WT/TPR/S/88 Trade Policy Review
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III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) MEASURES DIRECTLY AFFECTING IMPORTS
(i) Tariffs and other charges affecting imports1
1. The United States levies ad valorem  customs duties on imports on the basis of their f.o.b.
value at the point of export.  The 2001 Harmonized Tariff Schedule of the United States (HTS)
consists of 10,187 tariff lines in Chapters 1 to 97 at the HS 8-digit level.  However, the 8-digitprovisions may be subdivided to distinguish products for non-tariff purposes (e.g. monitoring textile
import quotas), and such subdivisions are given two additional digits.  Special classification
provisions are contained in Chapter 98, including for goods eligible for tariff preferences;  specific
institutions;  and articles admitted free of duty under bond.  Temporary modifications to import duties
(e.g. duty suspensions, sanctions) and safeguard measures (see section (ii) below) are contained inChapter 99.
2. As at January 2001, the United States applied most-favoured-nation (MFN) tariff treatment,
refered to in U.S. provisions as Normal Trade Re lations tariff treatment, to all but six countries:
Afghanistan, Cuba, the Democratic People's Republic of Korea, Laos, Serbia and Montenegro, and
Viet Nam.  All WTO Members except Cuba receive unconditional MFN tariff treatment from theUnited States.  Conditional MFN tariff treatment is granted to non-market economies under Title IV of
the 1974 Trade Act, subject to compliance with the freedom of emigration provisions of the Jackson-
Vanik Amendment and conclusion of a bilateral commer cial agreement with the United States providing
reciprocal treatment.  In 2000, Russia and the other Newly Independent States, with the exception of
Belarus, received conditional MFN treatment.  Be larus continued to receive MFN tariff treatment
under annual waivers.  In 2000, pursuant to specific legislation, the President terminated application
of Title IV to Albania, Georgia, and the Kyr gyz Republic.  In October 2000, China was granted
permanent MFN status conditional on its accession to the WTO (Chapter II(1)).
(b) MFN tariff rates
3. The main features of the U.S. MFN schedule are reported in Table III.1.  The simple average
applied MFN tariff, including the ad valorem  equivalents (AVEs) of specific and compound rates,
was 5.4% in 2000, slightly lower than its 1999 level.
2  The average applied tariff for agriculture
in 2000 was 10.4% with an average of 4.5% for non-agricultural products.3  Excluding the AVEs, the
average applied MFN rate was 4.6% in 2000 and 4.5% in 2001.
4. Specific and compound tariff rates apply mainly to agricultural products, footwear and
headgear, and certain precision instruments;  a number of specific duties are also applied on chemicals
and chemical products, textiles, and base metals.  In general, the specific and compound rates appliedby the United States result in higher protection than the applied  ad valorem  duties:  in 2000, the
average of AVEs was estimated at 11.5% (compared with 4.5% for ad valorem  duties), and specific
and compound duties accounted for 75 of the 100 highest rates.
                                                     
1 Tariff and trade data are accessible from the United States International Trade Commission online
information.  Available at:  http://dataweb.usitc.gov.
2 Although the 2001 tariff was available, ad valorem  equivalents of non-ad valorem tariff rates were
only available for the year 2000 at the time of preparing this report.
3 These averages are based on the WTO definition of agriculture, including both in- and out-of-quota
rates.United States WT/TPR/S/88
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Table III.1
Structure of applied MFN tariffs in the United States
(Per cent)
Indicators 1996a1998b1999b2000
 1. Bound tariff lines (share of all lines) 100.0c100.0c100.0c100.0c
 2. Duty-free tariff lines  (share of all lines) 21.4 13.8 29.7 31.0
 3. Specific and compound tariffs (share of all lines) 24.4 14.3 12.9 12.6
 4. Lines covered by tariff quotas (share of all lines) 1.9 1.9 1.9 1.9
 5. Non ad valorem  tariff lines with no ad valorem  equivalent
    (share of all lines)3.1 0.2 0.2 0.0
 6. Simple average bound tariff rated.. 5.9 5.7 ..
 7. Simple average applied tariff rated6.4 5.9 5.7 5.4
          Agricultural products (WTO definition)e10.0 10.3 10.7 10.4
          Non-agricultural  products (WTO definition) 5.7 5.0 4.7 4.5
 8. Lines exceeding 15% (share of all lines) 8.9 7.7 7.4 7.0
 9. Overall standard deviation 13.4 12.9 13.3 13.1
10. Coefficient of variation (CV) 2.10 2.19 2.34 2.38
.. Not available
a Calculated on the basis of data provided by the U.S. authorities for the 1996 TPR.b Calculated on the basis of data provided by the U.S. authorities for the 1999 TPR.
c Two lines applying to crude petroleum are not bound.
d Excludes in-quota tariff lines.
e Covers HS chapters 1 to 24 less fish and fish products plus HS codes 2905.43, 2905.4, 3809.10, 3823.60 and HS headings  33.01,
35.01 to 35.05, 41.01 to 41.03, 43.01, 50.01 to 50.03, 51.01 to 51.03, 52.01 to 52.03, 53.01 and 53.02.
Source : WTO estimates, based on USITC online information.  Available at:  http://www.usitc.gov/taffairs.htm and ad valorem
equivalents provided by U.S. government authorities.
5. 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).  In part as a result of these rates, dispersion is relatively high in the U.S.
tariff.
6. Tariff escalation, which arises when tariffs increase with the degree of processing, is present
in the U.S. tariff.  As at January 2001, escalation was particularly noticeable in the food, beverages
and tobacco industries and in the textiles, clothing and leather industries (Chart III.1).  Several WTO
Members have raised concerns about the possible negative impact of these tariff patterns on higher-
value-added exports from developing countries.4
7. Following the Uruguay Round, the United States bound all tariff lines in Chapters 1-97,
except two lines covering crude petroleum.  In September 2000, the United States provided the WTO
with its Consolidated Schedule of final bound rates resulting from all WTO Agreements, including the
Uruguay Round, the Information Technology Agreement, and the Agreement on Pharmaceuticals5;
the Schedule specifies the base and final rates, and the implementation periods.  Current applied rates
have been provided to the WTO Integrated Database Project;  current bound rates have not been
provided because the authorities state that curren t applied and bound rates are identical.  The United
States has provided the WTO with the revisions resulting from the introduction of the HS96
nomenclature, but in May 2001 these had not yet been certified by WTO Members.
                                                     
4 WTO document WT/TPR/M56, 11 August 1999.
5 The schedule was submitted on 19 September 2000 in the context of the Consolidated Tariff Schedule
Database Project.WT/TPR/S/88 Trade Policy Review
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02468101214
Manufacture of food,
beverages and tobaccoTextile, wearing apparel and
leather industriesNon-metallic mineral products
except petroleum and coalBasic metal industriesChart III.1
Tariff escalation for selected manufactured productsa, 2000
Per cent
Raw materials
Semi processed
Fully processed
ISIC 2-digit category.
WTO Secretariat calculations, based on data from USITC website on htt p://www.usitc. gov/taffairs.htm.a
Source:
(c) Tariff quotas
8. The United States has used tariff quotas for beef, dairy products, sugar and some sugar
products, peanuts, tobacco, and cotton since 1995 (Table III.2).6  Such measures cover 1.9%
(some 198) of all tariff lines.  Close to 91% of the out-of-quota tariffs are non  ad valorem,  compared
with close to 28% of the in-quota rates.  The simple average in-quota MFN tariff rate for 2000
was 9% while the corresponding out-of-quota average was 53%.  U.S. out-of-quota tariffs range to
350%.  Rates at the top end of this may act as import prohibitors.  The authorities noted, however, that
out-of-quota imports of sugar and butter have taken place recently, reflecting high U.S. prices.
9. 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 in order to be
granted the in-quota tariff rate.7  Dairy licences are issued to:  historical licensees each year for the
same volume of imports from the same supplying countries;  eligible applicants designated by the
government of the country of origin as a preferred importer;  or eligible applicants through a lottery
system.  For sugar, export certificates are issued to the exporting governments, which then distribute
them to their exporters.
                                                     
6 Tariff quotas are referred to in U.S. regulations as tariff rate quotas (TRQs).
7 Import licencing procedures, including for dairy products and sugar, are detailed in WTO document
G/LIC/N/3/USA/3, 9 November 2000.United States WT/TPR/S/88
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Table III.2
Imports of products covered by tariff quotas, 1998-99
Average tariff ratea
2000 (%)
Description of products In-quotaOut-
quota Total importsImport
quotaFill rate
(%)Partners with reserved access
(% of WTO quota)b
Beef:  fresh, chilled or frozen (mt) 4.6 26.4 518,040 c696,621 74.4 Canada and Mexico (no limit)
AUS (57.6) NZ (32.5), Japan
(0.03), Others (9.9)
Cream ('000 litres) 2.5 49.4 6,279.0 cd6,501.5 96.6 NZ (87.3)
Evaporated/condensed milk  (mt) 3.9 46.5 5,219.8 cd6,057.3 86.2 EU (21.8), Canada (17.0) AUS
(1.5)
Nonfat dried milk (mt) 1.8 67.6 4,355.6 cd4,461.0 97.6 Global, no country allocation
Dried whole milk (mt) 3.5 145.2 2,667.9 cd2,731.3 97.7 Global, no country allocation
Dried cream (kg.) 4.5 61.6 10.0 cd99,500 0.0 Global, no country allocation
Dried whey/buttermilk (mt) 4.2 54.7 114 cd296 38.5 Global, no country allocation
Butter (mt) 4.0 29.1 6,244.2 cd6,397.0 97.6 Global, no country allocation
Butter oil/substitutes (mt) 8.0 106.7 5,497.1 cd5,560.5 98.9 Global, no country allocation
Dairy mixtures (mt) 12.9 36.4 3,106.6 cd3,665.0 84.8 AUS (27.7), EU (4.2)
Blue cheese (mt) 14.4 39.4 2,767.8 cd2,847.7 97.2 EU (96.1), Chile (2.3), Czech
(1.5), Argentina (0.07)
Cheddar cheese  (mt) 12.0 25.8 10,681.2 cd11,161.2 95.7 kNZ (56.8), AUS (25.4), EU (8.5),
Canada (6.4) Oth ** (2.8)
American type cheese (mt) 14.3 49.9 3,356.9 cd3,505.9 95.8 NZ (57.0) AUS (28.5), EU (9.6),
Oth** (4.8)
Edam and Gouda cheese (mt) 12.1 44.0 6,393.3 cd6,649.7 96.1 kEU (81.2), Costa Rica (10.2),
Argentina (2.9), Uruguay (2.8),
Oth** (3.0)
Italian type cheese (mt) 13.9 46.1 13,060 bc13,281 96.6 Argentina (51.2), EU (33.5),
Uruguay (7.1), Romania (3.5),Hungary (2.8), Poland (1.8),
Oth**(0.1)
Swiss/Emmenthal cheese (mt) 6.4 52.2 32,610 cd34,289 95.1 EU (62.6), Norway (20.3),
Switzerland (10.6), AUS (1.5),
Czech (1.0), Hungary (1.0)
Oth**(3.0)
Gruyere process cheese (mt) 9.3 38.8 7,045.0 cd7,791.5 90.4 EU (74.1), Switzerland (16.0)
Oth** (1.0)
Other cheese NSPF (mt) 10.0 41.0 46,703 cd47,862 97.6 EU (56.7), NZ (25.2),
Switzerland (3.6), AUS (3.3),
Poland (2.7), Canada (2.5) Israel
(1.5), Oth** (4.3)
Lowfat cheese (mt) 10.0 37.5 2,878.2 cd5,474.9 52.6 lEU (74.2), NZ (17.5), AUS (4.4),
Poland (3.1), Israel (0.9)
Peanuts (mt) 8.2 139.8 quota filled def43,901 100.0 Argentina (84.0), Others (16.0)
Chocolate crumb (mt) 4.5 21.2 18,767 cd24,028 78.1 EU (32.1), AUS (8.3)
Low-fat chocolate crumb (mt) 5.9 36.3 0.2 cd2,122.8 0.0 Ireland (80.1), UK (19.9)
Infant formula containing
Oligosaccharides (mt)17.5 168.3 quota filled c100 100.0 Global, no country allocation
Green ripe olives (mt) 2.7 1.8 0.0 c730 0.0 Global, no country allocation
Place packed stuffed olives (mt) 1.1 1.6 991.6 c2,700 36.7 Global, no country allocation
Green olives, other (mt) 2.4 3.8 233.6 c550 42.5 Global, no country allocation
Green whole olives (mt) 3.6 1.9 1,084.4 c4,400 24.6 Global, no country allocation
Mandarin oranges (Satsuma) (mt) 0.0 0.3 quota filled c40,000 100.0 Global, no country allocation
Peanut butter and paste (mt) 0.0 131.8 17,272 c19,830 87.1 Canada (73.1), Argentina (15.4),
Others (9.3)
Ice cream ('000 litres) 20.0 27.8 3,558.4 cd5,191 68.5 EU (20.0), NZ (11.4), Jamaica
(0.7)
Animal feed containing milk (mt) 7.5 75.9 623.2 cd7,399.4 8.4 EU (75.1), NZ (24.1), AUS (0.8)
Raw cane sugar ('000 mt) 3.7 32.1 1,089.5 g1,164.9 93.5 Mexico (2.1), Others (95.3)
Other cane or beet sugars or syrups
('000 mt)5.8 20.6 24.3 g25.0 97.0 Canada (29.4), Mexico (8.6),
Others (62.1)
Other mixtures over 10% sugar (mt) 9.2 27.1 quota filled g64,709 100.0 Canada (91.6), Others (8.4)
Table III.2 (cont'd)WT/TPR/S/88 Trade Policy Review
Page 28
Average tariff ratea
2000 (%)
Description of products In-quotaOut-
quota Total importsImport
quotaFill rate
(%)Partners with reserved access
(% of WTO quota)b
Sweetened cocoa powder (mt) 6.7 15.9 139 g2,313 6.0 Global, no country allocation
Mixes and doughs (mt) 10.0 20.8 quota filled g5,398 100.0 Global, no country allocation
Mixed condiments and seasonings
(mt)7.5 16.9 218 g689 31.6 Global, no country allocation
Tobacco (mt) 11.9 350.0 73,457 h150,575 48.8 Brazil (53.3), Malawi (8.0),
Zimbabwe (8.0), Argentina (7.1),EU (6.6), Guatemala (6.6),
Oth**(10.5)
Short staple cotton (mt) 0.0 11.5 12,098 i15,522 77.9 Global, no country allocation
Harsh or rough cotton (mt) 2.8 20.0 0.0 j1,200 0.0 Global, no country allocation
Medium staple cotton (mt) 2.6 0.0 1,471.0 8,980 6.4 Global, no country allocation
Long staple cotton (mt) 0.6 6.7 3,483.0 j34,260 10.2 Global, no country allocation
Cotton waste (mt) 0.0 0.2 0.0 i2,735 0.0 EU (26.3), Japan (5.7), Canada
(4.0), India & Pakistan combined(1.2), China (0.3)
Cotton processed but not spun (kg.) 5.0 34.9 1,796.0 k1,900 94.5 Global, no country allocation
Cream and Ice cream ('000 litres) 8.3 42.2 .. 366 .. Mexico (100)
Evaporated/condensed milk, dairy
mixtures, chocolate crumbs and
 low fat chocolate crumbs  (mt)10.0 33.8 .. 733 .. Mexico (100)
Nonfat dried milk, dried whole milk,
dried whey, animal feed (mt)4.2 101.8 .. 422 .. Mexico (100)
Dried cream and butter(mt) 4.2 42.1 .. 43 .. Mexico (100)
Other mixtures over 10% sugar,
sweetened cocoa powder
mixes & doughs, and mixedcondiments & seasonings (mt)8.7 23.6 .. 12,791 .. Mexico (100)
.. Not available.
a Ad valorem  rate or ad valorem equivalent.
b Data on country allocation based on Schedule XX;  total quota based on WTO document G/AG/N/USA/30, 9 March 2000.
c Imports/quota are for the 1999 calendar year.d Does not include quantities reserved for Mexico under NAFTA.
e Imports are for the period 1April 1998 through 31 March 1999.
f Imports are for the period 1April 1999 through 31 March 2000 is 48,403,000 (kg.) and the quota has been filled.g Imports are for the quota period 1 October 1998 through 30 September 1999.
h Imports are for the quota period 13 September 1998 through 12 September 1999.
i Imports are for the quota period 20 September 1998 through 19 September 1999.j Imports are for the quota period 1 August 1998 through 31 July 1999.
k Imports are for the quota period 11 September 1998 through 10 September 1999.
l Schedule XX allows for less than the quota presented in the WTO document G/AG/N/USA/30, 9 March 2000.m No country allocation on Schedule XX. Allocation based on WTO document G/AG/N/USA/29/Rev.1 30 March 2000.
** Other countries excluding Mexico.
Source : WTO documents G/AG/N/USA/16, 28 May 1998,  G/AG/N/USA/23, 3 March 1999,  G/AG/N/USA/30, 9 March 2000 and
G/AG/N/USA/29/Rev.1, 30 March 2000; and Schedule XX - United States of America.
10. Some quotas, including beef, dairy products, and peanuts, were allocated to selected countries
during the Uruguay Round through the incorporation in the U.S. schedule of commitments of reserved
access (Table III.2).
11. Sugar imports are subject to tariff quotas that are largely filled, and to ad valorem  equivalents
of out-of-quota rates ranging to 140%.  The Secretary of Agriculture establishes for each fiscal year
the quantity of sugars and syrups that may enter at the in-quota tariff rate, and the USTR allocates thisquantity, at its discretion, among eligible countries.
8  Tariff quotas for raw cane sugar are reserved for
some 40 countries;  those for refined sugar and sugar-containing products are largely reserved for
                                                     
8 Sugar tariff quota allocation for fiscal year 1 October 1999 to 30 September 2000 was notified in
WTO document G/AG/N/USA/29, 24 February 2000.United States WT/TPR/S/88
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preferential trading partners.9  The tariff quota for specialty sugar is available on a first-come first-
served basis.  In this respect it is worth noting that some exporters are shipping a close substitute for
raw sugar syrup (or "stuffed molasse"), which is not subject to a tariff quota.
12. The degree to which tariff quotas have been filled varies according to product and across
years.  Although quota quantities have increased, tariff quotas continue to be one of the main
instruments of import protection for some agricultural products.  Tariff quotas for most dairyproducts, sugar and certain sugar-containing products, mandarin oranges, and peanuts were
consistently filled between 1996 and 1999, and act as a de facto quantitative restriction for products
subject to prohibitive out-of-quota tariff rates (Table III.2).
10  In contrast, 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, despite low duties in some cases(e.g. cotton waste), reflecting market conditions.
13. Under the special safeguard (SSG) provisions of the WTO Agreement on Agriculture, the
United States has reserved the right to apply additional tariffs on over-quota imports if import prices
drop below a specified level, based on the average 1986-88 import price.
11  The price-based
safeguards are invoked automatically on a shipment-by-shipment basis.  Importers who enter goods inan over-quota tariff line are required to declare which pre-established price range is applicable to their
product.  If there is a safeguard duty associated with that price range, the additional charge is
assessed.  An additional tariff based upon quantity may also be levied on the same products, but not
simultaneously.  A safeguard based upon quantity may also be levied on sheep meat products even
though these are not subject to tariff quotas.
12  In 1999, under the SSG, price-based duties were
assessed on certain products (including fresh and frozen beef, sweetened milk, milk fats and oils, milk
based drinks, cheeses, sugar, and peanuts);  no volume-based actions were taken during that period.13
The authorities stated that no SSG measures were applied in 2000.
(d) Preferential tariffs
14. Tariff preferences granted by the United States, either unilaterally or in the context of free
trade agreements (Chapter II(3)), are described in Table III.3.  The United States grants and receives
tariff preferences under the NAFTA and the United States-Israel Free-Trade Area.  In 2000, theaverage tariff applied to imports from Mexico was 0.9%, and 0.8% from both Canada and Israel.
Imports of non-agricultural products from Canada a nd Israel were duty free, while those from Mexico
were subject to an average tariff of 0.4%;  Mexican industrial goods that are not yet duty free include
products of the following HS sections:  hides and sk ins;  chemicals products;  footwear and headgear;
and transport equipment.  Under procedures set out in the NAFTA, the United States, Canada, andMexico implemented a third accelerated tariff elimination exercise on 1 January 2001.  The selection
of items was based on requests by consumers, pr oducers, and traders, and included chemicals,
pharmaceuticals, leather and footwear, and heavy machinery.
15. Following Presidential Proclamation No. 6955 of November 1996, products of the West
Bank, the Gaza Strip or a qualifying industrial zone (QIZ) in Israel and Jordan or Israel and Egypt are
                                                     
9 See WTO document G/AG/N/USA/34, 27 April 2001.
10 Tariff quota filling rates between 1996 and 1998 can be found in WTO (1999), Annex Table III.2.2.
11 The United States notified, under Article 5 of the Agreement on Agriculture, all tariff lines to which it
applies the price-based special safeguard (WTO document G/AG/N/USA/1, 10 February 1995 and addendum).
12 HTS 0204.21.00, 0204.22.40, 0204.23.40, 0204.41.00, 0204.42.40 and 0204.43.40.
13 WTO document G/AG/N/USA/33 of 15 September 2000.WT/TPR/S/88 Trade Policy Review
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eligible for duty-free entry into the United States.14  As at 12 December 2000, only Jordan and Israel
had taken advantage of this programme by creating ten QIZs.
Table III.3
Tariffs according to U.S. preferential agreements, 2000
Number Average tariffs (%)
of lines MFN Canada Mexico aIsrael CBERA bATPA bGSP LDC
Total 1,0198 5.5 0.8 1.1 0.8 2.6 2.7 4.0 2.9
By WTO category
Agriculture 1,739 10.2 4.7 4.1 4.8 6.1 6.2 9.0 6.3
WTO Non-agriculture (exc petroleum) 8,446 4.5 0.0 0.4 0.0 1.9 2.0 3.0 2.2
By ISIC sectorc
Agriculture and fisheries 490 5.9 0.7 3.3 0.7 3.4 3.4 5.0 3.6
Mining 121 0.5 0.0 0.0 0.0 0.0 0.0 0.1 0.0
Manufacturing 9,586 5.6 0.8 1.0 0.8 2.6 2.7 4.0 2.9
By HS section
       01 Live animals and products 502 12.2 7.7 3.7 8.0 8.0 8.0 11.9 8.0
       02 Vegetable products 492 3.9 0.6 0.9 0.6 0.6 0.6 2.4 0.9
       03 Fats and oils 66 4.2 0.3 0.3 0.3 0.3 0.3 2.8 0.3
       04 Prepared foods, etc. 725 13.2 5.3 6.7 5.3 8.7 8.7 11.4 8.8
       05 Minerals 184 0.5 0.0 0.0 0.0 0.0 0.0 0.1 0.0
       06 Chemicals and products 1,665 4.4 0.0 0.4 0.0 0.0 0.0 2.0 0.0
       07 Plastics and rubber 353 3.8 0.0 0.1 0.0 0.0 0.1 0.5 0.1
       08 Hides and skins 156 4.9 0.0 1.1 0.0 1.9 1.9 3.3 3.0
       09 Wood and articles 186 2.3 0.0 0.1 0.0 0.2 0.2 0.4 0.2
       10 Pulp, paper, etc. 223 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
       11 Textile and articles 1,567 10.2 0.0 0.6 0.0 8.5 9.4 10.0 10.0
       12 Footwear, headgear 168 13.5 0.0 5.8 0.0 12.0 12.1 12.4 12.4
       13 Articles of stone 299 5.0 0.0 1.1 0.0 0.3 0.3 2.7 0.5
       14 Precious stones, etc. 104 3.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0
       15 Base metals and products 982 2.7 0.0 0.5 0.0 0.0 0.0 1.1 0.1
       16 Machinery 1,437 1.6 0.0 0.0 0.0 0.0 0.0 0.3 0.0
       17 Transport equipment 238 2.6 0.0 0.3 0.0 0.0 0.0 1.3 0.0
       18 Precision equipment 530 3.1 0.0 0.1 0.0 0.0 0.0 1.7 0.8
       19 Arms and munitions 37 1.7 0.0 0.0 0.0 0.0 0.0 0.2 0.0
       20 Miscellaneous manufactures 277 3.3 0.0 0.2 0.0 0.0 0.1 0.8 0.2
       21 Works of art, etc. 7 0.0 n.p. n.p. n.p. n.p. n.p. n.p. n.p.
n.p. No preferences are granted under this section.
a The number of tariff lines for Mexico varies slightly because of the additional provisions in sections 98 and 99,
which necessitated adjustment in the corresponding HS sections.
b Duty rate is either the preferential rate granted under this agreement or GSP preferential rate, whichever is lower.
c ISIC Classification (Rev.2), excluding electricity (1 line).
Source: WTO Secretariat estimates, based on USITC online information.  Available at:  http://www.usitc.gov/taffairs.htm.
16. The United States grants unilateral preferential tariff treatment to countries qualifying under
the AGOA;  the ATPA;  the CBERA;  the GSP;  and the United States-Caribbean Basin Trade
Partnership Act.  Imports are also eligible for duty-free treatment under the Agreement on Trade in
Civil Aircraft, the Agreement on Trade in Pharmaceutical Products, the Automotive Products Act, and
the Uruguay Round Concessions on Intermediate Chemicals for Dyes.
17. Average tariffs under unilateral U.S. preference schemes (Table III.3) tend to be significantly
lower than the average MFN rate but still substantially higher than the average under the FTA's that
the United States has concluded;  moreover they are in general conditioned to statutory criteria
                                                     
