RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/126 
17 December 2003 
 
 (03-6599) 
Trade Policy Review Body  
 
 
 
 
 
 
 
TRADE POLICY REVIEW 
 
UNITED STATES 
 
Report by the Secretariat 
 
   
This report, prepared for the seventh Trade Policy Review of the United States, 
has been drawn up by the WTO Secretariat on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from the Government of the 
United States on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. R. Valdés (tel. 022 739 5346), Mr. A. Silvy (tel. 022 739 5249) and 
Ms. C. Hennis-Pierre (tel. 022 739 5640). 
 
Document WT/TPR/G/126 contains the policy statement submitted by the 
Government of the United States. 
 
 
Note: This report is subject to restricted circul ation and press embargo until the end of the meeting 
 of the Trade Policy Review Body on the United States. United States WT/TPR/S/126 
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CONTENTS 
    P a g e  
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC DEVELOPMENTS  vii 
 (2) P OLICY DEVELOPMENTS  viii 
 (3) M ARKET ACCESS IN GOODS  viii 
  (i) Tariffs viii 
  (ii) Contingency measures ix 
  (iii) Other import measures ix 
 (4) E XPORT MEASURES  x 
 (5) O THER POLICIES AFFECTING TRADE  xi 
 (6) A CCESS CONDITIONS IN SERVICES  xi  
I. RECENT ECONOMIC DEVELOPMENTS 1  (1) I
NTRODUCTION  1 
 (2) O UTPUT , EMPLOYMENT AND PRICES  1 
 (3) M ONETARY AND EXCHANGE RATE POLICIES  4 
 (4) F ISCAL POLICY  5 
 (5) B ALANCE OF PAYMENTS  7 
 (i) Merchandise trade 10 
 (ii) Trade in services 10  (iii) Foreign direct investment 12 
 (6) O
UTLOOK  14 
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY 15 
 (1) I NTRODUCTION  15 
 (2) I NSTITUTIONAL AND POLICY FRAMEWORK  16 
 (i) Institutions and recent changes 16 
 (ii) Main legislative developments 17 
 (iii) Policy objectives 18 
 (3) P ARTICIPATION IN THE WTO 19 
 (4) P REFERENTIAL AND OTHER ARRANGEMENTS  20 
 (i) Introduction 20 
 (ii) North American Free Trade Agreement 21 
 (iii) Other free-trade agreements in force as of June 2003 23  (iv) Other free-trade agreements 24 
 (v) Unilateral preferences 25 
 (vi) Other trade-related arrangements 27 
 (5) F
OREIGN INVESTMENT REGIME  27 
 (i) Reporting and review requirements 27 
 (ii) National treatment and sectoral restrictions 29 
 (iii) International investment arrangements 30 
 WT/TPR/S/126 Trade Policy Review 
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    P a g e  
III. TRADE POLICIES AND PRACTICES BY MEASURE 32 
 (1) I NTRODUCTION  32 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  33 
 (i) Customs procedures 33 
 (ii) Rules of origin 38 
 (iii) Tariffs 39  (iv) Customs fees and other charges affecting imports 46 
 (v) Anti-dumping, countervailing, and safeguards actions 47 
 (vi) Quantitative restrictions and controls 59  (vii) Technical regulations and sanitary and phytosanitary measures 60 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  68 
 (i) Export finance, insurance and guarantees 68  (ii) Other export assistance 70 
 (iii) Section 301 and related actions 72 
 (iv) Export restrictions and controls 73 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  75 
 (i) Competition policies 75 
 (ii) Government subsidies and other assistance 80 
 (iii) Government procurement 83  (iv) State trading 89 
 (v) Intellectual property rights 90 
IV. TRADE POLICIES BY SECTOR 100 
 (1) I
NTRODUCTION  100 
 (2) A GRICULTURE  101 
 (i) Introduction 101 
 (ii) Border protection:  tariff quotas and safeguards 103 
 (iii) Domestic support 106  (iv) Export assistance 110 
 (v) Food aid 112 
(vi) State-trading activities 113 
 (3) M
ANUFACTURING  114 
 (i) Overview 114 
 (ii) Steel 115  (iii) Textiles and clothing 119 
 (4) M
ARITIME TRANSPORT  125 
 (5) A IR TRANSPORT SERVICES  132 
 (i) Introduction 132 
 (ii) Regulatory framework 133 
 (iii) Internationa l agreements 136 
 (6) T ELECOMMUNICATION SERVICES  138 
 (i) Market structure and developments 138 
 (ii) Regulation 138  (iii) Market access 140 
 (iv) Pricing issues 142 
 (v) Standards 143 
 (7) A
UDIOVISUAL SERVICES  143 United States WT/TPR/S/126 
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    P a g e  
 (8) F INANCIAL SERVICES  145 
 (i) Recent market developments 145 
(ii) Legislative and regulatory framework 147 
 (9) S ELECTED PROFESSIONAL SERVICES  156 
 (i) Accounting services 157 
 (ii) Legal services 159  (iii) Architectural and engineering services 161 
REFERENCES   163 
APPENDIX TABLES  169 
CHARTS 
I. RECENT ECONOMIC DEVELOPMENTS I.1 Fiscal accounts, 1991-03 6 
I.2 Current account of the balance of payments, 1991-03 9 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Anti-dumping duty orders in effect, 30 June 2003 51 
IV. TRADE POLICIES BY SECTOR 
IV.1 Direct government payments, 1990-03 102 
IV.2 Domestic support payments, 1995-03 107 
TABLES 
I. RECENT ECONOMIC DEVELOPMENTS 
I.1 Selected macroeconomic indicators, 1998-03 2  
I.2 Selected monetary and exchange rate indicators, 1998-03 4 I.3 Selected fiscal indicators, 1996-03 5 
I.4 Current and capital accounts, 1998-03 8 
I.5 Cross-border trade in services, 1998-02 11 I.6 Major indicators of U.S. direct investment abroad and foreign direct investment in the 
 United States, by  selected country and sector 13 
I.7 U.S. economic projections for 2003-13 14 
II. DEVELOPMENTS IN TRADE  AND INVESTMENT POLICY 
II.1 Bilateral investment agreements, June 2003 31 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Structure of applied MFN tariffs in  the United States, 1996-02     40 
III.2 Tariffs according to U.S. pr eferential agreements, 2002 43 
III.3 CDSOA disbursements from the Special Account 48 
III.4 Anti-dumping inves tigations, 1980-02 50 
III.5 Countervailing duty i nvestigations, 1980-02 52 
III.6 Suspension agreements in effect on 31 December 2002 53
 
