates.  The Administration estimates that
the tax cut alone will add roughly one percentage point to economic growth in the second half of 2001
and early in 2002.  For 2002, the Administration expects U.S. real GDP to grow at an annual rate of
3.7 percent.
(Canada) The GDP figures have been updated recently; and therefore those figures cited in
paragraph 5 and in Table I.1, are no longer accurate.  For example, real GDP growth in 2000 should
be 4.1%, down from the previous figure of 5.0%.   The U.S. may wish to follow-up with the WTO
Secretariat to ensure that the Secretariat report includes the most updated figures.
Answer:
We agree that the data for GDP growth in 2000 have been adjusted to 4.1 percent.
(Canada)  The US Administration forecast GDP growth of 2.4% in 2001 and 3.4% in 2002 seems to
be overly optimistic.  On August 16, the Administration's forecast was reduced to 1.7% this year and
3.2% next year. The U.S. may wish to follow-up with the WTO Secretariat to ensure that the
Secretariat report includes the most updated figures.
Answer:
Current forecasts indicate U.S. GDP growth in 2001 of 1.7 percent, and of 3.7 percent in
2002.WT/TPR/M/88/Add.1
Page 86
2. Miscellaneous Issues
Labor Standards and Trade
(Japan) (pages 17-18, paras.22-25, Labour Standards and Trade)  The California State Law
(SB1888), which was amended in September 2000, prohibits the purchase of any foreign goods and
services produced by using such labour as forced labour, or from the benefits of such labour as forced
labour.  These provisions target only foreign goods and services, and therefore are considered as
constituting violation to Article 3 of the WT O Government Procurement Agreement (i.e. National
Treatment clause). The Government of Japan requests that the Government of the United States takes
appropriate measures in order to bring these provisions into consistency with the WTO Agreement.
The Law also obliges contractors to verify that foreign-made products furnished to the State are not
produced with the use of such labour as forced labour.  While the Smoot-Hawley Act of 1930 prohibits
the import of products produced with the use of such labour as forced labour under penal sanctions,contractors are additionally obliged by the State law to verify after customs clearance that such
labour has not been used.  Such dual obligation has caused an excessive burden to foreign suppliers.
We would appreciate if the Government of the United St ates would explain the reason for this matter.
Answer:
U.S. laws and regulations prohibit the use of forced or indentured labor within the jurisdiction
of the United States.  Some jurisdictions have taken steps to ensure that requirements regarding forced
labor that apply to domestic suppliers are applied by all suppliers that provide goods and services to
governments, including imports.
(India) Ban on bidi import on the basis of non-trade related issues: The US Customs Department
issued temporary orders in the latter half of 1 999 suspending imports of ‘Ganesh’ brand bidis into the
US, on the ground that the concerned Indian Bidi manufacturer was employing forced child labour in
the manufacture of bidis. India expresses its strong concern at raising such trade barriers which arenot WTO-consistent. We would request the US authorities to lift the ban in question.
[Answer to be supplied]
Shipbuilding
(Japan) (pages 93 and 96, paras 31 and 43, The Merchant Maritime Act of 1920)  The Merchant
Maritime Act of 1920 prescribes that ships for coastal shipping services are required to be built in theUnited States.  Although this issue was dealt with in the review process pursuant to the paragraph
3.(b) of the GATT 1994, Japan regrets that sufficient explanation by the United States, on whether the
conditions which created the need for the exempti on still prevail, was not provided, and would expect
an appropriate review next time.  Please provide the U.S. view on this point.
Answer:
The U.S. position on this issue was stated unambiguously during the review process under
paragraph 3(b) of the  GATT 1994.
Section 301
(Japan) (page 59, paras.127-128, Section 301 of the Trade Act of 1974 )  (a) Although the Super 301
will expire at end of this year, Section 301 of the Trade Act of 1974 will, itself, remain in effect. Japanrequests the United States to apply Section 301 in an appropriate manner in order to abide by itsWT/TPR/M/88/Add.1
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obligations set out in the WTO agreements, as per the findings of the Panel Report regarding the same
matter. What is the U.S. opinion?
Answer:
The United States is committed to complying with its obligations under the WTO Agreement.
(Japan) (page 59, paras.127-128, Section 301 of the Trade Act of 1974 )  (b) Japan is concerned
about the consistency of the so-called “Carouse l” amendment with the WTO agreements, since it
requires the Government of the United States to periodically revise the list of products subject to thesuspension of WTO concessions, thereby affecting the stability and the predictability of trade. The
amendment is a subject of the consultations between the U.S. and the EC, and Japan is carefully
monitoring the development of these consulta tions. Please explain the U.S. view on this.
Answer:
This question refers to section 407 of the Trade and Development Act of 2000,  amending
section 306(b)(2) of the Trade Act of 1974.  As the United States explained in consultations held last
year with the EC, nothing in section 407 requires actions inconsistent with U.S. obligations under the
WTO Agreement.
(Canada) (para 127)  According to para 127, "since the [Section 301] provision first entered U.S.
trade law in 1974, the USTR has initiated 119 such investigations; since January 1999, however, onlyfour Section 301 investigations have been initiated. "  There were seven U.S.-initiated investigations
addressing Canadian wheat trade between 1990 and 1998.  While none of these seven investigations
has shown any evidence to indicate that wheat is traded unfairly, wheat was the subject of one of the
four Section 301 investigations initiated since 1999.  Please explain how the U.S. ensures that any
trade action that might be undertaken pursuant to a Section 301 investigation fully respects U.S. WTO
obligations.
Answer:
The U.S. Trade Representative decides what actions, if any, are taken as a result of an
investigation under sections 301-309 of the Trade Act of 1974, and the Trade Representative is
committed to complying with U.S. obligations under the WTO Agreement.
(Japan) (page 60, para.130, 1995 measures by the Government of Japan and the Government of the
United States regarding autos and auto parts)  The measures mentioned herein are taken not only bythe Japanese Government, but by each government respectively and are not international agreements.
This fact should be accurately reflected in the Report.  The Japanese Government did not only remark
that the measures adopted in 1995 had outlived its significance, but also proposed last year an idea of
establishing a new bilateral dialogue mechanism designed to better respond to today  rapid advance
of globalization and the development of informati on technology.  When the discussion between Japan
and the United States on the auto and auto parts issues is mentioned, the proposal made by the
Japanese side should be described accurately.
Answer:
The U.S. Government views the 1995 measures as a bilateral agreement between the United
States and Japan, fully consistent with WTO provisions.  The measures are focused on issues relatedto the Japanese automotive market and the Japanese  transplants in the United States.  The declared
joint objective of the Agreement envisages "...achieving significantly expanded sales opportunities toWT/TPR/M/88/Add.1
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result in a significant expansion of purchases of foreign parts by Japanese firms in Japan and through
their transplants, as well as removing problems which affect market access, and encouraging importsof foreign autos and auto parts in Japan."  The Government of Japan made a proposal at the end of last
year regarding the establishment of a new bilateral automotive dialogue to look at globalization,
information technology and other issues.  We regret that this information was not included in our
submission.
GATT 1994Legislative Agenda
(Japan)  (page13, para.2, Trade Promotion Authority)  W hat, in the view of the Government of the
United States, is the prospect of Trade Promotion Authority being approved by Congress?  What kind
of efforts have been made for achieving this goal?
Answer:
President Bush has placed enactment of Trade Promotion Authority (TPA) at the top of his
2001 International Trade Legislative Agenda.  The formal legislative process has begun with the
introduction of a bill in Congress for such authority.  TPA is an important part of President Bush’s
plan for opening markets and promoting global economic prosperity, and the Administration intends
to work with Congress to enact TPA this fall.
State level impediment to trade
(EU) (State level impediment to trade) Some States still persist in having rules that: prevent cross-
state retail sales of wines and spirits; prohibit EU exporters from distributing, rebottling, or retailing
their own wine. These measures are a severe impediment to the free circulation of alcoholic beverages
originating from the time of prohibition.
Answer:
All alcohol beverage products intended for sale in the interstate commerce of the United
States, whether domestic or imported, are subject to labeling requirements found in the FederalAlcohol Administration Act.  One of the labeling requirements includes obtaining a "Certificate of
Label Approval", which is administered by the Bureau of Alcohol, Tobacco  and Firearms (ATF).
ATF does not charge any application fees for the issuance of a Certificate of Label Approval, whether
the product is imported or domestic.
Other Measures Affecting Production And Trade
(Japan) (Metric system)  Considering the impact of the U.S. market on the world, the Government of
Japan strongly requests that the metric system (the  SI Unit), which is a global standard, be adopted
more broadly by the Government of the United States and American businesses. We note that the
United States did indeed commit itself to this issue in the 2nd annual report of the SII (Structural
Impediments Initiative) in 1992.  We would appreciate receiving the U.S. view on this matter.
GATT 1994Answer:
The U.S. Metric Program, located at the National Institute of Standards and Technology in the
U.S. Dept. of Commerce, is undertaking renewed efforts to provide leadership, example, and model
initiatives for building awareness of the metric system's widespread presence, its relative ease to learn
and use as a language of measurement, and its vital role in an increasingly global marketplace.  Thisinvolves encouraging, facilitating, and promoting the acceptance and use of the metric "language" in
federal, state, and local government organizations, in business and manufacturing, in packagedWT/TPR/M/88/Add.1
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consumer products, in business and public education, and in general trade. We seek  to heighten public
awareness and appreciation for the metric system and to promote its use in daily life.
The U.S. Metric Program office plans to take the lead to promote changes to the U.S. Fair
Packaging and Labeling Act (FPLA) to permit metric only declarations on U.S. consumer product.
This will be accompanied by efforts to contact state weights and measures directors, in those states
that haven't already implemented the Uniform Packaging and Labeling Regulations (UPLR) option on
metric-only labeling, and working with them to pr omote parallel changes in their state laws and
regulations to permit metric only labeling on consumer products regulated by the UPLR.  Plans are
being developed to meet with representatives of  U.S. companies experienced in using the metric
system to explore opportunities for sharing their successful transition techniques with other
companies, particularly small- and medium-sized U. S. enterprises, to assist their management and
employees in implementing the metric system.
The objective of these efforts will be to promote, directly and through professional and trade
associations, metric resource materials that businesses can use in products and services, a goal being
to facilitate the use of metric measures in manufacturing and production, as well as in metric-only
packaging (when permitted by FPLA), and to increase the number of products sold in metric sizes.
Developments in Selected  Sectors
(EU) Each year, the U.S. fixes the total allowable le vel of foreign fishing (TALFF) and accordingly
makes allocations to foreign fishing fleets. Mackerel migrating off the East coast is the only stock
currently identified as being in surplus in th e U.S. Exclusive Economic Zone. However, the U.S.
authorities have set a zero TALFF since 1990 for this  stock, following pressure from its domestic
industry. The EU believes that this line neither corresponds to the provisions and intentions of the
Magnuson-Stevens Fishery Conservation and Management Act or to the provisions of Article 62 of the
UN Convention on the Law of the Sea.
Answer:
We take note of the EU’s views.
3. Measures
Regional Initiatives
(Japan) (page 19, para.32 and page .35, para.38) (a) Please explain the U.S. position on the
relationship between the multilateral trading system  established by the WTO agreements and bilateral
free trade agreements.
Answer:
Bilateral trade agreements that are fully cons istent with WTO rules and compatible with its
objectives can also support and complement the rules-based and trade-expanding orientation of themultilateral trading system.  The United States is presently seeking to encourage further trade
liberalization through the pursuit of several bilateral agreements.  Such initiatives include the U.S.-
Jordan FTA and the negotiation of free trade agreements with Chile and Singapore.
(EU) (para 44- 45, Free Trade Area of the Americas (FTAA)  Could the Government please explain
its views on the relationship between the ongoing FTAA negotiations and a New Round of WTOnegotiations?WT/TPR/M/88/Add.1
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Answer:
The FTAA will support and enhance the U.S. commitment to the multilateral system.  It is
premised on the success of the Uruguay Round, and on further contributions and commitments to the
multilateral system.  In April 2001, trade ministers from throughout the Western Hemisphere
reiterated their pledge that the FTAA will be a balanced, comprehensive agreement that is consistent
with the rules and disciplines of the WTO, and improve upon those rules and disciplines wherever
possible and appropriate, taking into account the full implications of the rights and obligations ofcountries as members of the WTO.  The increase in economic growth and improved access to new
ideas resulting from liberalized trade brought about by the FTAA will also reinforce democratic
principles in the region.
(EU) (para 60, The Caribbean Basin Initiative (CBI ) and the African Growth and Opportunity Act
(AGOA) The Report states that “The United States intends to request any WTO waivers which may be
necessary for the enhanced benefits of the CBTPA.” Can the U.S. specify its intentions in this regard?
What is the situation with regard to the AGOA (paras. 52-58), where no reference is made to any
waiver requests?
Answer:
The United States is evaluating what sort of waiver it needs for these programs and intends to
submit its waiver request soon.
(Canada) (para 31, Relations with Canada and Mexico) According to para 31, two-way trade
between the United States and Canada is about US$1.1 billion daily.  This is the 1999 figure.  The
updated 2000 figure from the US Survey of Current Business is US$1.23 billion.  Using a Canadian
source, the corresponding figure is even higher, at US$1.3 billion daily. The U.S. may wish to follow-
up with the WTO Secretariat to ensure that the Secretariat report includes the most updated figures.
Answer:
In June 2001, the U.S. Department of Commer ce indicated that total two-way trade in goods
with Canada is $409.8 billion, or $1.12 billion daily.
(Hong Kong) (page 11, para 40)  We note that the U.S. sees that regional agreements can become
models for future multilateral liberalization in new areas, for example, environment and labour
standards etc. However, it appears that there is still controversy within the US, notably in the U.S.
Congress, over the inclusion of these new areas in regional initiatives/agreements. A prominent
example is the US-Jordan Free Trade Agreement, which is yet to be ratified by the U.S. Congress. We
would like to know the US' latest stance on these new areas in the context of its future regional
initiatives/agreements.
Answer:
The achievement of mutually supportive trade and environment and trade and labor policies is
part of the President's 2001 International Trade Agenda.  More broadly, the U.S. Congress has
explicitly linked respect for internationally recogniz ed worker rights and/or for environmental values
with aspects of U.S. trade, investment, and lending policies in over a dozen pieces of legislation over
the last twenty years.  These include the original  (1983) Caribbean Basin Initiative, OPIC, the Trade
Act of 1988, NAFTA, and the Uruguay Round Agreements Act.  The Administration will continue to
work with Congress to develop negotiating objec tives addressing these issues in Trade Promotion
Authority legislation.WT/TPR/M/88/Add.1
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Bilateral Initiatives
(Bangladesh) (II(3)(iii) Unilateral Preferences)  Under the TDA 2000, the U.S. has provided duty-
free and quota-free market access for the products of 72 countries, of which 35 belong to the category
of LDC.  Among the 49 LDCs designated as such by the UN, 14 LDCs have been left out of the
purview of this legislation.  Does the U.S. have an y plans of extending similar preferential treatment
to the remaining 14 LDCs?
Answer:
We plan to work towards the objective of duty-free and quota-free market access for all LDC
imports as stated at the Third United Nations Conference on the Least Developed Countries.
(Canada) (paras 52-58, African Growth and Opportunity Act (AGOA)) What are the expected benefits
to sub-Saharan African countries of the various market access provisions in AGOA?  Does USTR
anticipate substantial increases in exports from these countries not least because many of the
provisions are subject to the use of U.S.- produced raw materials?  What are the anticipated impacts
on employment and poverty reduction in sub-Saharan Africa?
Answer:
AGOA provides expanded trade opportunities for eligible countries, and is especially
beneficial to those countries that put in place a business environment that will attract and retaininvestors who are interested in taking advantage of the benefits AGOA provides.  AGOA has already
begun to generate increased trade flows with the United States, increased investor interest across the
region, and job creation in the region.  For exampl e, Kenya estimates that  AGOA will create 50,000
new jobs directly and over 100,000 jobs indirectly.  South Africa anticipates about $100 million in
investment in its textile and apparel facilities, creating 13,000 new jobs.  As a result of AGOA,
Madagascar has received more foreign direct investment in the first quarter of this year than in all of
2000.  Lesotho's apparel sector is expected to receive $122 million in new investments as a result ofAGOA.
(Thailand) Please describe the preferences under the Trade and Development Act (TDA) of 2000
which offers to Sub-Saharan African and Caribbean countries including the process of certifying
beneficiary countries.
Answer:
The Caribbean Basin Trade Partnership Act (Title II of the TDA) expands on previously-
existing preferential treatment extended to eligible Caribbean and Central American countries.  Duty-
and quota-free treatment is provided for certain apparel products, subject to specific origin
requirements including use of U.S. yarns and fabrics.  In addition, other previously-excluded products
(including petroleum products, canned tuna, and leather footwear) are now eligible for U.S. tarifftreatment equivalent to that extended to Mexi co under the NAFTA.  Eligibility for these enhanced
preferences was conditioned on a review of the countries' adherence to legislative criteria dealing with
trade policies, protection of intellectual property, protection of worker rights, transparency in
government procurement, efforts to combat corruption, and counter-narcotics efforts.
The African Growth and Opportunity Act (AGOA), Title I of the Trade and Development Act
of 2000, provides duty free and quota free access to the U.S. market for a substantial number of
products from eligible beneficiary sub-Saharan African countries.  For textiles and apparel, AGOA
provides the following benefits:WT/TPR/M/88/Add.1
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(1) lifts all existing quotas on apparel products from sub-Saharan Africa, after these
countries have implemented effective visa systems to combat illegal transshipment;
(2) extends duty/quota free treatment for sub-Saharan African apparel made from yarns
and fabrics not available in commercial quantities in the U.S.;
(3) extends duty/quota free treatment for sub-Saharan African apparel made in Africa
from U.S. yarn and fabric;
(4) extends duty/quota free treatment for knit-to-shape sweaters made in sub-Saharan
Africa from cashmere and some merino wools as well as apparel produced in Africa
from silk, velvet, linen, and other fabrics not produced in commercial quantities in the
U.S.;
(5) extends duty free and quota free U.S. market access for apparel made in Africa with
African/regional fabric and yarn, subject to a cap (limit) ranging from 1.5 to 3.5
percent of the U.S. apparel import market over an 8 year period; and
(6) promotes investment in Africa’s poorest countries through a special provision in the
cap which allows African countries with an annual GNP of $1,500 and below to use
third country fabric inputs for 4 years.
AGOA extends U.S. Generalized System of Preferences (GSP) benefits for eight years for
eligible sub-Saharan African countries and elimin ates the GSP competitive need limitation for AGOA
beneficiary countries.  AGOA also mandates a U.S.-sub-Saharan Africa Trade and Economic
Cooperation Forum to facilitate regular trade and investment policy discussions, provides for technical
assistance to develop trade capacity in Africa and established equity and infrastructure funds for
Africa.  Thirty-five of the 48 sub-Saharan African  countries are eligible to receive AGOA’s trade
benefits.  The President may designate a country as  a beneficiary sub-Saharan African country if he
determines that the country meets the eligibil ity criteria set forth in section 104 of the AGOA.
(Japan)  (page 19, para.32 and page .35, para.38) (b) When does the Government of the United States
expect the Congress to ratify the U.S.-Jordan FTA?
Answer:
Implementation of the U.S.-Jordan Free Trade Agreement is a high priority for the
Administration.  The President signed implementing legislation for the Agreement in October.  Weexpect the Agreement to enter into force on December 15, 2001.
(Japan) (page 19, para.32 and page .35, para.38)(c) If the U.S.-Chile FTA is concluded, does it mean
expansion of the NAFTA, seeing as there already  exists a Canada-Chile FTA and a Mexico-Chile
FTA? Please explain the U.S. position on the re lationship between the U.S.-Chile FTA and the FTAA.
Answer:
The U.S.-Chile FTA is a stand alone agreement, not an accession to the NAFTA.  In our
negotiations, we are striving for a state-of-the-art bilateral free trade agreement.  With respect to the
FTAA, our efforts to conclude this agreement complement our efforts on the FTAA.WT/TPR/M/88/Add.1
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Export Restrictions and Controls
(Japan) (page 60, paras.131-133, Export restrictions and controls)  (a) As an example of export
restrictions, the Report says  or example, exports of unprocessed timber originating from non-federal
public lands in the western continental United States are prohibited.  It should be corrected to  or
example, exports of unprocessed timber originating from federal and state-owned forests, which are
located on the west-hand side of the 100_ West Longitude in the continental United States are
prohibited.  Japan thinks that this measure is rather an export quantitative restriction for protectingdomestic sawmillers as, first of all, protection of spotted owls must be done through regulating
logging and not by export bans. Secondly, only export restrictions have been introduced, whereas no
regulations have been established for the domestic transactions of logs. Moreover, the United States
strongly requests its exports of timber products to Japan, therefore, Japan would like to request the
United States to remedy this measure in accordance with the WTO Agreement once again as werequested at the last Trade Policy Review of the United States.
Answer:
We take note of Japan’s comments.
(Japan) (page 60, paras.131-133, Export restrictions and controls)  (b) The Report says  he U.S.
maintains export restrictions and controls for (i)national security, (ii)and foreign policy reasons, (iii)or to prevent situations of short supply. Although we hear that agricultural products are not included
in the Control List of restricted and controlled products, will the possibility of including these
agricultural products in the Control List arise, if export restrictions and controls for (ii) or (iii) are
undertaken?  For the trading of commodities such as agricultural products, international prices
depend significantly on the actions taken by the exporting countries. If the agricultural products are
subject to export restrictions and controls, the exporting countries are free to impose export
restrictions and controls. This system raises not only a trade distorting effect, but also difficulty onfood security, which impedes stable food supply to the importing countries.
Answer:
It is U.S. policy not to institute export rest rictions on foodstuffs and medicine except under
extraordinary circumstances. Article 12 of the WTO Agreement on Agriculture requires members
instituting export restrictions to notify such measures to the Committee on Agriculture. The UnitedStates has been diligent in doing so when necessary.
(Japan) (Re-export control)  The U.S. Export Administration Regulations mandate firms located
outside the U.S. to obtain authorization from the Go vernment of the United States when it is necessary
to re-export certain goods. Such a requirement apparently constitutes an extraterritorial application
of the U.S. laws and thus should be abolished.  Furthermore, until its abolishment, the following
transitional measures should be taken into consideration:
(i) in light of the fact it is difficult that for non-U.S. companies to obtain information on
re-export regulations, the United States should strengthen its efforts to publicize such
information, and in case where a company  cannot be expected to know a specific
requirement, it must not be held liable;
(ii) the United States should publicize as a guideline the methodology used by the DOC
when calculating the ratio of software and technology incorporated in a product;WT/TPR/M/88/Add.1
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(iii) companies should be allowed to resort to a de minimus level, according to their own
judgement, by making use of the above guidelines.
Answer:
We take note of Japan’s comments.
(Japan) (page 42, para 61, Quantitative restrictions on imports) It is said that the United States is
maintaining bans on imports from certain countries for foreign policy purposes.  Could the United
States provide the details of the bans (e.g. banned products and countries)?
Answer:
Under regulations promulgated under the International Emergency Economic Powers Act
(IEEPA), certain products from selected countries may only be imported into the United States
pursuant to a license. Such license requirements apply to certain imports from Sudan, Iran, Iraq,Libya, and Liberia. An expedited license (notification) procedure is in place for North Korea.
Applications for licenses can be made to the Depa rtment of the Treasury's Office of Foreign Assets
Control (OFAC). There is no quantitative limit to the number of licenses that may be issued.
(Japan) (pages 62-63, paras 134-138, Sanctions Acts)  Sanction measures based on the Iran and
Libya Sanctions Act of 1996 (ILSA) and the Cuban Liberty and Democratic Solidarity Act of 1996(Helms-Burton Act) could constitute an extraterr itorial application of domestic laws, which is not
permissible under general international law, and may thus be considered as problematic in relation to
the WTO Agreement.  The Government of Japan requests the Government of the United States to be
prudent when implementing these Acts in order to ensure consistency with international law.  In
particular, the Government of the United States sh ould refrain from applying sanctions to companies
from third countries.
(Japan) Despite repeated appeals from many WTO members, including Japan, it is regrettable that
the ILSA was renewed in August with such problems remaining unresolved.  We strongly urge the
Government of the United States to implement the Act with due prudence while, at the same time,
maintaining consistency with international law.  What is the U.S. opinion on the above?
(EU) (para 138) The U.S. has recently extended the provisions of the Iran and Libya Sanctions Act
(ILSA) for another period of five years. Could the U.S. give any indication that the EC's objections to
the U.S. Congress in response to this extension will be considered seriously and give any indication as
to the likelihood of the extension being withdrawn or reduced?
(India) In paragraph 30 of its summary observations, the Secretariat report observes that ‘trade
restrictions imposed by the United States for national security and foreign policy reasons may be a
source of concerns for some trading partners, particularly, because of the unilateral nature of certain
such measures. 
…..Congress is considering reforms to sanctions policy and to export controls’. We
are interested to know the details of the reforms being considered by the US Congress.
(Malaysia) There have been concerns expressed over US unilateral trade measures that are not WTO
consistent.  In particular, we note especially the extension to the Iran-Libya Sanction Act.  How does
such Acts reconcile with US obligations under the WTO?
Answer: (For all five questions)
We appreciate the views of all our trading partners in these matters.WT/TPR/M/88/Add.1
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The Iran and Libya Sanctions Act (ILSA) remains U.S. law.  In August 2001, the Act was
extended for a further five years, until 2006, with amendments.  The re-authorizing legislationincludes a provision calling for a report by the President to Congress on the impact of certain actions
taken pursuant to the Act.  The President is invited to include in that report a recommendation on
whether the Act should be terminated or modified.  In his statement upon signing the legislation, the
President welcomed this provision, emphasized our continuing concerns about Iran and Libya, and
noted that we are strengthening our cooperative efforts with other countries to pursue effectiveapproaches to the problems of proliferation and terrorism that are key ILSA concerns.  By its terms,
ILSA applies to those who engage in activities covered by the statute, without distinction by
nationality.  The legislative history of the Act indicates a concern by Congress that the law be applied
in a manner consistent with the international obligations of the United States.
The United States believes that the Cuban Liberty and Democratic Solidarity (LIBERTAD)
Act is consistent with U.S. obligations under the GATT 1994 and the GATS.  Since the enactment of
the LIBERTAD Act the President has exercised his authority under Title III of the Act to suspend the
right of U.S. nationals to file suit against persons that are trafficking in confiscated property in Cuba.
That suspension remains in effect.  In 1998, the United States and the European Union reached an
Understanding with Respect to Disciplines for the Strengthening of Investment Protection.  ThatUnderstanding provides that the United States would continue consultations with the Congress with a
view to obtaining an amendment of Title IV of Helms-Burton that would provide authority for a
waiver that would apply, with respect to the EU, once the EU has adhered to the agreed disciplines
and principles.  Consultations with the Congress are continuing.
(EU) (para 137, Export restrictions and controls) Title III of the Helms-Burton Act allows U.S.
citizens to file lawsuits for damages against foreign companies investing in confiscated U.S.
(including Cuban-American) property in Cuba. Titl e IV requires the U.S. Administration to refuse
entry to the U.S. to the key executives and shareholde rs of such companies. The EU is of the view that
these measures are contrary to U.S. obligations under the WTO Agreements, in particular the GATT
(General Agreement on Tariffs and Trade) 1994 and GATS (General Agreement on Trade in
Services). Recently, the U.S. suspended Title III for an additional six months but its commitment to
grant a waiver on Title IV has not yet been honoured. Does the U.S. intend to introduce a permanentsolution to this problem?
Answer:
In 1998, the United States and the European Union reached an Understanding with Respect to
Disciplines for the Strengthening of Investment Pr otection.  That Understanding provides that the
United States would continue consultations with th e Congress with a view to obtaining an amendment
of Title IV of Helms-Burton that would provide authority for a waiver that would apply, with respect
to the EU, without a specific time limit, so long as the Understanding was in effect.  Consultations
with the Congress are continuing.
(EU) (para 138) The Iran Non-proliferation Act, 2000 provides for discretionary sanctions against
foreign companies that transfer to Iran goods, services and technology listed under the internationalexport control regimes, as well as any other item prohibited for export to Iran under U.S. export
control regulations, as potentially contributing to the development of weapons of mass destruction.
The EC sees the adoption of this Act as a sign of failure to comply with the U.S. commitment to resist
the passage of extraterritorial sanction legislation. Will the U.S. confirm that the promise made by
President Clinton (to work with Congress in order to seek to rationalize the reporting requirements ontransfers deemed legal under applicable foreign laws and consistent with the multilateral export
control regimes) will be honoured under the current administration?WT/TPR/M/88/Add.1
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Answer:
The Clinton Administration opposed the Iran Proliferation Act in the Congress but the
legislation passed by an overwhelming margin.  President Clinton signed the legislation after being
satisfied that the bill would not damage internationa l cooperation with non-proliferation efforts.  The
President has flexibility to impose or not impose sanctions under the Act.
(Brazil)  In its report, the United States affirms that  NAFTA agreements “can become models for
future multilateral liberalization in new areas, such as agriculture, services, investment, andenvironmental and labour standards” (page 11, §40).  In view of the fact that to be eligible for
NAFTA preferences it is necessary to fulfil strict rules of origin, NAFTA is seen as highly distortive to
commerce. Therefore, how can agreements su ch as NAFTA contribute to freer trade?
Answer:
Every preferential trade agreement includes rules of origin which assure that the benefits of
the agreement flow to the parties of that agreement.  For the majority of products, NAFTA’s rules of
origin require that processing or assembly of goods within the Parties that contains non-NAFTA
inputs be sufficient to result in a designated change in tariff classification under the Harmonized Tariff
System, as specified in NAFTA’s Annex 401.  In some product sectors, the change in tariff
classification requirement is supplemented or replaced by a requirement that a specified percentage ofeither the value of the goods or their net cost be attributable to labor performed and materials
produced in the territories of the NAFTA parties.
In all cases, NAFTA’s rules of origin are defined in a clear, transparent manner that do not
distort trade flows.  NAFTA also provides for adva nced rulings regarding origin to allow traders to
make sourcing and manufacturing decisions with a high degree of certainty.  In addition, the NAFTA
allows for modification of rules of origin.  The Parties have agreed to several such modifications,
including those which have simplified, clarified or provided added sourcing flexibility.
(Brazil)  Enabling Clause (Decision of 28 November 1979) establishes, in its Article 5, that “The
developed countries do not expect reciprocity for co mmitments made by them in trade negotiations to
reduce or remove tariffs and other barriers to the trade of developing countries, i.e., the developed
countries do not expect the developing countries, in the course of trade negotiations, to make
contributions which are inconsistent with their individual development, financial and trade needs”.
Developed contracting parties shall therefore not seek, neither shall less-developed contracting
parties be required to make, concessions that are inconsistent with the latter's development, financial
and trade needs”. However, as mentioned in the Secretariat Report, the United States have been
conditioning the concession of preferences under  agreements such as GSP, CBTPA and AGOA to
adherence to labour and environmental standards,  among others. How are these requirements
consistent with the Enabling Clause?
(India) In paragraph 14 of its summary observations, referring to the unilateral extension of
preferences under the US GSP scheme, the Secretariat has observed that ‘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’. The GSP scheme is a non-reciprocal scheme of incentives granted
to developing countries without any conditions attached and as such India strongly opposes any
linkage of GSP benefits to non-trade issues such as labour rights. We would like to hear the response
of the US delegation.WT/TPR/M/88/Add.1
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Answer:  (For both questions)
We believe that the conditions for eligibility are fully consistent with beneficiaries’
development, financial, and trade needs.  If countries feel otherwise and that the Enabling Clause is
being violated, they are free to forego the unilateral grant of preferences.  We believe that the edibility
criteria reinforce the development and trade incentives in the trade preference programs by
encouraging countries to engage in self-help in crucial areas. We also believe that the trade
preferences should benefit workers as well as firms
(EU)  Based  on an agreement in 1991 (Rose Garden Agreement), the US has entered in discussions
with the Mercosur countries with a view to launc h negotiations in a 4+1 format. Could the US please
inform about: (a) the nature and state of play of these discussions, (b) the objective and timeframes of
the negotiations, (c) whether a free trade area between the Mercosur countries and the US is foreseen
or among US intentions; and/or whether sectoral liberalisation is foreseen or among US intentions,(d) its relation to the FTAA negotiations.
Answer:
The 4 + 1 format seeks to explore expanded market access.  No FTA negotiations are
contemplated at this time.
(India)  In paragraph 15 of its summary observations, the Secretariat referring to the US Trade and
Development Act (TDA) of 2000 that includes both the African Growth and Opportunity Act and the
Caribbean Basin Trade Partnership Act has pointed out that textile and clothing imports from
beneficiary countries in sub-Saharan Africa and the Caribbean would enter the US market duty-free
and quota-free subject to content requirements on US  produced-inputs. According to the Secretariat,
this requirement would ‘ensure that US input produc ers also benefit from the arrangement, possibly
at the expense of lower-cost third-country suppliers’.We would like to hear the response of the US
delegation to these observations. We would also like to know whether all the Acts referred to in this
paragraph have been notified to the WTO. If yes, the details of the notification may be given. If not,
the reasons thereof and the likely time-frame by which the notification would be made may be
indicated. Since AGOA is neither generalised nor non-reciprocal, it cannot be dealt with under the
‘Enabling Clause’. The US delegation is requested for information on when they propose to approach
the CTG and the General Council with a waiver request.
Answer:
The United States is evaluating what sort of waiver it needs for these programs and intends to
submit its waiver request soon.
(India)  Problem of classification of Elastic Rubber Tape (ERT): It has been brought to our notice
that under the provisions of the new Caribbean Ba sin Trade Partnership Act (CBTPA), a very narrow
definition has been adopted for Elastic Strips to qua lify as Finding and Trimmings, namely, that they
should be less than one inch in width and should be used only in production of brassieres.  Further,
the Indian exporters are finding their market access of Elastic Rubber Tapers (ERT) to the USA
severely affected on account of a provision in the CBTPA that the quota and duty preference on the
garment would be allowed in the US provided that  not more than 25% of the value of the garment is
made from foreign “Findings and Trims”. We would like to have a clarification from the US
authorities on the reasoning behind adoption of such a narrow definition for ERTs and on the
difficulties being faced in classifying Elas tic Rubber Tape (ERT) similar to Narrow Woven
Elastic/Spandex and giving protection and pref erence to ERT as given to Narrow Woven
Elastic/Spandex?WT/TPR/M/88/Add.1
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Answer:
We are not aware of any current classification problem with this product.  The definition of
“findings and trimmings” in the CBTPA was deve loped in 1986 for use in the Caribbean Basin
Initiative Special Access Program, which provided guaranteed access to apparel products assembled in
CBI countries from fabric formed and cut in the United States.  At that time it was determined that
elastic textile strips less than one inch in width used in the production of brassieres met the definition
of findings and trimmings.  Elastic rubber strips, of any width, have always been eligible to beconsidered as findings or trimmings.
(India) Denial of GSP benefit to industrial leather gloves: It has been brought to our notice that as
specified under chapter 42 of the US Customs Tariff, articles of leather of different types are eligible
for concessional/duty free import under the US GSP Scheme.  However, in the guidebook published by
the office of USTR, work-gloves (HSN Code 4203.29) are not included in the list of articles eligible
for GSP. We would request the US authorities to clarify the reasons for such a specific exclusion and
also to consider inclusion of work-gloves in the list of items eligible under its GSP scheme.
Answer:
These gloves are statutorily excluded from GSP by the Congress.  We have no legal authority
to consider them for inclusion in the GSP program.
(India)  Preferential Agreements: In the process of conferring access to Preferential Trading
Agreement (PTA) members, the opportunities for other members in the given market are adversely
affected. Very often, preferential quota given to members of a PTA is counted as a part of the MFN
tariff quota, and thereby limits export  opportunities available to the MFN trading partners. For
example, the total tariff quota of the USA for refined sugar was 22,000 tonnes in 1998. Under the
provision of pre-allocated bilateral quota, an FTA partner received a quota of 2954 tonnes, and got
an additional quota of 25,000 tonnes under the NAFTA. Hence, channelisation of regional/bilateraltariff quota through tariff quota seeks to limit the market access opportunity of non-PTA members of
the WTO. We would request the US authorities to reconsider the matter.
Answer:
None of the sugar access provided by the United States to its NAFTA partners reduces the
access provided by the United States to other supplying countries under its MFN obligations.  Withrespect to refined sugar, the 2,954 tons cited by India is provided to a NAFTA partner based on
historic import shares, consistent with WTO practice, not as a result of any NAFTA commitment.
With respect to the 25,000 tones provided to this same party in marketing year 1998, 7,258 tons was
allocated based on WTO commitments of the United States, the same volume allocated to this country
in years prior to the NAFTA.  The additional 17,742 tons, required by the NAFTA, was provided tothis country outside of and in addition to the United State’s WTO commitments.  That is, the increase
in access provided under NAFTA has not reduced the access provided to other supplying countries.
4. Tariffs
(Bangladesh) (Chapter III, Section (1)(i)(d))  The Secretariat report notes that the United States
grants unilateral preferential tariff treatment to a number of countries under the AGOA, ATPA,
CBTPA and GSP, which are aimed at encouraging the exports from developing countries, particularly
from least developed countries.  Moreover, over the last two years the U.S. has committed more than
US$ 600 million towards strengthening the trade capacity of developing countries and economies in
transition.  We welcome the effort of the U.S. towards the effective integration of developing countriesWT/TPR/M/88/Add.1
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in world trade.  However, it is noted (table III.3) that while average preferential tariff on imports from
LDCs under GSP is nearly half of MFN tariff average, tariffs on imports of textiles and clothing; andfootwear and headgear from LDCs are substantiall y high.  Imports from LDCs  into the U.S. comprise
mainly the products such as mineral oils {Ch apter-27(44.26%)}; woven ready-made garments {Ch-26
(28.5%)}; knitwear {Ch-61 (14.18%)}; headgear and parts {CH-65 (2.13%}
4  Although mineral oil
from LDCs does enter duty free, MFN duties on mi neral oils are negligible.  However, other products
of export interests of LDCs face high tariffs in the U.S. and are not subject to preferential treatment.
Do the U.S. authorities not consider that all LDCs should be provided duty free access under GSP on
products of their substantial interest?  If so, do the U.S. authorities have any plan to grant preferential
treatment to the products of special interest of LDCs particularly in textiles and clothing?
(Switzerland)  Preferential tariffs: In paragraph 17 the Secretariat notes that "the average tariffs
under unilateral U.S. preference schemes tend to be significantly lower than the average MFN ratebut still substantially higher than the average under the FTAs that the United States has concluded".
Initiatives have been taken recently by some members to improve the market access opportunities of
the LDCs.  Do the USA foresee to improve also the market access opportunities for the LDCs, for
instance to grant them the same preference as under the FTAs?
Answer: (For both questions)
We plan to work towards the objective of duty-free and quota-free market access for all LDC
imports as stated at the Third United Nations Conference on the Least Developed Countries.
(Switzerland)  According to our information the US International Trade commission was working last
year on ways to simplify the tariff schedule, the national list of import product categories and sub-
categories. Could the US delegation provide information as to which steps have been taken so far ?
What have been the USITC recommendations for simplifying the tariff schedule and have they been
put in force?
Answer:
The USITC completed a report to the Congress and the President in 2000 suggesting means
for simplifying the tariff, mainly through consolidating rate lines which are scheduled to be reduced to
common levels by 2004.  The USITC also noted that, due to tariff rate compression, there were many
rates that fall below 5% ad valorem and that the next round of tariff negotiations could offeropportunities for further rate harmonization and simplification.  A copy of the report is available on
the Internet at http://www.usitc/gov/wais/reports/arc/w3318.htm .
(Chile)  The application of specific duties affords greater protection to lower-value products, thereby
making it possible to stabilize domestic prices against fluctuations in the international prices of those
products.  If a country intensively exports agricultural products and their price falls, that country,instead of being able to benefit from its greater competitiveness, finds that its exports to the United
States have become more expensive, since it has to pay a specific duty whose ad valorem equivalent
varies from approximately 40 to 232 % thus becoming an effective barrier to trade.  Does the United
States intend to stop applying specific duties within the near future?
                                                     
4Figures in the Parenthesis indicate the share of each category of products in total imports
from LDCs into the U.S. in 2000 and are based on USITC Trade Dataweb online information.WT/TPR/M/88/Add.1
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Answer:
The WTO does not prohibit the use of specific duties.  Many WTO Members employ specific
rates on certain products.  With respect to Chile’s concern, where applicable, a specific rate also
provides overall price stability in cases where the cost of the product from Chile might increase.
(Japan) (page 24, para.1, Tariff rates of trucks (motor vehicles for the transport of goods)  The
United States imposes high tariff rates, such as 25%, on most trucks (HS 8704).  In comparison with
Japan, which sets its tariff rates at 0% on the same items, the U.S. figure remains considerably high.Japan would also like to know why the United States imposes tariff rates on trucks 10 times higher
than on passenger vehicles (of which the bound rate is at 2.5%.)  According to the Minutes of the
1999 Trade Policy Review, the United States stated that it had initiated the necessary domestic
procedures in its reply to a similar question.  Japan  would like to know the current situation of the
above case, and further would like to request eliminatio n of this tariff peak.  Please provide the U.S.
view on the matter.
Answer:
The United States has indicated a willingness to engage in comprehensive market access
negotiations on goods to complement the negotiations on agriculture and services mandated in the
WTO’s built-in-agenda.  With respect to the domestic procedures discussed at the last TPR, inNovember 1999 the U.S. International Trade Commission completed its report on the probable
economic effects of various scenarios of tariff reductions.
(Japan)  (page 5, para. 5) The Report says, sizeable tariff barriers tend to be concentrated mainly in
agricultural, food, and tobacco products ; tariffs reach ad-valorem or ad-valorem equivalent rates of
350% for tobacco, 164% for peanuts, and 132% for peanut butter (out-of-quota tariff rates).  Could
the United States provide the reason for maintaining such a high tariff on these products and does the
United States have future plans to improve this?
Answer:
These tariffs are permitted under the U.S. WTO obligations.  In the agriculture negotiations,
the United States has proposed that all WTO members should reduce substantially, or eliminate, all
tariffs.
(Japan)   (page 25, para.7) The authorities of the United States stated that the current applied and
bound rates are identical.  It would, therefore, appear that the United States is in no hurry to complete
the modification process of its Schedule for the purpose of introducing the HS96 changes.  What is the
situation of negotiations with countries havi ng made reservations on U.S. Schedule changes?
Answer:
The United States Harmonized Tariff Schedule has since 1996 reflected HS96 nomenclature,
as does our electronic submission to the Consolidated Tariff Schedule (CTS).  Through agreed
procedures in the Market Access Committee, we have completed consultations regarding the United
States’ HS96 changes with all but one Member, with whom we are in the process of finalizing an
understanding.
(New Zealand)  The contrast between the low average U.S. tari ff an the tariff peaks in sectors such as
agriculture remain a feature of U.S. trade policy and appear to be an obvious contradiction to the
statements in favour of trade opened that are a feature of the U.S. Government report (G/I, paras 1,3WT/TPR/M/88/Add.1
Page 101
and 4).  Table III.1 of the Secretariat report (S/III, page 25) also demonstrates that while a simple
average applied tariff rate on non-agricultural products fell from 5.7 percent in 1996 to 4.5 percent in2000, on agricultural products it actually rose slightly from 10 percent in 1996 to 10.4 percent in
2000 (with a peak of 10.7 percent in 1999).
The Secretariat notes that “sizeable tariff barriers” tend to be concentrated in a few “sensitive”
sectors, including agriculture, and that tariff escalation was particularly noticeable in food industries
where out-of-quota tariffs range to 350% and may act as import prohibitors (S/III, pages 22-26).These barriers of course have a negative impact on higher-value-added exports, from developing and
developed countries.
--In view of this, what it the US’ justification for maintaining high tariff protection in sectors
such as agricultural and food products?
--What programme does the U.S. have for the reduction and eventual elimination of such
tariffs?
--When does the U.S. intend to reduce or eliminate tariff peaks?
Answer:
These tariffs are permitted under the U.S. WTO obligations.  In the agriculture negotiations,
the U.S. has proposed that all WTO members should reduce substantially, or eliminate, all tariffs.This includes substantial reduction or elimination of tariff disparities.
(Korea) (page 24, paras 3-4, tariffs)  Excluding the ad valorem equivalents (AVEs), the average
applied MFN rate of the United States was 4.6% in 2000, but the average of AVEs was estimated at
11.5% and specific and compound duties accounted for 75 of the 100 highest rates in the same year.
What are the objectives pursued in maintaining the specific and compound duties? Does the U.S. have
any plan to reduce the number of products subject to those duties?
Answer:
WTO rules do not prohibit the use of compound or specific duties.  The United States has
indicated a willingness to engage in comprehensive market access negotiations on goods to
complement the negotiations on agriculture and services mandated in the WTO’s built-in-agenda.
(Korea) (page 25, Table III.1)  Table III. 1 shows that items subject to tariff peaks with tariffs over 15
% account for 7.0% in 2000. This level is higher than that of other developed countries. What is theU.S. plan to reduce items subject to tariff peaks in the future?
Answer:
Table III.1 also indicates U.S. tariff rates above 15% have declined since 1996, consistent
with our UR commitments.  See also answer to question 2 above.
(Korea) (page 25, para. 6)  In the US, tariff escalation, which arises when tariffs increase with the
degree of processing, is particularly noticeable in  the food, beverages, tobacco, textiles, clothing and
leather industries. Does the U.S. government intend to  ease or eliminate these tariff-rate structures?
Answer:
See previous response.WT/TPR/M/88/Add.1
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(Malaysia) (Government Report, para 15) The U.S. tariff regime, while having generally low ad
valorem duties, continues to exhibit high specific duties as well as tariff escalation in sectors of exportinterest to developing countries.  This has been in force for some time.  Is the U.S. undertaking a
review of these rates particularly in light of possible new negotiations on tariffs and in line with U.S.
commitment to an open market policy.
Answer:
Please see the response to question from Japan.
(Brazil)  In the Secretariat Report, it is stated that despite the relative openness of the US economy,
“sizeable tariff barriers tend to be concentrated in a few "sensitive" sectors, which are often also of
particular interest to exporters from developing countries.  These sectors involve mainly agricultural,
food, and tobacco products, as well as textiles and footwear; tariffs reach ad valorem or ad valorem
equivalent rates of 350% for tobacco, 164% for peanuts, and 132% for peanut butter (out-of-quotatariff rates)” (page 25, §5). How is that feature consistent with the stated objective of “extending the
benefits of trade liberalization to the developing world and fostering their further integration into the
multilateral trading system” ? (Government Report, page 6,§6)
Answer:
Overall, the U.S. market is one of the most open in the world.  The average U.S. tariff
currently is 5.5 percent and will drop to 3.1 percent upon full implementation of the United States’
Uruguay Round commitments.  Moreover, 66 percent of  imports from developing countries enter the
U.S. market duty free under MFN or our trade preference programs.  The United States is prepared to
consider further duty reductions in the context of  new negotiations in market access.
(Brazil)  The Secretariat Report identifies the presence of important tariff escalation and tariff peaks
in US tariffs (pages 25-26). Please describe what are the main sectors protected by these instruments
and the possible effects on other countries.
Answer:
Page 25 of the Report indicates the sectors that are affected.  The United States has not
conducted a study of the effects on other countries; however, some further analysis can be found in the
WTO Secretariat’s Special Study 6 regarding Market Access.
(Brazil) Could an explanation be provided as to why the US has not consolidated two lines covering
crude petroleum? What is the applied rate for these tariff lines? Does the United States have plans to
consolidate these tariff lines?
Answer:
The 2001 U.S. applied rates are:  5.2 cents/bbl for HS 2709.00.10 and 10.5 cents/bbl for HS
2709.00.20.
(Brazil) According to the WTO IDB, the US Tariff has 4.2% of total of tariff lines consolidated in
terms of non ad valorem rates, applying mainly to agricultural products, footwear, textiles and base
metals (Secretariat Report, page 24). Given the known distortive effect of specific and compound
tariffs, what are the views of the United States, in case of a new WTO round, on the possibility of
consolidating only ad valorem tariffs?WT/TPR/M/88/Add.1
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Answer:
There are no WTO limitations on the use of compound or specific rates.  The United States is
prepared to review tariff rates in a future round of market access negotiations.
(India) In paragraph 1 of the Summary Observations, the Secretariat has observed that in a few
important areas significant barriers to market access persist. It has suggested that reducing such
remaining barriers would not only increase th e otherwise high efficiency of the US economy and
benefit its domestic consumers and taxpayers but also  lessen distortions in global markets, frictions
with the trading partners and strengthen the multil ateral trading system. We would like to hear the
response of the US delegation to these observations.
Answer:
The United States is prepared to consider further duty reductions and to discuss non-tariff
measures in the context of a new negotiation in non-agricultural market access.
(India) In paragraph 2 thereof, the Secretariat has observed that “significant barriers to foreign
competition have remained in areas like textiles and clothing, transport and some services sectors.
The new Administration’s response to these policy challenges will be important to global trade and
welfare”. Given the fact that sectors such as agriculture and textiles and clothing that are the
mainstay of most of the economies of developing countries, we would like to hear the response of theUS delegation to the Secretariat observations.
Answer:
See answer to previous question.
(India) In paragraph 12 of its observations, the Secretariat report observes that ‘the highest tariffs
apply mainly to imports of agro-food and tobacco produ cts, as well as clothing, textiles and footwear.
In these industries, tariffs tend to increase with the degree of processing’. All these items are of
importance to developing countries and increased tariffs on processed items act as a barrier to value-added exports by developing countries to the US. We would request the US delegation to respond to
these observations.
Answer:
See response to Brazil question 1.
(India)  It is noted that despite a low average MFN rate for all goods, significant tariff peaks and
escalations exist in the US, especially for the products of interest to developing countries like India.
The highest tariffs apply mainly to imports of ag ri-food, tobacco, clothing, textile and footwear. Non
ad valorem rates, representing nearly 13% of tariff lines, mask relatively high levels of protection. We
would request the US authorities to address this problem and eliminate these tariff peaks.
Answer:
There are no WTO limitations on the use of compound or specific rates.  The United States is
prepared to review tariff rates in a future round of negotiations.WT/TPR/M/88/Add.1
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5. Rules of Origin/Marking/Labeling
(EU) (EC as a country of origin)  As U.S. Customs refu ses to recognize the EC as a country of origin,
EU firms are forced to incur additional expens e by providing supplementary documentation and
following further procedures.
Answer:
As is the case for numerous WTO members, many of the trade laws of the United States are
written in terms of country of origin, and do not contemplate a 'customs union of origin.'
6. Non-Tariff Measures
(EU) The Merchandise Processing Fee (MPF) is levied on all imported merchandise (with certain
exceptions) including that entered under Schedule 8, Special Classifications, of the Tariff Schedules of
the US. As of 1 January 1995, this fee amounts to 0.21% ad valorem on formal entries with a
maximum of US$485. The MPF was originally set to expire in 1990 but is currently set to run until 30September 2003. We are concerned that additional amendments would be made extending the time
beyond this date.
(Canada) (Merchandise Processing Fee) Canada understands that the U.S. Congress is proposing to
extend the imposition of the Merchandise Processing Fee (MPF) to 2011. Of particular concern to us
is that the current legislative proposal would di vert fee revenues away from customs clearance
operations and would channel the same to offset any shortfalls to the U.S. Social Security Trust Fund.
What are the U.S. government's views in regard to  the consistency of this proposal with U.S.
international trade obligations?
(Chile) Could the United States explain the WTO consistency of levying a so-called Merchandise
Processing Fee to pay for the cost of the newly enacted Patients Protection Act?  Would the United
States consider this fee as tariff considering that it is paid at the border, and if so how would this
compromise the tariffs consolidated by the U.S. before the WTO.  Would the United States agree thatthe proposed users fees, given the existing users fees could change the established market conditions
and give greater protection to domestic producers
Answer: (For all three questions)
The inclusion of legal extension of the Merchandise Processing Fee in the Patients Protection
Act does not alter how the fee is calculated or appl ied, nor how the revenues of the fee are used.  Use
of the revenues remains restricted to customs clearance operations for goods upon which the fee is
levied.  None of the provisions of the Merchandise Processing Fee have changed with its extension,
and it remains consistent with the WTO Agreement.
(EU) (Registration, documentation and customs procedures)  The invoice requirements for exporting
certain products to the U.S. far exceed normal customs declaration and tariff procedures and areunnecessary since U.S. Customs can demand all rele vant supplementary documents and information
during clearance. This practice is costly and acts as a significant barrier to small and new
competitors, particularly those in diversified high-value and small quantity markets.
