RESTRICTED
WORLD TRADE WT/TPR/G/16
21October 1996
ORGANIZATION(96-4378)
Original: English
TRADE POLICY REVIEW
UNITED STATES
Report bytheGovernment
Pursuant totheAgreement Establishing theTrade Policy Review Mechanism (Annex 3ofthe
Marrakesh Agreement Establishing theWorld Trade Organization), theUnited States Government 's
initial policy statement isattached.
Note:Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body ontheUnited States.United States WT/TPR/G/16
Page iii
TABLE OFCONTENTS
Page
I. THE UNITES STATES INTHE MULTI8LATERAL SYSTEM 1
II. THE UNITED STATES ECONOMIC AND TRADE ENVIRONMENT 3
III. TRADE POLICY DEVELOPMENTS, 1994-1996 5
(i) TheUruguay Round andWTO Implementation 5
(ii) Regional initiatives 6
(a) TheNorth American Free Trade Agreement 7
(b) TheFree Trade Agreement oftheAmericas 7
(c) TheAsia Pacific Economic Co-operation Forum 7
(d) TheNew Transatlantic Agenda 8
(iii) Domestic regulatory developments affecting trade policy 8
(a) Regulatory reform 8
(b) Deregulation 9
(c) Agricultural reform 9
IV. FUTURE DEVELOPMENTS INUNITED STATES TRADE POLICY 10United States WT/TPR/G/16
Page 1
WTO TRADE POLICY REVIEW
REPORT OFTHE UNITED STATES OFAMERICA
I. THE UNITED STATES INTHE MULTILATERAL SYSTEM
1. High-income countries liketheUnited States aswellasmiddle andlower income economies
allpursue many ofthesame economic goals: more rapid expansion ofproductivity, higher-wage
employment, increased living standards, andstrengthened economic growth. These shared aspirations
create acommon interest between theUnited States andothermembers oftheWorld Trade Organization
infaithfully implementing agreements already reached aswellasinmoving ahead where possible
inremoving remaining distortions andimpediments toglobal trade andinvestment flows.
2. TheUnited States government hasfocused ontradepolicy asoneoftheprincipal toolsavailable
toittoachieving thenational economic goalofexpanded domestic economic opportunity. Various
studies haveshown thewages ofU.S.jobsdirectly andindirectly supported by(goods) exports tobe
13percentto16percenthigher thantheaverage wage intheU.S.economy --apremium nodoubt
reflecting bothhigher labor productivity inexport-oriented sectors aswellastheusually expansionary
postures ofsuchindustries within thenational economy.
3. Fairly traded imports likewise benefit theUnited States inexpanding therange ofchoice in
theU.S.market, inmaking available forpurchase imported goods andservices atlower costthanthey
could beproduced athome, inproviding lowcost,highquality inputs intoU.S.domestic production,
andfostering healthy competition intheU.S.economy.
4. These effects ofimports, together with those ofexports, increase average U.S. labour
productivity, expand national purchasing power, raisedomestic living standards andincrease attractive
opportunities foremployment andinvestment. Inaddition, theexpansion oftradethrough theremoval
ofdistortions andimpediments hashadapositive impact ontherateofeconomic growth.
5. TheUnited States haspursued aconsistent policy ofseeking aworld ofincreasingly open
markets andexpanded trade since thefirstReciprocal Trade Agreements ActoftheU.S. Congress
in1934. Inthe1930's,constrained byglobal political conditions, U.S.tradepolicy focused especially
onthenegotiation ofreciprocal tariff reducing agreements withother countries intheWestern
Hemisphere. During andimmediately following theSecond World War,however, U.S.policy focused
onthecreation ofarules-based, truly multilateral trading system geared toward theremoval of
impediments andthecreation ofopportunity forall.Through 50years and8successful multilateral
trade rounds under theGATT, oursupport forthemultilateral trading system anditskeyimportance
toachievement ofatrulyopenandfairglobal trading system hasnever flagged.