III.7 Anti-dumping and countervailing duty ad ministrative reviews completed, 1980-02 54 
III.8 Five-year sunset review status, as of July 2003 55 
III.9 Ex-Im bank loan, guarantee, and insurance activities, 1996-04 70 
III.10 Antitrust statistics and case results 1993-02 (fiscal years) 78 
III.11 Summary of mergers reported and ac tions taken (fiscal years 1992-02) 79 WT/TPR/S/126 Trade Policy Review 
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    P a g e  
III.12 Royalties and lice nce fees, 1995-02 91 
III.13 Summary of patent examining activities, FY 199 5-02 (as of 30 September of each fiscal year) 92 
III.14 U.S. patent applications by  non-U.S. residents, and patents issued, ten main countries,  
 FY 1999-02  92 
III.15  Summary of trade mark examining activities, 1997-02 95 
IV. TRADE POLICIES BY SECTOR IV.1 Producer support estimates, 1995-02 103 
IV.2 Products covered by tariff quotas, 2002 104 
IV.3 Market prices versus target prices under the FSRIA, 1999-07 109 IV.4 Main indicators of the manufacturing sector, 1990-02 114 
IV.5 Main indicators of the U.S. steel industry, 1997-02 116 
IV.6 U.S Imports of steel by country, volume and value, 1999-02 116 IV.7 U.S. T&C imports from selected country groups 120 
IV.8 Imports of textiles and clothing, 1996-02 120 
IV.9 Water transport main indicators, 1990-02 126 IV.10 Trade in financial services, 1998-02 146 
 