(EU) (Customs formalities for imports of textiles)  Customs formalities for imports of textiles, clothing
and footwear to the U.S. require the provision of particularly detailed information which in some
cases include confidential processing methods. These requirements lead to additional costs. Much of
this information would appear to be irrelevant for customs or statistical purposes.WT/TPR/M/88/Add.1
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Answer:  (For both questions)
The U.S. Customs Service is required to determine the proper classification of goods under
the U.S. Harmonized System Tariff Schedule, and to determine the proper country of origin of goods
which are imported into the United States.  To do this,  Customs will occasionally request specific
information from importers, which is additional to that provided in the entry documentation.
(EU) (Liquidation Period) The liquidation period presently stands at 210 days which, according to
importers, may be extended for the most insignificant of reasons. This is particularly cumbersome forarticles of apparel such as fashion items that must  be sold within two to three months and be marketed
immediately. As a result, the retailer is often unable to re-deliver the goods upon request by U.S.
Customs and is therefore liable to an excessive penalty of 100% of the value of the goods.
Answer:
Liquidation of an entry simply means that all final actions on the part of Customs and the
trade have occurred regarding the importation of merchandise.  It does not affect the release of the
goods into the commerce of the country.  Goods may enter the country even though the paperwork is
not finalized i.e. not liquidated.  Keeping the liquidation open for 210 days allows the U.S. Customs
Service to take enforcement action at a later date if necessary.  It also allows the importer to present
additional information to Customs that might affect that particular shipment.  In the case of originfraud, illegal transshipment the goods are deemed inadmissible and Customs would ask for a re-
delivery of the goods back to Customs custody.  If the goods are not recoverable, then fines are
charged to the importer.  If the inadmissibility involv es a violation of law, civil or criminal penalties
are sought directly, without reference to the liquidation period.
(EU) The Luxury Tax is an excise tax imposed on cars valued above an arbitrary threshold, currently
around US$36,000. The tax has a higher incidence on imported cars than on U.S. produced cars; the
EU has a total market share of only 6% but bears nearly 70% of revenue generated by the tax. TheEU would appreciate it if the U.S. could confirm that  this tax will be eliminated as planned in 2003.
Answer:
The Luxury Excise Tax is scheduled to expire on December 31, 2002.  The tax now applies
only to passenger vehicles, and the rate is being phased down on an annual basis.   The U.S. Congress
approved an extension of the tax once before, tied to the phase-down in the rates.
(EU) (State level impediment to trade) Wine orig inating from the EU c annot be imported until the
labeling is approved by the Bureau of Alcohol and Firearms, for which a fee is charged. It may be
argued that cost recovery justifies the ATF fee but there can be no excuse for the subsequent fees
imposed on a state level. Furthermore, U.S. wine sold in its state of origin does not encounter the ATF
fee.
Answer:
All alcohol beverage products intended for sale in the interstate commerce  of the United
States, whether domestic or imported, are subject to  labeling requirements found in the Federal
Alcohol Administration Act.  One of the labeling requirements includes obtaining a "Certificate of
Label Approval", which is administered by the Bureau of Alcohol, Tobacco  and Firearms (ATF).ATF does not charge any application fees for the  issuance of a Certificate of Label Approval, whether
the product is  imported or domestic. Note, however, that some companies can be hired, for  a fee, to
complete and submit the application paperwork to ATF.  We are aware that some states imposeWT/TPR/M/88/Add.1
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requirements and fees prior to  allowing alcohol beverage products to be sold in its state. We also
understand that a number of foreign governments have expressed concern  about these "non-tarifftrade barriers."  However, as noted above, no fees are charged on the Federal level.
(Canada)  Is the U.S. giving consideration to the remo val of requirements that imported industrial
alcohol pass through U.S. registered distilled spirits plants to be eligible for an excise tax exemption?
What steps is the U.S. taking to address this non-tariff barrier?
Answer:
Under current U.S. law, imported industrial distilled spirts may be transferred in bond from
customs custody directly to a distilled spirits  plant without payment of tax. Tax paid imported
industrial distilled  spirits may be shipped directly to an end user or retailer of industrial  distilled
spirits. These requirements are imposed by the Internal Revenue  Code of 1986 and the legislative
history can be traced back to 1906. No  legislation is under consideration to change the presentsystem. Before  any legislation would be considered, the United States would have to  assess whether
an alternative procedure that would allow non-tax paid  imported industrial distilled spirits to be
shipped directly to end users  or retailers would contain adequate safeguards to protect the revenue.
(Australia)  We note the finding in the June 1999 OECD Economic Outlook "Trends in Market
Openness" that, notwithstanding improvements over recent years, NTMs still have a high frequency inthe US (16.8% of tariff lines, against 19.1% for the EU and 10.7% for Japan.) How does the US
propose to further decrease the incidence of NTMs in its market?
Answer:
The United States does not necessarily agree with the OECD's definition of what constitutes
an NTM.  For example, we do not believe that an inventory that includes necessary regulatory
measures provides an appropriate indicator of comparative market openness.
7. Contingency Measures
(Bangladesh) (Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action)  How
many anti-dumping and safeguard actions have been in itiated by the U.S. against textile and clothing
exports from LDCs since 1 January, 1995?  Given th e special and differential treatment provisions of
the ATC, can LD Cs and small suppliers expect an exemption from anti-dumping and safeguard
actions in the future?
Answer:
For investigations initiated since 1995, there have been no antidumping or countervailing duty
orders imposed on textile/apparel products from LDCs that are WTO Members.  Currently, the only
U.S. AD/CVD orders on textile/apparel products from a WTO-member LDC is an AD order on shop
towels from Bangladesh, imposed as the result of a case initiated prior to 1995.
The application of antidumping and safeguard measures are governed by the provisions of the
WTO Agreements on Antidumping and Safeguards, respectively.  Article 15 of the WTO
Antidumping Agreement does not contemplate exempting developing countries or small suppliers
from antidumping duties, rather it provides that members shall explore constructive remedies before
applying antidumping duties.  Similarly, Arti cle 9 of the WTO Safeguards Agreement does not
exempt developing countries from safeguard measures, but restricts their use to situations where
exports from a developing country are at least 3 percent of total imports, or where exports from allWT/TPR/M/88/Add.1
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developing countries accounting for less than 3 percent of total imports comprise at least 9 percent of
total imports.  The U.S. honors these obligations.  Further, while U.S. law does not permit exemptingany country or supplier from the possible application of antidumping duties, the United States
consistently endeavors to take into account any difficulties exporters from developing countries have
in participating effectively in antidumping investigations.
(Canada) (Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action)  There
appears to be some overlap in product coverage between current safeguard investigations and goodscovered by anti-dumping orders or anti-dumping inve stigations.  What is the opinion of the United
States regarding the permissiveness of this so called stacking of measures?
Answer:
Safeguard measures and antidumping measures are separate remedies for distinct trade
situations.  As such, there is no reason measures cannot apply simultaneously to the samemerchandise.
(Canada) (para 27, Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action)
According to para 27, a new provision, relevant to U.S. anti-dumping and countervailing legislation
was enacted in October 2000:  the Continued Dump ing and Subsidy Offset Act of 2000, also known as
the Byrd Amendment.  Did Congress pass the Bi ll partly because it determined that dumping
measures, as currently provided, may not be enough to provide appropriate relief to domestic
producers?  Please explain.
Answer:
The United States does not agree that the Continued Dumping and Subsidy Offset Act of 2000
(CDSOA) has particular relevance to U.S. antidumpi ng and countervailing legislation.  Although the
CDSOA was enacted as part of Title VII, which also contains the antidumping and countervailing
duty laws, it does not have any impact on how the AD/CVD laws operate, either substantively orprocedurally.  Duties collected under antidumping and countervailing duty legislation merely serve as
the source of funding for distributions made und er the CDSOA. The purpose of the CDSOA is to
distribute money to certain persons insofar as they meet the requirements of the statute.
(Canada) (para 27, Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action) As
the number of new users of anti-dumping legislation co ntinues to grow, is the United States not afraid
that the so called Byrd Amendment could serve as  an excuse for other WTO Members to put in place
similar measures?
Answer:
The CDSOA only addresses internal government  distribution of revenues which is not the
subject of any of the WTO Agreements, except the disciplines on subsidies.  Each member mustdecide how to utilize such revenues.
(Canada) (para 27, Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action)
How much assistance has been distributed by the U.S. Government under the Continued Dumping and
Subsidy Offset Act of 2000?  Does it intend to notify these disbursements under the Agreement on
Subsidies and Countervailing Measures?WT/TPR/M/88/Add.1
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Answer:
No assistance has been distributed under the CDSOA.  Until final regulations are adopted, and
distributions are made, the United States cannot determine whether notification under Article 25.2 will
be required.
(Norway) With regard to anti-dumping and countervailing duties, Norway is concerned with the
continued prevalence of these in US Trade poli cies. The passage of the ”Continued Dumping and
Subsidy Offset Act” (”Byrd Amendment”) as part of the Agriculture Appropriations bill for 2001 isparticularly discouraging in that it opens for the possibility for financial gain from bringing anti-
dumping and countervailing duty cases. Given the fact that the Byrd Amendment did not have the
support of a majority in Congress on its own merit, Norway would like to ask the US delegation what
the chances are of a new bill being promulgated t hat would repeal the Byrd Amendment, and whether
the administration will push for such a repeal or not?
Answer:
We are unaware of any effort in the U.S. Congress to repeal the CDSOA.
(Japan) (page 19, para.32 and page .35, para.38)  According to Article 24 of the GATT 1994,  free-
trade area should be to facilitate trade between the constituent territories and not to raise barriers to
the trade of other contracting parties with such territories  Japan considers that, in the free tradeagreements, the provisions on trade restrictive measures, such as safeguards and anti-dumping
measures, should be applied without discrimination to the parties and the non-parties.  In this regard,
please explain the U.S. view on how the provisi ons on the safeguards and anti-dumping measures, as
parts of trade restrictive measures, should be treated in the free trade agreements?
Answer:
While the meaning of Japan’s stated view that trade restrictive measures should be applied
without discrimination to the parties and non-parties is not entirely clear, we believe that it is up to theparties to any such trade agreements to determ ine how best to incorporate any provisions on
antidumping, subject to existing WTO requirements.  This question has been addressed differently by
the various bilateral agreements entered into between WTO members.
(Chile ) (Chapter III, Section (ii)  Antidumping, Countervailing and Safeguard Action) From the point
of view of economic theory, within a free trade area  dumping is not possible due to the fact that both
countries become like different states in a same country; i.e. if goods are really ”dumped” or sold
below cots, they could be shipped back and be sold at the higher price of the country of origin.
Therefore, antidumping measures are redundant in a free trade zone.  Taking into consideration that
the United States is an active participant of the Free Trade Areas of America (FTAA) and is
negotiating a Free Trade Agreement with Chile, will the United States consider the elimination ofantidumping mechanisms once the free trade areas are established?
Answer:
Please see our response to Japan’s question regarding trade agreements, above.  We note in
addition that Chile’s contention that dumping is not possible in a free trade zone is based on an
assumption that no differences remain in the markets of two countries that enter into a tradeagreement.  We do not believe that this is a real istic assumption with respect to trade agreements
currently being negotiated between the United States and other countries, including FTAA and the
proposed U.S.-Chile Free Trade Agreement.  Since these trade agreements would reduce tariffs andWT/TPR/M/88/Add.1
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other trade barriers without necessarily integrating the economies of the countries otherwise, the need
for effective remedies against unfair trade practices, including injurious dumping, will remain.
(Hong Kong) (page 34, para 32, Antidumping) We  note that the number of anti-dumping
investigations initiated per year by the U.S. has increased from an average of 37 cases in 1987-1997
to an average of 42 cases in 1998-2000.  What is the US’ comment on this rising trend?  Does the U.S.
envisage this trend to continue in the coming years?  If so, what might be the reasons?
Answer:
In light of the many factors that influence the level of antidumping cases brought from year to
year, we cannot predict the number of antidumping petitions that will be filed in the future, nor the
number of cases that we will initiate.  With respec t to the figures cited above, the increase in cases
brought during the late 1990s was due largely to the massive increase in low-priced steel imports into
the United States during this time, which was itself the result of significant structural problems withinthe global steel industry.  Prior to the steel crisis, the number of antidumping cases initiated by the
United States had fallen off significantly, from an average of 57 initiations in 1992-1994 to an average
of 17 initiations from 1995-1997.  See Table III.4 of the WTO Trade Policy Review.
(Hong Kong) (page 34, para 32, Antidumping) We also  observe that of those anti-dumping
investigations initiated in 1998-2000 for which a determination had been made, almost 40% resulted
in no provisional measure being imposed, either because of a finding of no injury by the International
Trade Commission or of a preliminary finding of no dumping by the International Trade
Administration.  This is a cause for concern as investigations without clear and objective justifications
would result in trade harassment to exporters and hamper free trade.  What are the measures in place
to prevent unjustified investigations from launching?  Given the high portion of investigations not
resulting in provisional measures, would the U.S. consider further measures to ensure that utmost
caution is exercised before investigations are launched, so as to prevent them from being abused?
Answer:
The fact that 40 percent of cases result in negative preliminary determinations is a reflection
of the stringent requirements in place that the Department of Commerce and the USITC must follow
prior to imposing provisional measures.  We intend to maintain these procedural protections for
foreign firms involved in U.S. antidumping proceedi ngs and to work to ensure that U.S. exporters
involved in foreign antidumping actions are afford ed similar protections.  As for the pre-initiation
process itself, the current procedures are fully WTO-consistent and there are no plans to revise these.
(Hong Kong) (page 34, para 32, Antidumping) Some independent studies in the U.S. (re. Brink
Lindsey of CATO) pointed out that the number of  AD measures in force against U.S. goods during
1996-2000 was 41% higher than that during 1991- 95.  The number of AD cases have indeed
increased quite dramatically after the conclusion of  the UR Agreements.  What is the assessment by
the U.S. on the impact of such surge of AD actions  on its industries?  Is there a case calling for
tightening of relevant disciplines so as to prevent potential gain from trade liberalization be further
hampered?
Answer:
We do not want to minimize the extent to which U.S. exporters are subject to antidumping
actions and need to ensure that they are treated fa irly in these cases.  We are currently working toward
this goal within the Antidumping Practices Committee and in other venues.WT/TPR/M/88/Add.1
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At the same time, it is important to put the statistics cited above in perspective.  The 41-
percent figure is a reflection of the large number of cases brought in the early 1990s.  Since then,according to the Cato Institute’s own data, the total stock of antidumping orders against the United
States has increased only slightly, from 60 in 1995 to 62 in 2000.  During this period the share of
worldwide AD orders that concer n U.S. exporters actually declined, from 6.8 percent in 1995 to 5.2
percent in 2000.  This issue is further clarified once the United States’ status as the world’s largest
exporter is taken into account.  While orders against the U.S. accounted for 5.2 percent of the totalworldwide stock of antidumping orders in 2000, the U.S. accounted for over 15 percent of worldwide
exports.
(EU) (para 31-49, anti-dumping) We note that the Secr etariat report places much emphasis on the use
of anti-dumping measures by the US. Could the U.S.  please indicate the stage of the investigation at
which suspension agreements were negotiated and in particular whether this was before or afterinjury/causation had been established?
Answer:
Suspension agreements are typically negotiated after a preliminary determination of
injury/causation and prior to a final determination.
(Korea) (page 33-34, para. 27-30)  The U.S. enacted the Continued Dumping and Subsidy Offset Act
of 2000 in October 2000. The Act, also known as the Byrd Amendment, includes provisions for
allocating the proceeds of anti-dumping and countervailing duty orders to the domestic producers
who are petitioners.  This allocation constitute s a violation of the Anti-Dumping Agreement and
Agreement on Subsidies and Countervailing Measures because it provides additional remedy not
allowed under the said WTO Agreements.  It is our deep concern that such a measure would lead to
proliferation of petitions for anti-dumping and countervailing measures and the disruption of the
multilateral trading system.  What is the U.S. vi ew on this matter?  Does the U.S. government have
any intention to amend the Act to make it consistent with WTO Agreements?
Answer:
The CDSOA is consistent with the Anti-Dump ing Agreement, which does not address the
internal government distribution of revenues.  The Agreement on Subsidies and Countervailing
Measures only prohibits certain types of subsidies, i.e., export or import substitution subsidies. TheCDSOA is neither an export nor an import substitution subsidy, and therefore does not constitute a
prohibited subsidy.
(Malaysia)  The U.S. has made active use of anti-dumping and countervailing measures, particularly
in the last two years.  The large number of inves tigations involving steel-related products have been
the main cause of this increase.  In addition, the U.S. has also initiated safeguard actions into steel-related products.  Does not such actions reflect an over-projectionist reaction by the U.S. against
normal competitive market-driven pricing norms in an environment of over-supply and constitute a
misuse of WTO contingency measures?
Answer:
We believe the responses above answer this question.  Please see our response to Hong
Kong’s question regarding the increase in recent cas es involving steel products. With respect to the
relationship between antidumping and safeguard actions, please see our response to Canada’s first
question.  For the reasons provided in these responses, we do not believe that either the antidumping
or safeguard actions taken to date on steel-related products constitute a protectionist reaction toWT/TPR/M/88/Add.1
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normal competitive market-driven pricing norms.  Ou r views regarding structural distortions in the
global steel industry that necessitate the contingency measures at issue are set forth in more detail inGlobal Steel Trade: Structural Problems and Future  Solutions, U.S. Department of Commerce, July
2000.
(Australia) Given that the WTO Safeguards Agreement already provides for the application of
temporary trade restrictions in certain specific circumstances and that legislative proposals before the
US Congress would significantly lower the US dom estic legal standard for obtaining import relief,
what plans does the United States have for preventing Section 201 of the 1974 Trade Act from being
used by US industries faced with unsubsidised import competition to avoid making competitive
adjustments?
Answer:
The SCM and the U.S. countervailng duty laws are designed to protect industries from
subsidized import competition.  The WTO Safeguards Agreement and Section 201 are separate
measures designed to address a different type of import competition and do not require an analysis of
subsidies or dumping.  With respect to the issue of competitive adjustments, the Safeguards
Agreement and Section 201 are designed to provide temporary relief so that the injured industry can
adjust competitively, and the Section 201 process provides for the submission of adjustment plans, animportant part of the Section 201 proceeding.
(Brazil)  The Secretariat Report draws attention to the fact that “the application by the United States
of anti-dumping, countervailing and safeguard measures has been one of the main sources of
complaint by its trading partners:  seven U.S. anti-dumping and countervailing measures in effect
since 1995 have been challenged under the WTO” (Secretariat Report, page 18, §27). As the United
States affirms that “the fundamental features of U .S. trade policy continue to be the maintenance of an
open, competitive market at home, compliance with WTO obligations" Government Report, page 5),why have there been so many challenges to US trade policies?
Answer:
The remainder of the paragraph cited by Brazil from the U.S. Government report provides the
statistical underpinning of the statement regarding the maintenance of an open, competitive market.
As the Report notes, the United States is the world's largest importer: In 2000, imports of goods andservices totalled $1.2 trillion, 66 percent of which entered the U.S. duty free.  The average duty paid
on all imports into the United States in 2000 was 1.6 percent.  Less than one half of one percent of all
U.S. imports were covered by an antidumping or countervailing duty order.  That said, the United
States respects the rights of Member countries to avail themselves of the dispute settlement process on
measures that they believe are in violation of their rights under existing WTO Agreements, and hasabided by adverse dispute settlement rulings in good faith.
(Brazil) How does the Continued Dumping and Subsidy Offset Act of 2000, also known as the Byrd
Amendment, which is due to come into effect on 1 October 2001, alter the existing legislation on anti-
dumping and countervailing duties? Was an assessment made on how the new legislation would affect
trade in iron, steel and orange juice?
Answer:
Although the CDSOA was enacted as part of Ti tle VII, which also contains the antidumping
and countervailing duty laws, it does not have any impact on how the AD/CVD laws operate, eitherWT/TPR/M/88/Add.1
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substantively or procedurally.  We are unaware of any assessment of how this legislation would affect
trade in any particular segment of the economy.
(Brazil) Secretariat Report, page 33, paras. 27-30. With regard to the Byrd Amendment, please
explain how the provisions of that legislation are consistent with WTO rules, particularly the
provisions of the Agreement on Subsidies and Countervailing Measures.
Answer:
The CDSOA only addresses internal government distribution of revenues, which is not the
subject of any of the WTO Agreements, except the di sciplines on subsidies.  With respect to the
Agreement on Subsidies and Countervailing Measures, that Agreement only prohibits certain types of
subsidies, i.e., export or import substitution subsidies. The CDSOA is neither an export nor an import
substitution subsidy, and therefore does not constitute a prohibited subsidy.
(Brazil) Secretariat Report, pages 37 and 38, paras. 42-43. Please explain in detail how the US
Government has implemented in its legislation the recommendations of the AB (in WT/DS138/AB/R)
concerning the “change-of-ownership” methodology in countervailing duty investigations.
Answer:
On November 15, 1999, the U.S. Department of Commerce revoked the countervailing duty
order at issue under its “sunset” procedures.  The revocation became effective by operation of law onJanuary 1, 2000.  Subsequently, on March 14, 2000, Commerce issued the final results of a “changed
circumstances” review in which it made the revocation of the order retroactive to January 1, 1995, and
rescinded the ongoing countervailing duty administrative reviews.  In light of these actions by the
Commerce Department, the United States has fully implemented the ruling in the referenced dispute.
We also note that the Appellate Body emphasized repeatedly that its decision was limited to the
particular circumstances of the case before it.  Moreover, pursuant to a decision by the U.S. Court of
Appeals for the Federal Circuit in Delverde, SrL v. United States, in December 2000 the CommerceDepartment adopted a new privatizaton methodology th at is fully consistent with U.S. law and the
WTO Panel and Appellate Body decisions.
(Brazil) Secretariat Report, page 92, para. 30. The US government stated that the US steel industry
has been affected  by foreign government intervention, which has resulted in excess capacity and
inefficient production.  How can it be argued that the problems of competitiveness of the US steelindustry are caused by foreign production given that the US government has taken an array of
measures in the last two decades to eliminate or minimize the alleged distortions in its internal
market? The voluntary restraint agreements of th e 1980’s and the various antidumping investigations
and countervailing actions of the last decade and even more recently are the concrete examples of the
actions taken by the US government to protect the sector.
Answer:
As discussed above, the increase in steel cases brought during the late 1990s was due largely
to the massive increase in low-priced steel imports into the United States during this time, which was
itself the result of significant structural problems within the global steel industry.  The paragraph in
the Secretariat report cited by Brazil notes the following facts regarding this period: (1) the U.S.remains the world's largest steel importer; (2) prior to 1998, around 25 percent of domestic
consumption was met through imports; (3) in 1998 alone, steel imports rose to 36 percent of domestic
consumption.  U.S. trade actions help alleviate the harm caused by periodic steel import surges such as
occurred in 1998.  They have not provided blanket protection to the U.S. industry from imported steel,WT/TPR/M/88/Add.1
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as the statistics above make clear.  The competitiveness of the U.S. steel industry, and the connection
between global structural distortions, import trends, and trade remedies, is examined in depth inGlobal Steel Trade: Structural Problems and Future  Solutions, U.S. Department of Commerce, July
2000.
(Brazil) Secretariat Report, page 92, para. 30. Please explain the arguments underlying the statement
that there is inefficiency in the global production of steel.
Answer:
As noted, the Commerce Department's recent examination of the global steel industry
provides a detailed analysis of the inefficiencies created by long-term structural distortions.  The
analysis is performed on both an aggregate and country-specific basis.
(Brazil) Secretariat Report, page 92, para. 30. With regard to item “a” which refers to the US
initiative to negotiate with trading partners seeking the elimination of global excess capacity, pleaseexplain how the US intends to proceed with this action in a manner consistent with WTO rules?
Answer:
Initial discussions on this issue were held at the OECD in September 2001.  It is our intention
that future discussions, and any future negotiations will proceed in a manner consistent with countries'
obligations under the WTO.
(Brazil) Secretariat Report, page 92, para. 30. With regard to item “b” which refers to negotiations
on international rules to govern steel trade with a view to eliminating subsidies. Given that the ASCM
already sets out the adoption of measures aimed at eliminating the negative effects of these practices
in the market of the importing country, what is the rationale for negotiating new rules specifically for
the steel sector? What could be the consequences of such an initiative, tailored to cater to the interests
of one single sector of the US economy, for the multilateral trading system?
Answer:
Government intervention in the global steel industry has been extensive over the past several
decades, resulting in overcapacity and trade patterns that do not fully reflect market forces.  There are
already sector-specific agreements within the WTO that address and/or modify rules set forth in the
SCM Agreement, and additional sector-specific agreements have been proposed that may extend
disciplines beyond that covered in the SCM.  Coun tries may wish to consider whether steel trade
should be subject to stronger disciplines than those currently available under the SCM Agreement.
(Brazil) Secretariat Report, page 92, para. 30. With regard to item “c”, it is stated that the USITC
initiated a Section 201 safeguard investigation of injury to the US steel industry. How does the US
government explain the “overlap of measures” due to the fact that already there are several
antidumping duties and countervailing measures in forc e for the steel sector with a view to neutralize
the alleged injury to domestic industry? Moreover, the adoption of a safeguard measure implies that
there is lack of competitiveness in the domestic industry. Therefore, if the US authorities recognize
that the country’s steel sector needs this kind of measure in order to eliminate serious injury and
facilitate the adjustment of the domestic industry to international competition, please explain how
causality can be established according to the pr ovisions of the Antidumping and ASCM Agreements?WT/TPR/M/88/Add.1
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Answer:
As noted above, safeguard measures and anti dumping measures are separate remedies for
distinct trade-distorting situations.  As such, th ere is no reason measures cannot apply simultaneously
to the same merchandise.  The two measures contain different injury standards and an affirmative
decision in either case has no bearing on the other.
(Brazil) According to the Secretariat Report, in 1999, the United States imposed Special Safeguards
on certain products, including fresh and frozen beef, sweetened milk, milk fats and oils, milk baseddrinks, cheeses, sugar and peanuts (page 29, §13). Could more information be provided on this issue
(i.e. the level of safeguard duties on these products)?
Answer:
The U.S. applied price-based agricultural special safeguards on those products in accordance
with the tariffs outlined in G/AG/ N/USA/2/Add.3 and G/ AG/N/USA/34/Add.1.
(Brazil)  Please provide detailed explana tion of  the "Carousel Amendment"
Answer:
This question is an apparent reference to section 407 of the Trade and Development Act of
2000,  amending section 306(b)(2) of the Trade Act of 1974.  To date, this provision has not been
applied.  Section 407 amends section 306(b)(2) of the Trade Act of 1974 by adding subparagraphs (B)through (F), which provide as follows:
“(B)  REVISION OF RETALIATION LIST AND ACTION-
(i) IN GENERAL- Except as provided in clause (ii), in the event that the United
States initiates a retaliation list or takes any other action described in section
301(c)(1)(A) or (B) against the goods of a foreign country or countries because of the
failure of such country or countries to implement the recommendation made pursuant
to a dispute settlement proceeding under the World Trade Organization, the TradeRepresentative shall periodically revise the list or action to affect other goods of the
country or countries that have failed to implement the recommendation.
(ii) EXCEPTION- The Trade Representative is not required to revise the
retaliation list or the action described in clause (i) with respect to a country, if–
(I) the Trade Representative determines that implementation of a
recommendation made pursuant to a dispute settlement proceeding described
in clause (i) by the country is imminent; or
(II) the Trade Representative together with the petitioner involved in the
initial investigation under this chapter (or if no petition was filed, the affected
United States industry) agree that it is unnecessary to revise the retaliationlist.
(C) SCHEDULE FOR REVISING LIST OR ACTION- The Trade Representative shall,
120 days after the date the retaliation list or other section 301(a) action is first taken, and
every 180 days thereafter, review the list or action taken and revise, in whole or in part, the
list or action to affect other goods of the subject country or countries.WT/TPR/M/88/Add.1
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(D) STANDARDS FOR REVISING LIST OR ACTION- In revising any list or action
against a country or countries under this subsection, the Trade Representative shall act in amanner that is most likely to result in the country or countries implementing the
recommendations adopted in the dispute settlement proceeding or in achieving a mutually
satisfactory solution to the issue that gave rise to the dispute settlement proceeding. The Trade
Representative shall consult with the petitioner, if any, involved in the initial investigation
under this chapter.
(E) RETALIATION LIST- The term `retaliation list' means the list of products of a
foreign country or countries that have failed  to comply with the report of the panel or
Appellate Body of the WTO and with respect to which the Trade Representative is imposing
duties above the level that would otherwise be imposed under the Harmonized Tariff Schedule
of the United States.
(F) REQUIREMENT TO INCLUDE RECIPROCAL GOODS ON RETALIATION
LIST- The Trade Representative shall include on the retaliation list, and on any revised lists,
reciprocal goods of the industries affected by the failure of the foreign country or countries to
implement the recommendation made pursuant to a dispute settlement proceeding under the
World Trade Organization, except in cases where existing retaliation and its correspondingpreliminary retaliation list do not already meet this requirement.”
(India): We would request the US delegation to confirm that in the various anti dumping
investigations initiated by the US against imports from developing countries, efforts have been made
to explore constructive remedies as required under Article 15 of the Anti Dumping Agreement and
that the special situation of developing country members is given special regard? We would like to
know whether there is an in-built mechanism in the US anti dumping law for giving effect to the
provisions contained in Article 15 of the Anti Dumping Agreement.
Answer:
The U.S. has met its Article 15 requirements in cases to date.  We understand from India's
WTO challenge to the U.S. steel plate investigation that it alleges the Article 15 requirements were not
met in that case.  We will provide a more detailed explanation of our practices vis a vis Article 15 in
that context.
8. Taxation and Investment
(Japan) (page 22, para.47, Investment–"Exon-Flo" provision)  Transparency and predictability in
government regulations are important factors for enterprises when making decisions on their
investment. These factors are also prerequisites in order for competitive enterprises to do their
business in a fair environment. The Governmen t of Japan has concern over the "Exon-Florio"
Provision in terms of the legal stability of completed transactions as well as in terms of ensuring the
due process. In the application of the "Exon-Florio" Provision, the Government of Japan requests the
Government of the United States to refrain fr om expanding excessively the concept of "national
security", and to ensure the maximum transparency and fairness in the entire process, i.e. from the
notice to the CFIUS (Committee on Foreign Investment in the United States) up to the final decisionby the President.  We would appreciate the U.S. view on our comment.
Answer:
The concept of "national security" is not defined in the Exon-Florio statute ("section 721 of
the Defense Production Act of 1950") in keeping with other U.S. statutes concerning national security.WT/TPR/M/88/Add.1
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Any attempt to offer a definition could improperly curtail the President’s broad authority to protect the
national security.
The Exon-Florio regulations also do not define "national security" and broadly define the
threshold concept of "foreign control" in the context of a merger or acquisition. CFIUS concluded that
it is necessary to take this approach in order to  provide the President the necessary flexibility to
address a transaction that may threaten the national security.
The Exon-Florio provision provides that in formation submitted to CFIUS under section 721
be kept confidential, which CFIUS has interpreted to include whether or not a notice has been filed
with CFIUS. Moreover, in implementing Exon-Flor io, CFIUS is acting on behalf of the President in
matters that potentially affect the national security.  In the past, when the President has taken a
decision on a particular transaction, the White House has issued a press release announcing his
decision.
CFIUS conducts its national security investigations on a case-by-case basis in the context of a
U.S. policy on Foreign Direct Investment that pr ovides foreign investors fair, equitable and non-
discriminatory treatment.
(Thailand) (page 22, para 47): Please explain the President’s decision-making process to determine
the need for a national security investigation.  Are the steps in the procedure transparent?
Answer:
Section 721 of the Defense Production Act of  1950 (the so-called Exon-Florio provision)
provides authority to the President to suspend or prohibit a foreign merger, acquisition, or takeover of
a U.S. company that is determined to threaten the national security of the United States.  By Executive
Order, the President designated the Committee on Foreign Investment in the United States (“CFIUS”)
to receive notices of foreign acquisitions of U.S. companies, to determine whether a particular
acquisition has national security issues sufficient to warrant an investigation and to undertake aninvestigation, if necessary, under the Exon-Florio provision.  The order also provides for CFIUS to
submit a report and recommendation to the President at the conclusion of an investigation.  The
President alone retains the power to block a foreign acquisition of a U.S. company.
The steps CFIUS takes in implementing Exon-Flor io and the steps the President takes in the
deliberative process leading to a decision whether to invoke the authority provided under Exon-Florioto suspend or prohibit a foreign acquisition of a U.S. company are not disclosed to the public.
National security considerations often preclude disclosing the factors that the Committee or the
President consider in reaching a view on a particular foreign acquisition.  Second, the Committee is
statutorily required to maintain confidentiality wi th respect to information made available to the
Committee under section 721.
(Japan) (page 22, para 48, International investment poli cy) Improvement of th e climate for foreign
direct investment should be promoted multilaterally as well as bilaterally.  In this connection, it is
important to include the negotiations on multilateral investment rules in the new round.  It is our
understanding that the United States has recently become open to the idea of multilateral investment
rules.  Please explain the current position of the United States.
Answer:
We are currently exploring what might be sensible in regard to investment rules in the WTO.WT/TPR/M/88/Add.1
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(Switzerland) Foreign Trade Zones are centered on oil refining the production of pharmaceuticals,
office equipment, high-technology merchandise, and the automobile sector.  Are there no agri-foodproducts being processed in the FTZ?
Answer:
There is some food processing in the Foreign Trade Zones for export, of drink mixes, bakery
mixes and infant formula . However, the value of such agri-food processing constitutes less than 1%
of FTZ production.
(EU) (paras 34_35, Foreign direct investment) Could the U.S. provide some more detailed
information on the shares of services in outbound and inbound US FDI, distribution by countries and
sectors, and their reasons?
Answer:
In 2000, U.S. direct investment abroad totaled $135 billion.  The leading destination countries
included the United Kingdom ($22 billion or 16% of total outbound investment), Canada ($14 billion
or 11%), Netherlands ($12 billion or 9%), Japan ($7.3 billion or 5%), Switzerland ($7.2 billion or
5%), Bermuda ($5.8 billion or 4%), Hong Kong ($4.9 or 4%), Germany ($4.4 billion or 3%), Ireland
($4.3 billion or 3%), and Mexico ($4.3 billion or 3%).  By industry, services accounted for 57% of
U.S. direct investment abroad in 2000.  Finance, insurance, and real estate services accounted for 66%of services trade, wholesale trade 17%, and professional services 11%.
In 2000, foreign direct investment in the United States totaled $60 billion.  The leading source
countries included the United Kingdom ($16.2 bi llion or 27% of total inbound investment),
Netherlands ($9 billion or 15%), Japan ($7.3 billion or 12%), France ($5.6 billion or 9%),
Luxembourg ($4.8 billion or 8%), Switzerland ($4.2 billion or 7%), and Germany ($2.6 billion or
4%).  By industry, services accounted for 35% of foreign direct investment in the United States in
2000.  Of this, wholesale trade accounted for 37%, insurance 28%, depository institutions 19%, andreal estate services 10%.
(EU) (Foreign direct investment) (para 46) Could the U.S. give some more information on the
rationale for its restrictions on foreign owners hip in domestic air and maritime transportation, and
several activities in the energy sector (e.g. oil and gas pipelines), leases to develop mineral resources
on federal lands, telecommunication services, and primary dealers in financial services, as well asrestrictions at the State level in insurance. Are there foreign ownership restrictions in other services
sectors? Are there any policies to address such investment and trade restrictions, including in a
cross_sectoral fashion? And what are the other existing restrictions to foreign ownership in the
non_services sectors, i.e. in agricultural and manufacturing industries. In this regard, it would be
relevant to know what are the particular restricting measures adopted, at the sub_federal level, byeach State.
Answer:
Restrictions on foreign ownership in domestic air and maritime transportation, and several
activities in the energy sector (e.g. oil and gas pipelines), leases to develop mineral resources on
federal lands, telecommunication services, insurance, and primary dealers in financial services, arebased on U.S. law and practice.  Restrictions in other sectors can be located in the Annexes to the
NAFTA.WT/TPR/M/88/Add.1
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9. Trade Related Intellectual Property
(Hong Kong) (page 74, para. 178, Parallel Imports) We note that under US legislation, parallel
imports of goods containing protected intellectual pr operty, in the form of patents, copyrights, or
industrial designs, may be prevented entry by the right holder of the goods and stopped at the border
by Customs.  We would appreciate details of th e circumstances under which parallel-imported goods
would be barred from importation and the reasons behind.
Answer:
U.S. Customs provides parallel import protection to certain foreign manufactured products
bearing trademarks which have been recorded with Customs and where the U.S. trademark owner
does not own the foreign trademark and no common ownership or control exists between the U.S.
trademark owner and a foreign trademark owner, pursuant to 19 USC 1526(a).  Additionally, parallel
import protection can be provided with regard to trademarks where a request for protection is madeand Customs determines that the U.S. goods are physically and materially different from the foreign
product.  Customs also provides gray market protect ion pursuant to exclusion orders issued by the
U.S. International Trade Commission (USITC).  Exclusion orders may be issued by the USITC, which
would result in the denial of entry of goods involv ing the infringement of all forms of intellectual
property rights, including situations involving parallel imports.
(Japan) (page 74, para 179, Bilateral and regional intellectual property agreements)  The
Government of Japan has faithfully implemented the "Japanese Actions to be taken by the Patent
Office", confirmed by the Japan Patent Office (JPO) and the United States Patent and Trademark
Office (USPTO) in the Framework Talks.  However, the United States has never entirely implemented
the introduction of an early publication system without exceptions, nor the improvement of re-
examination.  Japan strongly requests the United Stat es to implement these items completely and
promptly.  Please explain the U.S. view on this.
Answer:
The United States amended its patent law to address a number of issues by enacting Public
Law 106-113 on November 29, 1999.  This law contains a provision to publish, within 18 months,
most patent applications filed in the United States.  The law also adds new opportunities for third
parties to participate in reexaminations, including de terminations made by the patent examiner to the
Board of  Patent Appeals and Interferences, in accordance with the understanding reached as part of
the Framework talks.
(Japan) (page 75, para 180, First-to-Invent system)  The United States is the only country to use the
"first-to-invent system, which, with regard to the patent system, makes the United Stats rather unique.
This system, however, lacks certainty and predictability in the sense that a patentee  status can beoverturned by the appearance of the prior inventor afterwards.  This will provide extra burden to
inventors who are required to prepare and keep documentary evidence to prove the date of invention.
Many countries, including Japan, have pointed out that this issue creates a barrier for foreign
companies when trying to penetrate the U.S. business community.  Although the practice of
maintaining the first-to-invent system is not nece ssarily against the TRIPS Agreement, Japan again
requests the United States to adopt the first-to-file system and also to improve all aspects of the patent
systems that restrict trade in the United States.  This is due to the necessity of maintaining a
transparent and stable system, as well as reducing the burdens borne by users through the difference
in systems.  Please expla in the U.S. view on this.WT/TPR/M/88/Add.1
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Answer:
The United States has followed the first-to-invent system throughout the history of its
patent law.  The first-to-invent system is in full conformity with U.S. obligations under the TRIPS
Agreement, as is the rest of the U.S. patent law.
(Japan) (page 75, para 180, "Submarine patents" ) The early publication system in the United States
provides exceptions whereby patent applications filed in the United States, but not filed overseas, or
matters included in a patent application filed in the United States, but not included in thecorresponding application filed overseas, cannot be laid open at the request of the applicant.  It is,
therefore, possible for a patent application to become a "Submarine Patent".  Without knowing
whether or not another application is already on file for the same invention, this system creates
serious social and economic loss due to investments in R&D.  Any pending applications, already filed
with the USPTO at the time of the amendment of th e law, continue to benefit from the former patent
terms (i.e. a 17-year patent term from the date of the patent grant). There is, therefore, still the
possibility that additional submarine patents occur.  Japan strongly requests the United States to
implement fully and promptly what has already been  confirmed under the Framework Talks: i.e. by
abolishing the exceptions from the early U.S. publication system, and by publishing all applications
except those not pending, or those not able to be la id open, after a period of 18 months from the
earliest filing date.  Please explain the U.S. view on this.
Answer:
The United States amended its patent law to  address a number of issues by enacting Public
Law 106-113 on November 29, 1999.  This law contains a provision to publish, within 18 months,
most patent applications filed in the United States.  The law also adds new opportunities for third
parties to participate in reexaminations, including de terminations made by the patent examiner to the
Board of  Patent Appeals and Interferences, in accordance with the understanding reached as part ofthe Framework talks.
(Japan) (page 75, paras 180 and 182, Extension of the patent term)  USPTO provides that patent
protection may be extended to compensate for any  amount of processing delays and USPTO-caused
delays.  This extended patent term is guaranteed for at least a 17-year patent term.  The Government
of Japan would like to point out that there is a possibility of deliberate delays being caused, and thatunder the U.S. current conditions of not having an adequate early publication system, there would be
other opportunities of creating a submarine patent through the extension of patent terms. Please
explain the U.S. view on this.
Answer:
Extensions of patent term are not available for delays caused by a patent applicant.
(Japan) (page 75, para 181, Priority  in the Paris Convention (In re Hilmer)  The "Hilmer" doctrine
exists in the United States.  Foreign applicants usually file applications, first in their own country and
subsequently in the United States, thereby claiming priority under the Paris Convention.  Due to the
"Hilmer" doctrine, such foreign applicants cannot prevent the patent grant from conflicting with
applications filed before the actual filing date of any subsequent applications in the United States,even during the priority period, and thereby may suffer disadvantage. This is against Article 4B of the
Paris Convention, which stresses that acts by a third-party in the priority period "cannot give rise to
any third-party right of personal possession".  This is also inconsistent with Article 2.1 of the TRIPS
Agreement which requires compliance with Article 4 of the Paris Convention.  Please explain the U.S.
view on this.WT/TPR/M/88/Add.1
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Answer:
The definition of the effective date as a prior art reference under the so-called "Hilmer"
doctrine is not inconsistent with the obligations of Article 4B of the Paris Convention, as it does not
affect the ability of an applicant to obtain a patent where the applicant has made a priority claim that
establishes an effective filing date prior to the effective prior art date of the patent.
(Japan) (page 76, para 185, Unity of invention)  Th e Government of Japan understands that the
USPTO has been implementing a public comment procedure and is trying to harmonize its patentsystem with the international system of Patent Law.  However, with regard to the unity of invention,
under the current U.S. patent system, the scope of inventions that can be included in a single
application is, according to what we have been requested so far, narrower than that under the systems
of the JPO and the European Patent Office (EPO). Thus, a patentee is obliged to submit multiple
applications, thereby increasing the burden.  The Government of Japan wishes to repeat its request tothe Government of the United States to adopt the same criterion for its unity of invention as that of
Japan and Europe.  The U.S. view on the matter would be appreciated.
Answer:
The TRIPS Agreement does not address the requirements for patent applications, except for
the requirements regarding disclosure contained in Article 29.  Other issues regarding patentapplications should be addressed in the context of the WIPO discussions on harmonization.
(Japan) (page 77, para 189; and pages 82-83, paras 210-213, Special 301)  There is serious concern
over Special 301 provisions, regarding its compatibility with the WTO agreements, as pointed out
previously in 3.(11).  Please comment on this.
Answer:
The "Special 301" provisions require the U.S. Trade Representative, in consultation with other
U.S. government agencies, to identify foreign countries that deny adequate and effective protection ofintellectual property rights or fair and equitable market access for U.S. persons that rely on intellectual
property protection.  Identification of these countries do not automatically lead to a “Section 301"
investigation.  The “Special 301" provisions are in full conformity with U.S. obligations under the
WTO agreements.
(Japan) (page 79, para 198, Trademarks (Section 211 of the U.S. Omnibus Appropriations Act of
1988)  The panel report [WT/DS/76/R] circulated in August this year points out that Section 211(a)(2)
of the U.S. Omnibus Appropriations Act of 1988 is not consistent with Article 42 of the TRIPS
Agreement.  There is concern over this Section 211 of the U.S. Omnibus Appropriations Act of 1988,
involving the registration, renewal or enforcement in the U.S. of a trade mark, trade names and
commercial names associated with confiscated asse ts in Cuba, regarding its compatibility with the
provisions of National Treatment and the Most Fa vored Nation of the TRIPS Agreement.  Thus, the
Government of Japan would like to ask the Governme nt of the United States for prompt improvement
and to provide its view on the matter.  Please explain the U.S. view on this.
Answer:
The United States expressed its view that section 211 is consistent with the TRIPs Agreement
in numerous submissions to the WTO panel and to the WTO Appellate Body, all of which are
available on USTR's website.  The European Communities has appealed many of the findings of the
panel to the Appellate Body, and the United States has appealed one of the panel's findings.  For thisWT/TPR/M/88/Add.1
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reason, the panel report has not been adopted.  As the Appellate Body has not yet issued its report in
this dispute, it would be inappropriate for the United States to comment further.
(Japan) (page 80, para 200, Protection of the rights of authors, performers, etc)  (i) Japan requests
the United States to take the necessary procedures in order to accede as soon as possible to the
International Convention for Protection of Performers, Producers of Phonograms and Broadcasting
Organizations (Rome Convention, 1961), which has already been ratified and acceded to by many
developed countries, including Japan and the member states of the EC, in order to improve theprotection of performers rights, etc.  Japan would al so like to request the United States to bring into
conformity its protection of the moral rights of authors with the obligations set out under the Berne
Convention for the Protection of Literary and Artistic Works, to which the United States became a
party in 1989.  Please explain the U.S. view on the matter.
Answer:
The United States provides protection for performers and producers of phonograms, and
broadcasting organizations under its Copyright Law in a manner that is fully compliant with the
TRIPS Agreement.  In addition, protection for audiovisual performers is provided under labor law and
collective bargaining agreements between the performers' unions and the production studios.  With
regard to performers and producers of phonograms, the United States provides protection inaccordance with the WIPO Performances and Phonograms Treaty (WPPT), to which the United States
is a party.  The WPPT, which updates and expands the Rome Convention obligations with respect to
performers and producers of phongrams, represents the current international standard.  Accordingly,
since adequate and effective protection of these authors is provided through the WPPT and under U.S.
law, the United States does not find that accession to the Rome Convention is necessary.
Regarding protection of moral rights under U.S. law, please see the U.S. response to a
question from Japan (iv) below.
(Japan) (page 80, para 200, Protection of the rights of authors, performers, etc)  (ii) The right of
making available is independently stipulated in Ar t. 8 of WCT and Art. 10. and Art. 14 of WPPT. Even
though the Government of the United States has rati fied these two treaties, there is no independent
provision for the right in the U.S. Copyright Act.  How does the Government of the United States
protect the right of making available in the U.S. Copyright Act?  Please identify the relevantprovisions in the U.S. Copyright Act and explain why those provisions are sufficient enough to meet
the obligations under WCT & WPPT.
Answer:
The WCT and WPPT obligation to provide a right of making available (which is not an
obligation under WTO Agreements) is fully satisfied through sections 106(3) (right of distribution tothe public), 106(4) (right of public performance), 106(5)  (right of public display) and 106(6) (right to
perform sound recordings by means of digital transmissions) of the U.S. Copyright Law, as they have
been interpreted by the Federal courts.  See, e.g., Playboy v. Frena , 839 F. Supp. 1552 (M.D. Fla.
1993) and Sega Enterprises Ltd. v. MAPHIA , 857 F. Supp. 679 (N.D. Cal. 1994)
(Japan) (page 80, para 200, Protection of the rights of authors, performers, etc)  (iii) According to
Art. 14 of the TRIPS Agreement and Art. 6 of W PPT, performers are accorded the exclusive right of
authorization for their live performances. However,  Art. 1101 of the U.S. Copyright Act does not
provide any protection for live performances other than musical ones, whereas it might violate Art. 14
of the TRIPS Agreement and Art. 6 of WPPT.  If the Government of the United States believe that theWT/TPR/M/88/Add.1
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U.S. Copyright Act meets the obligations under the TRIPS Agreement and WPPT, please identify the
relevant provisions in the U.S. Copyright Act and explain why those provisions are sufficient enough.
Answer:
When joining the WTO, which had identical obligations with respect to musical performers,
we noted that no change in U.S. law was needed.  State statutes and judicial decisions satisfy the
obligations for nonmusical performers.
(Japan) (page 80, para 200, Protection of the rights of authors, performers, etc) (iv) The moral rights
of authors and performers are protected under Art. 6bis. of the Bern Convention and Art. 5 of WPPT.
However, Art. 106 A of the U.S. Copyright Act does not provide any protection for the moral rights
other than those of authors of a work of visual art  which might violate Art. 6bis. of Berne Convention
and Art. 5 of WPPT. If the Government of the United States believes that it satisfies the obligations
under Berne Convention and WPPT, please identify the relevant provisions in the U.S. Copyright Actand other laws, if any, and explain why those provisions are sufficient enough.
Answer:
Moral rights are protected in the United States not under a single law, but rather through a
combination of Federal Copyright Law, state common law, and other Federal and state laws.  Moral
rights are protected in the Copyright Act, not  only through section 106A, but also through the
application of the author’s economic rights in section 106, such as the right to prepare derivative
works under section 106(2).  For instance, the protection of the right of integrity will almost always
implicate the author’s (or other copyright owner’s) right to reproduce the work or to prepare a
derivative work.  These are rights that would be involved in preparing a modification of an author’s
work, which could violate the right of integrity (which is probably the moral right most likely to be
violated in the digital manipulation of images or text).
(Japan) (v) How does the U.S. Copyright Act protect the rights of broadcasting organizations, since
the Government of the United States has the obligation to ensure the protection of these rights
according to Art. 14 of the TRIPS Agreement? Please  identify the relevant provisions in the Copyright
Act and other laws, if any, and explain why those provisions are sufficient enough to meet the
obligation under Art. 14 of the TRIPS Agreement.
Answer:
In our view, Japan’s question fails to reflect accurately the meaning of Article 14.3 of the
TRIPS Agreement. Article 14.3 requires Members to provide protection to broadcasting organizations
or, in the alternative, to owners of copyright in the subject matter of broadcasts.  Either form of
protection is sufficient to satisfy the TRIPS oblig ation.  The United States provides both.  U.S.
copyright law provides owners of copyright in the subject matter of broadcasts with the exclusiverights of reproduction and public performance, which cover the activities enumerated in Article 14.3,
thereby fully satisfying the TRIPS obligation.  In addition, broadcasting organizations in the United
States enjoy considerable protection, both as authors under the Copyright Law and under the
telecommunications laws, which provide for a “right of retransmission consent.”.
  These laws provide
protection in excess of the minimum levels of protection required under Article 14.3 of the TRIPSAgreement, again fully satisfying that obligation.
(Japan) (page 80, para 200, Protection of the rights of authors, performers, etc)  (vi) Does the U.S.
Copyright Act provide the exclusive right of rental to the authors of  cinematographic works  since the
Government of the United States has the obligation to ensure the protection of these rights accordingWT/TPR/M/88/Add.1
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to Art. 11 of the TRIPS Agreement and Art. 7 of WCT?  If the Government of the United States believes
that the widespread copying of the works material ly impairing the exclusive right of reproduction will
not take place even without the right of rental, please explain why.
Answer:
Rental of cinematographic works is permitted in the United States.  There is no evidence that
copying of such works has been a problem, and no right holder has indicated that such a problem
exists in the United States.  The U.S. notes in this regard that many WTO members do not provide arental right for cinematographic works.
(Japan) (page 81, para 208, U.S. Copyright Act Section 110(5) (Implementation of DS160) Regarding
the Panel of United States-Section 110(5) of the U.S. Copyright Act (DS160), the United States must
implement the recommendations of the Dispute Settleme nt Body by the end of this year, or on the date
when the current session of the U.S. Congress adjourns, whichever comes earlier.  We note that thearticle in question has not yet been amended.  As the U.S. accepted the recommendations, it should
amend, as soon as possible, the related article of the Copyright Law in order to be in compliance with
the obligations under the TRIPS Agreement.  Please explain the planned schedule for revising the
Copyright Law.
Answer:
The United States has consulted actively with the U.S. Congress and domestic stakeholders
regarding section 110(5)(B), and those consultations are ongoing.  The United States is also engaged
in ongoing discussions with the European Communities to find a positive and mutually acceptable
resolution of the dispute.  In connection with those discussions, the United States and the European
Communities resorted to arbitration under Article 25 of the WTO Dispute Settlement Understanding,
in order to determine the level of nullification or impairment of benefits caused by section 110(5)(B).
On November 9, 2001, the Arbitrators notified their award to the DSB and the TRIPS Council, finding
that the level of nullification or impairment of annual benefits to the EC is $1.1 million.
(Japan) (pages 83-84, paras 214-216, Section 337 of the Tariff Act of 1930)  Import restriction on
goods which violate intellectual property rights may be justified under Article 20 (b) of the GATT
1994 with certain conditions.  At the time of the GATT 1947, however, a panel report was adopted
(November, 1989) wherein it was mentioned that Section 337 of the Tariff Act of 1930 cannot beconsidered as an exception under the GATT.  Following this adoption, there were some improvements
on Section 337 due to the amendments implem ented through the UR Agreement Act of 1994.