6. Inaneraoflow-cost, instantaneous communication, efficient transportation andglobalized
production, themultilateral system remains asrelevant toourtrade andeconomic interests asever.
PastachievementsunderthemultilateraltradesystemhavehelpedcreateandshapethemodernAmerican
economy intoonecharacterized byunprecedented levels ofoutput andrapidly expanding economic
opportunity. Likewise, American policy isbased onthebelief thatifthepromise oftheUruguay Round
andageneralized movement toward more openmarkets --bothinternal andattheborder --around
theglobe istorealize itsfullpotential, anexpanded andfurther strengthened multilateral trading system
must beitsfoundation.WT/TPR/G/16
Page 2Trade Policy Review
7. TheUnited States haspursued aconsistent trade policy based onthisglobal view. Ourpolicy
isclearly motivated onourviewofnational selfinterest, buttheendurance ofthispolicy oversomany
years alsoreflects theprofound belief oftheUnited States thatopenglobal markets benefit alltrade
partners. Theexpansion oftrade through theremoval ofbarriers anddistortions isa"positive sum"
endeavor, inwhich thegains frombetter useofnational resources andtheenhancements toinvestment
andgrowth areavailable toeachcountry, notattheexpense ofothers, butrather inaddition tothe
gains reaped byothers.
8. TheU.S.government isstrongly committed tobuilding aworld oftrulyopenmarkets with
theWorld Trade Organization asthecenterpiece oftherequisite open market disciplines. Despite
thehighlevelofpercapita output andincome already achieved intheUnited States, theU.S.public
haslegitimate concerns about jobsecurity andliving standards; about howtoassure expanded economic
andattractive employment opportunities inthefuture; about howtospread suchopportunities more
widely among thepopulation; and,howtoprepare better forthematerial responsibilities ofanaging
population. While anumber ofpurely domestic economic initiatives havebeenpursued inorder to
address these concerns, theU.S.government hasalsoconsidered trade policy asanintegral partof
efforts todevelop U.S.national economic interests andhelptomeetthesepublic concerns. Inworking
toexpand thescope ofopenmarkets globally aswellastoinvest athome inpeople andknowledge,
aswellasplants andequipment, thegovernment isfullycommitted tocontributing tothecreation of
economic opportunity andprosperity intheUnited States andabroad.United States WT/TPR/G/16
Page 3
II. THE UNITED STATES ECONOMIC AND TRADE ENVIRONMENT
9. TheUnited States istheworld ’slargest importing andexporting nation. Itisalsothelargest
investor worldwide andthelargest recipient offoreign direct investment. Depending ontheestimate,
theUnited States continues toaccount for20to25percentofrealglobal production. Assuch, its
economic performance andpolicies haveasignificant impact ontheworld economy andtheglobal
trading system. Recent U.S.economic performance hasbeenimpressive andU.S.trade hasgrown
rapidly.
10. TheU.S.economy, which hasrecently entered thesixthyearofeconomic expansion, hasdone
wellsince thelastreview. From thesecond quarter of1994 tothesecond quarter of1996 (latest
available data), realgross domestic product expanded bymore than4.6percent. Realnon-residential
fixedinvestmentexpandedbyover17percent,whileinvestment’sproducerdurableequipmentcomponent
isupby20percentinrealterms injusttwoyears. Non-agricultural employment expanded by
5.5million jobsnet,andtherateofunemployment hasfallen from6.2percent to5.4percent in1996's
second quarter. There hasbeennodiscernible upward pressure onthecurrent moderate rateofprice
inflation andthefederal budget deficit hasfallen forthefourth yearinarowtoitslowest dollar level
since 1981.
11. Similarly, U.S.trade hasexperienced strong growth. Thevalue ofU.S.goods andservices
exports (excluding earnings oninvestment) grew by24percent between thesecond quarter of1994
andthesameperiod of1996. Onanannualized basis, U.S.exports ofgoods andservices wererunning
atanannual rateofover$845 billion inthefirstseven months of1996.
