United States WT/TPR/S/88
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II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
1. In early May 2001, the President outlined his 2001 International Trade Agenda, which
includes pursuing a new round of global trade negotiations under the auspices of the WTO;  a Free-
Trade Area of the Americas agreement;  and other regional and bilateral trade negotiations, including
free-trade agreements with Chile and Singapore.1  The U.S. authorities are convinced that these
initiatives should be complementary and strengthen the operation of the multilateral trading system.The United States has stated its commitment to the launch of a new round during WTO's FourthMinisterial Conference at Doha in November 2001.
2
2. Under the U.S. system, the President has the responsibility and authority to undertake
negotiations with foreign governments, while Congress is required to provide implementing
authorization for any agreements that require change s to U.S. law.  In this context the President is
seeking Trade Promotion Authority from Congress, wh ich would be used to help implement the trade
agreements that are negotiated.  Under the precursor to that authority, "fast-track", legislation required
to implement trade agreements was submitted to Congress and voted on without amendment andwithin a fixed period.
3. In June 2001, the President announced a new policy initiative to respond to the perceived
challenges facing the steel industry.
3  This initiative, together with  recent developments in the U.S.
steel industry are further elaborated in Chapter IV(3).
(1) RECENT LEGISLATIVE ACTIVITY
4. A number of trade laws have been enacted by the U.S. Congress since the last U.S. Trade
Policy Review in July 1999.  Among these, the Trade and Development Act (TDA) of 2000,
described below, offers improved market access for countries in sub-Saharan Africa and
the Caribbean.4  The TDA contains both the African Growth and Opportunity Act (AGOA) and the
U.S.–Caribbean Basin Trade Partnership Act (C BTPA), which expanded the Caribbean Basin
Initiative (CBI).  The passage of this legislation is  expected to enhance trade and investment flows to
the regions, and consequently, to increase incomes and economic growth.  Thirty-seven sub-Saharan
African and 24 Caribbean countries have been designated as beneficiaries under the TDA.  In
May 2001, the authorities were in the process of certifying beneficiary countries under the TDA.Eligibility is based on such criteria as the implementation of WTO provisions, protection for
intellectual property rights, economic and political reforms, and the protection of workers' rights.
5. A major U.S. policy objective was met in October 2000, when the bill authorizing grant of
Permanent Normal Trade Relations (PNTR) status to the People's Republic of China became law
(Public Law No. 106-286).  The Act authorizes the President to grant China unconditional most-favoured-nation status ("Permanent Normal Trade Relations") upon China's accession to the WTO,
thus terminating the process of annual review and renewal of China's MFN treatment under Title IV
                                                     
1 The President's 2001 International Trade Agenda [Online].  Available at: http://www.ustr.gov/agenda.
For earlier statements, see USTR (2000), 2001 Trade Policy Agenda and 2000 Annual Report of the President ofthe United States on the Trade Agreements Program, also available at the USTR's website(http://www.ustr.gov).
2 For the latest statement in this regard at the time of finalizing this report see Remarks by Deputy
USTR, Press Release, 25 June 2001, U.S. Mission Geneva [Online].  Available at:  http://www3.itu.int/
missions/US/press2001/0625allgeier.htm.
3 Statement by the President regarding a multilateral initiative on steel, The White House, Office of the
Press Secretary, 5 June 2001 [Online].  Available at:  http://whitehouse.gov/news/releases/2001/06/20010605-
4.html.
4 The text of the TDA is available online at:  http://www.ustr.gov.WT/TPR/S/88 Trade Policy Review
Page 14
of the Trade Act of 1974 (the so called Jackson-Vanik Amendment).  The grant of unconditional
MFN treatment is conditional upon the President certifying that China's WTO accession commitments
are at least equivalent to those contained in  the November 1999 Agreement on Market Access
between the People's Republic of China and the United States of America.5
6. A recent legislative change that could potentially detract from more open trade is the "Byrd"
Amendment, which is due to come into effect on 1 October 2001 (Chapter III(1)(ii)).  This
amendment essentially requires anti-dumping and countervailing duties to be paid to domesticpetitioners and supporters of petitions.  Trade frictions have also arisen from Section 407 of the TDA,
also known as the "Carousel Amendment".  This amended Section 306 of the Trade Act of 1974 to
direct the USTR to review periodically the list of products subject to suspension of WTO concessionsas a result of a country's non-compliance with rulings made under a dispute settlement proceeding.