However, today there still exists the possibility of unfair treatment on imported goods.  As of January,
2000, the EC requested consultations on the matter in the WTO, and Japan and Canada joined as
third parties.  This dispute is still in the consultation phase and the Government of Japan will continueto closely monitor the process.  Please explain the recent practice regarding the period of time
between the  initiation by the USITC of an invest igation and its completion. What is the U.S. view on
this matter,  taking into consideration its conformity with the WTO agreements, such as GATT 1994
Art. 3(4) and TRIPS Art. 41(2)?
Answer:
The United States amended section 337 of the Tariff Act of 1930, 19 U.S.C. para. 1337, as
part of U.S. implementation of the Uruguay Round results.  As stated in the "Statement of
Administrative Action" accompanying the Uruguay Round Agreements Act, the amendments to
para. 337 brought U.S. procedures into conformity with U.S. national treatment obligations, while
providing for effective enforcement of intellectual property rights at the border.WT/TPR/M/88/Add.1
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The 1994 amendments to section 337 made the following changes to USITC procedures:
Eliminated the requirement that the USITC issue a final determination within a fixed period of
time.  Instead, the amendment provides that the USITC must complete its investigation "at the earliest
practicable time".  To promote rapid adjudication, the USITC must, within 45 days of initiating an
investigation, establish a "target date" for its completion.  See 19 U.S.C. para. 1337(b)(1).  These
requirements parallel the procedures set out in Rule 16 of the Federal Rules of Civil Procedure
providing district courts with various mechanisms for expediting litigation.  They are also consistentwith district court efforts to avoid delay, such as by establishing a schedule for the completion of
various stages of litigation;
Provided a means to prevent infringement pr oceedings being brought against imported goods
in two fora simultaneously.  A district court hearing an infringement case is required to stay its
proceedings, at the request of a respondent in a section 337 proceeding, in respect of any claiminvolving the same issues as those pending before the USITC.  Such issues would include questions of
patent validity, infringement, and any defenses that might be raised in both proceedings.  The district
court may, in its discretion, stay any other claims in the case.  In addition, the statute provides for the
record in an USITC proceeding to be transferred to the Federal district court for its use, with the
intended benefit of eliminating any duplication of effort or expense;  and
Resolved the problem regarding counterclaims that the GATT 1947 panel identified in its
report.  A respondent in a section 337 action may f ile with the USITC any counterclaim that may be
filed with a federal court.  If the claim is of the form of a defense to the alleged violation of section
337, the USITC will consider the matter.  If the party raising the counterclaim seeks a remedy such as
damages, the amendments now make that remedy available.  Moreover, the amendments ensure that
the party raising the counterclaim is not prejudiced by any delay or payment of fees.  See 19 U.S.C.
para. 1337(c).
(Korea) (page 82, para. 211, Intellectual Property Protection)  The USTR places trading partners on
the Special 301 Priority Watch List in case these countries are considered "to deny adequate and
effective protection of intellectual property rights" or "fair and equitable market access to U.S. artists
and industries that rely upon intellectual property protection". What is the definition of "adequate and
effective" and "fair and equitable"? Does the U .S. have any objective criteria? Couldn’t the US, by
using such classification, run the risk of being too arbitrary?
Answer:
The "Special 301" provisions require the U.S. Trade Representative, in consultation with other
government agencies, to identify foreign countries that deny adequate and effective protection of
intellectual property rights or fair and equitable market access for U.S. persons that rely on intellectualproperty protection.  Under the law, adequate and effective protection of intellectual property rights
includes adequate and effective means under the laws of the foreign country for persons who are not
citizens or nationals of such country to secure, exercise, and enforce rights and enjoy commercial
benefits, relating to patents, trademarks, copyrights and related rights, mask works, trade secrets and
plant breeder’s rights.  Denial of fair and equitable market nondiscriminatory market accessopportunities includes restrictions on the market access related to the use, exploitation, or enjoyment
of commercial benefits derived from exercising intellectual property rights in protected works or
fixations or products embodying protected works.  These criteria are consistent with the objectives of
international agreements, such as the TRIPS Agreement, which promotes effective and adequate
protection of intellectual property rights.  To ensure transparency in the Special 301 process, thepublic is invited to comment and such comments are part of the record during the annual review.WT/TPR/M/88/Add.1
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Foreign governments also have the opportunity dur ing the annual review to provide comments, which
are then taken into consideration during the review.
(Australia)  Could the US outline its intentions to fully comply with the rulings and recommendations
of the DSB in the "United States  Section 110( 5) Copyright Act" case (WT/DS160/R). In light of
compensation discussions with European Communities arising from the US's failure to comply within
the reasonable period of time, Australia seeks assurances from the United States that any
compensation arrangements will be extended to Australian rightholders, in accordance with the USobligations under the WTO Covered Agreements.
Answer:
The United States has consulted actively with the U.S. Congress and domestic stakeholders
regarding section 110(5)(B), and those consultations are ongoing.  The United States is also engaged
in ongoing discussions with the European Communities to find a positive and mutually acceptableresolution of the dispute, consistent with the WTO-covered agreements.
(Bangladesh) According to Article 66.2 of the TRIPS Agreement, developed Member countries are
obliged to provide incentives under their legislation to enterprises and institutions for the purpose of
promoting and encouraging the transfer of technology to LDCs.  Could the US delegation please
enlighten on the implementation status of this provision?
Answer:
As the United States reported to the TRIP s Council in 1999, the following are incentives
provided to encourage technology transfer to least developed and developing countries.  The
references are to Titles of the United States Code and the relevant sections are cited.  Copies of the
laws themselves are available from the WTO Secretariat.
Title 20: Education
Section 226:  encourages state governments, universities, colleges and businesses to establish
scholarships for students from the Caribbean and Central America.  The goal of the scholarships is to
assist in the development of the eligible countries.
Title 22: Foreign Relations and Intercourse
Sect Cooperation.  The purpose of the Institute is to encourage research on the problems of
development in developing countries and to facilitate scientific and technological cooperation.Section 3503 defines the functions of the Institute,  which include supporting U.S. research on critical
development problems, encouraging the exchange of scientists and experts and fostering the
involvement of U.S. enterprises in scientific and technology cooperation with the developing
countries.
Section 4703:  provides scholarships for undergraduate studies at U.S. schools for nationals of
developing countries to assist in the economic development of the countries.
Chapter 63 (Sections 5401-5495):  establishes the Support for East European Democracy
(SEED) Programme.  The activities of the SEED Programme include agricultural assistance, grants to
support "Enterprise Funds," which provide technical assistance and training, and programmes to
provide technical skills to assist in the development of the economy.  See sections 5401(c), 5421, 5422and 5423.  The SEED Programme also establishes scholarships to enable students from Poland and
Hungary to study at U.S. universities, colleges or businesses.  See section 5442.  Additionally, theWT/TPR/M/88/Add.1
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statute authorizes the Environmental Protection Ag ency (EPA) to provide education, training and
research to Hungary and Poland.  See section 5452.
Section 5821:  creates American Business Centres in the independent states of the former
Soviet Union.  The centres may facilitate in the de monstration and use of U.S. agricultural equipment
and technology.  The Centres also serve as a repository of technical information.
Section 5861:  establishes a research and development foundation, created by the Director of
the National Science Foundation in consultation with the Director of the National Institute ofStandards and Technology.  The Foundation partially funds joint research, development and
demonstration ventures between U.S. business and scientists and engineers and entrepreneurs of the
independent states.
Title 26: Internal Revenue Code
Section 501:  provides a tax credit for qualifi ed organizations (see subparagraph (A) and (B)
of section 41(e)(6) as redesignated by section 231(d)(2)) of the Internal Revenue Code of 1986) that
operate exclusively in reviewing technology disclosures, obtaining protection and licensing
technology or providing research grants.  This law is not limited to organizations that provide
technology transfer to developing countries.
Sections 951, 955, 956, 959 and 1248:  concerns a U.S. shareholder's tax liability in a foreign
corporation that invests in a less developed country.  There is no direct mention of technology in any
of the sections.
Title 42: The Public Health and Welfare
Section 7671b:  requires the Administrator to submit to Congress a report identifying
technology transfer programmes that could promote methane emissions reductions in lesser developed
countries.  See Methane Studies Act, subsection (c)(2).
Section 13316:  creates a technology transfer programme which assists U.S. firms to transfer
renewable energy technologies to foreign countries.  The programme establishes a financial assistance
to encourage U.S. companies to participate in energy projects in developing countries.  See sub-
sections (b)(7), (b)(9) and (d)(1)(A).
Section 13362:  creates a technology transfer programme which assists U.S. firms to transfer
clean coal technologies to foreign countries.  The programme establishes a financial assistance toencourage U.S. companies to participate in energy pr ojects in developing countries.  See subsections
(b)(7), (b)(9) and (d)(1)(A).
Section 13387:  establishes a technology transfer programme concerning environmental
technologies.  The programme creates a financial mechanism to encourage U.S. enterprises in energy
projects that substantially reduce environmental pollutants in developing countries. ion 2151:  declaresa policy of providing support for the people of developing countries to acquire knowledge and
resources.  Also known as the Foreign Assistance Act of 1961.
Section 2151d:  authorizes the President to furnish assistance by providing data collection and
analysis, the training of skilled personnel, research and development of energy sources and pilot
programs to test new methods of energy production to developing countries.  See sub-sections (b) and(d).WT/TPR/M/88/Add.1
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Section 2182: encourages the use of solar technology in worldwide housing projects.  The
legislation is unclear if it is explicitly encouraging the transfer of solar technology.
Sections 2191 and 2194:  creates the Overseas Pr ivate Investment Corporation to mobilize and
facilitate U.S. private capital and skills to improve development in less developed countries.
Section 2293:  establishes a development fund to encourage the private sector to promote
development in the Sub-Saharan Africa.  One type of assistance is providing research on agricultural
practices.  See sub-section (I)(1)(A).  Other assistance methods include providing technical support,training and education to improve the use of natural resources.  See sub-sections (I)(1)(B)(ii-iii).
Sections 2295, 2295a and 2295b:  authorizes the Pr esident to provide a variety of assistance to
the independent states of the former Soviet Union.  Under subsection (7), the President can authorize
assistance in providing appropriate telecommunications technologies and training to develop skills
necessary to produce educational television.  Under sub-section (10), the President can promoteenvironmental technology, education, research and training by U.S. businesses and universities.
Section 2351:  encourages U.S. enterprises to contribute to the economic strength of less
developed friendly countries by the exchange of ideas and technical information.
Section 2421a:  establishes a capital projects office within the Agency for International
Development (AID).  The purpose of the office is to  assist in the growth of a developing country's
infrastructure.  Subsection (c)6)(B) encourages U.S. high technology firms to help develop a
technological infrastructure.
Section 3262:  creates a programme to assi st in the energy development of developing
countries.  The programme provides for the development of energy resources, the application of
suitable energy technologies and an exchange of scientists, technicians and energy experts.
Chapter 50 (sections 3501-3513):  establishes the Institute for Scientific and Technological
(Brazil)  With regard to para. 180 (page 75), in what cases and how can a patent protection be
extended? Please explain.
Answer:
Pursuant to section 154(b) of Title 35, United States Code, a patent’s term can be adjusted to
compensate for loss of patent term resulting from  delays due to failure of the U.S. Patent and
Trademark Office to prosecute an application expeditiously or resulting from interferences ordecisions of the Office reversed on appeal.  A patent’s term can be extended, pursuant to sections 155,
155A, and 156 of Title 35, United States Code, to compensate for loss of patent term resulting from
the regulatory review by the Federal Food and Drug Administration
(Brazil)  Concerning para. 181, please indicate if there is any case of compulsory license of patents
under Section 203, 204 or 209 of Chapter 18, Part II, Title 35 of the US Code. If not, please explainhow it would be implemented.
Answer:
Section 204 concerns the grant of a voluntary license.  Since, with respect to section 209, a
U.S. government agency is the patentee, licensing also would be voluntary.  With respect to section
203, U.S. Government agencies responsible for the largest portion of funding agreements to smallbusinesses and non-profit organizations report that they have not had to exercise rights under the citedWT/TPR/M/88/Add.1
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sections.  The section spells out the circumstances under which a U.S. Government agency might
exercise march-in rights and the appeal process available to a contractor dissatisfied with an agency’sdetermination.  The procedures individual agencies might use to exercise their march-in rights are
spelled out in their regulations, which are consistent with the U.S. Administrative Procedure Act.
Agency regulations and the Administrative Procedure Act are publicly available.
(Brazil)  Regarding para. 199 (page 80), please give more details about the meaning of the sentence
“(
…) registration at the Copyright Office is not required before an infringement suit can be brought
(…)” referring to non-US works.
Answer:
Section 411 of the U.S. Copyright Law precludes the filing of a suit for infringement of any
U.S. work until registration of that work has been obtained.  Registration for non-US works, therefore,
is not required.
(Brazil)  Please give more details about compulsory license for making phono records of published
musical works, as indicated in para. 203 of page 80.
Answer:
Section 115 of the U.S. Copyright Law contains a compulsory license, permitted under Berne
Article 13(1), for the production and distribution of phonorecords of a nondramatic musical work.
This license is available only after the owner of copyright has first authorized the distribution of
phonorecords embodying the work.
(Brazil)  Concerning para. 208 (page 81), please describe how Section 110(05) of Title of the US
Copyright Act now implements Ar ticle 13 of the TRIPS Agreement.
Answer:
Please see response to Japan’s question (regarding U.S. Copyright Act, Section 110(5)).
(EU) The US is party to the Berne Convention for the Protection of Literary and Artistic Works
(1971).  However, despite the unequivocal obligation to make “moral rights” available for authors,
the US has never introduced such rights and has repeatedly announced that it has no intention to do
so in the future. Whilst US authors continue to bene fit fully from moral rights in the EU, the converse
is not.  Could the US please indicate if it intends to grant the same treatment to other Berne
Convention members as is granted to itself?
Answer:
In our view, the EU.’s question fails to refl ect accurately U.S. implementation of “moral
rights” or statements made by the United States regarding such implementation.  As the United States
noted in response to a question from Japan regarding moral rights during the last TPR, moral rights
are protected in the United States not under a single law, but rather through the exercise of provisions
in the copyright law, the common law and other Federal and state laws.  Many aspects of moral rights,
however, are intimately associated with rights protected under the copyright law.  For instance, the
protection of the right of integrity will almost always implicate the author’s (or other copyright
owner’s) right to reproduce the work or to prepare a derivative work.  The United States, therefore,
does not need to enact special legislation regarding moral rights because the required protection
already exists.WT/TPR/M/88/Add.1
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(EU)  Advertising low price perfumes imitating famo us European brands and thus benefiting from the
well-known reputation of the European brands is not prohibited.  This practice may violate the ParisConvention for the Protection of Industrial Property, as incorporated into the TRIPs Agreement. Does
the US have any plans to assure its compliance with the Paris Convention?
Answer:
The United States fully complies with its obligations under the Paris Convention and under
the TRIPs Agreement.
(EU)  Under  US law (28 US Code Section 1498) a patent owner may not enjoin or recover damages
on the basis of his patent for infringements due to the manufacture or use of goods by or for the US
government authorities.  This practice is ap parently extremely widespread in all government
departments.  Could the US please explain if it considers that this practice is in conformity with the
TRIPs Agreement that introduces a requirement to inform promptly a right holder about government
use of his patent?
Answer:
The E.C.’s question fails to reflect accurately the legal effect of section 1498 of title 28,
United States Code.  Article 44.2 of the TRIPS Agreement authorizes Members to limit the remedies
available against non-commercial use of a right by the government to payment of remuneration inaccordance with paragraph (h) of Article 31.  The United States does limit remedies in this manner;
however, the section does provide for reasonable compensation for use or manufacture of a patented
invention by or for the United States
(India)  Intellectual Property Rights Violation:  It has been noted that the piracy of Indian video films
and music CDs and cassettes is on the rise and as a result, the Indian entertainment (film and music)
industry is being deprived of royalties.  We would request the US authorities to ensure stricter
enforcement of Intellectual property rights for Indian music CDs and cassettes?
Answer:
India’s statement is not a question or a request for information and does not provide
information sufficient to identify the piracy alluded.  It is not, therefore, possible to respond to India’s
statement other than by noting that all required civil, criminal and border enforcement measures are
available under U.S. law to enable India’s right holders to enforce their copyrighted works in theUnited States
10. Standards, Sanitary Requirements and Environmental Regulations
(Bangladesh) Article 9 of the SPS Agreement contains the commitment to provide technical assistance
to developing country Members either bilaterally or through the appropriate international
organizations, in the areas of processing technologies, research and infrastructure, including in theestablishment of national regulatory bodies.  Simi larly, Article 11 of the TBT Agreement contains a
provision for providing technical assistance to developing country Members on the preparation of
technical regulations, establishment of nationa l standardizing bodies, and participation in the
international standardizing bodies.  Could the U.S. delegation please inform us about the
implementation status of these commitments by the US?WT/TPR/M/88/Add.1
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Answer:
The United States  recently provided $640,000 to the World Bank to assist African countries
to help find ways to participate in the development of standards and to disseminate information on
standards to facilitate their market access.  For information on U.S. technical assistance on SPS issues,
please refer to reports G/SPS/GEN/181 from June 15, 2000, and G/SPS/GEN/181.Add1 from July 9,
2001.
Technical Barriers to Trade
(Canada) (para 85)  According to para 85, a new strategy could increase the rate of transposition of
ISO and IEC standards in the United States, which has been described as low by several trading
partners.  Approximately what percentage of United States standards and technical regulations make
use of international standards?
Answer:
The U.S. government does not centrally compile statistics on the relationship between
standards and technical regulations to international standards.  As a matter of practice and law (see
G/TBT/2/Add.2), however, U.S. standardizing bodies  and agencies review existing standards and
consider whether international standards (if relevant ones exist) are appropriate and effective for
meeting domestic needs.  The United States does not agree with the assertion that there is a low levelof use of international standards in the United States and we are unaware of any quantitative data that
would support such an assertion.  Furthermore, we question whether the rate of transposition of ISO
and IEC standards would be meaningful as “transposition” is not necessarily an indicator of use, and
there are a number of bodies, other than ISO and IEC, that develop international standards which
could be of relevance to TBT implementation.
(Canada) (para 85)  In a May 24, 2001 press release of the American National Standards Institute
(ANSI) regarding the National Standards Strategy ("NIST Grant Will Help Advance NationalStandards Strategy" @ http://www.ansi.org/public/new s/2001may/nist_grant.html), it appears that the
primary focus of the strategy will be the objective of promoting U.S. technology, standards and
standards-development processes internationally rather than on the goal of increased adoption and
use of existing international standards by U.S. standardising bodies and agencies, including those
developed by the ISO and IEC.  Please explain how the National Standards Strategy will effectivelyaddress the latter goal.
Answer :
In its Statement on Implementation required under Article 15.2 of the Agreement on
Technical Barriers to Trade (G/TBT/2/Add.2), the Un ited States provided information on legislation
and policies it has in place to implement the TBT Agreement, including its obligation to use relevantinternational standards as a basis for technical regulations, when they are an effective and appropriate
means for the fulfilment of legitimate objectives.  The National Standards Strategy was developed
through the American National Standards Institute – a private, non-profit organization, that is the U.S.
member body to the International Organization for Standardization (ISO) and, via the U.S. National
Committee, the International Electrotechnical Commission (IEC).  While a number of U.S.government agencies participated in the development of the National Standards Strategy, it does not
represent official U.S. government policy and it is the laws and policies identified in G/TBT/2/Add.2
which are relevant and legally binding on U.S. agencies.WT/TPR/M/88/Add.1
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(Canada) (para 85)  Please explain the relationship between the National Standards Strategy and
policies and procedures of regulatory agencies with respect to the use of international standards as abasis for their technical regulations.
Answer:
Please see answer above.
(Canada) (para 86)  According to para 86, the Department of Agriculture has proposed new national
standards for organic products, as well as rules for the labelling ("grading") of imported meat.  Withrespect to the issue of the labelling of imported meat, as an example, please explain the approach and
criteria the United States uses to ensure that a labelling requirement represents the least trade
restrictive action.
Answer:
The development and application of labelling requirements, like other technical regulations, is
generally subject to the requirements of the U.S. Administrative Procedure Act (5 U.S.C. section 551
et seq.) which is a standardized system of consultations with the public as rules are developed and
revised.  Specific agency statutes may also apply.  The APA specifies requirements for rule making,
i.e., the process by which Federal agencies formulate, propose, establish, amend, or repeal a
regulation. The transparency provisions of the APA exceed WTO requirements in a number of ways,e.g., it contains provisions regarding the solicitation of public comment on preliminary notices of
proposed rules, and obligations for agencies to make public and respond to comments received on
proposals upon their adoption as final.  Transparency, along with guidance provided to agencies by the
Office of Management and Budget (Executive Od er 12866) on Regulatory Planning and Review,
which includes provisions for regulatory impact analysis, are but two of the key institutional
underpinnings to ensure that U.S. regulations (including labelling requirements), are not more trade
restrictive than necessary to fulfill legitimate objectives, as defined in the WTO.  These are in additionto requirements contained in the Uruguay Round Agreements Act (Public Law 103-465) and other
legislation and statutory requirements.
(Canada) (para 88)  According to para 88, no notific ations of proposed U.S. sub-national measures
have been received by the WTO related to the Technical Barriers to Trade (TBT) Agreement.  When
does the United States expect there to be a system in place to meet its obligations under the TBTAgreement with respect to the notification of technical regulations?  Please explain how the U.S.
government intends to notify technical regulations prepared or adopted by local government bodies,
in particular the level directly below the national level.
Answer:
The United States has in place a system to identify trade-significant proposed technical
regulations and conformity assessment procedures of state governments in the United States.  The
U.S. inquiry point, operated by the Department of Commerce, National Institute of Standards and
Technology, has assumed the responsibility for notification of state proposals on their behalf.
Notification involves a review of state publications to ascertain whether proposals fall within the
requirements of the TBT Agreement.  The United States has no obligation under the WTO to notifyregulations proposed by local governments and has no plans to implement such a system.
(Canada) (para 89)  According to para 89, the United States supports reliance on the supplier's
declaration of conformity (with or without accredit ation) and considers that national treatment could
be achieved though cooperative arrangements between national conformity assessment bodies,WT/TPR/M/88/Add.1
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instead of focussing on mutual recognition agreements (MRAs).  Please provide examples of
cooperative arrangements between national conf ormity assessment bodies, other than mutual
recognition agreements or similar arrangements, which would prevent and/or resolve technical trade
barriers.
Answer:
The question appears to misstate the U.S. position.  The U.S. position is to recognize that
conformity assessment procedures, and the approach taken to assure product conformity, need to beconsistent with good regulatory practice.  The United States recognizes there are a variety of
approaches to conformity assurance and confidence in procedures (or national treatment) conducted
by bodies in foreign countries need not depend on a negotiated agreement.
The U.S. Occupational Safety and Health Administration (OSHA) has a cooperative
agreement with the Standards Council of Canada (SCC) for exchange of test results.  It is not required
to recognize or accept the results of the other party, but a party can accept the test results after review
without re-testing on its own if it chooses.
The U.S. regulatory agencies such as USDA’ Food Safety and Inspection Service have been
willing to enter  into technical agreements with  public sector organizations in order to provide
services such as a laboratory certification to perform specific food safety tests , and the privatecertification of food processing and production practices to substantiate claims on labeling and to
show conformance with national and international requirements.  For example, third_party certifying
entities are used to certify animal  breeds and other animal production practices, such as such as “no
hormones added”, and "no antibiotics administered" to  facilitate international trade.
(Canada) (general question)  In regard to the adoption of international standards, the United States
stated in its submission under its 2000 APEC Individual Action Plan on Standards and Conformance
that its government's policy "is to adopt international standards whenever possible and appropriate".Further, in WT/TPR/M/56/Add.1, in response to Question 10.1, the United States stated that "as a
matter of practice and law, U.S. standardizing bodies and agencies review existing standards and
consider whether international standards (if rel evant ones exist) are appropriate and effective for
meeting domestic needs".  What review mechanisms exist for the United States to determine that its
standardising bodies and agencies are meeting its policy and legal requirements?
Answer:
The United States government has in place a number of requirements to ensure that technical
regulations do not create unnecessary barriers to tr ade and otherwise comply with WTO requirements.
Relevant legislation on transparency and regulatory planning and review have been noted above and
in information provided to the Committee on Tech nical Barriers to Trade (G/TBT/2/Add.2).  The
United States government does not attempt to direct the activity of private bodies’ use of international
standards beyond making them aware of the rights and obligations under the WTO and responding to
perceived violations.  Similarly, there is no specific program to monitor exclusively  whether a
regulatory agency has used a particular international standard; however, there are various mechanisms
for regulatory oversight more generally and, as noted above, detailed and stringent requirements fortransparency which call for public input in the development of technical regulations.  As part of the
National Technology Transfer and Advancement Act (NTTA) of 1995 and guidance issued by the
Office of Management and Budget (O MB) pursuant to that Law directs Federal agencies to participate
in voluntary standards development activities and to use voluntary consensus standards in lieu of
government standards except where inconsistent with law or otherwise impractical.  If agencies do notadopt a voluntary standard (which includes inte rnational standards), they must justify why andWT/TPR/M/88/Add.1
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indicate this in its annual report to the OMB (Annual Reports to OMB on Implementation of the
NTTA are available at http:ts.nist.gov/ts/htdocs/210/nttaa/pubs.htm.
(Japan)  (page 47, para 83, Standards required by private insurance companies)  Japan would like to
know what kinds of standards are required by private insurance companies to qualify for product
liability and health insurance, as well as to what kind of goods such standards apply?  We would also
like to know upon which laws, etc., these requirements are based.
Answer:
Could Japan be more specific regarding the above question on product liability and health
insurance?  It is likely that the “standards” or conditions for product liability insurance depend upon
the nature of the product involved.  It is not clear what products are of interest to Japan and difficult to
answer the question in the absence of this information.
(Japan) (page 47, para 85) (New National Standards Strategy)  Please explain the effects of the new
National Standards Strategy, which started in September 2000, including that on the rate of the
transposition of international standards into domestic standards.
Answer:
The U.S. government has not attempted to assess the effects of the National Standards
Strategy, which, as noted above, was developed by a private, non-profit federation.
(Japan) (page 48, para 86, Organic products)  The Report says, the Department of Agriculture has
proposed new national standards for organic products, as well as rules for the labeling ("grading") of
imported meat.  Could the United States explain the outline for these new standards and rules?
Answer:
In order to facilitate trade in organic prod ucts the USDA National Organic Program Internet
website provides detailed information at http ://www.ams.usda.gov/nop on the implementation of the
new rule including the entire rule translated into Japanese and Spanish.  Other Federal websites thatprovide comprehensive information on grading of U.S. imported meat are as follows:
http://www.fsis.usda.gov/OPPDE/arc/Claims.htm; http://www.ams.usda.gov/lsg/ls-mg.htm and for
notice of proposed rules the  U.S. Federal Register at
http://www.access.gpo.gov/nara/cfr_retrieve.html.
(Japan) (page 48, para 88, Sub-federal technical regulations)  As for sub-federal technical
regulations, the Government of Japan requests the Government of the United States to take
appropriate action, in accordance with Article 3 of the TBT Agreement, including notification of such
regulations to the WTO.
Answer:
The Uruguay Round Agreements Act included U.S. obligations with respect to coverage of
the WTO Agreement on TBT of state and local government activities.  The United States is unaware
of any sub-federal technical regulation which it ha s failed to notify in accordance with the TBT
Agreement.
(Switzerland) The U.S. applies many complex technical regu lations to a large number of products, for
health and safety purposes.  Is irradiated/ionized food in the U.S. subject to mandatory declaration?WT/TPR/M/88/Add.1
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-- If so, does the U.S. consider irradiation to be a production and processing  method
which alters the nature/character of the product in the light of Article III GATT 1994 (« likeproduct »)?
-- If so, what is the difference, in terms of human health implications,  between
irradiated and non_irradiated food?
-- If not, does the U.S. consider irradiation to be different, again in the light of Article
III GATT 1994, from other production methods such as biotechnological methods?
Answer:
To ensure that the consumer is informed that irradiation has been used, the FDA requires that
foods that have been irradiated bear both a logo and a statement that the food was irradiated.
(Korea) (pages 48-49, para. 89)  In order to reduce technical trade barriers, the United States
considers that national treatment could be achieved through cooperative arrangements betweennational conformity assessment bodies, instead of focusing on mutual recognition agreements
(MRAs). What does “cooperative arrangements between national conformity assessment bodies”
mean in detail, and what is the difference with mutual recognition agreement?
Answer:
Conformity assessment agreements can take different forms, and need not be reciprocal
(“mutual”).  See also response to Canada.
(EU) Procedures exist at both at Federal and State level, for the approval of wine labels. Names and
descriptive material that may pass off U.S. wine as possessing characteristics or qualities of EU wine
are often approved, undermining the reputation of the EU product and displacing potential sales. Can
the U.S. give assurances that the approval procedures  will be improved so that this will not occur in
the future?
Answer:
The Bureau of Alcohol, Tobacco, and Firearms (BATF) is responsible for wine labelling in
the United States.  It has not received any official complaints from the European Union on wine
labelling.  The United States has no current plans to change the wine labelling regulations.  If the
European Union chooses to pursue changes to the U.S. regulations, it can submit a petition to the
BATF, detailing suggested changes.
(EU)  In many areas state and local authorities are free to set their own technical regulations, even
when federal regulations exist. This leads in some cases to a very complicated regulatory
environment. At the same time the National Te chnology Transfer and Advancement Act (NTTAA) of
1995 aims at promoting the use of voluntary standards by federal agencies and to co-ordinate their
standards activities. Therefore, firstly, we would be interested to know if the US is considering
extending the NTTAA to state and local authorities,  and if not, what co-ordination activities do take
place to ensure that Article 3 of WTO/TBT Agreement is implem ented? Secondly, does the NTTAA
require federal agencies to review international standards when developing regulations? If not, how
is the application of Article 2(4) of the WTO/TBT Agreement ensured by federal agencies? And
thirdly, if a federal agency does not examine an existing international standard as a basis for atechnical regulation, would this constitute an infringement of the Administrative Procedures Act, with
regard to failure to consider reasonable alternatives or failure to explain reasons for rejecting them?WT/TPR/M/88/Add.1
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Answer:
The Uruguay Round Agreements Act (see G/TB T/2/Add.2) is the primary implementing
legislation for the United States WTO obligations, including obligations under the TBT Agreement.
The NTTA was developed for other domestic purposes but we believe it complements TBT
implementation.  Both the URAA and NTTA require the consideration of relevant international
standards.  We do not believe the failure of an agency to consider the use of an international standard
would be an infringement of the Administrative Procedures Act – that Act addresses procedural issuesof transparency in the development and application of regulations.
(EU)  In certain sectors, for example pressure vessels and in relation to building codes, private sector
standards bodies basically develop the technical regulations which are used by state and local
authorities in their regulations. Could the US please explain how transparency and public comment is
ensured since the Administrative Procedures Act does not apply to state and local authorities?
Answer:
States have adopted legislation similar to the Administrative Procedures Act which, among
other things, ensures publication of notices of proposed regulations for comment.  If the underlying
standard is an American National Standard developed by an ANSI-accredited standards developer, the
standard will have met the requirements set forth in the ANSI Procedures for the Development andCoordination of American National Standards (the  “ANSI Procedures”).  These requirements are
based on due process principles and include several required public announcements regarding the
status of the standard as it undergoes development.  One such announcement is a public call for
comments, pursuant to which all comments received must be reviewed and responded to.  These
public announcements are reflected in ANSI’s Standards Action publication which is forwarded to and
included in the ISONET reporting system in conforma nce with the requirements set forth in the Code
of Good Practice.
(EU) Electrical and electronic equipment amounts to 6% of total EU export to the US. However, this
trade is impeded by obstacles such as US stand ards diverging from the international standard (IEC)
and onerous conformity assessment requirements. Although the Occupational Safety and Health
Administration (OSHA) regulations (29 CFR 1910) do not explicitly rule out international standards
as a basis for the testing and certification to be done by NRTLs, so far only US standards (UL andASTM standards mostly) are accepted by OSHA. In addition, the Annex on Electrical Safety to the
EU-US Mutual Recognition Agreement (MRA), nego tiated in accordance with Article 6 Of the
WTO/TBT Agreement, is not yet implemented corre ctly on the US side. Under the MRA, European
designated laboratories should certify equipment according to US regulations. However, OSHA
continues to deny European authorities the right to designate European laboratories to operate underthe Annex on Electrical Safety. The behaviour of this Agency renders void the signature of the MRA by
the US Government. 1) Has OSHA examined the technical content of relevant ISO and IEC standards
to ensure that they, or their relevant parts, are not an appropriate or effective means of fulfilling the
legitimate objectives set in US law? If not, how does OSHA, as a central government body, intend to
ensure that Article 2(4) of the WTO/TBT Agreement is adhered to in terms of its regulations? 2) Canthe US give any indication that it will follow the practice adopted by most other countries in the world
with regard to reverting to suppliers self-declaration instead of third party certification for electrical
and electronic products? 3) Will the US also confirm that it will comply fully with the provisions of the
MRA?WT/TPR/M/88/Add.1
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Answer:
OSHA recognizes NRTLs to test and certify products using “appropriate test standards.”
Under the NRTL Program regulations, 29 CFR 1910.7, as clarified by OSHA’s rule promulgating
Section 1910.7, an appropriate test standard must be a U.S. consensus_based product safety test
standard.  OSHA does allow NRTLs to use appropriate U.S. “harmonized” international safety test
standards.  For example, the UL 1950 test standard is a U.S. harmonized version of the IEC 950
(international) test standard.  Any country must harmonize, i.e., adapt, international test standards tomake sure they conform to that country’s national codes and statutory or regulatory requirements.
Allowing general acceptance of an international test standard without harmonization would be unsafe
if it were incompatible with the U.S. system.
The NRTL Program regulations, 29 CFR 1910.7, set forth the requirements for NRTL
recognition by OSHA.  As allowed under these regulations, OSHA uses general criteria of relevantISO and IEC guides for purposes of evaluating an organization for recognition.  However, the criteria
in these guides are not substitutes for the requirements of the regulations, which in some cases exceed
the provisions of the guides.  Therefore, they do not necessarily provide the appropriate and effective
means of fulfilling legitimate objectives in U.S. law. OSHA must change its requirements through a
public rule making process and, as an initial matter, must have adequate justification and resources topropose any changes.  Currently, OSHA has no changes to the NRTL Program regulations under
consideration.
OSHA’s current statutory mandate allows it to regulate employers in protecting workplace
safety.  In contrast to European laws, this mandate does not allow OSHA to regulate manufacturers or
to perform surveillance of manufacturers in regulating employers.  Regulation and surveillance of
manufacturers are absolutely essential to ensure the safety of products under the supplier’s declaration
scheme.  Congress must substantially revise OSHA’s current statutory mandate before OSHA couldconsider permitting supplier’s declaration.  The Agency’s mandate would need to be broadened to
regulate manufacturers and products in the general marketplace.  To our knowledge, such revisions to
expand OSHA’s authority are not currently under consideration by Congress.  Unless properly
regulated, supplier’s declaration  by less-than-reputable manufactures would potentially expose all
users of products to great safety risks.  Also , OSHA permits a feasible alternative to supplier’s
declaration since qualified NRTLs may use manufacturers testing in approving products.
Regarding the Annex on Electrical Safety to the EU_US Mutual Recognition Agreement
(MRA), only one EU_based laboratory, TUV Product Services of Germany, has submitted a complete
application to OSHA, and OSHA has recognized this laboratory following the requirements of the
NRTL Program, which included an on_site assessment of the lab by OSHA.  The Annex on ElectricalSafety of MRA clearly states that the NRTL Prog ram requirements for processing will be followed,
and therefore OSHA has correctly implemented the Annex.  The Annex gives European authorities the
right to designate, i.e., identify, laboratories in the European Member States to be considered for
recognition by OSHA under the NRTL Program.  These countries, or the European Commission, may
undertake whatever analyses or assessments they consider appropriate to make this identification.  Ifthe information is provided to OSHA with the application, OSHA will rely on it as we evaluate the
laboratory, and adjust our own activities accordingly.  As already stated, OSHA has complied with the
provisions of the Annex on Electrical Safety.
(EU) The EU has previously asserted that US trac k record in implementing ISO and IEC standard is
poor. Previous questions from other WTO Members have related to the rate of US transposition ofinternational standards as national standards. The US has responded that the US government did not
collect comprehensive data on the number of standards in existence and that there is no data that
would support the assertion of a poor transposition ra te. We would like to know what data exists toWT/TPR/M/88/Add.1
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support a high transposition rate of ISO and IEC standards as US national standards? Does ANSI
and/or its accredited standards development organisation have such data and what are the results?
Answer:
The U.S. government does not centrally compile statistics on the relationship between
standards and technical regulations to international standards.  As a matter of practice and law (see
G/TBT/2/Add.2), however, U.S. standardizing bodies  and agencies review existing standards and
consider whether international standards (if relevant ones exist) are appropriate and effective formeeting domestic needs.  The United States does not agree with the assertion that there is a low level
of use of international standards in the United States and we are unaware of any quantitative data that
would support such an assertion.  Furthermore, we question whether the rate of transposition of ISO
and IEC standards would be meaningful as ‘transposition’ is not necessarily an indicator of use, and
there are a number of bodies, other than ISO and IEC, that develop international standards whichcould be of relevance to TBT implementation.  We note that ANSI has begun to attempt to track this
information as part of our “Project Initiation Notification System” forms, but we do not yet have
comprehensive data.
(EU)  The Secretariat’s report states that ANSI has developed a “National Standards Strategy for the
United States” and that this new strategy could increase the rate of transposition of ISO and IECstandards in the US. However, the transposition of ISO and IEC standards and the withdrawal of
conflicting national standards seems to play a subordinate or even non-existing role in the strategy.
The strategy paper itself states in its strategic vision that for only some technology sectors ISO and
IEC are the preferred organizations within which to achieve one global standard. Could the
Government inform us what co mmitments and/or obligations, if any, do the standards bodies
accredited by ANSI and ANSI itself have to transpose ISO and IEC standards as US national
standards and withdraw conflicting national standards, in particular when the US has activelyparticipated in their development? Furthermore, please indicate for which sectors are ISO and IEC
the preferred organizations? And why are ISO and IEC not suitable for other sectors?
Answer:
The National Standards Strategy for the United States states that “[t]he strength of
standardization in the United States is a sectoral focus supported by a dynamic infrastructure.  Thesectoral focus comes from the participants – companies, government agencies, public interest
organizations, talented individuals – who understand what is needed in their sector, and the standards
developers through which they work to meet those customer needs …. This allows efficient standards
development and fosters innovation and competition.”   ANSI accreditation of a standards developer is
not contingent on the developer’s agreement to transpose ISO and IEC standards and withdraw any
conflicting national standards.  ANSI-accredited standards developers do transpose ISO and IEC
standards whenever those standards are accepted by, and meet the needs of, the relevant sector.  Some
sectors (e.g., Heavy Equipment) rely extensively on su ch transposed standards to meet their standards
requirements. In other sectors (e.g., Medical Devices) the ISO standards in large measure are based
upon American National Standards.  Please be ad vised that the National Standards Strategy also
provides that the ANSI community “need[s] to guard against duplication of efforts and results where it
does not add value” to address the need for a coherent set of national standards.
(EU) The Secretariat’s report states that in relation to standards the US conformity assessment system
largely rests on supplier’s self declaration. However, most of the larger standards organizations (UL,
ASTM, ASME etc.) provide third party product certification and marking schemes for a large numberof sectors as well. It seems that these schemes ha ve a very large impact on market access almost to the
point of constituting de facto technical regulations. Even state and local authorities will refer not onlyWT/TPR/M/88/Add.1
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to the standards of these organizations but also to their approvals and/or markings as a perquisite for
approval, use and/or installation. Could the US please indicate us the sectors covered by “voluntary”third party marking schemes? And inform to what extent and in which sectors federal, state and local
authorities rely on private certification and marking schemes in relation to their regulations?
Answer:
The United States questions the assertion that a large impact on market access is the factor
determining what constitutes a technical regulation.  The EU may want to consult the Directory ofU.S. Private Sector Product Certification Prog rams (NIST SP 903, 2001 Edition) which is accessible
at http://ts.nist.gov/ts/htdocs/210/217/osc.htm.   We have not undertaken surveys on the extent to
which federal, state and local authorities rely on private certification and marking schemes in their
regulations.  If there is a specific area of interest, the U.S. inquiry point could provide information.
(Brazil)  Concerning para. 83 (page 47) which are the measures adopted by the US Government in
order to comply with Article 3 of the TBT Agreement with respect to the use of standards such as
those mentioned in this paragraph?
Answer:
TBT Article 3 concerns the preparation, adoption and application of technical regulations by
local government bodies and non-governmental bodies.  The United States is unaware of any non-governmental bodies in the United States with authority for technical regulations.  (If a non-
governmental body develops a standard that is subsequently referenced or used as a basis for a
technical regulation, it is done so under the authority of a government authority.)
States have adopted legislation similar to the Administrative Procedures Act which guides the
preparation, adoption and application of technical regulations by federal government agencies (see
G/TBT/2/Add.2).  Among ot her things, these procedures ensure publication of notices of proposed
regulations for comment by any interested party.
The United States has in place a system to identify trade-significant proposed technical
regulations and conformity assessment procedures of state governments in the United States.  The
U.S. inquiry point, operated by the Department of Commerce, National Institute of Standards and
Technology, has assumed the responsibility for notification of state proposals on their behalf.
Notification involves a review of state publications to ascertain whether proposals fall within therequirements of the TBT Agreement.
(Brazil) Regarding para. 84, which are the measures adopted by the US government aiming at
assuring that the technical requirements embodied in technical regulations are in accordance with
existing international standards? Is there any effort to change those technical regulations that are
older than the TBT Agreement?
Answer:
In its Statement on Implementation required under Article 15.2 of the Agreement on
Technical Barriers to Trade (G/TBT/2/Add.2), the Un ited States provided information on legislation
and policies it has in place to implement the TBT Agreement, including its obligation to use relevant
international standards as a basis for technical regu lations, when they are an effective and appropriate
means for the fulfillment of legitimate objectives.  As a matter of practice and law (see
G/TBT/2/Add.2), U.S. standardizing bodies and agen cies review existing standards and consider
whether international standards (if relevant ones exist) are appropriate and effective for meetingWT/TPR/M/88/Add.1
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domestic needs.  At the time we implemented the WTO, U.S. agencies were asked to review and
identify any technical regulations under their auth ority that might be incompatible with the WTO
obligations (including the TBT obligations).  Proce dures are in place to ensure periodic review of
regulations, though none of these procedures are linked to implementation of the TBT Agreement.  It
should also be noted that the United States was a signatory to the Tokyo Round TBT Agreement.
(Brazil) Concerning para. 85 and considering that the US is the most represented country in
international standards bodies (such as ISO), which are the measures adopted by the US governmentsfor:
a.  helping ANSI and US Standardizing Bodies to improve the use of international standards
in order to avoid practical technical barriers to US market access by foreign suppliers
b. adopting these international standards or releva nt parts of them, as a basis for technical
regulations (both in case of new and revised ones)?
Answer:
The adoption of international standards as a basis for technical regulations is addressed in the
response to the preceding question.  The use of international standards by U.S. standardizing bodies
will be a function of market forces and needs. The U.S. government does not attempt to direct the
activity of private bodies’ use of international standards beyond making them aware of the rights andobligations under the WTO and responding to perceived violations.
(Brazil)  Regarding para. 89, considering that the “US c onformity assessment system is unique in that
conformity assessment in the area of standards largely rests on supplier’s self-declaration, and is to a
large extent enforced through product-liability laws” and also the positions expressed by US
representatives at the WTO TBT Committee during la st years proposing a wider use of declaration as
a cheaper and time-saving way for conformity assessment, which are the rules for acceptation of such
declarations from foreign suppliers?
Answer:
The United States does not have a single or monolithic approach to conformity assurance.
Supplier’s declaration of conformity is frequently used for voluntary standards.  Some U.S. regulatory
agencies also rely on supplier’s declaration of conformity.  Whenever that approach is used, there is
no distinction the rules between foreign and domestic suppliers, though foreign suppliers generallyhave to have an importer or agent domiciled in the United States.
(India) Caution label on natural rubber gloves: The US law requires natural rubber gloves to carry
caution label that the natural rubber latex can give allergic reaction in some individuals. We would
request the US to clarify the basis of imposition of such a standard and provide details of the data
collected in this regard.
Answer:
The advent of the HIV/AIDS epidemic resulted  in major changes in protective practices for
health care workers, especially regarding the use of latex gloves.  During recent years FDA received
increasing numbers of reports of adverse reactions, including deaths, that seemed to be related to the
use of latex gloves.  Careful investigation established that increased exposure to natural latex cantrigger severe allergic reactions in some sensitive people.  The labeling requirement is a response toWT/TPR/M/88/Add.1
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this finding.  A discussion of the research leading FDA to require this label can be found on the FDA
website www.fda.gov under the topic of Medical Devices.
(India)  Pharmaceutical drug  approval procedures: Such procedures pose difficulties for non-US
based firms, including those from India as the US Food and Drug Administration has to approve any
new medicinal product before it can be put on sale.  It has been represented that for non-US medicinal
products, this procedure takes significantly longer than for those developed locally.  We would
request the US authorities to look into the matter and ensure that non-US based firms are not placedat a disadvantage.
Answer:
FDA’s policy is to deal with all applicants on a non-discriminatory basis.  Time to process the
application is effected by the category of the drug (certain drugs that appear likely to contribute
significant medical advances for a serious disease receive priority review) and the completeness of theapplication.  We have no information to suggest that these factors impact on foreign applicants
differently that on domestic firms
Sanitary and Phytosanitary Measures (SPS)
(Canada) (para 91)  According to para 91, the FDA has primary responsibility for the safety of foods,
with the exception of meat, poultry, and certain egg products, which FSIS regulates.  Please explainhow the FDA is attempting to facilitate trade in these products.  Does the FDA intend to expand these
activities that help facilitate in the near or medium term?
Answer:
Last year, FDA and CFIA finalized an “Action Plan on Food Safety” that focused on how
entry of fresh Canadian produce into the United States could be facilitated while maintaining FDA’s
ability to ensure product safety. As a part of the “Action Plan,” the two agencies have engaged in an
exchange of technical information about each country’s respective food safety programs for freshproduce regarding microbial contaminants, pesticide residues, tracebacks, good agricultural practices,
recalls, and food irradiation. We are very encouraged by the progress that has been made in the area of
microbial contaminants and look forward to reaching agreement on a similar action plan covering
chemical contaminants and pesticide residues in fruits and vegetable commodities.
(Japan) (page 47, para 82, Meat and poultry)  The Secretariat Report says, most products other than
meat and poultry do not require determination of equivalence or an export certificate to enter the U.S.
Could the United States explain the reason why these measures are applied only for meat and
poultry?
Answer:
Please refer to the document G/SPS/GEN/212 submitted on November 7, 2000 for the
explanation.
(Japan) (page 49, para 93) Japan has regained FMD free status since 26
th of September, 2000 by
OIE.  We have already provided the report on the eradication of FMD and the on-site investigation
conducted by USDA officers have been concluded, nevertheless we have not received the permission
to re-export meat and meat products derived from cloven-hoofed animal to the United States.Therefore, we would like to know when the ban for the export of the said items will be lifted.WT/TPR/M/88/Add.1
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Answer:
The Technical APHIS regulatory process will require a proposed declaration of Japan as
FMD-free as a formality before final declaration of Japan as FMD-free.  This normally takes 60 to 90
days.
(Korea) (page  49, para. 90)  Although the U.S. governm ent permitted the import of Korean mandarin
oranges in  August 1995, five major producing states (California, Louisiana, Texas, Florida and
Arizona) still prohibit the import of this product due to concerns related to the citrus canker disease.However, the phytosanitary concerns were effectively addressed through a risk assessment process
completed in June 2001. Therefore, the U.S. needs to revise federal regulation (7 CFR 319.28) as
soon as possible so that the aforementioned states open their markets to Korean mandarin oranges.
Korea would appreciate it if the U.S. could express its views on this issue.
Answer:
USDA’s Animal and Plant Health Inspection Service (APHIS) has completed its risk
assessment.  No proposed rule change has been drafted yet for publication, but the rule_making
process has begun.
(EU)  (para 91) The "Code of Federal Regulations of  1996, Title 7, Subtitle B, Ch.III, §319-56-2r"
provide for a pre-clearance inspection programme of apples and pears with the aim of guaranteeing,prior to shipment, that consignments are free from certain specified insect pests and from “other
insect pests that do not exist in the U.S. or that are not widespread in the US.” Operating on the basis
of an open list of unspecified pests is not scientific and is contrary to the spirit of transparency as
provided for in the International Plant Protection Convention and to the requirement of pest risk
analysis and transparency laid down in the WTO Sanitary and Phytosanitary Agreement (SPS). The
system increases costs and has had a negative effect  on EU exports of apples and pears to the US. We
would like to know if the U.S. has intentions to re-evaluate the procedure with a mind to following
more closely the International Plant Protection Convention and the WTO SPS?
Answer:
APHIS will manage their commodity preclearance programs in a safeguarding context with
specific treatment and/or treatment schedules utilized  to mitigate target pests of concern.  This risk
management strategy is certainly consistent with the purposes of the IPPC.
(Brazil)  Secretariat Report, Summary Observations, para. 22. The US government has, for alleged
sanitary and phytosanitary reasons, prohibited imports  of meat from Brazil originating from areas
declared free from Foot and Mouth Disease by the International Office of Epizootics. In light of the
concept of pest-or disease-free areas enshrined in the IOE, please explain what is the rationale for
maintaining these measures when the exporting country complies with all the other sanitary andphytosanitary requirements?
Answer:
The United States is within compliance with th e guidelines set out in the OIE Chapter of the
Animal Health Code when it prohibits imports of ruminant products from Brazil.
(EU)  The EC is operating a policy of regionalism where restrictions are applied in zones affected by
certain animal diseases, with free movement of animals and products outside the affected zones.
Furthermore, the same principle as an effective means of controlling animal disease has now beenWT/TPR/M/88/Add.1
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incorporated into the US Tariff Act 1930 by th e NAFTA and is part of the WTO SPS Agreement.
However, US import administrative rules concerning Foot and Mouth Disease (FMD), Rinderpest andother relevant diseases have still not been amended to reflect this change in legislation, despite a
clear commitment in the EU-US Agreement on Application of the Third Country Meat Directive,
reached in 1992.  Imports into the US of uncooked  meat products such as San Daniele ham, German
sausage, Ardennes ham, are still the subject to a long-standing prohibition despite the fact that meat
products may come from disease free regions and that the processing involved should render any risknegligible. Could the US could further elaborate on how it intends to meet its international
obligations concerning regionalisation?
Answer:
The Regionalisation policy has been finalized and is in effect.
(India)   Import alert on Fresh, Frozen and Cooked shrimp from India: The US FDA has been
operating an Automatic Import Alert (automatic detention and testing) in respect of Indian Fresh
(Raw) and Frozen Shrimps since 1979. In 1995, th e FDA extended the Automatic Import Alert to
cover cooked shrimp export from India. Some In dian exporters are exempt from such Automatic
Import Alert and are only subject to random checks. It may be noted that the processing technology in
India has been upgraded with modern facilities, and 103 processing establishments have beenapproved by the European Commission for exports to the European Union. Many other processors
exporting to the US have implemented HACCP (Hazard Analysis and Critical Control Points)
principles. We would request the US FDA to consider according similar approval after inspection of
the exporting units. Taking into consideration the developments in the Indian seafood industry, we
would also request the FDA to lift the import restrict ions such as detention of Indian shrimps imposed
vide Import Alert IA#1635.  Further, it is noted th at while the US FDA publishes the details of
detained consignments and give wide publicity, it does not publish the results of examinationsubsequently. We feel that this is not fair as such publicity concerning detained consignments would
create a bad impression concerning the exporters in question in the minds of the US seafood
importers. We would therefore request the US authorities to consider giving adequate publicity
concerning clearance given to such detained goods upon physical, chemical and bacteriological
examination.
Answer:
The cited Import Alert was imposed on Indian shrimp after FDA found pervasive
decomposition problems, sanitation violations and contamination with pathogenic microorganisms.
Individual shipping firms can request an exemption from this detention after they have had five
consecutive  non-violative shipments.  This FDA policy  recognizes that it is the responsibility of the
individual shipper to present safe and wholesome food products for marketing in the U.S.
Approximately 7 million shipments of FDA-regulated products enter the U.S. each year.  The
vast majority of those shipments enter the U.S.  market without problems.  It is not FDA’s
responsibility to publicize the safety of imported or domestic food. FDA does, however, believe that
the public has a right to know when we find unsafe products.  
