WORLD TRADE WT/TPR/M/16/Add.1
19March 1997
ORGANIZATION(97-1119)
Trade Policy Review Body
11-12 November 1996
TRADE POLICY REVIEW
UNITED STATES
MINUTES OFMEETING
Addendum
Answers toWritten Questions
Thefollowing communication wasreceived on15February 1997 fromtheDelegation ofthe
United States responding toquestions raised bydelegations andthediscussants during thereview.
_______________
QUESTIONS FROM ARGENTINA
1. Re:Report from theSecretariat, Section II,para. 58.
Certain bilateral agreements signed withJapan havenotbeennotified totheWTO, evenwhen
theyappear torelate toareas within thejurisdiction ofthatorganization, suchasconstruction services,
cellular telephony, etc.Could youprovide more information ontheprovisions ofthese agreements?
Inparticular,couldyoutelluswhatincentivestodirectforeigninvestmentarecontainedintheagreement
withJapan ofJune20,1995?
TheU.S.hasnotified agreements consistent withitsWTO obligations, andhasalsoprovided
information about specific agreements, including theagreement ofJune20,1995, toWTO members
onrequest.
2. Re:Report from theSecretariat, Section III,para. 22.
Wereadinpara. 22thatthe“United States Treasury Department isconsidering theadoption
ofuniform rules oforigin; nevertheless...that initiative hasnotreceived thesupport oftheCongress
orthevarious sectors ofindustry. Inthisregard, wewould liketoknow whether theTreasury
Department isstillconsidering theadoption ofuniform rulesoforigin, andwhatwerethereasons why
Congress andindustry didnotsupport thisinitiative?
Thequotationfrompara.22oftheSecretariat’sreportisfromanITCreport(“Country-of-Origin
Marking: Review ofLaws, Regulations andPractices, Investigation No.332-366, USITC Publication
2975, July,Washington, D.C.) which explains thedebate inmore detail. Although several industries
haveexpressed support forthisproject, changes totherules willnotbemade unless anduntilthere
havebeenconsultations withtherelevant Congressional committees.WT/TPR/M/16/Add.1
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3. Re:Report from theSecretariat, Section III,para. 25.
Para. 25ofthereport indicates thattherequest toinitiate ananti-dumping investigation or
aninvestigation intosubsidies canbesubmitted by“associations ofworkers whoarerepresentative
oftheindustry affected. ”What isthelegaljustification forthisinterms oftheWTO agreements?
4. Re:Report from theSecretariat, Section III,para. 29.
According topara. 29,U.S.legislation would onlyseem tocontain thetwo-percent rulefor
determining the“deminimum ”margin ofdumping, butwould notseemtoinclude theruleforvolume
(three percent oftheimports ofasimilar product). Could youclarify thissituation forus?
Along thesame lines, wewould appreciate having more information onthestandards with
regard totheminimum permissible volume ofsubsidized imports from developing countries, which
isfourpercent ofthetotalimports ofasimilar product, anddoesnotappear tohavebeencovered
inU.S.legislation.
The“three-percent ”deminimus, ornegligible, volume ofimports requirement isaddressed
in19U.S.C. sec.1677(24) oftheU.S.Code, which alsoaddresses the“fourpercent ”ruleforimports
fromcertaindevelopingcountries.Otherstatutoryprovisions,19U.S.C.secs.1671b(a)(‘1),1673b(a)(1),
1671d(b)(1)and1673d(b)(1)requirethatinvestigationsbeterminatedifimportsfromaparticularcountry
are“negligible ”asdefined insec.1677(24).
5. Re:Report from theSecretariat, Section IV,para. 22.
Could youspecify thestage oftheCongressional approval process ofthebillunder which the
U.S.International Trade Commission would beasked toexamine thepossibility ofdefining thenational
industry onthebasis ofseasonal competition? Inpractical terms, whatwould theadoption ofsuch
adefinition signify?
Thebilldidnotpass; assessment ofitspractical implications would therefore beamatter of
speculation.
6. Re:Report from theSecretariat, Section III,para. 71.Marketing Report.
Could theU.S. authorities explain indetail thescope ofthe“National Support Strategy ”
announced bythePresident inSeptember 1993 asabroad government export promotion plan? This
program ispartofthe1988 Export Enhancement Act,intended topromote and“protect ”U.S.trade
interests abroad.