(2) P
ARTICIPATION IN THE WTO
7. The United States has continued to be one of the major participants in the WTO, including its
dispute settlement mechanism.  Since its previous Review, the United States has tabled proposals in a
wide range of areas.6  Policy has also focused on increasing transparency, both internally and
externally, in WTO activities.7  Federal Register notices have been issued seeking public comment on
improving transparency in the WTO, the mandated negotiations, and most recently on preparations for
the WTO Fourth Ministerial Conference, including the possibility of launching a new round of
multilateral trade negotiations.8
8. In addition, the authorities noted that over the last two years the United States has committed
more than US$600 million towards strengthening the trade capacity of developing countries and
economies in transition, part of which has directly addressed WTO related issues.
(i) Agri-food trade negotiations
9. In the current WTO agriculture negotiations, the United States has submitted a comprehensive
proposal for long-term agricultural trade reform.9  In particular, improved market access would be
achieved by reducing tariffs and expanding tariff quotas.  Export subsidies would be eliminated, while
trade-distorting domestic support would be reduced in proportion to the value of agricultural
production.  More specific or detailed proposals have also been made concerning domestic supportand tariff quotas.
10  Current U.S. agricultural policies and measures are outlined in Chapter IV(1).
10. As the world's largest producer and exporter of foods derived from biotechnology
(i.e. containing genetically modified organisms (GMO s)), the United States may be affected by import
measures targeting these products, including special approval procedures and mandatory labelling
requirements already imposed or proposed by a number of WTO Members on foods derived frombiotechnology.
11  In the WTO, the United States submitted a proposal in the context of the agriculture
                                                     
5 See also "The U.S.-China WTO Accession Deal:  A Strong Deal in the Best Interests of America",
[Online].  Available at:  http://mac.doc.gov/China/Docs/ 2pgfactsheet.htm.
6 USTR online information.  Available at:  http://www.ustr.gov/wto/ministerial.shtml;  and WTO
document WT/MIN(99)/ST/12, 1 December 1999.
7 WTO document WT/GC/W/413, Rev.1, 13 October 2000.
8 Federal Register Notice, Vol. 65, No. 111, 8 June 2000 [Online].  Available at: http://www.ustr.gov/
wto/transp.shtml.
9 WTO document G/AG/NG/W/15, 23 June 2000.
10 WTO documents G/AG/NG/W/16, 23 June 2000 and G/AG/NG/W/58, 14 November 2000.
11 Mandatory labelling for GMOs is in place for example in the EU (see WTO, 2000,
Chapter III(2)(viii)(a)), and has also been introduced or w ill soon take effect in Australia, New Zealand, Korea,
Japan, Switzerland, and other countries.United States WT/TPR/S/88
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negotiations seeking to ensure that processes covering trade in products developed through new
technologies are transparent, predictable, and timely.12  The United States has also provided a list of
all notifications made by WTO Members regarding genetically modified agri-food products.13
11. The United States participated in the negotiations to conclude the Cartagena Protocol on
Biosafety to the Convention on Biological Diversity  (CBD), but has not signed or ratified it.14  This is
partly because the United States has not ratified the CBD and therefore cannot sign the Cartagena
Protocol.  The Protocol addresses trade in livin g genetically modified organisms (LMOs), a small
subset of GMOs.  The Protocol will enter into force after the deposit of the 50th instrument of
ratification.
(ii) Trade in services
12. The United States participates actively in current negotiations on an expanded framework for
trade in services, based on the conviction that access to high quality affordable services promotes
economic growth, improves consumer choice, and facilitates human resource development.  The
United States has presented proposals for further liberalization of 11 services sectors:  accountancy
services;  audiovisual and related services;  distribution services;  education and training services;energy services;  environmental services;  express delivery services;  financial services;  legal
services;  telecommunications services, value-added network, and complementary services;  and
tourism services.  The United States has also presented a proposal on the movement of naturalpersons.
(iii) Electronic commerce
13. The United States was an early supporter of a global electronic commerce (e-commerce)
framework in which electronic transmissions would remain free of customs duties.
15  The United
States has signed joint statements on e-commerce with a number of trading partners, including the
European Union, pledging, among other things, to avoid new discriminatory taxation on electroniccommerce.