12. Reflecting strong U.S.demand, particularly forinvestment, goods andservices, U.S.imports
roseby22percent between thesecond quarter of1994andthesameperiod of1996. Imports ofgoods
andservices onanannualized basis wererunning atarateofover $935 billion in1996'sfirstseven
months. These figures reflect theU.S.position astheworld ’slargest exporting andimporting nation.
13. TradelikewisecontinueditsriserelativetothetotalvalueofU.S.grossnationalproduct(GNP).
Exports plusimports ontheirbroadest balance-of-payments definition (goods, services andearnings
oninvestment) rosefrom$1.8trillion (annual rate)inthesecond quarter of1994to$2.25 trillion (annual
rate)inthesecond quarter of1996, orfrom anamount equal 26.4percent ofvalue ofGNP toabout
30percent ofthevalue ofGNP. Thecorresponding figure for1970 was13percent.
14. Estimates ofthetotalnumber ofjobssupported byU.S.exports arenotavailable onaquarterly
basis. Onanannual basis, however, U.S.employment supported byexports hasrisenfrom10.3million
in1994toanestimated figure of11.4million for1996, based onextrapolated seven month data. This
1.1million increase inexport-supported jobsintwoyears represents roughly 20percent oftheoverall
5.5million two-year increase incivilian employment cited above (though thetimeperiods arenot
identical).
15. Research ontheU.S. economy hassuggested thatexport-supported jobsaremore highly
remunerated thantheU.S.national average while jobsinimport-competing sectors onaverage tend
tohaveremuneration below theU.S.national average. Trade expansion fortheUnited States therefore
canbeexpected tosomewhat shiftthecomposition ofjobcreation overtimetoward higher paying
jobs. Thisfactor andrecent strong trade growth arelikely tohavecontributed totherecent findings
ofthePresident ’sCouncil ofEconomic Advisers thatovertwo-thirds ofU.S. full-time jobgrowth
between February 1994andFebruary 1996occurred inindustry/occupation groups paying above median
wages.WT/TPR/G/16
Page 4Trade Policy Review
16. Thetwo-year timeframe ofourtrade policy reviews is,ofcourse, oftooshort aduration to
draw strong, empirically-based conclusions about theeffects ofmost recent developments likethe
Uruguay Round. However, therecent, on-going good performance oftheU.S. economy reflects
atleastinpartthepro-competitive structural posture oftheU.S.economy, bothinternally andatthe
border. TheUnited States hasoneoftheworld ’smostpro-competitive markets internally --astance
thathasbeenstrengthened overthelastseveral decades through theeconomic deregulation ofanumber
ofimportant sectors oftheeconomy --andhasinrecent years beencitedbysome outside authorities
astheworld ’smostcompetitive major economy. Inaddition, theUnited States hasoneoftheworld ’s
most openmarkets withrespect toimports andinvestment andalsoenjoys higher levels ofaverage
labor productivity andrealpercapita income thananyother major economy intheworld. U.N. trade
datashow thatin1994 theUnited States imported slightly more manufactured products thanthe
European Union, Japan andCanada combined.
17. These factors, webelieve, areclosely connected: thealready high, andstillincreasing, level
ofU.S.openness totradeandcompetition, andthecorresponding highlevelofeconomic achievement
andrecent strength ofeconomic performance. The50years ofeffort toward building atrulyopen
multilateral trading system, while notcomplete, havecontributed substantially toourowneconomic
success andtothatofother countries thatdidnotoffset suchpro-competitive forces either through
afailure toopenborders orthrough internal restrictions andregulations countermanding theeffects
offreertrade. Furthermore, webelieve thatthemorewidespread global movement toward freermarkets
internally andattheborder overthelastdecade isoneofthemostpositive economic developments
ofourgeneration. These forces overtimepromise theextension ofbetter economic opportunities and
improved living standards forbillions oftheworld ’scitizens, inaprocess inwhich eachnation ’sgain
comes notattheexpense of,butinharmony withthegains ofothers.