TheUnited States would liketoreferyoutothe“National Export Strategy: theFourth Annual
Report totheUnited States Congress, ”October, 1996, which isavailable fromtheU.S.Government
Printing Office (ISBN 0-16-048825-7) andathttp://www.ita.doc.gov/ita_home/itahot.html.
7. Re:Report from theSecretariat, Section III,para. 86.Public Contracting.
(a) TheUnited States isamember oftheGPA. Itisestimated thatgovernment procurement
contracts areworth approximately 68billion dollars (Table III.9), notincluding setasides forsmall
andminority-owned businesses. Almost 13percent ofU.S.government procurement contracts are
included assetasides. What isthepossibility ofthispractice coming toanendwhen thethree-year
moratorium endsonMarch 8,1996, asannounced bythePresident. Could itendsooner? Footnote 109,
p.88.WT/TPR/M/16/Add.1
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TheUnitedStateshasnegotiatedexceptionstotheGPAandNAFTAforsmallandminority-owned
business (SMB) set-asides andhasnoplans tophase-out these set-asides. Asexceptions totheGPA,
U.S.legislation onset-asides iscompatible withitsobligations. Set-asides serve animportant socio-
economic function while being limited inscope toarelatively small portion ofcontracts. Historically,
theyhaveaffected between sixandseven percent ofthetotalvalue ofU.S.coverage under theTokyo
Round GPA. Itistooearly totellwhether theimpact maybeincreased astheresult ofcoverage of
services, including construction, under theWTO GPA, since statistics haveyettobereported under
thenewagreement. Despite thefactthattheUnited States hasnegotiated exceptions, ithasalways
sought toapply themonatransparent, predictable basis. TheUnited States expects tocontinue to
discuss withother GPAsignatories howtransparency andpredictability associated withsetasides can
beenhanced. However, oneaspect ofawards made toSMBs should notbeoverlooked. Many ofthese
awards aremade through afullandopencompetitive procurement process andnotthrough setasides.
(b) Doyouhaveanydataontheparticipation ofdeveloping countries inthegovernment
procurement scheme? Could youprovide suchdatainwriting later?
There isnoreadily accessible andreliable dataoninvolvement inU.S.Federal orsubcentral
procurement bydeveloping countries.
8. Services
ThelistofU.S. concessions isbroad interms ofitscoverage, yetsome ofitshorizontal
provisions, e.g.,those relating torestrictions onthetemporary movement ofprofessionals, diminish
theeffect andthepractical value oftheconcessions. Wewould appreciate yourcomments inthisregard.
U.S.commitmentsonservicesarebroadincoverage.Thehorizontalcommitmentsontemporary
movement ofpersons provide thebasis foradmission ofthousands offoreign professionals intothe
United States frommostofthenations oftheworld. These arequitebroad compared tothecommitments
ofother countries andapply fairly liberal treatment ofprofessionals andothers thatenter under those
provisions. Wearenotaware ofanycomplaints thatspecific commitments onprofessionals arebeing
undercut bylimitations ontemporary movement.
QUESTIONS FROM ASEAN
Textiles andClothing: Rules ofOrigin
1. Noting thatArticle 2.boftheARO provides thatrulesoforigin notbeusedasinstrument to
pursuetradepolicyobjectivesdirectlyorindirectly,wewonderwhetheratradepolicyobjectivemotivated
thechanges intherules oforigin ontextiles andapparel?
Theobjective oftheamended rulesoforigin wastoaidtheUnited States incombating illegal
transshipment. Inlarge part, therules alsohelpbring U.S.origin rules inthissector intolinewith
those ofother major trading importing countries. TheAdministration ’sstatement ofAdministrative
Action specifically defines theintent asfollows:
(i) therulesoforigin aretoreflect theimportant roleassembly plays inthemanufacture
ofapparel products
(ii) helpcombat transshipments byWT/TPR/M/16/Add.1
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(a) lessening confusion resulting fromdifferences between U.S.practices andthe
practices ofother major trading countries;
(b) facilitating theuseofmore effective labelling requirements; and
(c) focusing onpractices more easily subject toinspection bytheU.S.Customs
Service;
(iii) bring theU.S.rules oforigin inlinewithrules employed byother major importing
countries, suchastheEuropean Union andCanada
2. Noting thatoneoftheaccomplishments oftheURAgreements wasadecision toharmonize
alltheinternational rules oforigin toensure thatcountries cannot usespecial rules oforigin as
protectionist barriers totrade, thisraises concerns about: howcantheUSreconcile itsnewruleswith
therestoftheworld, taking intoaccount thatitsofarhasnotputforward aharmonization proposal
ontextiles andapparel inBrussels?