14 A qualifying industrial zone is defined as any area that:  encompasses portions of the territory of
Israel and Jordan or Israel and Egypt;  has been design ated by local authorities as an enclave where merchandise
may enter without payment of duty or excise taxes;  and has been designated by the USTR as a qualifyingindustrial zone.United States WT/TPR/S/88
Page 31
(e.g. protection of labour rights, intellectual property, see Chapter II).  Concessions granted under the
ATPA and those granted under the CBERA are sim ilar in terms of magnitude and coverage.  Both
schemes provide reduced-duty or duty-free treatment to most imports from qualifying countries,
resulting in average applied tariff of 2.7% and 2.6%, respectively.  The major exclusions from
preferential treatment are classified under the following sections: out-of-quota agri-food products,
canned tuna;  textile and textiles articles;  petroleum;  and footwear and headgear.
18. The CBI, which encompasses the CBERA, was extended in May 2000 through the enactment
of the CBTPA.  The CBTPA expanded duty-free (and quota-free (see section (iii) below) treatment to
certain apparel manufactured in the CBI region from U.S.-origin fabric, as well as limited quantities
of apparel made from fabric knit in the CBI region from U.S. yarns.  Such apparel was previously
excluded from preferential tariff treatment.  In addition, the CBTPA extended NAFTA-equivalenttariff treatment to a number of other products previously excluded from CBI trade preferences,
including footwear, canned tuna, petroleu m products, and watches and watch parts.
19. In 2000, imports from beneficiaries  under the GSP were subject to an average tariff of 4%,
which is 1.5 percentage points below the average MFN tariff rate.  The AGOA, implemented in
December 2000 as part of the Trade and Development Act, enhanced market access for sub-SaharanAfrican countries through the GSP programme by making over 1,800 new products eligible for duty-
free treatment until 30 September 2008, and by eliminating the GSP competitive-need limitation,
which eliminates duty-free treatment when imports from a country exceed certain limits.
15  I n
particular, the AGOA provides a 17.5% duty advantage on clothing imports from these countries into
the U.S. market.16
(e) The Harbor Maintenance Tax (HMT)
20. The HMT, introduced in 1986, is an ad valorem  levy of 0.125% collected by the U.S.
Customs Service on the value of imports and domestic cargo shipped through U.S. ports.  The tax has
not been collected on exports since 1998, when the U.S. Supreme Court ruled that the portion of the
HMT levied on exported cargo violated the Export Clause of the Constitution, which bans taxes on
exports, but not user fees.  According to some operators, the tax is a significant burden on shippers
and it raises the possibility of diversion of goods to Canadian ports for onward transport to the UnitedStates.
17
21. In its FY 2000 Budget, the Administration made proposals to replace the remaining portions
of the HMT as well as the previous export portion with a cost-based Harbour Maintenance Fee
intended to yield roughly US$1 billion annually.18  Unlike the HMT, the fee would be charged to
vessel owners and operators and assessed on the basis of ship size, sailing frequency, and otherfactors, instead of the value of shipments, to ensure that the fee corresponds more closely to the use of
port services and facilities.  The proposal has been evaluated by the U.S. General Accounting
Office.
19  As of May 2001, it was under consideration by the Bush Administration.20
                                                     
15 See USTR (1999).
16 USAID (2000).
17 Godwin (2000).
18 See FY 2000 Budget [Online].  Available a t:  http://w3.access.gpo.gov/usbudget/fy2000/pdf/
budget.pdf.
19 United States General Accounting Office (1999).
20 See Congressional Budget Office, Budget  options, available at http://www.cbo.gov.WT/TPR/S/88 Trade Policy Review
Page 32
(ii) Anti-dumping, countervailing and safeguards actions
(a) Overview
22. Domestic industries in the United States have continued to apply for active use of
contingency measures since the previous Review of the United States.  The initiation of anti-dumping
and countervailing measure investigations gathered momentum in 1999 and 2000.  Steel-related
products were the most affected by anti-dumping and countervailing duty orders, accounting for over
half and over three quarters of the total, respectively.  Safeguard investigation initiations increased in
1999 and 2000, but their number and scope remains limited.
23. A number of U.S. anti-dumping and countervailing duty investigations and of sunset reviews
were challenged in the WTO, as were the four safeguard measures.  Also challenged at the WTO was
the Continued Dumping and Subsidy Offset Act of 2000, under which proceeds from anti-dumpingand countervailing duties are to be distributed to the affected U.S. producers and to supporters of a
petition for investigation.  The passage of this Act is the main legislative event affecting contingency
measures during the period under review.
(b) Anti-dumping and countervailing measures
Legislation and administration24. The main U.S. countervailing duty and anti-dumpi ng provisions are contained in Title VII of
the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979.
21  Further modifications to
anti-dumping law were introduced by the Trade and Tariff Act of 1984, the Omnibus Trade and
Competitiveness Act of 1988, and by the Uruguay Round Agreements Act (URAA, 1994).
Legislation with respect to dumping is also contained in the Unfair Competition Act of 1916, also
referred to as the Anti-dumping Act of 1916, which was the subject of complaints by the European
Union and Japan.22  The panels established found the Act inconsistent with Article VI of the
GATT 1994 and with a number of procedural requirements found in the Anti-Dumping Agreement.23
The Appellate Body upheld the findings and conclusions of the panels.
25. Responsibility for anti-dumping and countervailing duty investigations rests with the
International Trade Administration (ITA) of the Department of Commerce (DOC) and with the U.S.
International Trade Commission (USITC);  the DOC  determines the margin of dumping or subsidy,
and the USITC determines whether there is material injury or threat of material injury by reason of the
dumped or subsidized imports.24  The DOC's Anti-dumping and Countervailing Duty  Regulations
were amended in late 1999 as a consequence of a panel decision25;  in particular, the DOC amended
section 351.222(b) of the DOC Regulations, which deals with the revocation of orders and the
termination of suspended investigations, by deletin g the "not likely" standard and incorporating the
"necessary" standard of the Anti-Dumping Agreement.
                                                     
21 USITC (1998a).
22 WTO documents WT/DS136/1,G/L/247,G/ADP/D11/1, 24 June 1998, and WT/DS162/1,
16 February 1999.
23 See (Table AII.1) and WTO documents:  WT/DS136/R, 31 March 2000, WT/DS136/RC1,
25 April 2000, WT/DS162/R, 29 May 2000, and WT/DS162/R/Add.1, 25 September 2000.
24 The relevant regulations may be found in 62 FR 27295-27424, 19 May 1997, and online at:
http://ia.ita.doc.gov/frn/frnmay97/adregs.htm.  See also Federal Register , Vol. 63, No. 227, 25 November 1998.
25 United States – anti-dumping duty on DRAMS of one megabite or above from Korea.  WTO
document WT/DS99/R,  29 January 1999.United States WT/TPR/S/88
Page 33
26. Aspects of the implementation of the panel and Appellate Body recommendations concerning
U.S. Title VII (anti-dumping and countervailing duty) investigations were challenged in the WTO by
Canada.26  India and the European Union have asked to join the consultations.27  Canada claimed that,
in a situation in which the WTO's Dispute Settlement Body (DSB) rules that the United States has
acted inconsistently with its obligations under the Anti-Dumping or SCM Agreements,
Section 129(c)(1) of the URAA prevents the United States from complying fully with the DSB ruling
because, under U.S. law, determinations to levy anti-dumping or countervailing duties are made after
the imports occur.  Canada claimed that, for imports that occurred prior to a date on which the USTR
directs compliance with the DSB ruling, the measures require U.S. authorities to disregard the DSB
ruling.
27. During the period under review, 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.28  The Act, which applies to all assessments after
1 October 2000, seeks to ensure that the "remedial" purpose of U.S. anti-dumping and countervailing
duty laws is achieved, particularly where "conti nued dumping or subsidization of imported products
after the issuance of anti-dumping orders or findin gs or countervailing duty orders can frustrate the
remedial purpose of the laws by preventing market prices from returning to fair levels".29  On passage
of the Act, President Clinton noted that it would "provide select U.S. industries with a subsidy above
and beyond the protection level needed to counteract foreign subsidies, while providing no
comparable subsidy to other U.S. industries or to U. S. consumers, who are forced to pay higher prices
on industrial inputs or consumer goods as a resu lt of the anti-dumping and countervailing duties".  He
called on the Congress to override this provision, or amend it to be acceptable.30
28. The Act creates an unprecedented situation in which, for qualifying expenditures, "affected
domestic producers" are allocated the proceeds of anti-dumping and countervailing duty orders.  The
Act defines "affected domestic producer" as any manufacturer, producer, farmer, rancher, or worker
representative that was a petitioner or interested party in support of the petition with respect to which
an anti-dumping duty order or a countervailing duty order has been entered;  qualifying expenditures
encompass most fixed and some variable costs.
29. Allocations are to be distributed on an annual basis.  Proposed budget appropriations for the
Act in FY 2002 are US$200 million.31  The distribution of the offset proceeds is assigned to the
Commissioner of Customs, and will be proportional to producers' new and remaining qualifying
expenditures.  The Commissioner of Customs must establish special accounts in the Treasury for each
anti-dumping or countervailing duty order, and de posit in them all anti-dumping or countervailing
duties assessed after 1 October 2000.
30. The Continued Dumping and Subsidy Offset Act of 2000 has been challenged in the WTO by
Australia, Brazil, Chile, the European Union, India, Indonesia, Japan, Korea, and Thailand.  The
requesting Members consider that the Act may be inconsistent with provisions of the GATT, and the
Anti-Dumping, and SCM Agreements;  and that the "offsets" constituted specific subsidies within the
                                                     
26 WTO document WT/DS221/1, G/L/434, G/SCM/D41/1, G/ADP/D33/1, 22 January 2001.
27 WTO documents WT/DS221/2, 2 February 2001 and WT/DS221/3, 9 February 2001.
28 Formally, Title X of the Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act of 2001 (Public Law No: 106-387).  The full text of the Act is accessible
online at:  http://thomas.loc.gov/cgi-bin/query/C?c106:./temp/~c106SarzKu.
29 Continued Dumping and Subsidy Offset Act of 2000, section 1002.
30 U.S. Government Printing Office (2000).
31 Budget of the United States Government, FY 2002, appendix [Online].  Available at:
http://www.whitehouse.gov/omb/budget/fy2002/tre.pdf.WT/TPR/S/88 Trade Policy Review
Page 34
meaning of the SCM Agreement.32  In their view, the "offsets" would provide a strong incentive to the
domestic producers to file or support petitions for anti-dumping or countervailing measures.  In
addition, the requesting Members consider that the Act would make it more difficult for exporters
subject to an anti-dumping or countervailing duty or der to secure an undertaking with the competent
authorities, since the affected domestic producers will have a vested interest in opposing undertakings.
Several WTO Members have also expressed concern with respect to the Act in the Committee onAnti-Dumping Practices.
33
Anti-dumping investigations
31. The number of U.S. anti-dumping investigations initiated annually has declined since the
establishment of the WTO in 1995.  However, in 1998 and 1999, petitions from some domestic
industries facing intense foreign competition, particularly in steel, led to an increase (Table III.4).Between 1998 and 1999, 28 final anti-dumping duty orders were issued:  nine in 1998 and nineteen
in 1999.
34  The investigations initiated in 1997 and 1998 covered a value of imports of some
US$3.18 billion.  Imports affected by an affirmative determination by the USITC were some
US$2.3 billion in the same period.35  In 2000, 45 anti-dumping investigations were initiated;  33 were
related to steel products.  There were 20 final duty orders.
Table III.4
Anti-dumping investigations, 1980-00
Y e a r 1 9 8 0 - 8 68 78 88 99 09 19 29 39 49 59 69 79 89 9 2 0 0 0
I n i t i a t i o n s 3 0 11 64 22 43 56 68 43 75 11 42 11 53 64 6 4 5
P r e l i m i n a r y  d e t e r m i n a t i o n s 2 0 84 53 52 32 54 34 76 74 62 31 61 62 83 4 2 2
F i n a l  d e t e r m i n a t i o n s 1 5 05 81 74 01 82 82 88 03 13 81 21 51 73 7 3 5
Duty Orders 85 53 12 24 14 19 16 42 16 24 9 7 9 19 20
Revocations 45 9 0 5 10 7 1 3 28 12 6 4 25 48 57
Source : U.S. Department of Commerce, International Trade Administration.
32. There was an average of 42 anti-dumping investigations initiated per year during 1998-2000,
compared with 37 in 1987-1997 (Table III.4).  According to WTO data, of those investigations
initiated in 1998-2000 for which a determination had been made at the time of finalizing this report
(mid-2001), almost 40% resulted in no provisional measure being imposed, either because of a
finding of no injury by the ITC or of a preliminary finding of no dumping by the ITA;  the remaining
investigations resulted in affirmative preliminar y determinations, i.e. exporters were found to be
dumping and causing injury, and were made subject to provisional measures.36  Although not final,
these measures are nevertheless likely to affect exporters' trade performance;  the authorities noted,
however, that any trade chilling effects would be at most temporary.  In their view, since the United
States has a bonding system during the provisional period, "up front" cash requirements while
investigations are underway are minimal, and the time-period between the preliminary and final
determinations is statutorily limited.
33. Over 1987-2000, initiations led to final duty orders in 53% of cases.  A small number of
initiations resulted in suspension agreements, under which exporters undertake to export at not less
than a set price (usually reflecting the "normal value"  determined in the investigation) or, only in the
                                                     
32 WTO documents WT/DS217/1, G/L/430, G/ADP/D31/1, G/SCM/D39/1, 9 January 2001.
33 WTO document G/ADP/M/17, 9 April 2001.
34 USITA (2000).
35 USITC (1999).
36 Data derived from the WTO Secretariat Rules Division Anti-dumping Measures Database.United States WT/TPR/S/88
Page 35
case of non-WTO Members, at not more than a set volume (see Suspension agreements below).  In all
other cases, exporters were found not to be dumping or not causing injury but, nevertheless, may have
been affected by the anti-dumping investigation process.
34. Almost two thirds of the 127 anti-dumping investigations initiated between 1998 and 2000
involved steel products;  seven involved agricultural and food products;  and the remainder a wide
range of products including supercomputers, semiconductors, rubber products, some textile products,and chemicals.  The countries whose firms were subject to the largest number of anti-dumping
investigations in the period were:  Korea (14);  Japan and China (13 each);  Indonesia (7);  India (6);
and the Russian Federation (5).  European Union countries were subject to 18 investigations
35. As of December 2000, anti-dumping duties were applied to imports from 41 countries and
customs territories.  The number of anti-dumping duty orders in effect at that time was 228, comparedwith 297 on 1 January 1999 (Chart III.2).  The reduced number of duty orders in effect is linked to the
process of sunset reviews that started in 1999 (see below).
36. Several aspects of the DOC and USITC anti- dumping procedures and findings have been
challenged in the WTO during the period under review, including the fair comparison of export price
and normal value and the method used for averaging.  On both issues, Korea presented a complaint inJuly 1999 regarding two cases involving steel products.
37  The panel concluded that the United States
had performed a non-required currency conversion, had made non-permissible allowances in respect
of sales through unaffiliated importers, and had not met the requirement to compare "a weighted
average normal value with a weighted average of all comparable export transactions".38
37. In another case brought by Japan concerning an anti-dumping investigation of some hot-
rolled products, the panel ruled that the DOC had acted inconsistently with its WTO obligations in
applying "facts available" to three Japanese companies.39  The United States appealed the panel's
findings.  The definition of material injury used in Title VII investigations has also been challenged in
the WTO.  In this respect, India complained with respect to an investigation on cut-to-length carbon
quality steel plate.40  India requested the establishment of a panel in June 2001.41
38. On a long-standing trade issue between the United States and Canada, the DOC initiated anti-
dumping duty (A-122-838) and countervailing duty (C-122-839) investigations with respect to certain
lumber products from Canada in April 2001.  The products covered by this investigation are softwoodlumber, flooring and siding.
42
39. The United States took an active role in the discussions in the WTO Anti-Dumping
Committee concerning additional time to comply with requests for information on anti-dumping
investigations.  At its meeting on 26 April 2001, the Committee issued non-binding recommendations
on the matter;  the United States has indicated th at it will abide by the recommendations although
these are not legally binding.
                                                     
37 WTO document WT/DS179/1, G/L/316, G/ADP/D18/1, 6 August 1999.
38 WTO document WT/DS179/R, 22 December 2000.
39 WTO document WT/DS184/R, 28 February 2001.
40 WTO document, WT/DS206/1, 9 October 2000.
41 WTO document WT/DS206/2, 8 June 2001.
42 HTSUS 4407.1000, 4409.1010, 4409.1090, and 4409.1020.WT/TPR/S/88 Trade Policy Review
Page 36
Chart III.2 
Anti-dumping duty orders in effect on 31 December 2000
Per cent
Total: 228 cases
(a) By country
               
Source:  WTO Secretariat based on information provided by the Department of Commerce.(b) By product categoryEurope
29.4
Asia
47.7Americas
16.5EU15
20.6
Other 
Europe
8.8
Japan
14.9 China
17.1Korea, 
Rep. of
6.6Other Asia
8.3Canada
2.6Others
1.4Other Americas
6.1
Base metals
58.3Iron & steel and 
products thereof
53.9
Machinery & 
electrical eqpt.
3.5Other base metals and products
4.4Vegetable  
products
3.5Prepared 
foodstuff & 
beverages
3.1Others
3.5
Textiles and 
clothing
5.7Chinese Taipei
8.3Brazil
5.3
Chemical 
products
19.3Mineral 
products
1.3Plastic & 
rubber prds
1.8
Countervailing duty investigations
40. There were 28 countervailing duty investigations initiated between 1998 and 2000, of which
seven were initiated in 2000;  18 of these investigations involved steel products.  Seven final
countervailing duty orders were issued in 1998 and 1999.43  Most countervailing duty investigations
were initiated with a parallel anti-dumping investigation.  The investigations initiated in 1998 and1999 covered a value of imports of some US$970 million.  Some US$310 million of imports were
affected by an affirmative determination in 1997, the last year for which information was available.
44
Between 1980 and 2000, the United States initiated 322 countervailing duty investigations;  46%
(147 cases) led to the imposition of countervailing duties (Table III.5).
Table III.5
Countervailing duty investigations, 1980-00
Year1980
-86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000
Initiations 201 8 17 7 7 11 22 5 7 2 1 6 11 10 7
Prelim. determinations 172 10 18 6 4 9 26 1 7 3 0 3 7 9 0
Final determinations 126 20 14 12 4 5 7 20 2 6 2 0 2 15 2
D u t y  O r d e r s 7 8 1 4 76224 1 6 1220166
R e v o c a t i o n s 7 2 21546015 3 5 114 1 9 8
Source : Information provided by the Department of Commerce.
                                                     
43 USITA (2000).
44 USITC (1999).United States WT/TPR/S/88
Page 37
41. The countries subject to U.S. countervailing duty investigations in the period 1998-2000
were:  Korea (6);  Italy (4);  Argentina (2);  France(2);  India (2);  Indonesia (2);  Brazil;  Belgium;
Canada;  Chile;  Chinese Taipei;  Denmark;  Germany;  Macedonia;  Spain;  South Africa;  Trinidad
and Tobago;  and Venezuela.  There were 41 final countervailing duty orders in effect on
31 December 2000, eight less than at the time of the last Review of the United States;  almost half
involved a member country of the European Union.  Asia accounted for over a quarter of the numberof orders in effect.  Some 73% of the countervailing orders were applied to steel products
(Chart III.3).
Chart III.3
Countervailing duty orders in effect on 31 December 2000
Per cent
Total: 41 cases
(a) By country
               
Source:  WTO Secretariat based on information provided by the Department of Commerce.(b) By product categoryEurope
53.7Asia
26.8Americas
14.6EU15
46.3
Other Europe
7.3Korea, Rep. of
12.2India
4.9Iran
4.9Brazil
7.3Canada
4.9South Africa
2.4Mexico
2.4
Base metals
75.6Iron & steel and 
products thereof
73.2
Prepared 
foodstuff
12.2
Other base metals 
and products
2.4Vegetable and 
animal products
2.4Chemical 
products
5.0Others
2.4Textiles and 
leather 
products
2.4
Other Asia
7.3
42. Complaints have been brought to the WTO regarding U.S. countervailing duty investigations
and measures.  Most of these complaints have involved the DOC's "change-of-ownership"methodology.  In a dispute involving the U.S. imposition of countervailing duties on hot-rolled lead
and bismuth carbon steel products from the United Kingdom, a panel found the DOC methodology to
be inconsistent with the SCM Agreement because it presumed that subsidies provided to the pre-sale
entity continued to benefit the post-sale entity under certain circumstances.
45  The Appellate Body
affirmed the panel's findings, while modifying its reasoning.46  Between the issuances of the panel and
the Appellate Body reports, the U.S. Court of Appeals for the Federal Circuit found the DOC's
methodology to be inconsistent with the U.S. countervailing duty statute.  The authorities noted that
the court's reasoning was similar to that of the Panel and the Appellate Body.
                                                     