18. TheUnited States iscommitted toexercising itsinfluence andleadership inworking withother
countries toreinforce thesestrongly pro-competitive developments. Oureconomic interests complement
those ofourtrading partners andtheglobal economic welfare. Theultimate goal, andtheultimate
vehicle, isaWTO thatiscomprehensive bothinmembership andinitscoverage ofallbarriers and
distortions restricting global trade.United States WT/TPR/G/16
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III. TRADE POLICY DEVELOPMENTS, 1994-1996
(i) TheUruguay Round andWTO implementation
19. Themost significant demonstration ofthecompetitiveness andopenness oftheU.S.market
liesinitsimplementation oftheUruguay Round. Inanimportant demonstration ofbipartisan
commitment anddetermination, theCongress approved theresults ofthenegotiation andestablishment
oftheWTO intheUruguay Round Agreements Act(URAA). President Clinton signed theURAA
onDecember 8,1994. TheUnited States continues togivethehighest priority tofullandeffective
implementation oftheUruguay Round Agreements.
20. TheUnited States hadmuch togainfromopening foreign markets through theUruguay Round.
Trade agreements thatpermanently change therules andstructure oftrade, liketheUruguay Round
Agreements, arereally investments inlongtermgrowth. Astudy byGATT atthetimeoftheUruguay
Round ’sconclusion estimated thatbytheyear2005, theRound would result inanincrease inglobal
production byasmuch as$510billion (constant 1990dollars) peryear,withtheUnited States accounting
for$122billion ofthisgain. Ourownwork suggested thattheRound could add0.15to0.3percentage
points peryeartotheU.S.GDP growth rateoveradecade, withGDP growth enhancements being
experienced throughout theglobal trading system.
21. American exports ofgoods andservices inthefirstyearofUruguay Round implementation
werebuoyant--up nearly 13percent from1994. Asaresult, U.S.jobssupported byexports increased
byover600,000(estimated)in1995.Whilemanyfactorscontributedtothisgrowth,theUruguayRound
would havetobeincluded asacontributory element. TheUruguay Round helped, notonlyasaresult
ofspecific barrier reductions, butalsobecause U.S.business began planning andinvesting onthebasis
ofthefullyimplemented agreement. Bybringing ahigher degree ofcertainty totheopenworld trading
system andaguaranteed blueprint forfuture staged market openings, theRound provided significant
incentives forU.S.businesses toexpand theirproduction inpreparation fortheincreased world demand.
22. Infact,U.S.non-residential fixed investment wasupinrealterms by10.1percent in1994
andanadditional 6.1percent in1995 --strong rates fortherelatively advanced stage oftheU.S.
economic recovery. Anticipation ofcontinued strong growth inforeign markets forU.S.exports --
dueinparttothesuccessful conclusion oftheUruguay Round --undoubtedly contributed tothis
growth-enhancing investment strength intheUnited States.
23. Since theentry intoforce oftheUruguay Round agreements, United States policy hasbeen
tofocus onensuring theeffective andtimely implementation ofthemultilateral agreements. Thevarious
manifestations ofthispolicy range fromanactive participation inthedeliberations ofthemany WTO
committees andcouncils toanaggressive useoftheWTO ’snewdispute settlement mechanism. Where
WTO Members havebeenslowtoimplement theirUruguay Round obligations, theUnited States has
beenquick tocriticize suchinaction. Where problems havearisen inthesystemic implementation
oftheUruguay Round ’sresults, theUnited States hasworked constructively withothers totrytoremedy
thedifficulties. Where obligations havebeenignored orside-stepped, theU.S. hasinitiated action
under theDSU.
24. Thecentral roleoftheWTO inU.S.economic policy isalsoreflected intheresources which
theUnited States devotes tothenegotiations withtheverylargenumber ofcountries seeking toaccede
totheWTO. Inthesenegotiations, American insistence onaccession onlyonviable commercial terms
hassetthestandard forothers toemulate.WT/TPR/G/16
Page 6Trade Policy Review
25. Finally, intheperiod leading uptotheSingapore Ministerial conference, theUnited States
hasputforward several initiatives forfurther liberalization within themultilateral trading system.