(India)  Ban on mango exports to US: It has been reported that the US has imposed a ban on import
of Indian mangoes on account of the problem of stone weevil and occurrence of oriental fruit fly. This
was in spite of the fact that the problem was rest ricted to a small belt of the mango producing area
and was being addressed through new technologies for detection (like x-ray radiography technique)
and control (like Hot Water Dip Treatment, Inte grated Pest Management System and Vapour HeatWT/TPR/M/88/Add.1
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Treatment). In such circumstances, we would request  the US authorities to lift the continued ban on
import of mangoes from India.
Answer:
The USDA still has legitimate concerns on mango seed weevil in India and will evaluate any
new technologies that India has developed to mitigate oriental fruit fly and mango seed weevil pests.
(India).  Strict and burdensome sanitary and phyto-sanitary requirements: All imports of fresh fruits
and vegetables into the US require clearance by the US Department of Agriculture. Such clearance isoften given only after extensive tests and inspection of the areas where the items have been grown.
The US requirements are sometimes quite unreasonable and take excessively longer time. We would
request the US authorities to consider this matter and take steps to streamline the procedure.
Answer:
The United States receives an extraordinary volume of import requests.  As recently as June
19, 2001 in the Federal Register the United States asked for public comment on how to streamline this
entire process.
(India) Meat and milk products: It has been represented that the US does not allow import of meat
and milk products from India on the ground of presence of foot and mouth disease in the animals.
Since it has now been proved that these are no w free from BSE (Bovine Spongyform Enciphalopathy)/
scrapple, it is requested that the ban in question may be removed.
Answer:
FMD is still present in India and independent of BSE and Scrapie-freedom, which prohibits
India’s meat and milk imports to the United States.
(New Zealand)  The Secretariat report notes that “Most products other than meat and poultry do not
require a prior determination of equivalence or an export certificate to enter the United States.”
(S/III, para 82, page 47)  We would note, however that the US has an explicit prohibition on the entryof plants, plant products and honey bees from all countries except for those recognized by the Code of
Federal Regulations.  We also understand that there is a substantial backlog of partially processed
applications for market access (in excess of 300) which are delaying the review of new application.
Furthermore, even after the Animal and Plant Health Inspection Service has completed its Pest Risk
Assessment (PRA) process which includes public consultation, and determined there are less traderestrictive measures applicable, prohibitions ate still maintained for an extended period of time until
the new regulations can be proposed, published, further commented on, and republished as a final
rule.  These facts give rise to a number of questions:
What is the United States doing to address the backlog of applications for pest risk assessments?
Answer:
As recently as June 19, 2001 in the Federal Register the United States asked for public
comment on how to streamline this entire process.  APHIS has also added additional personnel.
(New Zealand)  Can the United States explain why it is necessary to maintain measures more
restrictive than identified by their risk assessments for extended periods after such risk assessments
have been consulted upon and finalised?WT/TPR/M/88/Add.1
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Answer:
Risk assessment only provides the basis for a regulation.  A federal regulation must then be
published in order to be legal.
(New Zealand)  How does the United States justify the longstanding delay in resolving New Zealand’s
request for access to the United States for live honey bee and honey bee semen, when, in view of
New Zealand’s superior honey bee health status, there is no scientific basis for denying such access
on SPS grounds?
Answer:
APHIS is working to address this situation.
(New Zealand)  When will USDA publish the Proposed Rule and associated Risk Assessment for
New Zealand honey bees?
Answer:
APHIS is currently in the process of drafting a proposed rule.
PART 2
(New Zealand)  The concepts of equivalence, transparency and international harmonisation are three
of the foundations of the WTO SPS agreement (discussed at S/III, paras 90-94, page 42 and 43).  Can
the U.S. provide specific comment on efforts be ing made by its Food and Drug Agency (FDA) to
ensure that both the statutes which it administers, as well as the associated regulations, policies and
guides explicitly reflect the international commitment the US government has made in this regard.
Specific comments would be especially appreciated with respect to:
The consistency of the equivalence concept with  the Federal Food Drug and Cosmetics Act, noting
that the FDA is yet to finalise and publish guidance in this area.
The consistency of both the amending process and standards contained within the Pasturised Milk
Ordinance (PMO) and the National Shellfish Sanitation Program (NSSP) standards with the above.
The assessment of risk and determination of the appropriate level of sanitary or phytosanitary
protection (ALOP) is another key concept of th e WTO SPS agreement.  Can the US specifically
comment on:
How both risk assessment and the objective of minimising negative trade effects have been mutually
and consistently applied in the de velopment and amendment of the PMO.
Why the measures mandated for products covered by the PMO are more trade restrictive than those
for similar products which can contain the same hazard profiles and which are either directly
consumed or  made into products consumed by the same population.WT/TPR/M/88/Add.1
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[Answer to be supplied]
Environmental issues
(EU)  (para 83) How does the U.S. see the role of international, as opposed to purely national,
environmental policies in complementing international trade?
Answer:
International environmental policies are an important means of addressing environmental
concerns that have an international dimension, though the particular means to address an
environmental problem will vary from case to case.  The United States believes that internationalenvironmental and trade policies can and should be mutually reinforcing.  To that end, the United
States believes that it is important for environment and trade officials to work closely together and
respect each others’ expertise in the development of both environmental and trade policy.
(EU)  (para 85) The EU shares the U.S.’ belief that it  is important to identify and pursue area where
trade liberalisation holds particular promise for yielding both trade and environmental benefits.  Anarea which the EU considers worth examining in this respect is that of energy subsidies, including
pricing and taxation systems which effectively amount to subsidisation by avoiding that the true
environmental costs of energy use are reflected in the price of energy.  To what extent does the U.S.
share this view and is open to examine and review its own policies in this area?
Answer:
The United States agrees that energy development and use should be economically and
environmentally sustainable.  The United States is interested in explor ing market-distorting and
environmentally harmful subsidies across sectors mo re generally, recognizing that the issues are
complex.
(EU) ( para 87) The U.S. has stated that it will conduct an environmental review of the negotiations on
services and agriculture;  why has the U.S. chosen  to carry out only an environmental review as
opposed to a broader review taking into account all three pillars of sustainable development?
Answer:
The U.S. already considers many social and economic factors relevant to a sustainability
assessment when developing trade policy.  An environmental review, however, is useful in
highlighting environmental factors for consideratio n and allows for a targeted analytical focus on
these factors.  Now that the Doha agenda has been launched, the United States intends to fold theenvironmental review of the services and agriculture negotiations into a review of the broader agenda.
(Japan) (page 16, para.16, Trade Measures and  MEAs )  It is stated in the Report that the
Government of the United States considers that WTO provisions are sufficient to accommodate trade
restrictive measures contained in multilateral environmental agreements (MEAs).  What conditions
does the Government of the United States consider necessary for trade restrictive measures containedin MEAs to be consistent with the WTO provisions?  Please provide concrete examples of trade
restrictive measures contained in MEAs that are considered to be consistent with the WTO provisions.
Does the Government of the United States consider that relevant U.S. domestic laws fulfill such
conditions?WT/TPR/M/88/Add.1
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Answer:
Few MEAs contain specific trade measures.  Those that do – for example, the Convention on
Trade in Endangered Species (CITES) and the Montreal Protocol on Ozone-Depleting Substances –
have been in place for some time, and the United States is unaware of any potential inconsistency with
WTO rules.  The United States believes that trade restrictions in its domestic environmental measures
are also consistent with WTO rules.  In this connection, the WTO Appellate Body recently found that
the U.S. shrimp-turtle  and its implementing measures fully complied with WTO requirements.
(Korea)  (page 16, para 15) Paragraph 15 of page 16 of the Secretariat’s report indicates that the U.S.
has demanded the reduction of environmentally harmful and trade distorting fisheries subsidies.
However, the recent reports of OECD and FAO (i .e., OECD (2000)--Government Financial Transfers
and Resource Sustainability, and FAO (2001)--Report on the Export Consultation on Economic
Incentives and Responsible Fisheries) did not find any objective evidences on the relationship betweenfisheries subsidies and fisheries resources.  What is the basis for the U.S. to argue that fisheries
subsidies are environmentally harmful?
Answer:
Representatives from the United States participated in the preparation of both the OECD “The
Impact on Fisheries Resource Sustainability of Go vernment Financial Transfers (GFT)” and the FAO
“Report of the Expert Consultation on Economic Incentives and Responsible Fisheries” referred to by
the ROK.  While noting the “difficulties in isol ating the impact on fisheries sustainability of
government financial transfers,” the OECD Secretariat acknowledged that “[s]ome revenue enhancing
and cost reducing transfers, however, may have a negative impact on the governance of fisheries.
Transfers can embed expectations about capacity and activity levels that can be expensive and costly
for governments to remove.  Excess capacity, primarily due to the lack of appropriate management
and transfer policies, can lead to increased pressures on fisheries management decisions that favorshort term requirements at the expense of long term sustainability” (AGR/FI(99)3/REV3 pg. 6).
The OECD Committee for Fisheries continues to seek clarification of the effects of
government financial transfers on governance, coastal management, economic efficiency and
ultimately on the fisheries resource.  But the existence of $1.6 billion in revenue enhancing or cost
reducing transfers, as identified in the OECD GFT report, undeniably distorts trade and skews theallocation of scarce resources, creates political pressure on domestic fisheries managers, and limits the
export potential of developing countries.
The FAO “Report on the Expert Consultation on Economic Incentives and Responsible
Fisheries” summarizes the work of an experts’ consultation held in late 2000.  While the report found
that there are few empirical studies of the relationship between subsidies and resource sustainability,the experts did not conclude that there is no objectiv e evidence that this relationship exists.  To the
contrary, the experts found that a relationship between subsidies and the sustainability of the resource
does exist, although the extent of that relationship depends on the control of effort.
(Japan) (page 20, para.85, Fisheries matters)  The elimination of subsidies that contribute to over-
fishing is shown as one of three important areas where trade liberalization holds particular promise.
Could the United States inform us of fisheries subsidies which contribute to over-fishing within any
situation regardless of its fisheries management?WT/TPR/M/88/Add.1
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Answer:
The United States believes that subsidies to the fisheries sector can have a number of perverse
effects.  Government-provided subsides contribute to an inefficient allocation of scarce resources in
the domestic market and trade distortions in international markets.  Subsidies to the fisheries sector
lower fixed and/or variable costs to fishers and pu t pressure on the resource, thereby contributing to
overfishing.  The nature of the management system affects the dispersion of payment and, to some
extent, the magnitude of its impact but does no t mitigate the resulting decline in fish stocks.
The fact that many of the world’s fisheries are under distress confirms that effective
management systems are either not in place or not working as intended.  Illegal, unreported and
unregulated (IUU) fishing persists, affecting the resources on the high seas and in the EEZs of those
countries that, for whatever reason, cannot control it.  Japan, the United States, and other FAO
countries have committed themselves to eliminate this practice.  In addition, the United States andJapan have endorsed international studies that conclude that sound management systems are essential
to healthy stocks and can lessen the effects subsidies can have on stocks.  However, while the United
States acknowledges that subsidies are only one of the problems affecting the resource, that is not a
reason not to tackle subsidies – the aspect of the problem within the WTO’s competence.  The
existence of $12-15 billion in circulation from governments to industry distorts trade and theallocation of scarce resources, creates political pressures on domestic fisheries managers, and limits
the export potential of developing countries.
(Japan)  (Fisheries matters)  Although this is not mentioned in the Report, the United States recently
prohibited the landing of shark fins by foreign fishing boats, while commercial vessels are not
prohibited to land shark fins.  What is the reason for prohibiting the landing of shark fins by foreign
fishing boats and treating them differently from other commercial vessels?
Answer:
In December 2000, the U.S. Congress passed the Shark Finning Prohibition Act, which
prohibits the landing of shark fins without the a ccompanying carcass (the rest of the shark).  The
practice by fishermen of cutting_off the fins and discarding the rest of the shark in the ocean was
deemed wasteful.  Therefore, all landings of shark fins in the United States must now include the
carcass.  The National Marine Fisheries Service (NMFS/NOAA), which will implement theregulation, issued a call for public comments in the U.S. "Federal Register" in  June 2001  The
comment period ended in July.  Presently, NMFS is finalizing the regulation which will apply to both
domestic and foreign commercial fishing vessels.
(Switzerland) The U.S. did not ratify the CBD (Convention on Biodiversity).  Could the U.S. explain
the reasons for this non ratification?
Answer:
The U.S. Senate must give its advice and consent in order to ratify the Convention on
Biological Diversity.  The U.S. position on the CBD is under review by the current Administration.
(Canada)  Canada continues to agree with the 1999 U.S. Congressional Research Service report
which found that the Marine Mammal Protection Act (MMPA) appears to be inconsistent with theU.S.' WTO obligations.  On the occasion of the la st WTO Review of U.S. Trade Policy, the U.S.
delegation, in a written response, cited in defence of the MMPA the fact that a waiver is available,
subject to certain conditions, to allow imports of marine mammal products.  However, due to the U.S.
certification of Canada under the Pelly Amendment in 1996, U.S. officials since that time have notWT/TPR/M/88/Add.1
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been allowed to consider any MMPA waiver request from Canada.  (1) Is this certification still in
effect? (2) Please provide details of such waivers currently in effect under the MMPA allowing theimport of seal products, including:
o supplier countries holding the waivers;
o specific products covered by the waivers, by tariff item and by country;
o values and volumes of such products imported in the past three years;
o names of all countries which U.S. Govern ment Departments are currently barred from
considering for the granting of a waiver under the MMPA; and
o reasons for which those countries are barred from such consideration.
Answer:
The U.S. certification of Canada under the Pelly Amendment in 1996 was based on the
Secretary of Commerce's determination that Canada had diminished the effectiveness of theInternational Whaling Commission (IWC) on the basis of its aboriginal whaling activities involving
the eastern Arctic stock of bowhead whales.  While no trade sanctions were imposed on Canada as a
result of this 1996 certification, the President instructed the Department of Commerce to withhold
consideration of any Canadian requests for waivers to the existing moratorium under the MMPA on
importation of seals and/or seal products into the United States.  In addition, the Departments of
Commerce and State were instructed to keep this situation under close review.
Currently, as a result of the Pelly certification, Canada is the only country barred from
applying for a waiver under the MMPA.  A determination to issue or deny a waiver on the moratorium
to import seals and seal products into the U.S. from any country must take into consideration all of the
following:  1) whether the taking of such marine mammals is in accord with sound principles of
resource protection and conservation; 2) whether the marine mammal or marine mammal product was
taken in violation of the MMPA or taken in another c ountry in violation of the law of that country; and
3) whether the sale in commerce of the marine mammal product is illegal in the country of origin.
Under the MMPA, a denial of a waiver for import into the United States for any purpose implies a
denial of import for processing for exportation.  The Office of Protected Resources (the office of the
National Marine Fisheries Service that implements the MMPA) has not received an application for an
import waiver on seal products since 1975.
11. Government Procurement
(Chile) (Sub-Federal Measures)  According to the Uruguay Round Agreements Implementing Act,
Section 102, letter (b), number (2), no State law, or the application of such a State law may be
declared  invalid as to any person or circumstance on the ground that the provision or application is
inconsistent with any of the Uruguay Round Agreements, except in an action brought by the UnitedStates for the purposes of declaring such law or application invalid.  The foregoing rule recognizes
the Federal Law “Preemption Doctrine” regardi ng State law but does not implement an automatic
preemption mechanism.  Therefore if another  WT0 member or one of its constituents estimates a sub-
federal measure to be in violation  of a U.S. international trade obligation, the national denies it any
cause of action before a Federal Court.  The impl ementing law only entitles the Government of the
United States with such an action. Furthermore, a report of a dispute settlement panel or the
Appellate Body convened under the DSU regarding the State law, of the law of any political
subdivision thereof, is not considered as binding under U.S. national law.  This preemption system, inWT/TPR/M/88/Add.1
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practice, does not secure to WTO members that the concessions granted internationally will be
effectively applied at the State level.  How does the United States intend to address this preemptionmechanism so as to afford other WTO Members the opportunity to effectively challenge the
consistency of sub-federal measures? Would the United States consider the possibility of addressing
this issue by granting such an opportunity, for example, if a report adopted under the DSU declares a
sub-federal measure inconsistent?
Answer:
The United States is committed to full implementation of its WTO obligations, and our
domestic laws provide for their full enforcement. The pre-emption system has no effect on the ability
of a Member to challenge U.S. laws in the proper forum - the WTO.  We are not aware that pre-
emption is a common practice within the WTO Membership.
(Japan)  (page 43, para 66, WTO Agreement on Government Procurement (GPA))  The GPA is
applied to only 37 States.  Is there a substantial difference between the 37 States and other states in
their government procurement policies/practices?
Answer:
The government procurement policies and practices of each state are governed by that state’s
laws and regulations.  The procurement policies and practices of all 50 states require high levels oftransparency, due process and accountability in tendering procedures.  Detailed information on the
procurement policies and practices of individual states is available through the Internet site of the
National Association of State Procurement Officials ( www.naspo.org ) and the Internet sites of the
individual states.
(Japan)  (page 44, para 69, Construction Industry Payment Protection Act)  Has the large amount of
bond required by the Construction Industry Payment Protection Act increased the burden of main
contractors?  Considering that, in general, procuring entity  payment to main contractor is made on a
monthly basis based on the progress of the work, in which case would the penal sum that is as high as
100 % of the contract price be necessary to protect sub-contractors and suppliers?
[Answer to be supplied]
(Japan)  (page 45, paras 74-75, The Buy American Act)  From the viewpoint of fully applying the
principle of non-discriminatory treatment in gov ernment procurement, the Government of Japan
requests the Government of the United States to abolish Buy American Act, which accords a
favourable treatment to U.S. products, for the Fe deral Government procurement not covered by the
GPA, in order to ensure equal business opportunities for both the United States and foreign
enterprises.  As for local gover nment procurement, the Governmen t of Japan requests the Government
of the United States to take necessary measures as the Federal Government to ensure the principle ofnon-discriminatory treatment and equal business opportunities for both the U.S. and foreign
enterprises. The Government of Japan also requests the Government of the United States to abolish
the provisions which require the use of U.S. products as a condition for receiving a grant from the
Federal Government in such projects as mass transit and highway construction. The U.S. view on this
matter would be appreciated.WT/TPR/M/88/Add.1
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Answer:
The provisions cited above are not applied to any procurement contract that is subject to
current WTO commitments.  The United States is prepared to consider expansion of WTO obligations
in this area on the basis of comparable commitments from its trading partners
(Japan)  (p. xiv, para.24) Does the Federal Government have a list showing all the Buy-In-State
regulations enforced in some States? If so, has it been published?
Answer:
Detailed information on the procurement policies and practices of individual states is
available through the Internet site of the National Association of State Procurement Officials
(www.naspo.org ) and the Internet sites of the individual states.
(Norway) According to the GPA-agreement, Article XIII 4b, the contracting authority entity shall
make the award to the tenderer who has been determined to be fully capable of  undertaking thecontract and whose tender is either the lowest tender or the tender which is determined to be the most
advantageous.  As far as the Norwegian Government  understands, the Federal Acquisition
Streamlining Act of 1994 requires public authorities to use “past performance” as the second most
important criteria, after criteria.  Can the U.S. exp lain how the “past performance”  is evaluated?
How do public authorities ensure that the use of this criteria in practice does not lead todiscrimination of foreign tenders?
Answer:
Federal regulations relating to the evaluation of past performance are contained in FAR Part
9.104-3(b).  This evaluation is conducted for the purpose of determining that suppliers are
“responsible prospective contractors,” and is based on any evidence that a supplier has been “seriously
deficient” in performing previous contracts.  The information that may be used, specified in FAR Part
9.105-1, is not related to performance in any specific geographic area and does not lead todiscrimination against new to market suppliers, including foreign suppliers.
(EU) (para 65) Could the U.S. please confirm whether or not any special conditions are offered to
small businesses, as implied by the Preference Programme referred to in the Federal Procurement
Report?
Answer:
The U.S. Small Business Act (SBA) requires that certain contracts be set aside for small
businesses, minority-owned businesses and disadvantaged businesses.  The SBA is implemented by
the Federal Government through sub-chapter D (Socioeconomic Programs) of the Federal Acquisition
Regulation (FAR).  The FAR allows for contracts to be sets aside for competition among small
businesses, which are defined by the FAR in part 19.  Such set asides are excluded from the negotiatedcoverage of the GPA.
(EU) (para 68,  Institutional and legal framework) Th e Burma/Massachusetts dispute in the WTO has
lapsed. Nevertheless, the EC remains concerned about the wider issue of sub-federal selective
purchasing measures, which continue to exist. What measures is the U.S. preparing to ensure that
Supreme Court judgement on Burma/Massachusetts ca se is being respected, and what consultation is
going on with sub-federal entities in relation to both the GPA review and the transparency exercise?WT/TPR/M/88/Add.1
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Answer:
The Administration consults regularly with the states regarding the implementation of WTO
obligations, through the mechanism established under the Uruguay Round Agreements Act and other
procedures. To our knowledge, the Massachusetts legislation is no longer in effect.
(EU) (para 69,  Institutional and legal framework) A number of changes to the Federal Acquisition
Regulation (FAR) have been introduced since 1999 related to the bidding process. Could the U.S.
provide the WTO Secretariat with more details ?
Answer:
Information on all changes to the FAR are posted on the FAR Internet site
(www.arnet.gov/far/).
(EU) ( Institutional and legal framework) New legislation also includes the Construction Industry
Payment Protection Act of 1999. Could the U.S. author ities explain how it might affect procurement?
Answer:
This Act addresses payment bonds required of successful contractors on major construction
contracts.  Prior to the implementation of this Act, payment bonds were artificially capped at $2.5
million, regardless of the size of the project.  This resulted in situations where, when a major project
went bankrupt, sub-contractors could not be reimbursed and, in some cases, were forced into
bankruptcy themselves.  The Payment Protection Act is intended to prevent this from happening.  The
Act allows Federal contracting officers to reduce the payment bond where the public interest can be
protected with lower amounts.  These provisions are applied on a non-discriminatory basis with
respect to all contractors.
(EU) (para 71,  Institutional and legal framework) Federal government agencies may use positive list
of U.S. suppliers that include also potential EU  suppliers. On the grounds of which documents or
certifications can EU companies be included in this positive list?
Answer:
We are not certain we understand the meaning of “positive lists,” as used in this question.
The term may relate to U.S. regulations that provid e for the establishment of “qualified bidders lists”
(QBL) and “qualified manufacturers lists” (QML).  The Federal regulatory requirements for the use of
such lists are provided in FAR Part 9.2.  In accordance with the FAR, the specific requirements forqualification of particular bidders or manufacturers are established by individual agencies, depending
on the characteristics of the products and the government’s procurement needs.  FAR Part 9.202
requires any agency that wishes to establish a qualification requirement to prepare a written
justification of the need for such a requirement.
(EU) ( Institutional and legal framework) What are the criteria used by the General Services
Administration (GSA) to draw up a negative list of non eligible suppliers? What are the information
sources used to exclude non U.S. suppliers in general and EU companies in particular.
Answer:
The General Services Administration is responsible for compiling the list and publishing it for
use by agencies. The names on the list are supplied by agencies which make the determination that acertain individual or supplier should be barred or temporarily suspended from government contracting.WT/TPR/M/88/Add.1
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The information upon which an agency can act may be obtained from a variety of sources. It can be
formal - such as indictments, convictions - or informal such as information publicly available in
newspaper articles. The agency uses a process based heavily on due process considerations, providing
the supplier an opportunity to respond to this information and present reasons why it should not be
barred from government contracting.
(EU) (para 74,  Institutional and legal framework) The Buy American Act (BAA) and other similar
rules cover a number of discriminatory measures which apply to government-funded purchases. Theseexceptions have trade distorting effects on a free and efficient market, reducing the opportunities for
EU exports, but also discouraging U.S. bidders from us ing European products or services.  Is the U.S.
prepared to review and roll back “Buy American” re strictions in the context of further negotiations ?
Answer:
The measures cited above are not applied to any procurement contract that is subject to
current WTO commitments.  The United States is prepared to consider expansion of WTO obligations
in this area on the basis of comparable commitments from its trading partners .
(EU) (para 78,  Institutional and legal framework) Th e PRO-Net is an interesting tool for tendering
opportunities. Is the Small Business Administration (SBA) intending to open this register to small
foreign companies?
Answer:
There are no plans underway to use the PRO-Ne t as a tendering device.  You can, however,
register on www.ccr.2000.com .
(EU) (para 81,  Institutional and legal framework) The U.S. maintains sanctions against some EU
member states under Title VII of the 1988 Omnibus Trade and Competitiveness Act. The sanctions
were imposed following the adoption of the EC’s “Uti lities Directive” in 1993 on the grounds that it
discriminated against U.S. suppliers. Now that the EC telecoms sector has been liberalised (theDirective is to be amended accordingly),. what is the rationale for continuing these sanctions? Could
the United States indicate when it will lift them ? As soon as the U.S. takes steps to repeal the
sanctions, the EC will lift its own countermeasures.
Answer:
The United States is studying the possible continued effect  of discriminatory provisions of the
EU Utilities Directive in EU Member state markets, especially in light of recent liberalization in the
telecommunications sector.  On the basis of this review, the United States will consider whether
elimination of the sanctions would be appropriate.
(Canada) (para 65)  According to para 65, no statistical information has been provided by the United
States to the WTO under Article XIX:5 of the GPA. The GPA went into effect five years ago, and manymembers have submitted at least some annual statistical reports.  When does the United States plan to
submit its statistics?
(Switzerland)  (para 65) When do the United States foresee to submit statistical information to the
WTO under Art. XIX:5 of the GPA ?WT/TPR/M/88/Add.1
Page 153
Answer:  (For both questions)
The United States is currently preparing GPA statistical reports.  As has been discussed in the
GPA Committee, the United States agrees with many other GPA Parties, including others who have
not submitted reports to date, that the statistical reporting requirements of the GPA should be
reviewed and simplified.
(Switzerland (para 65) What is the relative share of the main tender procedures for Annex 1, 2 and 3
entities: open, selective and limited ? For limited tendering procedure, what is the importance offollow-up purchases (Art. XV, d) ?
Statistics corresponding to the lists of entities and thresholds in Annexes 1, 2 and 3 of the GPA are
currently not available.  The United States is in the process of preparing statistical reports relating to
GPA Article XIX:5.
Answer:
For the year 1997, statistics for a list of Federal entities comparable to those covered under
GPA Annex 1 show that contracts awarded under open  and selective tendering procedures accounted
for 90%  and contracts awarded under limited tendering procedures accounted for 10% of the value of
all contracts awarded (using thresholds that are si gnificantly lower than the current GPA thresholds).
The comparable statistics for a smaller list of Annex 3-type entities were 96% for open and selectivetendering and 4% for limited tendering.  U.S. entities do not make frequent use of “selective
tendering,” and disaggregated statistics on procurement contracts awarded through selective tendering
procedures are not available.
(Switzerland) (para 70)  How do the proposed US modifications to the GPA achieve the same level of
transparency and of competition as the present regime ?  How do the new information technologies
and forms of contracts impact on tendering procedures and offers ?
Answer:
The United States has stressed that its proposals for streamlining the procedural provisions of
the GPA are intended to achieve the same or a higher level of transparency and competition as the
Agreement’s existing provisions.  We consider that, by clarifying the text and making it more
understandable, the Parties may be able to promote more effective implementation of the Agreement’s
substantive transparency and competition requirements.
Many governments, including the GPA Parties,  are taking advantage of emerging computer
and telecommunications technologies to significantly improve the efficiency and effectiveness of their
procurement systems.  In our view, governments, their taxpayers, and their suppliers can all benefit
tremendously from the appropriate use of these technologies.  At the same time, adoption of these or
any other technologies is not a value in its own right, but must depend on the contribution that itmakes to governments’ overall procurement objectives and responsibilities.
It is not clear that the adoption of new information and communications technologies in
government procurement systems requires significant changes in specific GPA provisions.  However,
the United States is prepared to consider whether some modifications may be useful in order to ensure
that the application of GPA requirements to the use of such technologies is clear and understandable,and to ensure effective implementation of those requirements.  These considerations may also apply to
recent innovations in contracting modalities.WT/TPR/M/88/Add.1
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(Canada)  Please indicate the total value of GPA-covered procurement at the federal level and the
total value of procurement set-aside under the small and minority business set-aside programs that
would otherwise have been covered by the AGP?  Al so, please indicate the same information for GPA-
covered procurement at the State level.
Answer:
In 2000, the value of Federal government procurement covered by the GPA is estimated to
have been $197 billion.  The value of Federal contracts of greater than $25,000 that were awardedunder set aside programs in that year, much of which would not otherwise fall within the scope of
GPA coverage commitments, is estimated to have been $17 billion.
(Canada) (para 66)  United States legislation and regulations require the provision of subcontracting
plans for United States small business in GPA- covered contracts.  Please explain how these
provisions are consistent with Article III of the GATT 1994 and with Article III (Non-discrimination)
and Article XVI (Offsets) of the WTO Agreement on Government Procurement.  Please address this
issue both with respect to: 1) foreign suppliers who are providing goods and services that are not of
United States origin; and 2) foreign suppliers providing goods and services that are partially of
United States origin.
Answer:
Small and minority business set-asides are excluded from the coverage of the GPA under
General Note 1 to the U.S. Appendix 1.  We note that, under the Federal Acquisition Regulation (FAR
19.702(a)), sub-contracting plans are requirements that apply only to "apparently successful offerors"
and "bidders selected for award;" they are not factors that influence the initial competitive selection of
the “apparently successful offeror.”
(Canada) (para 66) According to para 66, there is legislation at the State level for the implementation
of the GPA in 37 States in the United States.  Does the United States Federal Government monitor theadherence and implementation of the GPA by these 37 States that are covered?
Answer:
The Administration (particularly through the Office of the United States Trade
Representative), has established regular consultative procedures with a number of national
associations of state representatives.  Specifically, it has coordinated with the National Association ofState Procurement Officials (NASPO) in producing a nd disseminating a "Guide for State Procurement
Officials Application of the WTO Agreement on Government Procurement".  NASPO is also
consulted in relation to issues raised by the Co mmittee and issues that arise in relation to the
implementation of the GPA.  Also, the U.S. Fede ral Government communicate with individual states
as needed on either proposed state level legislation or questions relating to other governments'coverage under the GPA.
(Canada) (para 68) Para 68 notes, “In some cases, where procurement in funded by federal money,
States must comply with certain federal statutory requirements.”  Please list these federal statutory
requirements.  During FY2000, what was the total value of procurement at the State level that were
funded by federal money?WT/TPR/M/88/Add.1
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Answer:
As stated in Note 5, Annex 2 of the GPA, Federal statutory requirements are attached to
Federal funds used in state governments’ procurement for mass transit and highway projects.  For the
Federal Transit Administration, the statutory requirements are in 49 C.F.R Part 661.  For the Federal
Highway Administration, they are in 23 C.F.R. 635.410.  Statistics on the total value of state
government procurement funded by the Federal government are not available.  Frequently, projects
are jointly funded by the Federal and state governments, and only some portions of the Federal grantsare subject to statutory restrictions.
(Canada) (paras 74 to 80)  Paras 74 through 80 provide information on the Buy America Act and set-
aside schemes.  Set-aside provisions may have a significant impact on the scope and predictability of
coverage under the GPA.  During the 1996 TPR of the United States, Canada suggested that the
United States give further consideration to the el imination and circumscription of these exclusions
and exemptions.   What progress has the United States made in eliminating or circumscribing
exclusions to the GPA, such as the small and minority set-aside programs?
Answer:
The provisions of the Buy America Act and small- and minority-business set-aside programs
are not included in the negotiated coverage of the GPA.
(Canada) (para 74) Para 74 notes the exceptions to the Buy American Act, specifically, “if it is
determined that domestic preference is inconsiste nt with the public interest; in case of U.S. non-
availability of a supply or material; or for reasonableness of cost.”  What percentage of federal
procurement contracts, for which the Buy America Act applies, is affected by one of the three
exemptions noted above?
Answer:
Statistics on the percentage of contracts for which BAA restrictions have been waived are not
available.  Since BAA restrictions are waived for all contracts covered by the GPA and other
international agreements, the waiver authority referred  to in this question would not be relevant to the
suppliers of other Parties to those agreements when competing for covered contracts.
(Canada) (para 78) According to para 78, for FY2000, the value of contracts awarded through set-
aside programmes was 8% of total federal procurement awards.  It is also noted that the proportionhas been declining in recent years.  Has the proportion of contracts that have been set aside but
would otherwise have been covered by the GPA also declined?  What is the proportion and value of
such contracts in comparison with total GPA-covered  procurement?
Answer:
The more detailed statistics requested are not available.
(Canada) (para 80) According to para 80, the Small Business Competitiveness Demonstration
Program, under the Small Business Demonstrati on Program Act of 1988 has implemented a pilot
programme to evaluate the effect of removing set-asides for the procurement of goods included in ten
Targeted Industry Categories.  What are the ten targ eted industries that form the basis for this pilot
program?  What is the forecasted timeline for completion of the pilot program and evaluation of
results?WT/TPR/M/88/Add.1
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Answer:
Detailed information on this program, including the list of targeted industries and the Small
Business Administration’s annual reports to Congress, are available on SBA’s Internet site, at
http://www.sba.gov/size/CompDemo.html.   The 2000 Report to Congress is anticipated to be
available close to January 1, 2002.
(Korea ) (page.43, para.65) No statistical information had been provided up to May 2001 by the
United States to the WTO under Article XIX:5 of GPA.
a. What is the main reason not to provide information?
b. What percentage of the total amount of th e US government procurement is open to GPA
signatories? What percentage of US government procurement do foreign companies represent?
Answer:
Statistics on the percentage of total government procurement open to GPA Parties are not
available, and are not required under Article XIX:5.  Statistics on government procurement by country
of origin also are not required under the GPA.
(Korea) (pages 44-45, para 71)  The U.S. GSA maintains a negative list of suppliers, domestic and
foreign, which must be excluded from federal procur ement. What are the criteria used when drawing
this list? How can listed suppliers be excluded from the list?
Answer:
The General Services Administration is responsible for compiling the list and publishing it for
use by agencies. The names on the list are supplied by agencies which make the determination that a
certain individual or supplier should be barred or temporarily suspended from government contracting.
The information upon which an agency can act may be obtained from a variety of sources. It can be
formal - such as indictments, convictions - or informal such as information publicly available in
newspaper articles. The agency uses a process based heavily on due process considerations, providingthe supplier an opportunity to respond to this information and present reasons why it should not be
barred from government contracting.
(Korea) Articles 210.21 (d)(2)(i) and (ii) of the National School Lunch Act, which were revised in
1998 but are not explicitly mentioned in the Secretar iat’s report, stipulate that “the Department of
Agriculture shall require that a school food authority purchase, to maximum extent practicable,domestic commodities or products.” This language contrasts with the language used in the pre-1998
NSLA which simply stipulated that DOA should provide only domestic agricultural products to those
school authorities. Such procurement of domestic agricultural products by DOA for those
programmes is exempted from national treatment obligations of GPA, as mentioned in Annex 1.1 of
the US GPA schedule. However, if the US government obliges school food authorities to buy onlydomestic commodities, this raises question as to whether the new NSLA violates GATT 1994 Article
III. What is the US view on this matter?
Answer:
Paragraph 8 of Article III of GATT 1994 specifies that Article III does not apply to
government procurement.WT/TPR/M/88/Add.1
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(Australia)  The US government procurement market is severely restricted by bilateral and
plurilateral trade agreements and by the Buy-Amer ica Act. What measures does the US envisage
adopting to improve access to, and increase the comp etitiveness of, this important market segment?
Answer:
The bilateral and plurilateral trade agreements covering government procurement, to which
the United States is a Party provide full national treatment to suppliers of all countries or territories
that are parties to those agreements.  The United States waives the application of Buy America Actprice preference and other restrictions on all procurement contracts covered by those agreements.
Those agreements do not in any way restrict access to U.S. procurement markets.
The U.S. Trade Agreements Act of 1979, as amended, authorizes the President to waive the
application of Buy America Act restrictions to the suppliers of any country or territory that agrees to
provide “appropriate reciprocal competitive government procurement opportunities” to U.S. productsand suppliers of such products.  The United States is ready to work with any WTO  Member to expand
international competitive opportunities in government procurement markets on a reciprocal and
mutually beneficial basis.
(Brazil)  Secretariat Report, para.71,  page 44. Is there a possibility for potential foreign suppliers
from countries that are not party to the GPA to be  included in the positive lists of suppliers used by
federal government agencies to invite for bidding pr ocess? If affirmative, how should those suppliers
proceed to be included? Which are the requirements to be qualified in those lists? Would suppliers
from countries part of other commercial agreements in which the US is signatory have a preferential
treatment in this regard?
Answer:
U.S. procurement entities do not make frequent use of permanent lists of pre-qualified
suppliers.  In most situations, procurement must be conducted through fully open and competitivetendering procedures in which any interested supplier may seek to participate.  An exception to this
general requirement is the “purchasing prohibit ion” established in Section 302 of the Trade
Agreements Act of 1979, as amended, which prohibits Federal agencies from procuring goods or
services of “non-designated” countries or territories for all contracts that are covered by the WTO
Government Procurement Agreement (GPA).  As is explained in the Secretariat’s report, “designatedcountries or territories” are countries or territories that are party to the GPA or the NAFTA, that
provide “appropriate reciprocal competitive government procurement opportunities” to U.S. products
and suppliers of such products, or that are least developed countries.
(Brazil) Secretariat Report, pages 45-46. What is the criteria used to characterize a small business? It
is mentioned, in paragraph 76, that small business are excluded from the GPA. What is the reason for
this exclusion?
Answer:
The criteria used to characterize a small business are available on the internet website for the
Federal Acquisition Regulations (FAR) in FAR Part 19.1.01.  The FAR website address is
www.arnet.gov.
(Brazil)  Secretariat Report, para. 77. The HUB Zone (Historically Under-utilized Business Zone)
foresees preferential treatment to qualified small business located in historically under-utilized
business zones. What characterizes an HUB zone?WT/TPR/M/88/Add.1
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Answer:
The criteria used to characterize a HUB Zone are available on the internet website for the
Federal Acquisition Regulations (FAR), in FAR Part 19.1303.  The FAR website address is
www.arnet.gov.
(Brazil)  Regarding the principle of national treatment that may exist in other commercial agreements
of which the US is a Party, do small business from  countries Parties in those agreements have equal
treatment (with preferential access conditions) in US government procurement?
Answer:
All suppliers of countries and territories that are party to international procurement
agreements with the United States, including their small businesses, are provided full national
treatment for all U.S. procurement covered by those agreements.
(Brazil)  Is there any other entity, besides the Department of Defense, excluded from entities coverage
in commercial agreements of which the US is a Party?
Answer:
Subject to restrictions related to U.S. essential security interests and the negotiated scope of
coverage, the U.S. Department of Defense is covered by both the GPA and the NAFTA.  All major
Federal agencies are covered by both these agreements, with the exception of the Federal AviationAdministration.
(Brazil) Regarding government procurement, are there fe deral government entities that cannot start
an international bidding process? Which are they?
Answer:
There are no such restrictions.
(Brazil)  Is the Built Operate Transfer (BOT) included in the coverage of commercial agreements, such
as GPA, NAFTA and others?
Answer:
The GPA and the NAFTA cover procurement “by all contractual means,” including
procurement through build operate transfer contracts.  The plurilateral Government Procurement
Committee is currently considering possible clarification of this issue.
(Brazil)  Which are the offsets allowed in the US bidding process?
Answer:
The United States has a longstanding policy of strongly discouraging the use of offsets in
Federal and international government procurement.  Offsets are prohibited for all procurement
covered under international procurement obligations.
(Brazil)  Are  there any eco-labeling or eco-audit offsets in the US government procurement
regulations and laws in the central and sub-central level that may be used in government
procurement? If affirmative, please indicate  its legal provisions and examples of their use.WT/TPR/M/88/Add.1
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Answer:
We are not familiar with use of the term “offsets” in reference to government procurement
requirements addressing environmental issues.  U.S. Federal government agencies are required to
purchase certain recycled content products, provided such products are price-competitive, reasonably
available, and meet agencies’ performance requirements.  These products include office supplies,
construction and landscaping products, vehicle lubricating oil and tires, and park and recreation
equipment.  Some sub-Federal governments have similar provisions.  Federal government agenciesalso are required to purchase alternative fuel vehicles, energy-efficient and water-efficient products,
and substitutes to ozone-depleting substances.  Examples of energy-efficient products include Energy
Star computers and printers, chillers, and refrigerators. These requirements are based on the Resource
Conservation and Recovery Act, the Energy Policy Act, and several presidential Executive Orders.  In
addition, Federal government agencies are encouraged to purchase other environmentally preferableproducts.
(Brazil)  Are there any social clause requirements in the US government procurement regulations and
laws in the central and sub-central level that may be used in government procurement? If affirmative,
please indicate its legal provisions and examples of their use.
Answer:
We are not certain what is meant by “social clause requirements?”  Part 19 of the Federal
Acquisition Regulation (FAR) describes Federal programs that encourage procurement of products
offered by small and disadvantaged businesses.  The FAR can be found on the internet at
www.arnet.gov.
(Brazil)  What is the application of the reciprocity principle in government procurement agreements
maintained by the US? Please mention examples regarding entities coverage within the scope of
NAFTA.
Answer:
The U.S. Trade Agreements Act of 1979, as amended, authorizes the President to waive Buy
America Act and other procurement restrictions, inter alia, for countries and territories that agree to
provide “appropriate reciprocal competitive government procurement opportunities” to U.S. products
and suppliers.  In this context, the United States waives those restrictions under internationalagreements that ensure: (1) transparency, due process, accountability and predictability in covered
government procurement opportunities; and (2) broad and balanced market access commitments.  For
example, under the NAFTA, the United States, Canada and Mexico cover a broad and balanced range
of Federal government entities in each country.  For procurement by those entities that is covered by
NAFTA, Chapter 10 of the NAFTA requires that tendering procedures be consistent with theprinciples listed above.  NAFTA provisions are consistent with U.S. domestic requirements for fully
open and competitive tendering.
(India) Buy America Act: It is noted that this act covers a number of discriminatory measures, which
apply to government-funded purchases.  It has been pointed out that some of its provisions prohibit
public sector bodies from purchasing goods and services from foreign sources; some establish localcontent requirements while some others still exte nd preferential price terms to domestic suppliers.
Products covered by this law include the manhole covers, rings, frames, catch basin frames and
grates etc. We would like to know if the US Governm ent has any proposal to modify this law so as to
improve market access for developing countries. Furthe rmore, it is noted that affirmative action for
small business and minority protection schemes are also  being widely employed in many US states.WT/TPR/M/88/Add.1
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Under the “Berry Amendmen t”, the concept of national security has been used to restrict purchases
by the Department of Defence to US sources.  We  would like to know if the US has any proposal to
improve market access for its trading partners in this regard.
Answer:
As noted above, the United States waives Buy America Act and other domestic procurement
restrictions under international  agreements in which our trading partners agree to provide
“appropriate reciprocal competitive  government procurement opportunities” to U.S. products andsuppliers.  Under these agreements, U.S. Government entities provide full national treatment to
suppliers of products of other countries and territories that are party to those agreements.  The United
States is ready to work with other WTO Members to expand international competitive opportunities in
government procurement markets on a reciprocal and mutually beneficial basis.  Under the Trade
Agreements Act of 1979, as amended, the United States provides national treatment to suppliers of allleast developed countries for all contracts covered by the WTO Government Procurement Agreement.
(New Zealand) The Secretariat Report states that “the policy of the United States in respect to
government procurement is to grant national treatment to any country willing to grant reciprocal
treatment” (S/III, para 73, page 45).  To our understanding New Zealand gives the United States
national treatment rights with respect to gover nment procurement but does not receive the same
treatment in return.
Answer:
Please refer to our answer to the next question.
(New Zealand) What criteria does the United States use to assess whether a country accords it
national treatment and therefore should be granted  reciprocity vis-a-vis government procurement?
Answer:
As noted above, the U.S. Trade  Agreements Act of 1979, as amended, authorizes the
President to provide national treatment to suppliers of, inter alia, countries and territories that agree to
provide “appropriate reciprocal competitive government procurement opportunities” to U.S. products
and suppliers.  In this context, the United States  seeks international commitments that ensure:  (1)
transparency, due process, accountability and predictability in covered government procurement; and
(2) broad and balanced international market access opportunities.  The United States is ready to workwith New Zealand and other WTO Members to expand competitive opportunities in government
procurement markets on the basis of international commitments consistent with these objectives.
12. Competition Policies
(Hong Kong) (page 73-74, para. 176)  We note that the Department of Justice regularly expresses its
view on the appropriateness of antitrust exemptions , and seeks the elimination of antitrust exemptions
where warranted. We are interested to know more details in this regard, including the reasons for
maintaining the existing antitrust exemptions as well as the amount and nature of the antitrust
exemptions that have been eliminated in recent years.
Answer:
The vast majority of the U.S. economy is subject to standard antitrust scrutiny.  Any existing
exceptions to the application of the antitrust laws are narrow and strictly construed, exempting specific
activities or entities for important public policy or constitutional reasons.  In addition, in some cases,WT/TPR/M/88/Add.1
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specialized regulatory agencies with sector-specific responsibilities apply competition rules analogous
to the federal antitrust laws, and the antitrust agencies retain an advisory, competition-advocacy role.There is a wealth of public information available relating to antitrust exemptions and the reasons for
maintaining them.  See e.g., ABA Section of Antitrust Law, Antitrust Law Developments (4
th ed.
1997).  The United States has relatively few exemptions from its antitrust regime, and there have been
no further revisions to such exemptions since the last trade policy review of the United States in 1999.
(Japan) (pages.70-71, paras 165-168, Competition laws)  Japan has already abolished or limited the
scope of numerous exemptions from the application of its Anti-monopoly Act.  Likewise, Japan would
like to urge the United States to reduce the num ber of exemptions applied under the U.S. Anti-trust
laws, both at federal and state levels.  Please explain the rationale of the exemptions applied in the
area of agriculture, referred to in para.166.
Answer:
Please refer to response given above to Hong Kong’s question on exemptions.
(Thailand )  Is there any type of anti-competitive prac tices which is exempted from the US Antitrust
Legislation?
Answer:
Please refer to response given above to Hong Kong’s question on exemptions.
(Japan)  (pages 71-74, paras 169-176, Enforcement of co mpetition law)  It is the understanding of
Japan that the policy of the U.S. Department of Just ice applies U.S. Anti-trust laws to even those
practices performed outside the United States.  However, it is more than likely that the application, or
any related enforcement activities, can be consider ed as an extra-territorial application of the U.S.
Anti-trust laws, or even as infringement of the sovereignty, of a foreign country, both of which are not
permitted according to international law.  Japan hope s, therefore, that the U.S. will enforce its Anti-
trust laws with both deliberation and care.  Japan is interested in knowing how successful the UnitedStates is in the collecting fines that are imposed on foreign companies or foreign nationals.  What is
the percentage of the fines imposed that are actually collected?  Does the United States have any
intention of taking action to collect unpaid fines?
Answer:
To date, the United States has not had any problems collecting the fines that have been
imposed on foreign companies and foreign nationals for violating U.S. antitrust laws .
(Japan)  (page 17, para 21)  It is our understanding that the United States has recently become more
open towards the negotiations on competition policy.  However, it is stated in the paragraph 21 of the
Report that the United States  as also questioned whether the WTO was the appropriate institution in
which to initiate the development of rules on competition in a multilateral context at this time  Wewould appreciate having the U.S. current position on the matter.
Answer:
Like other WTO Members, the United States continues to be actively engaged in an
examination of the relevance of competition policy to the trading system, and is actively working with
other Members in determining the best way forwar d in terms of future WTO work in this area.WT/TPR/M/88/Add.1
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(Switzerland)  The Government report remains silent on the current position regarding negotiations
on a multilateral competition agreement under the auspices of the WTO, while the Secretariat’s reportmentions that the U.S. questions whether the WTO is, at this time the appropriate institution to
develop such rules.  What is the positi on of the new Administration on that issue?
Answer:
Please refer to response given above to Japan's question on the WTO.
(Thailand ) (page 17, para 21)  In the U.S. remarks delivered by Deputy U.S. Trade Representative
Peter Allgeier at the WTO General Council Meeting on 30 July 2001, it was stated that “With respect
to competition policy, the U.S. sees merit in a modest negotiating agenda of core competition
principles of transparency, non-discrimination, and procedural fairness.  We also can support
consultative and capacity-building efforts to help countries develop modern competition policies that
promote efficient and dynamic markets
…..”
-  Does this mean that the U.S. views now that the WTO was the appropriate institution in which to
initiate the development or rules on competition in a multilateral context?
Answer:
Please refer to response given above to Japan's question on the WTO.
13. Textiles
(Bangladesh)  Decisions on measures in favor of Least- Developed Countries adopted at the Uruguay
Round Trade Negotiations provide that the specific needs of the Least-Developed Countries will be
taken into account facilitating the expansion of trading opportunities in favor of these countries.
There is an apprehension that the final phasing out of the MFA after 31-12-2004 may adversely
impact textile and apparel exports of the LDCs.  Do es the U.S. have any programme to adopt positive
measures in favors of LDCs in the above circumstances?
Answer:
The final integration of textile and apparel trade into the GATT 1994 and WTO rules was
strongly supported by least developed countries in the Uruguay Round negotiations, and the phase out
is being implemented according to the agreed schedule by the United States.  Industries in the UnitedStates, and in other countries, will all face tremendous challenges as a result of the changes in
international trade patterns in this sector under the WTO’s Agreement on Textiles and Clothing .
(Bangladesh)  How many anti-dumping and safeguard acti ons have been initiated by the U.S. against
textile and clothing exports from LDCs since 1 January, 1995?  Given the special and differential
treatment provisions of the ATC, can LDCs and small suppliers expect an exemption from anti-
dumping and safeguard actions in the future?
Answer:
There have been no antidumping or countervailing duty orders imposed on textile/apparel
products from WTO-member LDCs as a result of investigations initiated since 1995.  Currently, there
are only two U.S. AD/CVD orders on textile/a pparel products from WTO-member LDCs - an AD
order on shop towels from Bangladesh and a CVD or der on shop towels from Pakistan.  These were
the result of cases initiated prior to 1995.WT/TPR/M/88/Add.1
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As under the ATC, least developed countries and small suppliers will benefit from applicable
provisions of the Anti-dumping Agreement and Safeguards Agreement in respect of any potentialaction under those agreements.
(Hong Kong )   We note with great disappointment that insofar as the US ATC integration programme
is concerned, phasing out of the bulk of textile quotas has been left until 2005.  In the case of HKC, as
much as 84% of the value of our imports into the US  in 2000 will not be liberalized until 2005.  Where
the US integration programme may have complied with the letter of the ATC, it has fallen far short of
honouring its spirit.  Being the world's leading importer of textiles and clothing, does the US
Government have any plan to further liberalize the textile and clothing sector before 2005 by making
use of the flexibility available under Articles 2.10 and 2.15 of the ATC?  If so, what are the details?
Answer:
The ATC represents a careful balance of the interests of textile importing and exporting
countries.  The United States has faithfully implemented the terms of the ATC.  Exporting countries
have benefitted greatly from the increased market access the United States has provided through the
ATC.  From 1994 through 2000, U.S. imports of textiles and apparel from WTO member countries
increased 108 percent by volume.  Changes to the U.S. integration schedule would require legislation,
as our current integration commitments are written into the “The Uruguay Round Agreements Act”.
(Hong Kong ) To prepare for the eventual integration of the textiles and clothing sector intoGATT
1994, Article 1.5 of the Agreement on Textiles and Clothing provides that membersshould allow for
continuous autonomous competition in their markets.  Can the US share withmembers the measures it
has put in place to implement this particular provision, particularly inview of the fact that the  vast
majority of its textiles and clothing imports will not be liberaliseduntil 2005?
Answer:   
The United States has allowed continuous autonomous competition in its market for textiles
and apparel.  This has resulted in the painful st ructural adjustment process underway in the U.S.
industry.  The U.S. textile and apparel sector has lost over 600,000 jobs, 36 percent of its total
workforce, since 1994.  Over that period, over 260 textile plants have shut down, at least 85 have shut
down so far this year.  Last year was the first year in fifty years that the U.S. textile industry as a
whole incurred a net financial loss, and conditions have worsened this year.
(India)   It is understood that the US is imposing quota restrictions on plastic woven sacks andbags
and  fabrics made out of polyethylene or polypropylene on the grounds that they are classified as
textile  articles (under chapter 63) and are consumer items.  However, it is pointed out that these
items are  only used for industrial application like packing PP Fibre, multifilament yarn, sand, salt,
seeds,  chemicals, etc. Further, it may be noted that these items are being exported to Europe withoutany quota restriction. We would, therefore, request the US delegation to clarify the rationale for
continuing quota restrictions on these items.