Asnoted, theamended rules toalarge extent more closely align U.S.rules withother major
importers. Obviously, harmonization ofrules ontextiles, aswithother product sectors, willrequire
aconsensus oftheinterested parties. TheAROprovides aprocess andschedule fordiscussing and
examining theproposals ofMembers before anyharmonization ofrules isadopted.
3. InviewofthefactthattheUShasrefused todiscuss textile rules oforigin inBrussels, do
theUSnegotiators havetheauthority tomake anychanges toSection 334oftheUruguay Round
Agreements Act(URAA)?
TheU.S.hasnotrefused todiscuss textile rulesoforigin; Inaddition, wehaveheldconsultations
with12countries ontherules oforigin, where applicable, alsoinaccordance withtheprocedures
intheUruguay Round Agreement onTextiles andClothing. U.S.negotiators maydiscuss various
approaches, butdonotcurrently havetheauthority tonegotiate changes toprovisions embodied in
U.S.law.
4. Does theUSAdministration haveCongressional FastTrack Authority tonegotiate andmake
necessary changes intheUSrules oforigin ontextiles andapparel?
Asnoted, theU.S.Administration doesnotcurrently haveCongressional FastTrack Authority.
5. What aretheUSviews andexpectations regarding theimpact oftheserulesonvarious products
andprocesses?
TheU.S.hasbeenengaged indiscussions withanumber ofcountries ontheirassessment of
thepotential impact oftheamended rulesontheirtrade. TheU.S.isnotinaposition toindependently
assess anysuchimpact without theparticipation of,andinput from, those countries.
6. Ifafinished product wasconsidered made inCountry Abecause itwasprinted, dyed, finished
andsewn there, butthefabric iscoming from Country B,won'ttheimporter berequired under the
newrules topresent aCountry Bvisa? How willCountry Bbeabletocontrol thistrade when the
product thatleftthatcountry wasunfinished fabric?
Yes,under thenewrules theimporter willberequired topresent acountry Bvisa. TheU.S.
bilateral agreements statethatquota ischarged tothecountry oforigin. Assuchexporting countries
areresponsible forensuring thattheyknow theultimate destination oftheirtextile exports whether
finished orunfinished. Avisaarrangement helps toprevent illegal transshipments andquota fraudWT/TPR/M/16/Add.1
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byproviding aneffective means ofcontrolling textile andapparel exports. Thelicensing authority in
eachforeign government isresponsible forissuing visas andisalsoaware ofthefinaldestination of
thegoods covered bythetextile visa.Under avisaarrangement, goods willnotbepermitted intothe
United States without avalidvisa. Inconjunction withavisaarrangement, theUnited States andmany
exporting countries, havedeveloped theElectronic VisaInformation System (ELVIS), anadditional
means tocontrol theexportation oftextiles andapparel totheUnited States. ELVIS allows countries
toelectronically transmit information ontextile andapparel shipments, which maybesubject to
quantitative restrictions, toU.S.Customs, andtherefore provides ameans toverify thatshipments
havebeenauthorized forexport byacertain country. ELVIS willassist boththeU.S.Government
andtheexporting government bydetecting andpreventing fraudulent useofthebilateral quotas by
verifying shipments atthepoint ofentry.
7. InaFederal Register notice published on12February 1995, theFederal Trade Commission
hasasked forcomments onhowtoaddress the"apparent conflict" between itsRule33,which permits
aproduct made intheUSofimported fabric tobelabelled "Made intheUSA ofImported Fabric"
andSection 334oftheURAA under which thecountry oforigin forcertain categories oftextile products
"will bethecountry where thefabric wasproduced notthecountry where theitemwasfinished." In
viewofsuchcontradiction intheUSownlaws, howdoestheUSthink thisissueshould beresolved?
Since July1,1996U.S.Customs hasrequired thatallimported textile andapparel merchandise
bemarked inaccordance withsection 334andassuchtheFederal Trade Commission willenforce
thesection 334labelling requirements onimported merchandise. Weunderstand thatRule33applies
tofinalproducts soldintheUnited States thatwerenotimported butmanufactured here, albeit from
foreign fabric.
8. Theability ofthesechanges tohelpcombat transshipment isdifficult tounderstand. AllWTO
Members arefullycommitted tocooperate intheprevention ofcircumvention. Please provide further
clarification ontheUSclaim thatthenewrulesweredeveloped tocombat illegal transshipments and
other circumvention oftextile andapparel quotas.