APPENDIX TABLES 
I. RECENT ECONOMIC DEVELOPMENTS AI.1 U.S. exports and re-exports (f.o.b.) by trading partner, 1995-02    171 
AI.2 U.S. imports (c.i.f.) by trading partner, 1995-02      172 AI.3 U.S. exports and re-exports (f.o.b.) by commodity, 1995-02     173 
AI.4 U.S. imports (c.i.f.) by commodity, 1995-02       174 
II. DEVELOPMENTS IN TRADE  AND INVESTMENT POLICY 
AII.1 Notifications under WTO Agreements, July 2001 to August 2003    175 
AII.2 Status of dispute-related WTO matters involving the United States, March 2001-August 2003 177 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
AIII.1 Rules of origin          182 
AIII.2 In-State government procurement preferences      184 
IV. TRADE POLICIES BY SECTOR 
AIV.1 Textiles and clothing quotas with utilization rates exceeding 90%, by country, 2002  188 
 
 United States WT/TPR/S/126 
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SUMMARY OBSERVATIONS 
1. The United States has overcome 
several shocks since its last Trade Policy 
Review in 2001, helped by the contribution of its open and transparent trade regime to the highly efficient U.S. economy.  Forceful 
counter-cyclical policies made a recession in 
2001 short and shallow, and underpinned 
subsequent growth.  However, barriers to 
market access  persist in a few, but important, areas, which detracts from the market-based 
solutions that have promoted U.S. welfare so 
well.  Assistance to selected activities such as 
agriculture and steel has burdened U.S. 
consumers and taxpayers, and affected global trade because of the importance of the U.S. economy. 
2. Since 2001, the United States has 
taken further steps to liberalize its trade 
regime, both unilaterally and through 
negotiations;  liberalization has been carried out on both MFN and preferential bases.  
Competition in many domestic markets has 
thus increased, and helped maintain the drive 
for structural change and efficient resource 
allocation, which characterizes the U.S. economy as a whole.  Trading partners have benefited as well, as the United States remains 
the world's largest single importer and a main 
engine of growth.  Deepening and securing 
such beneficial interdependency has 
historically played a central role in U.S. trade 
policy;  achieving this through the multilateral 
system offers the United States unique 
advantages in view of the distinctive global 
reach of its trade and investment interests.  The United States thus has a major stake and a key role in bringing about a successful 
conclusion to the Doha Development Agenda, and thereby also contributing to the stability of 
international trade relations and to growth in 
the world economy. 
(1) E
CONOMIC DEVELOPMENTS  
3. The U.S. economy underwent a 
recession in 2001;  with the policy levers 
geared to growth, the recession was short and shallow, and the pace of expansion was accelerating in 2003.  During much of the 
period under review, growth in the 
United States reflected in part the subdued 
economic performance of several key U.S. trade partners.  Although the U.S. slowdown may have impinged on its trade policy by 
encouraging demands for import protection 
and government support, the U.S. economy 
continued to support global growth by 
maintaining its market largely open. 
4. Illustrating the benefits and complex 
interdependencies characteristic of the 
international trading system, U.S. counter-
cyclical fiscal and monetary policies were 
buttressed by imports helping to keep U.S. prices down even as public expenditure and private consumption rose, and by the sustained 
interest of foreigners in investing in the 
United States.  Large inflows of foreign capital 
have financed a widening current account 
deficit, and have allowed the U.S. market to 
remain a key outlet for foreign suppliers. 
5. Recent U.S. macroeconomic policy 
has been directed, increasingly successfully, 
towards recovering and sustaining growth, 
with benefits to the global economy, including through trade transmission.  But the situation is not without a certain downside risk.  The 
return to large fiscal deficits, if maintained, 
could contribute to continued substantial 
current account deficits, although this also 
depends on private savings and investment 
decisions, where the efficiency and openness 
of U.S. capital markets is a positive force for 
U.S. and international growth.  The 
sustainability of the current account deficit remains an open question, but the possibility of a hard landing, including in the absence of 
improved growth performance by some critical partners, is not without risk;  and the presently 
perceived large bilateral trade imbalances 
that are now part of the U.S. current account 
situation could give rise to protectionist 
sentiment.  In this context, the "twin deficits" 
are of some concern;  equally, it is as 
important for the United States as for other 
Members that trade not be unduly hindered by administrative and other barriers, both in the United States and other markets. WT/TPR/S/126 Trade Policy Review 
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(2) POLICY DEVELOPMENTS  
6. The United States considers the 
multilateral trading system as the core of 
current commitments in U.S. international trade relations.  In the ongoing multilateral negotiations, the United States has made 