AtthesametimetheUnited States hassought toensure thatother initiatives toweaken therulesagreed
intheUruguay Round orproposals which distract from theeffective implementation oftheWTO
agreements donotgain undeserved credibility. IntheU.S. view, theWTO must remain a
consensus-based organization andtheWTO canonlysucceed asacredible institution overthelong
termifitswork program isseentobebeneficial toallofitsdiverse membership.
(ii) Regional initiatives
26. TheUnited States recognizes theprimacy oftheWTO ’smultilateral tradesystem andbelieves
thatthefirsttestofthisconviction isthefullconsistency ofregional arrangements withtheWTO ’s
multilateral rules. Withthisinmind, andinorder tocapture andexpand thebenefits ofanexpanding
global trading system, theUnited States isactively embarked onanagenda oftrade expansion in
emerging markets.
27. TheUnited States ’trade expansion agenda inthisareafocuses ontheexpansion oftrade in
keymarkets, inpartthrough thenegotiation ofnewtradeagreements, butalsobyenforcing compliance
withcurrent agreements (including WTO agreements) andpursuing regional trade expansion inAsia,
South America andEurope. Suchregional tradeinitiatives include theNAFTA, theFTAA, andAPEC.
Atthesame time, weseektomaintain andimprove ourtieswithEurope through theTransatlantic
Initiative.
28. Asnoted above andwithout exception, theregional initiatives inwhich theUnited States is
involved looktotheWTO asproviding asolidfoundation togofurther. Inanearlier GATT Trade
Policy Review oftheUnited States, theU.S.delegation made clear thattheWTO system isseenas
thebaseuponwhich regional arrangements might bebuilt, provided thatsucharrangements gofurther
inthecause ofliberalization. Thisisfully inlinewiththefactthattheGATT hadhistorically
recognized the“desirability ofincreasing freedom oftrade bythedevelopment, through voluntary
agreements, ofcloser integration between theeconomies ofthecountries party tosuchagreements ”
(Article XXIV) aslongastheagreements didnotresult inincreasing external barriers oftheparties.
TheUnited States supports regional agreements thatareconsistent withWTO rules. Weseesuch
agreements aschallenging themultilateral system tokeeppacewiththeinterests andneeds ofMembers,
andcontributing totheWTO system intheform ofinnovation andstrengthened disciplines.
29. Regional agreements often achieve deeper andbroader economic integration thanmultilateral
agreements; asneighbors, members often haveinterests incommon. They canbecome models for
future multilateral liberalization innewareas, suchasservices, investment, environmental andlabour
standards. Thefollowing regional initiatives areeachexamples ofthispotential.
(a) TheNorth American FreeTrade Agreement
30. InJanuary of1994, theUnited States began toimplement theNAFTA, theworld 'slargest
freetrade area: 380million people producing nearly $8trillion dollars worth ofgoods andservices.
NAFTA increases opportunity forallthreepartners --Mexico, Canada andtheUnited States --toexpand
trade andenhance growth. Theforeign trade partners oftheNAFTA countries arelikely tobenefit
aswellfrom stronger growth inNorth America, asNAFTA actstoenhance thesizeoftheNAFTA
market andpurchasing power ofNAFTA countries. Since theAgreement 'sentry intoforceonJanuary
1,1994, theU.S. government hasworked toensure thatitsprovisions areimplemented swiftly.
Cooperative agreements onlabor andtheenvironment areincluded intheNAFTA package.United States WT/TPR/G/16
Page 7
31. NAFTA hashelped sustain North America onacourse toward freetrade during aperiod of
difficulties. From 1993 to1996 (levels annualized from thefirstseven months), U.S.exports toits
NAFTA partners increased by33percent, despite theinternational liquidity crisis beginning inMexico
inDecember of1994. U.S. exports totheworld overthesame period increased by35percent.