Theassembly ruleoforigin enhances theability ofCustoms authorities todetect andprevent
illegal transshipment. Forexample, consider ascenario where goods enter country Bfromcountry
A,marked asmade inacountry other thanB.Previously Customs authorities could notbecertain
oftheorigin ofthatshipment. Nowsuchashipment would clearly suggest anillegal transshipment
9. There havebeensignificant delays intheissuance ofbinding rulings ontherules oforigin
change, including Customs 'original failure tomeettheIJuly1996statutory deadline forpromulgating
regulations. Werequest theUStoprovide information withregard tomeasures andsteps which it
hasundertaken toavoid orprevent disruption tolegitimate trade resulting from theintroduction of
these newrules.
Veryfewruling requests havehadasignificant delay. Most rulings havebeenissued within
30daysofreceipt bytheCustoms Service.
TheUruguay Round Agreements Actwassigned intolawonDecember 8,1994 providing the
trade withmore than18months toadjust before theimplementation ofthetextile origin rulesonJuly
1,1996. Thedelay inthepromulgation oftheregulations insured thatconcerns ofallinterested parties
could betaken intoaccount. That18month delay wasspecifically included inthestatute toaddress
therequests fromtheU.S.importing community. TheonlyASEAN country tosubmit comments was
theRepublic ofSingapore. These comments weresubmitted onJuly11,1995aftertheoriginal deadline,
butwithin theextended period. TheUnited States started accepting requests forbinding rulings on
October 5,1995. Since thattimemore than250origin rulings havebeenissued.WT/TPR/M/16/Add.1
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10. Whatisthestatusof"appropriateandequitableadjustments"requestedbyallaffectedMembers?
TheU.S. hasconsulted witheachofthe12countries which have requested talks. These
consultations areongoing. Asaresult ofthese consultations, countries arealready realizing thattheir
initial estimates ofadverse affect wereunfounded andadjusted theirassertions accordingly.
11. Willthese rules haveanimpact onproducts thatarenotcurrently subject toquotas, suchas
products from Europe orevenCanada? HastheUSheldconsultations andsuccessfully settled with
suchindustrialized countries whodonothavequotas ontheirproducts regarding therules change?
TheUnited States hasheldseveral rounds ofconsultations ontherules oforigin withthe
European Union, Switzerland andCanada. Additional rounds ofconsultations arescheduled for
November andDecember.
Agriculture
12. Despite theriseintheworld agricultural prices (Table IV.3ofSecretariat Report), theUS
continues theuseofexport subsidies asmarked bythegrowth insales ofsubsidized exports. Can
theUSprovide further clarification onitsunderlying reasons inhaving highout-quota tariff, the
allocation ofquotas toselected trading partners andtheunderutilization oftariff quotas ?
TheUnited States negotiated itstariffratequotas (trqs) andtheirallocation during theUruguay
Round, andhassubsequently submitted allrequired trqnotifications totheAgriculture Committee.
TheU.S.iscommitted toitsWorld Trade Organization (WTO) obligations, andwillcontinue toabide
byallitscommitments. Withregard tounderutilization oftariffquotas, thetrqfordairy products was
notfilled in1995, because lowU.S.dairy prices discouraged imports oftheproducts intotheUnited
States.
Contingency Trade Measures
13. ASEAN takenoteoftheUScontingent trademeasures suchasantidumping andcountervailing
duties andsafeguard measures, andcallontheUStoexercise duerestraint intheuseofthesemeasures,
(Paragraph 40,page65oftheSecretariat report indicates thenumber ofsuchcasesthatareoutstanding).
Inthefaceofimproving economic conditions, recourse tothese contingent measures willbeeasier
tominimize.
U.S.antidumping andcountervailing dutylawsareadministered inanopen andimpartial
manner, inaccordance withourobligations under theWorld Trade Organization (WTO). Providing
domestic industries witharemedy against injurious unfair trade practices isintegral tothebalance
oflegal rights andobligations embodied intheWTO andisanessential element inmaintaining the
public consensus infavour ofcontinued oftrade liberalization. Ingeneral, aslongastrade remedies
arenotabused --forwhich there isinanycaseareliable recourse intheWTO’sdispute settlement
mechanism --theycorrect distortions which disadvantage trulycompetitive enterprises inboththe
importing market andinotherexporting markets. Toexercise (i.e.,exert) restraint beyond thatrequired
bytheWTO would prejudice theimpartiality oftheprocess, which would betotheultimate detriment
ofallpotentially interested parties.