contributions or proposals in a majority of 
trade topics discussed in the WTO, including 
agriculture, industrial goods and services.  
The United States has also continued to be an active complainant and respondent in the 
WTO dispute settlement mechanism.  From 
mid-2001 to mid-2003, out of around 60 new 
consultations requested, the United States was 
a complainant in one tenth of cases and respondent in nearly half.   Many cases related 
to its application of trade remedy laws to steel 
imports.  U.S. notification obligations were 
fulfilled during the period under review, with 
the exception of state trading, import 
licensing, and domestic support and special 
safeguards in agriculture. 
7. The Trade Promotion Authority (TPA) 
Act of 2002, a successor to "fast-track" 
authority, brings greater predictability to 
trade negotiations because Congress, when considering legislation for a new trade agreement, can approve or reject the 
legislation but must do so without amendment 
and within a fixed period.  The Act states that 
the expansion of international trade is vital to 
the national security of the United States, and 
that trade agreements maximize opportunities 
for the critical sectors of the U.S. economy. 
8. The United States has stated its 
intention to work also on regional and 
bilateral initiatives to promote free trade, thus 
exerting its leverage for openness and creating 
a climate for "competitive liberalization".  As 
a result, in addition to the two free-trade 
agreements (FTAs) in force at the time of its 
previous Review, as of June 2003 the 
United States had concluded three FTAs and 
was negotiating new agreements with several 
countries.  Unilateral preferences in favour of 
developing countries have also been 
expanded;  these preferences may be conditional on compliance with various U.S. policy objectives.  The expanding U.S. 
preferential network could serve to draw its 
partners more closely into the multilateral 
trading system, the acknowledged "first-best";  however, care should be taken that negotiating and administrative resources are not 
distracted away from the multilateral system, 
that vested interests are not created that 
complicate multilateral negotiations, and that 
trade and regulatory structures attendant on 
preferential agreements do not hinder trade. 
9. In the aftermath of the September 
2001 attacks, security consideration have 
become an essential component of trade and 
investment policy.  Significant changes to U.S. trade practices have been implemented to ensure the nation's security.  Security now 
receives more consideration in the 
implementation of investment provisions, 
although the foreign dire ct investment regime 
has not changed.  It is important that the new 
U.S. security-related policies and practices do 
not become unnecessary trade or investment 
barriers. 
(3) M
ARKET ACCESS IN GOODS  
(i) Tariffs 
10. The United States accords MFN tariff 
treatment to all but one WTO Member (Cuba).  
All except two tariff lin es are bound.  Some 
31% of all tariff items enter the United States 
duty free.  In 2002, the average MFN tariff was just over 5%, a slight decline from 2001;  the average tariff on agricultural products 
stood at 10%.  Certain products, however, 
receive tariff protection in the 50-350% range, 
notably tobacco, peanuts, certain dairy 
products, sugar, and certain footwear;  most 
tariffs on textiles and clothing are in the 15-
30% range.  Tariff escalation is present in 
textiles and clothing, non-metallic minerals, 
and basic metal industries.  In the ongoing 
WTO negotiations, the United States has 
proposed the elimination of all industrial 
tariffs by 2015, and substantial cuts in 
agricultural tariffs. United States WT/TPR/S/126 
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11. Non-ad valorem tariffs apply to about 
12% of all lines;  some 77 of the 100 highest 
U.S. tariffs are non-ad valorem.  For products 
subject to non-ad valorem rates, tariff protection has varied widely over time, increasing when import prices decline and 
vice versa.  The United States maintains tariff 
quotas on 1.9% of tariff lines, corresponding 
to agricultural products, broomcorn brooms 
and tuna.  High out-of-quota tariffs on 
agricultural products constitute one of the 
main forms of import protection for these 
products. 
12. The growing number of preferential 
tariff schemes has resulted in an increased set of different rules of origin, thus adding complexity to the U.S. trade regime.  Recent 
preferential tariff schemes in favour of African 
and Caribbean countries have been enhanced, 
and extended for the first time to Andean 
countries;  their provisions for duty-free 
clothing imports generally require U.S. input 
content, possibly at th e expense of lower-cost 
third-country suppliers. 
(ii) Contingency measures 
13. Contingency measures remain a key 
form of protection against imports into the United States.  The active use of anti-dumping 
(AD) and countervailing duty (CVD) measures 
has continued to generate uncertainty for 
foreign exporters.  Initiations of AD 
investigations increased in 2001, to the highest level since 1992, but decreased in 2002 and 
the first half of 2003.  A large percentage of 
investigations has involved steel-related 