Answer:
Polyethylene and polypropylene bags and sacks are products of textile materials covered
under the Agreement on Textiles and Clothing and are included in the Annex to this agreement.These  bags and sacks will remain subject to visa and quota requirements until January 1, 2002, when
the United States will integrate these products, thus removing bags and sacks from quantitative
restrictions.WT/TPR/M/88/Add.1
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(India)  Integration of textile sector under ATC by U.S. It is noted that the 1st and 2nd stage integration
and the schedule finalised for the 3rd stage integration makes it clear that the US has implemented the
provisions of ATC in letter but not in spirit. The main apparel items, that are going to be integrated in
the 3rd stage, are gloves, men’s and women’s nightwears, underwears, hosiery, silk and silk blended
garments. 80% of trade in textiles and clothing covered by bilateral restraints would still remain to be
integrated by 1 January 2005. For apparel, the final percentage to be integrated would be even higher
, at 89%. For India, as Floor Coverings and Silk Garments are already exempted and outside quotas,
at  the end of the tenth year, 96.64% of India’s apparel trade would remain to be integrated.
Similarly,  95.83% of India’s yarn trade and 98.8 8% of fabric trade would also remain to be
integrated. In view of  the fact that so far the integration by US has not really been progressive in
nature, we would request the  US to accelerate the integration process in keeping with the spirit of the
ATC Agreement and also given  the fact that these products are of great interest to the developingcountries.
Answer:
The integration of textiles products into GATT 1994, implemented by the United States in
1995, 1998,  and on schedule for 2002, is completely consistent with the ATC.  The ATC, including
the integration process, reflects a careful balance of the interests of importing and exporting countries.In essence, the spirit of the agreement was reflected in the precise terms which were negotiated,
reflecting the diverse interests of the signatories.  Integration is also being implemented consistent
with United States implementing legislation, the “Uruguay Round Trade Agreements Act of 1994.”
The list of products to be integrated in each stage set out  in the ATC was published in 1995, and may
not be changed unless otherwise required by statute or  the international obligations of the United
States, to correct technical errors, or to reflect reclassifications.
(India)   Changes in the US Rules of Origin : As was also highlighted in the last TPR of the US, the
revised US Rules of Origin on textiles which entered into force on July 1, 1996 have adversely
affected the exports  by its trading partners. It has also resulted in a situation of double jeopardy as
Indian exports to the  European Union are debited to our fabric quota for the EU and if they are
converted into made ups such as bed sheets or scarves, and exported to the US, the US would debit
India’s textile quota again, thus leading to India’s quota being debited twice for the same exports. It isobserved that such unilateral changes in the Rules of Origin are in violation of Articles 2.4 and 4.2 of
the Agreement on Textiles and Clothing and of Article 2 of the Agreement on Rules of Origin. The
problem has been further exacerbated as, cons equent upon the agreement with the EU, the US
amended its Rules of Origin as notified through Trade and Development Act, 2000 under which origin
of dyed silk fabric would be the country where the silk fabric is dyed and printed.  However, strangely,this rule does not apply in the case of fabric co ntaining more than 16% cotton.  Such an arbitrary rule
of origin has adversely affected the market access of cotton producing countries.  We would request
the US authorities to take steps to rectify this situation
Answer:
On July 1, 1996, modified rules of origin went into effect pursuant to Section 334 of the
Uruguay Round Agreements Act.  The United States notified its trading partners of these new rules
well in advance of their implementation and offered to consult with countries that requested such
meetings. The United States held consultations with India in April, 1996.  The United States asked
India to provide information substantiating its cl aim that its textile and apparel trade would be
adversely impacted.  India never submitted such evidence.  In November, 1999, the United Statesagain held consultations with India during which this issue was discussed.  India stated that the rule
had not affected it apparel trade and indicated that the non-apparel trade affected amounted to $1
million.  The United States responded that it would consider adjustments once India submittedWT/TPR/M/88/Add.1
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evidence of the trade disruption.  Again, India fa iled to provide such information.  India’s cotton
non-apparel exports to the United States have done well.  Since the implementation of the WTO, suchimports from India have increased 95 percent.
India had joined the EU in a WTO dispute against the United States involving textile products
dyed and printed in the  EU from imported fabric.  The agreement reached and implemented by the
Trade and Development Act of  2000 results in the rules of origin reverting, for those named products,
to the rules in effect prior to the  implementation of the Section 334 rules.  This change provides that
fabrics and certain made-up products originate in the country where the fabric is both dyed and printed
when accompanied by 2 or more finishing operations.  The fabrics included are those of silk, cotton,
man-made fiber or vegetable fiber.  The made-up  products included are scarves, handkerchiefs, bed
linens and other products, except for goods classified under such headings as of cotton or of wool or
consisting of fiber blends containing 16 percent or more by weight of cotton.  This modificationeliminates the double debiting of quota that was of concern to India.  As a party to the WTO dispute,
India must have been aware of the settlement reached to resolve the case.  The United States would
review any evidence that India submitted to substantiate its claim that it continues to be adversely
impacted by the U.S. rules of origin.
(India)  Holding up of consignments of ‘India Items’: Under the provisions of the Indo-US Textile
Agreement, ‘India Items’ are e xempt from quota restrictions.  The Development Commissioner
(Handicrafts), is the authority designated by Governm ent of India for certification of ‘India Item’
consignments.  However, lately, there has been an increase in the number of held up consignments at
various ports as it has been reported that the US customs often disregard the certification issued by
the DC (Handicrafts).  As exporters have to clear th eir consignments to meet the delivery schedules,
such consignments are often cleared under the visa waiver provisions by issuing visa in the re-
classified categories.  This results in debiting of quotas.  The Agreement does not permit unilateralmodification of definitions contained in the Agreem ent. Hence, we would request the US authorities to
reconsider the matter and honour the certification by the DC (Handicrafts)
Answer:
"India items” are exempted from quota under the “Certified Handloomed, Folklore provision”
of the U.S./India agreement, notified to the TMB under Article 2 of the ATC.  This agreement doesnot allow for unilateral modifications of the definitions, as contained in the agreement.  These items
are quota free only if such products conform to the descriptions in the agreement and are certified by
the Government of India in accordance with the provisions of the agreed visa and certification
systems.  The United States maintains the right to inspect all cargo entering its borders and determine
if the certification of the product is in accordance with the U.S./India agreement.  If U.S. Customsdetermines products do not qualify for the exemption, entry is denied.  India can choose to permit
entry of the goods by authorizing entry of the g oods and the charging of quota, through the visa
waiver process.
(India)  The tariff rate on garments in the US is between 17.5% and 22.5% with an average tariff rate
of 18.3%. We would request the US to consider reduction in such peak tariff rates.
Answer:
It is premature to consider the potential for tariff reductions in particular sectors.  As part of
the new negotiations on non-agricultural market access, the United States will give careful
consideration to the tariff requests of our trading partners.WT/TPR/M/88/Add.1
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(India)  Differential Treatment to cotton producing countries under ATC : As per Article 1.3 of the
ATC, the cotton producing countries were to be given a special treatment.  However, no additionalquota access has been granted to cotton producing countries like India. We would request the US to
take positive action in this regard.
Answer:
High limits and growth rates that were established prior to 1995 have been continued with the
acceleration allowed under the ATC.  This has allowed major cotton producing and textile exportingcountries huge growth in their exports to the United States.
(India)  Subsidies in textile industry : It is learnt that the US has been giving large amounts of direct
and indirect subsidies to the cotton farmers. According to a study commissioned by one of our NGOs,
the Consumer Unity and Trust Society (CUTS), Jaipur, the direct and indirect subsidy given to the US
cotton farmer is US$2.5 for each pound of cotton.  This is based on the calculation of total subsidy bill(excluding exclusive export subsidies) in 1997 amounting to around US$ 1.6 billion.  We would
request the US authorities to consider plans for reducing the extent of this subsidy.
[Answer to be supplied]
(India) Continuation of visa requirements for integrated products : In certain categories like 369 (O),
visa continued to be issued even though this item wa s integrated in 1995.  It is reported that in actual
practice, all restricted and non-restricted items to the US require visa.  Similarly, the US customs is
insisting on visa for export of jute bags, which are not covered under quota.  This is a restrictive
measure and increases the transaction cost and adds to administrative burden. We would request the
US authorities to address this issue.  We would also request the US delegation to clarify whether, with
the elimination of quotas, the US would do away with such procedural requirements/documentation
formalities like issuance of visas, certification aimed at prevention of circumvention of quota or trans
shipments etc.
(Hong Kong )  Up till now, the US Government has yet to announce the details of the outstanding
implementation arrangements, including the visa requirement for integrated products.  Bearing in
mind that commencementof Stage 3 integration is only three months down the road, could the US
Government announce such  arrangements, including confirming that the visa arrangement for
products integrated under Stage 3  will  be  eliminated with effect from 2002, as was the case withStage 2?
Answer:  (For both questions)
For all WTO countries with which the United States maintains visa requirements, including
India, no  items that  were integrated in 1995 require a visa, and no items that were integrated in Stage
2 have required a  visa since  January 1, 1999.  Most of the United States’ visa arrangements arecomprehensive in coverage, and do include some items  that are not subject to quota, as well as those
that are.  The visa requirement is part of an administrative  arrangement,  and helps to avoid the entry
of goods that are mis-classified or transshipped, in addition  to the benefit of helping exporting
countries to control their exports.  If there is no import restraint limit  on a product, and no “quota
charges” incurred in the exporting country, the co st of the visa cannot be  termed a “restrictive
measure.” For goods that are now subject to visa requirement, and that are  integrated in Stage 3,
effective on January 1, 2002, a visa will continue to be required until further notice.
(India)  High conversion factor for socks: Presently, a high conversion factor is being applied by the
concerned US authorities in respect of socks fo r debiting quotas under Cat. 332 Group-II. The CITAWT/TPR/M/88/Add.1
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is  correlating the  conversion factor for Cat. 332 with HS No. 61.15, which covers, besides socks,
items  like Panty Hose, Tights and Stockings. In this situation, a high conversion factor of 3.80 SMEper dozen  pairs gets applied to socks, +resulting in higher debittance of quotas under Cat. 332
Group II. The  technical study conducted by the Office  of the Textile Commissioner has shown that
the average requirement for manufacturing 1 dozen pair of socks  is about 1.22 Sq. mtr. Hence, it
would be seen that the US is applying disproportiona tely higher conversion  factor as compared to the
actual consumption norm. We would request th e US authorities to correct the situation
Answer:
All countries that have category 332 in a group limit are charged at the same square meter
equivalent (sme) factor of 3.8 square meters equivalent per dozen pair. The same factors in Annex A
of our  agreement, and  the category system itself, were developed in close consultation with our
industry, are standard in our textile  agreements, and have been notified and continued  under theWTO  Agreement on Textiles and Clothing (ATC).
The factors do not change if a country is shipping goods within a category that use MORE
fabric per category unit than the Annex A sme factor, nor if it is shipping goods that use less fabric
than the sme factor.
14. Agriculture
(EU) (Government Report, para 4) The Report states  that “Agricultural export subsidies impose
especially unfair burdens on farmers in the poorest countries."  Could the U.S. please explain the
continued use of export enhancing instruments, such as export credits, P.L. 480 and the EEP, in the
light of such a statement and in the light of the comprehensive framework proposal submitted to the
WTO Committee on Agriculture?
Answer:
The major objective of the U.S. Export Enhancement Program (EEP) is to challenge unfair
trade practices.  Since fiscal year 1999, the EEP program has been made operational only for frozen
poultry (not for grains and rice).  The program was last made operational for barley in fiscal year
1998.
The export credit programs were distinguished from direct export subsidies for a reason in the
Uruguay Round -- both in the Agreement on Agricult ure and the Decision on the Possible Negative
Effects of the Reform Program on Net Food Importing and Least Developed Countries.  They were
addressed separately because they have a different impact on the market than direct export subsidies,
and they serve a legitimate function in food security.
As we discuss the various components of export competition, we must keep in mind their
impact on global markets.  The United States believes export credit guarantee programs createadditional purchasing capacity for importing countries that might not otherwise exist because of a lack
of liquidity in the importing country’s market.  This assumption was also supported in the OECD
study.
The United States sees multilateral negotiations as the route to more open and competitive
markets.WT/TPR/M/88/Add.1
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(EU) (Government Report, para 16) The Report states that it is implementing its UR commitments on
time and in full. Could the U.S. please elaborate on the delays in notifying the domestic support levels
for 1998 to the WTO Secretariat?
Answer:
The United States submitted its domestic support notification for marketing year (MY)
1998/99 in June 2001.  The MY 1998/99 notification was more data intensive than relative to previous
submissions.  Given our resource constraints and our strong commitment to making sure thenotification was done correctly, we needed additional time to complete the notification .
(EU) (Government Report, para 30, Built-in-Agenda Negotiations in Agriculture and Services ) The
Report states that the U.S. comprehensive framewor k proposal “sets out clear, attainable goals for
far-reaching, ambitious reforms”. In the light of the continued need for additional subsidies for U.S.
farmers and exporters, and the discussion on which U .S. policies should be classified as Amber Box,
is the U.S. ready to stand by proposals which would seem particularly difficult for its own agricultural
production base?
Answer:
The U.S. program is WTO consistent and will continue to abide by international commitments
in the future.
(EU)  (Government Report, para 31) The U.S. proposes to  eliminate the current three classifications of
domestic support and replace them by trade distorting and non-trade distorting support. However, it
is clear that the 1996 Farm Bill, combined with almost assured annual emergency payments, has led
to surplus production in some cases. This has led to increased government use of export measures.
These would also include food aid programs, whereby the aid consists of commodities rather than
financial aid to buy the necessary commodities on the world market. In fact, disposing of surplus
stocks is a stated objective of U.S. food aid. Asid e from the implied need for Blue Box policies, this
unintended effect of surplus stocks on world markets caused by current farm legislation should be
taken into account. Is the U.S. preparing a new Farm  Bill that takes the effects on international trade
of domestic support fully into account? Are countercyc lical payments also view ed as having an impact
on international trade?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and rancherswhen unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Canada) (para 4, Agri-Food Activities) According to para 4, imports of softwood lumber from
Canada, have been restrained by a system similar to a tariff quota.  This section does not mention thatimports of Canadian softwood lumber into the United States have been affected by a 19.31%
preliminary countervailing duty determination fr om the U.S. Department of Commerce as of August
10, and further affected by a positive preliminary cr itical circumstances determination made on the
same date.  The Atlantic provinces have been excluded from the investigation.  Canada is currentlyWT/TPR/M/88/Add.1
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requesting WTO consultations on these two determinat ions.  The U.S. should follow-up with the WTO
Secretariat to ensure that the Secretariat report includes, and accurately describes, these actions bythe U.S.
Answer:
The U.S. agrees that the sentence at issue in paragraph 4 (“In addition, imports of softwood
lumber from Canada, the main exporter of this product to the United States, have been restrained by a
system similar to a tariff quota.”) should be revised and updated.  We suggest the WTO replace thesentence at issue with the following:
“In addition, until March 2001 imports of softwood lumber from Canada, the main exporter of
this product to the United States, were subject to a bilateral agreement that operated in a manner
similar to that of a tariff quota.  Subsequent to the expiration of this agreement, the U.S. lumber
industry filed antidumping and countervailing duty actions against Canadian lumber imports.  TheAugust 10, 2001 preliminary determination in the CVD case resulted in provisional measures being
imposed at a rate of 19.31 percent, and the United States also preliminarily found that critical
circumstances exist.  Canada is currently requ esting WTO consultations regarding the preliminary
CVD determination.  The October 31, 2001 preliminary determination in the antidumping case
resulted in provisional measures being imposed at a rate of 5.94 to 19.24 percent.  Certain lumberproduced in the Atlantic provinces has been excluded from the CVD investigation.”
(Canada)  Since the last TPR of the United States, there has been an increasing trend by State
governments to propose or initiate measures, primarily in the agriculture sector, which are
inconsistent with U.S. international trade oblig ations, and have significant impacts on Canada's
exports to the United States (e.g., measures proposed in North Dakota and Montana).  Please explain
what measures the U.S. is taking to ensure compliance with its WTO obligations.
Answer:
Domestic support provided through federal and state measures is reported in U.S. notifications
to the WTO Committee on Agriculture.  USDA reviews state-level domestic support data reported in
national statistics and surveys states annually to ensure that U.S. domestic support notifications
provide comprehensive coverage of state-level programs.
(Canada)  While it is not mentioned in the Secretariat Report, the U.S. Department of Agriculture is
developing proposals for the labelling of domestically-produced beef.  Will the criteria for the use of
any U.S.-produced beef be consistent with U.S. international trade obligations, including with respect
to rules of origin?
Answer:
Yes.  FSIS has published an advance notice of proposed rulemaking to get input on the need
for such regulations.  This is in response to Congressional direction.  Comments on the advanced
notice were accepted until Oct. 9.  FSIS will then develop a regulatory proposal, which will be
published for public comment.  After all comments are considered, the Agency will determine the
appropriate response, which generally results in publishing of a final regulation.
(Canada) The U.S. Department of Agriculture announced in July 2000 that it would propose to
discontinue grading of imported meat. Please indi cate the status of this proposal.  How would the
proposal be consistent with U.S. WTO obligations?WT/TPR/M/88/Add.1
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Answer:
Refer to http://www.usda.gov/news/releases/2000/07/0246.htm  for a USDA news release on
this topic.  The proposed rule to stop grading imported meat was never published in the Federal
Register.
(Canada)  In the current Farm Bill debate in the United States, the House of Representatives
Agriculture Committee has proposed replacing the current high levels of support for peanut
production with counter-cyclical payments and marketing loans / loan deficiency payments.  If theseproposals were to be accepted, please explain how they would alter your trade regime with respect to
the import and export of peanuts.  Does the United St ates envisage any similar reform of its support
applicable to sugar?  Would such a reform also affect the intense import restrictions and export
incentives on sugar and sugar-containing products?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and rancherswhen unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Canada) The U.S. Administration is pursuing tariff reclassification of certain sugar syrups from an
unrestricted item into a tariff item with a highly restrictive tariff rate quota.  What are the anticipated
consequences of this tariff reclassification on trade?  When will the United States be notifying WTO
members about the reclassification of sugar syrups?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
Biotechnology
(Japan) (pages 14-15, para 10, Biotechnology-related food)  Last year, the export of a genetically
modified (GM) corn “Starlink”, whose safety as food has not been approved in the United States,
gave rise to public fear in many importing countries including Japan.  The Government of the United
States should take necessary measures for preventing exports of not only GM foods whose safety has
not been approved in the United States, but also of GM foods/feeds for livestock which have notpassed the safety assessment processes in importing countries.WT/TPR/M/88/Add.1
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Answer:
The United States has a well-coordinated and rigorous system for regulating products of
biotechnology. This regulatory process sets the standard of safety for human health, animals and the
environment. Products of biotechnology commercially produced in the United States are reviewed
under this process for particular uses. The Environmental Protection Agency has announced that it
will not approve a biotechnology product for feed use until it also has an approval for food use.
(Japan)  (page 15, paras 10-11, Cartagena Protocol) Since the United States is the largest producer
and exporter of GMOs in the world, its influence on international trade is quite significant, given the
fact that it has not ratified the Cartagena Protocol.  Does the United States consider ratifying the
Convention on Biological Diversity (CBD) and the Cartagena Protocol in the future?  If not, why?
Answer:
The U.S. Senate must give its advice and consent in order to ratify the Convention on
Biological Diversity.  The U.S. position on the CBD is under review by the current Administration.
The United States cannot sign or ratify the Cartagena Protocol as we are non-parties to the CBD.
(Japan)  In case the Cartagena Protocol does take eff ect without ratification of the United States, how
will the United States cope with the following issues concerning Article 24 on non-Parties:
To conform with the advance informed agreement procedures (AIA) by the importing Parties based on
the Protocol;
Answer:
As a non-party to the Cartagena Protocol, the United States will have no rights or obligations
under the Protocol.  However, U.S. exporters will be subject to the rules under the Protocol when
exporting to Parties to the Protocol.  Importers of products to the United States, as now, will be
required to conform with U.S. domestic requirements.
(Japan)  To conclude bilateral or multilateral agreements with individual Parties; and
Answer:
The United States will continue to negotiate bilateral or multilateral agreements as necessary
with other countries in order to best facilitate trade.
(Japan )To contribute appropriate information to the Biosafety Clearing-House (BCH) on living
modified organisms released in, or moved into or out of, areas within the United States.
Answer:
The Biosafety Protocol Secretariat has create d a Biosafety Toolkit - a guide describing how
countries can make their national information regarding the regulation and risk assessments for living
modified organisms available on the Biosafety Clearing House.  The United States believes that this
information is critical for facilitation of transboundary movement of LMOs and is committed tomaking this information available through the Biosafety Clearinghouse mechanism .WT/TPR/M/88/Add.1
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Market Access
(Japan) (Report by the Government--page 5, para 4; page 6, para 8; and page 10, para 31,
Liberalization of agricultural products) Food security should be achieved by adequately combining
domestic production, import and stock holding in acco rdance with agricultural situations of each
country, and we think there is a problem in the U.S. idea that only liberalization of agricultural
products can ensure food security.  As the U.S. President Bush said, an you image a country that was
unable to grow enough food to feed the people? (excer pt from the transcript of the remarks by the
President to future farmers of America on July  27th 2001 in Washington D.C.), the U.S. recognises
the importance of domestic production.  Moreover, although the Report says, trade liberalization
supports the protection of the environment  agriculture has a multifunctionality including protection
of the environment and this cannot be achieved only through trade liberalization.
Answer:
The United States recognises that there is a balance between domestic production and imports
in achieving food security.  However, we believe that trade liberalisation plays an important role in
ensuring food security.
(Japan) (page 14, para 10, Agri-food trade negotiations–new technologies) What kinds of
technologies are included in “new technologies” other than genetic modification as indicated in thefirst sentence of the same paragraph?
Answer:
There are a number of new technologies that will be commercialized over the next ten years,
and we need to look beyond the current emotionally sensitive biotechnology debate in order to create
rules that will work for various new technologies in the future.  One example of a new technology that
is widely accepted is using genetically modified enzymes to produce wine and cheese.  Other
technologies that the United States considers new technologies are food irradiation and ozonetreatments.
(Japan)  (page 26, paras 8-12, tariff quotas) We hear that the United States is examining a bill to
amend tariff lines and apply tariff quotas, in order to control the rapidly increased import of Milk
Protein Concentrates (MPC) into the United States.  We don’t think this is coherent with the U.S.
proposal, which insists on developing disciplines for importing countries in order not to administratetheir TRQs for the purpose of hampering trade.  W hat does the United States think of this matter?
Answer:
On October 3, 2001, The United States Customs Service proposed the revocation of ruling
letters and treatment related to the classification of milk protein concentrates.  Before taking this
action, consideration will be given to any written comments timely received.  Comments on thisproposal must be received by November 2, 2001.
In November 1998, the classification of a product commonly referred to as milk protein
concentrate was determined to be in heading 0404.90.1000, HTSUS, which provides for whey,
whether or not concentrated or containing added su gar or other sweetening matter; products consisting
of natural milk constituents, whether or not containing added sugar or other sweetening matter, notelsewhere specified or included, other, milk protein concentrates.  Since the issuance of those rulings,
the U.S. Customs Servoce has review dthe classification of this merchandise and has determined that
the classification set forth is in error.  It is now the position of the Customs Service that, because ofWT/TPR/M/88/Add.1
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their composition, the milk protein concentrates described in these rulings are classified in subheading
0404.90.3000, HTSUS, which provides for dairy products described in additional U.S. note 1 tochapter 4, further described in additional note 10 to chapter and entered pursuant to its provisions.
(Japan) (page 26, para.9, tariff quotas) The Report says, in general, access to tariff quotas is
provided on a first-come first-served basis. Exceptions include certain dairy products and sugar.
Certain dairy products require import licences and for sugar, export certificates are issued.  What is
the reason for the exceptions provide regarding certain dairy products and sugar?  Could the UnitedStates provide more concrete ways by which the TRQ is administrated for these products?
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/USA/2 /Add.3 and G/AG/N/USA/34/Add.1.
(Japan)  (page 26, para.10, tariff quotas) It is pointed out that some quotas including beef, dairy
product and peanuts were allocated to selected countries.  What are the standards for selecting these
countries? Also, what is the past record as to the imports of these products?
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/USA/2 /Add.3 and G/AG/N/USA/34/Add.1.
(Japan)  (page 26, para.12, tariff quotas) The Report says, tariff quotas for products such as olives,
dried cream, certain cotton articles, low-fat c hocolate crumb, and mixed condiments and seasoning
were not used at all or filled at very low levels.  Is there any reason for this null or very low fill rate
besides supply- demand conditions?
Answer:
No, this is because of market conditions.
(Japan) (tariff quotas) What is a reason to maintain tariff quotas that were not used at all or filled
with at very low levels, for example, olives, dried cream, certain cotton articles?
Answer:
TRQs exist for these products because of the process of tariffication during the Uruguay
Round. The U.S. negotiation proposal offers suggestions for dealing with low fill TRQs.
(Thailand)  (pages 25-7, paras 8-10, Measures Directly Affecting Imports) The United States’s fill rate
of imported tobacco under the TRQ is only 48.8% and the out of quota tariff rate is very high at the
level of 350%.  Considering that global q uota allocation could enhance the competition among
suppliers and thus improve the fill rate under TRQ, does U.S. have any plan to improve the fill rate of
tobacco TRQ through a change of the present allocation method?
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/U SA/2/Add.3 and G/AG/N/USA/34/Add.1.  Any changes to U.S. tariff rate
quotas should be discussed in the context of negotiations.WT/TPR/M/88/Add.1
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Thailand)  (page 49, paras 92) Please explain the process of an equivalent determination for poultry
products and how a country could be granted an equivalent status.
Answer:
Please refer to the document “FSIS Process for Evaluating the Equivalence of Foreign Meat
and Poultry Food Regulatory Systems”, at the web site www.fsis.usda.gov/oa/programs/equiv.pdf
(EU) (Government Report, para 8, Tariff quotas) The division of quotas for certain cheeses into
Tokyo Round quantities and Uruguay Round quantities, complicates license applications by traders,and should be eliminated. A single quota for each cheese group would be more transparent,
comprehensible and accessible (and is particularly needed for the NSPF (not specifically provided
for) group). Could the U.S. confirm that it will in troduce such a system and take notice of the April
2001 study by the USDA's Economic Research Service which identified inefficiencies in current quota
administration?
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/U SA/2/Add.3 and G/AG/N/USA/34/Add.1.  Any changes to U.S. tariff rate
quotas should be discussed in the context of negotiations.
(Chile)  (Check-Off Programs) For the last years, the United States has been enacting and
implementing several Info rmation Research and Promotion acts regarding some agricultural products
by which it has imposed the collection of mandatory  assessments (internal taxes) to locally promote
those products, leaving the total control over the spending of the assessments to the domestic
producers and creating some considerable advantages in the internal treatment they receive as
compared with producers from abroad.
How would the United States explain its Check-Off Programs in terms of their consistency concerning
its international obligations under the WTO and its applicable agreements?
Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile)  How would the United States justify the legitimacy of its Check-Off Programs under U.S. law
considering the recent Supreme Court ruling on th e subject? Specifically, how would the United
States explain the constitutionality of the m andatory assessments these programs impose for
promotion purposes?
Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile)  The Check-Off Programs and mandatory assessments are constitutional.  Taking into
consideration that the U.S. Supreme Court ruling is a mandatory rule of law for every executive
agency, among them the USDA, is the executive branch adopting and implementing any measure to
put the Check-Off Programs in conformity with this ruling?  And is so, what sort of measures is the
U.S. Government adopting and impl ementing and what are the Check-Off Programs and subject
matters within them that are being modified?WT/TPR/M/88/Add.1
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Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile)  How can the United States explain the di fferences between promotion, information and
research under the U.S. Constitutional concept of Fr eedom of Speech so as to exclude the last two
areas from the imposition of voluntary assessments?
Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile) ( The Hass Avocado Promotion Research and Information Act (HAPRI)) Considering the
Supreme Court ruling in the Mushroom Check-Off Program case is a mandatory law for the USDA
and that the Implementing Order is not yet in fo rce is this Agency going to limit the mandatory
assessments only for information and research activities leaving promotion assessments as voluntary?
Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile)  The HAPRI and the Proposed Order, through the assessment collection method, establishes a
difference between the timing and. The conditions of collection.  While the domestic producers would
be allowed to pay the assessment within 30 days after the end of the month in which the sale or non-
sale transfer has been made, the importers wh ether their avocados are sold or not, have the to
unconditionally pay the assessment at the time of im portation into the United States.  What is the
reason behind this?
Answer:
The United States undertakes to write its Check-Off Programs so that they are consistent with
U.S. WTO obligations.
(Chile) Another aspect is the assessment refund system. While the state associations, in fact, the
California Avocado Commission (¨C.A.C.¨), will receive 85% of the funds generated by all the
assessments attributable to California’s total production of avocados, the importers associations will
only receive 85% of the funds generated by assessments paid by the members of these associationswithout regard of the fact that almost 90% of the importers are Californian producers and that there
is no clear mechanism to compel any importer to join an importer association. What is the reason
behind this?
Answer:
The Statute does not provide for importers to be compelled to join an importer association,
and we have no authority to require it.
(Chile) Why does the HAPRI not involve other domestically produced avocados such as Fuerte,
Zutano, Bacon, Pinckerton, etc., that are “like”  Hass avocados and, in any case, are directly
competitive or substitutable products of the latter, and therefore affords protection to domestic
producers and discriminates exporters?WT/TPR/M/88/Add.1
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Answer:
The Statute provides for the inclusion of “like” Hass avocados.
Export Subsidies
(Japan) (page 52, paras 104-106, Export subsidies) Although the funding level of export subsidies
based on the Export Enhancement Programme (EEP) is decreasing, the Dairy Export Incentive
Program (DEIP) is utilized actively as was previously.  The United States says, the stated purpose of
the program is to enable the U.S. exporters to meet prices that are being subsidized by othergovernments into the world markets.  Does the United States consider that the program would act as a
negative influence on the prices of agricultural products worldwide, since the government can grant
export subsidies freely when exporting to specific countries?
Answer:
The major objective of the U.S. Export Enhancement Program (EEP) and the Dairy Export
Incentive Program (DEIP) is to challenge unfair trade practices.  Since fiscal year 1999, the EEP
program has been made operational only for frozen poultry (not for grains and rice).  The program
was last made operational for barley in fiscal year 1998.  The levels of programming under DEIP have
been reduced consistent with U.S. reduction commitments under the Uruguay Round.  The DEIP is
designed not to set world prices but to meet distorted world prices.
(Japan) (page 53, paras 107-110, Export credit guarantee) Japan is continuously concerned with this
program's trade distorting effect, because it tends to make U.S. agricultural products advantageous
while competing with other exporting countries.  The Commodity Credit Corporation (CCC) collects
claims in case of default.  Does the United States consider that this program comprises a
characteristic similarly to the circumvention of expor t subsidies?  It is also a serious problem when
the program makes it possible to export specific agricultural products to selected markets, where
financing resources are provided by the CCC, and also when enhancing a strategic export promotion.
Answer:
The export credit programs were distinguished from direct export subsidies for a reason in the
Uruguay Round – both in the Agreement on Agriculture and the Decision on the Possible Negative
Effects of the Reform Program on Net Food Importing and Least Developed Countries.  They were
addressed separately because they have a different impact on the market than direct export subsidies,and they serve a legitimate function in food security.  As we discuss the various components of export
competition we must keep in mind their impact on global markets. The United States believes export
credit guarantee programs create additional purchasing capacity for importing countries that might not
otherwise exist because of a lack of liquidity in the importing country’s market.
(Thailand)  (page 52, paras 105, Export Subsidies) Please specify the markets to which the U.S.
exports the products under the Export Enhancement Program (EEP).
Answer:
Please refer to the press release on this on the USDA/FAS home page,
http://www.FAS.USDA.GOV/scriptsw/PressRelease/pressrel_dout.asp?PrNum=0265-00
For July 2000 through June 2001 EEP was available for Egypt, Jordan, Lebanon, Oman,
United Arab Emirates, and Yemen for frozen poultry.WT/TPR/M/88/Add.1
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(EU) (para 105, Export subsidies, Measures related to agri-food exporters) Could the U.S. clarify the
purpose of its export subsidy regime which operates for certain grains and rice? Whilst the statedpurpose of the regime is to “enable U.S. exporters to  meet prices that are being subsidised by other
governments into the world market”, para 102 notes the central objective of U.S. trade policy is to
“open markets to U.S. exporters” to which end export assistance measures are utilised.
Answer:
The Export Enhancement Program (EEP) helps products produced by U.S. farmers to meet
competition from subsidizing countries. The United  States remains committed to the elimination of
export subsidies in the agriculture negotiations.
(EU)  (para 106, Export subsidies) The EU is concerned to note that the latest WTO notification by the
U.S. shows values for export subsidies and subsidised  export volumes exceeding those specified in the
U.S. Schedule of WTO commitments for dairy pro ducts. What is the justification for U.S. export
subsidies and subsidised export volumes exceeding those specified in the U.S. schedule of WTO
commitments for dairy products?
Answer:
In 1999/2000, the United States employed the flexibility provision in Article 9.2(b) of the
Agreement on Agriculture and remained within its Uruguay Round export subsidy commitment.  The
United States remains committed to the elimination of export subsidies in the agriculture negotiations.
(EU) (para 108, Export finance, insurance, and guarantees Does the U.S. intend to share its estimates
of total budgetary outlays for 1990-2000 under subsidised export credits and guarantee programs
with the Secretariat?
Answer:
As stated in paragraph 108, the estimates of total budgetary outlays for 1990-2000 under
subsidized export credits and guarantee programs are not available.
(EU) (para 110) Other forms of export enhancements are the use of credit facilities which have been
recognized as trade distorting. Discussions in the OECD are ongoing with a view to establishing anacceptable Agreement on the use of credits as an export enhancement tool. U.S. suggest that the use of
export credits can be beneficial in that importing countries might otherwise lack financial “liquidity”.
However, in the recent OECD report “An Analysis of Officially Supported Export Credits in
Agriculture” it is suggested that export credits might actually create demand under certain
circumstances. It notes in particular that “the U .S. export credits are calculated to be almost twice as
distorting on a per unit basis as any other countries’ and, given the USA’s relatively large
programme, account for the majority of the distortions in world markets caused by officiallysupported export credits.”
Answer:
No question was asked.  We provide the following comment:  The OECD study concludes
that the level of export credits relative to world trade was small and the estimated impact on aggregate
world markets is small, e.g., export credits faci litated only 5.2 percent of world trade in 1998 and of
these only a portion were estimated to have distortionary market effects.WT/TPR/M/88/Add.1
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Domestic support of agricultural products
(Japan)  (page 64, para 147, Federal Agricultural Improvement and Reform Act of 1996 (FAIR Act)
and its successor legislation ) In the debate of the successor legislation, resurrection of the Deficiency
Payment System abolished by the FAIR Act is pr oposed by the Parliament.  How does the United
States evaluate the “abolishment of the Deficiency  Payment System” by the FAIR Act, which caused
invocation of Emergency Farm Relief?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and rancherswhen unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Switzerland )  (para 147, Government support to business) What are the main changes expected from
the new FAIR act?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Tradepolicy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations .
(Switzerland )  (para 148, Government support to business) Direct government assistance nearly
tripled between 1997 and 2000.  This is mainly due to natural disasters and falling prices for
agricultural products.  It allowed to maintain the net farm income above its lowest level since 1983.Does this amount of emergency assistance depend more on the natural disasters or on falling prices?
Is the emergency assistance being used as compensation for the price fall?
Answer:
The United States notified its emergency payments in accordance with WTO criteria.  Please
see G/AG/N/USA/36 for our mo st current notification.
(Canada)  (Government Support to Business; Chart III.5)  Chart III.5 shows the value of agricultural
support rising in every year since 1995, even without the "emergency payments" being factored in.
Please indicate what the proportion of market returns was relative to FAIR Act payments and to total
farm payments for the years since 1995.
Answer:
Production Flexibility Contract payments under the FAIR Act began in fiscal year 1996.  For
fiscal years 1996 through 2000, the proportion of cash farm receipts to Production Flexibility ContractWT/TPR/M/88/Add.1
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payments was, respectively, 39:1, 33:1, 34:1, 34:1, and 38:1.  In fiscal years 1995 through 2000, the
proportion of cash farm receipts to total direct government payments was, respectively, 26:1, 27:1,28:1, 16:1, 9:1, and 8:1.
(Canada)  (Government Support to Business; Chart III.5) Chart III.5 shows that a significant portion
of farm support is in programs that fall in the WTO’s "amber" category.  Given this trend, and
considering the testimony by a wide variet y of U.S. agricultural groups to the House of
Representatives Agriculture Committee in the first half of 2001 requesting additional spending beyondcurrent levels, how does the U.S. assess the prospects for spending in future years?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, mustpromote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Canada) (Government Support to Business; Chart III .5) Does the U.S. Government anticipate that
the nature of the programs in support of U.S. agricul ture will continue to move away from "green"
towards "amber" programs?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, mustpromote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Canada) Para 88 refers to the lack of WTO notifications about proposed State technical regulations.
The para does not mention, however, that estimates of domestic support for agriculture try to include
State programs, but the data are based on a survey of  States that was conducted in 1993.  Does the
U.S. propose to update the basis on which it notifies State support to agriculture?  Would it plan to
conduct an annual survey of the State departments of agriculture?
Answer:
Domestic support provided through federal and state measures is reported in U.S. notifications
to the WTO Committee on Agriculture.  USDA reviews state-level domestic support data reported in
national statistics and surveys states annually to ensure that U.S. domestic support notifications
provide comprehensive coverage of state-level programs.
(Canada)  Will the United States notify to the WTO the federal grants to the states of $159 million in
support of agriculture promotion and "specialty agriculture" as part of the "emergency" support votedWT/TPR/M/88/Add.1
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by Congress earlier this year?  Please provide in formation on the actual amounts and activities that
these funds are supporting.
Answer:
“The Crop Year 2001 Agricultural Economic Assistance Act” signed by President Bush on
August 13, 2001 includes a provision for Specialty Crops Assistance.  Under the Specialty Crops
Assistance provision, $26 million in grants are provided to states to support activities that promote
agriculture with $500,000 for each state and $1 million for Puerto Rico.  An additional $133 million ingrants are provided to states in amounts that represent the proportional value of specialty crop
production.  Domestic support provided through federal and state measures is reported in U.S.
notifications to the WTO Committee on Agriculture.  USDA reviews state-level domestic support data
reported in national statistics and surveys states annually to ensure that U.S. domestic support
notifications provide comprehensive coverage of state-level programs.
(Japan)  (page 67, para 152, Emergency farm relief poli cy) The United States has implemented a farm
relief policy four times. What is the political background as well as the direction aimed by this
emergency farm relief policy.
Answer:
The current U.S. administration outlined its principles on farm policy in a September 2001
report released by Secretary Veneman.  The report stated that farm policy, including providing a
safety net, must promote more sustainable prosperity for farmers through market orientation without
engendering long-term dependence on government support.  This does not rule out helping farmers
and ranchers when unexpected events beyond their control occur and cause output or income to
plummet.  Trade policy must focus on opening markets through tariff reductions and the elimination
of trade distorting subsidies, and be supported by domestic policies that meet our existing international
obligations.
Japan  (page 67, para 153, Emergency market loss payments) In the U.S. notification to the WTO on
domestic support measures for the period of October1998-September 1999, the Emergency Market
Loss Payments (ELPs) is notified as a non-product-specific AMS. Could the United States explain the
meaning of non-product-specificity?
Answer:
The United States has notified the World Trade Organization (WTO) that $2.8 billion in 1998
Market Loss Assistance (MLA) payments (so-called AMTA supplemental payments) are classified as
trade-distorting or “Amber Box” support.  This decision was not taken lightly.  MLA payments are
paid in the same manner to the same producers as Production Flexibility Contract (PFC) payments
which will continue to be notified as non-trade-distorting or “Green Box” support.
MLA payments are considered non-product specific support because they are based on
historical production.  Similar to the “Green Box” PFC payments, MLA payment recipients are under
no obligation to produce a specific crop or to produce any crop at all.  Under WTO de minimus rules,
non-product specific support is not added to the total level of trade-distorting support unless all
non-product specific support exceeds 5 percent of the value of total U.S. agricultural production.Total non-product specific support did not exceed the de minimus threshold in 1998/99.
(Japan)  (page 68, para 157, Domestic support measures of dairy products) The United States
proposes in the comprehensive proposal (G/AG/NG /W/15) that domestic supports should be non-WT/TPR/M/88/Add.1
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exemptive, if they have none or least distortive effects on trade or production.  On the other hand, the
United States took a measure to increase the purchasing price of butter last May.  How does theUnited States consider the coherence between  this measure and the U.S. proposal on domestic
support?
Answer:
The United States is currently consistent with its WTO commitments, including the May price
increase.  Future changes in commitments will be decided in negotiations.
(Japan) (page 69, para 158, Two-tier price support program of peanuts ) Since this program provides
a high support rate on peanuts for domestic food use and a much lower rate for peanuts grown for
export or for crushing, we consider it similar to the special milk system in Canada, which was ruled
adversely by the WTO Panel and Appellate Body.  Could the United States show us where it stands in
this issue?
Answer:
Market price support for U.S. peanut producers is classified and reported under WTO rules as
domestic support.  The United States recognized that such domestic support can be trade distorting
and notifies peanut support measures accordingly within the Amber Box of our notifications to the
WTO Committee on Agriculture.  No support provided under the peanut program is contingent in anyway upon a requirement to export and, therefore, the program is not in any way considered an export
subsidy.
(EU)  (para 162, Assistance to the agri-food sector) Risk management policy: It is said that these
insurance programs have been notified to the WTO as Amber Box, under de minimus provisions.
Could the U.S. please specify whether this includes the crop insurance premiums as well, or just the
coverage against non-catastrophic events such as price declines?
Answer:
Catastrophic and non-catastrophic crop and revenue insurance is covered by the U.S.
notification to the WTO on Domestic Support (Supporting Table DS: 9).  The net insurance benefits to
producers referred to as "total non-product-specific support" reflects the fact that producers pay
premiums for insurance at a subsidized rate.  The net benefit is the value of the indemnities received
by farmers less the actual premiums paid by producers.
(Hong Kong)  (page 9, para 30) It is noted that the U.S. proposals for the mandated negotiations on
Agriculture include the progressive elimination of export subsidies over a fixed period of time.  We
are interested in the current level of export subsid ies the U.S. provides for its agricultural sector, and
further details on the pace and timeframe of its proposal in the agricultural negotiations to eliminate
export subsidies.
Answer:
Please refer to the U.S. ES:1 notification for curr ent levels of export subsidies.  The pace and
timeframe of elimination of export subsidies is subject to negotiation, but the United States is hoping
for bold action on this topic.
(Chile)  Considering the latest supplemental subsidies to US domestic agriculture recently signed into
law. In the opinion of the U.S., what is the level of  consistency with the WTO of this law, and does the
U.S. intend to notify the WTO?WT/TPR/M/88/Add.1
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Answer:
The U.S. administration outlined its principles on farm policy in a September 2001 report
released by Secretary Veneman.  The report stated that farm policy, including providing a safety net,
must promote more sustainable prosperity for farm ers through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distortingsubsidies, and be supported by domestic policies that meet our existing international obligations.
(Chile) How can the United States explain the consistency of the fact that part of the above mentioned
supplemental subsidies maybe be directed towards financing cases against trade partners including
accusations of subsidizing?
Answer:
The U.S. administration outlined its principles on farm policy in a September 2001 report
released by Secretary Veneman.  The report stated that farm policy, including providing a safety net,
must promote more sustainable prosperity for farm ers through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Tradepolicy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Chile)  On various occasions the United States has proposed to lowering subsidies in all sectors and
has urged the European Community to do so itself. How can the United States justify the fact that year
after year it increments its subsidies towards its domestic industry, concentrating a great part in the
agricultural sector?
Answer:
The United States is currently within its WTO commitments, and hopes for all members to
reduce trade distortions in the next agreement.
Food Aid
(Switzerland )  (para 103, Measures related to agri-food exports) It is mentioned in 103 that in the
1999-2000 period, there was a reduction in the use of export subsidies and of export creditguarantees.  However, in the same period, there was a large increase in food aid volumes, and
domestic support to producers went up as well.  Given the fact the U.S. is the world’s largest food aid
supplier, accounting for 64 (by volume) of food aid delivered in 2000 (para 111) and that volumes of
food aid and world cereal prices are negatively correlated, developing countries could be induced to
further benefit from the food aid instead of deve loping their own ceral production.  How does the U.S.
view this assumption?
Answer:
We seriously question the assumption in this question.  The correlation between food aid and
commodity prices is not conclusive, debatable and fa r from proven or agreed.  That said, US food aid
supports the agriculture development efforts in the recipient countries.  All programs followinternationally agreed upon standards and are required to have an analysis conducted on the potentialWT/TPR/M/88/Add.1
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market impacts, including commercial imports and prices.  The majority of US programs are targeted
to specific vulnerable groups, such as feeding programs for women and children.
(Thailand) (page 54, paras 111, Food aid) Please specify the countries to which the U.S. exports rice
as food aid in the past five years.
Answer:
The United States has exported rice under food aid programs to the following countries over the last
five years:
1997 1998 1999 2000 2001 (thru May)
Angola Angola Angola Albania Albania
Angola Angola
Armenia Armenia Armenia Armenia Armenia
Azerbaijan Azerbaijan Azerbaijan Azerbaijan Azerbaijan
Benin Benin
Bhutan
Bolivia Bolivia
Bosnia-
Herzegovina
Bulgaria Bulgaria Bulgaria
Burkina Faso Burkina Faso Burkina Faso Burkina Faso Burkina Faso
Cambodia Cambodia
Cameroon Cameroon Cameroon
Cape Verde
IslandsCape Verde
Islands
Congo Congo Congo
Congo, Dem.
Republic
Cote D'Ivoire Cote D'Ivoire Cote D' Ivoire Cote D'Ivoire Cote D'Ivoire
Dominican
RepublicDominican
RepublicDominican
Republic
Djibouti Djibouti
E. Timor E. Timor
Ecuador Ecuador Ecuador
El Salvador El Salvador El Salvador El Salvador
Equatorial
GuineaEquatorial
GuineaEquatorial
GuineaEquatorial Guinea Equatorial Guinea
Ethiopia Ethiopia Ethiopia Ethiopia Ethiopia
Gambia Gambia
Georgia Georgia Georgia Georgia
Ghana Ghana Ghana Ghana Ghana
Guatemala Guatemala Guatemala Guatemala Guatemala
Guinea
Guinea Bissau
Haiti Haiti Haiti Haiti Haiti
Honduras Honduras Hondur as Honduras Honduras
India India
Indonesia Indonesia Indonesia Indonesia
Jamaica Jamaica Jamaica Jamaica JamaicaWT/TPR/M/88/Add.1
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1997 1998 1999 2000 2001 (thru May)
Jordan
Korea, North Korea, North Korea, North Korea, North Korea, North
Kyrgyzstan Kyrgyzstan Kyrgyzstan Kyrgyzstan Kyrgyzstan
Laos
Lebanon
Madagascar Madagascar Madagascar Madagascar Madagascar
Mauritania Mauritania Mauritania Mauritania
Moldova Moldova Moldova Moldova Moldova
Mozambique Mozambique
Nepal
Nicaragua Nicaragua Nicaragua Nicaragua
Niger Niger
Peru Peru Peru Peru Peru
Philippines Philippines Philippines Philippines
Russia Russia Russia Russia Russia
Senegal Senegal Senegal
Sri Lanka Sri Lanka Sri Lanka
Tajikistan Tajikistan Tajikistan Tajikistan Tajikistan
Togo Togo Togo
Turkmenistan Turkmenistan Turkmenistan
Uganda
Ukraine Ukraine
Uzbekistan
Yemen Yemen
Yugoslavia(Serbia)Yugoslavia
(Serbia)Yugoslavia
(Serbia)
(EU) (para 111, Food aid) The report notes that the U.S. is the largest food aid supplier in the world
and that food aid volumes are “negatively correlated” with world cereals prices, i.e. when prices are
high, food aid shipments go down. Part of the stat ed purpose of the U.S. food aid programme is to
“stabilise U.S. farm incomes by disposing of surplu s stock.” In effect therefore, the use of food aid
could be construed as another form of subsidy
Answer:
As by far the largest provider of food aid, the United States undertakes careful analysis to
ensure that normal commercial trade within recipient countries is not unduly disrupted by food aid
shipments.  Our food aid is provided in accordance with rules under the Food Aid Organization (FAO)of the United Nations, which provide for consultations  with trading partners to ensure that commercial
export trade is not disrupted by food aid shipments.  This is accomplished through calculation of the
Usual Marketing Requirement (UMR), which helps determine the appropriate level of food aid
programming.  Specific country needs and World Food Program (WFP) appeals drive our decisions to
provide food aid, which is targeted to those most in need of assistance.
(Australia) US Farm Bill: Can the United States confirm its commitment in future farm legislation to
a movement of domestic support m echanisms away from "amber" into the "green" box as was the
original intent of the FAIR Act?WT/TPR/M/88/Add.1
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Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Tradepolicy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(Australia) Agriculture Domestic Support Arrangements: We note that since 1998 Congress has
approved annual multi-billion dollar payments to farmers in the form of  additional Agriculture
Market Transition Act (AMTA) payments, as a response to low commodity prices. The United Stateshas recognized that these payments were linked to commodity prices. In June 2001 the United States
notified USD 10.4 billion in payments for the 1998/99  marketing year as trade-distorting "amber" box
payments to the WTO. When will the United States notify the WTO that the payments made in 1999,
2000 and this year were "amber" box payments?
Answer:
The domestic support notification the United States submitted for marketing year 1998/99 has
already identified Market Loss Assistance payments as Amber Box payments.
(Australia) Food Aid: While food aid for genuine humanitarian assistance is widely supported, food
aid donations can be contentious and the United States has been criticised by its export competitors
for many donations. In its food aid decision-making, doe s the United States take account of exports by
a recipient country of the commodity in question, given the requirement that the recipient country
does not export the same or like commodity during the supply and use period?
Answer:
As by far the largest provider of food aid, the United States undertakes careful analysis to
ensure that normal commercial trade within recipient countries is not unduly disrupted by food aid
shipments.  Our food aid is provided in accordance with rules under the Food Aid Organization (FAO)
of the United Nations, which provide for consultations  with trading partners to ensure that commercial
export trade is not disrupted by food aid shipments.  This is accomplished through calculation of the
Usual Marketing Requirement (UMR), which helps determine the appropriate level of food aid
programming.  Moreover, the U.S. Government takes steps to ensure that our food assistance does not
undercut local producers in recipient countries, which is in fact required by U.S. food aid law.
Specific country needs and World Food Program (WFP) appeals drive our decisions to provide foodaid, which is targeted to those most in need of assistance.
(Australia) Sugar: We note that access to the US market for raw sugar, governed by a tariff rate
quota, is now at near record low levels, and in the current year only just exceeds the US's WTO
minimum access commitment. We note also that the differential between the world market price for
sugar and the US price is now at near record levels, with the US price nearly three times the worldmarket price. The sugar program is continuing to send the wrong market signals to US producers who
are expanding production at a time of low world prices. Given the sugar program has moved into
surplus (with the Government not only stockpiling, but also selling sugar back to its own producers
and requiring them not to produce), what plans does the United States have to bring the sugarWT/TPR/M/88/Add.1
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program back into balance, to make it more liberal and market oriented and to progressively
liberalise market access?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations .
(Australia) When will the United States be rectifying its Harmonized Tariff Schedule to take account
of the long acknowledged necessary polarity adjustment for raw sugar? (The polarity adjustment
would mean the base tariff equivalent to be applied to raw sugar imports entering the United States
under the second tier of the tariff rate quota would be 17 cents per pound instead of 18 cents per
pound.)
Answer:
We are mindful of the issue and intend to comply with this commitment.
(Brazil):  What is, and how does the FAIR Act affect the net income of American farmers?
Answer:
Net farm income statistics including direct government payments provided to producers
through FAIR Act programs are available at:  http://www.ers.usda.gov/Briefing/FarmIncome/
(Brazil) Secretariat Report, page 69, paras. 160-161. What is the US government’s assessment of the
effects of the Loan Deficiency Payments on international prices, particularly in the case of soy beans?
Answer:
The U.S. Government has only done preliminary review of this topic, the result of which is
published on the USDA web site at www.ers.usda.gov/publications/agoutlook/oct2000/ao275e.pdf.
(Brazil) Secretariat Report, para. 154, page 68. Please explain in more detail how PFC and ELP
affect agricultural investment and production.
Answer:
The U.S. Government has only done a preliminary review of this topic, the result of which is
published on the USDA web site at www.ers.usda.gov/publications/agoutlook/oct2000/ao275e.pdf.
(Brazil) Secretariat Report, para. 1, page 85. The report states that the US has justified the large
amounts of government support to the agri-food sector by its inherent volatility and by the supportand protection afforded to agri-food by its main trading partners. Please explain the role played by
these programmes in the sectors volatility, particularly with regard to the recent decreases in
international prices of agri-food products. Additionally, please clarify what would be the volatility
without recourse to these programmes.WT/TPR/M/88/Add.1
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Answer:
The U.S. Government has only done a preliminary review of this topic, the result of which is
published on the USDA web site at www.ers.usda.gov/publications /agoutlook/oct2000/ao275e.pdf.