16  A number of issues remain outstanding, however, such as the taxation of "non-tangible"
products, such as software or music.
14. In the United States, the taxation of electronic commerce is under debate in Congress and in
many of the 50 States.17  Some 45 States levy state retail sales as well as use taxes which may apply to
transactions in electronic commerce;  and some cities and countries can also levy these taxes.  In bothcases, governments can tax only those companies that have "substantial nexus" in that State (which
can be defined generally as a physical presence, such as a retail store, warehouse, inventory, or
regular presence of travelling salespeople or agents).  If the vendor does not have substantial nexus,
the consumer must in principle pay the sales or use tax to the state and local tax bodies.  In some
States, both information (e.g. data, e-books, music or access to for-pay web sites and databases) and
software are exempt from sales/use tax;  in others, both are subject to sales/use taxes;  while in a third
                                                     
12 WTO document G/AG/N/W/15, 23 June 2000.
13 WTO document G/TBT/W/115/Add.1, 18 October 2000.
14 Further information on the Cartagena Protocol can be found in WTO document WT/CTE/M/24,
19 September 2000.
15 WTO documents WT/GC/W/78, 9 February 1998 and WT/GC/W/95, 29 July 1998.  Such a
framework is presented in the website of the Advisory Commission on Electronic Commerce, available at:
http://www.ecommerce.gov/framewrk.htm.
16 Available online at:  http://www.ecommerce.gov/joint_ statements.htm.
17 An advisory commission on electronic commerce was created by Congress (see
http://www.ecommercecommission.org).WT/TPR/S/88 Trade Policy Review
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group of States, information purchased over the internet is tax exempt, but software is subject to a
sales/use taxes.18
(iv) Trade and the environment
15. U.S. efforts in the WTO Committee on Trade and the Environment have focused on the
reduction of environmentally harmful and trade distorting agricultural and, in particular, fisheries
subsidies, with a proposal on how to categorise these subsidies; environmental assessments of tradeliberalization agreements;  and the liberalization of trade in environmental goods and services.
19
16. The United States has in place a significant body of law to address environmental
protection.20  Some of these laws, such as the Marine Mammal Protection Act of 1972, and the
Endangered Species Act of 1973 and related legislation, have a direct bearing on trade.  The
authorities consider that trade measures contained in these laws (Chapter III(1)(v)) can be critical forachieving certain environmental objectives, when carefully tailored and appropriately applied.
21  The
United States also considers that WTO provisions are sufficient to accommodate trade measures
contained in multilateral environmental agreements (MEAs).
17. The United States is a party to most international environmental agreements.  Exceptions
include the Basel Convention on the Transboundary Movement of Hazardous Wastes and their
Disposal, and the Bonn Convention on the Conser vation of Migratory Species of Wild Animals.
Before the United States can formally ratify the Basel Convention, domestic legislation must be in
place to implement all of the Convention's requirements.  For example, while U.S. law alreadyrequires the written consent of an importing country before hazardous waste is exported from the
United States, there are no provisions for ensuring that waste sent without proper authorization is
repatriated, which is a requirement under the Basel Convention. The Administration is in the process
of preparing to implement legislation to allow the Un ited States to ratify this convention.  The United
States is also in the process of developing implementing legislation to ratify the RotterdamConvention on the Prior Informed Consent (PIC ) Procedure for Certain Hazardous Chemicals and
Pesticides in International Trade, and the recently concluded Stockholm Convention on Persistent
Organic Pollutants (POPs).
18. The United States signed the December  1997 Kyoto Protocol to the UN Framework
Convention on Climate Change but has announced that it will not ratify the Protocol "because it
exempts 80 per cent of the world, including major population centres such as China and India, from
compliance, and would cause serious harm to the U.S. economy."
22  The United States has expressed
its intent to work with other nations to develop new technologies, market incentives and otherapproaches to addressing climate change.
19. In December 2000, the USTR and the Council on Environmental Quality released guidelines
for the environmental review of trade agreements.
23  Environmental reviews are required for three
                                                     
18 For more information, see the Sales Tax Institute [Online].  Available at:  http://www.salestax
institute.com.