14. ASEAN alsotakenoteofthereport oftheUSInternational Trade Commission ontheeconomic
effects ofanti-dumping andcountervailing dutyorders (seeBoxIll.1,page68oftheSecretariat Report).
Although ITCCommissioners didnotagree among themselves ontheresults ofthestudy, thestudy
didindicate, among others, thataremoval ofoutstanding anti-dumping andcountervailing dutyorders
canresult innetwelfare gains.WT/TPR/M/16/Add.1
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U.S.antidumping andcountervailing dutylawsandpractices areconsistent withtheWTO.
Asexplained intheresponse toquestion 13,theseprovisions (andtheirfairandimpartial enforcement)
areveryimportant tothemaintenance ofsupport forthemultilateral trading system --which isone
ofthereasons theUnited States sostrongly supports theirexistence anduse.
TheITCstudy examined, asrequested, theeconomic effects ofenforcement ofourantidumping
andcountervailing dutylaws. Thatthere arecosts associated withmaintaining these provisions is
hardly surprising. Asamatter oftransparency andpublic information, however, theU.S.government
wasinterested toimprove itsunderstanding ofsuchcostsandeffects. Neither thefindings northestudy
itselfcallintoquestion ourcommitment tothese provisions andtheirimplementation, forthereasons
setforthabove. Wewould invite other WTO members whoareinterested inthisissuetoconduct similar
studies oftheirownregimes, bothforreasons oftransparency andfortheanalytical results.
Regional Trade Agreements
15. Wenotethat,liketheUS-CanadaFTA,theNAFTAprovidesthatintheeventofconflictbetween
NAFTAandGATT/WTOprovisions,NAFTAprovisionsprevail(para37,page31ofSecretariatreport).
ASEAN callsontheUStoimplement itsvarious RTAs inaccordance withtheprovisions oftheWTO,
andreaffirm theprimacy ofthemultilateral trading system. ASEAN callsontheUStoavoid the
negative effects ofeconomic integration, suchastrade andinvestment diversion.
Wehaveimplemented, andwillcontinue toimplement, ourregional trade agreements consistent
withtheWTO.
QUESTIONS FROM AUSTRALIA
1. Wenote, andwelcome, thereiteration inthereport bytheU.S. Government oftheUnited
States ’commitment to,andsupport from, themultilateral trading system. WealsonotetheU.S.
Government ’srecognition oftheincreasing internationalisation oftheU.S. economy andtherising
importance oftrade totheU.S.economy andemployment creation. Inthiscontext wefurther note
thattheU.S.refers to“fairly traded imports likewise benefitting theUnited States... ”
- CantheU.S.comment onwhyitdescribes imports inthisway?
- What doestheU.S.mean bythetermfairly traded inthiscontext?
Thesupport ofparticipants inanyrules-based commercial system depends inpartontheirsense
thattherulesarebeing fairly applied, andthat,when violated, legalrecourse isavailable. Maintaining
public support forthemultilateral trading system isofgreat importance intheUnited States asinother
member countries aswell. TheWTO itselfdefines cases when exports maybetraded unfairly, asin
dumped orsubsidized exports. Ourreference tothebenefits totheU.S.economy offairly traded imports
reflects ourconcern thatunfairly traded products tendtoerode public confidence inthefairness of
thesystem andthusinsupport forthemultilateral system itself.
2. Inpastnegotiation sfast-track negotiating authority hashelped theU.S.achieve itsnegotiating
objectives, while atthesametimeallowing theU.S.todemonstrate leadership andproviding confidence
totrading partners.
- CantheU.S.confirm thatthenewadministration willseek., asapriority, comprehensive fast-
track negotiating authority from Congress?WT/TPR/M/16/Add.1
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While thePresident hasstanding authority under theConstitution tonegotiate agreements,
theAdministration recognizes theimportance ofCongressionally agreed procedures toconsider and
implement agreements given oursystem ofgovernment andtherespective roles ofthePresident and
theCongress onissues ofcommerce. Werecognize thattohavesuchagreed procedures helps toensure
thattheCongress iswilling toaddress trade agreements, which sends animportant signal toourtrading
partners. Wewilltakethismatter upwiththeincoming Congress.