NAFTA isalsothefirstcomprehensive trade agreement accompanied byagreements onlabor and
environmental issues related totrade. These provisions ensure thatexpanded trade supports the
improvement oflabor andenvironmental conditions andtheenforcement ofnational labor and
environmental lawsinNorth America.
(b) TheFreeTrade Agreement oftheAmericas
32. InDecember of1994, theleaders of34countries oftheWestern Hemisphere metinMiami
forthefirsthemisphericsummitsince1967,whenPresidentJohnsonmetwith19LatinAmericanleaders
atPunta delEste. AtMiami, President Clinton and33other leaders committed to"conclude the
negotiations ofthe"Free Trade Area oftheAmericas" (FTAA) nolaterthan2005."
33. ItisclearthattheFTAA willsupport andenhance ourcommitment tothemultilateral system.
Itispremised onthesuccess oftheUruguay Round, andonfurther contributions toward and
commitmentstothemultilateralsystem.InJuneof1995,tradeministersfromthroughoutthehemisphere
pledged thattradeliberalization should beconsistent withWTO disciplines andcomprehensive inscope.
InMarch of1996, trade ministers reaffirmed thispledge andagreed thatapproaches forconstructing
theFTAA mustinclude consistency withGATT Article XXIV anditsUruguay Round Understanding
andwithGATS Article V.Theincrease ingrowth andimproved access tonewideas thatwillresult
from liberalized trade brought about bytheFTAA willalsostrengthen democracy intheregion, and
promote development. Thetrade ministers oftheHemisphere willnextmeet inMayof1997 in
BeloHorizonte, Brazil, forthethirdWestern Hemisphere Trade Ministerial.
(c) TheAsiaPacific Economic Co-operation Forum
34. Overthepasttwoyears theUnited States hascontinued itsactive involvement intheAsiaPacific
Economic Cooperation (APEC) Forum, which includes thelarger developing anddeveloped economies
inthePacific Rim.
35. TheUnited States considers APEC tobeanimportant vehicle forbuilding aregional economic
structure toensure thatpromotion ofprosperity andstability iscontinued overthelongterm. After
growing fromtheoriginal dozen countries in1989to18countries onbothrimsofthePacific, APEC
isaunique combination oftheworld 'sbiggest existing markets andtheworld 'sbiggest emerging
markets. According totheWorld Bank, tradeliberalization inthePacific Rimcountries would provide
enormous gains --notonlytotheregion buttotherestoftheworld.
36. APEC leaders metinBogor, Indonesia in1994andagreed todismantle barriers overthenext
25years thathaveimpeded tradeandinvestment between theireconomies. LastyearinOsaka, APEC
began toinitiate implementation intheBogor Declaration. Astheculmination ofafullyear'sefforts,
leaders ofthe18APEC economies approved theOsaka Action Agenda ontrade andinvestment
liberalization, facilitation andco-operation. ThisyearinManila, theMinisters andLeaders willpress
forward onindividual andcollective actions toreach thetrade liberalization goals setforth atBogor
andOsaka, aswellasplans forco-operation inlabour, capital, technology, infrastructure, andthe
environment.WT/TPR/G/16
Page 8Trade Policy Review
(d) TheNewTransatlantic Agenda
37. TheU.S.-European relationship, oneofthemostdurable intheworld, isfurther strengthened
bytheTransatlantic Agenda, aninitiative which seeks todeepen transatlantic relations byinitiating
specific jointU.S.-EU actions toaddress global economic, political, humanitarian andenvironmental
challenges more effectively. Thisisakeycomponent ofUnited States efforts tomeetthechallenges
posed bythepost-Cold Warreality, including theneedtobuild astrong transatlantic community of
democratic, freemarket economies.
38. Theemphasis onjointaction isarecognition ofthefactthatmany global challenges are
transnational andcanonlybesatisfactorily addressed iftheUnited States andEUacttogether; inan
ageofincreasing budgetary stringency, neither theUnited States northeEUhasthefinancial means
tosolve certain problems alone.