products.  Initiations of investigations may 
affect exporters' trade performance, with 
preliminary duties applied in most cases.   
14. Trading partners have increasingly 
questioned the rules and methods used by the 
United States concerning AD and CVD 
investigations and measures, including the 
Anti-dumping Act of 1916, the continued 
application of the Continued Dumping and 
Subsidy Offset Act (Byrd Amendment), and the 
methodology used by the U.S. authorities to determine the existence of subsidies following privatization.  The DSB findings have led on 
occasions to a revision of U.S. regulations and 
laws.  The Byrd Amendment, passed in 2000, 
requires proceeds from AD and CV duties to be distributed to affected U.S. producers, and has resulted in disbursements totaling 
US$840 million since FY 2001.  
15. Only one safeguard investigation has 
been initiated since 2000 under Section 201, 
but the scope of the resulting measure was wide, affecting a large number of steel 
products.  Such measures consisted of tariffs 
ranging from 8% to 30%, and one tariff quota.  
The tariff levels were adjusted downward in 
March 2003, while the tariff quota was expanded.  FTA partners were completely excluded from the measures, as were many 
developing countries.  At the request of 
domestic users and foreign producers, several 
steel products were excluded from the 
measures in 2002, and others in 2003.  
Although exclusions are made on an MFN 
basis, they may benefit producers from some 
countries more than others, depending on the 
composition of their exports to the 
United States. 
16. At the request of eight WTO Members, 
the safeguard measure on steel was examined 
by the DSB;  the Panel report concluded that 
the United States had acted inconsistently with 
some WTO provisions.  The Appellate Body 
reaffirmed most of the Panel's findings. 
17. In October 2003, the United States 
was considering a safeguard request for 
quotas to be imposed on imports of knit fabric, 
dressing gowns, and brassieres from China, 
under a transitional safeguard mechanism for 
textiles and clothing products contained in 
China's WTO Accession Protocol.  
(iii) Other import measures 
18. In 2002, 48% of the total value of 
clothing imports were still subject to quantitative restraints, and 24% of textiles imports.  The decline in these shares since 
2001 partly reflects the gradual 
implementation of the WTO Agreement on WT/TPR/S/126 Trade Policy Review 
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Textiles and Clothing (ATC).  The 
United States is committed to abolishing 
quantitative import restrictions in the textiles 
and clothing sector by end 2004, as foreseen in the ATC.  Most other non-tariff border measures are maintained  for national security, 
health, environmental or foreign policy 
reasons.  Among these, embargoes continue on 
imports of shrimp and tuna from countries 
found not to be in compliance with U.S. 
environmental provisions.   
19. Security concerns have brought 
significant changes to U.S. import regulations 
since 2001.  A new 24-hour rule requires the 
electronic transmission to the U.S. authorities of information pertaining to U.S.-bound cargo prior to departure.  Agreements have also 
been concluded with several foreign seaports 
to screen U.S.-bound containers before 
departure for the United States.  The 
Bioterrorism Act of 2002 is to enter into force 
in December 2003;  it requires in particular 
the registration of most food manufacturing 
and handling facilities, and prior notice to 
FDA of all food shipments destined for the 
United States.  In the WTO Committee on 
Sanitary and Phytosanitary Measures, several Members have expressed concerns over these 
requirements.  Mainly  due to their recent 
adoption, the Secretariat had no information 
to ascertain the economic impact of the new 
security-related measures. 
20. The United States maintains measures 
that restrict foreign participation for 
procurement not covered by the plurilateral 
Agreement on Government Procurement or other international agreements.  The Federal Government maintains "Buy American" 
restrictions under which agencies may in principle only purchase supplies and 
construction materials manufactured in the 
United States with more than 50% of U.S. 
components.  A "Balance-of-Payments" 
programme applies to certain Department of 
Defense procurement but the programme's 
application to civilian agency acquisitions was 
eliminated in 2001.  A number of programmes are in place to foster the ability of small business to compete for federal contracts and various set-aside schemes.  These measures 
are complemented in some States by Buy-In-
State or Buy American regulations, as well as 
preferences and set-asides. 
21. The infringement of certain 
intellectual property rights is considered an 
unlawful import practice under Section 337 of 
the Tariff Act of 1930.  These practices may 
lead to exclusion orders barring entry of 
infringing goods into the United States.  Between 1 January 2001 and 30 
September 2003, 56 new Section 337 
investigations involving products from 26 
countries were initiated, mostly dealing with 
allegations of patent infringement.  During the same period, ten limited exclusion orders 
covering imports were issued. 
(4) E
XPORT MEASURES  
22. A central objective of U.S. trade 