(Brazil):  What are the views of United States on tariff quotas and on their administration methods?
Answer:
Views of the United States are presented in the U.S. comprehensive proposal for the WTO
agricultural negotiations.
(Hungary)  We note with some concern that, although partly due to natural disasters, direct
government assistance to the agri-food sector nearly tripled between 1997 and 2000, and currently
amounts to over one half of new farm income. Significant tariff barriers, peak tariffs and tariff
escalation are present in the agri-food sector as well as in other sensitive areas.  Tariff quotas remain
to be one of the main instruments of protection for some important agricultural products, including inthe dairy sector,, and act as a de facto quantitative restrictions for a number of them, where the out-
of-quota tariff rates are prohibitive.  Such high rates effectively prevent the out-of-quota exports of
certain types of cheese from Hungary.  In addition, for certain dairy products, including cheese,
partner governments have to designate preferred importers two months before the start of the quota
year and there is no possibility to reallocate quota shares during the year.  This inflexibility, at times,results in an underfill of TRQ’s, even if the dem and is there.  We would like to know if the U.S.
government would be willing to relax these regulations, making possible at least the reallocation of
quota shares during the year.
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/U SA/2/Add.3 and G/AG/N/USA/34/Add.1.  Any changes to U.S. tariff rate
quotas should be discussed in the context of negotiations.
(Hungary) As the Secretariat report points out the United States maintains import prohibitions for
sanitary and phytosanitary reasons.  Although the Animal and Plant Inspection Service of the USDA
found Hungary to be free from Foot and Mouth Disease (FMD) on May 2000, referring to Hungary’s
common borders with regions designated as infected with the disease, we were put into a special
category of FMD free countries from additional conditions.  Unfortunately, when inquiring about ifHungary is allowed to export chilled and frozen meat of swine and other ruminants to the US, we
received differing information in the WTO and through bilateral channels.  While in the SPS
Committee the US delegation confirmed that we can export fresh, chilled and frozen products of
Hungarian origin, the Animal and Plant Inspecti on Service informed us that we could not.
We would appreciate if the US delegation could clarify the situation, especially in light of the fact that
in May 2001 the USDA lifted the import ban for 10 EU countries, where no cases of the disease have
been found.
Answer:
Please consult the web page http://www.aphis.usda.gov/ppd/rad/  for detailed explanations of
APHIS procedures .
(India)  Dairy products: It has been represented that the export subsidy given by the USA on Skimmed
Milk Powder (SMP) is around US$900 per metric tonne, which works out to about 60% of theWT/TPR/M/88/Add.1
Page 188
international price of SMP. The average subsidy on dairy products mainly on SMP by the US
Department of Agriculture during 1999-2000 worked out to US$1101 per metric tonne. Such a heavysubsidy results in the fall in international prices of dairy products, which, in turn, when imported in
India tend to destabilise the prices and adversely affect the dairy farmers of the country. We would
request the US authorities to consider phasing out all direct and indirect subsidies in this sector.
Answer:
The United States is currently within its WTO commitments, and hopes for all members to
reduce trade distortions in the next agreement.
(India) TRQ on Tobacco : It is understood that the base period for working out total quota for tobacco
import was taken as 1992-1994. We would like to know  from the US delegation the basis for selecting
this base period. We would also like to know the major suppliers under the existing TRQ regime, the
fill rate of the Quota and the methodology of realloca tion of unfilled TRQ. Despite the fact that India
is the world’s second largest producer of tobacco and has one of the largest shares in the export of
FCV tobacco, its present quota for export to US is very small. India seeks to have a TRQ of at least
10,000 tonnes per annum. Taking into account these factors, we would request the US authorities to
consider allocating unfilled TRQs to the developing countries like India.
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/U SA/2/Add.3 and G/AG/N/USA/34/Add.1.  Any changes to U.S. tariff rate
quotas should be discussed in the context of negotiations.
(India) Need for increase in sugar quota : India’s quota for export of sugar to the US has remained at
around 0.8% of the total quota since 1982.  One of the criteria for allocation of quotas to various
countries is the share of the individual countries in the total import into the US market during the
period 1975-81.  The economic situation has changed considerably since then and in severalcountries, the production capacity and marketable surplus have increased whereas for the others,
though they have high quota available, their own production and consumption of  sugar hardly leaves
them with any marketable surplus.  We would ther efore request the US authorities to change their
quota allocation policy with a view to allocating a higher quota to some countries commensurate with
their production and export potential. We would also re quest the US to review its sugar policy in view
of the US International Trade Commission’s estimate that repeal of the Federal Sugar Programme
would add nearly US$1bn to national welfare and cut domestic sugar prices by 8.6%.
Answer:
The U.S. quota allocation policy is consistent with WTO regulations.  All information on U.S.
tariff rate quotas can be found in our MA:1 no tifications.  The docume nts are G/AG/N/USA/2/Add.3
and G/AG/N/USA/34/ Add.1.  Any changes to U.S. tariff rate quotas should be discussed in the
context of negotiations.
(New Zealand)  Despite the fact that the value of the sales supported by agricultural export credits fell
between 1998 and 2000 (Secretariat Report para 107-108) we have continued concerns about those
government financed export credits which act as a type of export subsidy.  Could the United Statesplease advise what steps it is taking to mitigate the effect that the use of government financed export
credits and export guarantee programmes has on other exporters?WT/TPR/M/88/Add.1
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Answer:
The export credit programs were distinguished from direct export subsidies for a reason in the
Uruguay Round – both in the Agreement on Agriculture and the Decision on the Possible Negative
Effects of the Reform Program on Net Food Importing and Least Developed Countries.  They were
addressed separately because they have a different impact on the market than direct export subsidies,
and they serve a legitimate function in food security.  As we discuss the various components of export
competition we must keep in mind their impact on global markets.  The United States believes exportcredit guarantee programs create additional purchasing capacity for importing countries that might not
otherwise exist because of a lack of liquidity in the importing country’s market.
(New Zealand)  New Zealand welcomes the confirmation in the US Government’s statement on the
United States Economic and Trade Environment that “open, competitive markets - both
internationally and at the border - have contributed to our economic efficiency and prosperity” (G/II,para 25, p 8).  However, certain US industries, such  as dairy, with its complex systems of import
licensing and quota administration regulating dairy im ports, dairy compacts, exports subsidies, price
supports and milk marketing orders, appear not to be so open and competitive.
How does the United States reconcile maintaining a highly protected dairy sector with its commitment
to “the maintenance of an open, competitive market at home” (G/I, para 3, p 5)?
Answer:
All information on U.S. tariff rate quotas can be found in our MA:1 notifications.  The
documents are G/AG/N/U SA/2/Add.3 and G/AG/N/USA/34/Add.1.  Any changes to U.S. tariff rate
quotas should be discussed in the context of negotiations.
(New Zealand)  In particular, what justification does the United States have for the continued use of
export subsidies under the DEIP, when these have a price distorting effects in an already depressed
global commodity market, and which are contradictory to the US’ declared objective of theelimination of export subsidies in a new round of agriculture negotiations?
Answer:
The Dairy Export Incentive Program (DEIP) helps products produced by U.S. farmers meet
competition from subsidizing countries, especially the European Union. The United States remains
committed to the elimination of export subsidies in the agriculture negotiations.
(New Zealand)  What measures are envisaged to reform the US dairy industry to make it more open
and competitive by submitting it to the same market disciplines as other industries?
Answer:
The United States sees multilateral negotiations as the route to more open and competitive
markets.
(New Zealand) Current draft legislation before the House seeks to place tariff rate quotas (TRQs) on
milk protein concentrate and casein (including caseinate) at severely restrictive levels is of concern to
New Zealand as it would contravene the bound rate s and product descriptions in the United States’
WTO schedules. The House Agriculture Committee’s new Farm Bill does nothing to reduce the US
Government’s subsidies for agriculture production.  The Bill, in fact, includes many worrying aspects,such as increased spending on conservation programs, greater provision for subsidizing exports, the
re-instatement of production-linked income prot ection through a counter-cyclical payment programWT/TPR/M/88/Add.1
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and extending the milk price support program thr ough to 2011.  Section 146 of the draft Farm Bill
would also expand the dairy “check off” levy to include all imported dairy product.
While these pieces of legislation are not yet law, they appear to contradict the United States’
statements in support of open markets and the direction of US domestic agriculture policy. How does
the United States reconcile the draft legislation mentioned above with its commitment to “the
maintenance of an open, competitive market at home” (G/I, para 3, p 5)?
Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and rancherswhen unexpected events beyond their control occur and cause output or income to plummet.  Trade
policy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
(New Zealand)  The Secretariat report notes the ongoing high level of US food aid and the negative
correlation between world cereal prices and volumes of US donations (S/III paras 111 and 112, page54) While the report also notes US attempts to donate food aid in a way that limits disruption of
commercial sales in markets, we would question the ongoing high volumes of US food aid, given the
rationale would appear to be disposal of surplus production which is caused by domestic support in
the United States, for example donations of Skim Milk Powder.  To what extent do USDA expect food
aid donations to continue?  And at what volume? Which markets are likely to be targeted?  Is USDA
notifying these donations through the CSSD mechanism of the FAO?
Answer:
Please refer to the U.S. NF:1 notification for details on our Food Aid programs.  The Uruguay
Round Agreement on Agriculture requires that food aid be provided in accordance with the rules of
the U.N. Food and Agriculture Organization, and the United States carefully adheres to these
guidelines, including an analysis of a recipient country’s so-called Usual Marketing Requirements.
(New Zealand) The Secretariat Report notes that “direct government assistance to the agri-food
sector nearly tripled during 1997 and 2000 and currently amounts to over one half of net farm
income.” (S/III, para 148, page 64) In dollar te rms, direct government payments to US farmers
increased from around US$7.5 billion in fiscal yea r 1997 to a record US$28 billion in fiscal year
2000.  One of the main causes of this increase is the so-called “emergency assistance” programmes.
This would appear to be in contradiction to US statements in support of “the maintenance of an open,competitive market at home” (G/I, para 3, p 5) or its proposals to the mandated agriculture
negotiations which have the objective to “substantially reduce high levels of protection and trade-
distorting support that disadvantage competitive farmers, ranchers and processors and that distort
international markets” (G/III, para 30, p 9). How will the United States address its dramatic increase
in domestic support levels (much of which is classified as Amber box) at a time when it is proposingthat domestic support levels should be cut? How does the United States justify domestic support of
historic magnitude ($US28 billion direct and US $60 billion total), particularly as it is the United
States itself that, in many cases, accounts for a significant share of world agriculture output and has a
direct effect on the volatility of world markets and prices?  What measures are the United States
taking to reduce direct government assistance to the agri-food sector?WT/TPR/M/88/Add.1
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Answer:
An answer at this time would be premature, given that the Farm Bill is still under discussion.
The U.S. administration outlined its principles on farm policy in a September 2001 report released by
Secretary Veneman.  The report stated that farm policy, including providing a safety net, must
promote more sustainable prosperity for farmer s through market orientation without engendering
long-term dependence on government support.  This does not rule out helping farmers and ranchers
when unexpected events beyond their control occur and cause output or income to plummet.  Tradepolicy must focus on opening markets through tariff reductions and the elimination of trade distorting
subsidies, and be supported by domestic policies that meet our existing international obligations.
15. Steel
(Japan)  (Pages 91-92, paras 27-30) Protectionist bills in the steel sector have been introduced in the
U.S. Congress which include a bill that aims to re lax the criteria to impose safeguard measures and a
bill  that calls for import quotas programs. Al so in June 2001, Bush administration initiated
investigation  based on Section 201 at the request of the U.S. steel industry.  Apparently, these are
increased  tendency toward protectionism in the U.S. steel sector.  The Government of Japan
considers the multilateral initiative by President Bush aiming at reducing inefficient excessive
capacities and market distorted subsidies in the steel industries to be useful.  However, in light of thefact that the true issue lies in improving competit iveness of the U.S. steel industry, we are of the view
that what is important is to proceed with structural reforms rather than depend on protectionist
measures. We expect that U.S. authorities will understand this situation accurately and pursue their
Section 201 investigation in a fair and impartial manner, without any political distortions and
consistent with the WTO Agreement on Safeguards.   We would appreciate the U.S. views on this
matter.
(EU)  (paras 27-30, Cost Competitiveness)  Given the importance of the steel industry in U.S. trade
policy, the EU would like to have seen discussion of a wider variety of factors that may contribute to
the industry’s problems. For example, whilst imports are emphasised as the main cause of difficulties,
other factors such as lack of cost competitiveness have not been mentioned.
Answer:  (For both questions)
The United States has one of the most competitive steel industries in the world.  In the past 20
years the industry has invested billions of dollars in plant modernization, closed dozens of inefficient
mills, eliminated 25 million tons of steelmaking capacity, raised productivity by more than 300
percent, eliminated 330,000 jobs, and invested billions of dollars in environmental controls, cutting
pollution emissions by 90 percent.  Despite these efficiencies, the U.S. steel industry has encountered
very difficult market conditions in recent years.
Because it has a large and open market for steel, the United States has been the destination of
choice for much of the world’s exported steel production.  Steel imports into the United States surged
in 1998 after the financial crises dried up demand for steel in other world markets.  Steel imports
continued at very high levels in 1999 and 2000, leaving the U.S. steel industry extremely vulnerable.
In response to the developing crisis in the steel industry, President Bush directed the United
States Trade Representative to request the U.S. International Trade Commission (USITC) to initiate a
Section 201 safeguard investigation to determine whether certain steel products are being imported
into the United States in such increased quantities as  to be a substantial cause of serious injury, or the
threat thereof, to the domestic industries producing like or directly competitive productsWT/TPR/M/88/Add.1
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We are aware of concerns about the potential imposition of a safeguard on steel.  However,
these concerns are speculative given the range of potential remedies available to the Administrationfollowing the USITC injury finding to the U.S. steel industry.  It is the Administration’s intention that
any remedy following the USITC's affirmative injury determination be consistent with our WTO
obligations.
By remedying injurious and unfair trade, WTO-sanctioned trade remedies, such as those on
steel, play an important role in the trading system.  The existence of trade remedies have enabled theUnited States to make strong commitments to open its markets in trade negotiations by helping
persuade U.S. industry to accept significant cuts in U.S. tariffs and other market opening efforts.
But we also recognize that the problems in steel are global, and require a global solution.
That is why we are implementing the President’s proposal of June 5 for negotiations seeking the
elimination of inefficient excess capacity in the steel industry worldwide and establishing  new
disciplines on subsidies and other market-distorting practices in the global steel trade.  This initiative
was launched at a special high level OECD steel meeting on September 17 and 18.
(India) Proposed Steel Revitalisation Act, 2001: It is understood that this act has been designed to
provide  certain safeguards to the US steel industry by empowering the US President to take
necessary steps by imposing quotas, tariff surcharges, negotiated and forcible voluntary restraintagreements or other  measures on steel import in USA.  It is further learnt that the aim of this act
would be to ensure that the  imports of iron and steel products into USA during any month do not
exceed the average tonnage of each  such product imported monthly into the USA during the 36 month
period preceding July 1997 and that the share of domestic consumption of such imported steel
products does not exceed the average monthly  share of domestic consumption of that steel product in
the past 36 months.  We request the US to explain the rationale for this Act and its consistency with
the WTO rules.
Answer:
The Steel Revitalization Act is a legislative proposal that has not been enacted to law.  The
U.S. Administration has not expressed a position on this legislation.  In April 2001, the legislation was
referred to several congressional committees for consideration, but no further legislative action has
been taken.
(India) Steel Import Notification and Monitoring Programme: It is learnt that this programme shall
include a requirement that any person importing a product classified under chapter 72 or 73 of
Harmonized Tariff Schedule of the USA has to obtain an Import Notification Certificate before such
products entered the US.  The application for impo rt certification would have to contain importer’s
name and address, country of origin, port of entry, description of goods, quantity and CIF value ofgoods to be imported etc.  It is also learnt that the import certificate would be valid only for 30 days.
We  would request the US authorities to explain th e rationale for such a requirement which, given the
limited period of validity of the Certificate, would act as a non-tariff barrier.
Answer:
The “Steel Import Notification and Monitoring Programme” that this question refers to has
been proposed in legislation that has not been enacted to law.  The U.S. Administration has not
expressed a position on this proposal.  Proponents of the monitoring program contend that it is
modelled upon an import licensing program that has been administered by the Government of Canada
since the 1980s.WT/TPR/M/88/Add.1
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(India) Multilateral initiative on steel: On June 4, 2001, the US President in a statement on
multilateral initiative on steel, has indicated intention to initiate discussions to eliminate the excesscapacity of steel in the world, to eliminate subsidies and to make rules of trade as per US trade laws.
In paragraph 5 of its report, the Secretariat has also referred to this initiative concerning negotiations
on elimination of global excess capacity of steel and development of rules to govern steel trade. We
would like to hear from the US delegation more de tails regarding this initiative including the present
stage and also on how inefficient production capacity would be defined. We would also like to knowthe compatibility of this initiative with WTO obligations.
Answer:
The multilateral initiative on steel was launched at a special high-level OECD meeting on
steel of  September17-18, 2001.  At that meeting,  government representatives from 39 countries
including India agreed upon a plan of action containe d in a statement of conclusions.  The text of the
conclusions from that meeting can be obtained from the OECD website.
16 Financial Services
(Canada) (para 70, The Gramm-Leach-Bliley Act (GLB) Paragraph 70 in the Secretariat Report
states that although broad banking is permitted by the GLB Act introduced in 1999, U.S. banks
continue to have little freedom to own and be ow ned by non-financial companies.  Does the United
States foresee more liberalization of the banking sector to permit banks to be owned and to own non-
financial companies?
Answer:
Given the substantial liberalization of the banking sector in 1999 with the passage of the
Gramm-Leach-Bliley Act, there is nothing currently pending that would allow banks to be owned by
non-financial companies.  The issue of whether ba nks would be permitted to own non-bank companies
as merchant banking investments may be reviewed five years after the enactment of the GLB Act.
(Canada) (The Gramm-Leach-Bliley Act (GLB) Has the structure of the financial services industry
changed since the introduction of the GLB Act?  If yes, please explain how.  What, if any, additional
changes are expected over the next few years?
Answer:
Many bank holding companies and foreign banks have become financial holding companies
and have established full scope securities subsidiaries.  Several foreign banks have acquired major
U.S. investment banks (UBS purchased Paine Webber and Credit Suisse purchased Donaldson, Lufkin
& Jenrette).  One major U.S. securities company bought a large U.S. bank (Charles Schwab, Inc.
purchased U.S. Trust).  Many financial holding companies, including foreign banks, have commenced
insurance operations, mostly through insurance agencies.  There has not yet been a broad movementby insurance companies into banking.  One major insurance company (Mass Mutual) has bought a
bank.
(Canada) (para 71, The Gramm-Leach-Bliley Act (GLB))  According to para 71, a U.S. bank wishing
to affiliate with insurance or other financial services companies must first set up a bank holding
company under the Bank Holding Company Act;  foreign banks are not required to set up holdingcompanies.  Please explain the differences be tween the requirements imposed on U.S. and foreign
banks, and explain how the treatment accorded forei gn banks is equivalent to that accorded to U.S.
banks.WT/TPR/M/88/Add.1
Page 194
Answer:
The United States has recognized in its laws th at foreign banks that engage in banking in the
United States may not have the same holding compan y structures as U.S. banks.  Consequently, for
purposes of a foreign bank acquiring a company in the United States, a foreign bank is generally
treated as a bank holding company.  This treatmen t is designed to allow the foreign bank to gain
access to the U.S. market and compete in financial services on a national treatment basis.  If the
foreign bank were treated as a U.S. bank (and not as a bank holding company), the foreign bank wouldbe precluded from engaging in the same range of activities permitted to a bank holding company.
Therefore, under the GLB Act, a foreign bank is treated as a bank holding company and is eligible to
become a financial holding company.
The Gramm-Leach-Bliley Act provides that a bank holding company may become a financial
holding company and engage in a broad range of financial services if the company’s subsidiary banksare, among other things, well-capitalized and well-managed.
The GLB Act also provides that a foreign bank that does not own a subsidiary bank but
engages in banking in the United States through a branch, agency or commercial lending company
will be allowed to become a financial holding company.  The Federal Reserve, however, must and has
adopted regulations that require a foreign bank to meet capital and management standards comparableto those of a U.S. bank.  Thus, the GLB Act sets a framework that allows for equivalent treatment
between the U.S. and foreign banking organizations.
(Canada) (para 80, Banking Services)  According to para  80, although financial services are highly
liberalized, there are still a few restrictions to foreign market access and national treatment in the
financial sector.  For example, a majority of directors of national banks must be U.S. citizens; and
approximately one half of the States require all or the majority of the board of directors of depository
financial institutions to be U.S. citizens.  Are there in tentions to remove these restrictions at either the
national or state level?
Answer:
We do not accept the premise that such restrictions are a violation of national treatment or
market access.
A statute permits the Comptroller to waive the citizenship requirement for not more than a
minority of the total number of directors.  The current statute reflects a number of amendments that
have liberalized this requirement.  Prior to December 27, 2000 the Comptroller could waive the
requirement only for a national bank that is a subsidiary or affiliate of a foreign bank.  Prior to 1978,
the Comptroller had no waiver authority.  We are not aware of any efforts at this time to further
remove these restrictions.
The purpose of the citizenship requirement, which has been in effect since the 19
th century, is
to restrict management to persons more likely to know the trustworthiness of the officers of the bank
and the character and financial ability of prospective borrowers.  Arguably, the requirement is
prudential in nature.  The Comptroller, however, grants the vast majority of citizenship waiver
requests.
We are unable to comment on intentions of the States to remove citizenship restrictions for
directors of State-chartered banks without consulting the States.WT/TPR/M/88/Add.1
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(Canada) (para 82, Banking Services)  Para 82 states that a domestic bank subsidiary of a foreign
firm is provided national treatment based on its "home" State of incorporation. It is our understandingthat states remain free to discriminate on the basis of state incorporation and therefore foreign
institutions can encounter discrimination  based on their home state of incorporation.  Is this
understanding correct? If not, please explain.
Answer:
A U.S. bank that is owned by a foreign firm has the same rights and privileges as a U.S. bank
owned by a domestic firm.  A state cannot discriminate against an out-of-home state bank on the basis
of its foreign ownership.
(Japan)  (page 103, para 75, Discriminatory measures against foreign banks in obtaining the status of
financial holding companies)  In order for banks to enter securities business through affiliates, it is
necessary for such banks to obtain the status of Financial Holding Companies (FHCs), based on theGramm-Leach-Bliley-Act enacted in November 1999. In this regard, whereas U.S. banks may
"automatically" become FHCs as long as they meet certain requirements, it is provided that 'foreign
banks are required to meet the same level of necessary capital requirement as U.S. banks affiliated to
the FHCs  Japan thinks that this gives too much discretion to the FRB in making the 'well capitalized'
judgement. Therefore, Japan requests the United States to clarify the criteria of FRB  judgementregarding this well-capitalized requirement.  Also, when making judgements on capital adequacy, the
FRB seems to consider whether or not foreign banks rely on public funds for their capital. However,
this practice does not conform to the principle of the Basle Accord, which does not discriminate
capital according to the nature of the shareholders. Accordingly, Japan requests the United States to
eliminate unfavorable treatment of foreign banks branches on the ground of reliance on public funds.
What are the U.S.  views on these points?
Answer:
U.S. banks do not “automatically” become FHCs.  U.S. banks’ capital is evaluated on a
quarterly basis.  Any failure to meet the numerical capital requirements, including a five percent
leverage ratio which does not apply to foreign banks, results in the FHC potentially losing its status if
the capital shortfall is not remedied.  In addition, U.S. banks are examined on-site every year (every
18 months in the case of very small banks) and management is separately evaluated at that time.  U.S.banks are subject to the discretionary judgment of their  supervisors formally once a year and
informally throughout the year, when management could be downgraded as a result of events
occurring in between examinations.  There is no thing automatic about U.S. bank holding company
qualification for FHC status.
The final rule essentially retains the provisions contained in the interim rule that relate to the
factors the Board may consider in making a comparability finding.  The board does not believe that
these discretionary factors are either  vague or overbroad.  Rather, they are factors that allow a
decision on comparability of capital to be made.  All U.S. banks are subject to essentially the same
regulatory framework, which includes frequent examinations and  extensive quarterly reporting.
Foreign banks, on the other hand, operate under supervisory and accounting systems  that can differsignificantly from U.S. systems and do not (and should not) report to U.S. authorities as extensively as
U.S. banks.  Under these circumstances, it is reasona ble for the Board to retain the ability to evaluate
these differences in deciding whether a foreign ba nk’s capital meets the requirements of the FHC
regulations.
Additionally, applying these factors enables the Board to ensure that the minimum capital
levels specified for foreign banks do not unfairly exclude them from FHC status because of theirWT/TPR/M/88/Add.1
Page 196
differing operating structures and  conditions.  Moreover, almost all foreign banks electing FHC status
have had their election become effective  within the 30 day period applicable to U.S. banks,notwithstanding the existence of these discretionary factors.
The Board takes into account a foreign bank’s reliance on government support to meet capital
requirements in determining whether the foreign bank  is well capitalized.  The final rule retains this
factor in the list of factors for determinations of capital and management comparability.  In order to
assure equality of competitive opportunity,  the Board must be able to consider the impact of anyassistance a foreign banking organizations receives from its home country for purposes of meeting
capital requirements.  A bank operating with government assistance is  not competing on market
terms.
(Japan)  (page 104, para 79, Discriminatory measures aga inst foreign banks in raising funds within
the United  States)  When a foreign bank raises funds within the United States, it is necessary todeposit a certain amount of  collateral with the authorities as a guarantee. Under the New York State
Banking Law, for instance, the authorities demand bonds of high liquidity as eligible collateral,
mainly CDs and CPs.  This causes a substantial oppor tunity  cost in complying with the requirement,
since a much higher return could be expected if invested in other assets.  There are also other
problems such as the heavy burden related to admin istrative procedures and price fluctuation  risk of
the collateral bonds. Furthermore, according to a research conducted by the Institute of International
Bankers (IIB), United States and Canada are the only countries among over 40 countries surveyed,
that oblige 'fund collateral  posting by foreig n banks' as business guarantee. Therefore, Japan
requests that 'fund collateral posting by foreign  banks' be abolished, or if not possible, qualifications
for eligible collateral should be expanded to include, for  example, standard loan assets in order to
provide flexibility for foreign banks. What are the U.S. views on these  points?
Answer:
The asset pledge is a prudential measure designed to ensure money is available if liquidation
is necessary.  The New York State Banking Department (the “Department”) has had several meetings
with foreign banks, including  Japanese banks, to discuss their concerns and has taken action to
alleviate those concerns.  For example, repurchase  agreements are now excluded from the liabilities
against which assets must be pledged.  The Department has asked  foreign banks to identify otherinstruments that share characteristics of repurchase agreements and therefore can  be excluded from
the liabilities against which assets must be pledged.  The issue remains under review.  Additionally,
many countries require endowment capital or impose asset maintenance requirements.
(Japan)  (page 105, para 88, Regulations under the Investment Company Act of 1940)  According to
the Investment  Company Act of 1940, an 'investment company,' which is defined as a company thatholds more than 40% of its  assets in the form of investment securities and engages primarily in
securities investment, is subject to regulations  such as registration and disclosure requirement under
the supervision of the SEC. In this context, it should be noted  that there are many cases where
Japanese companies that have a large amount of cros s-holding stocks by their  business practice, are
recognized as  investment companies under the Act, and therefore required to comply with  relevantregulations. Although there are exemption clauses in th e Act, Article 3 (b) 2 that stipulates companies
applying for such exemption should be declared by the SEC to be primarily engaged in other
businesses, this gives  a room for discretion by the SEC. Japan therefore requests the United States to
clarify and relax the criteria of SEC  decisions under Article 3 (b) 2, by introducing objective criteria
such as the composition of their sales or profit dependency ratio based on financial statements. Whatare the U.S. views on this point?WT/TPR/M/88/Add.1
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Answer:
It is true that the Investment Company Act may include some operating companies in the
definition of investment company.  The Act’s drafters anticipated this problem, providing both
statutory exclusions and giving the Securities a nd Exchange Commission administrative authority to
exempt companies.  Over the past 60 years, the Commission has developed extensive administrative
experience in providing appropriate relief to operating companies, even as  new industries and
business models emerged.  The Commission has addressed status issues faced by companies fromaround the world, including Europe, South America, Canada, South Africa, Australia and Hong Kong.
In 1993, the Commission specifically addressed issues faced by biotechnology companies.  In the past
several years, the Commission also has addressed issues faced by Internet and high technology
companies.  The Commission is willing to work w ith Japanese companies to ensure that operating
companies are not hindered in their operations by the  Investment Company Act while making surethat those companies that engage in the types of ac tivities designed to  be regulated under the Act are
so regulated.
Background:  The Investment Company Act defines an investment company as any issuer that
is engaged or proposes  to engage in the business of  investing, reinvesting, owning, holding or trading
securities and has more than 40% of  the value of its total assets (other than Government securities and
cash items) invested in “investment securities.”  Investment securities generally consist of all
securities other than Government securities and securities of majority- owned subsidiaries that are not
themselves investment companies.  Japanese and Am erican companies alike may meet  this definition
if they own significant but not majority, interests in other companies.
Section 3(b)(2) of the Act authorizes the Co mmission to declare by order upon application
that an issuer is primarily engaged in a non-investment business either directly, through majority-
owned subsidiaries, or through controlled compan ies conducting similar types of businesses.  The
Commission uses objective and subjective criteria when analyzing the status of companies under
Section 3(b)(2).  For purposes of evaluating the primary business of an issuer  the Commission
generally uses the following five factor test, with th e fourth and fifth accorded the most weight: (1) the
company’s historical development; (2) its public representations of policy; (3) the activities of its
officers and directors; (4) the nature of its present assets; and (5) the source of its present income.  TheCommission also, however, has proposed and adopted  Rule 3a-1 under the Act, which is a self-
operating exemption from the definition of investment company in the Act for certain operating
companies.  Rule 3a-1 is based on the above standards, but focuses on the objective, statistical tests
relating to the nature of a company’s assets and income.
While the relief available under Section 3(b)(2) and Rule 3a-1 are sufficient for most foreign
and domestic operating companies wishing to offer their securities in the United States, the
Commission has worked with operating companies for whom these standards are inappropriate.  For
example, if a company can demonstrate that it is a bona fide research and development company, the
Commission will consider the use, rather than simply the composition, of its assets and income.  The
Commission is willing to explore with Japanese companies whether an alternative test is necessaryand, if so, to develop appropriate standards that balance the needs of issuers seeking to access the U.S.
markets with the Commission’s mandate of protecting investors.
(EU)  (ii) Banking services
Interstate branching by de novo establishment is still limited (in 17 States).  Could the US please
inform if other States plan to allow it?  What are the reasons for their reluctance?  Does the federalState contemplate to do anything to prompt them to do so?WT/TPR/M/88/Add.1
Page 198
Answer:
With regard to de novo branching, legislation has been passed in a number of states (plus
Puerto Rico and the District of Columbia) permitting some form (mostly on a reciprocal basis) of de
novo interstate branching.  We do not have further information as to when other states might move to
permit this type of interstate branching.  Federal authorities do not plan to compel acceptance of de
novo interstate banking by the remaining States.  Of greater potential\ consequence, we would note
that interstate merger transactions are now permitted in all 50 states
(EU)   Many banks are concerned over the requirement of the Office of the Comptroller of the
currency and of some  State banking supervisors to maintain 'asset pledges' in addition to the paid-up
capital they maintain in their home  country.  Do the US have any plans to ensure the elimination of
this requirement?
Answer:
The asset pledge is a prudential measure designed to ensure money is available if liquidation
is necessary.  The New York State Banking Department (the “Department”) has had several meetings
with foreign banks, including Japanese  banks, to discuss their concerns and has taken action to
alleviate those concerns.  For example, repurchase agreements  are now excluded from the liabilities
against which assets must be pledged.  The Department has asked foreign banks  to identify otherinstruments that share characteristics of repurchase agreements and therefore can be excluded from
the liabilities against which assets must be pledged.  The OCC is also receptive to discussions with
foreign banks  about ways to minimize regulatory burden of its capital equivalency deposit (CED)
within the scope of the current  law.  In additi on, over two years ago the Comptroller of the Currency
requested an amendment to the U.S. law that  would give the OCC more flexibility in setting the CED
for Federal branches and agencies.  This amendmen t would  provide the OCC with more discretion to
adjust the CED requirement to be consistent with the OCC's philosophy  of supervision by risk and theprinciple of national treatment.  In addition, the amendment would afford the OCC  similar discretion
to adjust the CED requirement by regulation that State regulators of key States have today under  State
law.  While to date Congress has not amended the law, the OCC has been discussing this issue on an
ongoing  basis with Congressional staff, other Federal banking agencies, and some State banking
departments in an effort to  find language that is generally acceptable to the various groups.  Wewould also note that many countries require endowment capital or impose asset maintenance
requirements.
(EU) (iii) Security services
The market is de facto almost closed for forei gn investment funds willing to offer their shares.  What is
the rationale of this policy?  Is any remedy contemplated?
Answer:
The United States approach to foreign investment funds is to provide national treatment.
Generally, foreign and domestic investment companies must register with the SEC in order to publicly
offer securities to US investors, unless  an exem ption applies.  A foreign investment company must
obtain an order from the SEC under Section 7(d) of the Investment Company Act of 1940 in order toregister.  Section 7(d) is a prudential standard that ensures that US investors receive the same essential
investor protections whether they acquire shares in  a non-US fund or in a US- based fund.  Alternative
mechanisms for accessing US markets include establishing and registering mirror funds in  the United
States, or conducting a private placement.WT/TPR/M/88/Add.1
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(EU)  There is concern over the impracticability to establish a branch in the US by foreign securities
firms in broker- dealer activities, since registration as a broker-dealer means that the foreign firmestablishing the branch has to register  and become itself subject to SEC regulations.  Is there
anything contemplated to eliminate this barrier?
Answer:
Foreign broker-dealers that wish to operate branches or subsidiaries in the United States are
provided national  treatment; there are no discriminatory barriers.  Foreign broker-dealers wishing tobranch into the US would be  subject to the SEC’s registration and other requirements on the same
basis as domestic branches, including having  the entire entity be subject to regulation such the SEC’s
capital and other requirements.  Foreign broker-dealers, of  course, can avoid subjecting the entire
firm to SEC oversight by establishing a US subsidiary that registers as a  broker-dealer.  In addition,
under Exchange Act Rule 15a-6, foreign broker-dealers may engage in certain limited  US broker-dealer activities without registration, so long as the conditions specified in the applicable exemption
are  met.  Commission staff is working on a proposal  to modify Rule 15a-6 that, among other things,
would streamline  one of the more frequently used exemptions.
(EU)   A market access restriction not mentioned in the Report pertains to foreign electronic securities
markets  providing to remote access facilities ('screen s') to brokers-dealers in the US, so that they can
those markets on a  remote basis.  Could the US explain the rationale of this policy?  Is any remedy
contemplated?
Answer:
The United States provides national treatment to foreign exchanges that wish to operate in the
United States.  Currently, all exchanges, whether domestic or foreign, are subject to the SEC’s
registration and other requirements, unless exempted.
The issue of whether the SEC should allow foreign exchanges access to the US market
through the placement of  screens without complyin g with the SEC’s registration requirements raises
investor protection, market integrity, and  fair competition concerns.  The Commission staff is
working on the issue of foreign market access and the possibility  of offering additional regulatory
options to foreign markets.  A number of issues must be addressed when considering  these options.
US law imposes significant responsibilities on US markets to carry out effectively their self-regulatoryobligations, such as surveillance for and enforcemen t against violations of the federal securities laws.
In considering  greater access to US markets by foreign markets, the Commission would need to
consider  the competitive impact  on US markets, and how access could be provided without impairing
US market integrity or investor protection.  In  addition, US federal law requires that all securities
traded on an exchange in the United States be registered with the  Commission.  This requirementmust also be addressed in considering allowing access to US markets by foreign  exchanges.
(EU)  (iv) Insurance services
Many States have no mechanism for licensing initial entry of non-US insurance companies.  What is
contemplated  to remedy this problem?
Answer:
Please see answer below.WT/TPR/M/88/Add.1
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A branch of a foreign company may write premiums based only on its US situs capital,
whereas all its assets in the  world are subject to liability to policyholders.  How does the US explainthe contradiction between those two rules?
Answer:
Please see answer below.
Some States have regulations that imply direct discrimination for foreign for foreign firms,
such as the requirement  to buy reinsurance from State-licensed companies, or the need of companiesthat specialize in the ‘surplus lines’  market to be ‘white-listed’ by the National Association of
Insurance Commissioners.  Could the US please clarify  how it intends to bring such legislation into
line with its international obligations?
Answer:
Please see answer below.
Given the slow pace of harmonization of legislation between States, what are the subjects that
the Federal State  contemplates to pre-empt to ease the process?
Answer:
We note the EU’s first three questions and the possibility that the EU may choose to raise
them at an appropriate point in the GATS nego tiations.  Regarding the EU’s fourth question, the
United States continues to have authority to regulate insurance.
17. Telecommunications
(Canada) (paras 110 and 118, Licensing and Competition-U.S. commitments to foreign satellite
operators)  What  effect does Federal Communications Commission (FCC) deference to the Executive
Branch on matters of national security and law enforcement (paragraph 110) have on U.S.
commitments to allow foreign satellite operators to  provide satellite services to points in the U.S.
from gateways outside the U.S. (paragraph 118)?
Answer:
FCC deference to the Executive Branch on matters of national security and law enforcement
has no effect on U.S.  WTO commitments.  Such deference is clearly within the scope of U.S. WTO
commitments.
(Canada)  (para 112, Licensing and Competition-Removal of Barriers to Investment)  In para 112, the
U.S. provides  examples to show that WTO Members are in practice able to invest in the U.S. telecom
services market despite the fact that existing legislation prohibits investments greater than 20%.  Does
the U.S. intend to legislate to reflect in law  the "p ractical" removal of barriers to investment by WTO
Members, thus providing the full security of law to foreign firms of WTO Member-countries?
Answer:
This question wrongly assumes that this limitation applies to all foreign investment.  As the
U.S. WTO schedule makes clear, the limitation applies only to direct investment in the ownership of a
common carrier radio license by a U.S. corporation of which more than 20 percent of the capital stock
is owned or voted by a foreign government of its representative, non-U.S. citizens or theirWT/TPR/M/88/Add.1
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representative, or a corporation not organized under the laws of the United States.  Members may be
interested to know that notwithstanding this limitation, there are few if any Members that enjoy a levelof foreign participation in their wireless market comparable to the United States, now home to tens of
billions of dollars in foreign investment.
(Japan)  (page 111, para 107, Harmonization of state-level regulations) Telecommunications services
are regulated at both federal and state level. Japan is concerned that each State not only has different
procedures, but also has different terms and conditions for certification and that applicants mustadapt themselves to the regulations at federal level, as well as those of each State, where they wish to
provide services.  Such differences have caused serious burdens upon those operators. The
Government of the United States should, therefore, resolve the current situation, which could
constitute a market entry barrier for carriers wish ing to enter the U.S. telecommunications market,
and should take a positive position towards harmonizing the state-level regulations in response to thetrend of liberalization and internationalization of the telecommunications business. Does the
Government of the United States have a plan to standardize application forms, and contents and forms
for licenses' report?  If so, please explain its outline and current status.
Answer:
Licensing and reporting requirements of different states are generally speaking not a federal
matter.  It is the right of  each state to determine specific requirements. As a practical matter,
variations in licensing and reporting requirements tend to be minor, and the burden such requirements
pose is substantially less than that typically found in other  countries.
(Japan)  (page 111, para 108, Implementation of Section 1377 of the Omnibus Trade and
Competitiveness Act of 1988) The Government of the United States should refrain from adopting the
approach of exercising pressure upon trading partners by using the threat of resorting to unilateral
sanctions under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988. Pleasecomment on this point.
Answer:
Section 1377 provides a means of monitoring the operation and effectiveness of
telecommunications trade agreements to which the United States is a party, including
telecommunications services commitments in the WTO.   There is little need for bilateral pressure
when countries are fully abiding by their WTO commitments.
(Japan)  (Page 111, Para 109, Regulations on "Dominant Carriers")  a Foreign Carrier Providing
International Telecommunications Services, Which Has "Market Power" in its Own Market, Is More
Regulated than Other Carriers. Such Regulations Have No Rationale and May Result in Unjustified
Discriminatory Treatment Against Foreign Carriers. These Regulations May Also Have the Effect ofUnfairly Restricting Foreign Direct Investment. Applied According to U.s. Domestic Law, These
Regulations, Which Have No Basis under the Wto Agreement, May Be Inconsistent and Should
Therefore Be Revised. What Is the U.s. View on the Matter?
Answer:
These regulations are consistent with U.S. WTO commitments and  there is little evidence that
they have deterred foreign direct investment in the U.S. market, given the hundreds of international
licenses issued over the past several years.  For a greater discussion of the rationale for these
safeguards, see Foreign Participation Order,  12 FCC Rcd 23,891.WT/TPR/M/88/Add.1
Page 202
(Japan)  (page 112, para 110, Certification and licensing criteria for foreign carriers' entry into the
U.S. telecommunications market)  Regarding the certification and licensing criteria for foreigncarriers' entry into the U.S. telecommunications mark et, the Government of the United States retains
discretionary criteria concerning the "public interest" factors, such as "trade concerns" and "foreign
policy", and a "very high risk to competition".  The existence of such criteria is regarded by foreign
carriers, including those from Japan, as a concern lasting into the future.  The Government of Japan
considers that the criteria of "trade concerns" and "foreign policy" should be abolished as these couldbe invoked for refusing the issuance of a certification or license for reasons irrelevant to the
telecommunications policy.  Please explain the position of the Government of the United States in this
regard.  The Government of Japan further considers that the Government of the United States should
clarify and publish some guidelines under which the criteria of a "very high risk to competition"
would be invoked.  Is there any plan to do so?  If not, then why?
Answer:
The large amount of foreign investment in the U.S. telecommunications sector, more than any
other WTO Member, demonstrates that the main intended beneficiaries of the WTO commitments--
investors--have few of these theoretical qualms.  Please consult the FCC’s Foreign Participation Order
for details on these issues.
(Japan)  (page 112, para 111, Restriction of foreign investment on the licensing of radio stations)  The
Government of Japan abolished the restriction of fo reign investment on the licensing of radio stations
for the purpose of conducting telecommunications activities, and thus, has been requesting the
Government of the United States to take the same action on the restriction of foreign investment
stipulated in Section 310 of the Communications Act 1934.  In addition, the Fourth Joint Status Report
on the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy states that, "[t]he
United States Government will continue a dialogue on this issue with the Government of Japan".  On
the other hand, however, the Report states that, "[t]here are no plans to abolish the restrictions on
direct ownership of a  common carrier radio licens e".  Please explain the position of the Government
of the United States with regard to these restrictions. In particular, please explain the grounds for
maintaining the restrictions on direct investment, despite the fact that indirect investment itself has
been fully liberalized.
Answer:
Please consult the response to the similar question on licensing from Canada, above.
(Japan)  (Inter-state access charge)  Regarding the inter-state access charge, the Government of
Japan has been requesting the Government of the United States to establish the legal foundation for
the LRIC model adopted in the U.S. Please provide information on the progress in this regard.  In
addition, the Government of Japan recognizes that different methods, such as the "Bill and Keep"
method, are being considered.  Please also explain about any progress regarding such consideration.
Answer:
The United States does not use or plan to use a LRIC-based model to determine or set inter-
state access charges.  Nevertheless, rates currently in effect, typically as low as 55 cents per minute,are less than one-half rates of countries such as Japan which purport to use a LRIC-based
methodology.
The FCC is currently involved in a proceeding examining the possibility of replacing certain
inter-carrier  compensation arrangements with a “bill and keep” system.  WTO Members, includingWT/TPR/M/88/Add.1
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Japan, are welcome to participate in this proceeding, details of which are available at
http://www.fcc.gov/Bureaus/Common_Carrier/News_Releases/2001/nrcc0113.html
(Norway)   (Satellite services)  Under Telecommunicati on Services, paragraphs 199-123 describe the
opening of the U.S. market to direct access to the INTELSAT satellite system, including access to
INMARSAT services.  Norway welcomes this d evelopment which was overdue.  The former U.S.
restrictions have impeded on the development of INTELSAT and INMARSAT.  This has slowed down
the worldwide.
Answer:
See responses below on various satellite questions
(EU)   (para 108) In 1997, the Federal Communications Commission adopted two rulings to
implement U.S. commitments in the Basic Telecoms Agreement. Ho wever, despite some improvements,
it retained the very unclear “public interest” criteria which can be invoked to deny a licence to aforeign operator for various motives, such as “trade concerns”, “foreign policy concerns” and “very
high risk to competition”. Can the U.S. give any assu rances that the "public interest" criteria will be
revoked, or at least clarified?
Answer:
The United States has no plans to revoke the public interest test or the FCC’s deference to the
Executive Branch in areas of national security, law enforcement, foreign policy and trade policy.  It is
clear that these elements have not deterred foreign investment in the United States, given that the
United States has hosted more foreign investment in its telecommunications sector than any other
WTO Member.
(EU) (Licensing and competition)  Also foreign investo rs in the communications sector still face a
degree of  uncertainty and lengthy procedures (in particular, the uncertainty of leaving the
implementation of U.S. commitm ents to suppress restrictions to indirect investment to FCC waivers, in
the absence of any specific legislation in this regard). Could the U.S. confirm that it is willing to
introduce more certainty in procedures relating to foreign investment in the U.S. communications
sector?
Answer:
Please consult the response to the similar question on licensing from Canada, above.  Based
on the number of foreign investors in the U.S. telecommunications market, many investors and
carriers do not find the procedures so uncertain as to act as a deterrent to investing in the U.S. market.
(EU) (para 112) The report notes that it took more than seven months for a European company to get
approval. This is much longer than what happens in the EU for a similar case. The report does not
mention in that respect that the company had to go through two procedures in parallel (those of theFCC and the DOJ) and that the second one was much quicker to assess the same issues. Do the U.S.
authorities have any plans to suppress duplication and speed up the process?
Answer:
The FCC’s review and DOJ review operate independently from each other, and each
regulatory agency operates under different statutory obligations. There are many reasons why anycompany – whether U.S. or foreign – including a large European company, may require an extensive
review.WT/TPR/M/88/Add.1
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(EU)   (para 112) The report also does not mention that the U.S. Congress considered during the year
2000 legislation that would have severely limited the ability of foreign govt-owned companies toinvest in U.S. telecommunications companies. In pa rticular, one piece of legislation would have, if
adopted, constituted a clear violation of U.S.  co mmitments in the WTO on foreign investment and
would have affected the interests of European companies. Such initiatives are affecting the climate for
foreign investment in the sector and bringing uncertainty to the procedures  above-mentioned, in
contradiction with the objectives of the WTO.
Answer:
In the U.S. system of government, the U.S. Congress is able to consider and debate any
legislative  initiative proposed by any Member of Congress.  Consideration of all legislative proposals
contributes to the vigor  and dynamism of the U.S. democracy.
(EU)  (para 115, International Internet charging arrang ements)  Could the U.S. please explain how it
defines a “public  telecommunications service”?
Answer:
For the United States, a public telecommunications service means a telecommunications
service required to be offered  to the public generally.  Internet services do not meet this definition.
(EU)  (Satellite services) The EU notes that it takes a long time for foreign operators to get an
unconditional license:  what does the U.S. intend to do to remedy this situation which tilts the balance
in favor of US-based operators?
Answer :
FCC licenses for both U.S. and foreign operators routinely include conditions.  In fact, certain
conditions are required by statute to be included in each license.  (See Section 309(h) of the
Communications Act).  We also note that the use  of conditions appears to be a routine practice among
other national regulatory authorities.  Concerning the speed of action by regulatory authorities, theFCC has undertaken a number of initiatives to improve the time taken to  process applications,
regardless of whether the satellite operator is U.S. or foreign.
(EU) (Satellite services) (para 120) The ORBIT act imposes criteria on entry into the US market of
Inmarsat and New  Skies, in particular statutory privatization criteria which the FCC must apply in
order to determine whether to grant  market access to these entities. However, since these criteriaapply to no other competitor, foreign or domestic and could lead the FCC to limit these entities’
access to the US market (thus preventing an increase in the number of  players in the market), could
the U.S. explain how this conforms  with the intent of the Act to promote competition?  Also, one
criterion for allowing market entry by these entities conditions market access on the place of
registration of the company
5 even for WTO members’ territories : can the U.S. explains how this
conforms with its WTO  obligations on market access, Most Favored Nation (MFN) and National
Treatment?
                                                     
5 “Any successor entity or separated entity shall be subject to the jurisdiction of a nation or nations that-
(A) have effective laws and regulations that secure competition in telecommunications services;
(B) are signatories of the World Trade Organization Basic Telecommunications Services Agreement; and(C) have a schedule of commitments in such Agreement that includes non-discriminatory market access to theirsatellite markets.”WT/TPR/M/88/Add.1
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Answer:
The licensing criteria of the ORBIT Act apply both to U.S. or non-U.S. satellite systems that
are the progeny of the intergovernmental satellite organizations (IGOs) – INTELSAT and Inmarsat.
The purpose of the licensing criteria is to ensure that the competitive advantages formerly enjoyed by
the IGOs have not been passed on to the newly privatized companies.  The United States has
previously made clear to its negotiating partners in the WTO that it not grant market access to a
privatized IGO that would likely lead to anti-competitive results.  In applying the licensing criteria, theORBIT Act directs the FCC to construe the Act’s provisions in a manner consistent with U.S.
obligations and commitments for satellite services under the Fourth Protocol of the General
Agreement on Trade in Services.
The FCC has granted New Skies full access to the U.S. market, as it has done for Intelsat
LLC, --  an FCC licensee.  The FCC  has recently granted applications giving Inmarsat full access tothe U.S. market for mobile satellite services.  It should be noted that Inmarsat has and continues to
provide service in the U.S. market for many years including maritime, aeronautical and international
mobile satellite services.
(EU)  (Satellite services) (para 122, 123) New Skies and Inmarsat are EU-based companies.
According to the US commitments in the WTO, market access should not be limited for companiesconstituted and registered in an EU  member state (thus intending to provide a cross-border service to
the US) or for companies constituted in the US t hat European companies own or control in the sense
of the GATS (thus having a commercial presence in the US). Can  the US explain thus why it takes so
long for those companies to get full and unconditiona l market access in the US? What is the rationale
of requiring these companies to conduct IPOs and how does it conform to the US WTO obligations?
In particular, why is there a need for a « substantial dilution of Intelsat signatories » as mentioned in
paragraph 122 and how is it consistent with US WTO obligations?
Answer:
The status of New Skies and Inmarsat’s access to the U.S. market is described in response to
the question above.  The need for privatized IGOs to conduct an IPO to dilute former signatory
ownership was part of the arrangements agreed upon in privatizing the IGOs.  The concept, as
provided for in the ORBIT Act, is intended as on e means to assure that privatized IGOs become
independent of former signatories and do not receive preferential treatment as a result of  their former
ownership structure.  The ORBIT Act additionally,  however, recognizes that market conditions and
business factors are considerations in the timing of an IPO and therefore gives the FCC flexibility, in
carrying out this  part of the Act’s criteria.  The FCC has exercised this flexibility by (1) determining
that the Act permits it to grant  full market acces s to privatized IGOs prior to their IPO, and (2)
granting requests of both New Skies and Inmarsat  to extend the period under the Act to conduct an
IPO.
(EU)   Following a US decision to allocate to second generation systems the frequency bands which
had been identified for third generation systems by  the ITU, there is a lack of availability of
frequencies in the US that restricts access of 3G mobile communication systems to the US market.Could the US explain the efforts and progress it has  made in ensuring future availability of
frequencies for foreign 3G mobile  communication systems in the US?WT/TPR/M/88/Add.1
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Answer:
The US is still in the process of developing a plan for the selection of 3G spectrum.  For
additional information on this process, please visit the Department of Commerce's website at
"www.ntia.doc.gov/ntiahome/threeg/index.html"  and the FCC's website at "www.fcc.gov/3G/" .
(EU)  Can the US explain how current universal service is defined and financed? In particular can it
give assurances that foreign consumers are not subsidizing universal service obligations in the US?
Answer:
For a detailed explanation of the U.S. universal service regime, please review the FCC
website at  www.FCC.gov.   All FCC Orders related to Universal Service are posted.
(EU)  For digital terrestrial television, the US has mandated an exclusive transmission standard in the
US (the ATSC developed in the U.S.), which preve nts a technology (DVB-T) developed in Europe and
being adopted in several countries around the world from entering into the US market. Can the USexplain why it does not let the market  choose which technology is working best?