45 WTO document WT/DS138/R, 23 December 1999.
46 WTO document WT/DS138/AB/R, 10 May 2000.WT/TPR/S/88 Trade Policy Review
Page 38
43. Subsequently, the European Union challenged the alleged continued applications of the
DOC's change-of-ownership methodology in other outstanding countervailing duty procedures.47
Brazil and Israel asked to join the consultations.48  Brazil filed a consultation request of its own on the
same subject.49  With respect to these cases, the authori ties noted that, in response to the court ruling
referred to in the preceding paragraph, the DOC had revised its change-of-ownership methodology to
consider that if the pre- and post-sale entities are the same "legal person" the post-sale entity continues
to benefit from the pre-sale subsidies;  otherwis e, the DOC considers whether the post-sale entity
received a subsidy pursuant to the change-of-ownershi p transaction.  As of June 2001, the United States
had consulted with both the European Union and Brazil with respect to its old and new methodology,
and both disputes remain at the consultation stage.
44. In the case of a U.S. countervailing duty investigation on live cattle from Canada, Canada
alleged that the application filed with the DOC was not made by or on behalf of the domestic industry,
and that the DOC lacked sufficient information to warrant the initiation of an investigation.50  Mexico
asked to join the consultations in April 1999.51  Because the DOC's final determination was negative, no
countervailing measure was imposed.
Suspension agreements45. In cases under investigation, suspension agreements are sometimes negotiated with the
exporters or the Government of the exporting country.  These agreements are generally voluntary
limits on exports or price undertakings by firms, or involve the elimination of subsidies by the
investigated countries.  An agreement with a WTO Member to suspend anti-dumping investigations
may involve only price undertakings;  agreements with respect to countervailing-measure
investigations may also involve quantitative restrictions.  Suspension agreements are sometimes
preferred by exporters to continuing an anti-dumping or countervailing duty investigation because, ingeneral, they allow the exporter to appropriate at least some of the subsequent economic rents.
46. The United States reached seven suspension agreements in the 1998-2000 period, five were
related to steel (with Brazil, Venezuela, and the Russian Federation).  Of the agreements reached, five
(with Brazil and the Russian Federation) led to the suspension of anti-dumping investigations, andtwo (with Brazil and Venezuela) to the suspension of a countervailing duty investigation.  As of
31 December 2000, 16 suspension agreements were in place.  Although the agreements cover
different sectors and products, the highest recurrence is found in steel products, textiles, and uranium.
Suspension agreements currently in place cover nine countries;  the highest number per single country
is six, for the Russian Federation (Table III.6).
47. The suspension agreement with Venezuela was terminated based on a USITC finding of no
injury, on 8 November 1999.
52  The Agreement concerning trade in certain steel products from the
Russian Federation had not been published in the Federal Register at the time of drafting this report.53
The agreements regarding anti-dumping investiga tions reached with other WTO Members resulted in
price undertakings;  those with non-member countries contained provisions to limit exports.
                                                     
47 WTO document WT/DS212/1, 27 November 2000.
48 WTO documents WT/DS212/2, 13 Decembe r 2000, WT/DS212/2A, 19 February 2001, and
WT/DS212/3, 20 December 2000.
49 WTO document, WT/DS218/1, 9 January 2001.
50 WTO document WT/DS167/1, 25 March 1999.
51 WTO document WT/DS167/2, 9 April 1999.
52 WTO document G/SCM/N/56/USA,  28 March 2000.
53 USITA (2000).United States WT/TPR/S/88
Page 39
Table III.6
Suspension agreements in effect on 31 December 2000
Country Products Date of order
Brazil Hot-rolled flat-rolled carbon-quality steel products (A), (C) 19.07.99
China Cut to length carbon steel plate (A) 19.11.97
Japan Sodium azide (A) 07.01.97
Germany Large newspaper printing presses and components thereof (A) 07.04.00
Mexico Tomatoes (A) 01.11.96
Russian Federation Uranium (A) 30.10.92;  amended 15.07.97
Russian Federation Cut to length carbon steel plate (A) 19.11.99
Russian Federation Hot-rolled flat-rolled carbon-quality steel products (A) 19.07.99
Russian Federation Agreement concerning trade in certain steel products (A) n.a.
Russian Federation Ammonium nitrate (A) 11.07.97
Russian Federation Cold rolled flat rolled carbon quality steel products (A) 04.02.00
South Africa Cut to length carbon steel plate (A) 19.11.97
Ukraine Siliconmanganese (A) 29.11.94
Ukraine Cut to length carbon steel plate (A) 19.11.97
Venezuela Gray Portland cement and cement clinker (A) 27.02.92
n.a. Not available.
(A) Anti-dumping investigation.(C) Countervailing measure investigation.
Source : U.S. Department of Commerce, International Trade Administration.
Administrative reviews
48. Administrative reviews of existing anti-dumping or countervailing duty orders may be
requested of the DOC by an interested party each year during the anniversary month of the
publication of the order.  In 1998-99, 203 administrative reviews were completed in the case ofanti-dumping duties, and 26 in the case of countervailing duties.  This is a substantial decrease in both
cases with respect to 1996-97.  Between 1980 and 1999, 1,148 anti-dumping duty and
485 countervailing duty administrative reviews were completed.
Sunset reviews
49. The sunset provisions embodied in Section 751  (c) of the Tariff Act of 1930 as amended by
the URAA, require the DOC and the USITC to conduct reviews no later than five years after an anti-
dumping or countervailing duty order is issued, to  determine whether the revocation of the order
would be likely to lead to continuation or recurr ence of dumping or subsidies (DOC) and of material
injury to the U.S. industry (USITC).  Sunset  reviews are order-specific (country- and product-
specific). Suspension agreements are also subject to review.  Reviews are initiated by the DOC notlater than 30 days before the fifth anniversary of the date of publication of an order.
50. Under sunset regulations, all anti-dumping and countervailing duty orders in existence as of
1 January 1995 were reviewed starting July 1998, at the initiation of a three-year transition period
finalized on 30 June 2001.  All transition-period reviews, of which there were 309, started before
31 December 1999.  Of these, in 140 cases duties were revoked on 1 January 2000:  76 by the DOCdue to no domestic response, and 67 by the USITC (Table III.7).
54  Products for which the USITC
issued an affirmative determination to continue the order included frozen concentrated orange juice
                                                     
54 For a complete list of cases terminated by th e ITA see Sunset Review Schedule and Disposition,
USITC, on Internet address http://www.usitc.gov/ussunset.htm.WT/TPR/S/88 Trade Policy Review
Page 40
(Brazil), barbed wire (Argentina), cotton towels (Bangladesh, China, Pakistan), cookware (China,
Chinese Taipei, Mexico), extruded rubber thread (Malaysia), aspirin (Turkey), carbon steel pipes
(India, Turkey) and butt-weld pipe fittings (Brazil, China, Chinese Taipei, Japan, Thailand).  In some
cases (e.g. cotton towels), the order was revoked for some suppliers, but not for others.
Table III.7
Five-year sunset review status, 1 July 1998-25 April 2001a
Institution period Number instituted Number revoked by commercebUSITC expedited/full decisionc
Expedited Full
Transition reviews
July 1998- December 1999 309 (105) 76 (37) 51 (28)d182 (40)e
Normal reviews
January 2000-April 2001 28 (12) 3(2) 3 (3)f19 (6)g
a Numbers shown in parentheses are on a grouped basis:  reviews on the same or similar products from different countries and/or
reviews of anti-dumping and countervailing duty orders on the same or similar products that were instituted simultaneously are
counted as one.  Grouped numbers for revocations mean that all orders in a group were revoked; if at least one order in a group
was not revoked, the group is shown as not revoked.
b Revoked because of no domestic response.
c For January 2000-April 2001, decisions were pending for 3 (1) reviews.
d The USITC’s determinations in these reviews are as follows:  determination to revoke:  3 (2);  determination not to revoke:
48 (26).
e As of May 2001, the status of these reviews was as follows:  USITC determination to revoke:  64 (11);  USITC determination no t
to revoke:  115 (28);  negative Department of Commerce determination:  3 (1).
f USITC determination not to revoke in the three cases.
g USITC determination to revoke:  0 (0);  USITC determination not to revoke:  7 (3);  cases pending USITC determination at end 
April 2001:  12(3).
Source : United States International Trade Commission online information.  Available at:  www.usitc.gov.
51. Of the 28 cases initiated under normal procedures since 1 January 2000, 13 had been
terminated by late April 2001;  of these, duties were revoked in three cases, all by the DOC, while
USITC determinations not to revoke were made in ten cases, including products such as furfuryl
alcohol (China and Thailand), canned pineapple (Thailand), and stainless steel bars (Brazil, India,
Japan, Spain).
52. Certain aspects of the procedures followed by the DOC for initiating sunset reviews and
implementing regulations issued by the DOC were challenged in two cases by the European Union in
the WTO.55  The main issue related to the European Union claim that the  de minimis  rates defined in
the Anti-Dumping and SCM Agreements with respec t to investigations should apply in sunset
reviews, and that DOC decisions to maintain duties  were inconsistent with these Agreements.  The
European Union also alleged that by self-initiating sunset reviews without positive evidence, the DOC
was shifting the burden of proof in sunset reviews to exporters.  At the time of drafting of this report,
consultations were still pending.
(c) Safeguards
53. Safeguards investigations are carried out under Sections 201-204 of the Trade Act of 1974
(also known as the "escape clause"), as amended by the URAA.  Safeguard measures may be applied
by the President within 60 days from receipt of a USITC report containing an affirmative
determination of serious injury or threat of serious injury.  Since they require Presidential action, anaffirmative determination of injury is a necessary but not sufficient condition for their application.
                                                     
55 Anti-dumping duties on Seamless pipe from Italy, WTO document, WT/DS225/1, 8 February 2001,
and Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WTO
document WT/DS213/1, 20 November 2000.United States WT/TPR/S/88
Page 41
NAFTA countries are excluded from the application of safeguard measures, unless they are among the
top five suppliers and it is shown that they make an important contribution to serious injury.
54. Although the use of safeguards has increased in recent years, their number and scope remain
moderate.  Between 1998 and 2000, six new safeguard investigations were initiated and notified to the
WTO by the United States.  The USITC found no injury in two cases, related to crabmeat from
swimming crabs, and extruded rubber thread, while a determination of injury was made in four casesinvolving agricultural or steel-related products, (w heat gluten, lamb meat, steel rod wire, and circular
welded carbon quality line pipe).
56  Both negative determinations by the USITC were notified by the
United States to the WTO in 2000.57
55. Safeguard measures may be in the form of quantitative restrictions, an increase in tariffs, or a
tariff quota.  The United States has used all these measures in recent years.  Of the four cases wherean affirmative determination of injury was made in the 1998-2000 period, quantitative restrictions
were used in one case (wheat gluten), tariff quotas in two (lamb meat and steel rod wire), and tariff
increases in one (circular welded carbon quality line pipe).
56. All four cases in which safeguard measures were applied by the United States during the
period under review were challenged in the WTO.  Two of these cases have been concluded, and thetwo others, related to steel products, were still ongoing as of May 2001.  The MFN application of
safeguard measures was the subject of a dispute brought by the European Union, which considered
discriminatory the application of a tariff quota excluding only NAFTA countries.  Other procedural
aspects of safeguard investigations that were challenged included the timely notification of
investigation initiations and application of safeguard measures, the determination of serious injury, of
causation, and the definition of domestic industry in USITC investigations.
57. In the wheat gluten case, quantitative limits on imports of wheat gluten were imposed for a
period of three years ending on 1 June 2001.
58  More than 90% of the quota was allocated to Australia
and the European Union.  The tariff quota on imports of lamb meat was set for a period of three years
ending 22 July 2002.59  Individual country allocations for imports from Australia, New Zealand, and
an "other country" category within the tariff-rate quota were established, reflecting the actual shares
of each country in 1998.  In both cases, imports from NAFTA, CBERA, and ATPA countries, as wellas Israel and GSP beneficiaries were excluded (under certain conditions).
58. In the challenge of the wheat gluten safeguard in the WTO, the Appellate Body and panel
found inconsistencies in the non-discriminatory application of the measure, and also reached the
conclusion that the United States had failed to notify immediately the initiation of the investigation.
60
In the case concerning the safeguards measure on lamb meat the issue of causation emerged again.61
                                                     
56 All notified to the WTO, in documents G/SG/N/8/USA/2, 12 February 1998 and
G/SG/N/8/USA/2/Rev.1, 27 March 1998 (wheat gluten);  G/SG/N/8/USA/3, 18 February 1999 andG/SG/N/8/USA/3/Rev.1, 15 April 1999 (lamb meat);  G/SG/N/8/USA/4,  26 May 1999 (steel wire rod);
G/SG/N/8/USA/7, 11 November 1999 and G/SG/N/8/USA/7/Rev.1, 25 January 2000 (circular welded carbon
quality line pipe).
57 WTO documents G/SG/N/6/USA/8, 22 March 2000 and G/SG/N/9/USA/2, 25 August 2000
(crabmeat), and G/SG/N/6/USA/9, 23 June 2000 and G/SG/N/9/USA/3, 23 October 2000 (extruded rubberthread).
58 WTO document G/SG/N/10/USA/2, 8 June 1998.
59 WTO documents G/SG/N/10/USA/3, G/SG/N/11/USA/3, 12 July 1999, and G/SG/N/10/USA/3S1,
G/SG/N/11/USA/3S1, 17 August 1999.
60 WTO document WT/DS166/AB/R, 22 December 2000.  The report of the panel may be found in
WTO document WT/DS166/R, 31 July 2000.
61 WTO document WT/DS177/1, 16 July 1999, and WTO document WT/DS178/1, 23 July 1999.WT/TPR/S/88 Trade Policy Review
Page 42
The Appellate Body upheld the panel's finding that the United States had failed to demonstrate the
existence of "unforeseen developments", and that the USITC definition of domestic industry as
including input producers as producers of lamb meat was inconsistent with the Agreement on
Safeguards.62
59. The tariff quota on imports of wire rod was effective as of 1 March 2000, and applicable over
a period of three years, on a decreasing basis.63  Out-of-quota rates of 10% are several times MFN
tariffs.64  An increase in import duties was used in the case involving certain line pipe products.  The
increased tariffs were to be applied for three years starting 1 March 2000.65  The additional duty was
19% in the first year of relief, declining to 15% and 11% in the second and third years.  Imports of
wire rod and certain line pipe products from Cana da and Mexico were excluded from the measures.
With respect to both safeguard measures, the European Union questioned in the WTO the provisionsof the Trade Act of 1974 relating to the determination of a causal link between increased imports and
injury or threat thereof, and the treatment of imports from NAFTA countries.
66  Korea challenged
U.S. procedures and determinations that led to the imposition of a safeguard measure on line pipe
products as well as the measure itself, which Korea considered contravened various provisions
contained in the Agreement on Safeguards and GATT 1994.67
60. In June 2001, the USTR requested the USITC to initiate an investigation of injuries to the
steel industry under Section 201 of the Trade Act of 1974.68  The steel products covered by the
request include:  certain carbon and alloy flat products;  certain carbon and alloy long products;
certain carbon and alloy pipe and tube;  certain stainless steel and alloy tool steel products.69
Following the request, on 22 June 2001, the USITC initiated a Steel Global Safeguard Investigation.
(iii) Quantitative restrictions on imports
61. Quantitative restrictions are in place for commercial reasons in only a few sectors, notably
textiles and clothing.  In general, however, most U.S. quantitative restrictions and controls on trade
are designed to ensure national security, safeguard consumer health, protect public morals, or are
maintained for environmental purposes.  For example, the United States prohibits imports of tuna
from certain countries (e.g. Panama, Honduras, and Belize) whose fleets fish in the Eastern Pacific,
with the objective of ensuring dolphin conservation.  As of 1 May 1996, the U.S. also prohibitedimports of shrimp and shrimp products harvested with technology that may harm sea turtles.  These
measures are discussed in section (v).  The United States also maintains bans on imports from certain
countries for foreign policy purposes.
62. U.S. import controls are implemented through a system of licences.  The latest U.S.
notification to the WTO on import licensing describes the procedures to follow in order to import thefollowing products:  plants and animals and their products, natural gas, fish and wildlife, narcotic
                                                     
62 WTO document WT/DS177/AB/R, WT/DS178/AB/R, 1 May 2001.
63 Proclamation 7273 of 16 February 2000-To Facilitate Positive Adjustment to Competition From
Imports of Certain Steel Wire Rod";  and Memorandum of 16 February 2000 "Action Under Section 203 of the
Trade Act of 1974 Concerning Steel Wire Rod by the President of the United States", Federal Register Vol. 65,No. 34, 18 February 2000.  Notified to the WTO in WTO documents G/SG/N/10/USA/4, 18 February 2000 andG/SG/N/10/USA/4/Corr.1, 28 March 2000.
64 WTO documents G/SG/N/8/USA/4, 26 May 1999 and G/SG/N/10/USA/4, 18 February 2000;
USITC, Harmonized Tariff of the United States (2000) and (2001).
65 WTO documents G/SG/N/10/USA/5/Rev.1 and G/SG/N/11/USA/4, 28 March 2000.
66 WTO document WT/DS214/1, 7 December 2000.
67 WTO documents WT/DS202/1, G/L/388, G/SG/D10/1, 15 June 2000.
68 USTR Press Release 01-45, 22 June 2001.
69 USITC online information.  Available at:  http://www.usitc.gov/steel/ERO6ZZYI.pdf.United States WT/TPR/S/88
Page 43
drugs, alcohol, tobacco and firearms, and nuclear facilities and firearms.70  As noted in the Secretariat
Report for the previous Review of the United States, imports of natural or liquefied natural gas are
authorized only if they are consistent with the public interest, except for imports originating in a
country with which the United States has a free-trade agreement.
63. Trade in textiles and clothing continues to be affected by import quotas applied to imports of
certain products from over 40 countries.  These are described in Chapter IV(2).  Quantitativerestrictions on imports of agri-food products covered by the WTO Agreement on Agriculture were
converted into tariff quotas in 1995 as a result of the Uruguay Round.  For several sensitive products,
such as sugar and dairy products, prohibitive out-of-quota tariffs may act as de facto quantitative
restrictions on imports (section (1)(i)).  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 tariffquota.  Restraints on imports of uranium, ammonium nitrate, and steel products have been negotiated
with Russia and on imports of silicon-manganese and steel products with Ukraine (section (1)(ii)).
(iv) Government procurement
64. The value of U.S. government consumption expenditure and gross investment was
US$1.74 trillion in 2000, or some 17.5% of GDP.  At the federal level, defence consumptionexpenditure in goods and services totalled US$320 billion, non-defence totalled US$170 billion and
US$918 billion at the state and local level.  Expenditure on services, excluding depreciation and
employee compensation, was US$121 billion at the federal level and US$46.6 billion at the state and
local level, while gross investment expenditure (structures and equipment) totalled US$106 billion for
the Federal Government and US$220.6 billion for state and local governments.
65. Although no statistical information had been provided up to May 2001 by the United States to
the WTO under Article XIX:5 of the GPA, the Federal Procurement Data System contains "snapshot"statistics on the procurement activities of over 60 agencies.
71  The total procurement of these agencies
above the US$2,500 "micro purchase" threshold, was US$218.8 billion in FY 2000, of which some
65% from the Department of Defense.  In value terms, some 22% of the contracts (prime contracts)
reported by agency were awarded to small business, of which over a third (7.8% of the total) were
awarded making use of some preference programme.72  Procurements performed outside the United
States were US$9 billion in FY 2000;  around ha lf were in Europe.  Among the 100 top federal
contractors, the vast majority are U.S. firms, with a few European firms, mainly British and German,
as well as the German Government.
(a) Institutional and legal framework
66. The United States is party to the WTO Agreement on Government Procurement (GPA).  The
GPA is implemented in U.S. law at the federal level primarily through the Trade Agreements Act, as
amended.  There is also legislation at the state level for the implementation of the GPA in each of the
37 states listed in Annex 2 of the United States' GPA Schedule.  The United States grants national
treatment on federal and state procurement covered by the GPA to all parties to this Agreement.
Under the Trade Agreements Act of 1979, national treatment is provided to least developed andCBTPA countries.  Under NAFTA, Mexico is granted national treatment for federal, but not sub-
federal procurement.
                                                     
70 WTO document G/LIC/N/3/USA/3, 9 November 2000.
71 Federal Procurement Data System, Federal Procurement Report [Online].  Available at:
http://fpds.gsa.gov/fpds/fpdsdata.htm.
72 Federal Procurement Report, p-viii and ix(a).WT/TPR/S/88 Trade Policy Review
Page 44
67. Regulations for central government agency purchases are contained in the Federal Acquisition
Regulations (FAR) as well as agency-specific proc urement regulations to supplement or implement
the FAR.  The Office of Federal Procurement Policy is responsible for policy issues;  the Secretary of
Defense, the Administrator of the General Services Administration (GSA), and the Administrator,
National Aeronautics and Space Administration (NASA) also have responsibility for government
procurements.  The Acquisition Reform Network provides information regarding U.S. governmentprocurement statutes and related data.
73  Procurement notices are advertised in the Commerce
Business Daily .74
68. At the sub-federal level, state procurement is ruled by state or other sub-federal government
laws and procurement regulations.  In some cases, where procurement is funded by federal money,
States must comply with certain federal statutory requirements.  As detailed in the Secretariat Reportfor the previous Review of the United States, a total of 37 States are covered under the GPA, the
scope of coverage varies according to the State.
75  A number of public utilities and other authorities
are also subject to the GPA;  additionally, as the result of a memorandum of understanding with the
European Union, two States and seven cities treat EU  suppliers no less favourably than U.S. suppliers
from outside their jurisdictions.
69. A number of changes to the FAR have been introduced since 1999, including amendments to
implement changes in legislation or to clarify or extend the scope of certain provisions of the
Regulations.  Several of the amendments were linked to the set-aside or preferential access conditions
granted to small businesses (see below);  others related to changes in the bidding process.  New
legislation passed in the area of government procurement also includes the Construction Industry
Payment Protection Act of 1999 (H.R. 1219), which amended existing legislation to expand
protection for sub-contractors and suppliers on federal construction contracts by requiring a largebond amount.
76
70. As part of the ongoing review of the GPA by the WTO Committee on Government
Procurement, the United States presented a proposal calling for the streamlining of the procedural
provisions of that Agreement.  The authorities noted that the objective of this proposal was to seek
ways to make the GPA simpler and more understandable, while retaining its overall effectiveness inensuring market access within the negotiated scope of the coverage.  In their view, the streamlining of
the GPA may contribute to the Committee's goal of making the Agreement more accessible to a
broader range of WTO Members.
(b) Access conditions to procurement
71. The FAR requires government agencies to publish notices of proposed procurement
opportunities in excess of US$25,000, except if perishable subsistence supplies are being purchased or
when the publication of a notice could result in serious injury to the Government.   State governments
are also required to publish invitations to tender.  Non-exhaustive (positive) lists of suppliers may be
used by federal government agencies provided they give written justification, but they remain subject
to the general requirements for publication and open  competitive tendering.  These lists may include
both national suppliers and potential foreign suppliers from countries that are party to the GPA.  The
GSA maintains a (negative) list of suppliers, domestic and foreign, which must be excluded from
                                                     