policy is to expand markets for U.S. exporters;  
trade statutes such as th e Section 301 family of 
laws, and its counterparts in 
telecommunications and in government 
procurement, target foreign measures deemed to affect U.S. exports or impair U.S. rights under trade agreements.  The application of 
these statutes to WTO Members must conform 
with WTO dispute settlement provisions in 
areas covered by multilateral rules.  The 
United States also monitors foreign 
compliance with intellectual property 
agreements through Special 301 
investigations.  In the 2003 review, 11 
countries were placed on the Priority Watch 
List and 36 countries were placed on the Watch List.  
23. A number of export assistance 
schemes are also in place.  Legislation has yet 
to be enacted to implement the 
recommendations of the DSB in respect of the 
Foreign Sales Corporation Repeal and 
Extraterritorial Income Exclusion Act of 2000, 
which was found to provide prohibited export 
subsidies.  The Export-Import Bank provides 
mostly officially supported credit guarantees, 
which also constitute the main instrument by 
which the Commodity Credit Corporation supports agricultural exports.  A large number United States WT/TPR/S/126 
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of foreign trade zones operate in the 
United States, and a duty drawback 
programme is in place. 
24. The United States maintains export 
restrictions and controls for national security 
or foreign policy purposes, or to ensure sufficient domestic supply.  Exports may be controlled unilaterally or through U.S. 
participation in non-binding multilateral export control regimes (e.g. the Wassenaar 
Arrangement).  Re-exports out of third countries of items s ubject to U.S. export 
controls are also subject to U.S. authorization.  
(5) O
THER POLICIES AFFECTING TRADE  
25. The United States views the 
relationship between trade and competition 
policy as of great importance, as competition 
policy considerations are playing an 
increasingly visible role in trade and 
investment matters.  Enforcement during the 
2001-03 period continued to focus on the 
activities of international price-fixing cartels.  
New regulations to implement higher notification thresholds for mergers and 
acquisitions have resulted in a lower number 
of notified mergers, allowing U.S. authorities 
to concentrate on the examination of larger 
mergers. 
26. As the United States is among the 
world's largest producers, exporters, and 
importers, domestic support although not 
targeted at exports may significantly affect 
trade.  Assistance to domestic producers may take the form of  tax exemptions, financial outlays, and credit  programmes.  Since the 
last Review of the United States, there have 
been sizeable financial transfers in air 
transport and agriculture.  In air transport, 
government financial support was extended to 
U.S. carriers in the aftermath of 
11 September 2001.  In agriculture, the Farm 
Security and Rural Investment Act of 2002 
expanded the coverage of marketing loan 
provisions;  and introduced a counter-cyclical 
income support mechanism that, although not 
linked to current production, increases subsidies when commodity prices fall, and vice versa.  The new legislation may thus further 
blunt the effects of market signals on 
production decisions, and runs the risk of 
large increases in assistance in the event of price falls.  Under the new Act, government payments in 2003 were expected to approach 
the high level of 2001;  such payments had 
declined substantially in 2002 when 
commodity prices increased and virtually no 
ad hoc emergency payments were disbursed. 
27. The United States considers that 
public policy aimed at protecting intellectual 
property rights (IPRs) contributes to a diverse 
and competitive marketplace, and it uses both 
bilateral and multilateral policy tools to enforce IPRs in the international arena.  Since 2001, the United States has implemented the 
Madrid Protocol, and adopted statutes to 
grant compensation for delays in processing 
patent applications, and to enhance third-
party participation in the re-examination of 
patents. 
28. The United States has maintained its 
long-standing policy of national treatment of 
foreign direct investment, subject to sector-
specific restrictions that in most cases are motivated by prudential and national security considerations.  Aside from those described 
below in the services sectors, restrictions on 
foreign direct investment exist in energy, 
mining, and fisheries. 
(6) A
CCESS CONDITIONS IN SERVICES  
29. The services sector is the largest 
contributor to output in the U.S. economy.  
Market access in services is generally open, 
with exceptions.  Many service activities have 
been undergoing gradual modernization, 
including the removal of domestic restrictions 
to international trade;  as a result, current 
practice is considerably more liberal than U.S. 
commitments in the WTO.  In the context of the 
Doha Development Agenda, the United States 
presented a draft offer on services that largely 
reflects changes in U.S.  laws and regulations 
since the end of the Uruguay Round.  The 
provision of services in the United States through foreign commercial presence is the WT/TPR/S/126 Trade Policy Review 
Page xii 
 