3. WhatplansdoestheU.S.havetorecommencenegotiationsontheMSAorMultilateralSpecialty
Steel Agreement?
TheUSGremainsveryinterestedinanMSAwhich,byestablishingtoughdisciplinesonsubsidies
andother trade-distortive practices, would benefit theentire world steelcommunity. However, atthis
point, itappears thatsignificant policy differences remain which would prevent usfrommoving this
initiative forward. Thesituation onspecialty steelisdifferent. Here, USandEUindustry organizations
haveresolved mostoftheirdifferences anddeveloped jointrecommendations foraMultilateral Specialty
Steel Agreement (MSSA). TheUSG andEUCommission have been consulting onthepossible
establishment ofanMSSA; webelieve theprospects arefavourable. Other countries andindustries
alsoappear positively disposed tothisinitiative, which wasdiscussed attheOECD SteelCommittee
meeting inOctober. Weplantofollow thismeeting upwithinformal discussions between interested
countries early nextyearwiththehopeofconcluding negotiations onanMSSA inthenearfuture.
4. Wenotethattherewassome movement toward maritime reform earlier thisyear,inparticular,
theproposed Ocean Shipping Reform Act(H.R. 2149) which would have partially deregulated
international shipping intheUnited States.
- CantheU.S. comment onthelikely future direction ofmaritime reform andwhether such
reform maybeextended tochanges intheso-called Jones Act,which prevents foreign built
vessels operating incoastwise trade?
ThelastCongress considered substantial changes totheShipping Actof1984 (1984 Act),
including theclosing oftheFederal Maritime Commission (FMC orCommission), which administers
the1984 Act.Thiswasinresponse toacompromise worked outbyshippers andU.S.-flag carriers.
Among other things, thisproposal maintained thecarriers ’antitrust immunity, ended tarifffiling, and
permitted negotiation ofconfidential agreements between shippers andcarriers. Withtheclosing of
theFMC, itsresidual functions would havebeencontinued intheDepartment ofTransportation or
some other government organization.
Ifthecompromise proposal isreintroduced inthenewCongress insubstantially thesame form
andeventually incorporated intothe1984 Shipping Act,theinternational shipping trades inandout
oftheU.S.would bedramatically deregulated. Regarding thelikely future direction ofmaritime reform,
there arearange ofviews ontheproposed legislation. TheAdministration isready toworkwiththe
newCongress onthismatter. Thereform oftheShipping Actof1984 doesnotextend tochanges in
theJones ActorU.S.cabotage lawsinproposals made inthelastCongress tomodify orrepeal the
Jones Act.Twoofthese proposals called forthegrant ofreciprocal domestic trading privileges for
carriers ofother countries, butthere wereother concerns thatwerenotaddressed, suchasforeign
subsidies, taxincentives, lower safety standards andnational security. Noproposals wereenacted,
andtheAdministration reaffirmed itsstrong support oftheJones Act.
5. Alsoinregard totheJones Actwewould notethatitiscontrary tothegeneral thrust ofU,.S.
policies asdescribed inthegovernment report aimed atimproving thecompetitiveness andefficiency
ofdomestic industry. Studies carried outbytheU.S. International Trade Commission (IT)have
estimated thattheJones Actimposes significant costs ontheU.S.economy.WT/TPR/M/16/Add.1
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- CantheU.S.provide anexplanation ofthecontinuing justification forthisimport prohibition?
TheAdministration hastaken theposition thattheU.S.coastwise laws, including thedomestic
build requirement, areanessential element ofU.S.maritime policy andournational andeconomic
security. Further, anyencroachment ontheJones Act,aspartofthecoastwise laws, could jeopardize
thestable shipping service iscurrently being supplied bydedicated U.S.-flag carriers tolocaleconomies
andstrategically located military installations inthenon-contiguous communities. TheAdministration
doesnotsupport legislative proposals thatwould weaken theJones Act.TheU.S.coastwise lawspromote
thehigheststandardsofmarinesafetyandenvironmentalprotectioninU.S.portsandwaterway,ensuring
thatvessels moving between U.S.ports comply withthefullrange ofapplicable environmental and
safety laws.
6. CantheU.S. comment onitsintentions tonegotiate theliberalization ofmaritime services
and,inparticular, whether itconsiders itnecessary toretain theauthority, under Section 19ofthe
1920 Merchant Marine Act,totakeunilateral action toaddress foreign shipping practices affecting
U.S.carriers?