19 WTO documents WT/CTE/W/154, 4 July 2000, and WT/CTE/W/171, 20 October 2000.
20 See WTO (1999), Chapter III (4)(iv).
21 WTO document WT/CTE/M/25, 12 December 2000.
22 Letter of 13 March 2001 from President Bush to Senators Jesse Helms of North Carolina, Chuck
Hagel of Nebraska, Pat Roberts of Kansas, and Larry E. Craig of Idaho.  For the status of ratification of the
Kyoto Protocol see UNFCCC Secretariat online information.  Available at:  http://www.unfccc.int/resource/conv/ratlist.
23 USTR and Council on Environmental Quality (2000) [Online].  Available at:  http://www.ustr.gov/
releases/2000/12/guides.pdf.United States WT/TPR/S/88
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types of trade agreement:  comprehensive multilateral trade rounds, bilateral or plurilateral free-trade
agreements, and major new trade liberalization agreements in the natural resources sector.  In
April 2001, the USTR announced that it would proceed with an environmental review of the current
WTO negotiations on agriculture and services.
20. The Trade Promotion Authority framework released as part of  the 2001 International Trade
Agenda was based on the premise that, in the trade and economic sphere, inter alia , the U.S.
Administration can promote environmental protection;   this would include actions such as those
included on an illustrative list provided in a "Labour and Environmental Toolbox".24
(v) Competition policy
21. The United States has actively participated in the WTO Working Group on the Interaction
between Trade and Competition Policy, viewed as a valuable multilateral educational and capacity-
building forum.  The United States has stated that the relationship between trade and competition
policy is of increasing importance for the multilateral trading system and for international trade, but
has also questioned whether the WTO was the appropriate institution in which to initiate the
development of rules on competition in a multilateral context at this time.25
(vi) Trade and labour standards
22. Section 131 of the Uruguay Round Agreements Act mandates the President to seek the
establishment of a working party in the WTO to examine the relationship between trade and labour
standards.  Accordingly, the United States has pursued discussions and made a proposal in the WTO
towards this end.26
23. Labour provisions have been included in all U. S. unilateral trade preference programmes.  For
example, under the U.S. Generalized System of Pr eferences (GSP) the President may not designate
any country a beneficiary if the country has not taken or is not taking steps to provide internationally
recognized worker rights to workers in the count ry.  In this respect, in July 2000 the President
suspended all GSP benefits to Belarus because Belarus had not taken sufficient steps to conform to
internationally recognized worker rights.27  In January 2001, the USTR announced the termination of
a worker rights review of Swaziland, after conc luding that Swaziland had brought its laws and
practices into conformity with GSP statutory requirements.28  In May 2001, the USTR announced the
suspension of a worker rights review of Guatemala after that country enacted new labour laws and
undertook additional measures.29  Reviews of GSP eligibility may be initiated by the Government
itself, or in response to complaints by other parties.
24. The CBTPA conditions trade preferences to an evaluation by the USTR that "internationally
recognized worker rights" are being respected in CBTPA countries.30  The AGOA requires that
beneficiary countries must be making continual progress in promoting internationally recognized
worker rights.  The TDA, which includes the CBTPA and AGOA, also added that the elimination of
the worst forms of child labour must be included as a criteria for eligibility for the GSP, CBTPA, andAGOA.  Similar conditions apply under th e Andean Trade Preference Act (ATPA).
                                                     
24 See USTR online information.  Available at:  http://www.ustr.gov/toolbox.pdf.
25 WTO document WT/WGTCP/M/12, 8 November 2000.
26 See also WTO document WT/GC/W/382, 1 November 1999.
27 USTR Press Release, 00-51.
28 Federal Register, Notices, 10 January 2001.
29 Federal Register, Notices, 10 January 2001.
30 19 U.S.C. 2702 (b).WT/TPR/S/88 Trade Policy Review
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25. The Trade Promotion Authority framework seeks to promote adherence to core labour
standards through actions such as those contained in the "Labour and Environmental Toolbox".  Core
labour standards are defined as freedom of association, right to organize and bargain collectively,
prohibition of forced labour, elimination of exploitative forms of child labour, and non-discrimination
in employment or occupation;  they differ from internationally recognized workers rights mainly in
that they do not refer to minimum wage provisions.31
(vii) WTO dispute settlement
26. Since 1999, the United States has continued to be the most active complainant and respondent
in the WTO dispute settlement mechanism.  Of the 77 requests for consultations from January 1999 to
May 2001, the United States was the complainant in 20 cases and the respondent in 24 cases.  As can
be seen from Table AII.1, 34 complaints by the United States were active during January 1999-May
2001, as were 34 cases regarding U.S. policies and practices.