73 The Acquisition Reform Network (ARNET) is available at www.arnet.gov.
74 Available online at:  http://cbdnet.access.gpo.gov/index.html.  WTO document WT/GPA/23, 15 July
1998.
75 WTO (1999) and WTO document GPA/23, 15 July 1998.
76 Federal Acquisition Regulation FAC 97-19, as amended, 26 July 2000 and 21 October 1997,
[Online].  Available at:  http://www.arnet.gov/far/facframe.html.United States WT/TPR/S/88
Page 45
federal procurement;  contracting officers use this list to ensure that they do not award contracts to
ineligible offerors.77
72. In certain cases imported supplies for use in government contracts may be exempted from
customs duties.  These goods are listed in subchapters VIII and X of Chapter 98 of the U.S. tariff
schedule.  Other supplies may also be granted duty-fr ee entry;  in this case, the contract price must be
reduced by the amount of duty that would be payable if the supplies did not enter duty free.  Supplies(excluding equipment) for government-operated vessels or aircraft may be imported duty free.
73. The policy of the United States with respect to government procurement is to grant national
treatment to any country willing to grant reciprocal  treatment.  For procurement not covered by the
GPA, NAFTA, the WTO plurilateral Agreement on Trade in Civil Aircraft, and bilateral procurement
agreements with Canada, the EU, and Israel, the United States maintains a number of "Buy American"restrictions, mainly under the Buy American Act and the Balance of Payments Program.
74. The Buy American Act of 1933, as amended, restricts the purchase of supplies and
construction materials by government agencies to those defined as "domestic end-products" in
accordance with a two-part test that must establish that the article is manufactured in the United
States, and that the cost of domestic components exceeds 50% of the cost of all the components.   The
Act does not apply to services.  Exceptions to the Buy American Act can be granted 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.  The cost of the domestic offer is considered
unreasonable if the cost of the foreign (non-eligible) product, inclusive of import duty and a 6% added
margin, is below the lowest domestic offer when this offer is from a large business concern.   If the
lowest domestic offer is from a small business concern, the added margin considered is 12%.  For
purchases by the Defense Department the price difference must be of at least 50%.   National
preferences for defence are also allowed under the Department of Defense Appropriations Act of
1992.
75. The Trade Agreements Act of 1979 waives the application of the Buy American Act and the
Balance of Payments Program to the end-products and construction materials of designated countries
(GPA parties and countries benefiting from preferences in the area of procurement), which are grantednational treatment.  The Trade Agreements Act also prohibits discriminatory practices based on
foreign ownership and applies to acquisitions of supplies or services if the estimated value of the
acquisition is US$177,000 or more, or for construction if the estimated value of the acquisition is
US$6,806,000 or more (subject to revision by the USTR  approximately every two years).  Under the
Act, the USTR has also waived the Buy American Ac t for civil aircraft and related articles that meet
the substantial transformation test of the Act, from countries that are parties to the WTO Agreement
on Trade in Civil Aircraft.  Subject to the Act, only U.S.-made end-products or eligible products
(designated, Caribbean Basin, or NAFTA countr y end-products) may be acquired, from a country
with which the United States has entered into a reciprocal agreement, except for certain purchases by
the Department of Defense.
76. During the period under review, set-asides schemes for certain types of enterprises were
maintained under the Very Small Business Pilot Program, established by Section 304 of the Small
Business Administration Reauthorization and Amendments Act of 1994; the Historically Under-
utilised Business Zone (HUBZone) Program, launche d under the Historically Under-utilised Business
Zone Act of 1997;  and the Small Disadvantaged Business Participation Program.  These programmes
are covered by Part 19 of the FAR, Small Busine ss Programs, which is aimed at encouraging small
                                                     
77 The list, issued monthly, may be found in the GSA online information.  Available at:
http://epls.arnet.gov/epl/owa/epls.WT/TPR/S/88 Trade Policy Review
Page 46
business participation in acquisitions;  they are managed by the Small Business Administration
(SBA).78  Small and minority business set-asides are excluded from the coverage of the GPA under
General Note 1 to the United States' Appendix I.79
77. The Historically Under-utilized Business Zone (HUBZone) Program provides federal
contracting assistance for qualified small businesses located in historically under-utilized business
zones.  Until 30 September 2000, the procedures under the programme applied only to acquisitions
made by certain departments and agencies;  after that date, the procedures apply to all federalagencies.  For acquisitions beyond thresholds and open to competition, price evaluation preferences
may be granted, calculated by adding a factor of 10% to all offers.
78. An important element of procurement policy is to promote the participation of small
businesses in government procurement.  The Small Business Administration manages a number of
programmes intended to promote the ability of small business to compete for federal contracts.  As a
part of the promotion of the participation of small businesses in procurement, a number of set-aside
schemes are in place.  In FY2000, the value of contracts awarded through set-aside programmes was
8% of total federal procurement awards.  The authorities noted that the proportion has been decliningin recent years, and that a pilot programme to assess  the effect of the removal of these preferences is
currently in place (see below).  To this end, the SBA negotiates prime and subcontracting goals with
each federal agency, and agencies report actual performance results through the Federal Procurement
Data System.  The SBA encourages small enterprises to register in PRO-Net, a U.S. national directory
of small businesses, accessible through the Internet, which offers a search tool for contracting officers,a marketing tool for small firms, and a link to government procurement opportunities.  At the end of
FY 2000, there were 200,803 firms registered in PRO-Net. For FY 1999, the SBA estimates that
agencies awarded about 39% of federal procurement, both prime and subcontract, to small businesses;
over two third were prime contracts.
80
79. The Small Disadvantaged Business Certification and Eligibility Program assists small
disadvantaged businesses (SDBs) by certifying them as  SDB-eligible firms.  To be certified by the
SBA as an SDB, a small business must be at least 51% owned and controlled by an individualdetermined as socially and economically disadvantaged.  A price evaluation adjustment, as
determined every year by the DOC, is applied for SDBs under the Program in authorized competitive
acquisitions meeting certain criteria.
80. The Small Business Competitiveness Demonstration Program, under the Small Business
Demonstration Program Act of 1988, as implemente d by the Policy Direction and Implementation
Plan of 1999 and managed by the SBA, is a pilot programme to evaluate the effect of removing set-
asides for the procurement of goods included in ten Targeted Industry Categories.  The programme
establishes a reserve amount of US$25,000 to 100,000 for construction, refuse systems, and related
services, and non-nuclear ship repair;  and US$50,000 to 100,000 for architectural and engineering
services.  There are no set-asides for these groups, but a simplified acquisition threshold ofUS$100,000.
81. Under Section 305(g) (1) of the Trade Agreements Act of 1979, the United States has applied,
since May 1993, sanctions on EU countries that are considered to discriminate against U.S. products
                                                     
78 FAC 97-20., 20 October 1997.  Information about the SBA is available online at:  http://www.sba.
gov/aboutsba/indexreports.html.
79 WTO document GPA/50, 15 June 2001.
80 "Small Business Administration FY 2000 Performance and Accountability Report" [Online].
Available at:  http://www.sba.gov.United States WT/TPR/S/88
Page 47
and services in their government procurement practices.81  The sanctions do not apply to contracts
covered by the GPA or in support of U.S. national security interests.  The procurement of goods and
services from countries subject to import bans is prohibited, as well as the purchase of supplies or
services from entities controlled by the Government of Iraq.
(v) Standards, technical regulations and sanitary requirements
(a) Standards and technical regulations
82. As in most countries, technical regulations in the United States are applied for health or safety
purposes to a large number of products.  These include food, beverages, tobacco, cosmetics, drugs,
biologics, medical devices, radiological products as well as motor vehicles.  In general, products
marketed in the United States, whether domestically produced or imported, must meet government-
determined health, safety, and labelling requirements.  It is primarily the responsibility ofmanufacturers to meet these requirements including pre-market approval requirements.  The
responsible agencies take enforcement action when requirements are violated.  Most products other
than meat and poultry do not require a prior determination of equivalence or an export certificate to
enter the United States.
83. Previous U.S. Reviews have examined in detail the U.S. system of standards and technical
regulations.
82  These may be developed by the private or public sectors, at the federal, state or local
levels.  Product standards developed privately or publicly may be incorporated in technical
regulations when regulatory agencies choose to adopt them as mandatory.  Some standards are
required by private insurance companies to qualify for product liability and health insurance.
84. The U.S. Customs Service is responsible for enforcing technical regulations at the border, in
cooperation with the agencies responsible for regulated products;  imported products may be refused
admission if they fail to comply with certai n standards embodied in technical regulations.
85. The National Institute of Standards and Technology (NIST), a non-regulatory agency of the
U.S. Department of Commerce's Technology Administ ration, collaborates with industry to develop
and apply technology, measurements, and standards.  NIST is the designated U.S. enquiry point and
notification authority under the Agreement on Technical Barriers to Trade and provides, on request,
information on U.S. industry standards and governme nt technical regulations.  The American National
Standards Institute (ANSI), is a non-profit federation of about 1,000 private standards-setting
organizations.83  ANSI coordinates the development of private standards, but coordination of
standards is not mandatory. ANSI adheres to the WTO TBT Code of Good Practice for the
Preparation, Adoption, and Application of Standards on behalf of its member organizations, and is the
U.S. member body to the International Electrotechnical Commission (IEC) and to the InternationalOrganization for Standardization (ISO).  In  September 2000, a new strategy was announced to
develop international standards, guide standards development in the United States, and promote U.S.
technology interests internationally.
84  The new strategy could increase the rate of transposition of
                                                     
81 Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden,
and the United Kingdom.
82 See for example WTO (1999a), Chapter III(4)(iv).
83 ANSI online information.  Available at:  http://www.ansi.org.
84 The National Standards Strategy can be found in the ANSI online information.  Available at:
http://www.ansi.org.WT/TPR/S/88 Trade Policy Review
Page 48
ISO and IEC standards in the United States, which has been described as low by several trading
partners.85
86. The United States has continued to participate actively in the WTO Committee on Technical
Barriers to Trade.  U.S. communications to the Committee include a proposal on transparency in
international standards86; and a submission concerning geneti cally modified agricultural and food
products (see below).87  The United States notified, for Members to comment upon, 45 technical
regulations in 1999, and 32 in 2000.88  Among these were new regulations on air conditioners, water
heaters, and other machinery, mostly implemented by the Department of Energy for efficiency
purposes.  Regulations were proposed by the Environmental Protection Agency (EPA) on the use of
the gasoline additive MTBE.89  The Department of Agriculture has proposed new national standards
for organic products, as well as rules for the labelling ("grading") of imported meat90;  the latter led to
a question about U.S. steps to ensure that such labelling is not trade distorting.91  Tuna labelling92,
tobacco, and several other agri-food products were also the subject of notifications.
87. The United States has notified the WTO of modifications to size and ripeness requirements
for grapefruit and kiwi fruit, under Section 8e of the Agricultural Marketing Agreement Act of 1937.93
This Act provides that whenever certain specified commodities are regulated under a federal
marketing order, imports of those commodities must meet the same grade, size, quality and maturity
requirements as those in effect for the domestically produced commodity.  These regulations continue
to be criticized by trading partners.94  The United States has stated that the regulations comply with
WTO requirements, do not limit the volumes of commodities that may be imported, and are in effect
only during the periods of U.S. domestic production.
88. As noted above, technical regulations (including labelling requirements) may also be
established at sub-federal level. For example, in Idaho, food products containing foreign eggsmust have printed on the outside of the wrapper the words "Foreign Eggs Used in This Product".
95
Sub-federal technical regulations are also common in a number of services industries, includingaccountancy and insurance.  No notification of proposed U.S. sub-federal measures has been received
by the WTO.
89. Assessing the conformity of goods (and services) with standards and technical regulations
may be done by the Federal Government, state or local governments, by an independent testing
authority, or by the supplier (producer or importer).  The U.S. conformity 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.
96  For the assessment of technical
regulations, a variety of approaches are followed by the different agencies.  In 1999, the United Statessubmitted a proposal to further consider, in the WTO TBT Committee, a code of good practice on
conformity assessment procedures, considering these procedures as the most challenging area for
                                                     
85 WTO document WT/TPR/M/56/Add.1, 9 March 2000, comments by the European Union.
86 WTO document G/TBT/W/75/Rev.1, 17 June 1999.
87 WTO document G/TBT/W/115, 17 June 1999, and G/TBT/W/115/Add.1, 18 October 2000.
88 Notifications are, since January 2001, listed in a monthly WTO document (the first was
G/TBT/GEN/N/1, 20 February 2001).
89 WTO document G/TBT/Notif.00/191, 12 April 2000.
90WTO documents G/TBT/Notif.00/148, 22 March 2000, and G/TBT/Notif.00/94, 22 February 2000.
91 WTO document WT/TPR/M/56/Add.1, 9 March  2000, question from Canada.
92 WTO document G/TBT/Notif.00/5, 10 January 2000.
93 See for example WTO documents G/TBT/Notif.00/350, 486, and 499.
94 See, for example, WTO document WT/TPR/M/56/ Add.1, 9 March 2000, p. 58, comments by Japan.
95 Idaho Statutes [Online].  Available at:  http://www3.state.id.us/cgi-bin/newidst?sctid= 370150006.K.
96 U.S. conformity assessment procedures were an alysed in detail in WTO (1996), Chapter III(7)(iii).United States WT/TPR/S/88
Page 49
preventing and resolving technical trade barriers.97  This stemmed partly from the lack of acceptance
by importing authorities of test results undertaken by foreign conformity assessment bodies.98  Th e
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 focusing on mutual
recognition agreements (MRAs).
(b) Sanitary and phytosanitary (SPS) measures
90. The United States has made the most SPS notifications to the WTO, with over
500 notifications and addenda as of 4 May 2001, reflecting a systematic process of notification to the
WTO of all proposed changes in domestic sanitary and phytosanitary measures.  The number of
annual notifications has increased sizeably in recent years, from about 80 in 1999 to over 200 in 2000and 100 as of 9 May 2001 (including addenda).  The increase largely reflects the notifications relating
to tolerance levels for residues of chemicals in food products notified by the Environmental Protection
Agency.  In addition, a number of import restrictions have been notified in response to risks of animal
disease, notably Bovine Spongiform Encephalopathy (BSE) and Foot and Mouth disease (see below),
as well as screw-worm, hog cholera, and tuberculosis.  Several notifications have been made oninternational cooperation regarding veterinary drugs.
91. Four different federal agencies have SPS responsibilities in the United States: the Food and
Drug Administration (FDA); the Department of Ag riculture's Food Safety and Inspection Service
(FSIS); the EPA, and the Department of Agriculture’s Animal and Plant Health Inspection Service
(APHIS).
99  The FDA has primary responsibility for the safety of foods, with the exception of meat,
poultry, and certain egg products, which FSIS regulates.  The EPA's mission is to protect human
health and to safeguard the natural environment, no tably by reducing environmental risk.  In regard to
measures applied to protect plant and animal health, APHIS has regulatory responsibility to safeguard
U.S. and animal and plant resources from exotic pests and diseases.100
Meat and poultry
92. An equivalence determination is required before meat and poultry products can be imported
into the United States.  Once granted, FSIS lists the country as eligible to export to the United States.FSIS has developed and published a process for evaluating whether a foreign country’s meat and
poultry regulatory system and individual sanitary measures are equivalent to the system and measures
of the United States.  According to the authorities, there are currently 33 countries recognized as
having meat and poultry inspections systems equivalent to the United States.
101
93. During the period since January 1999, U.S. import prohibitions implemented because of risk
of Foot and Mouth Disease (FMD) have been notified to the WTO with respect to Argentina, Japan,
Korea, South Africa, and Uruguay.  In addition, a temporary ban on imports from the European Union
                                                     
97WTO document GC/W/323, 17 September 1999.
98 WTO document G/TBT/M/17, 12 November 1999.
99 WTO document G/SPS/GEN/212, 7 November 2000.  FDA, FSIS and EPA online information is
available, respectively, at:  http://www.fda.gov, http://www.fsis.usda.gov, and http://www.epa.gov.  The WTOSPS Enquiry point is the Foreign Agricultural Service at USDA  (E-mail:  ofsts@fas.usda.gov).
100 Recently published APHIS rules and notices are posted online.  Available at:  http://aphis. usda.gov.
101 Argentina, Australia, Austria, Belgium, Brazil, Canada, Costa Rica, Croatia, Czech Republic,
Denmark, Finland, France, Germany, Honduras, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan,Mexico, Netherlands, New Zealand, Nicaragua, Poland , Romania, Slovenia, Spain, Sweden, Switzerland,
United Kingdom and Northern Ireland, and Uruguay.WT/TPR/S/88 Trade Policy Review
Page 50
was introduced in March 2001102;  the ban was lifted in May 2001.  Prohibited products from
countries affected with FMD include live ruminants and swine, and their meat and products.  In
addition, since March 2001, all used farm equipment from FMD affected countries is denied entry
into the United States.103  Canned, cured or cooked meat and meat products may be allowed entry
under certain conditions.
94. In December 2000, imports of all rendered animal protein products from most countries in
Europe were banned, regardless of species.  This followed previous bans on imports of live ruminants,
ruminant products, as well as bans on feed c ontaining products from ruminant origin from most
European countries with cases of BSE.104  In February 2001, the USDA announced that it was
temporarily suspending imports of beef and beef products from Brazil, on concerns of BSE, following
a similar ban introduced by Canada105; the ban was lifted in February 2001.
Foods derived from biotechnology
95. Several federal agencies regulate agricultural biotechnology.106  APHIS regulates the field
testing of genetically engineered plants and certain micro-organisms.  APHIS also approves and
licenses veterinary biological substances, that may be the product of biotechnology, including animal
vaccines.  In addition, the FDA has recently proposed a requirement for the submission of data andinformation regarding plant-derived bio-engineered foods.
107  The EPA regulates most genetically
altered micro-organisms under the Toxic Substances Control Act.
96. Testing of biotechnology-derived plants requires prior APHIS approval.  Generally, before
a genetically engineered crop can be produced on a wider scale and sold commercially, its creators
must petition APHIS for a "determination of non-regulated status", i.e. for the new plant to be treated
like any other plant.  All petiti ons are published in the Federal Register for public comment.108
APHIS has granted approval to over 5,000 field trials since 1987.  About 40 new agricultural products
have completed all the federal regulatory requirements (from all relevant agencies) and may be
sold commercially.  They range from longer-lasting tomatoes to pest-resistant corn.109  Biotech
soybean, cotton, and corn acreages have increased dramatically since the introduction of these crops
in the mid-1990s.  They accounted for 20-44% of acreage planted in 1998.110
(c) Environmental regulations related to trade
97. U.S. law authorizes the enforcement of environmental regulations in relation to imports under
various statutes, as detailed in previous Reviews.   In particular, domestic environmental provisions
governing the use of marine resources have been enforced, in a number of cases, through trade
measures.  In 1991, under the Marine Mammal Protection Act (MMPA), an embargo was placed on
tuna imports from countries failing to protect dolphins when fishing in the eastern tropical
                                                     
102 USDA online information.  Available at:  http://www.usda.gov/news/releases/2001/03/0044.htm.
103 See APHIS online information.  Available at:  http://www.aphis.usda.gov/oa/fmd/fmdblist.html.
104 APHIS online information.  Available at:  http://www.aphis.usda.gov/lpa/press/1997/12/eubse.txt.
105 USDA online information.  Available at:  http://www.usda.gov/news/releases/2001/02/0025.htm.
106 See also International Trade Administration online information.  Available at:  http://www.ita.doc.
gov/NewsFrameset.html.
107 WTO document G/SPS/N/USA/384, 24 January 2001.
108 See for example USDA (2001).
109 USDA’s Economic Research Service (ERS) recently released the first government data on acreage
of biotechnology-derived crops.  The ERS report is available online at:  http://www.econ.ag.gov/whatsnew/issues/biotech.  See also http://www.ers.usda.gov/publications/aib762/.
110 A listing of U.S. laws that use import restrictions to encourage foreign governments to comply with
U.S. environmental standards is available on line at:  http://www.itds.treas.gov/EnvImp.htm.United States WT/TPR/S/88
Page 51
Pacific Ocean.  The import ban, which was successfully challenged in the GATT, has been removed
on imports from countries found by the United State to be in compliance with the International
Dolphin Conservation Program (IDCP).  Under th e MMPA as amended in 1997 to implement the
international agreement on the IDCP, a country may export yellow fin tuna to the United States if it
submits evidence that it participates in the IDCP and takes certain other conservation measures.  Since
1999, two countries have been certified as meeting the requirements.  Imports of yellow fin tuna fromthe eastern tropical Pacific Ocean are required to be accompanied by evidence supplied by the
exporting country that dolphin mortality limits permitted for the exporting country have not been
exceeded.  Exporting countries are also required be, or to have taken steps to become, a member of
the Inter-American Tropical Tuna Commission.  Producers meeting these requirements may label
their products as dolphin safer tuna.  The import ba n currently applies to Belize, Bolivia, Colombia,
El Salvador, Guatemala, Honduras, Nicaragua, Panama, Spain, Vanuatu, and Venezuela, although
some of these countries are in the process of completing the requirements for lifting the ban.
98. Section 609 of Public Law 101-162 Relating to the Protection of Sea Turtles in Shrimp Trawl
Fishing Operations, enacted in 1989, provides, inter alia , that shrimp harvested with technology that
may adversely affect certain sea turtles may not be imported into the United States unless theharvesting nation has been certified to have a regulatory programme, and an incidental take-rate
comparable to that of the United States, or that the particular fishing environment of the harvesting
nation does not pose a threat to sea turtles.  All shipments of shrimp and shrimp products into the
United States must be accompanied by a declaration attesting that they have been harvested either
under conditions that do not adversely affect sea turtles or in waters subject to the jurisdiction of a
nation currently certified pursuant to Section 609.  Since January 1999, revisions have been issued to
the guidelines implementing Section 609.
111
99. All shrimp-harvesting nations are subject to the import ban, but the United States has certified
sixteen nations as having sea turtle protection programmes comparable to that of the United States,
and twenty-five nations as having fishing environments that do not pose a danger to sea turtles.112
100. In 1996, Malaysia, India, Pakistan, and Thailand brought a joint complaint to the WTO
against the import prohibition under Section 609.  The Appellate Body found that the measure was notjustified under Article XX of GATT 1994 (on exceptions to the Agreement).
113  In November 2000,
Malaysia brought a complaint against U.S. implementation of this ruling.114  The original panel was
reconvened and found in favour of the United States.115
101. The Pelly Amendment to the Fisherman's Protective Act of 1967 authorizes the U.S.
Secretary of Commerce to certify a country for activities that diminish the effectiveness of aninternational fishery conservation programme.  A certification triggers a process for the President to
consider the imposition of import restrictions against the country, to the extent such restrictions are
sanctioned by the WTO.  In September 2000, the Secretary of Commerce certified Japan under the
Pelly Amendment for undermining international efforts to protect whales.  Certification was based on
Japan's decision to kill two additional species of whales under its research programme in the NorthPacific.  In December 2000, the President sent a letter to Congress stating that he did not believe that
import prohibitions would further U.S. objectives at that time, but directing certain Executive
agencies to keep Japan's whaling activities under active review.
                                                     