Answer:
The United States, like all countries, mandates a national television broadcast standard
because such a policy is appropriate given the unique technical and economic requirements of the
broadcasting industry.  For digital television, the U.S. adopted a standard that had been developed bythe private sector under the auspices of a special FCC Advisory Committee established for that
purpose.
The EU has established a policy that effectiv ely mandates a supranational, EU-wide digital
television standard.  In  particular, Direct ive 95/47/EC, dated 24 October 1995 ("On the use of
standards for the transmission of television  signals"), specifies in Article 2(c) that "All television
services transmitted to viewers in the Community whether by  cable, satellite or terrestrial means shall
... use a transmission system which has been standardized by a recognized  European standardizationbody."  However, the only standard recognized by a European standardization body is the DVB
standard mandated by ETSI.  Therefore, the result of this decree is a single standard for digital
television broadcasting.
E Commerce
(Japan)  (page 15, para 13, Electronic commerce)  What is the United States view on the imposition of
customs duties  on digital  products delivered through the Internet?
Answer:
The United States believes the current moratorium on such customs duties should be made
binding and permanent and invites Japan to actively support this position.
(Norway)  (Electronic commerce)  On the subject commerce, paragraph 14 gives a short presentation
of what seems to be an array of different taxation sy stems in different states within the United States.
We will not raise the issue of international harmonization of taxation of trade, which does not belong
to this forum,  but would like to express intere st for our U.S. colleagues to share with us their
experience with the apparently wildly  different syst ems within their own boundaries.  This could shed
some interesting light on the issue of when harmon ization in needed and when different systems can
coexist without creating distortions.”WT/TPR/M/88/Add.1
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Answer:
The U.S. Congress recently extended the moratorium  on Internet taxes for two years.  The bill
has been forwarded to the President.  Congress pass ed the original ban on Internet taxes to prevent
states and local governments from imposing new taxes that might discourage the growth of e-
commerce, which still accounts for a small percent of all retail sales.
(Brazil)  How does the U.S. analyze the issue of taxation in electronic commerce? Does the U.S. fully
agree with the  views raised in OECD documents such as, for instance, the Taxation FrameworkConditions?
Answer:
The first question is not clear.  There are many interested parties that analyze the issue of
taxation in electronic commerce.
See above answer to Norway’s question.
(Brazil)   Does the US maintain the position stated in document S/C/W/81, that “software” is classified
as a service  under computer and related services of the W/120 under CPC 842 (software
implementation services)?
Answer:
There are software services, as identified in the CPC.  These generally refer to  software
provided on a customized basis.  This does not mean that all software is a service, and we would reject
any assertion that this classification applies to all software.
(Brazil)  Does the U.S consider that, addressing electronic transmissions as its similar tangible goods
might have  trade-distortive effects? Is it possible that electronic commerce brings negative outcomes
to traditional exporters of  equivalent physical products?
Answer:
The U.S. supports a liberalized trade environment for digital products, therefore we examine
these issues not in the context of trade distortions, rather we explore ways that foster a liberal trade
environment.  On the second question, it’s not clear what Brazil is asking, but in the U.S., e-commerce
can bring benefits to traditional exporters of all products, be they physical or electronic.
(Brazil)   The US Technology Transfer Commercialization Act of 2000 includes provisions for a
federal agency to  grant licenses for federally owned inventions only to licensees agreeing tomanufacture substantially the license- related produc ts within the United States (WT/TPR/S/88 § 183).
Electronic Commerce is supposed to have  positive effects on competition, for instance, by allowing
SME’s to have access to the global market and by possibly reducing the economic gap between
Developed and Developing Countries since location is no longer important.  In  this sense, is the
working requirement embodied in the condition of  manufacturing substantially license-related
products within the US compatible with articles 7 and 27(1) of the TRIPS Agreement? Is it possible
that US legislation such as this Act hinder transfer and dissemination of technology and, thus, harm
the benefits of e-commerce for the developing countries?WT/TPR/M/88/Add.1
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Answer:
This provision is not a local working requirement, thus it is entirely consistent with articles 7
and 27.1 of the TRIPS Agreement.  The provision relates to situations where the United States is
simply a patent owner.  Consistent with the TRIPS Agreement, all patent owners have the right to
conclude licensing contracts.  In this provision, the United States is not conditioning the enjoyment of
patent rights on a working requirement, as Brazil does in Article 68 of its  patent law.
Moreover, this provision does not "hinder transfer and dissemination of technology."  Nothing
in this provision  prevents the publication of a patent in order to disclose the technology so that others
can learn of it. Indeed, the U.S.  Patent and Trademark Office makes the full text and drawings of all
patents granted by the United States since 1790 available on its web site without charge so that all
countries may obtain access to the information.
(Brazil)   The US has highlighted its regional initiatives toward liberalization in its document
WT/TPR/G/88 (§44).  How is the US approach in those fora  such as NAFTA, FTAA and the
Transatlantic Economic Partnership (TEP), on matters related to Electronic Commerce?
Answer:
E-commerce is not explicitly covered by the NAF TA.  The US participates in the FTAA Joint
Government-Private  Sector Committee of Experts on Electronic Commerce in accordance with theCommittee’s mandate to increase and broaden the benefits of electronic commerce.  E-commerce is
not explicitly being discussed in TEP.
18. Transportation Services
Maritime Transport and Related Services
(Canada)  (para 40, Maritime Transport and Related Services--Cargo preference)  Para 40 notes that
international cargo under the preference system acc ounts for 29% of international cargoes carried by
U.S. flag vessels in FY 1997.  Cargo preference is made up of agricultural, military, and exports ofAlaskan crude oil.  Please provide a breakdown of the 29% between agricultural, military, and crude
oil.  Also, if possible, please provide more recent figures.  Are agricultural and military cargoes
diminishing in recent years?
Answer:
Based on preliminary trade data for CY 2000, preference cargoes accounted for 44 percent of
the total U.S.-flag share, or 11.9 million tons. Of  this amount, agricultural commodities, including
relief aid and government food assistance, accounted for about 50 percent of the total U.S-fag carriage
of  preference cargoes, followed by Alaskan crude oil, at about 10 percent, with military cargoes
accounting for about 5 percent.
(Canada)  (para 42, Maritime Transport and Related Services--Maritime Security Program)
According to para 42,  subsidy outlays for the Maritime Security Program (MSP) were US$38 million
in 1997, while funding in 1999 was US$94.  Please explain the rationale for this sharp increase from
1997 to 1999.  Para 42 also states that funding of  up to US$100 million is authorized through 2005
for MSP.  Does this mean US$100 million will be provided on an annual basis until 2005; or does this
mean a total of US$100 million is being provided over the six year period (from 2000-2005inclusive)?  If it is the latter, what is reason for the decrease in subsidy outlays?WT/TPR/M/88/Add.1
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Answer:
The Maritime Security Act of 1996 provides that funding may not exceed US$100million per
year. Funding is subject  to annual appropriation limits set by the Congress each year.
(Hong Kong) (page 96, para.43, Maritime Transport, Jones Act )  We are concerned that the Jones
Act limits cargo and domestic passenger service betwee n ports in the U.S. to ships that are registered
under the U.S. flag, U.S. crewed, and bui lt in the US.  That poses a major barrier for market access to
the U.S. market.  Could the U.S. explain whether the conditions which created the need for suchprotection still prevail; and if so, provide the details of such conditions?
Answer:
There are about forty maritime nations that have cabotage regimes that reserve the domestic
trade to national-flag vessels. There has been no change in the Administration’s support for U.S.
cabotage provisions as they apply to the movement of  passengers and cargo in the U.S. domestictrades.
(Switzerland)  (Maritime Transport and Related Services-- GATS 2000 negotiations )  What are the
objectives of the United States in the current GATS 2000 negotiations on maritime transport services?
Answer:
We would like to see verifiable liberalization of maritime transport services in the GATS
services negotiations.
(Japan)  (page 94, para 36,  Maritime transport and related service--Retaliatory Action Taken by the
FMC)  Japan is of the view that before resuming the Negotiations on Maritime Transport, any
retaliatory action taken by the FMC can become consistent with the DSU.  Please provide the U.S.
view on this point.
Answer:
Please clarify the question.
(Japan)  (page 94, para 36,  Maritime transport and related service--Retaliatory Action Taken by the
FMC)  Regarding FMC sanctions in 1997 that imposed  fees against Japanese ocean carriers on the
grounds of allegations with regard to Japan  port practices, Japan would like to stress again its view
that the sanctions violate the MFN and national treatment clause of the Treaty of Friendship,
Commerce and Navigation between the U.S. and Japan. The sanctions were suspended in 1997, andwithdrawn in May 1999 as a result of bilateral talks.  The description in this paragraph is not
appropriate, because it can be construed as ending.  Despite the situation of the port transport sector
in Japan remarkably improved,* there still remains the action by the revised order dated 9 August
2001 that requires the United States, Japan and third countries carriers to file reports.  In this regard,
Japan would like to point out that the revised or der imposes submission of documents beyond the
carriers responsibilities such as copies of any cabinet order, ministerial ordinance or notification
implementing or interpreting the revised Port Transportation Business Law.  We would like to seek
the U.S. views on this matter.
* The improved situation is as follows;
-  As for the previous consultation system  its procedure has been facilitated significantly since
shipping companies and port transporters reached an agreement in October 1997.WT/TPR/M/88/Add.1
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-  Japan amended the Port Transportation Business Law and abolished the economic needs test
requirement at the major 12 ports (Chiba, Tokyo, Yokohama, Kawasaki, Shimizu, Nagoya, Yokkaichi,Osaka, Kobe, Shimonoseki, Kitakyushu and Hakata) last year, as a result there actually appeared to
be new participation in the port transport business.
-  Port terminal services have steadily progressed toward 24-hour/day operation.
Answer:
In light of the FMC’s ongoing orders and expr essions of continuing concern made in its
proceeding, we do not understand what the GOJ refers to as the “description in this paragraph [being]
inappropriate because it can be construed as ending.”  With regard to the FMC’s May 28, 1999
decision, the FMC expressed disappointment with  the pace and degree of proposed reform in Japan’s
port transportation sector, compared to the 1997 commitments of the GOJ to market opening and
increased accountability.  The FMC nevertheless withdrew the final rule, including the sanctions,when it concluded that its record regarding the effects of GOJ laws and regulations on the port
transportation sector had or was likely to become stale and needed to be refreshed in order “to
continue its review of this matter and to update its record in this proceeding.”  Port Restrictions and
Requirements in the United States/Japan Trade, 28 S.R.R. 822 (FMC, 1999), 64 FR 30245 (June 7,
1999). U. S. law authorizes the Commission to “require, by order, any . . . carrier to file . .. a report . . .[and] documentary material” as considered necessary by the Commission.  46 U.S.C. app. 876(1)(f).
The FMC’s semiannual reporting requirement imposed in May 1999 on  Japanese and United States
carriers, was entered pursuant to this authority, and was replaced by the FMC’s August  9, 2001 order
to the same carriers to file information and docum ents relating to the changes in laws and regulations
of the GOJ.  The FMC concluded that “it is necessary to gather further information and to update the
record in this proceeding” in light of recent legislative and ministerial enactments of the GOJ.
Responding on the separate issue raised in the Japane se comment about an "improved situation" in the
port transport system, we note that port operations in Japan continue to be controlled by the
stevedoring cartel, the Japan Harbor Transport Association (JHTA), with support from the Japanese
government.  The new law that took effect on November 1, 2000 imposes additional government
controls on users of stevedoring services.  A sampling of the practices that continue to impair access
and competition at Japanese ports are "prior consultation," enforced by the JHTA, which limits whatcarriers can and cannot do on the docks; restrictive government stevedoring permission requirements,
administered by MLIT; and mandatory manning and equipment levels at Japanese ports enforced by
MLIT.  With respect to the latter practice, mandatory manning levels have, in fact, been raised under
the new law.
(Japan)  (page 95, para 40,  Maritime transport and related service--Cargo preference measure)  At
the last review, the United States replied  ake note to the comment by Japan regarding the
abolishment of the Cargo Preference Measures and th e disclosure of information concerning cargoes
subject to cargo preference requirements and those actually carried on US-flag vessels.  Please give
details on progress of the U.S. consideration on the abolishment of the above Measures, as well as on
the disclosure of the information concerned.
Answer:
Please clarify this question.
(Japan)  (pages 95-6, paras 41-2,  Maritime transport and related service--MSP)  There are 3 classes
of shipping  company:  rusts  who own U.S.-flag vessels;  . S.-owned ship-management companies
who charter those vessels; and  foreign-owned ca rriers  such as APL, Maersk-Sea-Land, who time-WT/TPR/M/88/Add.1
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charter those vessels. Which of these 3 classes can directly benefit from MSP subsidies?  In this
regard, please indicate to which class the following words used in this report belong.
1) U.S. shipping companies on 5th line in paragraph 36, p.94
2) U.S. companies on 3rd line in paragraph 37, p.94
3) U.S.-flag vessel operators on 2nd line in paragraph 42, p.96
Answer:
Please clarify this question.
(Japan) (page 96, paras 42,  Maritime transport and related service–MSP)  Please provide the results
so far of vessels commandeered under the MSP scheme. It appears that the MSP has the same effect
as direct support measures for maritime industries, since despite aiming at national securities,
subsidies are supplied for the time corresponding to ordinal commercial operation and consequently
distort free and fair competition. Please provide the U.S. view on this point.
Answer:
Please clarify this question.
(Japan)  (page 96, paras 44,  Maritime transport and related service--Foreign vessels for cruises)
The paragraph  mentions that,  recently, a number of legislative proposals have been made for a
relaxation of restrictions on the use of foreign vessels for cruises in the United States  Please explainthe prospect of enacting such legislation.
Answer:
We do not know what the prospects are for enacting these legislative proposals.
(Japan)  (page 96, paras 45,  Maritime transport and related service--Longshore work by crew)
Please provide:
1) the list of countries permitted to carry out long shore work by the crews of vessels registered in and
owned by the nationals of those some countries on the basis of reciprocity;
2) the names of organization referred to in the wording  the authorities in the first line.
Answer:
See attached list of countries. For additional information see Federal Register Notice: June
13,1996 (Volume 61,  Number 115), pages 29941-29949.
Countries that do not permit longshore work by crewmembers aboard U.S-flag vessels:Algeria, Angola, Argentina, Australia, Ba hamas, Bangladesh, Belgium, Belize, Benin,
Bermuda, Brazil, Burma, Cameroon, Canada, Cape Ve rde, China, Colombia, Comoros, Costa Rica,
Cote d'Ivoire, Croatia, Cyprus Djibouti, Do minica, Dominican Republic, Ecuador , Egypt, El
Salvador, Eritrea, Estonia, Fiji, Finland, France, Gabon, Germany, Ghana, Greece, Guatemala,
Guinea, Guyana, Haiti, Honduras, Hong Kong, Icel and , India, Indonesia, Ireland, Israel, Italy,
Jamaica, Japan, Jordan, Kenya, Korea, Kuwait, Liberia, Lithuania, Madagascar, Malaysia, MaldiveWT/TPR/M/88/Add.1
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Islands, Malta, Mauritania, Mauritius, Mexico, Micronesia, Morocco, Mozambique, Namibia, Nauru,
Netherlands, Netherlands Antilles, New Zealand, Ni caragua, Pakistan, Panama, Papua New Guinea,
Peru, Philippines, Poland, Portugal (including Azores ), Qatar, Romania, St. Lucia, St. Vincent & the
Grenadines, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Slovenia, Solomon Islands, South
Africa, Spain, Sri Lanka, Sweden, Taiwan , Tanzan ia, Thailand, Togo, Trinidad and Tobago, Tunisia,
Uruguay, Vanuatu, Venezuela, Western Samoa, Yemen, Zaire.
(EU) (para 40, Maritime Transports And Related Services--International shipping services)  Could
the U.S. please give updated figures concerning the value/volume of the international cargo carried
out under each of the cargo preference instruments mentioned?
Answer:
See response to Canadian question, above. Updated information is not available at this time.
The Maritime Administration’s web site will have updates (www.marad.gov)
(EU) (para 43-44,  Maritime Transports And Related Services--International shipping services) No
foreign-built vessel can be documented and regist ered for dredging, towing or salvaging in the U.S.
despite the fact that part of the U.S. fleet needs renewing and many U.S. ports are in need of dredging.
Could the U.S. confirm whether there are any initiatives to relax these restrictions?
Answer:
There are no such initiatives that we are aware of.
(EU) (para 48  Maritime Transports And Related Services--International shipping services) Progress
on the U.S.  Administration’s efforts to obtain implementing legislation for the OECD Shipbuilding
Agreement is unclear. Could  the U.S. give an indication of how close it is to achieving this?
Answer:
At present, no guidance has been received from the new U.S. Administration on the subject of
shipbuilding  because key members of the new Administration have not yet been appointed at severalagencies, and many officials  who have been appointed have only recently assumed their new
responsibilities. In recent months, we have continued our consultations with Members of Congress
and representatives of the U.S. shipbuilding industry. In those consultations we have received no
indication that there is sufficient support in the industry or Congress for the near- term implementation
of the OECD Shipbuilding Agreement by the United States.  Our consultations indicate that,  while
some Members of Congress and some segments of the U.S. industry remain interested in U.S.
ratification of the Agreement, there remains significant opposition to U.S. participation in the
Agreement. We will continue to inform the OECD  Council Working Party on Shipbuilding of any
further developments concerning the prospects for U.S. ratification.
(Norway ) According to available information, the US controls the fourth largest fleet in the world
(01.01.2001: 855 vessels, 41.6 mill. dwt).  It would be of interest to have more information on the size
of the maritime sector in the US  and the economic activity which this fleet create in terms of turn over
and employment on board and ashore.
Answer:
We are not aware of the information referred to. Information on the U.S.-flag fleet is available
from the Maritime  Administration’s web site: www.marad.dot.gov.WT/TPR/M/88/Add.1
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(Norway ) In paragraph 37 it is stated that "virtually all U.S. international ocean-borne trade is
carried by foreign flag  vessels".  Does this imply that the impact of the US cargo preference schemesas described in paragraph 40, and the  subsidy scheme (amounting to USD 94 mill in 1999) as
described in paragraph 42 is negligible?  Would it be possible to give figures on the share of U.S.
international ocean-borne trade, which is carried by US owned vessels under foreign flags ?
Answer:
We would agree that the amount of  preference cargoes carried by U.S-flag vessels is
negligible. Concerning the question of the amount of subsidy provided to operators under the MSP
program, there is considerable opinion that  the amount is barely sufficient to provide adequate marine
transportation assets in time of war or national emergency. With respect to participation of U.S-owned
vessels in U.S. international trades, this information is not collected.
(Norway)  As regards the Ocean Shipping Reform Act (OSRA 1998) described in paragraph 38, the
Federal Maritime Commission (FMC) is about to finish an "Impact Study Report" covering the two
first years of this act.  Finalization  and presentation of the findings of the study has, however, been
delayed, and will probably take place at a later stage.  Could the US give an overview of the most
significant findings of the report, and indicate whet her any adjustments of the US regulatory regime
covering the container liner industry can be expected?
Answer:
The FMC has announced that the report was released to the public on September 26, 2001;
please check the FMC  website:www.fmc.gov.
(Norway) With reference to paragraph 40, Norway and other countries have previously addressed the
reservation of exports of Alaskan crude oil to US flagged vessels in the WTO context.  We maintain
the position that this reservation is not in the conformity with the standstill clause contained in
paragraph 7 in the Decision on negotiations on maritime transport services annexed to the GATSagreement.  We would be interested to have figures  on the volumes of this trade in terms of annual
export volume and number of shipments.
Answer:
As of September 21, 2001, there have been no export shipments of Alaskan crude oil since
April of last year. For CY  2000, export shipme nts were approximately 1.5 million tons. The volume
of shipments per vessel have ranged from  about 100,000 to 180,000 tons.
(Norway)  To the description of the Jones Act can be commented that a maritime bill is proceeding in
Congress that would, if enacted, enhance US cabotage laws relating to cable laying and vessel escort
and towing operations.  Extending the scope of the Jones Act would be regrettable as seen from a
Norwegian point of view, both as a matter of principle and because this particular bill can hurtNorwegian interests in the US.  We would be  happy to be informed on the position of the
administration on these proposals which we by the way question whether are in  accordance with the
standstill commitment contained in the Decision regarding maritime transport services made by  the
Council for Trade in Services on 28 June 1996.
Answer:
The legislative bill in question would extend certain cable laying activities in U.S. waters to
U.S.-flag vessels. These  activities are not related to cabotage. The towing and escort provisions wereWT/TPR/M/88/Add.1
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enacted into law last year under 46 App. U.S.C ., SEC.119. The legislative proposal for cable laying
activities is contained in a House of Representative’s bill (HR 8421). The Administration has made nocomment on this latter proposal.
(Australia -- maritime)  US laws governing coastal shipping, the 1920 Merchant Marine Act and the
1885 Passenger  Services Act, effectively preclude foreign involvement in the US maritime sector.
How does the US intend to liberalize  the unusually restrictive laws on the provision of maritime
services?
[Answer to be supplied]
Air Transport Services
(Switzerland)  (GATS Air Transport Annex)  Would the United States support a clarification by the
Council for Trade in Services of the effective scope of the GATS Air Transport Services in the context
of the current review of this Annex?  What is the United States’ view on the possible extension of thecoverage of the GATS Air Transport Annex?
Answer:
The United states believes that a Council clarification of the effective scope of the Annex is
unnecessary.  The  meaning of the Annex can be understood by reading its terms and definitions, and
by understanding that the intent of the drafters was not to duplicate or disrupt the longstandingbilateral air transport services agreements on which  the sector has relied for over half a century.
(Hong Kong)  (para 57)  We note that the U.S. maintains MFN exemptions with regard to the selling
and marketing  of air transportation services as well as the operation and regulation of computer
reservation system (CRS).  Would  the U.S. wi thdraw its exemptions upon expiry of 10 years in
accordance with the relevant GATS provisions?
Answer:
The GATS does not contain an obligation to withdraw exemption at the end of ten years' time.
Moreover, the  conditions creating the need for the exemption still exist.
(EU) (para 52, Recent developments)  It is stated in the report that, by including beyond rights (or the
“fifth  freedom”), the Open Skies agreements  have “greatly enhanced” market access for U.S.
carriers and their foreign  counterparts in the geographic areas covered. How many foreign carriers
are currently taking advantage of their rights  under such agreements to fly fifth freedom flights inbetween the U.S. and other Open Skies countries, wh ich  countries are these airlines from and which
routes do they operate?
Answer:
This question suggests a misunderstanding of the Fifth Freedom provisions of open-skies
agreements; open skies agreements afford far greater Fifth Freedom rights than the question implies.The open-skies rights to serve third countries are granted, regardless of whether or not those third
countries also are open-skies partners of either of the first two.  Moreover, the rights can be exercised
via cooperative services arrangements like code sharing.  The benefitting carrier need not fly the
routes itself.  The United States does not require the filing of carriers’ routings, which change at
airline managers’ discretion, and the United States does not otherwise compile this information.WT/TPR/M/88/Add.1
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(EU) (para 53, Recent developments) In the context of the “multilateral” Open Skies agreement, the
U.S. has sought  to maintain a tight control on fo reign investments by U.S. carriers - why is it not
considered beneficial or appropriate  for U.S. companies to make international investments in the
aviation sector in the same way that they do in other industries?
Answer:
There is historical basis for concern about the utilization of aviation "flags-of-convenience."
The United States  imposes the least economic regulation on its flag carriers of any country in theworld, but imposes probably the most stringent safety, environmental, and consumer-protection rules,
in most cases substantially exceeding the ICAO benchmark standards.  While the original four
partners in the multilateral agreement present no concern in this regard, the agreement is intended to
be available for ready accession by other states.  The agreement should not become a means by which
an air carrier actually owned or controlled by U.S.  interests serves the United States under a foreign
flag, thereby evading U.S. operating standards.
(EU) (para 53, Recent developments) Under what exact circumstances would the U.S. Government
make use of the provision in the "multilateral" Open Skies agreement that allows it to cancel the
traffic rights of an airline based in one of the parties, but controlled by American nationals?
Answer:
Please see the preceding answer.
(EU)  (para 56, Recent developments) Given that in several EU/U.S. transatlantic markets, the market
share of carriers, in particular U.S. carriers, fr om outside the principle alliance appears to have
fallen considerably, is there evidence to show that the combination of an Open Skies agreement and
anti-trust immunity for an alliance maintains enough choice in those markets for time sensitive
passengers?
Answer:
In any given market, time-sensitive passengers have as much choice as their number and
affluence command in a market economy.  In a mature, deregulated, open-skies market, actual and
potential competitors apply continuous pressure to this effect.
(EU) (para 57, Further liberalization of air transport services)  Are there any plans to bring air
transport into the  NAFTA agreement and thereby adopt a more liberal regime on a regional basis?
Answer:
No.
(EU) (para 57, Further liberalization of air transport services)  There appears to be little envisaged
by the U.S. in the  way of further liberalization of air transport services. Given the general benefits of
liberalization and increased competition in all serv ice industries, in particular for consumers, does
the U.S. see any scope at all for further liberalizing measures providing for market access by foreign
carriers into the U.S. market or relaxation of foreign investment rules?WT/TPR/M/88/Add.1
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Answer:
The United States foresees substantial continuing liberalization of air transport services under
reciprocal aviation agreements, including bilateral, plurilateral, regional, and multilateral agreements
among committed countries.
(EU) (para 62, Conditions affecting foreign competition, Foreign ownership and cabotage)  The U.S.
rules on "wet" leasing prevent any lease of non-U.S. registered aircraft by U.S. carriers. No
Community-registered aircraft with Community flig ht crew can thus be le ased to U.S. companies.
Does the U.S. Administration intend to eliminate this restriction as a result of further GATS
negotiations?
Answer:
Wet leasing, like other exercises of traffic rights, is excluded from the GATS by the Annex on
Air Transport Services.  Excluded services are not negotiable under GATS.
(EU)  (para 68, Conditions affecting foreign competition, Airport and other services)  There is concern
on the FAA re-authorization bill (AIR-21) of April 2000, which directs the Administrator to establish
an aircraft repair and maintenance advisory panel, and also directs the Secretary of Transportation
to request information from foreign air carriers in or der to assess balance of trade issues. How is the
U.S. Administration going to ensure that this bill does not conflict with the GATS-specificcommitments undertaken by the U.S. regarding aircraft repair and maintenance services?
Answer:
The work of the Aircraft Repair and Maintenance Advisory Committee is ongoing. Carrying
out this legislative mandate need not compromise U.S. specific commitments under GATS.
(Brazil – air service)  para. 58. In the context of the review of the GATS Annex on Air Transport
Services there are  U.S. statements regarding th e opportunity of adding new services under the
coverage of the GATS. In the view of the U.S., which are the services that could/would be part of this
coverage, since document S/C/M/50 do not clarify  this point.
Answer:
During the period of the meeting reported in S/ C/M/50 and the preparation of the TPR report,
the Air Annex review was at a relatively early stage.  At that time, it would have been premature to
rule out any possible changes.
Now, however, the United States has conclude d that there should not be any expansion of
GATS coverage of air transport or related services.  The U.S. views are set forth in more detail in its
paper, S/C/W/198, October 02, 2001.  Neither the Secretariat papers distributed in August nor any
member contribution has presented any substantive  justification for further application of the
Agreement to air transport traffic rights or to related services.
(Brazil – air services) para. 66. Could more information be provided on the Federal Aviation
Administration AIR-21,  adopted in April 2000, mainly regarding questions as aircraft repair and
maintenance advisory panel and request of information to  assess balance of trade issues vis-à-vis the
U.S. commitments on aircraft repair and maintenance  services?WT/TPR/M/88/Add.1
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Answer:
The work of the Aircraft Repair and Maintenance Advisory Committee is ongoing. Carrying
out this legislative mandate need not compromise U.S. specific commitments under GATS.
19 Services–general and Professional
General Services Issues
(EU)  (para, 64, 66) To what extent do the bilateral FTA negotiations with Chile and Singapore
address trade in services?  What are the U.S. objectives?
Answer:
The United States seeks a comprehensive arrangement for trade in services with both Chile
and Singapore in the context of negotiations of free trade arrangements with both countries.  In both
cases, it has been decided to use a "negative list" approach to the negotiations.
(Switzerland)   Do the United  States intend to submit further negotiating proposal in the services
sector?  If this is  the case, in which sectors?
Answer:
The United States does not currently have plans to submit negotiating proposals for other
service sectors or topics.  Nevertheless, we reserve the right to do so.
(EU) (para 74) What are the services aspects of the bilateral Trade Agreements with Jordan, Vietnam
and Laos?
Answer:
The Jordan FTA includes a comprehensive approach to services liberalization.  The chapter
addresses all modes of  supply and includes a broad sectoral coverage.
The U.S.-Vietnam Bilateral Trade Agreement (BTA ) includes provisions pertaining to trade in
services.   Vietnam has committed to uphold WTO rules – such as MFN, national treatment and
disciplines on domestic regulations.  In addition, Vietnam has agreed to allow U.S. companies andindividuals to in markets in a wide range of services sectors.  Most sector-specific commitments are
phased-in over three to five years.
The U.S.-Laos BTA includes provisions pertaining to trade in services.  Laos has made
market access and national treatment commitments in a significant range of services sectors.
(EU) Are there any measures or programs specifically designed to support U.S. services exports, or is
information  available to what extent general export measures benefit services exports?
Answer:
There are no particular U.S. export assistance programs that specifically focus on U.S.
services exports.  Export-Import Bank and OPIC assistance are project-based and, if a project in an
emerging/developing market involves services, it would receive assistance as would any other project.WT/TPR/M/88/Add.1
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(EU) (para 35, Liberalization of Services) Could the U.S. please provide more information on the
liberalization of  services they have undertaken beyond U.S. commitments under the GATS?
Answer:
The United States is currently assessing liberalization undertaken since previous GATS
negotiations and will be prepared to provide such information, as appropriate, in the future
(EU)  (para 29, Balance of Payments–trade in services) With regard to Table A-I.5, would it be
possible to have a  breakdown of Business, professional, and technical services?
Answer:
Data that provide a breakdown of business, professional, and technical services for 2000 is not
currently available.  The annual article on U.S. international services, which covers both cross-border
trade and sales through affiliates, will be published in the November 2001 Survey.
(EU)  (para 31-33 Balance of Payments–trade in se rvices) Could the U.S. please provide some more
complete analysis on the development of their trade through commercial presence, in particular on
the main sectors on the import side?
Answer:
In 1998 (the most recent year applicable data are available), sales to U.S. customers by
majority-owned affiliates of foreign companies in the United States (U.S. imports of affiliate services)totaled $255 billion.  Of this, financial  services (except depository institutions) and insurance
accounted for 31%, information services (e.g.; publishing,  motion pictures and sound recordings, and
broadcasting and telecommunications) 17%, manufacturing services 10%, transportation and
warehousing services 6%, real estate and rental and leasing services 6%, professional, scientific, and
technical services 6%, and utilities 5%.
(EU) (Construction and other services)  As a general remark, the EU would like to express its regrets
that the report could not include the sub-sect ors of construction, engineering and computer and
management consulting services, which account for large shares of the U.S. trade in services, as
indicated by table AI-5.
Answer:
This is not a question for the United States.
(Bangladesh)  (Article IV of GATS)  With the objective of enhancing the participation of developing
countries in global trade in services, Article IV of the GATS spells out specific commitments for
developed Member states in three areas:  (a) strengthening domestic services capacity of developing
countries through providing access to technology; (b) improving access to distribution channels and
information networks; and (c) liberalization of market access in sectors and modes of supply of export
interest to developing countries.  The above Article further lays down that special priority shall begiven to LDC Members in the impl ementation of the above.  Could the U.S. delegation please throw
some light on the implementation status of Article IV  of GATS by the US, particularly the provisions of
movement of natural persons?WT/TPR/M/88/Add.1
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Answer:
Pursuant to GATS Article IV, WTO Members should facilitate increasing participation of
developing country WTO Members in world trade through negotiated specific commitments in three
areas:  (a) strengthening of developing country Members’ domestic services capacity and its efficiency
and competitiveness, inter alia through access to technology on a commercial basis;  (b) improvement
of their access to distribution channels and information networks; and (c) liberalization of market
access in sectors and modes of supply of export interest to them.  Article  IV further states that specialpriority shall be given to least-developed country Members in the implementation of the  above.
The United States has welcomed statements by developing and least-developed country
Members of their export interests in the negotiations, including specific negotiating proposals from
some of these countries.  The United States looks forward to further specific statements of objectives
in the negotiations.  The United States also believes developing and least-developed countries havebenefitted from their GATS commitments in areas such as telecommunications, financial services,
distribution, and other infrastructural services, which have enabled these countries to improve their
access to global distribution channels and information networks, to the benefit of their exporters and
business and individual consumers.
U.S. commitments in GATS mode 4 have provided concrete benefits to developing countries,
the nationals of which are among the top entrants under the committed categories.
Professional Services
(EU, Canada)  (Para 129, Selected Professional Services)  The horizontal commitments on mode 4 are
only part of the existing temporary entry picture.  Please elaborate briefly on the existing U.S.
measures in immigration laws, regulations, proced ures or programs, not bound in the GATS schedule,
that facilitate the temporary entry and stay for certain types of foreign workers.
Answer:
The commitments also include temporary admission for “Fashion Models and Specialty
Occupations” who perform their services for a specific employer in the United States.  The original
paragraph appears to omit U.S. admission  commitments for “Fashion Models and Specialty
Occupations.”  Generally, professional services may be performed by the Intra-company Transferee
Specialist or the Specialty Occupation alien, if these services are performed in a  manner thatcomplies with U.S. law.
(EU, Canada)  (Para 129, Selected Professional Services)  In para 129, reference is made only to the
category of intra- corporate transferees, includ ing specialists, some of who could be licensed
professionals.  Please describe the other horizontal commitment and any existing measures not in the
GATS on specialty occupations, which could also include Certain Professionals.
Answer:
The regulations of the U.S. Immigration and Naturalization Services (INS) controlling
specialty occupations  under the H-1B program requi re a U.S. employer.  The INS regulations define
at 8 CFR 214.2(h)(2)(ii) the term “United States employer.”  United States employer means a person,
firm, corporation, contractor, or other association, or organization in the United States which:  (1)engages a person to work within the United States; (2) has an employer- employee relationship with
respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or
otherwise control the work of any such employee;  and (3) has an Internal Revenue Service TaxWT/TPR/M/88/Add.1
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identification number.  Additionally, the INS regulations provide that in certain circumstances agents
may be permissible, provided they meet the definition of a U.S. employer.
(EU, Canada)  (Para 129, Selected Professional Services)  According to para 129, “in practice,
foreign professional service suppliers may only enter the United States to perform a professional
service if employed by a company that is either es tablished in the United States or affiliated to one
such company.”  It appears that th is statement refers only  to intra-corporate transferees.  Please
confirm that certain professionals under the specialty occupations category (i.e.,  professionals whoare independent or on contract) may also qualify for entry to the U.S. to perform a professional
service, subject to meeting other immigration requirements.
Answer:
See preceding answer.
(EU, Canada) ( Para 129, Selected Professional Services)  The commitment on specialty occupations
is limited by a quota of 65,000 persons annually; however, several years ago, Congress authorized
annual increases over several  years.  Please provide details on that, and if possible, recent statistics
on the number and type of entrants under the specialty occupation category.
Answer:
In  1998 and 2000, the United States amended its immigration law to increase the number of
H1-B visas for specialty occupations.  The current annual limit of 195,000 is effective for three years
beginning FY2001.  In addition to increasing the num ber of visas available, the law also exempts
certain H-1B workers from the numerical limit.  Specifically, the law exempts workers employed by
colleges, universities, their affiliated non-profits, and other non- profit and government research
organizations.  On a related matter, U.S. immigr ation law was also amended in  November 1999 to
create a new nonimmigrant visa classification (H-1C) for up to 500 registered nurses per year who
will work in facilities located in medically underserved areas.  We are checking the relevant statistics.
(Hong  Kong) ( pages 115-116, paras 125 - 129, Professional Services--Harmonization of Regulations
among States)  The absence of uniform regulatory regimes and requirements among States constitutes
barriers to the entry of foreign services suppliers.  We would like to know if the U.S. has any plan to
ensure harmonization of regulations among  States in this respect.
Answer:
Divergent state requirements and practices do not constitute barriers to access, and the U.S.
system does not  discriminate against foreign service suppliers.  Moreover, there is a great deal of
commonality in state requirements  for licensing.  National associations of regulatory officials and
professional societies have developed model codes  or model rules for regulation.  They are engaged
in continuing efforts to obtain state legislation whic h conforms to  the codes.  This provides impetus
for harmonization.  As stated above, there already is a great deal of commonality  in state regulation of
the professions.
 (Japan) (page 117, paras 134-135, Professional se rvices--Accounting services regulation)
 --(i) We understand that the SEC intends to accept financial statements from foreign private issuers
which are already prepared by using the International Accounting Standards for the purpose ofraising funds in the United States.  Please confirm our understanding.WT/TPR/M/88/Add.1
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--(ii) What level of reconciliation would the SEC re quire when permitting the use of IAS in the United
States?
--(iii) What is the schedule for accepting IAS in the United States?
Answer:
The SEC already allows foreign issuers to use International Accounting Standards Committee
(IASC) standards,  subject to reconciliation to U.S. Generally Accepted Accounting Principles
(GAAP).  In fact, all issuers seeking to  list their public shares on U.S. markets must prepare theirfinancial statements either: 1) in accordance with U.S.  GAAP; or 2) in accordance with a
comprehensive set of national accounting standards or IASC standards, subject  to reconciliation to
U.S. GAAP. Thus,  U.S. and foreign issuers are subject to comparable requirements.
(Japan) (page 118, paras 141-2, Acceptance of Foreign Le gal Consultants (FLC)) (i) It is stated in
the para.141 that  ine jurisdictions require in-sta te offices for licensing, and 16 jurisdictions maintain
in-state or U.S. residency requirements, please specify those states which maintain such regulations.
Answer:
As specified in the U.S. schedule of commitments: “An in-state office must be maintained for
licensure in: District of Columbia, Indiana (or an affiliate with an office and with other attorneys in
the state), Michigan, Minnesota (or  maintain individual residency in Minnesota), Mississippi, NewJersey, Ohio, South Dakota and Tennessee.”  “In-state or U.S. residency is required for licensure in:
Hawaii, Iowa, Kansas, Massachusetts, Michigan, Minnesota (or maintain an office in Minnesota),
Mississippi, Nebraska, New Jersey, New Hampsh ire, Oklahoma, Rhode Island, South Dakota,
Vermont, Virginia, Wyoming.”
(Japan) ( ii) In the United States, 23 States, as well  as the District of Columbia, have regulations
regarding foreign legal consultants (FLC).  The period of practicing experience which is required to
be eligible as a FLC under these  regulations varies from 3 to 5 years among those States and theDistrict.  For the purpose of promoting international business, all States should accept foreign
qualified lawyers as FLC and should reduce the period of the practicing experience requirement down
to three years.  It would be appreciated if the Government of the United States would explain the
results of its consultations with the American Bar Association regarding the acceptance of foreign
qualified lawyers.
Answer:
The Office of the U.S. Trade Representative consults periodically with representatives of the
American Bar Association.  It is the official policy of the American Bar Association (a 400,000+-
member body) that states should  adopt the ABA model rule for the licensing of legal consultants.
From the ABA perspective, it seems irrelevant to emphasize which states do not have FLC statutes.
Those that do not yet provide for FLC licensure don’t do so because there is no demand for such
licensure.  The fact is that, with very narrow exceptions, foreign lawyers can  obtain licensed FLC
status in the principal commercial U.S. states where they wish to practice.
(EU) (para 41, Regulation of Professions at the State Level) The Report states that the U.S. Federal
system reserves  the governance of professions to individual U.S. states. Does this principle not alsoapply to other services sectors  (see U.S. GATS schedules)? Which measures in the sense of Article 1
para 3 of the GATS will the U.S. take for  ongoing GATS negotiations to ensure the observance andWT/TPR/M/88/Add.1
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improvement of U.S. obligations and commitments by  regional and local governments and authorities
and non-governmental bodies within U.S. territory?
Answer:
In addition to professional services, insurance is regulated by the states.  Some services are
regulated by both the states and the federal government (e.g., financial services, telecommunications).
The second part of the question is unclear, but if it means what is being done to make state regulations
more uniform, we can report that the major professions, such as accounting, law, architecture andengineering have developed model codes or model rules, which are used to by state governments as
guidance in drafting regulations with respect to th e professions.  Thus, there is much  commonality in
state regulation of the professions.
(EU)  (Regulation of Professions at the State Level)  The Report discusses at length the problem of
regulation of professions at the state level which severely impacts on the ability of foreign (anddomestic) professionals to supply their services ac ross the US. What does the U.S. envisage to remedy
this?
Insurance
(Japan)  (pages 106-7, para 92-97, Different insurance regulatory regimes in States)  Since regimes of
insurance supervision and regulation differ from one State to another, in order for insurancecompanies to engage in inter-state business, they need to apply for a license in each State, as well as
to comply with supervisory regulations set by each  State  authorities. While Japan takes note of the
NAIC  effort to achieve uniformit y among States regulatory regimes, it requests further deregulation
regarding inter-state insurance business. What are the U.S. views on this point?
Answer:
The U.S. States are planning to develop further uniformity for regulation of certain insurance
sectors in an effort to respond to the needs of the U.S. market.  Please see the NAIC website,www.naic.org , for more information.
(e) (Japan)  Discriminatory measures against foreign insurers. Japan requests the elimination of
discriminatory  regulations as mentioned below. What are the U.S. views on these points?
(i) Requirements for foreign insurers to trust funds or  to submit a letter of credit issued by primary
insurers in reinsurance business. (p.108, para.100)
When a foreign insurer without a branch in the United States underwrites reinsurance products in the
United States, it is required either to have a trust account or to submit L/C by the original
underwriter. Japan requests the elimination of this  system, since it discriminates against foreign
insurers.
 (ii) Compulsory trust of assets for foreign insurers (p.108, para.99)Branches of foreign insurance companies are required  to trust a larger amount of assets than their
liabilities in American banks or trust companies. Since this system prevents foreign insurance
companies from making investment with flexibility,  and they thus may miss investment opportunities,
Japan requests the elimination of this system, since it discriminates against foreign insurers.WT/TPR/M/88/Add.1
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 (iii) Tax on cross-border insurance transaction (p.110, para.102)
When a foreign insurer undertakes to cover risks within the United States, it is liable to a federal tax
whose rate is 4% of premiums for non-life insura nce and 1% of premiums for life insurance and
reinsurance. Japan requests the elimination of this system, since it discriminates against foreign
insurers.
(iv) Citizenship requirement for foreign insurance companies (p.108, paras.88-89)  Many States
regulatory authorities impose on foreign insurance companies the requirement that all or part of theirboard members should be U.S. citizens. Japan re quests the elimination of this system, since it
discriminates against foreign insurance companies.
[Answer to be supplied]
(Japan)  (p.47, para.83, Standards required by private insurance companies)  Japan would like to
know what kinds of standards are required by private insurance companies to qualify for productliability and health insurance, as well as to what kind of goods such standards apply?  We would also
like to know upon which laws, etc., these  requirements are based.
Answer:
The standards or conditions for product liability insurance would likely depend upon the
nature of the product involved.
(Canada)  (para 133, Professional Services)  According to para 133, a set of joint recommendations
by the NASBA and the AICPA, sought to reduce some of  the most significant barriers linked with the
sector's decentralized regulatory  system.  The two bodies recommended, in particular, that licensed
CPAs in public practice be authorized to operate across State lines, in person or electronically, to
service clients outside their State of licensure. This is just one example of measures that could be
taken to increase inter-state mobility to eliminate the necessity of licencing in every state in many
professions.  Have federal and state governments announced their intention to implement these
recommendations?  If so, how many state governments have announced their intention to enact
legislation to implement the recommendations?  Ha s the federal government drafted, or tabled a new
Uniform Accountancy Act?  If no, when does the federal government anticipate drafting and tabling
this legislation?
(Canada)  Does the U.S. Government plan to play a ro le in state regulatory reform not only in the
accounting profession but in other professions as well?
Answer:  (For both questions)
Since 1998, the Uniform Accountancy Act, wh ich is published by the AICPA and NASBA
has included the provision  referenced in the que stion.  The AICPA and NASBA work to promote the
UAA provisions.  In the past three years, several states have enacted legislation similar to the UAAprovision and many others are considering the measure.  In the U.S. professional licensing is a state,
not federal, function.
(Canada)  (para. 134, Professional Services)  According to para 134, the Securities and Exchange
Commission (SEC) launched an enquiry in 1999 re garding the possible acceptance of financial
statements of foreign private issuers that are prepared using the standards promulgated by the
International Accounting Standards Committee ("IASC").  We understand that the SEC issued a
concept release entitled "International Accounting Standards" on 16 February 2000.  This releaseWT/TPR/M/88/Add.1
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sought comments on the conditions under which the SEC should accept financial statements of foreign
private issuers that are prepared using the IASC standards.  Has the SEC issued a further release or
proposed rules on this issue?  If no, do they intend to?
Answer:
In February 2000, the SEC issued a concept release seeking public comment on questions
relating to accounting, auditing and regulatory issues that impact the effectiveness of financial
reporting in a global environment.  The SEC received over 90 comment letters that reflect a widevariety of views.  European commenters, includ ing European issuers and the European Commission
(EC), favored reducing or eliminating reconciliation requirements.  The EC, however, also recognized
that "the adoption of [IASC standards] will improve the functioning of the securities markets only
when they are properly and rigorously enforced."  It further acknowledged that a comprehensive
infrastructure is essential for high quality, global accounting standards to be interpreted, applied, andenforced consistently throughout the world.
Most US commenters urged that present reconciliation requirements be retained.  A number
of prominent U.S. based multinational companies, as  well as the Business Roundtable, the Securities
Industry Association, and several industry and profes sional organizations noted that IASC standards
are not yet of sufficient quality, are still too general, and are not yet being consistently applied, auditedand enforced.  These commenters recognized that the strength and liquidity of the U.S. capital markets
are due in no small part to the high quality of invest or information provided in the United States.  The
SEC is currently evaluating alternatives for action.
(Canada) (para. 143, Professional Services)  Para 143 states that foreign law firms can
establish subsidiaries in the United States.  Are these law firms restricted to only providing advice on
foreign and international legal issues or,  if  these law firms hire U.S. qualified lawyers, can these law
firms also advise on U.S. law issues?  Please explain.
Answer:
Foreign law firms can provide advice on U.S. law if their lawyers are licensed in the United
States.
 (EU)  (para. 47, Asia Pacific Economic Partnership (APEC)) Could the Government inform what will
be the impact  of the APEC work program on trade in services on GATS negotiations?
Answer:
From the U.S. perspective, the APEC work program on trade in services, through the Menu of
Options, may be expected to further GATS services negotiations in several ways:
-- First, discussion on the Menu of Options will first help to clarify for representatives of
member economies the GATS principles underlying the Menu’s objectives of  Liberalization,Facilitation, and Promotion of Economic and Technical Cooperation in services (Ecotech).
-- Second, work on the Menu of Options, which is intended to be developed taking into account
APEC member economies, will focus discussion on APEC-specific ramifications of these principles.
-- Third, discussion on the Menu of Options, which separates GATS principles into the three
areas of Liberalization, Facilitation and Ecotech, will help to underscore that effective tradeliberalization cannot be defined in terms of a single  principle, such as national treatment or market
access.  Indeed, without transparency, national treatment can lose much of its liberalizing impact. AndWT/TPR/M/88/Add.1
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in the services area, where so many service activities are regulated, domestic regulation, which is
closely related to principle of transparency, becomes an integral part of the liberalization process.
-- Finally, the Menu of Options, by presenting the trade principles in discreet steps, provides a
context for member economies to begin the liberalization process and test its impact on their economy
before binding themselves in the WTO services negotiations.
(Australia)   What measures or reforms does the US envisage to ensure that state-level regulation, e.g.
skill and residency requirement) does not create unnecessary impediments to market access forbusiness and professional service providers, particularly in accountancy, law, engineering and
architecture?
Answer:
Divergent state requirements and practices do not constitute barriers to access, and the U.S.
system does not discriminate against foreign service suppliers.  Moreover, there is a great deal ofcommonality in state requirements for licensing.  National associations of regulatory officials and
professional societies have developed model codes or  model rules for regulation.  They are engaged
in continuing efforts to obtain state legislation wh ich conforms to the codes.  This provides impetus
for harmonization.  As stated above, there already is a great deal of commonality in state regulation of
the professions.
(Brazil)  (para. 127) Is there any ongoing negotiation under GATS Article VII.4 (Recognition)?
Answer:
The U.S. has negotiated several mutual recognition agreements under Article VII.4.  These
include MRAs with Canadian and Australian accountants, an MRA with Canadian architects, and
recognition of fundamental engineering education with Canada, Australia, New Zealand, the United
Kingdom, and Iceland.
(Brazil) (para. 133) The recommendations that licensed certified public accountants (CPAs) in public
practice be  authorized to operate across State lines, in person or electronically, to service clients
outside their State of licensure  require the passage of a new Uniform Accountancy Act. What is the
current status of this measure?
Answer:
Since 1998, the Uniform Accountancy Act, a model law published by the American Institute
of Certified Public Accountants (AICPA) and the National Association of  State Boards of
Accountancy (NASBA), has included the  provis ion referenced in the question.  The AICPA and
NASBA work to promote the UAA provisions to state CPA associations and state boards of
accountancy.  The UAA does not have the force of law.  In the United States, professional licensing is
a state not a federal function.  State legislatures enact the laws that regulate CPAs.  All states allow forinterstate reciprocal licensing for CPAs.  The UAA provision would allow CPAs who meet the
requirements in the relevant UAA provision to operate interstate or electronically without the need to
obtain a reciprocal CPA license.  In the past three years, several states have enacted legislation similar
to the provision in the  UAA and many other states are considering the measure.
(Brazil)  Which States have adopted the current Uniform Accountancy Act?WT/TPR/M/88/Add.1
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Answer:
Many State governments consider provisions similar to those in the Uniform Accountancy
Act when considering pertinent legislation related to the accounting profession.  The UAA is generally
not adopted in its entirety, but rather provisions in the UAA are adapted to the needs of the state.
(Brazil) (para. 137)  The proposal to liberalize trade in accounting services in WTO negotiations lists
obstacles identified in this sector. As some of these obstacles exist in the U.S., particularly with regard
to US citizenship requirements (Alabama and North Carolina), does the US plan to eliminate those inthe negotiations?
[Answer to be supplied]
(Brazil)  (para. 139  Regarding the U.S. negotiating proposal in the WTO on legal services, please
provide examples of the measures sought from trading partners in the current negotiations that are
schedulable under Articles XVI and XVII of the GATS.
Answer:
Citizenship and residence requirements for licensing; restrictions on ownership of law firms
by foreign lawyers; and restrictions on association with local lawyers (hiring or working for them).
(Brazil) (para. 142)  In 1993 the American Bar Association adopted a proposed Model Rule for the
Licensing of Foreign Legal Consultants to encourage  the States to liberalize regulations concerning
foreign lawyers in a standardized manner. Until 1999 twelve States had adopted it. Have other States
adopted the Model Rule? If so, was  the adoption integral or did it suffer any modifications?
Answer:
Twenty-three states (including New York, California, Illinois, Texas, and Florida) and the
District of Columbia now have provisions for foreign legal consultants.  U.S. commitments in GATS
and NAFTA specifically list fifteen of these states and the District of Columbia.  The provisions of
state laws on foreign legal consultants are similar, but not necessarily identical.
(Brazil)   Has there been any progress on the July 1998 joint recommendations for the recognition of
foreign legal consultants in the NAFTA context? (WT/TPR/S/56 p. 216)
Answer:
There has been no further progress.
(Brazil)  What is the current status of the negotiations on mutual recognition regarding professional
services with  the European Union? The WT/TPR/S/56 document acknowledges the possibility of
establishing mutual recognition agreements in “oth er services”. Which are they? (WT/TPR/S/56 p.
213)
Answer:
The United States and the EU have discussed the possibility of establishing a framework for
the negotiation of recognition agreements in professional services, namely architectural and
engineering services.  There have been no meetings since April 2000.WT/TPR/M/88/Add.1
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(Brazil)  Article V of the GATS establishes that bilateral or regional agreements liberalizing trade in
services must have substantial sectoral coverage. In order to meet this condition, agreements shouldnot provide for the “a priori” exclusion of any m ode of supply. How does the US find the NAFTA
Services Chapter to be consistent with thatcondition?
Answer:
Chapter 12 of the Nafta establishes binding obligations for what the GATS defines as modes
1, 2, and 4.  Chapter 11 of the Nafta establishes binding obligations for what the GATS defines asmode 3.  The Nafta therefore does not exclude a priori any mode of supply.