27. The application by the United States of anti-dumping, countervailing and safeguard measures
has been one of the main sources of complaint by its trading partners:  seven U.S. anti-dumping andcountervailing measures in effect since 1995 have been challenged under the WTO.  The United
States has been found in breach of multilateral rules in several of these disputes (Chapter III(1)(ii)).
Complaints have come from a wide spectrum of developing and industrialized countries.
28. Many of the disputes involving the United States also involve the European Union (EU).  In
the banana dispute, the United States imposed 100% duties on imports of EU products amounting toUS$191.4 million, after receiving authorization from the DSB to suspend concession.  In April 2001,
the United States and the European Union reached a bilateral agreement to resolve the dispute and in
July 2001 the duties were lifted.  In the dispute regarding the EU ban on imports of U.S. beef treated
with hormones, the damage to the United States was determined by WTO arbitrators to be
US$116.8 million.
32  In November 2000, the EU requested authority to suspend concessions in an
amount exceeding US$4 billion, in a dispute re garding the tax treatment of Foreign Sales
Corporations.  As of May 2001, the matter was su spended pending a review of the replacement
legislation's WTO-consistency (Chapter III(2)(iii)).
(3) PREFERENTIAL AND OTHER ARRANGEMENTS
(i) Relations with Canada and Mexico33
29. Reflecting the free-trade provisions of the North American Free-Trade Agreement (NAFTA)
as well as geographical factors, Mexico is now the United States' main trading partner after Canada
(Tables AI.3 and A1.4).  U.S. tariffs on Canadian imports were eliminated in 1998 except on
44 groups of products, which mainly include out-of-quota imports of products subject to tariff quotas
(TQ), such as sugar and sugar products, dairy and dairy products, peanuts and products, and cotton.
Tariffs on imports from Canada average 0.8%.  For some products, such as sugar, peanut butter, and
some dairy products, parts of the TQ access allocated to WTO Members in the Uruguay Round werereserved for Canada (Table III.2).
                                                     
31 U.S. legislation defines internationally recognized worker rights as, the right of association, the right
to organize and bargain collectively, prohibition of the use of forced or compulsory labour, a minimum age for
the employment of children, and acceptable conditions of work with respect to minimum wages, hours of work,and occupational safety and health (Section 507(4) of the Trade Act of 1974).
32 The list of products on the retaliation lists is available online at:  http://www.ustr.gov.
33 See also USTR (2000a), available at:  http://www.ustr.gov/naftareport/intro.htm.United States WT/TPR/S/88
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30. Tariff elimination with Mexico continued through staged phase-outs and "accelerated" tariff
reductions.  The latest, which took place in January 2001, covered footwear, chemicals,
pharmaceuticals, auto parts and batteries.34  U.S. tariffs on imports from Mexico now average 0.9% and
remain on approximately 1,000 tariff lines, of whic h the highest rates levied are on agri-food products
and clothing.  The phase-out period runs to  January 2008.  Meanwhile, additional TQs opened
exclusively for Mexican exporters provide substantial market access privileges for most productscovered by WTO TQs.
31. Bilateral trade flows between the United States and Canada (about US$1.1 billion daily) and
those with Mexico (US$0.7 billion da ily) have remained to a large extent free of problems, reflecting
regular cooperation and consultation in a number of committees and working groups.  Main exceptions
include U.S. anti-dumping and countervailing measures, which Canadian and Mexican pr oducers
have increasingly challenged under Chapter 19 (Article 1904) of the NAFTA.  Between 1994 and
May 2001, 42 final U.S. determinations, amounting to over three quarters of all U.S. determinations
regarding imports from Canadian or Mexican producers, have been appealed to bi-national panels.
The largest number of reviews took place in 1997 (8 reviews), 1999 (7 reviews) and 2000
(11 reviews) and concerned the steel sector.  NAF TA panel decisions may affirm, remand, or affirm
in part and remand in part a domestic agency's determination.  Since 1994, eight of the 42 appeals for
which a decision has been issued, were remanded totally or in part
35;  a total of 19 reviews were
terminated by joint consent of participants.  The remainder of the 42 cases was still active in
May 2001.