111 Revised Guidelines for the Implementation of Section 609 of Public Law 101-162, Federal Register
Vol. 64, No. 130, 8 July 1999.
112 65 Federal Register 25785 (27 April 2000).
113 WTO document WT/DS58/AB/R, 12 October 1998.
114 WTO document WT/DS58/18, 8 November 2000.
115 WTO document WT/DS58/RW, 15 June 2001.WT/TPR/S/88 Trade Policy Review
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(2) EXPORT MEASURES
102. A central objective of U.S. trade policy is to open markets to U.S. exporters.  Instruments to
achieve this aim mainly consist of the U.S. trade laws, the use of the WTO dispute settlement
mechanism (Chapter II(2)(vii)), and export assistance measures.  U.S. trade laws, which include
Section 301 laws, have been used sparingly since 1999, whilst increased use has been made of the
WTO's dispute settlement mechanism.
(i) Measures related to agri-food exports
103. In the 1999-2000 period, there was a reduction in the United States' use of export subsidies
and of export credits and guarantees;  in the same period, there was a large increase in food aid
volumes, and domestic support to producers went up.  Recent trends in domestic support are presented
in section (3)(i)(b) below.
(a) Export subsidies
104. The two long-standing agri-food export subsidy programmes, the Export Enhancement
Programme (EEP) and the Dairy Export Incentive Pr ogramme (DEIP), have not been modified since
the last U.S. Review.116  In accordance with U.S. export subsidy commitments under the WTO
Agreement on Agriculture, maximum funding levels have been set for both the EEP and the DEIP ineach fiscal year through 2002, with a total amount of US$579 million for FY 2000.  That year, the
actual bonuses awarded under the EEP were low (about US$1.6 million), and covered only frozen
poultry (2,495 tonnes).  Under the DEIP, approximately US$79 million were paid to allow for
128,453 tonnes of dairy exports.
117
105. Under the EEP, the USDA pays cash bonuses to exporters, allowing them to sell agricultural
products in targeted countries at prices below the exporter's costs of acquiring them.  All sales under
the EEP are made by the private sector.  The stated purpose of the programme is to enable U.S.exporters to meet prices that are being subsidized by other Governments into the world market.
Prospective exporters submit a bid to USDA requesting a bonus that would allow the sale to take
place at the agreed price.  Once USDA accepts a bid, the exporter and the Commodity Credit
Corporation (CCC) enter into an agreement.  The bonus is paid by the CCC to the U.S. exporter in
cash once the exporter furnishes USDA with evidence that the commodity has been exported underthe terms of the agreement.  Commodities eligible under EEP initiatives are wheat, wheat flour, rice,
frozen poultry, barley, barley malt, table eggs, and vegetable oil.  The DEIP functions in a similar way
as the EEP.  Commodities eligible under the DEIP are milk powder; butterfat; and Cheddar,
Mozzarella, Gouda, Feta, cream, and processed American cheeses.
106. The latest available WTO notification by the United States covers October 1999 to
September 2000.
118  During that period, both the reported value of export subsidies and subsidized
export volumes actually exceeded levels specified in the U.S. Schedule of WTO commitments for
cheese and other milk products, in the latter case by a factor of seven.  In FY 1998, commitments had
already been exceeded for these products.119  According to the authorities, the notification refers to
"export awards" for dairy products, for example 17,908 tonnes in the case of "other milk products",whereas actual exports totalled only 10,356 tonnes;  the corresponding WTO commitment level was
2,518 tonnes.  The authorities also stated that the Unit ed States, in this context, is relying on flexibility
                                                     
116 USDA (1999a).
117 USDA (2000).
118 WTO document G/AG/N/USA/35, 12 June 2001.
119 See WTO document G/AG/N/USA/32, 30 March 2000.United States WT/TPR/S/88
Page 53
provisions provided in Article 9.2(b) of the WTO Agreement on Agriculture to "roll forward" some of
the unused export subsidies from previous years.
(b) Export finance, insurance, and guarantees
107. The CCC administers export credit guarantee programmes for commercial financing of U.S.
agricultural exports.  The programmes seek to encourage sales to buyers in countries where credit is
necessary to maintain or increase U.S. sales, but where financing may not be available without CCCguarantees.  Credit is extended by the private banking sector in the United States (or, less commonly,
by the U.S. exporter) to approved foreign banks, and the foreign buyers use letters of credit to pay for
the food or other agricultural products.  The Export Credit Guarantee Program (GSM-102) covers
credit terms up to three years.  GSM-103 covers credit terms up to ten years.  Products eligible for
GSM-102 and GSM-103 are also eligible for the Supplier Credit Guarantee Programme (SCGP),
under which the CCC guarantees a portion of paym ents due from importers under short-term
financing (up to 180 days) extended directly by U.S. exporters to the importers for the purchase of
U.S. agricultural commodities and products.
108. The value of exports of agri-food products that benefited from officially supported export
credit guarantees under GSM-102 and GSM-103 declined from US$4 billion in FY 1998 toUS$2.9 billion in FY 2000.  Grain accounted for more  than 80% of export credits administered under
the programmes.  Mexico was the largest recipient of such credits, with a third of total outlays.
Export credit guarantees administered under GSM-102 and GSM-103 have been programmed until
2002, allowing for annual export insurance up to US$5.5 billion.  Estimates of total budgetary outlays
for 1990-2000 under subsidized export credits and guarantee programmes are not available.
109. The subsidy embodied in the GSM-102 and GSM-103 programmes is determined in large part
by the obligor's sovereign or non-sovereign country risk grade, and the resulting risk premium whichis not reflected in the interest rate actually paid because of the government guarantee.  According to a
recent OECD study, exporters' defaults net of recoveries on officially supported export credits are
low, amounting to 0.1% of total U.S. export credits
120;  however, the periods of repayment are long
and the fees are low.121
110. In the OECD, negotiations have been taking place on disciplines to govern the provision of
export credits, guarantees and insurance programmes, described as trade-distorting instruments of
export competition.  WTO Members were committed to this negotiation in accordance with Article
10.2 of the WTO Agreement on Agriculture.  Some  WTO Members consider that long-term state
guaranteed export credits that substantially exceed the lifetime of the goods, at an interest rate lower
than a bank would normally charge, constitute a subsidy.122  While recognizing that export credit
guarantee programmes "may relate to trade distortion in third country markets", the United States also
considers that such programmes create additional purchasing capacity for importing countries that
might not otherwise exist because of a lack of liquidity in the importing country's financial market.123
The authorities noted that the United States has endorsed the OECD Sector  Understanding on Export
Credits for Agricultural Products, contingent upon its acceptance by other Members.
                                                     
120 OECD (2000).  The default net of recoveries is the share of obligations that come due to the
government and reflect loans that are not paid.  For a gua rantee, for example, it is the portion of the total export
credits for which the government had to pay the loan, less the portion that was repaid.
121 These terms and fees determine the future payment the importer receives in using the particular
export credit, which is then converted into present value using that importer's discount rate.
122 WTO document G/AG/6, 28 November 2000.
123 WTO document WT/TPR/M/56/Add.1, 9 March 2000, "Responses to questions raised".WT/TPR/S/88 Trade Policy Review
Page 54
(c) Food aid
111. The United States is the world's largest food aid supplier, accounting for 64% (by volume) of
food aid delivered in 2000.124  U.S. food aid shipments substantially increased in FY 1999, before
declining somewhat in FY 2000 (Chart III.4).  The commodity value of total food aid planned in
FY 2000 was US$1.26 billion, about 2.5% of agri-food exports.125  It is noteworthy that volumes of
food aid and world cereal prices are negatively correlated.
112. U.S. food aid consists of both concessional sales and donations, with about 90% of U.S. food
aid provided in fully grant form.  Its stated purpo se is to enhance food security in the developing
world, whilst stabilizing U.S. farm income by disposing of surplus stocks.126  Each year's level of food
aid depends on the overall budget authority and the demand for food by needy countries.  The
authorities noted that the market situation is care fully examined when allocating food aid so as to
limit the possibility of disrupting commercial sales in recipient countries.
(ii) Activities of the Ex-Imbank and other credit agencies
113. The Export-Import Bank of the United States (Ex-Imbank) is responsible for assisting the
export financing of U.S. goods and services through a variety of loan, guarantee, insurance, and
working capital programmes.127  Its activities are described in the United States' most recent WTO
subsidy notification.128  Ex-Imbank activities are subject to periodic review under U.S. law;  the
current charter runs through September 2001.
114. Most Ex-Imbank finance is provided for capital equipment, large-scale projects, and related
services, but the Ex-Imbank also furnishes export credits for other goods and services, including
agricultural commodities and their products.129  The Ex-Imbank does not seek to compete with
commercial lenders but rather assumes risks that commercial banks decline.  For example, during the
Asian financial crisis in January 1998, Ex-Imbank recorded a surge in requests for short-terminsurance for letters of credit for certain Asian countries, because private banks were no longer
accepting the risks.
130
                                                     
124 World Food Programme, Food Aid Flows , various issues.
125 For details of food aid deliveries, see the Foreign Agricultural Service online information.
Available at:  http://www.fas.usda.gov/excredits/quarterly/2000/nov-aid.pdf.
126 Foreign Agricultural Service online information.  Available at:  http://www.fas.usda.gov/food-
aid.html.  See also http://www.fas.usda.gov/excredits/pl480/ pl480ofst.html.
127 These programmes are described in the Ex-Imbank online information.  Available at:  http://www.
exim.gov/mltprog.html.  See also http://www.exim.gov/guarantee.html
128 WTO document G/SCM/N/38/USA, 19 November 1998.
129 While Ex-Imbank may finance agri-food exports, the CCC (see above) administers most export
credit guarantee programmes for the financing of U.S. agricultural exports.
130 Ex-Imbank online information.  Available at:  http://www.exim.gov/press/mar1198.html.United States WT/TPR/S/88
Page 55
04284126168210
0.02.04.06.08.010.0Chart III.4                                  
Trends of food aid shipments and cereal prices, 1993-2000
For food aid shipments - World Food Programme (May 2001).
For cereal prices - USDA, National Agricultural Statistics Service [Online].   Available at 
http://www.nass.usda. gov:81/i pedb.aData on food shipments for the three commodities refer to wheat and wheat flour,  milled paddy 
rice, and coarse grains, respectively. $/ton      Mn tons of 
grain equivalentWHEAT
r = -0.40
04284126168210
0.00.30.60.91.21.5RICE
r = -0.31
03570105140
1993 1994 1995 1996 1997 1998 1999 20000.01.02.03.04.05.06.07.0MAIZE
r = 0.04
Source:Food aid shipment  a
(right hand scale)PriceWT/TPR/S/88 Trade Policy Review
Page 56
115. Local-content requirements may be applied to Ex-Imbank programmes.  For example,
Ex-Imbank must ensure that the foreign content in the exports it supports is less than 15%.  While the
Ex-Imbank changed its procedures in 2000 so as to apply the foreign content rule more flexibly, the
requirement has been described as an obstacle to funding the new forms of export business, which
increasingly consists of components from a range of countries.131  In this context, the Ex-Imbank
entered into a co-financing agreement with the E xport Credits Guarantee Department of the United
Kingdom, in January 2001, which will be accessible to both American and British exporters.132
Exports under Ex-Imbank financing must be shipped in vessels of U.S. registry (see Chapter IV(4)and (5)).  U.S. insurers should be given a "nondiscriminatory opportunity" to bid for insurance on all
shipments of items financed by Ex-Imbank.
116. In FY 2000, Ex-Imbank authorized US$13 billion in financing, to support US$16 billion in
exports revenues (Table III.8), or a comparatively low 2.3% of total U.S. exports of goods and
services.  The financing was reportedly sustaining an estimated 62,700 U.S. jobs.
133  Authorizations
increased for working capital guarantees, medium-term guarantees, long-term loans, project
financing, and medium-term export credit insurance.  Some 8.4% of total financing was for U.S.
exports to Africa and the Middle East (4.7% for Africa), nearly 20% each for exports to Asia andLatin America, 10% each for Europe and Canada, and 2% for Russia and the Newly Independent
States.
117. Every year, Ex-Imbank receives an appropriati on for its programme budget (the "subsidy" or
Cost Budget Authority), which is then used to cover possible losses;  Ex-Imbank estimates that it
supports US$20 in exports for every dollar in the programme budget.
134  The Federal Government
assumes the entire costs in case of default.  Annual appropriations have averaged US$800 million in
recent years.  The most recent Budget, for 2002, calls for a 25% cut in Ex-Imbank's budget.
Table III.8
Ex-imbank activities
(US$ million)
Fiscal year Export valueAmounts lent,
guaranteed or insured Subsidy
Direct Loan Budget Authority
Direct loan
1996 1,376.6 1,236.3 98.3
1997 1,798.3 1,548.9 43.7
1998 116.1 102.5 16.5
1999 1,066.6 902.7 53.0
2000 1,127.1 932.6 11.7
Loan Guarantees and Insurance Budget Authority
Guarantee and insurance
1996 13,220.0 10,281.4 771.7
1997 13,297.7 10,609.9 767.1
1998 12,751.6 10,433.0 700.3
1999 15,642.0 12,164.9 602.8
2000 14,421.0 11,704.5 890.4
Source : WTO document G/SCM/N/38/USA, 19 November 1998.
                                                     
131 See for example Hufbauer and Rodríguez (2001).
132 See Ex-Imbank Press Release, 17 January 2001 [Online].  Available at:  http://www.exim.gov/
press/ jan1701.html.
133 Ex-Imbank online information.  Available at:  http://www.exim.gov/press/oct2000b.html.
134 Ex-Imbank online information.  Available at:  http://www.exim.gov/press/mar1198.html.United States WT/TPR/S/88
Page 57
118. The Small Business Administration also offers a range of long- and short-term financing
options, designed specifically for small business exporters.  Its guarantee programme encourages
lenders to make loans to small business exporters that they might not otherwise make.135  Among the
States' export financing agencies, the California Export Finance Office also issues guarantees to banks
securing export loans for small and mid-sized California companies.136  Access to direct loans up to
US$50,000 or loan guarantees of up to US$500,000 are available for Florida's small and medium-sized businesses through the Florida Export Finance Corporation.
137  The Georgia Export Finance
Fund provides loans to exporters based in Georgia.138  Massachusetts offers export loan guarantees.139
(iii) Fiscal concessions in support of exports
(a) Duty drawbacks and foreign-trade zones
119. A drawback system allows for the refund or remission, in whole or in part, of internal taxes,
fees or customs duties on the import content of exported products.140  The use of drawback and duty
deferral programmes among NAFTA partners was eliminated in January 2001 for exports to Mexico,
in order to remove the trade distorting provisions of the drawback laws (it was already restricted on
exports to Canada since January 1996).  The NAFTA drawback formula had already essentially
eliminated drawback for NAFTA-origin goods.141  For non-originating goods, the elimination of the
drawback prevents a NAFTA country from becoming an  export platform for third countries, as it can
no longer deduct the duties on imported non-NAFTA i nputs if exporting to a NAFTA partner.  This
seeks to ensure "that the benefits of NAFTA preferential duty treatment only accrue to NAFTA
parties".142
120. The NAFTA drawback restriction also applies to duty deferrals allowed in foreign trade zones
(FTZ), which are designated sites licensed by the FTZ Board and are considered for customs entry
purposes as outside the U.S. customs territory.  Foreign and domestic merchandise may be placed inan FTZ for purposes such as storage, exhibition, assembly, manufacture, and processing, without
formal customs entry procedures and payment of duties, unless and until the foreign merchandise
enters U.S. customs territory for domestic consumption.  Quota restrictions do not apply to foreign
goods in the zones.  Merchandise moved into FTZs for export may be considered exported for
purposes such as federal excise tax rebates and drawback.  In addition, foreign goods and domesticgoods held for exportation are exempt from state/local inventory taxes.
143  There are currently about
240 FTZs and 400 sub-zones.  Around US$170 billion of merchandise is handled in FTZs and exports
from the zones amount to US$17 billion.  FTZ activity is centred on oil refining, the production of
pharmaceuticals, office equipment, high-technology merchandise, and  the automobile sector.
                                                     
135 See Small Business Administration online information.  Available at:  http://www.sba.gov/
OIT/exportexpress.doc.
136 See CEFO online information.  Available at:  http://www.commerce. ca.gov/international/cefo/.
137 For more information see CEFC online information.  Available at:  http://www.dos.state.fl.us/fefc/.
138 See http://www.georgia.org/trade/exporter_tk_faqs.html
139 See http://www.massdevelopment.com/.
140 U.S. Customs Service (1997).
141 Under the drawback formula, the amount refunded is the lesser of the amount of import duties paid
or payable on inputs and the amount paid or payable on the finished good exported to the other party.
142 See http://www.customs.gov/nafta/hwm016.htm.
143 See International Trade Administration online information.  Available at:  http://ia.ita.doc.gov/
ftzpage/tic.html.WT/TPR/S/88 Trade Policy Review
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(b) Tax exemptions on extraterritorial income
121. A set of U.S. tax provisions conferring export incentives has been under scrutiny in the WTO
since 1998, first by a panel, then by an Article 21.5 implementation panel since November 2000.144
Since the last U.S. Review, a new law has been pa ssed that modifies the taxation of income derived
from certain foreign sales.  The new law is al so intended to comply with the recommendations
resulting from the first panel.
122. The issue under scrutiny by the first panel was the tax exemption of certain "foreign trade"
income of foreign sales corporations (FSCs).  Foreign trade income was generally defined as export
property held for sale or lease, produced in the United States and sold abroad, with no more than 50%
of its value attributable to imports.145  An FSC had to be formed under the laws of a jurisdiction
outside the U.S. customs territory, and meet certain requirements of foreign management, foreignpresence, and foreign economic processes.  A domestic corporation was generally not subject to U.S.
income tax on dividends distributed from the FSC out of earnings attributable to this income.  Thus,
there was no U.S. income tax imposed on a portion of the FSC's income from exports.  The tax
revenue forgone as a result of the FSC provisions was around US$2.55 billion according to the
FY 2000 Budget; it was expected to be  US$4.16 billion in the FY 2001 Budget.
146  About 6,000 U.S.
corporations used FSCs.
123. In October 1999, the WTO Panel found that the FSC scheme constituted a prohibited export
subsidy both under Article 3.1(a) of the SCM Agreement (subsidies contingent on export
performance) and under the Agreement on Agriculture.  In February 2000, the Appellate Body
confirmed the findings of the Panel with respect to the violations of the SCM Agreement and
modified the findings concerning the Agreement on Agriculture, concluding that the FSC scheme
violated Articles 10.1 (circumvention of export subsidy commitments) and 8 (on export competitioncommitments).  In March, the DSB recommended that the United States withdraw the export
subsidies.
124. On 15 November 2000, the U.S. President signed into law H.R. 4986, the FSC Repeal and
Extraterritorial Income Exclusion Act of 2000 which, in the view of the United States, implemented
the DSB recommendations.  As a first measure, the Act terminated FSC treatment for all transactionsentered into after 30 September 2000, subject to certain transition rules allowing existing FSC
companies that entered into binding contracts to continue to benefit from the FSC provisions.
125. The FSC Replacement Act modified the definition of U.S. taxable income to exclude most
"extraterritorial income", defined as receipts from  qualifying foreign trade property.  This property
must not be for use in the United States.  In addi tion, not more that 50% of the fair market value of
such property can be attributable to the sum of th e fair market value of articles manufactured outside
the United States plus the direct costs of labour performed outside of the United States.  Also, certain
economic processes connected to the activities generating the receipts, such as the sale of the
property, must take place outside the United States.  The European Union considers that the FSC
Replacement Act replicates the violations of the WTO Agreement found in the original dispute, whichhas led to the examination of the new law by the original WTO Panel.
147
                                                     
144WTO documents WT/DS108/1, 28 November 1997, and WT/DS108/Add.1, 12 March 1998.
Article 21.5 provides for the resort to the original panel where there is disagreement regarding the
implementation of the Panels original rulings and recommendations.
145 See WTO document WT/DS108/R, 8 October 1999, p. 2.
146 See FY 2000 Budget, p. 354, Table 34-4;  and FY 2001 Budget, p. 382, Table 32-4.
147 WTO document WT/DS108/14, 21 November 2000.United States WT/TPR/S/88
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126. The estimated budgetary effect of the Act is  approximately US$4.4 billion over ten years.148
This could reflect the substantially broader category of income now exempt from tax under the new
provisions.
(iv) Section 301 and related actions
127. There has been a net decline in the number of Section 301 investigations, under which the
USTR reviews foreign practices deemed to affect U.S. exports of goods and services or impair U.S.rights under international trade agreements.  Since the 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 (Table III.9).  Also, while over the 1995-99 period approximately
one third of U.S. complaints under the WTO Dispute Settlement Body had been paralleled
by Section 301 investigations domestically, the United States is increasingly using the DSUindependently from Section 301.
128. Two WTO disputes regarding Section 301-310 of the Trade Act of 1974 were active during
1998-2000.
149  In a first case, the European Union complained that the timeframes specified in
Section 301-310 provisions did not allow the U.S. Government to wait until the WTO Dispute
Settlement Body had adopted panel and Appellate Body findings before making its determinationsand suspending concessions.  The Panel found, in the light of the U.S. undertakings articulated in the
Statement of Administrative Action approved by the U.S. Congress at the time it implemented the
Uruguay Round agreements, that those aspects of Sections 301-310 are not inconsistent with U.S.
obligations under the WTO.  In the second case, the European Union requested consultations
regarding the "Carousel Amendment" embodied in Section 306, as recently amended (Chapter II(1)).
Table III.9
Section 301 cases initiated or active from 1999-00
Date of initiation
and case numberCountry
involved TopicOrigin of
complaintWTO/NAFTA
procedure Recent action taken
May 1999
301_62(a)EU Hormones USTR WTO July 1999, United States announced
imposition of 100% ad valorem
duties on certain products of certain
EU member States
October 1994
301_100EU Bananas USTR WTO April 1999, United States announced
imposition of 100% ad valorem
duties on certain products of certainEU member States
April 1998301_118Mexico High Fructose Corn Syrup Petition by Corn
RefinersAssociation.WTO February 2000, WTO Dispute
Settlement Panel agreed with theU.S.
March 1999301_119Canada Tourism and Sport Fishing Petition by Border
Waters CoalitionNAFTA November 1999, USTR announced
successful resolution of the matter
October 2000
301_120Canada Canadian Wheat Board Petition by North
Dakota Wheat
CommissionNAFTA Under investigation
March 2001 Ukraine Optical media (intellectual
property rights)USTR No Under investigation
Source : USTR at http://www.ustr.gov.
                                                     
148 FSC Repeal And Extraterritorial Income Exclusion Act of 2000:  Report by the Senate Committee
on Finance [Online].  Available at:  http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_reports&docid= f:sr416.106.
149 WTO document WT/DS152 and WT/DS200 series (see Table AII.1).WT/TPR/S/88 Trade Policy Review
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129. Prior to taking any action under Section 301 legislation, the USTR must request consultations
with the foreign government involved and follow the dispute settlement provisions of any applicable
trade agreement, including the WTO.  WTO Members have expressed concern about investigations
and the publication of "reports" and "lists", notably under the "Special 301" provisions regarding
intellectual property protection (section (3)(iii) and Table III.10).150
130. The 1995 Japan-U.S. Autos and Auto Parts Consultations expired on 31 December 2000.
This agreement had been concluded after a Section 301 investigation was launched regarding Japan's
policies and practices deemed to affect U.S. auto parts suppliers.151  The agreement required Japan to
take market-opening steps in its motor vehicle and parts industries.  The bilateral trade imbalance in
these products was expected to exceed US$41 billion dollars in favour of Japan in 2000.  The U.S.
Government proposed an updated replacement agreement, given continued U.S. concerns related toaccess to the Japanese automotive market and the Japanese transplants in the United States.  The
Japanese Government, however, was of the view that the agreement had outlived its significance.
152
(v) Export restrictions and controls
131. The United States maintains export restrictions and controls for national security, non-
proliferation, and foreign policy reasons, or to pr event situations of short supply.  For example,
exports of unprocessed timber originating from non-federal public lands in the western continental
United States are prohibited.  The Bureau of Export Administration (BXA) at the U.S. Department of
Commerce regulates exports of dual-use commercial commodities, software and technology that are
listed on the Commerce Control List (CCL) or otherwise subject to Export Administration
regulations.153  There are two types of controls on the CCL:   those controlled unilaterally; and those
controlled multilaterally, for example under the Wassenaar Arrangement, Nuclear Supplier Group,
and the Missile Technology Control Regime.  BXA also maintains "catch all" controls to items notspecifically listed on the CCC but that can be used to manufacture weapons of mass destruction.
154
132. Regulated exports may require a licence, based upon the item classification, the destination,
the end-user, and the end-use.  In FY 2000, about 13,000 individual licences were delivered.  Export
enforcement investigations of unauthorized exports may result in fines or imprisonment of exporters
found to make unlawful exports.
133. Commerce's export control authority is based on the Export Administration Act of 1979, as
amended, which was renewed on 13 November 2000.  This simple renewal is valid until 20 August
2001;  the Congress is currently considering a new Export Administration Act.155
                                                     