These subjects willbothbeaddressed inthecomprehensive service negotiations scheduled to
commence intheyear2000.
DISCRIMINATORY APPLICATION OFWINE AND BEER EXCISE AND OTHER MEASURES
7. WerefertheU.S.delegation totheoutcome oftheGATT panel ruling onacomplaint brought
byCanada against theU.S.onmeasures affecting alcohol andalcoholic beverages in1991andonwhich
Australia made athirdparty submission. Indelivering itsdecision inApril 1992, theGATT panel
ruled thatapreferential federal taxonbeerandwineandnumerous taxanddistribution practices in
41states andPuerto Ricowere“inconsistent ”withmultilateral traderules. Wenotealsothestatement
oftherepresentative oftheU.S. delegation on19July1992, that“theU.S. would notoppose the
adoption ofthepanel report ”andthat“wewillmake serious efforts toachieve “prompt conformity
withthereport within theconfines ofourconstitutional system? ”
- What actions havebeentaken bytheUnited States toachieve prompt conformity withthe
conclusions ofthepanel report (adopted inJuly1992), including:
(i) atthefederal level, toremove differential excise treatment ofbeerandwineproduced
byforeign andcertain domestic producers?
(ii) atthestate level, topromote theremoval ofarange ofdiscriminatory measures
adversely affecting foreign wineandbeerproducers?
Withregard tothestatemeasures implicated intheGATT panel ruling, theAdministration
worked toeducate stateofficials ontheGATT andonthemeaning ofthepanel report. TheFederal
government suggested methods ofcompliance, answered questions, andrequested status reports from
thestates. There hasbeensome progress todate. Sixstates passed legislation addressing thepanel's
recommendations andothers havemade regulatory changes.
Itisimportant tonotethatforeign beerandwinehaverelatively unfettered access totheU.S.market
onterms comparable toU.S.beerandwine, andthestatepractices citedinthepanel report haveminor
trade effects. Additionally, anumber ofstatestatutes citedinthepanel report aresimply notbeing
enforced bystateauthorities.WT/TPR/M/16/Add.1
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8. TheU.S.hasalong-standing tradepolicy thatdiscriminates against wooltextiles andapparel -
especially vis-a-vis cotton. Weareconcerned thattheproduct definitions applied, andthedisparity
between theduties applied towool fabrics andcotton fabrics bytheU.S.discriminate against wool.
Forexample, duties onpurewool fabrics are33.9percentwhile duties oncotton fabrics are4.8.-
9.6percent. Wool isdefined asgreater than36percentwool forwoven products, greater than23
forknitted products and17percentforcertain blended products, withwoolproducts attracting higher
tariff ratesthanproducts defined ascotton.
- What aretheprospects forachieving parity inthetariff treatment ofwool andcotton fabrics
inthenearfuture?
Thewoolproduct sector haslongbeenconsidered aparticularly sensitive sector intheUnited
States, particularly withrespect toitsvulnerability tolowcostimports. Thissensitivity isreflected
inthehistorical treatment ofwoolproducts bothunder theMFA andtheWTO Agreement onTextiles
andClothing (ATC), aswellasunder theU.S.tariff schedule.
Itbears noting thattheaverage U.S.tariff onimports oftextiles andclothing was12.5per
centin1995, alower average orabsolute ratethanthatofmostofouttrading partners, including
Australia. Moreover, theU.S.didagree intheUruguay Round toreduce itsmaximum tariffs onwool
products to25percent, down fromastarting point insome instances of40percent.
9. When doestheU.S.expect tobeinaposition toallow foreign users access tosatellite links
toInmarsat andIntelsat?
Direct access toInmarsat andIntelsat intheUnited States isthemonopoly ofComsat. This
isnotamatter ofdenial ofnational treatment, insofar asAT&T isComsat 'slargest customer. Comsat 's
monopoly isnotunder review atthepresent time.
U.S.UNILATERALISM, INCLUDING SANCTIONS
Continued threatened useofSection, Special andSuper 301
10. WenotetheUnited States ’apparent confidence intheoperation todateoftheWTO dispute
settlement mechanism, evidenced byitsresort toformal procedures onmore than20occasions since
January 1995. Wenote, inthisregard, thestatement ofacting USTR Barshefsky (toaCongressional
hearing on11September) thattheDSU was‘proving tobeaveryeffective tooltoopenother nations ’
markets ’.
InthelightofUSTR Barshefsky ’sstatement, whatistheroleofS.301actions, particularly
where theissue fallswithin theambit ofrules andobligations covered bytheWTO Agreement?