32. On the long-standing issue of trade in softwood lumber between the United States and
Canada, recent developments include the initiation by the United States of new anti-dumping and
countervailing duty investigations in April 2001 (Chapt er III(1)(ii)).  This fo llowed the termination of
a five-year agreement whereby the Canadian Government agreed to have restrictions placed on
exports of softwood lumber to the United States from four Canadian provinces.
33. Chapter 11 of the NAFTA contains, inter alia,  disciplines to ensure that foreign investors are
provided national treatment.  Disputes may be referred either to government-to-government dispute
settlement under the Agreement or, in some cases, to investor-state arbitration.  The United States isin favour of increased transparency in the investor-state arbitration process.  Available information
indicates that between 1995 and 2000, this process had been used four times against the United States:
by the Loewen Group (Canada), concerning a Mississi ppi state court award related to fraudulent and
malicious business practices
36;  by Methanex Corp. (Canada), concerning California's order to
eliminate MTBE from gasoline by 31 December 200237;  by the ADG Group Inc. (Canada);  and by
Mondev International Ltd. (Canada), concerning a decision by the Massachusetts Supreme Judicial
Court in a lawsuit against the City of Boston and the Boston Redevelopment Authority.
34. Long-standing frictions between the United States and Canada persist regarding Canadian
wheat exports.  In October 2000, the USTR initiated a Section 301 investigation of the trade practices
of the Canadian Wheat Board.  Canada has also complained about U.S. set-asides for small andminority businesses and the Buy-American provisions in government procurement.
38  C a n a d i a n
                                                     
34 The full list of products is available online at:  http://www.ustr.gov.
35 NAFTA Secretariat online information.  Available at:  http://www.nafta-sec-alena.org.
36 Details available online at:  http://www.citizen.org/pctrade/nafta/cases/Loewen.htm.
37 Details available online at:  http://www.methanex.com/investorcentre/newsreleases/nafta.pdf.
MTBE (methyl tertiary-butyl ether) is a chemical compound used as a fuel additive in motor gasoline to replacelead as an octane enhancer (helps prevent the engine from "knocking").
38 See for example WTO document WT/TPR/M/56.Add.1, 9 March 2000.WT/TPR/S/88 Trade Policy Review
Page 20
protection of its cultural (mainly broadcasting and magazines) and dairy sectors have also continued
to be a source of tension in the bilateral relationship.39
35. Several disputes have also been active under NAFTA Chapter 20, which concerns
the interpretation or application of the NAFTA, on cross-border trucking services and investment,
and on cross-border bus services.  The United States requested consultations on Mexico's
administration of its transitional TQ on dry beans, and has also pursued WTO dispute settlementprocedures against Mexico concerning market access to the Mexican telecommunications market and
Mexico's anti-dumping duties on high fructose corn syrup.
(ii) Bilateral agreements
36. The 1985 U.S.–Israel Free Trade Agreement was complemented in 1996 by the Agreement on
Trade in Agricultural Products (ATAP).  Most Israeli agricultural products have duty-free access tothe U.S. market.  Therefore, the additional market-access commitments under the ATAP have mainly
consisted of supplementary duty-free quota allocations, in excess of U.S. WTO commitments.  The
ATAP expires at the end of 2001 and the United States and Israel will be negotiating a successor
arrangement on market access for this sector.
37. Yet to be ratified by Congress as of May 2001, the U.S.–Jordan Free Trade Agreement, of
October 2000, would provide duty-free imports into the United States for most goods within four
stages of implementation, the longest being ten years, although for some products duties will not be
eliminated.
40  This FTA includes provisions addressing trade and the environment, trade and labour
issues, and electronic commerce:  these provisions can be enforced through the Agreement's dispute-
settlement provisions.  Other provisions address intellectual property rights protection, balance of
payments, rules of origin, and safeguards.  Because the United States already has a Bilateral
Investment Treaty with Jordan, the FTA does not include an investment chapter.
38. The Administration is committed to concluding the negotiation launched in November 2000
on a comprehensive free-trade agreement with Chile covering all sectors.  Negotiations were also
launched in November 2000 for a U.S.–Singapore Free Trade Agreement, which would be the first
FTA between the United States and an Asian country.