39. TheJointActionPlanalsospecificallyincludesstrengtheningthemultilateraltradeandinvestment
system by;consolidating thenewly-created World Trade Organization (WTO); exploring waystoreduce
tariffs, including aneffort toeliminate tariffs oninformation technology products; starting work on
newinternational rulesforintellectual property rights andgovernment procurement; andagreeing to
work together intheOECD toconclude amultilateral agreement oninvestment (MAI).
(iii) Domestic regulatory developments affecting trade policy
40. Among themore notable structural developments intheU.S.economy arederegulation efforts
thatprovide increased incentives foractive pursuit ofmarket openness inbothmultilateral andregional
fora. Domestic regulatory developments inthetwoyears since thelastreview oftheUnited States
aresignificant. They include regulatory reform inthepublic sector, andincreased recognition ofthe
costs andbenefits ofderegulation andpromotion ofcompetitiveness inseveral important industries.
(a) Regulatory reform
41. Inaddition totaking steps tomake itsprivate andregulated sectors more competitive and
efficient, theUnited States hasbeenengaged inaneffort tomake itspublic sector more efficient.
TheNational Performance Review hasfocused onmaking government agencies more performance-
andcustomer-oriented, eliminating outdated programs andpromoting newonesdesigned forthe21st
century. Forexample, theDepartment ofAgriculture hasreduced thenumber ofitsagencies from
43to29andisintheprocess ofclosing orconsolidating 1200 fieldoffices. Asapercentage oftotal
employment, Federal employment issmaller today thanatanytimesince theearly 1930's.
42. The“reinvention ”ofgovernment hasbeenaccompanied byaphilosophical change, asthe
United States hassought tochange itsregulatory systems from rules-based, toperformance-based,
regulations. Infacilitating compliance rather thanacting asadisciplinarian, theFederal government
hasencouraged innovation andcost-effectiveness. Regulatory systems affected include pension systems,
regulations affecting thebanking andcommunications sector, andthose affecting theenvironment.
This isregulatory reform thatresponds tofundamental changes intheeconomy, promoting
non-discriminatory competition andinnovation, butalsoretaining safeguards designed toprotect
consumers, andtheenvironment.United States WT/TPR/G/16
Page 9
(b) Deregulation
43. Astheauthors oftheReport ontheUnited States havecorrectly observed, “theUnited States
isamong theworld 'smost open economies, which helps tokeep economic actors under constant
competitive pressure nottomisallocate resources. ”Thepaceofthedomestic deregulation initiated
inthe1970'shascontinued,reinforcingAmerica’sfree-marketorientationandentrepreneurialtraditions,
andcomplementing itsopentrade policy withregulatory changes thatenhance markets andpromote
competition.Anopeninternationaltradesystemallowsallnationstousetheirresourcesmostefficiently,
thusmaximizing realincomes andliving standards. Responsible deregulation spurs competition, and
improves economic efficiency, thereby expanding economic opportunity.
44. Regulatory reforms inthe1970'sand1980'sdemonstrated thatremoving regulatory elements
thatneedlessly distort markets andlimitcompetition yields more efficient performance inindustries
suchasairtransport, trucking, andlong-distance telephone service. Themomentum ofthisregulatory
reform hasrecently expanded tonewareas, suchastelecommunications, where theUnited States
experienced anexplosion oftechnology andnewservice venues, andfinancial services.
45. Overthepastthreeyears,theUnitedStateshasmodernizedandstrengthenedthecompetitiveness
ofitsfinancialsystem.Legislationandregulatoryreformhaveeliminatedbarrierstofinancialinnovation,
promoted opencompetition infinancial services, andreduced thecosts--while improving thequality
--ofdepository institution regulation.
46. Regulatory reform hasbeenachieved without compromising safety andsoundness, jeopardizing
thefederaldepositinsurancefunds,orimpairingprotectionsforconsumersandcommunities.Legislative
barriers tocompetition have been removed, allowing forfullinterstate banking andbranching.