150 See for example WTO document WT/TPR/M/56/Add.1, 9 March 2000.
151 WTO (1996), Chapter II(3)(iv)(c).
152 Remarks by the Minister of International Trade and Industry, 25 December 2000.
153 More information is accessible in BXA online information.  Available at:  http://bxa.fedworld.gov.
154 See also "Catch All Controls:  The United States Perspective", Speech by Brian H. Nilsson, Senior
Export Policy Analyst, Office of the Assistant Secretary, for Export Administration, Department of Commerce[Online].  Available at:  http://www.bxa.doc .gov/press/Archive2000/NilssonsOxfordSpeech.html.
155 The Act is available online at:  http://enzi.senate.gov/eaaone.htm.  It is in effect until 20 August
2001 (http://www.bxa.doc.gov/PageTwo.html#EEAsign).United States WT/TPR/S/88
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Table III.10
Selected countries identified under Section 301 and related reports, 1999-00
Special 301 Super 301
CountrySection 306
monitoringPriority
watch list Watch listOut-of-cycle
reviewsWTO
disputesContinued
monitoring Section 1377 Title VII
Argentina 1999, 2000 2000
Armenia 2000
Australia 1999
Azerbaijan 2000
Belarus 1999, 2000
Bolivia 1999, 2000
Brazil 1999, 2000 2000
Canada 1999, 2000 1999 2000 2000
Chile 1999, 2000
China 1999, 2000 1999
Columbia 1999, 2000 1999
Costa Rica 1999, 2000
Czech Rep. 1999, 2000 1999
Denmark 1999, 2000
Domincan Rep. 1999, 2000
Ecuador 1999, 2000
Egypt 1999, 2000
El Salvador 2000
EU 1999, 2000 1999 1999, 2000 1999
Germany 1999, 2000 1999, 2000
Greece 1999, 2000
Guatemala 1999, 2000
Hong Kong 1999
Hungary 1999, 2000
India 1999, 2000 1999, 2000 2000
Indonesia 1999 2000
Ireland 1999, 2000
Israel 1999, 2000 1999 2000
Italy 1999, 2000
Jamaica 1999, 2000
Japan 1999 1999, 2000 1999, 2000 1999, 2000
Jordan 1999
Kazakhstan 2000
Korea 2000 1999 1999 1999 1999, 2000 1999, 2000
Kuwait 1999 2000 1999
Latvia 2000
Lebanon 1999, 2000
Lithuania 2000
Macau 1999 2000
Malaysia 2000 1999 2000
Mexico 1999 1999, 2000 1999, 2000 2000
Moldova 2000
New Zealand 1999
Oman 2000
Pakistan 2000
Paraguay 1999, 2000
Peru 1999, 2000 2000
Philippines 2000 2000
Poland 2000 1999 1999
Qatar 2000
Romania 2000 2000
Russia 1999, 2000
Saudi Arabia 2000
Singapore 2000
Spain 2000
S. Africa 1999 1999 2000
Sweden 1999
Chinese
Taipei2000 2000 2000
Tajikistan 2000
Thailand 2000
Turkey 1999, 2000
Turkmenistan 2000
Table III.10 (cont'd)WT/TPR/S/88 Trade Policy Review
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Special 301 Super 301
CountrySection 306
monitoringPriority
watch list Watch listOut-of-cycle
reviewsWTO
disputesContinued
monitoring Section 1377 Title VII
Ukraine 1999, 2000
UAE 1999
UK 2000
Uruguay 2000
Uzbekistan 2000
Venezuela 2000
Viet Nam 2000
West Bank
and Gaza2000
Source : USTR online information.  Available at:  http://www.ustr.gov.
134. Congress and the Administration are also considering the reform of U.S. sanctions policy.
Sanctions may include unilateral restrictions or conditions on economic activity (including trade,
investment, finance, and aid) with respect to a foreign country or entity.  Currently, embargoes or
sanctions are in place on exports to a number of countries, including Cuba, a WTO Member.  The
Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and
enforces economic and trade sanctions against targeted foreign countries.156
135. Sanctions were the subject of a 1998 USITC report, which identified a total of 29 countries
subject to U.S. unilateral economic sanctions in 1998;  42 separate U.S. statutes authorized or set forth
economic sanctions in such categories as arms proliferation, terrorism, national security,
environmental protection, narcotics, expropriation of U.S. property, communism, war crimes, human
rights, worker rights, and forced labour.157  The USITC study also identified 27 state, county, and city
sanction laws restricting access to procurement cont racts by any company that does business with or
has investments in the targeted country.  Partly due to their unilateral nature and extra-territorialapplication, these measures remain a source of concern for trading partners.
158
136. The Trade Sanctions Reform and Export Enhancement Act of 2000, resulting from the
agriculture appropriations bill for FY 2001, eliminates existing unilateral sanctions on agricultural
exports to Cuba, Iran, Libya, and Sudan, and on e xports of machines and medical devices to Iran,
Libya, and Sudan.  It also establishes new restrictio ns against Cuba.  In particular, it prevents U.S.
exporters from using public and private credit for sales of foodstuffs to Cuba;  it reinforces the
prohibition on access by Cuban goods and services to the U.S. market;  and it gives the status of law
to the restrictions on U.S. citizens to travel to Cuba, which until now had been a prerogative of the
Executive.159
137. Title III of the 1996 Cuban Liberty and Democratic Solidarity LIBERTAD Act (also known
as the Helms-Burton Act) provides the right to U.S. nationals to file suit against persons that are
"trafficking" in confiscated property in Cuba.  In June 2001, the President announced his decision to
suspend Title III for an additional six months, as has been done every six months since the law was
voted.  Title IV of the Act directs the U.S. State Department to deny visas to executives and controlling
shareholders (as well as their spouses and minor children) of the companies determined to be"trafficking" in such property.
                                                     
156 OFAC online information.  Available at:  http://www.ustreas.gov/ofac.
157 USITC (1998b).
158 See the Minutes of the 1999 Review, in WTO (1999).
159 See also "Cuba:  Background and Current Issues for Congress", 17 January 2001 [Online].
Available at:  http://usembassy.state.gov/posts/cu1/wwwhcrs.html.United States WT/TPR/S/88
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138. The Iran Nonproliferation Act of 2000 (H.R. 1883) introduces new prohibitions on U.S.
government sales to foreign persons of any military or defence articles, if those foreign persons are
found to transfer to Iran certain goods, services, or technology.160  The Iran and Libya Sanctions Act
of 1996 (ILSA) requires the President to take action (such as deny government procurement
opportunities) against companies, U.S. or foreign, that make certain investments in the petroleum
sectors of Iran or Libya.161  The ILSA will expire in August 2001;  its renewal was under consideration
by Congress in May 2001.
(3) OTHER MEASURES AFFECTING PRODUCTION AND TRADE
(i) Government support to business
(a) Support instruments and recipients
139. Since the previous U.S. Review, the Govern ment has continued to advocate reductions in
subsidies affecting competition in international markets.162  Domestically, these efforts are mirrored in
U.S. law by the requirement to evaluate and publish the cost of all programmes or measures providing
financial support to business.  For example, the Federal Budget contains a list of all tax expenditures,
defined as revenue losses from tax exemptions, incentives or concessions that benefit businesses.163
Certain States publish state expenditure reports.164  The Federal Budget, as well as State Budgets, also
contain cost estimates of government outlays and credit activity that support business.
140. According to a study by the C ongressional Budget Office, government support to business is
heavily weighted toward tax expenditures, while financial outlays and credit programmes account for
a smaller share of federal assistance.165  For 1999, estimated U.S. outlays in support of commerce and
business amounted to US$28 billion and credit programmes slightly exceeded US$2 billion.  By
comparison, tax expenditures were US$6.8 billion in the international business sector, US$2.4 billion
for space and technology companies, US$3.2 billion in the energy sector, and US$1.7 billion fornatural resources and the environment;  the largest single business tax expenditure (accelerated
depreciation of assets) was estimated at US$32 billion in lost revenue that year.
141. Created in 2000 by the GSA, the Catalog of Federal Assistance Programmes is a government-
wide compendium of federal programmes, projects, services, and activities that provide assistance or
benefits to the U.S. public.  It contains financial and non-financial assistance programmesadministered by departments and establishments of  the Federal Government, including those available
to state and local governments.
166
142. A detailed inventory of state incentives for business investment is published annually by the
National Association of State Development Agencies.167  Incentives are described as having "a direct
impact on the investor's bottom line", with some, such as job training and infrastructure programmes,
                                                     
160 See U.S. Department of State.
161 One WTO Member has noted the extraterritorial application of the Act (WTO document
WT/TPR/M/56, 11 August 1999).
162 See for example Import Administration (2001).
163 See for example Budget of the United States Government Fiscal Year 2001, Table 32-4, p. 382
[Online].  Available at:  http://w3.access.gpo.gov/usbudget/fy2001/pdf/budget.pdf.
164 See for example New York State Department of Taxation and Finance (2001).
165 Congressional Budget Office (1995).
166 Catalog of Federal Domestic Assistance [Online].  Available at:  http://www.cfda.gov/default.htm.
167 NASDA online information.  Available at:  http://www.nasda.com.WT/TPR/S/88 Trade Policy Review
Page 64
seeking to reduce the costs of doing business in the State.  Incentives provided by State authorities
include loans, loan guarantees, infrastructure improvements grants, and tax credits.
143. In its 1998 WTO subsidies notification, the United States included a number of subsidies
applied in some specific sectors, namely:  aerospace and aeronautics;  agriculture;  automotive;
building and equipment;  ceramics;  chemical energy;  fisheries;  lumber and timber;  metal and
minerals;  textiles and clothing;  and timepieces.168  It also notified other subsidies at the federal level,
including regional assistance and Ex-Imbank's export credit programmes (section (2)(ii) above).  Total
amounts notified under these federal programmes slightly exceeded US$11 billion.  In addition, the
United States notified some 210 measures maintained by 43 U.S. States;  most of these measures
involve tax concessions.  No notification has been received for 1999 and 2000.
144. The agri-food sector is the largest recipient of government outlays, both in absolute value and
in relation to value added.  The oil and coal industries are also large recipients of government support
provided through tax breaks and various other measures.  Several programmes provide assistance to
the aerospace and aeronautics sector.  Support is provided by the aeronautics expenditures of the
NASA and the Federal Aviation Administration (F AA), as well as by Department of Defense
expenditure on R&D.
(b) Assistance to the agri-food sector
145. The farm and ranch sector contributes approxim ately 0.8% to GDP ;  total inputs used by the
sector, including services, amount to an additional 5% of GDP.  Manufacturing activities, which
include food processing as well as textiles, leather, and tobacco manufacture, contribute another 2.8%.
And distribution, which includes transport, sales, and food services, represents 7.7% of GDP. Taking
into account all these activities, the sector, directly and indirectly, accounts for over 16% of GDP.
146. Assistance to agri-food reflects its political, social and cultural importance.  Jobs in
agriculture and related input and marketing industri es account for 17% of U.S. employment.  Support
has also been in large part sustained in recognition of the sector's inherent volatility.  In some
activities, such as corn, wheat, and soybeans, U.S. production accounts for a significant share of world
output.  Therefore some measures affecting domestic production in these areas may effect world
markets.  Reciprocally, the economic well-being of agri-food producers is linked directly to theircapacity to compete in international markets.
Overall support
147. Government support to agri-food production and exports is provided under the authority of
the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act), which is the umbrella
farm policy legislation since 1996.  The FAIR Act is effective until 2002;  its successor legislationwas being debated in Congress in mid-2001.
148. As a consequence of natural disasters and falling prices for agricultural products, direct
government assistance to the agri-food sector nearly tripled between 1997 and 2000, and currently
amounts to over one half of net farm income (Chart III.5).
169  In FY 2000, the USDA made available a
record US$28 billion in direct assistance to farmers and ranchers.170  Without this assistance, U.S. net
farm income would have hit its lowest level si nce 1983. The overall increase in direct payments
                                                     
168 WTO document G/SCM/N/38, 19 November 1998.
169 Economic Research Service (2000).
170 Remarks by the Agriculture Secretary, News Release No. 0348.00, 2 October 2000 [Online].
Available at:  http://www.usda.gov/news/releases/2000/10/october.htm.United States WT/TPR/S/88
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over 1997-2000 (US$15 billion) more than offset the decline in the value of agricultural output
(US$13 billion).
0.05.010.015.020.025.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 200001122334455Chart III.5
Direct government payments, 1990-2000 
US$ billion
Source:  USDA, Economic Research Service [Online].  Available at:  http://www.ers.usda.gov/briefing/farmincome/Fore.htmAmount of emergency assistance%
As a share of net farm income
(right-hand scale)
Note: Data are on calendar year basis.
149. Most money transactions under both mandatory and emergency price and income support
programmes continue to be handled throug h the CCC.  In FY 2000, CCC outlays exceeded
US$32 billion.  Corn, wheat, cotton, soybeans and rice received the highest levels of support
(Chart III.6).171
150. The U.S. total Aggregate Measurement of Support (AMS) level for 2001 is about
US$19 billion.  The last U.S. notification to the WTO on domestic support measures covers the period
October 1998–September 1999.172  It indicated a total AMS of US$10.4 billion, up from
US$6.2 billion the previous year;  and de minimis  payments amounting to US$4.7 billion, up from
US$811  million.173  Notified "green box" support, which is not limited under the WTO in terms of
budgetary outlays, was US$49 billion, down fr om US$51 billion in 1997.  Delays in WTO
                                                     
171 For data on net outlays of the CCC by commodity and function see ERS online information.
Available at:  http://www.ers.usda.gov/briefing/FarmPolicy/data/cccnetoutlays.xls.
172 WTO document G/AG/N/USA/36, 22 June 2001.
173 De minimis  in terms of the AMS includes product-specific support that does not exceed 5% of the
value of production of the product concerned and non-product-specific support that does not exceed 5% of thevalue of total agricultural production.United States WT/TPR/S/88
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0255075100125150
01020304050Chart III.7
Estimates of support to agriculture by the largest OECD agricultural exporters
PSE a
US $ billion %
 a    Producer support estimate  expressed at 1998 prices using US GDP deflator.
 b    Crop year varies (e.g. crop year for 2000 is from mid-2000 to mid-2001) according to commodity.Australia Canada United States EU
Source : WTO Secretariat, based on data provided by the OECD .As a share of gross 
farm receipts
(right-hand scale)19971998
19992000 1986-88Crop year b
152. In addition to the support provided under the FAIR Act, several emergency assistance
packages have been enacted since October 1998, resulting in the increased outlays described above.
These packages are summarized in Table III.11.
Payments based on historical entitlements
153. The recent increase in outlays has been mainly the result of emergency market loss payments
(ELPs) and ad hoc disaster assistance;  ELPs are disbursed to farmers in proportion to their
Production Flexibility Contract (PFC) payments, wh ich continued during the period under review as
stipulated under the FAIR Act.176  ELPs totalled US$3 billion in FY 1999 and US$11 billion in
FY 2000;  as of May 2001, they had not been notified to WTO Members.  The distribution of the PFC
payments has been statutorily set under the FAIR Act:  26.3% for wheat, 46.2% for corn, 5.1% forsorghum, 2.2% for barley, 0.2% for oats, 11.6% for upland cotton, and 8.5% for rice.  PFC payments
are based on yields and acreage at a fixed time in the past.
                                                     
176 USDA (1999b).WT/TPR/S/88 Trade Policy Review
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Table III.11
Expenditure under selected agricultural support progr ammes (other than directly to exports), May 2001
Budgeted (b)/actual expenditure (US$ billion)
Scheme/form of support Products covered 1999 2000 2001 2002
Production Flexibility Contract
payments.Wheat, corn, barley, cotton,
oats, rice, sorghum.5.6 5.1 4.1(b) 4.0(b)
Marketing loan programmes Wheat, feed grains, cotton,
oilseeds, peanuts, rice, sugar,
tobacco.
Omnibus ConsolidatedAppropriations and EmergencySupplemental Appropriation Act,1999Products subject to crop
losses or marketing losses1.5
Agriculture, Rural Development,
Food and Drug, and Related AgenciesAppropriation Act of 1999Products subject to crop
losses or marketing losses6.0
Agriculture, Rural Development,
Food and Drug Administration, and
Related Agencies Appropriation Actof 2000Products subject to crop
losses or marketing losses8.3
Agricultural Risk Protection Act of
2000Products subject to crop
losses or marketing losses8.2 1.6 1.6
Agriculture, Rural Development,
Food and Drug Administration, andRelated Agencies Appropriation Actof 2001Products subject to crop
losses or marketing losses3.5
Conservation Reserve Programme Not applicable 2
Source : WTO Secretariat estimates, based on information from USDA online information.  Available at:  http://www.usda.gov.
154. Both PFC and ELP payments are predetermined, i.e. they are not a function of production.
However, these payments may serve to sustain and encourage agricultural investment and
production.177  In addition, emergency packages have been provided in each of the last three years,
which may raise expectations of new disaster assistance packages when prices or production fall to
low levels.  This in turn could lead to higher production than would otherwise occur.
155. There have also been emergency income support packages for farmers in other sectors:  for
example, estimated emergency payments to dairy producers in FY 2001 totalled nearly
US$675 million.178  Approximately US$350 million were disbursed to tobacco growers in each of the
crop years 1999 and 2000 to offset reduced production quotas linked to declining demand for tobacco.
Price support programmes
156. Although price support programmes remain a major vehicle of U.S. farm support, their
importance appears to have decreased recently:  according to OECD estimates, market price support
in 1999 and 2000 accounted respectively for 39% and 32% of the U.S. PSE dollar value.  By
comparison, their average share in all OECD countries remained at 65% in 2000.179  In the United
States, price support programmes are in place for milk, grains, oilseeds, cotton, sugar, tobacco,peanuts, and honey.
157. The dairy industry continues to rely heavily on price support measures.  In particular, the
USDA purchases surplus dairy products under a fede ral dairy price support programme.  Federal
marketing orders establish minimum prices for milk depending on its use by processors.  There is one
regional "dairy compact" (accounting for about 3% of U.S. milk production) which allows a minimum
                                                     
177 Economic Research Service (2000), p. 11.
178 ERS online information.  Available at:  http://www.ers.usda.gov/Briefing/FarmPolicy/emerge.htm.
179 OECD document AGR/CA/APM/(2001)2/PART3, 19-22 March 2001.United States WT/TPR/S/88
Page 69
price to be set above the minimum federal level.  This system appears to result in multiple pricing of
milk:  a higher price for fluid milk, and lower prices for milk sold to cheese and other dairy
processors.  Peanut production is also supported by a two-tier price support programme providing a
high support rate on peanuts for domestic food use and a much lower rate for peanuts grown for
export or for crushing.  Support to tobacco producers is also essentially through price guarantees.
Income and production support programmes158. "Loan" programmes provide a fixed income floor for producers of eligible crops.  These
programmes take two forms:  commodity loan programmes and the more recent marketing loan
programmes.
180  The loan rate provides incentives to continue planting when prices fall, through the
compensation provided by the marketing loan programme.  For this reason, the United States has
notified these loan programmes as in the "amber box" under the WTO Agreement on Agriculture.Marketing loans can link the economic incentive for production decisions to a government determined
price, thus introducing market distortions.
159. The commodity loan programme allows farmers to default on loans, forfeiting their crop to
the CCC when market prices are below the loan rate in order to retain the government-determined
price (the "loan rate");  forfeitures support prices as they remove crops from the marketplace.  Theauthorities noted that most producers choose the marketing loan programme.
160. The marketing loan programme provides income support but does not support market prices:
farmers repay the loan at the lower of the current market price or the original loan rate.  The
difference between the loan rate and the loan repaym ent rate is a subsidy to producers.  In this case,
farmers sell the crops themselves on the market.  A frequently used alternative is to collect the
subsidy directly through loan deficiency payments (LDPs).  The LDP rate is the amount by which the
loan rate exceeds the posted county price or prevailing world market price, and thus is equivalent tothe marketing loan gain that could alternatively be obtained for crops under loan.
161. Soybeans are among the crops whose production has been most heavily supported by the
marketing loan programmes;  over 90% of U.S. soybean production is eligible to receive subsidies
under such programmes.  Those programmes have resulted in considerable increases in areas planted
with soybeans, and in record production levels.  U.S.  market prices have decreased by over 40% since
the current marketing loans system was introduced  in 1991.  According to data provided by the
authorities, assistance payments to soybean growers have increased from US$40 million in FY 1991
and US$20 million in FY 1992 to US$1,289 mil lion in FY 1999 and US$2.7 billion in FY 2000.
Other crops that benefited substantially from the market loan programme include wheat, corn, cotton,
and rice.
Risk management policy
162. In addition to the "loan", support programmes described above, a number of other federal
government programmes are in place to reduce the financial consequences of uncertainties in weather,
yields, prices, government policies, global markets and other factors.
181  Crop insurance and revenue
insurance aim to protect farmers against, respectively, including price declines.  Premiums forcatastrophic production losses are fully paid for by the Government, which also partly subsidizes
                                                     
180 This description is based on Westcott and Price (1999).
181 For a description of farm risk management programmes, see SDA Briefing Room - Farm Risk
Management [Online].  Available at:  http://www.ers.usda.gov/Briefing/RiskManagement/risk%20in%20agriculture.htm.WT/TPR/S/88 Trade Policy Review
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coverage against non-catastrophic events such as price declines.  These insurance programmes have
been notified to the WTO as amber box, under de minimis  provisions.
163. Crop insurance is delivered through the private sector, with premiums subsidized by the
Government at a cost of about US$1.5 billion per year.  Almost US$30 billion in risk protection is
provided on about 190 million acres, which is about 70% of the country's insurable acrage.  The
historical average indemnity payout is US$1.40 for every dollar in premium.182  This subsidization
increases revenue and reduces its variance, and thus encourages planting.  According to one estimate,
crop insurance subsidies have contributed to an estimated 900,000 acre increase in planted area, with
wheat and cotton showing the largest percentage gains.183
164. Crop insurance programmes underwent reform during the second half of the 1990s, notably
following the falls in farm incomes after 1997.184  In particular, the Agricultural Risk Protection Act, a
US$15.3 billion package for fiscal years 2001 to 2005, expanded crop insurance funding by more than
80%.185  The Act also expanded insurance coverage for livestock.  Also enlarged was USDA's Dairy
Options Pilot Program, under which the USDA subsidizes both premiums and brokerage fees for
participating dairy farmers.186  As a result of the Act, crop insurance subsidies (measured as net
indemnities to producers) may more than double, to about US$2 billion annually.
(ii) Competition policies
(a) Antitrust legislation and administration
165. As detailed in the Secretariat report for the previous Review of the United States, U.S.
antitrust legislation at the federal level is included in three main acts:  the Sherman Antitrust Act
(15 U.S.C. Sections 1-7), the Clayton Act (15 U. S.C. Section 12 et seq), and the Federal Trade
Commission Act;  provisions with respect to the trade aspects of competition policy are also included
in other Acts.187  There is also antitrust legislation in nearly all States.  Federal antitrust laws apply to
all types of activities, including foreign trade, and cover a wide range of business practices considered
to be restricting competition.  Federal antitrust laws are enforced by the Antitrust Division of the
Department of Justice (DOJ) (criminal and civil actions), and by the Federal Trade Commission
(FTC) (civil action).  In addition, private parties may bring lawsuits with damage claims and civil
actions for injunctive relief.
166. Limited immunity from antitrust laws is provided by some statutes in specified cases.
Immunity applies especially in agriculture under the Capper-Volstead Agricultural Producers’
Associations Act, which allows collective action in the processing, preparing for market, handling,
and marketing of agricultural products, and the Agricultural Marketing Agreement Act of 1937, which
authorizes the Secretary of Agriculture to ente r into marketing agreements exempted from the
application of antitrust laws with producers and processors of  agricultural commodities.  The Act also
allows the Secretary of Agriculture to enter into marketing orders, except for milk, to control the
quantity of an agricultural product to increase the price.  The Fishermen’s Collective Marketing Act
                                                     