39. In July 2000, the United States and Viet Nam signed a bilateral trade agreement.41  Such an
agreement is required under the Jackson-Vanik Amendment for a non-market economy to become
eligible for conditional (annually renewable) Normal Trade Relations (i.e. MFN treatment).  Until the
approval of the agreement by Congress, Viet Nam remains one of six countries that do not enjoy
MFN tariff treatment;  the others are Afghanistan, Cuba, Laos, the Dem. People's Republic of Korea,and the Federal Republic of Yugoslavia (Serbia and Montenegro).
(iii) Unilateral preferences
40. Programmes providing duty-free treatment for developing country exports consist of the GSP,
the recently enhanced CBI, the ATPA
42 and the AGOA.  The GSP was renewed by Congress until
September 2001 (see also section (2)(iv) above).
                                                     
39 See WTO (2001).
40 Information on the agreement can be found online at:  http://www.ustr.gov/regions/eu-med/
middleeast/textagr.pdf.
41 Information on the Agreement can be online found at:  http://www.ustr.gov/speech-test/barshefsky/
barshefsky_t41.htm.
42 See also WTO document WT/L/372, 20 November 2000.United States WT/TPR/S/88
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41. The TDA, which contains the AGOA and the CBTPA, sought to enhance investment in and
trade with sub-Saharan African (SSA) countries and 24 Caribbean countries.  As general preferences,
the AGOA offers eligible SSA countries duty-free and quota-free U.S. market access for essentially
all products through the GSP programme for eight years, and eliminates the GSP competitive-need
limitation for beneficiary SSA countries.  Provisions of the AGOA and of the CBTPA are described in
Chapter III(1)(i) and (iii).43  GSP duty-free treatment for selected products from beneficiary SSA
countries may be provided by the President upon advice from the U.S. International Trade
Commission that imports of the products from these countries are not sensitive.  A total of 1,835
products have been added to the GSP programme for SSA countries.44
42. The ATPA was designed as an incentive for countries in the Andean region to move away
from narcotics cultivation into other products.  As a group, between 1991 and 1999 the four countriesincluded (Bolivia, Colombia, Ecuador, and Peru) increased their exports to the United States by about
97%.
45  The Andean Community has requested that the U.S. Government enact legislation extending
the programme for at least several years.  In addition, they have asked for fewer products to be
excluded from preferential treatment, notably in  the context of the recently enhanced benefits
extended to Caribbean countries, and to add Venezuela (the fifth member of the Andean Pact) as abeneficiary country.
(iv) Developments in other fora
43. In April 2001, at the Summit of the Americas in Quebec, leaders endorsed the decision to
conclude by January 2005 negotiations on the Free Trade Area of the Americas (FTAA) among all the
countries of the Western Hemisphere except Cuba.
46  Leaders also agreed that the FTAA would enter
into force no later than December 2005.  Product- and sector-specific market access negotiations were
to begin in May 2001.
44. The United States has continued its participation in other multilateral fora, such as the Asia-
Pacific Economic Cooperation (APEC).47  Established in 1989 as a dialogue group, APEC is now
seen by the United States as a primary regional vehicle for promoting open trade and practical
economic cooperation.  Its goal is to advance Asia-Pacific economic dynamism and sense of
community.48
45. The Organization for Economic Cooperation and Development is another key forum for the
discussion of economic and social issues relevant to the multilateral trading system.  Among recent
achievements, the Convention on Combating Bribery of Foreign Public Officials entered into force
in 1999.  The OECD Arrangement on Guidelines for Officially Supported Export Credits was
estimated to save U.S. taxpayers about US$800 million in reduced appropriations (Chapter III(2)(ii));however, as of June 2001 negotiations within the OECD aimed at establishing disciplines on officially
supported export credits in agriculture had not yet reached a conclusion (Chapter III(2)(i)).
                                                     
43 Conditions for eligibility may be consulted in the USTR online information.  Available at:
http://www.ustr.gov/regions/africa/factsheet.html.
44 The list has been notified to WTO Members (WTO document WT/COMTD/N/1/Add.3,
1 March 2001.  It is also accessible in the USTR online information.  Available at:  http://www.ustr.gov/regions/africa/agoa.html.