 
most important mode of supply, although 
cross-border trade is also important, in 
particular for travel, professional and 
business, and financial services.  
30. The U.S. international maritime 
transport market is generally open to foreign 
competition;  the share of foreign carriers in 
U.S. international trade exceeds 97% 
notwithstanding financial government 
assistance or cargo preferences granted to international cargoes carried by U.S.-flag 
vessels.  Domestic cargo restrictions under the 
Jones Act remain in place but legislation to 
facilitate the granting of waivers to the Act 
was passed in 2002.  The U.S. domestic air transport market accounts for about one third of the world aviation market, and remains 
subject to market access restrictions in the 
form of U.S. ownership and control 
requirements.  Liberalization of international 
air transport services has continued through 
open skies agreements and, on a case-by-case 
basis, the approval of alliances among 
domestic and foreign airlines. 
31. In financial services, the industry's 
regulatory framework has continued to be modernized through new regulations in the wake of the Gramm-Leach-Bliley Act of 1999 
(GLB), which put an en d to the restrictions 
imposed by the 1933 Glass-Steagall Act, on 
affiliations between banks and securities firms.  
The United States grants , in general terms, 
open market access and national treatment to 
foreign banks.  In insurance, firms are 
primarily regulated at the State level, but steps 
towards uniformization have been adopted since the previous U.S. Review.  States require companies to be licensed in-State to conduct insurance business within and across their 
borders.  During the 2001-03 period, several 
incidents of securities laws violations came to 
light and measures have been taken against a number of financial service providers;  to strengthen the regulatory framework, new 
legislation was passed in 2002. 
32. The U.S. market for both domestic and 
international telecommunications services is 
highly competitive and open to foreign firms.  Although restrictions remain on direct foreign 
ownership of radio licences, in practice, 
foreign firms may supply domestic and 
international services.  This high level of 
competition contributes to below-OECD-average price levels for most services.  In the 
audiovisual subsector, radio and television 
broadcast licences may not be owned by 
foreigners.  In addition, rules limiting 
ownership (domestic or foreign) of radio and 
television networks aim to promote 
competition, diversity, and localism in media 
production. 
33. The regulation of professional 
services is mainly under the responsibility of 
the individual States.  Foreign market access in some States is affected by local presence, domicile, nationality, or legal form of entry 
requirements.  The lack of a uniform 
regulatory regime at the national level also 
complicates market access.  During the period 
under review, the regulatory framework has 
been subject to a number of reforms to 
strengthen governance, notably through the 
Sarbanes-Oxley Act of 2002 affecting 
accounting and legal services.