Previously, bothbankholding companies andindividual banks faced severe restrictions ontheirability
tooperate onaninterstate basis.
(c) Agricultural reform
47. TheUnited States ’commitment tothemultilateral system andtoeconomic reform isevident
inthereforms introduced intheFederal Agricultural Improvement andReform Actof1996. Forthe
nextseven years, income support tofarmers willbecompletely delinked from commodity prices.
Adeclining levelofpayments willbemade based solely onhistorical program participation andthe
number offarmers whosignupforthenewcontracts. Planting decisions andcommodity prices will
bedetermined bymarket forces, notgovernment incentives. Thisdecision, along withexport subsidy
capsapproved byCongress, willleaveU.S.agricultural support expenditures wellbelow U.S.Uruguay
Round commitment levels.WT/TPR/G/16
Page 10Trade Policy Review
IV. FUTURE DEVELOPMENTS INUNITED STATES TRADE POLICY
48. Asemphasized atthebeginning ofthisstatement, U.S.policy isbased strongly onthepremise
thattheremoval ofbarriers anddistortions toglobal tradeenhances higher wage jobcreation, incomes,
living standards andgrowth potential, intheUnited States aswellasintheeconomies ofourtrade
partners. Inefforts toreduce barriers andexpand trade, theU.S.interest isintheresulting promotion
ofeconomic opportunity andexpansion.
49. Given ourstrong sense ofitsbroad effects andobjectives, U.S.tradepolicy hasbeenconsistent
overmany decades initspursuit ofmore openglobal markets. Those efforts, however, havehadto
betailored tospecific conditions andchallenges which haveevolved overtime. Atthepresent time,
wewould emphasize twoover-riding factors.
50. First, rapidly changing technologies incommunications, transportation andother areas are
increasing theglobal potential forwelfare-enhancing tradeingoods andservices. Withthistremendous
expansion oftrade potential, however, hascome asubstantial increase inthecomplexity ofthetrade
policy issues withwhich theglobal trading community mustdeal. Thiscomplexity comes bothfrom
anexpanded scope fortradeandincreased potential fornon-traditional tradeandtrade-related measures
torestrict ordistort trade flows. TheUruguay Round represents amajor stepforward inmatching
global tradestructures anddisciplines tocurrent realities ofinternational trade. But,while recognizing
theimportance ofourefforts tomake theWTO aseffective aspossible, wemustalsorecognize that
much work which wasbegun andevenwelladvanced intheUruguay Round, remains tobedonein
theyears ahead.
51. Second, themovement overthelast10years ofmany lowandmiddle income countries around
theglobe tofreer markets athome andmore outward, lessrestrictive policies attheborder isof
fundamental importance intheshaping offuture tradeflows andissues. Some 85percent oftheworld ’s
population livesincountries withlowandmiddle percapita incomes. Withfreermarkets andgreater
outward orientation many ofthese countries areorwillsoonbeexperiencing highratesofgrowth in
output, incomes andtrade. Needless tosay,fromaU.S.perspective, thisisoneofthemostpositive
developments imaginable ontheglobal economic front--fortheneweconomic opportunities thatwill
begenerated forlargesegments oftheworld ’spopulation where suchopportunities havebeenscarce,
aswellasfortheexpansion ofwelfare-enhancing trade potential these developments create for
high-income countries liketheUnited States. Substantial efforts onthetrade policy front, however,
willberequired tohelpencourage andnurture suchtrends, toaddress remaining barriers, andhasten
adjustment inalloureconomies. Because ofourbelief intheimportance oftrade, oursense ofthe
challenges ahead andourunderstanding ofthecentrality oftheWTO toeconomic progress, weare,
aswehavebeen, committed toefforts tomaintain andexpand themomentum ofthemultilateral system,
through theWTO andother international institutions. TheUnited States remains fullycommitted to
active participation inthemultilateral system andtowork withourtrading partners toensure full
implementation ofitsachievements.