45 See also WTO document WT/L/372, 20 November 2000.
46 FTAA online information.  Available at:  http://www.ftaa-alca.org.
47 APEC online information.  Available at:  http://www.apecsec.org.sg/.
48 For more information on U.S. activities in APEC, see USTR online information.  Available at:
http://www.ustr.gov/regions/asia-pacific/apec.shtml.WT/TPR/S/88 Trade Policy Review
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(4) INVESTMENT POLICIES
(i) Foreign direct investment
46. The openness of the U.S. investment regime together with lucrative domestic investment
opportunities have continued to attract foreign investors, thus helping bridge the gap between national
savings and domestic investment (Chapter I).  Notwithstanding the United States' basic commitment
to an open investment regime, there are certain reciprocity or other conditions to national treatment orrestrictions on market access on national security grounds.  Restrictions on foreign ownership apply to
a few subsectors, including domestic air and maritime transportation, and several activities in the
energy sector (e.g. oil and gas pipelines), leases to develop mineral resources on federal lands,
telecommunication services, and primary dealers in financial services.  Restrictions at the State level
exist in some sectors where State regulation plays a major role, as in insurance.  Some of these, andother provisions pertaining to selected services sectors, are described in more detail in Chapter IV.
47. The President may undertake a national security investigation of foreign mergers,
acquisitions, and take-overs.  Section 721 of the Defense Production Act of 1950, the so-called
"Exon-Florio" provision, authorizes the President to suspend or prohibit proposed foreign investments
(mergers or acquisitions) or divest completed transactions that constitute a threat to national security.Since the provision was first introduced in 1988, as few as 17 of the 1,180 transactions notified have
proceeded to the investigative phase and only one transaction has actually been prevented.
(ii) International investment policy
48. The United States has actively participated in the WTO Working Group on the Relationship
between Trade and Investment.  It has also gained experience on international investment relations in
its bilateral investment treaties, and notably under Chapter 11 of the NAFTA (section (3)(i) above).
49. Bilateral investment agreements have been signed with over 45 countries;  30 are in force.
Those concluded since January 1999 are described in Table II.1.  Among other things, investment
agreements seek to protect U.S. investment in countries where U.S. investors’ rights are not protected
through existing agreements;  encourage adoption of market-oriented domestic policies;  and support
the development of international law consistent with  these objectives.  The authorities are of the view
that these agreements also lay the groundwork for plurilateral and multilateral agreement.   United States WT/TPR/S/88
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Table II.1
List of trade and investment agreements concluded since 1999 (and date of signature), March 2001
Partner I.  Agreements that have entered into force
Australia Understanding on Automotive Leather Subsidies (20 June 2000)
Belarus Agreement regarding Imports of Certain Fiberglass Fabric (17 February 2000)
Cambodia Agreement on Trade in Textiles and Textile Products (21 January 1999)
Canada Amendment to the Softwood Lumber Agreement Resolving Dispute over British Columbia’s 1998
Reduction in Stumpage Pricing (August 1999)
Agreement on Implementation of the WTO Decision on Canada’s Dairy Support Programs(December 1999)
China U.S. – China on Agricultural Cooperation (10 April 1999)
India Agreement on Textile Tariff Bindings (15 September 2000)
Japan U.S.– Japan Joint Report on Investment (28 April 1999)
U.S. – Japan initiative on Deregulation and Competition Policy (3 May 1999)
U.S.– Japan Agreement on NTT Procurement Procedures (1 July 1999)
U.S. – Japan initiative on Deregulation and Competition Policy (19 July 2000)
Laos Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products (4 August
2000)
Macedonia Memorandum of Understanding Establishing Outward Processing Program (September 1999)
Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products (2 June 2000)
Nepal Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products (13 July 2000)
Oman Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products
(25 November 2000)
Romania Memorandum of Understanding Establishing Outward Processing Program (September 1999)
Russia Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products
(15 December 2000)
Chinese Taipei Extension to Agreement on Trade in Textiles and Apparel Products (15 December 2000)
II.  Agreements that have been negotiated but have not yet entered into force
Inter-American Mutual Recognition Agreement for Conformity Assessment of Telecommunications
Equipment (29 October 1999)
Bahrain Bilateral Investment Treaty (signed 29 September 1999;  pending exchange of instruments)
El Salvador Bilateral Investment Treaty (signed 10 March 1999;  pending exchange of instruments)
Jordan Agreement between the United States of America and the Hashemite Kingdom of Jordan on the
Establishment of a Free Trade Area (signed 24 October  2000; pending approval by both parties)
Viet Nam Agreement between the United States and Viet Nam on Trade Relations (13 July 2000;  pending approval
by both parties)
Source: USTR (2000b) Annual Report, available at www.ustr.org, and information provided by the authorities.