182 Budget of the United States Government – Fiscal Year 2000, p. 200 [Online].  Available at:
http://w3.access.gpo.gov/usbudget/fy2000/pdf/budget.pdf).
183 Economic Research Service (2000), p. 11.
184 USDA (1999c).
185 ERS Briefing Room, Farm and Commodity Policy, available at http://www.ers.usda.gov/
briefing/FarmPolicy/emerge.htm.
186 USDA News Release  No. 0372.00, 27 October 2000 [Online].  Available at:  http://www.usda.gov/
news /releases/2000/10/0372.htm.
187 WTO (1999), Chapter III(4)(vii).United States WT/TPR/S/88
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has similar provisions to the Capper-Volstead Agricultural Producers’ Associations Act.  The
McCarran-Ferguson Insurance Regulation Act exempts most aspects of the insurance business from
antitrust laws to the extent "regulated by state law".188
167. Among new legislation passed over the last two years affecting competition policy, the
Gramm-Leach Bliley Act (GLB) amended the Banking Act of 1933 (Glass-Steagall Act) and the
Bank Holding Company Act of 1956 to permit banks to affiliate, under certain conditions, withcompanies that participate in specified financial service markets (see also Chapter IV(2)).  The GLB
Act amends the Clayton Act to apply its pre-merger notification and waiting period requirements to
mergers and acquisitions by banks to these new product areas.  In addition, the Act requires the Board
of Governors of the Federal Reserve System to notify the FTC of its approval of a proposed
acquisition, merger, or consolidation that involves acquisition of non-banking interests (e.g. creditcard activities, financial data processing, ATM network investments).  It also directs designated
federal banking agencies to make data available to the Attorney General and the FTC that the latter
deem necessary for antitrust review under specified statutes.  The Act grants the FTC enforcement
powers with respect to fraudulent access to financial information, and directs the FTC and the
Attorney General to report annually to Congress on enforcement actions taken pursuant to this Act.
168. Other legislative changes in the area of competition policy include Public Law No. 106-553,
114 Stat. 2762 amending the regulations under Sectio n 7A of the Clayton Act – the Hart-Scott-Rodino
Antitrust Improvements Act (HSR Act) – which contains provisions to facilitate enforcement of
antitrust laws with respect to mergers and acquisitions.  The new regulations, the first significant
changes to the HSR Act since its passage in 1976, took effect on 1 February 2001 through the
introduction of new rules by the FTC.
189  These regulations eliminate the requirement to notify
acquisitions resulting in the acquirer holding 15% or more of the voting securities or assets of abusiness.  The changes to notification requirements, which are the first step to detect anti-competitive
mergers, are intended to allow Federal antitrust agencies to focus on larger mergers by increasing the
minimum threshold for which a notification is required.  This is particularly important given the large
number of mergers and acquisitions that have taken place in recent years.  Under defined conditions,
HSR Act pre-merger notifications must be filed for acquisitions resulting in a total amount of assets orvoting securities exceeding US$50 million;  the previous threshold was US$15 million.  Transactions
valued at more than US$200 million are reportable without regard to "size of person".  The current
size of person test, which generally requires one side of the transaction to have sales or assets in
excess of US$100 million and the other US$10 million, will continue to be in place for transactions
valued at US$200 million or less (all dollar thresholds are to be adjusted yearly to reflect GDPchanges during the previous year).
(b) Enforcement activities
169. In recent years, enforcement of competition policy has increasingly touched on the activities
of international cartels, apart from the criminal pr osecutions of purely domestic companies involving
price-fixing, bid-rigging, and market -allocation agreements.  The fines imposed in the last four fiscal
years are many multiples higher than the sum of all criminal fines imposed for antitrust violations
since the Sherman Act was enacted in 1890.  Thus, in FY 1999, total fines of approximately
US$970 million were imposed in cases brought by the Antitrust Division of the DOJ, mostly from the
prosecution of international price-fixing cartels;  in 2000, fines collected declined to US$308 million(Table III.12).  The average yearly total of fines imposed in Antitrust Division cases has exceeded
US$200 million;  some of the largest fines on international cartels include a US$500 million fine to
F. Hoffman-La Roche Ltd., and a US$225 million to BASF AG.  Fines are generally determined
                                                     
188 For further details see WTO (1999), Box III.4.
189 Federal Register, Vol. 66, No. 22, 1 February 2001.WT/TPR/S/88 Trade Policy Review
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based on U.S. sales value.  There are some exceptions to this, e.g., where the defendant argues
illegally to stay out of or limit sales to the U.S. ma rket.  The proceeds of the fines are devolved to the
Treasury Department.
Table III.12
Antitrust statistics and case results, 1991-00 (fiscal years)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Investigation
Sherman Act Sect 1:  Restraint
of Trade77 84 110 136 98 93 73 80 55 82
Sherman Act Sect. 2: Monopoly 5 3 7 22 16 14 8 5 5 8
Clayton Act Sect. 7:  Mergers
of which:  Hart-Scott-Rodino.92
6784
52102
72102
57134
88237
186276
220228
176230
175177
137
Case Results
N u m b e r  o f  c o r p o r a t i o n s  f i n e d 5 54 56 45 93 23 13 01 82 5 2 6
Amount of fines to corporations
(US$ million)17.6 22.4 40.4 39.0 40.2 25.2 203.9 241.6 959.9 303.2
Amount of fines to individuals
(US$ million)2.8 1.3 1.9 1.2 1.2 1.6 1.2 2.5 12.3 5.2
HSR fines (US$ million) 6.8 2.0 2.0 2.6 0.4 7.7 5.8 0.5 3.3 0.0
Source : Department of Justice, Antitrust Division.
170. The Antitrust Division of the DOJ has also been successful in negotiating plea agreements
and obtaining litigated convictions that resulted in imposition of substantial jail sentences for businessexecutives found to have engaged in illegal behaviour, including foreign citizens whose conspiratorial
acts have been conducted outside the United States.  The Antitrust Division has also undertaken a
corporate amnesty programme to encourage firms and individuals to report illegal cartel behaviour.
171. An area of increasing importance is the Antitrust Division's civil non-merger enforcement
programme, of which the most well known case is the Microsoft investigation, discussed in the
Secretariat report for the previous U.S. Review and still ongoing.
190  Other important cases include the
challenge by the Antitrust Division to the structure and practices of Visa and MasterCard and achallenge in May 1999 alleging that American Airlin es engaged in a variety of predatory practices,
including price reductions and additions of capacity, intended to drive start-up carriers out of the
Dallas-Ft. Worth market.
191  The latter was the first predation case brought against an airline by the
Antitrust Division since the industry was deregula ted in 1979.  The DOJ predation complaint against
American Airlines was recently dismissed by the District Court;  the DOJ has expressed its intentionsto appeal the District Court's dismissal.
172. As reported in the documentation for the 1999 Review of the United States, the number of
investigations initiated by the FTC increased substantially during the 1990s, reflecting the rising
number of mergers and acquisitions.  Investigation initiations stabilized, however, in 1999
(Table III.13).  The FTC has noted that the dollar value of commerce affected by these mergers hasincreased almost 20 fold, from US$169 billion in 1991 to approximately US$3 trillion in 2000.
192
Many of these mergers involve international operations, and imply decisions affecting international
                                                     
190 WTO (1999), Chapter III(4)(vii).
191 United States of America, plaintiff, vs. Visa U.S.A. Inc., Visa International Corp., and MasterCard
International Incorporated., defendants, civil action No. 98-civ.7076, complaint for equitable relief for violations
of 15 U.S.C. § 1 (Sherman Antitrust Act), filed on 7 Octobe r 1998;  and United States of America, plaintiff, vs.
AMR Corporation, American Airlines, Inc., and AMR Eagle Holding Corporation, defendants, civil actionNo. 99-1180-JTM, filed on 13 May 1999 [Online].  Available at:  http://www.usdoj.gov/atr/ cases.html#a.
192 Federal Trade Commission (2001), p. 19.United States WT/TPR/S/88
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trade and investment.  The authorities view is that given the need of companies to compete in the
global marketplace, antitrust review is necessary to identify and stop mergers that could diminish
competition in specific markets as restructuring proceeds.
Table III.13
Summary of mergers reported and actions taken, fiscal years 1990-99
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Transactions reported 2,262 1,529 1,589 1,846 2,305 2,816 3,087 3,702 4,728 4,642
Filings receiveda4,272 2,914 3,030 3,559 4,403 5,439 6,001 7,199 9,284 9,151
Transactions in which a second
request could have been issued1,955 1,376 1,451 1,745 2,128 2,612 2,864 3,438 4,575 4,340
Investigations in which second
requests were issued89 64 44 71 73 101 99 122 125 113
F e d e r a l  T r a d e  C o m m i s s i o n 5 53 32 64 04 65 83 64 54 64 5
D e p a r t m e n t  o f  J u s t i c e 3 43 11 83 12 74 36 37 77 96 8
Transactions involving a
request for early termination1,975 1,321 1,403 1,689 2,081 2,471 2,861 3,363 4,323 4,110
Granted 1,299 907 1,020 1,201 1,508 1,869 2,044 2,513 3,234 3,103
Not granted 676 414 383 488 573 602 817 850 1,089 1,007
a Two filings are usually received for each transaction; one from the acquirer, the other from the acquired company.
Source : Federal Trade Commission (2001), Annual Report , Washington, D.C.
173. Most FTC cases are resolved through the negotiation of consent agreements;  these are placed
on the record for public comment after which the FTC issues a consent order that carries the force of
law with respect to future actions.  Such orders  apply to U.S. and foreign companies on a national
treatment basis.  FTC antitrust orders ordinarily remain in place for a maximum of 20 years.
174. The FTC recently issued a Strategic Plan with two main goals:  to prevent fraud, deception,
and unfair business practices in the marketplace;  and to prevent anti-competitive mergers.  To obtain
these two goals, the FTC sets a number of performance measures and targets.  In its report forFY 2000, the FTC noted that most of its targets were met or exceeded.
193  The FTC estimates that
savings for consumers resulting from FTC actions to prevent anti-competitive mergers was
US$2.98 billion in FY 2000, against a target of US$500 million.194
175. The United States has antitrust cooperation agreements with Australia, Brazil, Canada, the
European Union, Germany, Japan, Mexico, and Israel.  The authorities noted that there have beenfrequent instances of cooperation under these agreements.  The United States also has a 1999
agreement on "positive comity" with the Europ ean Union, and a 1999 agreement with Australia
allowing their competition agencies to share conf idential information.  This type of agreement is
covered by the International Antitrust Enforcement Assistance Act of 1994.
176. Under the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy
established in June 1997, the United States presents to Japan each year a list of proposals that include
detailed requests on deregulation and competition policy pertaining to Japan; and Japan submits to the
United States a list of its own proposals pertaining to the United States.  The most recent exchange of
proposals occurred in October 2000.
195  Also, Joint Status Reports, which include progress made
under the Enhanced Initiative, are presented every year to the U.S. President and the Japanese PrimeMinister:  during the period under review, the second and third such reports were released.
196  Among
deregulation measures taken under the Enhanced Initiative, the United States agreed to continue its
                                                     
193 Federal Trade Commission (2001a).
194 Federal Trade Commission (2001b).
195 See USTR online information.  Available at:  http://www.ustr.gov/releases/2000/10/japanprop.pdf.
196 See USTR online information.  Available at:  http://www.ustr.gov/regions/japan/third.pdf.WT/TPR/S/88 Trade Policy Review
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efforts to ensure that re-export controls are streamlined and transparent.  The United States also
agreed not to apply routinely the strengthened regulation for monitoring launches of U.S.
communications satellites, contained in Public Law 105-261, to launches in or by nationals of a
member of the North Atlantic Treaty Organization (NATO) or a major ally of the United States,
including Japan.  With respect to anti-trust exem ptions, the Third Joint Report stated that the DOJ
regularly expresses its view on the appropriateness of antitrust exemptions, and seeks the eliminationof antitrust exemptions where warranted.
(iii) Intellectual property rights
177. The United States has traditionally had a significant balance of payments surplus in
intellectual property, as measured by royalties and licence fees.  Net receipts in 2000 were
US$21.6 billion, down from US$23.2 billion in 1999.  Receipts totalled US$38.0 billion, andpayments were US$16 billion (Table III.14).
Table III.14
Royalties and licence fees, 1995-00
(US$ million)
1995 1996 1997 1998 1999 2000a
Receipts
Royalties and licence fees 30,289 32,823 33,676 36,197 36,467 37,955
Affiliated 22,859 24,710 25,515 26,809 26,307 26,889
Unaffiliated 7 ,430 8 ,113 8 ,161 9 ,388 10 ,160 11 ,056
Payments
Royalties and licence fees 6 ,919 7 ,854 9 ,411 11 ,713 13 ,275 16 ,331
Affiliated 5 ,257 5 ,506 7 ,087 8 ,754 10 ,208 12 ,213
Unaffiliated 1 ,663 2 ,347 2 ,324 2 ,959 3 ,067 4 ,118
Net payments 23,370 24,969 24,265 24,484 23,192 21,625
aP r e l i m i n a r y .
Source : U.S. Department  of Commerce, Bureau of Economic Analysis, Survey of Current Business , various issues.
178. Under U.S. legislation, parallel imports of goods containing protected intellectual property, in
the form of patents, copyrights, or industrial designs, may be prevented by the holder of the right.
Goods may be stopped at the border by Customs.  Parallel imports of goods bearing trade marks are
allowed if domestic and foreign products are both owned by the same entity or person and the product
sold in the United States does not differ materially from the parallel imported goods.
179. The United States has signed a number of bilateral intellectual property agreements.  In
general terms, these agreements are based on the WTO TRIPS Agreement and do not provide
transition periods.  No new intellectual property agreements were signed during the period underreview.  However, within the framework agreements  signed with Jordan and Nigeria, intellectual
property protection issues were included (Chapter II (3)(ii)).  In the framework of the U.S.–Jordan
Free Trade Agreement, Jordan made commitments in  the area of intellectual property, namely the
adoption of
 international standards for copyright protection.197  T h e  U.S.–Nigeria Trade and
Investment Framework Agreement (TIFA)  created a Council on Trade and Investment, composed of
                                                     
197 USTR Press Release 00-75, 24 October 2000 [Online].  Available at:  http://www.ustr.gov/releases
/2000/10/index.shtml.United States WT/TPR/S/88
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representatives of both governments, and provided a mechanism in which trade, investment,
intellectual property, and other issues are to be addressed.198
(a) Patents
180. U.S. laws relating to patents  are codified in Title 35 of the U.S. Code (35 U.S.C.),  as
amended.  Patents are granted by the United States Patent and Trademark Office (USPTO) using afirst-to-invent rule (the United States is the only WTO Member using this rule).  Patents are valid
from the day of issuance;  patents granted are published.  Subject to certain exceptions, applications
are published promptly after a period of 18 months from the earliest filing date.  Patents of invention
(utility patents) have a term of protection of 20 years from the date the first U.S. non-provisional
patent application was filed.   For patent applications filed before and patents in force on 8 June 1995,
the term of protection is 20 years from the filing date, or 17 years from the date of grant, whichever is
longer.  Patent protection may be  extended to fully compensate applicants for any amount of USPTO-
caused delays;  the period of extension is determined by formula.  Design patents have a term of
protection of 14 years from the date of grant.  Inventions considered patentable subject-matter are
those corresponding to one of the statutory categories of 35 U.S.C. 101.
181. Patent applicants who first file in another WTO Member or a signatory to the Paris
Convention have up to 12 months to file for the same invention in the USPTO and successfully claim
priority.  The foreign priority period, therefore, is 12 months or less.  Compulsory licensing of patents
is authorized in some specific cases under the At omic Energy Act, the Clean Air Act, and the Energy
Policy Act.  The authorities indicated that these provisions have never been used.
182. The main changes to patent legislation since the last U.S. Review are contained in the
American Inventors Protection Act of 1999 (AIPA), enacted on 29 November 1999, as Title IV of the
Intellectual Property and Communications Omnibus Reform Act of 1999.  The authorities consider
the changes introduced to the patent system by the AIPA to be "the most significant since the 1952Patent Act".
199  The AIPA provides that investors must be compensated for certain processing delays
and for delays in the prosecution of pending applications.  The Act amends federal patent law to
extend the term of a patent one day for each day lost as a result of specified delays created by the
USPTO.  The USPTO has noted that under the new Act, diligent applicants are guaranteed a
minimum 17-year patent term, and that the USPTO had implemented the timeliness standardsprescribed by the Act.  The AIPA also provides for publication by the USPTO of patent applications
published abroad 18 months after filing, and the Act enhanced third-party participation for the re-
examination of patents, although preventing the use of  this participation to raise a subsequent civil
action.  The AIPA amended the patent law to reorganize the PTO into the USPTO, subject to the
general policy direction of the Secretary of Comm erce but exercising independent control of its
budget, administration and management functions.
200
183. Additionally, the Technology Transfer Commercialization Act of 2000 (Public Law
No. 106-404), enacted on 1 November 2000, amended patent law to allow a federal agency to grant an
exclusive or partially exclusive licence on a federally owned invention if necessary to attract the
investment needed to bring the in vention to practical application.201  Under the Act, a federal agency
may normally grant a licence to use or sell any federally owned invention in the United States only to
                                                     
198 USTR Press Release 00-12, 16 February 2000 [Online].  Available at:  http://www.ustr.gov/
releases/2000/2/index.shtml.
199 USPTO (2001), p. 23.
200 The complete text of the Act is available online at:  http://thomas.doc.gov/cgi-bin/bdquery/
z?d106:5;01948
201 The complete text of the Act is available online at:  http://thomas.loc.gov/cgi-bin/query/D?
c106:2:./temp/~c106Ihgp7l.WT/TPR/S/88 Trade Policy Review
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a licensee who agrees that any products embodying the invention or produced through the use of the
invention will be manufactured substantially in the United States.  In equality of conditions,
preference for the granting of any licence must be given to small business firms.
184. The USPTO amended its rules of practice relating to patent applications filed under the Patent
Cooperation Treaty (PCT) in March 2001.  The auth orities noted that these changes conform U.S.
rules of practice to the Regulations under the PCT, which became effective 1 March 2001, and thatthe result will be more streamlined procedures for filing and prosecuting international applications
under the PCT.  As a result of the changes, applicants for a patent in the United States may file a
declaration of  inventorship as part of the PCT Request.
202
185. In March 2001, the USPTO requested public comment on U.S. involvement in the
international effort to harmonize patent laws in  the Standing Committee on the Law of Patents (SCP),
and the subsequent changes, if any, to United States law and practice.  The USPTO is leading the
negotiations for the United States.  Some of the issues under discussion include priority of invention,
patentable subject matter, the "useful arts" test, disclosure requirements, multiple inventions in a
single application, utility requirements for patentability, and the treatment of disclosures that may
invalidate a patent claim.
186. In FY 2000, 182,223 patents were issued;  the average pendency period for patent
applications with the USPTO was 25 months (Table III.15).   The USPTO has the goal of reducing the
average pendency period to 12 months by 2003.
Table III.15
Summary of patent examining activities, 1995-00 (as of 30 September of each fiscal year)
Patent examining activity 1995 1996 1997 1998 1999 2000
Total applications filed 236,679 206,276 237,045 256,666 278,268 311,807
Utilitya220,141 189,922 219,486 238,850 259,618 291,653
Re-issue 647 637 607 582 664 805
Plant 516 557 680 658 759 786
Design 15,375 15,160 16,272 16,576 17,227 18,563
Patents granted 114,744 116,875 122,977 154,579 159,166 182,223
Utility 102,298 104,900 111,979 139,298 142,856 164,490
Re-issue 321 291 267 284 437 561
Plant 387 338 400 577 393 453
Design 11,738 11,346 10,331 14,420 15,480 16,719
Average pendency timeb c19.2 20.8 22.2 23.8 25.0 25.0
PCT international application, PTO as
receiving office15,941 20,106 22,767 27,138 30,305 36,671
a Utility patents include chemical, electrical and mechanical applications.
b Average time (in months) between filing and issuance or abandonment of utility, plant, and re-issue applications, but excludin g
design patents.
c Fiscal year.
Source : United States Patent and Trademark Office.
187. Non-U.S. residents filed 136,102 patent applications in FY 2000, or about 43.7% of all
applications.  The country filing the largest number of applications was Japan (Table III.16).  A total
of 81,675 patents were issued to non-U.S. residents.  Among the top ten entities granted patentsin 2000, were five Japanese corporations, four U.S. corporations, and one Korean corporation.
Table III.16
                                                     
202 Federal Register, Vol. 66, No. 56, 22 March 2001, Rules and Regulations, Department of
Commerce, United States Patent and Trademark Office, 37 CFR Part 1, [Docket Number 010202029–1029–01],Revision of Patent Cooperation Treaty Application Procedure.United States WT/TPR/S/88
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U.S. patent applications by non-U.S. residents, and patents issued, ten main countries, FY 1997-00
1997 1998 1999 2000
Country (1) (2) (1) (2) (1) (2) (1) (2)
Japan 44,318 24,314 46,569 30,490 47,413 30,425 54,365 34,563
Germany 12,963 7,180 13,799 9,304 17,446 9,113 17,858 10,978
Chinese Taipei 6,349 2,490 7,627 3,543 11,392 4,105 10,380 5,578
United
Kingdom5,589 2,787 6,072 3,548 7,128 3,686 7,613 4,241
France 5,093 3,121 5,414 3,823 6,398 3,802 6,859 4,392
Korea 4,957 1,828 5,625 3,052 5,634 3,477 5,882 3,699
Italy 2,472 1,422 2,449 1,754 2,835 1,595 3,031 1,915
Sweden 2,062 996 1,897 1,258 2,245 1,368 2,840 1,805
Netherlands 1,978 878 1,914 1,282 2,158 1,322 2,446 1,484
Switzerland 1,782 1,176 1,897 1,339 2,770 1,310 2,318 1,516
Total
applications/
patents issued102,248 53,682 110,461 68,796 125,423 70,047 136,102 81,675
Note (1) = Applications;  (2) = Patents issued.
Source : United States Patents and Trademark Office.
188. In early 2001, Brazil requested consultations with the United States under the WTO dispute
settlement mechanism on some provisions of the U.S. Patents Code.203  Brazil claimed that there were
several discriminatory elements in the Code, including the requirement that small business firms ornon-profit organizations that receive title to any subject invention grant the exclusive right to use or
sell any subject invention in the United States on condition that any products embodying the subject
invention or produced through the use of the invention are manufactured substantially in the United
States.  India requested to join the consultations.
204  The U.S. authorities indicated that the
Government of Brazil agreed, in June 2001, not to pursue this case further.
189. A high-profile policy issue during the period under review has been patent protection for
pharmaceuticals.  The Special 301 Report for 2001 reiterated that the United States is not consideringa change in its approach to health-related intellectual property issues.  In its view, countries taking
steps to address a major health crisis, like the HIV/AIDS in sub-Saharan Africa, should avail
themselves of the flexibilities afforded by the TR IPS Agreement, provided that any steps they take
comply with the provisions of the Agreement.  The United States was committed to a policy of
promoting intellectual property protection, including for pharmaceutical patents, because of thecritical role of intellectual property rights in the rapid innovation, development, and
commercialization of effective and safe therapies.  The USTR noted that a comprehensive approach
was needed to deal with serious health emergencies.
205
190. In a case dealing with the scope of patent protection, the U.S. Court of Appeals for the
Federal Circuit ruled that any amendments that narrowed the scope of a patent precluded the patentholder from later invoking the doctrine of equivalents for protection.  This doctrine seeks to prevent
patent infringement through claims involving only minor changes to an invention;  up to now, the
doctrine of equivalents could be used to broaden the scope of protection for an invention.
206  T h e
                                                     