(Brazil)  Para 14, page 15.  Please provide in more detail a definition of the term “substantial nexus”
and how it is  assessed for purposes of taxation.
[Answer to be supplied]
(Brazil)  Para 128, page 115. Please clarify whether and how the US negotiating proposal on mode 4
(S/CSS/W/29)  includes regulation at the sub-federal levels.
Answer:
Temporary entry is not regulated at the subfederal level in the United States. But to the extent
temporary entry is  regulated at the subfederal level in other WTO Members, then consistent with
Article I of the GATS, the U.S. would  be interested in applying the concepts contained in thenegotiating proposal at those levels.
(India)  In Paragraph 41 of its summary observations. the Secretariat has observed that ‘in the case
of professional services, the US federal system reserves the governance of professions to individual
states, each state has its own  licensing regulati ons and licensing board to administer the regulations.
The absence of a uniform national regulatory  regime, and divergent market access conditions across
States complicate inter-State supply and foreign market access’.  We would like to hear the response
from the US delegation. Further, we would like to know if the Federal Government could give someguidance to the States in the matter of having ce rtain minimum uniform national  regulatory regime
for professional services.
Answer:
The questions above relate to what is being done to make state regulations more uniform. We
can report that the major  professions, such as accounting, law, architecture and engineering havedeveloped model codes or model rules, which are used to by state governments as guidance in drafting
regulations with respect to the professions.  Contrary to  popular belief, there is much commonality in
state regulation of the professions.
(India):  Problem relating to social security taxes for Indian professionals working in USA.  It is noted
that Indian professionals employed in India and de puted temporarily in USA for rendering software
consultancy and development services are being made to pay social security taxes under Federal
Insurance Contribution Act (FICA) (12.4%), MEDICARE (2.9%) and Federal Unemployment Tax Act
(FUTA) (6.2%). This works out to a total of 21.5% of the  total wages.  It has been pointed out that
since the Indian employees are only deputed for a temporary period and the  services rendered by
them are only sporadic and temporary in nature, this deputation does not constitute any form  of
‘employment’ for the purpose of levy of Social Security Taxes by the US.  The Indian professionals
continue to  get their wages in India in Indian rupees and they are only paid ‘away from home’ livingWT/TPR/M/88/Add.1
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expenses in USA within the  per diem rates published by the US Internal Revenue Service. At the same
time, their provident fund contributions  and other social security taxes are also deducted at source inIndia. Moreover, according to the US laws, a person has  to work in USA for 40 quarters or 10 years
to claim any social security benefit whereas th e maximum period of stay  allowed under H-1B visa
(under which the professionals mostly work in USA) is 6 years. As such, the Indian software
professionals pay social security in USA for which they neither get any refund nor any benefit. Given
the genuineness of the problems, we would request the US authorities to remove this anomaly.
Answer:
The United States has addressed such issues through negotiation of bilateral “totalization
agreements.”
(India)  Wage parity: The US Department of Labor has stipulated Wage Parity on foreign skilled
manpower working  in the US for short-term duration. However Indian software professionals, whogo to the US for short duration, are  paid salaries in India. The company concerned also spends the
amount on the airfare of these professionals. It is  therefore noted that insistence on wage parity by
the US is to be seen as a kind of non-tariff barr ier. With a view to  fa cilitating better movement of
professionals, it would be appropriate that wage parity is not insisted upon in the H- 1B category
visas. We would request the US authorities to consider removal of this stipulation. We would alsorequest  the US authorities to put in place more transparent procedures for locational changes during
the validity period of  H1-B visas.
Answer:
The United States requires that the employer of an H-1B Specialty Occupation Alien attest
that the alien for whom  admission is sought is paid the prevailing U.S. wage for that occupation.
Generally, when professionals enter the  United States, and are paid from a foreign source, they are
classified as Visitors for Business and these rules do not  apply.
(India) Locational Issues of H-1B visas: An Indian prof essional going to US on H-1B visa is allowed
to work only in a particular State of the US. If during the maximum six years-period for which the H-
1B visa is valid, a professional  has to go to another State on account of change of assignment, he is
required to take specific permission from the US  INS for change of location. It has been represented
that this procedure is a time consuming one and thus  acts as a non- tariff barrier. We would suggest
to the US authorities to consider making the H1-B visa valid for working throughout the US and in
any State of the US without any requirement for a specific permission to move from one State to
another.
Answer:
Rules concerning employment of H-1B aliens  and the Labor Condition Application, with
which U.S. employers of these persons must comply, are found in the U.S. Immigration and
Nationality Act. Specific cases of employer assignment are administered by the United States
Immigration and Naturalization Service.  Employer issues arising from the Labor Condition
Application are administered by the U.S. Departme nt of Labor, Employment Training Administration
and the Employment Standards Administration according to regulations published by those agencies.Interested parties may contact these agencies directly.
(India)  Increase in world-wide H-1B visa cap: It is learnt that the US continues to suffer from
domestic shortage of IT professionals. According to  Information Technology Association of America
(ITAA), the US faces a shortage of  300,000 IT professionals in the next three years. It would beWT/TPR/M/88/Add.1
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highly appreciated if we could be informed of the steps  being taken by the US in order to meet this
shortfall. We would also request the US authorities to consider increasing  the visa cap for H-1B for
the next three years.
Answer:
The numerical ceiling on admission of H-1B Specialty Occupation Aliens has been
temporarily increased to admit  more of these persons in the coming years.
PART 3
2. Miscellaneous Issues
(Japan) (Re-export control)  The U.S. Export Administration Regulations mandate firms located
outside the U.S. to obtain authorization from the Go vernment of the United States when it is necessary
to re-export certain goods. Such a requirement apparently constitutes an extraterritorial application
of the U.S. laws and thus should be abolished.  Furthermore, until its abolishment, the following
transitional measures should be taken into consideration:
(i) in light of the fact it is difficult that fo r non-U.S. companies to obtain information on re-export
regulations, the United States should strengthen its efforts to publicize such information, and in case
where a company cannot be expected to know a specific requirement, it must not be held liable;
(ii) the United States should publicize as a guideline the methodology used by the DOC when
calculating the ratio of software and technology incorporated in a product;
(iii) companies should be allowed to resort to a de minimus level, according to their own judgement,
by making use of the above guidelines.
Answer:
These issues have been discussed bilaterally in the Deregulation and Competition Policy
working group of the Enhanced Initiative on Deregulation and Competition Policy as well as in other
fora.  The U.S. Government recognizes the Governme nt of Japan’s point of view, but does not agree
U.S. re-export control constitute the extra-territorial application of domestic law.   In an effort to
respond to Japan’s concerns, Bureau of Export Administration (BXA) in the U.S. Department of
Commerce has developed guidance on its website specifically to address reexport requirements.  This
guidance is available at www.bxa.doc.gov/factsheet s/ExportGuidance.html   In addition, the U.S.
Government is developing Japanese-language information on U.S. reexport controls and hopes to be
able to forward it to Japan soon.  The U.S. Government has also sponsored seminars in Japan on U.S.
export controls and is contemplating another for Spring, 2002.
(EU)  Each year, the U.S. fixes the total allowable level of foreign fishing (TALFF) and accordingly
makes allocations to foreign fishing fleets. Mackerel migrating off the East coast is the only stock
currently identified as being in surplus in the U.S. Exclusive Economic Zone.  However, the U.S.authorities have set a zero TALFF since 1990 for this  stock, following pressure from its domestic
industry. The EU believes that this line neither corresponds to the provisions and intentions of the
Magnuson-Stevens Fishery Conservation and Management Act or to the provisions of Article 62 of the
UN Convention on the Law of the Sea.WT/TPR/M/88/Add.1
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Answer:
We do not consider that the issue of foreign fishing fleet access to U.S. fisheries is a trade
policy question.  The U.S. market is open to EU fish exports on an MFN basis, and on relatively
liberal terms when compared to the access allowed by other trade regimes.  If the EU will identify a
trade policy issue to be addressed, we will be pleased to respond.
10. Standards, Sanitary Requirements and Environmental Regulations
(Brazil)  Secretariat Report, Summary Observations, para. 22. The US government has, for alleged
sanitary and phytosanitary reasons, prohibited imports  of meat from Brazil originating from areas
declared free from Foot and Mouth Disease by the International Office of Epizootics. In light of the
concept of pest-or disease-free areas enshrined in the IOE, please explain what is the rationale for
maintaining these measures when the exporting country complies with all the other sanitary and
phytosanitary requirements?
Answer:
The United States is within compliance with th e guidelines set out in the OIE Chapter of the
Animal Health Code when it prohibits imports of ruminant products from Brazil.  The United States
does not recognize the OIE status of FMD-freedom with vaccination.  The United States does not
recognize countries as FMD-free if they continue to vaccinate for the disease - as is the case in Brazil.
(New Zealand)  The concepts of equivalence, transparency and international harmonisation are three
of the foundations of the WTO SPS agreement (discussed at S/III, paras 90-94, page 42 and 43).  Can
the US provide specific comment on efforts being made by its Food and Drug Agency (FDA) to ensure
that both the statutes which it administers, as well as the associated regulations, policies and guides
explicitly reflect the international commitment the US government has made in this regar d.
Specific comments would be especially appreciated with respect to:
The consistency of the equivalence concept with  the Federal Food Drug and Cosmetics Act, noting
that the FDA is yet to finalise and publish guidance in this area.
The consistency of both the amending process and standards contained within the Pasturised Milk
Ordinance (PMO) and the National Shellfish Sanitation Program (NSSP) standards with the above.
The assessment of risk and determination of the appropriate level of sanitary or phytosanitary
protection (ALOP) is another key concept of th e WTO SPS agreement.  Can the US specifically
comment on:
How both risk assessment and the objective of minimising negative trade effects have been mutually
and consistently applied in the de velopment and amendment of the PMO.
Why the measures mandated for products covered by the PMO are more trade restrictive than those
for similar products which can contain the same hazard profiles and which are either directlyconsumed or made into products consumed by the same population.
[Answer to supplied]WT/TPR/M/88/Add.1
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11. Government Procurement
(Japan) (page 44, para. 69, Construction Industry Payment Protection Act)  Has the large amount of
bond required by the Construction Industry Payment Protection Act increased the burden of main
contractors?  Considering that, in general, procuring entity  payment to main contractor is made on a
monthly basis based on the progress of the work, in which case would the penal sum that is as high as
100 % of the contract price be necessary to protect sub-contractors and suppliers?
Answer:
Prior to the implementation of the Construction Industry Payment Protection Act, payment
bonds were artificially capped at $2.5 million, regardless of the size of the project.  This resulted in
situations where, when a major project went bankrupt, sub-contractors could not be reimbursed and, in
some cases, were forced into bankruptcy themselves.  The Payment Protection Act is intended to
prevent this from happening.  The Act allows contracting officers to reduce the payment bond wherethe public interest can be protected with lower amounts.  These provisions are applied on a
non-discriminatory basis with respect to all contractors.
13. Textiles
(India) Subsidies in textile industry: It is learnt that the US has been giving large amounts of direct
and indirect subsidies to the cotton farmers. According to a study commissioned by one of our NGOs,the Consumer Unity and Trust Society (CUTS), Jaipur, the direct and indirect subsidy given to the US
cotton farmer is US$2.5 for each pound of cotton.  This is based on the calculation of total subsidy bill
(excluding exclusive export subsidies) in 1997 amounting to around US$ 1.6 billion.  We would
request the US authorities to consider plans for reducing the extent of this subsidy.
Answer:
As notified in G/AG/N/USA/27 for 1997, total subsidies for cotton were $465.62 million.
This translates to a $0.05 per pound subsidy for cotton in the United States.  In 1998, total subsidiesfor cotton were $934.68 million, which translates to a $0.14 per pound subsidy for cotton.  The U.S.
program is WTO consistent, and we will continue to abide by international commitments in the future.
18. Transportation Services
Maritime Transport and Related Services
(Australia -- maritime)  US laws governing coastal shipping, the 1920 Merchant Marine Act and the
1885 Passenger  Services Act, effectively preclude foreign involvement in the US maritime sector.
How does the US intend to liberalize  the unusually restrictive laws on the provision of maritime
services?
Answer:
There are about forty maritime nations that have cabotage regimes that reserve the domestic
trade to national-flag vessels.  There has been no change in the Administration's support for U.S.
cabotage provisions as they apply to the movement of passengers and cargo in the U.S. domestic
trades.WT/TPR/M/88/Add.1
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19. Services–general and Professional
 (e) (Japan) Discriminatory measures against foreign insurers. Japan requests the elimination of
discriminatory  regulations as mentioned below. What are the U.S. views on these points?
(i) Requirements for foreign insurers to trust funds or  to submit a letter of credit issued by primary
insurers in reinsurance business. (p.108, para.100)
When a foreign insurer without a branch in the United States underwrites reinsurance products in the
United States, it is required either to have a trust account or to submit L/C by the originalunderwriter. Japan requests the elimination of this  system, since it discriminates against foreign
insurers.
(ii) Compulsory trust of assets for foreign insurers (p.108, para.99)
Branches of foreign insurance companies are required  to trust a larger amount of assets than their
liabilities in American banks or trust companies. Since this system prevents foreign insurancecompanies from making investment with flexibility,  and they thus may miss investment opportunities,
Japan requests the elimination of this system, since it discriminates against foreign insurers.
(iii) Tax on cross-border insurance transaction (p.110, para.102)
When a foreign insurer undertakes to cover risks within the United States, it is liable to a federal tax
whose rate is 4% of premiums for non-life insu rance and 1% of premiums for life insurance and
reinsurance. Japan requests the elimination of this system, since it discriminates against foreign
insurers.
(iv) Citizenship requirement for foreign insu rance companies (p.108, paras.88-89)  Many States
regulatory authorities impose on foreign insurance companies the requirement that all or part of their
board members should be U.S. citizens. Japan re quests the elimination of this system, since it
discriminates against foreign insurance companies.
Answer :
Without prejudice to whether the measures listed by Japan are discriminatory, we are aware
that Japan may choose to raise them at an appropriate point in the GATS negotiations.
(Brazil)  (para. 137)  The proposal to liberalize trade in accounting services in WTO negotiations lists
obstacles identified in this sector.  As some of these obstacles exist in the U.S., particularly with
regard to US citizenship  requirements (Alabama a nd North Carolina), does the US plan to eliminate
those in the negotiations?
[Answer to be supplied]
(Brazil) (para. 14, page 15)  Please provide in more detail a definition of the term “substantial
nexus” and how it is  assessed for purposes of taxation.
[Answer to be supplied]
PART 4
(Brazil)  para. 137.  The proposal to liberalize trade in accounting services in WTO negotiations lists
obstacles identified in this sector. As some of these obstacles exist in the U.S., particularly with regardWT/TPR/M/88/Add.1
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to US citizenship  requirements (Alabama and North Carolina), does the US plan to eliminate those in
the negotiations?
Answer:
With respect to U.S. citizenship requirements in Alabama and North Carolina, we understand
that there are alternatives that can be used by foreign practitioners.  For example, intent to become a
citizen may be acceptable and possession of a "green card" may be sufficient to demonstrate intent to
become a citizen.  Alabama law provides authority for the licensing board to permit registration of anyperson with good moral character who holds a certificate, license or degree in a foreign country,
which constitutes a recognized qualification for the practice of public accounting in such country.WT/TPR/M/88/Add.1
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RESPONSES TO ISSUES RAISED IN THE COURSE OFTHE REVIEW MEETING
Mr. Chairman, I would like to express my thanks to you and the Secretariat for preparing the
list of themes that will serve as the focus of today's discussion.  We found it very helpful in preparing
for this second stage of our review.
At the same time, I would note that we received over 400 written questions from Members
prior to our first meeting.  Many additional issues were raised during the first day of the Review and
many of the questions ask for detailed and quite technical information.  Given the number of written
questions, the technical level of detail of many of them and the events of the last several days we are
not in a position to respond to all of the questions that have been put to us.  However I will respond to
each of the themes you have identified and endeavour to respond to as many of the issues raised as
possible.  We will also provide written responses covering all the questions in a timely manner.
One overarching point raised by a number of delegations on Friday was the importance of
U.S. leadership to the multilateral trading system. In this regard, I would like to read to you a
statement that was issued on Friday by United States Trade Representative Robert Zoellick:
"America has been attacked by those who want us  to retreat from world leadership.  Let there
be no misunderstanding:  the United States will continue to advance the values that define this nation -openness, opportunity, democracy and compassion.  Trade reinforces these values, serving as an
engine of growth and a source of hope for workers and families in the United States and the world.
Trade is particularly vital today for developing nations that are increasingly relying on the
international economy to overcome poverty and create opportunity.  While we will take every possible
step to ensure security, it is important that the World Trade Organization meeting in Doha proceed so
that the world trading system can continue to promote international growth, development, and
openness."
Mr. Chairman, I would also like to reiterate the deep U.S. commitment to open markets and
the further expansion of the rules-based multilateral trading system under the WTO.  We believe that
our own prosperity has been based on open, competitive markets, both internally and at the border.
We also believe that open markets and free trade are critically important to resolving the problems of
global poverty and the creation of economic opportunity for all. Our unstinting commitment to theGATT and the WTO for the past 54 years reflects the view that the reduction of distortions and
barriers to international commerce offers the best hope for economic betterment to low, middle and
high income countries alike.  Under the peri od of review 1999-2000, I would simply note, as a
reflection of our openness, that U.S. imports grew by $340 billion, accounting for nearly one-third of
global import growth and contributing importantly to the recovery of other WTO members fromfinancial crisis.  It is against this background of firm commitment to open markets and appreciation
for the WTO's central role in the global trading system that the United States embarks on this second
and final day of the U. S. Trade Policy Review.
I. ECONOMIC ENVIRONMENT AND THE TRADE POLICY REGIME
Let me turn first to the economic environment and the trade policy regime.
Macroeconomic situation:  Some delegations raised concerns about the slowdown of the U.S.
economy and the prospects for the future.  The current slowdown of the U.S. economy reflects several
quarters of reductions in business inventories and declines in non-residential business investment.  On
an annualized rate, the U.S. GDP rose at just 0.2%  in this year's second quarter.  The Administration,WT/TPR/M/88/Add.1
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however, expects a pick-up in economic activity in the second half of the year, supported by the fiscal
stimulus of the recent tax cut and the Federal Reserve's reductions in interest rates.  TheAdministration estimates that the tax cut alone will add roughly one percentage point to economic
growth in the second half of 2001 and early in 2002.  For 2002, the latest Administration forecast is
for U. S. real GDP growth of 3.2%.  Any possible erec ts of the tragic events of last week on the macro
economy are far to uncertain to speculate upon at the present time.
Domestic taxation: (electronic commerce, luxury tax)
A few delegations expressed interest on the United States view on the imposition of customs
duties on digital products delivered through the Internet.  The United States believes the current
moratorium on such customs duties should be made binding and permanent and invites others to
actively support this approach.
Some delegations expressed their opinion that the luxury tax discriminates against imports
because there are a greater proportion of expensive cars.  We do not believe that the luxury tax is
discriminatory.  It was the subject of dispute at one time under the GATT, and that panel reached the
correct conclusion.  I note that many countries ta x luxury goods at higher rates than other goods.
Environment and labour issues
Environmental Reviews:  Some delegations asked about the environmental reviews.  The
United States has found environmental reviews of  trade agreements helpful in identifying and
addressing both the positive and negative effects of such agreements.  In addition, the review process
is a useful avenue for public input and public understanding of the trade agreements we negotiate.  We
are committed to pursuing an environmental review policy and have underway reviews of the FTAA,
the FTAs with Singapore and Chile, and the built-in agenda negotiations on services and agriculture.
We welcome the offer of some delegations to share their environmental reviews with us. We are more
than willing to share the results of our environm ental reviews with other Members.  As a general
practice, we make the results of all environmental reviews available to all Members through the
Secretariat.
Fish Subsidies:  The United States believes that the depleted state of the world's fisheries has
become a major economic and environmental concern.  Subsidies that contribute to overcapacity or
over fishing, or hive other trade-distorting effects,  are a significant part of the problem, and should be
addressed in the WTO, which has competence in this area.  The WTO fish subsidies initiative is win-
win-win, that is an initiative that advances trade liberalization, environmental protection, and
development goals, all at the same time and in a very concrete way.  In looking toward, Doha, we see
the fish subsidies initiative as presenting a golden opportunity to demonstrate to the outside world that
the WTO can advance its trade agenda in a way that is good for the environment and for developingcountry interests. We therefore support negotiations on fish subsidies.  Some delegations have
suggested that there is a need to focus on the role of effective fisheries management.  We do not
disagree.  We do not agree, however, that this is a reason not to tackle fish subsidies in the WTO,
since this is an area within the WTO's competence.
Multilateral Environmental Agreements:  Several delegations asked about our views on the
relationship between multilateral environmental agreements and WTO rules.  Given differences in the
environmental matters at issue in environmental agreements, it is not surprising, and it is indeed quite
logical, that there are differences among MEAs in  the compliance, enforcement and dispute settlement
mechanisms.  For this reason, we think the most productive way to look at these items is on a case-by-
case basis.  In general, we believe that strengthened implementation of MEA obligations dependsupon domestic measures taken by Parties to a given MEA, not necessarily upon strengthening theWT/TPR/M/88/Add.1
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international compliance/dispute settlement provisions included in an international agreement.  We
think that we can all agree on the objective of sustainable development and mutually supportive tradeand environmental policies.  To obtain this objective, we think it is best to focus on practical steps,
such as coordination and communication between MEAs and the WTO Secretariat and enhanced
efforts toward domestic policy coordination on trade and environment issues in capitals and in MEA
and trade negotiations.  We are not convinced that efforts to clarify the legal relationship between
MEAs and WTO rules would add value and are concerned that efforts in this regard would divertdiscussion on trade and environment issues away from the positive of mutually supportive efforts and
toward the negative of possible theoretical conflicts.
Competition policy and international agreements:  Some delegations have inquired about our
position on negotiations on trade and investment and trade and competition.  We are aware of the
importance that many members attach to these two items.  For both, we are currently exploring whatkind of approach would make sense, in the context of preparing for the Doha Ministerial Conference.
Multilateral/WTO:  new round, trade promotion authority; regional and bilateral agreements and
negotiations
New Round:  A few delegations expressed interest in the U.S. position regarding the launch of
a new round of multilateral trade negotiations.  As I indicated in my initial remarks on Friday theUnited States is committed to a successful launch of a new Round at the Doha Ministerial.  To be
successful, we will need an agenda that addresses the concerns of all members.  At meetings of the
General Council in June and July we laid out our ambitions for the Round in considerable detail.  I
will not repeat what we said at those meetings since we are at a point in time where what is needed is
not a reiteration of positions but rather a commitment to find common ground.  Clearly, we are an
advocate in a number of areas, including the need fo r ambitious negotiating objectives for agriculture.
In other areas we may not necessarily be an advocate but we are prepared to work with all Members tosee that their interests are reflected.  As noted in my opening statement, we also recognize the
importance of the implementation issue to success at Doha and are making every effort to achieve
positive results.
Encouraging public comment on the new round:  The issue of how we seek private sector
advice on negotiating objectives was also raised during the Friday's discussions.  As discussed inParagraph 95 of the Government report we regularly solicit public comment on trade issues and have
issued Federal Register notices seeking public comment on the mandated negotiations on agriculture,
services, the priorities for future market access negotiations on industrial goods, institutional
improvements to the WTO particularly with respect to the transparency of its operations and outreach,
and preparations for the WTO Fourth Ministerial Conference, including the possibility of launching anew round of multilateral trade negotiations. The responses have been distributed to the relevant USG
agencies and are also available in the USTR reading room which is open to the public and many
foreign country's Embassy and trade officials have taken advantage of this to examine them. In
addition the private sector advisory committee system established by law in 1974, with as many as
1,000 private sector advisors, has provided an important avenue for gathering input on a new roundand the Doha Ministerial.
Trade Promotion Authority:  Several delegations asked the Administration's views on
obtaining Trade Promotion Authority (TPA).  President Bush has placed enactment of TPA at the top
of his trade legislative agenda. The formal legislative process has begun with the introduction of a bill
in Congress for such authority.  TPA would allo w the President to have any negotiated agreements,
covered by the 2001 International Trade Legislative Agenda, considered legislatively as a package,
without change or amendment.WT/TPR/M/88/Add.1
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The present economic slowdown highlights the importance of pro-trade initiatives for
economic recovery. Earlier this month, Ambassador Zoellick noted the key role that trade can play instimulating our economy, observing that TPA is an important part of President Bush's plan for
opening markets and promoting American and global economic prosperity.  He said that he looked
forward to continuing to work with Congress to get TPA enacted this fall. The current global
economic slowdown makes it all the more essential that  we press forward in pursuit of open markets
and that the rules-based trading system of the World Trade Organization is strengthened andexpanded.
Regional and Bilateral Initiatives:  Several delegations questioned the role of regional trade
agreements in United States trade policy.  The trade policy of the United States reflects our
fundamental interest in open markets and free trade, and we are pursuing these objectives through
bilateral, regional and full multilateral agreements under the WTO.  We believe that regionalagreements, consistent with WTO obligations, can be building blocks, rather than stumbling blocks to
the multilateral trading system.  We view our invo lvement in such agreements and initiatives as
complementary to our commitments to the WTO.  However, we also believe it would be most
unfortunate if the WTO stood still, while regional trade liberalization moved forward.
We appreciate the interest expressed by WTO Members to review the CBI and AGOA acts.
The United States has informed the Secretariat about the Caribbean Basin Trade Partnership Act and
the African Growth and Opportunity Act (AGOA) and is evaluating what sort of waiver it needs for
these programs and intends to submit its waiver request soon.
Regional initiatives relation to new round:  The discussant asked what complementarities the
United States saw between the FTAA and the shape of the future WTO agenda.  We believe that there
are complementarities, and that they are positive.  The negotiation of the North American Free-Trade
Agreement and the broad scope of its disciplines helped inform final outcomes in the Uruguay Round.Also, cooperation developed in the APEC proce ss likewise contributed to reaching the WTO
Agreement on the Information Technology.  Regional agreements and for a in other words can act as
laboratories for finding solutions to specific proble ms in the international trade arena that can later
become fully multilateralized.  They can also help  in building constituencies in support of trade
liberalization and assist governments in developing their expertise in various areas covered by theagreements.  I expect that current negotiation of the FTAA agreement will play a similar role.
Dispute Settlement (sufficient prior consultation):  Some interest was expressed in the
possible overuse of the WTO dispute settlement mechanism because of inadequate informal
consultation.  The vast majority of U.S. trade takes place without recourse to dispute settlement.
When a problem does arise the USG consults with foreign governments before going to formal disputesettlement.  There are many channels for such consultations, and we are constantly looking for
opportunities to expand and improve these channels.
Dispute Settlement (number of cases):  There was some speculation among members about
the number of dispute settlement cases brought against the United States and the implications of these
numbers.  In fact, there is rough balance in the number of cases brought by and against the UnitedStates, the substantial number undoubtedly related to the large volume of U.S. trade.  With respect to
recent increases in cases brought against the United States, the United States considers that this more
likely reflects the asymmetries in market share between the United States and all but its largest trade
partners rather than any broader systemic issues in  the United States.  Cases that the United States
might not bring against another Member, because of the relatively small volume of trade concernedfor the United States, might be brought against the United States because of the relatively greater
importance of our import markets for other Members.WT/TPR/M/88/Add.1
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Unilateral Preferences:  A few delegations expressed interest in learning about the experience
the U.S. has had to date from linking unilateral trade preferences to progress on domestic reforms.According to the report submitted in May 2001 by the President to the Congress on the
Implementation of the African Growth and Opportunity Act (AGOA) , many countries implemented
or strengthened economic or political reforms and committed to improving labour or human rights
situations during the AGOA country eligibility process and the ensuing bilateral consultations.
The report can be found on the USTR web site.  As of July 1, 2001, 35 of Africa's 48 sub-Saharancountries had been designated as AGOA beneficiary countries.  We are coordinating country
eligibility reviews based on current conditions, events and commitments occurring since the
October 2, 2000 country eligibility designations, and we are working to increase the level of
participation in the program.
II. TRADE POLICIES AND PRACTICES BY MEASURE
Registration, customs procedur es, fees and other charges
Customs Procedures:  We noted the question from the European Communities regarding
customs procedures that are applied to its, individual member states, rather than the Community as a
whole.  As is the case for numerous WTO Members, however, many of the trade laws of the United
States are written in terms of country of origin, and do not contemplate a "customs union of origin".We note that each Member of the European Community is a WTO Member in its own right.
Merchandise Processing Fee:  Several delegations have asked about the extension of the
Merchandise Processing Fee. Use of the fee remains restricted to customs clearance operations for
goods upon which the fee is levied.  The inclusion of the Merchandise Processing Fee in the Patients
Protection Act does not alter how the fee is calculated or applied, nor how the revenues of the fee are
used. None of the provisions of the Merchandise Pr ocessing Fee have changed with its extension, and
it remains consistent with the WTO Agreement.
Customs formalities for imports of textiles:  A few delegations asked about customs
formalities for textiles. The U.S. Customs Service is required to determine the proper classification of
goods under the U.S. Harmonized System Tariff Schedule and to determine the proper country of
origin of goods which are imported into the United States.  To do this, Customs will occasionally
request specific information from importers, whic h is additional to that provided in the entry
documentation.
Tariffs and tariff quotas
Some WTO Members have identified particular interests or concerns with the level or type of
U.S.. tariff on particular products or groups of products.  We have listened carefully to the comments
concerning the structure of our tariffs.  As I mentioned in my statement on Friday the current U.S.trade-weighted average tariff is just under 3% on a legally bound basis under the WTO and will
continue to fall with the full implementation of Uruguay Round commitments.
With respect to concerns about levels and structures of tariffs, we believe that a new round of
multilateral negotiations will afford the best mean s to address such issues.  In the agriculture
negotiations, the United States has proposed that all WTO Members should reduce substantially, oreliminate, all tariffs.  This includes substantia l reduction or elimination of tariff disparities.
Furthermore, the United States has indicated a willingness to engage in comprehensive market access
negotiations on goods to complement the negotiations on agriculture and services mandated in the
WTO's built-in-agenda.  As we have indicated we plan to work towards the objective of duty-free andWT/TPR/M/88/Add.1
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quota-free market access for all LDC imports as stated at the Third United Nations Conference on the
Least Developed Countries.
Contingency measures
Increase in Such Measures:  There was substantial interest among Members in U.S.
contingency measures. First, let me remark that, in light of the many factors that influence the level of
antidumping cases brought from year to year, we cannot predict the number of antidumping petitions
that will be filed in the future, nor the number of cases that we will initiate.  The increase in casesbrought during the late 1990s was due largely to the massive increase in low-priced steel imports into
the United States during this time, which was itself related to significant structural problems within
the global steel industry.  Prior to the steel crisis, the number of antidumping cases initiated by the
United States had actually fallen off significantly, from an average of 57 initiations in 1992-1994 to an
average of 17 initiations from 1995-1997. [See Table IIL4 of the WTO Trade Policy Review.] Withdue respect, the fact that 40% of cases result in negative preliminary determinations is a reflection of
the stringent procedures in place that the ITA an d ITC must follow prior to imposing provisional
measures.  We intend to maintain these procedural protections for foreign firms involved in U.S.
antidumping proceedings and to work to ensure th at U.S. exporters involved in foreign antidumping
actions are afforded similar protections.  As for the pre-initiation process itself, the current proceduresare fully WTO-consistent and there are no plans to revise these.
With regard to U.S. exporters, the United States seeks to ensure that they are treated fairly
when made subject to foreign country antidumping laws.  We are currently working toward this goal
within the WTO Committee on Anti-dumping Practices and in other venues.  At the same time, it is
important to put the statistics cited above in perspective.  The questioner mentioned a 41% increase in
the number of antidumping measures in force against U.S. firms from the 1991-1995 period to 1996-
2000.  The data were cited to the Cato Institute in the United States.  The strong increase, however, is,in part, a reflection of the large number of cases brought in the early 1990s.  Since then, according to
the Cato Institute work, the total stock of anti-dumping orders against the United States has increased
only slightly, from 60 in 1995 to 62 in 2000.  During  this period, the share of worldwide antidumping
orders that concern U.S. exporters actually declined, from 6.8% in 1995 to 5.2% in 2000.  To put this
into perspective, the United States accounts for 15% of global exports but only a 5.2% share of the
total worldwide stock of antidumping orders in 2000.
With regard to the simultaneous subjection of imports to both antidumping and safeguard
action.  Safeguard measures and antidumping measures are separate remedies for distinct trade-
distorting situations.  As such, there is no reason measures cannot apply simultaneously to the same
merchandise.
Byrd Amendment:  Several delegations asked about the Byrd Amendment.  First, the United
States does not agree that the Continued Dumping and Subsidy Offset Act of 2000 has any particular
relevance to U.S. anti-dumping and countervailing legislation.  Although the Act was enacted as part
of Title VII, which also contains the antidumping and countervailing duty laws, it does not have any
impact on how the AD/CVD laws operate, either substantively or procedurally.  Duties collectedunder antidumping and countervailing duty legislation merely serve as the source of funding for
distributions made under the Act.
Second, the purpose of the Act is to distribute money to certain persons insofar as they meet
the requirements of the statute.  Beyond what is contained in the statute itself, we cannot speculate on
Congress' intent.  The Act only addresses internal government distribution of revenues which is notthe subject of any of the WTO Agreements, except the disciplines on subsidies.  Each member must
decide how to utilize such revenues.  No assistance has been distributed under the Act.  Until finalWT/TPR/M/88/Add.1
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regulations are adopted, and distributions are made, the United States cannot determine whether
notification under Article 25.2 will be required.  The Act is consistent with the Anti-Dumping
Agreement, which does not address the internal government distribution of revenues.  The Agreement
on Subsidies and Countervailing Measures prohibit s two types of subsidies: export subsidies and
import substitution subsidies; the Act is neither.
Technical Barriers to Trade/Sanitary and Phyto-Sanitary
TBT (Complexity):  Several delegations expressed concern about the complexity of technical
regulations. The United States government has in place a number of requirements to ensure that
technical regulations do not create unnecessary barriers to trade and otherwise comply with WTO
requirements.  Relevant legislation on transparency and regulatory planning and review has been
noted in information provided to the Committee on Technical Barriers to Trade (GfTBT/2/Add.2).
The United States Government does not attempt to direct the activity of private bodies' use ofinternational standards beyond making them aware of the rights and obligations under the WTO and
responding to perceived violations.  Similarly, there is no specific program to monitor whether a
regulatory agency has used a particular international standard; however, there are various mechanisms
for regulatory oversight more generally and, as noted above, detailed and stringent requirements for
transparency which call for public input in the development of technical regulations.
Use of International Standards:  A number of delegations asked about the use of international
standards in the United States.  The United States does not believe that there is a basis for the assertion
that there is a low level of use of international st andards in the United States because of the lack of
data to conduct such a measurement.  The U.S. Government does not centrally compile statistics on
the relationship of standards and technical regulations to international standards, and we are unaware
of any quantitative data that would support such an assertion.  As a matter of practice and law,
however, U.S. standardizing bodies and agencies re view existing standards and consider whether
international standards (if relevant ones exist) are appropriate and effective for meeting domestic
needs.
National Standards Strategy:  A number of countries also asked questions about a U.S.
national standards strategy.  The National Standards Strategy was developed by a private, non-profit
federation.  While a number of U. S. government agencies participated in the development of theNational Standards Strategy, it does not represent official U.S . government policy and is not legally
binding.  The U.S. Government has not attempted to assess the effects of the National Standards
Strategy.
TBT (Sub federal measures including WTO notifications):  Some delegations inquired about
technical regulations at the sub-federal level.  The Uruguay Round Agreements Act included the U.S.obligations with respect to coverage of state and local government activities.  The United States is not
aware of any sub-federal technical regulations that it has failed to notify in accordance with the TBT
requirements.  The United States has in place a system to identify trade-significant proposed technical
regulations and conformity assessment procedures of state governments in the United States.  The
U.S. inquiry point, the National Institute of Standards and Technology or NIST, operated by the U.S.Department of Commerce, has assumed the responsibility for notification of state proposals on their
behalf. Notification involves a review of state publications to ascertain whether proposals fall within
the requirements of the TBT Agreement. The United States has no obligation under the WTO to notify
regulations proposed by local governments, and has no plans to implement such a system.
The U.S. Metric Program:  Some Members asked about metrification in the United States.
The U.S. Metric Program, located at the NIST in the Department of Commerce, is undertaking
renewed efforts to provide leadership, example and model initiatives in the United States for buildingWT/TPR/M/88/Add.1
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awareness of the metric system's widespread presence, its relative ease to learn and use as a language
of measurement, and its vital role in an increasingly global marketplace. The U.S. Metric ProgramOffice plans to take the lead to promote changes in the U.S. Fair Packaging and Labeling Act to
permit metric-only declarations on U.S. consumer products.
TBT/SPS (Technical Assistance):  Several delegates asked about technical assistance in the
TBT and SPS areas.  According to preliminary figures from a new USG survey on technical
assistance, the United States provided $13 million for technical assistance for SPS and $6.5 million forTBT from 1999 to 2001.  In addition, the United States recently provided $640,000 to the World Bank
to assist African countries to help find ways to  participate in the development of standards and
disseminate information on standards to facilitate their market access.
Government procurement
Buy America Provisions:  A number of delegations have raised questions about the "Buy
American Act" trade restrictions.  It is very important to note, as is pointed out in the Secretariat's
report, that the United States fully waives these restrictions for all procurements that are covered by
Government Procurement Agreement and our other relevant international commitments.  Our policy is
that we are prepared to provide full national trea tment to our trading partners in covered government
procurement markets, provided that out trading pa rtners will provide comparable treatment to U.S.
suppliers in their own procurement markets throug h adherence to the GPA or a bilateral agreement
containing comparable commitments.  In addition, we unilaterally waive the "Buy American Act"
restrictions for all suppliers from least developed countries.
Purchasing restrictions:  A number of questions also focus on programs that the United States
uses to facilitate the participation of small- and minority-owned businesses in government
procurement.  We view these programs as important elements of our broader economic policy of
ensuring a high level of competition for government  contracts, fostering small scale entrepreneurship,
and creating jobs.  The vast majority of Federal government business that goes to small- and minority-
owned firms is awarded through fully open and competitive tendering procedures.  As the Secretariat's
report notes, about 9% of Federal contracts are awarded under tendering procedures "set aside" for
competition among small- and minority-owned companies.
Federal Measures:  With regard to Federal procurement, the United States is strongly
committed to ensuring the highest possible level of transparency, due process and accountability in
government procurement.  This is of critical importance, not just because it facilitates trade, but
because it ensures the government uses taxpayers' money as efficiently as possible and because it
bolsters confidence in democratic governance, the pr edictability of the commercial environment, and
the stability of the national economy.  The other most fundamental principle of the U.S. procurementsystem is "full and open competition".  The USG procurement markets are among the most open and
competitive in the world.
U.S. State Procurement:  Some Members raised questions about state government
procurement in the United States. In that rega rd, I would note that the government procurement
policies and practices of each state are governed by the state's laws and regulations.  The procurementpolicies of all 50 States require high levels of transparency, due process and accountability in
tendering procedures.  Detailed information on the procurement policies and practices of individual
states is available through the U.S. National Association of State Procurement Officials.WT/TPR/M/88/Add.1
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Trade measures
Iran/Libya Sanctions Act:  A few delegates asked about the Iran/Libya Sanctions Act. We
appreciate the views of all our trading partners in this matter.  The Iran and Libya Sanctions Act (ILA)
remains U.S. law.  In August 2001, the Act was extended for a further five years, until 2006, with
amendments.  The re-authorizing legislation includes a provision calling for a report by the President
to Congress on the impact of certain actions taken pursuant to the Act.  The President is invited to
include in that report a recommendation on whether the Act should be terminated or modified.  In hisstatement upon signing the legislation, the President welcomed this provision, emphasized our
continuing concerns about Iran and Libya, and noted that we are strengthening our cooperative efforts
with other countries to pursue effective approaches to the problems of proliferation and terrorism that
are key ILA concerns.  By its terms, ILA applies to those who engage in activities covered by the
statute, without distinction by nationality.  The legislative history of the Act indicates a concern byCongress that the law be applied in a manner consistent with the international obligations of the
United States.
Helms-Burton:  A few delegations have asked about the Helms-Burton Act.  The Cuban
Liberty and Democratic Solidarity (LIBERAL) Act is consistent with U.S. obligations under the
GATT and the GATS.  Since the enactment of the LIBERAL Act, the President has exercised hisauthority under Title III of the Act to suspend the right of U.S. nationals to file suit against persons
who are trafficking in confiscated property in Cuba. That suspension remains in effect.
Section 301
With respect to Member references to the Section 301 provisions in our trade law, I would
note that the U.S. Trade Representative decides what actions, if any, are taken as a result of an
investigation under sections 301-309 of the Trade Act of 1974.  The United States is committed to
complying with U.S. obligations under the WTO Agreement.
Intellectual property rights
International rules:  A few delegations asked about the U.S. first-to-invent system for patent
registration. The United States has followed the first-to-invent system throughout the history of our
patent law.  The first-to-invent system is in fu ll conformity with U.S. obligations under the TRIPS
Agreement, as is the rest of the U.S. patent law. The United States amended its patent law inNovember 1999 to address a number of issues.  This new law contains a provision to publish, within
18 months, most patent applications filed in the United States.  The law also adds new opportunities
for third parties to participate in reexaminatio ns, including determinations made by the patent
examiner to the Board of Patent Appeals and In terferences, in accordance with the understanding
reached as part of the Framework talks.
Enforcement:  Several delegations asked about U.S. policy with regard to parallel imports.
U.S. Customs provides parallel import protection to certain foreign manufactured products bearing
trademarks which have been recorded with Customs, and where the U.S. trademark owner does not
own the foreign mark and no common ownership cont rol exists between the U.S. trademark owner
and a foreign trademark owner.  Additionally, parallel import protection can be provided with regardto trademarks where a request for protection is made and Customs determines that the U.S. goods are
physically and materially different from the foreign product.  Customs also provides gray market
protection pursuant to exclusion orders issued by the U.S. International Trade Commission (ITC).
Exclusion orders may be issued by the ITC, wh ich would result in the denial of entry of goods
involving the infringement of all forms of intellec tual property rights, including situation involving
parallel imports.WT/TPR/M/88/Add.1
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Special 301:  Several Members asked about the compatibility of U.S. Special 301 provisions
dealing with intellectual property rights protection and our WTO obligations.  The "Special 301"provisions of the Trade Act of 1974, as amended, require the U.S. Trade Representative, in
consultation with other government agencies, to identify foreign countries that deny adequate and
effective protection of intellectual property rights or fair and equitable market access for U.S. persons
that rely on intellectual property protection.  To ensure transparency in the Special 301 process, the
public is invited to comment and such comments are part of the record during the annual review.Many foreign governments have taken the opportunity during the annual review to provide comments
that have received consideration during the review.  The Special 301 provisions of U.S. law are in full
conformity with U.S. obligations under the WTO agreements.
III. DEVELOPMENTS IN SELECTED SECTORS
Agriculture and fisheries
Several delegations have asked what is the objective of recent U.S. agricultural policy,
particularly in light of increased domestic support.  The underlying thrust of U.S. farm policy as
expressed in the FAIR Act of 1996 is to de-link previously regimented production from government
limitations and support in favor or more flexible, market-oriented decisions by producers. Let me
reconfirm our commitments to obligations undertaken in the UR, and highlight as an example therecent notification of U.S. domestic support payments for the 1998/99 marketing year. The U.S.
Government took the politically difficult, but correct, decision to notify Market Loss Assistance
payments in the Amber Box, setting a precedent for other nations in the way they classify their own
trade distorting subsidies and setting an open and above-board tone as we move toward a challenging
new round of trade negotiations in the WTO.
President Bush has also outlined this Administration's objectives for a sound agricultural
policy.  They include:
1. Pursuing an aggressive trade policy, resolving trade conflicts, and aggressively monitoring
policies that distort trade;
2. Reducing tax and regulatory burden on farmers and ranchers while continuing to protect
America's natural resources;
3. Conducting research addressing food safety, the environment, biotechnology, energy, and new
uses for agricultural products;
4. Providing a safety net for farmers and ranchers that is consistent with the free market, and that
gives them the opportunity to prosper in an evolving and dynamic global marketplace.
Regarding agricultural domestic support, the difficulty of being able to classify all agricultural
support measures within the context of the ongoing agricultural negotiations as either trade-distortingor non-trade distorting was raised.  Quite frankly, the U.S. never indicated this would be an easy task.
We see it as a necessary task and one to be best achieved in a cooperative, mutual effort with the view
of significantly reducing trade barriers and improving global trade benefits.
And finally, a number of countries have noted significant levels of tariff or quota protection
for certain U.S. agricultural imports.  The U.S. recognizes that these issues would be part of theoverall discussion in a new, comprehensive round.WT/TPR/M/88/Add.1
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The U.S. proposal on agriculture, submitted in June of 2001, is a framework for substantial
reductions in agricultural trade-distorting policies and practices.  This proposal, when combined withadditional proposals submitted by the U.S. government to date and further proposals that will be
submitted, provide 'a roadmap for substantial reform of agricultural trade policy and demonstrate the
U.S. commitment to reform.
Softwood lumber
One delegation was concerned that the Secretariat report did not have most recent information
on the August imposition of preliminary countervailing duties in the case concerning imports of
softwood lumber from Canada.  We would certainly assist Secretariat in updating any information, if
so desired, and note that the final determination is not due until next spring.
Textiles and clothing:  market access
Questions about implementation of U.S. commitments under the Agreement on Textiles and
Clothing (ATC) were raised by a few delegations.  Quite simply, the U.S. is fully and faithfully
implementing its obligations under the ATC and is committed to continuing to do so.  As I noted on
Friday, U.S. imports of textiles and apparel increased by 90.2% overall since the WTO entered into
force, or by an average rate of 11.3% each year (in square meters equivalent).  In value terms, imports
of textiles and apparel increased absolutely by 79.4% or by an average rate of 10.2% each year sincethe WTO has entered into force.  The implementation of U.S. commitments will remain on schedule in
years ahead.  Developing country exports of textiles and apparel to the United States have grown 72%
since 1994, reaching a value of $42 billion in 2000.
As anticipated in the ATC, liberalization is occurring through the ATC's accelerated growth
provisions, on top of the growth rates already mandated by the bilateral agreements notified under the
AT.  The United States textile and apparel industries have continued their adjustment efforts, in the
face of significantly deteriorating economic conditions, in recent years.  Job losses have beensignificant: the industries have lost 534,000 jobs, which is equivalent to approximately 89,000 jobs
per year since the WTO came into effect, or, in total, nearly one-third of the work force.  This has had
a particular impact on the apparel sector.  Textile and apparel plants have closed or announced
closings at a rapid rate.  Since the beginning of 1998, in excess of 150 plants have closed.
Steel:  competitiveness, contingency measures
Competitiveness, contingency measures:  Some delegations have raised questions about trade
remedies on steel products.  The United States has one of the most competitive steel industries in the
world.  In the past 20 years the industry has invested billions of dollars in plant modernization, closed
dozens of inefficient mills, eliminated 25 million tons of steelmaking capacity, raised productivity by
more than 300%, eliminated 330,000 jobs, and invested billions of dollars in environmental controls,cutting pollution emissions by 90%.  Despite these efficiencies, the U.S. steel industry has
encountered very difficult market conditions in recent years.  Because it has a large and open market
for steel, the United States has been the destination of choice for much of the world's exported steel
production.  Steel imports into the United States surged in 1998 after the financial crises dried up
demand for steel in other world markets.  Steel imports continued at very high levels in 1999 and2000, leaving the U.S. steel industry extremely vulnerable.
In response to the developing crisis in the steel industry, President Bush directed the United
States Trade Representative to request the U.S. International Trade Commission to initiate a
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into the United States in such increased quantities as  to be a substantial cause of serious injury, or the
threat thereof, to the domestic industries producing like or directly competitive products.
We are aware of concerns about the potential imposition of safeguard measures on steel.
However, these concerns are speculative.  Before there can be any safeguard measure, the U.S.
International Trade Commission must determine that increased imports have caused serious injury or
threat of serious injury to a domestic industry.  The ITC is an independent agency, and we cannot
predict the outcome of the steel 201 investigation. If the ITC does make an affirmative determination,the United States may apply a range of potential remedies. It is the Administration's intention to
ensure that any remedy considered is consistent with our WTO obligations.
By remedying injurious and unfair trade, WTO-sanctioned trade remedies, such as those on
steel, play an important role in the trading system.  The existence of trade remedies have enabled the
United States to make strong commitments to open its markets in trade negotiations by helpingpersuade U.S. industry to accept significant cuts in U.S. tariffs and other market opening efforts.
But we also recognize that the problems in steel are global, and require a global solution.
That is why we are implementing the President's proposal of June 5 for negotiations seeking the
elimination of inefficient excess capacity in th e steel industry worldwide and establishing new
disciplines on subsidies and other market-distorting practices in the global steel trade.  This initiativeis being launched at a special high level OECD steel meeting on September 17 and 18.
Transport
Maritime and Air Transport:  Specific questions were raised about maritime.  With respect to
U.S. cabotage practices in maritime transport (the Jones Act), the Administration supports the Jones
Act as an essential element of our Nation's maritime policy, and will not be proposing changes to the
Act.  We have responded in great detail in other forums about the Jones Act.  The United States is
among the more than 40 maritime nations that reserve their domestic trade to national flag vessels.The terms of reference governing the extended ma ritime negotiations following the Uruguay Round
excluded cabotage from the negotiations.  The United States supported this position due to the
essential link that the Jones Act provides in our national transportation network and readiness
capability.  This point has been repeatedly noted by our Department of Defense. Indeed, over 75% of
the ocean going vessels in the Jones Act fleet have military utility.  The Jones Act assures U.S. controlof essential transportation assets (including vessels, shipyards, and parts and equipment suppliers) and
related infrastructure in both peacetime and wartime.
Financial services
Banking Insurance and securities: foreign part icipation:  Several delegations have raised
questions about the Gramm-Leach-Blailey Act.  The Gramm-Leach-Blailey Act provides that a bankholding company may become a financial holding company and engage in a broad range of financial
services, if the company's subsidiary banks are, among other things, well-capitalized and well-
managed.  The GLB Act also provides that a foreign bank that does not own a subsidiary bank, but
engages in banking in the United States through a branch, agency or commercial lending company
will be allowed to become a financial holding company.  The Federal Reserve, however, must and hasadopted regulations that require a foreign bank to meet capital and management standards comparable
to those of a U.S. bank.  Thus, the GLB Act sets a framework that allows for equivalent treatment
between the US and foreign banking organizations.  Given the substantial liberalization of the banking
sector, in 1999 with the passage of the Gramm-Leach-Blailey Act, there is nothing currently pending
that would allow banks to be owned by non-financia l companies.  The issue of whether banks wouldWT/TPR/M/88/Add.1
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be permitted to own non-bank companies as merchant banking investments may be reviewed five
years after the enactment of the GLB Act.
Telecommunications:  FDI restrictions, satellite, Internet
Investment restriction:  One concern raised was that a percent ownership restriction in the
U.S. telecom services market might act as an impediment to foreign investment.  The limitation does
not apply to all foreign investment.  As the U.S. WTO schedule makes clear, this limitation applies
only to direct investment in the ownership of a co mmon carrier radio license by a U.S. corporation of
which more than 20% of the capital is owned or voted by a foreign government or its representative,
non-U. S. citizen or their representative, or a corporation not organized under the laws of the United
States. Members may be interested to know that not withstanding this limitation, there are few if any
Members that enjoyed a level of foreign participa tion in their wireless market comparable to the
United States, now home to tens of billions of dollars in foreign investment.
Satellite:  One delegation inquired about the effect the Federal Communications Commission
(FCC) deference to the Executive Branch on matters of national security and law enforcement have on
U.S. commitments to allow foreign satellite operators  to provide satellite services to points in the
United States from gateways outside the United States.  FCC deference to the Executive Branch on
matters of national security and law enforcement has no effect on U.S. WTO commitments.  Suchdeference is clearly within the scope of U.S. WTO commitments.
Internet:  U.S. views were sought on the imposition of customs duties on digital products
through the internet.  The United States believes the current moratorium on such customs duties
should be made binding and permanent and invites other delegations to support this position.
Professional Services and Movement of Natural Persons
Movement of Natural Persons:  One delegation asked whether U.S. visa requirements and
sub-federal professional certification requirements served to unduly restrict access to the U.S. marketfor foreign professionals.  No country allows free flow of persons, particularly those wishing to work
in a foreign country.  United States regulations in this area address, among other things, legitimate law
enforcement concerns about individuals improperly using a temporary visa to secure permanent
residence.  With respect to professional certification requirements, there is nothing discriminatory
about U.S. regulatory requirements.  United States and foreign professionals must meet the samesub-federal requirements.  There are many professions, such as accounting and architecture, where the
essential qualification requirements are harmonized, even though administered by states.
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