203 WTO document WT/DS224/1, G/L/437, IP/D/24, G/TRIMS/D/18, 7 February 2001.
204 WTO document WT/DS224/2, 19 February 2001.
205 USTR 2001 Special 302 Report [Online].  Available at:  http://www.ustr.gov/enforcement/
special.pdf.
206 See:  United States Court of Appeals for the Federal Circuit, 95-1066, Festo Corporation, Plaintiff-
Appellee, v. Shoketsu Kinzoku Kogyo Kabushiki CO., Ltd., a/k/a SMC Corporation, and SMC Pneumatics,Inc., Defendants-Appellants [Online].  Available at:  www/law.emory.edu.fedcircuit/nov2000/95-1066.wp.htlm.WT/TPR/S/88 Trade Policy Review
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Supreme Court of the United States recently granted certiorari  (an order that the record of
proceedings be sent to it) to review the federal circuit decision.
Trade marks
191. In the United States, trade marks are protected by federal and state laws.  With limited
exceptions, protection arises from the actual use of the mark.  In addition, federal registration is not
required to establish rights to a mark, or to use it, but grants the holder additional rights in the mark,such as the legal presumption of ownership and entitlement to use the mark in connection with the
goods or services identified in the registration.  Applications for federal trade mark registration are
filed with the USPTO.  The federal registration of trade marks and other marks is governed by the
Trademark Act of 1946, as amended, and the implementing regulations.  The procedures followed by
the USPTO in examining applications for regist ration are detailed in the Trade Mark Manual of
Examining Procedures (TMEP).  Federal trade mark registrations have an initial term of ten years,
renewable indefinitely for ten-year periods, for as long as the mark is in use.
207  It is not required that
a trade-mark be used commercially before an application for federal registration is filed;  this benefit
was extended to U.S. citizens and firms in 1989.   However, a federal trade mark registration will be
cancelled unless an affidavit of use or acceptable non-use is provided between the fifth and sixth yearfollowing the date of registration of the mark.  A pplications for registration filed with the USPTO are
examined on the basis of filing date, taking into account claims of priority under the Paris Convention
or other agreements.  Foreigners applying for registration of a mark with the USPTO must designate a
U.S. representative before a registration can be issued.  However, the designation of a domestic
representative is not a requirement for obtaining a filing date.
192. The Trade Mark Law Treaty Implementation Act (TLTIA, P.L. 105-350), signed by the
President on 30 October 1998, implemented the Trade Mark Law Treaty (TLT).  The TLTIAstreamlined the filing requirements, and among other things, extended the period in which a renewal
may be filed from six months to one year, before the end of each successive ten-year period for which
the registration was issued or renewed .  Additional  changes to the Trademark Act of 1946 include the
removal of a requirement that an application for registration of a foreign trade mark be accompanied
by a certification of the foreign registration, and the extension of renewal periods for expiredregistrations from three to six months.
193. The TLTIA amendments to the Trademark Act were prospective, affecting only applications
for registration of a trade mark pending on, or filed on or after the date of implementation
(30 October 1999).  The TLTIA was implemented through an amendment to USPTO rules.
208  As
noted above, the new rules incorporated the statutory amendments eliminating a number of theminimum requirements for receiving a filing date, i.e.  a verification or declaration signed by the
applicant and an allegation of intended use in commerce.  However, the amended regulations permit
the USPTO to require a substitute verification of the applicant's continued use or bona fide intention
to use the mark when the applicant does not file the verified statement within a reasonable time after
the date it is signed.
194. The Trademark Amendments Act of 1999 (Public Law No: 106-43), enacted on 5 August
1999, reinforces U.S. legislation with respect to remedies for the dilution of famous marks.  The Act
                                                     
207 A registration may also be maintained with an affidavit setting forth those goods or services with
which the mark is not in use in commerce and showing that any such non-use is due to special circumstances
which excuse such non-use and is not due to any intention to abandon the mark.
208 Patent and Trademark Office, "Final rules for the Trademark Law Treaty Implementation Act
Changes", Federal Register, 8 September 1999, Vol. 64, No. 173 Rules and Regulations, 37 CFR Part 1 et al. pp.48899-48928 [Online].  Available at:  wais.access.gpo.gov.United States WT/TPR/S/88
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amends the Trademark Act of 1946 to grant holders of famous trade marks the right to oppose or seek
cancellation of a mark on both principal and supplemental registers that would cause dilution of their
marks, and specifies the proceeding for refusing registration of such a mark.  The amendments apply
only to applications for registration filed on or after 16 January 1996.  The Act specifies remedies in
cases of dilution of famous marks, and waives sovereign immunity for the Federal Government to
grant the right to bring an action for trade mark infringement against the Government.209  Non-U.S.
citizens or corporations may also sue the U.S. Government under the Act.
195. The Anti-cybersquatting Consumer Protection Act of 1999, (Title III of the Intellectual
Property and Communications Omnibus Reform Act of 1999), amends the Trademark Act of 1946 to
make liable in civil action by the owner of a mark, any person who, with bad faith, intends to profit
from that mark, registers, traffics in, or uses a domain name which, at the time of its registration isidentical to a distinctive mark, dilutive of a famous mark, or is a protected trade mark, word or name.
196. In February 2001, both the House and Senate introduced versions of the "Madrid Protocol
Implementing Legislation" (H.R. 741 and S. 407);  H.R. 741 passed on 14 March 2001.  In July 2001,the accession documents were with the Senate Foreign Relations Committee.
197. In FY 2000, 127,924 trade marks were registered, more than the 104,325 registered in
FY 1999.
210  Approximately two thirds of applications resulted in registrations, while one third were
abandoned.  A total of 1,020,126 trademarks were protected in FY 2000;  the average pendency time
to final disposition (registration to use applications, abandonments, and Notices of Allowance)
dropped from 18.9 months in FY1999 to 17.3 months in FY2000 (Table III.17).
Table III.17
Summary of trademark examining activities, 1995-00 (as of 30 September of each fiscal year)
1995 1996 1997 1998 1999 2000
Applications for registration
Applications fileda150,508 170,783 188,080 193,034 240,308 295,165
App. including additional classes 175,307 200,640 224,355 232,384 295,165 375,428
Disposal of trade mark applications
Registrations 75,372 91,339 112,509 106,279 104,324 127,794
Abandonments 42,214 49,189 64,409 71,838 77,184 101,099
Trade mark first actions 176,764 198,160 226,651 238,191 338,937 352,325
App. approved for publication 118,727 127,481 149,721 145,209 181,366 203,251
Certificates of registration issued 65,662 78,674 97,294 89,634 87,774 106,383
Total active certificates of registration b751,783 784,667 839,071 901,805 931,273 1,020,126
Renewal of registration
Applications filed 7,220 7,543 6,720 7,413 7,944 24,435
Registrations renewed 6,785 7,346 7,389 6,504 6,280 8,821
Notices of Allowance  (NOAs) issued 51,473 71,117 80,693 78,072 82,940 120,177
Avera ge pendenc y timec (months ) 16.4 15.9 16.3 17.8 18.9 16.0
a Refers to individual trade mark applications submitted to the PTO.
b Refers to applications for all the 47 classes of trade marks.  Applications can be submitted to several classes at the same ti me.
c Between filing and issuing a NOA.
Source : United States Patent and Trademark Office.
198. The European Union and its member States challenged Section 211 of the U.S. Omnibus
Appropriations Act of 1998, in the WTO in July 1999, involving the registration, renewal or
                                                     
209 The full text of the Act is available online at:  http://thomas.loc.gov/cgi-bin/query/z?c106:S.
1259.ENR.
210 Trade mark application and registration status  information is available through the Trademark
Application and Registration Retrieval (TARR) system  [Online].  Available at:  http://tarr.uspto.gov/.WT/TPR/S/88 Trade Policy Review
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enforcement in the United States of a trade mark , trade names, and commercial names associated with
confiscated assets in Cuba.211  A WTO panel was established in September 2000.212
Copyright
199. Copyright is protected in the United States through federal law, under the Copyright Act of
1976, as amended (17 U.S.C.).  The United States grants automatic protection to copyrighted works,including software, from all WTO Members, Berne Convention signatories and others.  With respect
to a non-U.S. work, registration at the Copyright Office is not required before an infringement suit can
be brought.  Works originating in the United States must be registered at the Copyright Office before
an infringement action can be initiated.  Computer programs and original compilations of data are
treated as literary works.
200. The United States is a member of the WIPO Copyright Treaty and WIPO Performance and
Phonograms Treaty, and a party to the Geneva Phonograms Convention.  It is not a party to the Rome
Convention.  U.S. copyright law does not incorporate the concept of "neighbouring rights" (the rights
of performers, producers of sound recordings and broadcasters) separate from copyright.
Neighbouring rights are protected domestically through the application of copyright legislation.
Sound recordings are considered to be works of authorship under the Copyright Act;  publicperformance rights for sound recordings are limited to digital transmissions other than digital
broadcasts.  Live musical performances are protec ted against unauthorized fixation by federal law.
201. Manufacturers and importers of digital audio recorders and recording media pay fees that are
distributed to recording artists, record producers, and songwriters on a national treatment basis,
without a reciprocity requirement, as mandated by the Audio Home Recording Act of 1992 (Public
Law 102–563).  The distribution of the funds is decided either by the parties or by Order of the
Librarian of Congress, following a distribution proceeding conducted by a Copyright Arbitration
Royalty Panel (CARP).  The Copyright Office collects fees for cable;  satellite broadcast;subscription services;  and webcasting.  A CARP proceeding is used for setting rates and distributing
fees.
202. The Copyright Office collects fees under compulsory licences for cable and satellite
retransmissions of broadcast television signals (sections 111 and 119).  In addition, a collective acting
on behalf of record producers collects royalties under the section 114 statutory licence for digital
transmissions of sound recordings as part of non-interactive subscription and webcasting services.  A
CARP proceeding is used for distributing fees and, with the exception of the cable licence, setting
royalty rates.
203. Compulsory licensing for making phono records of published musical works is allowed under
Section 115 of the Copyright Act, on payment of a fee to the publisher of the musical work.
204. As of 1998, the term of copyright protection for works created after 1 January 1978 is the life
of the author plus 70 years;  for anonymous works, pseudonymous works and works made for hire,protection was extended to 95 years after publication, or 120 years from creation, whichever is theshorter.
205. The Digital Millennium Copyright Act of 1998 (P.L. 105-304), implemented the WIPO
Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).
213  The Act,
inter alia , the Copyright Act to extend protection under U.S. law to works from foreign countries
protected under the WCT and the WPPT, once those treaties come into force.
                                                     
211 WTO document WT/DS176/1, IP/D/20, 15 July 1999.
212 WTO document WT/DS176/3,  27 October 2000.
213 The Digital Millennium Copyright Act of 1998 , U.S. Copyright Office Summary, December 1998.United States WT/TPR/S/88
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206. A number of Acts were passed in 1999-2001 to amend copyright legislation.  The Work Made
For Hire and Copyright Corrections Act of 2000 introduced some technical corrections to the
Copyright Act.  The Digital Theft Deterrence and Copyright Damages Improvement Act of 1999
amended federal copyright law to increase the statutory damages available for copyright infringement.
The National Recording Preservation Act of 2000 established a National Recording Registry to
maintain and preserve sound recordings that are culturally, historically or aesthetically significant, andestablished criteria and procedures under which sound recordings may be included in the Registry;
the Act also required the Librarian of Congress  to implement a comprehensive national recording
preservation programme.
214  The Satellite Home Viewer Improvement Act of 1999, Title I of the
Intellectual Property and Communications Omnibus Reform Act, amended federal copyright law to
restructure and extend the scope of compulsory licensing of the transmission and broadcasting oftelevision through satellite.  The Act also extended to 31 December 2004 the sunset of the satellite
compulsory licensing.
207. The Copyright Office issued a proposal in May 2001 for amendments to its regulation
governing notices of termination of transfers and licences covering the extended renewal term enacted
by the Sonny Bono Copyright Term Extension Act.
215  The proposed regulation would establish
procedures governing such notices similar to the current procedures for termination of transfers andlicences under the Copyright Act of 1976.
216
208. Some aspects of U.S. copyright legislation were challenged by the European Union in the
WTO in early 1999, namely some provisions of the Copyright Act that allow, under certainconditions, the playing of radio and television music in public places without the payment of a royalty
fee.
217  The provisions challenged are contained in Section 110(5) of the U.S. Copyright Act, as
amended by the Fairness in Music Licensing Act.218  The dispute centered on the compatibility with
Article 13 of the TRIPS Agreement (exceptions to exclusive rights of copyright holders) of the
"business" and "homestyle" exemptions in Section 110(5) allowing the public performance of music
broadcasts, without an authorization and payment of a fee, by food, drinking, and retail
establishments.  The panel found that the "business" exemption did not meet the requirements ofArticle 13 of the TRIPS Agreement.
219  In October 2000, the European Union requested that the
reasonable period of time for implementation by the United States of the recommendations of the
panel be determined by binding arbitration.220  In January 2001, the Arbitrator determined the
reasonable period of time to be 12 months from the date of the adoption of the panel report.221
                                                     
214 The Work Made For Hire and Copyright Corrections Act of 2000 became Public Law No. 106-379
on 27 October 2000;  the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 became
Public Law No. 106-160 on 9 December 1999;  the Act to Make Technical Corrections in Title 17, United States
Code became Public Law No. 106-44 on 5 August 1999;  and the National Recording Preservation Act of 2000
became Public Law No. 106-474 on 9 November 2000.  The complete text of all these laws is available onlineat:  http://thomas.loc.gov/.
215 Library of Congress, Copyright Office, 37 CFR Part 201 [Docket No. 2001–2], Notice of proposed
rulemaking, Federal Register, Vol. 66, No. 86, 3 May 2001, Proposed Rules.
216 The text of and changes in the new regulations are contained in Federal Register, Vol. 66, No. 86,
3 May 2001, Proposed Rules.
217 WTO document WT/DS160/1, 4 February 1999.  Australia, Japan, and Switzerland reserved their
third-party rights (WTO documents WT/DS160/2, 15 February 1999, WT/DS160/3, 17 February 1999, andWT/DS160/4, 17 February 1999).
218 Title II of the Act to amend the provisions of title 17, United States Code, with respect to the
duration of copyright, and for other purposes, (P.L. 105-298), signed by the President on 27 October 1998.
219 WTO document WT/DS160/R, 15 June 2000.  The panel report was adopted on 27 July 2000.
220 WTO document WT/DS160/10, 26 October 2000.
221 WTO document WT/DS160/12, 15 January 2001.WT/TPR/S/88 Trade Policy Review
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209. Outside the WTO, an important copyright case involved a U.S. court case to determine
whether the Audio Home Recording Act of 1992 excused an Internet music provider from liability for
copyright infringement.  The Act bars actions "based on the manufacture, importation, or distribution"
of the specified recording devices and recording media, and actions "based on the non-commercial use
by a consumer of such a device or medium for making digital or analog musical recordings".  In
December 1999, two music companies brought cases for copyright infringement against Napsterasserting that consumers who used Napster's Internet-based service and software to exchange sound
files containing copyrighted musical recordings were engaged in copyright infringement and that
Napster was liable for contributory copyright infringement.
222  In July 2000, the court issued an
opinion and order granting a preliminary injunction against Napster.  The district court concluded,
among other things, that Napster's users were engaged in extensive copyright infringement and thatNapster was liable for their actions.
223  The Court of Appeals for the Ninth Circuit affirmed the district
court's ruling, remanding the case for a modification of the preliminary injunction.
Enforcement activitiesSpecial 301210. Since April 1989, the USTR must make determinations, by 30 April of each year, under the
Special 301 intellectual property provisions of the Trade Act of 1974, as amended.  In these
determinations, the USTR must identify foreign countries deemed to deny adequate and effective
protection of intellectual property rights or fair a nd equitable market access to U.S. persons that rely
upon intellectual property protection.
211. In 2001, the Special 301 exercise reviewed some 80 countries, the largest number  ever.  The
USTR identified 51 countries that it considered denied adequate and effective protection of
intellectual property or fair and equitable market access to United States artists and industries that rely
upon intellectual property protection.  Ukraine was identified as a Priority Foreign Country inMarch 2001 and a Section 301 investigation was initiated.  China and Paraguay were designated for
“Section 306 monitoring” to ensure compliance wi th the commitments of bilateral intellectual
property agreements.  The USTR also placed 16 other trading partners on the Special 301 Priority
Watch List:  Argentina;  Chinese Taipei;  Costa Rica;  the Dominican Republic;  the European Union;
Egypt;  Hungary;  India;  Indonesia;  Israel;  Korea;  Lebanon;  Malaysia;  the Philippines;  Russia;and Uruguay.  It placed 32 other countries on the Watch List.
212. The 2001 review focused on the progress made toward resolving outstanding bilateral
concerns identified through previous Special 301 determinations or previously announced WTOdispute settlement cases.  Specific progress was mentioned for a number of trading partners,
including:  Ecuador;  Guatemala;  Hong Kong, China;  Italy;  Macau;  China;  Moldova;  Peru;  Spain;
and Turkey.  In addition, the report highlighted the resolution of WTO disputes with Denmark,
Greece, and Ireland.
224  The report noted that a total of 14 intellectual property complaints had been
filed by the United States in the WTO between 1996 and early 2001.  The report also stated that the
                                                     
222 At the time the court case was initiated, Napster provided a centralized service that expanded the
ability of Internet users to copy MP3 music files from other persons' computers by providing a "virtual meetingplace" where an individual user of the Napster system could find MP3 music files on the hard drive of othercomputers participating in the Napster "community."  Na pster then facilitated the direct copying and transfer of
those files.
223 Complaints Nos. 00-16401 and 00-16403 in the U.S. Court of Appeals for the Ninth Circuit,  A&M
Records, Inc., et al. Plaintiffs-Appellants, v. Napster, Inc., Defendant-Appellant, Je rry Leiber, individually and
d/b/a Jerry Leiber Music, et al., Plaintiffs-A ppellants, v. Napster, Inc., Defendant-Appellant , Brief for the
United States as Amicus Curiae.  Available online at :  www.loc.doc/copyright/docs/napsteramicus.htlm.
224 WTO documentsWT/DS83/1, 21 May 1997, WT/DS82/1, 22 May 1997, and WT/DS124/1, 7 May
1998 contain the requests for consultations with Denmark, Ireland, and Greece, respectively.United States WT/TPR/S/88
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United States would consider all options, including but not limited to initiation of dispute settlement
consultations with countries that in the view of the United States do not appear to have implemented
fully their obligations under the TRIPS Agreement, including the Andean Community, the Dominican
Republic, Hungary, India, Israel, and the Philippines.
213. In the Special 301 review for 2000, the USTR had identified 59 trading partners under the
Special 301 provisions.  As a result of the review the United States initiated dispute settlement
consultations with Argentina and Brazil.  The U.S. authorities noted that in June 2001 the UnitedStates and Brazil agreed to transfer their disagreement from the WTO dispute settlement mechanism
to a newly-created bilateral consultative mechanis m.  The 2000 Special 301 review also addressed
concerns in Italy, Israel, India, Malaysia, Korea, Poland, and the West Bank and Gaza, as well as
progress in Macau, Mexico, Sweden, and the United Arab Emirates.
Section 337 investigations
214. Section 337 of the Tariff Act of 1930 makes it unlawful to engage in unfair acts or unfair
methods of competition in the importation or sale of imported products in the United States andauthorizes the USITC to conduct investigations and enter relief if a violation is found to exist.
Specifically, Section 337 declares unlawful the importation, the sale for importation, or the sale within
the United States of articles that infringe a valid and enforceable U.S. patent, a registered trade mark,
a registered copyright, or a registered mask work, for which a domestic industry exists or is in the
process of being established.  Also unlawful under Section 337 are other unfair methods ofcompetition and acts in the importation or sale of imported products, the threat or effect of which is to
destroy or substantially injure a domestic industry , to prevent its establishment, or to restrain or
monopolize trade in the United States.  Section 337 was modified by sections 321 and 322 of the
Uruguay Round Agreements Act.  If the USITC dete rmines that a Section 337 violation exists, it can
issue exclusion or cease and desist orders, or both.  If the USITC issues an exclusion order, the U.S.Customs Service is directed to bar entry into the United States of infringing goods from whatever
source (general exclusion orders) or from specifically identified manufacturers, sources, such as
importers and producers (limited exclusion orders).  The President may disapprove an USITC order
within 60 days of its issuance, for policy reasons.
215. Most Section 337 investigations involve allegations of patent or trade mark infringement.
Section 337 investigations have also involved copyright infringement, misappropriation of trade
secrets, violations of antitrust laws, passing off, and false advertising.  Investigations may involve
firms in foreign countries or firms in the United Stat es.  Of the 38 investigations initiated in the period
1999 to end of first quarter 2001, 33 involved patent infringement, two involved trade mark
infringement, and three both patent and trade mark infringement.  Investigations covered products
from the following countries (number of cases betw een parentheses):  Belgium (1);  Canada (2);
China (5);  Chinese Taipei (13);  Czech Republic (1);  Finland (1);  France (2);  Germany (3);  Israel(2);  Japan (10);  Korea (1);  Mexico (1);  Philippines (1);  Singapore (1);  Slovakia (1);  Switzerland
(1);  United Kingdom (1);  United States (1).
225  As of 31 March 2001, 18 of the foregoing 38 cases
had been completed and 20 were pending.  In 1999, the USITC issued three general exclusion orders
and no limited exclusion orders.  In 2000, the USITC issued two general exclusion and one limited
exclusion orders.  In the first quarter of 2001, no exclusion orders were issued by the USITC.
216. In January 2000, Section 337 investigations were the subject of a complaint in the WTO by
the European Union and its member States, which considered that the Section 337 and the related
Rules of Practice and Procedure of the USITC violated GATT 1994 and the TRIPS Agreement.226
                                                     
225 Some investigations involved more than one country.
226 WTO document WT/DS186/1, IP/D/21, 18 January 2000.WT/TPR/S/88 Trade Policy Review
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Noting that Section 337 had already been twice examined by GATT panels, the European Union
claimed that, although Section 337 had been amended by the URAA, this had not eliminated the
major GATT inconsistencies and further violated several provisions of the TRIPS Agreement.
Canada and Japan requested to join in the consultations.227  As of May 2001, the dispute was still in
the consultation phase.
                                                     
227 WTO documents WT/DS186/2, 1 February 2000, and WT/DS186/3,  1 February 2000.