TheUnited States made itclear totheCongress when itsubmitted legislation implementing
theresults oftheUruguay Round howsection 301would beusedinregard topractices covered by
theWTO. AtthattimetheAdministration saidwithrespect toinvestigations thatinvolve analleged
violation ofaUruguay Round agreement ortheimpairment ofU.S.benefits under suchanagreement,
thattheTrade Representative will:
- invoke dispute settlement procedures, asrequired under current law;
- baseanysection 301determination thatthere hasbeenaviolation ordenial ofU.S.
rights under therelevant agreement onthepanel orAppellate Body findings adopted
bytheDSB;WT/TPR/M/16/Add.1
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- following adoption ofafavourable panel orAppellate Bodyreport, allow thedefending
party areasonable period oftimetoimplement thereport 'srecommendations; and
- ifthematter cannot beresolved during thatperiod, seekauthority fromtheDSBto
retaliate.
CantheU.S.explain theunreasonable action provision ofsection 301which implies thatacts
maybeactionable under section 301eventhough notnecessarily inviolation ofU.S. international
legalrights?
Weallrecognize thatthere arepractices offoreign governments thatunfairly restrict our
countries exports toforeign markets andthatarenotcovered byWTO agreements. Unlike some other
countries, theUnited States hasprovided initsdomestic lawsforatransparent process whereby its
companies canaskthegovernment totrytoobtain theelimination ofthose barriers through negotiations
andwhatever leverage maybeavailable. Theimportant point isthatastheWTO agreements now
cover more types ofbarriers thanbefore, theU.S.expects thatsection 301willbeamore effective
toolthaninthepast.
Does theU.S.delegation believe theU.S.would bejustified intaking unilateral action against
aparticular policy practice evenifitiswithin coverage ofrelevant WTO rules anddisciplines and
consistent withthem?
Section 301requires theTrade Representative touseatrade agreement ’sdispute settlement
procedures ifaninvestigation involves atrade agreement. Thus, ifaninvestigation involves whether
certain practices areconsistent withacountry ’sobligations under theWTO, theTrade Representative
mustresort totheDSUprocedure toresolve thatquestion ifconsultations fail.However, astheU.S.
saidinthestatement submitted totheCongress along withtheUruguay Round agreements implementing
legislation:
...themerefactthattheUruguay Round agreements treataparticular subject matter --such
asintellectual property rights --does notmean thattheTrade Representative mustinitiate DSU
proceedings inevery section 301investigation involving thatsubject matter. Intheevent that
theactions oftheforeign government inquestion falloutside thedisciplines ofthoseagreements,
thesection 301investigation would proceed without recourse toDSUprocedures.
Howwould theU.S.viewsuchaction inrelation toitsobligation under article 23oftheDSU?
Article 23oftheDSUrequires that“When Members seekredress ofaviolation ofobligation
orother nullification orimpairment ofbenefits under thecovered agreements oranimpediment tothe
attainment ofanyobjectives ofthecovered agreements, theyshallhaverecourse to,andabide by,the
rules andprocedures ofthisUnderstanding. ”
IftheTrade Representative decides thatasection 301investigation doesnotinvolve aviolation
oftheWTO oranother situation covered byArticle 23,thenthere isnorequirement under Section
301andnopoint inresorting toWTO dispute settlement procedures. There havebeenoccasions when,
afterconducting aninvestigation, theUSTR hasdecided thattherewerepractices thattheU.S.considers
arecovered byWTO agreements and,inthose instances, wehaveatthattimeresorted toWTO dispute
settlement procedures.
11. Werefer tothe1May1996 unilateral embargo ontheimport ofwildcaught shrimp from
countries thatdonotrequire theuseofturtle andexcluder devices (TEDS).
- HowdoestheU.S.seethisembargo attaining thepurported environmental goalofseaturtle
protection?WT/TPR/M/16/Add.1
Page12
- What account doesthisembargo takeofothermeasures fortheprotection ofseaturtles inshrimp
exporting countries, andother factors affecting seaturtle populations inthese countries?
A1990 National Research Council study, "The Decline oftheSeaTurtles: Causes and
Prevention," concluded thatincidental capture inshrimp trawl netswastheprincipal human cause
ofseaturtle mortality inUnited States waters. Fortunately fortheseaturtles, aninexpensive device
nowexists thatvirtually eliminates theiraccidental death inshrimp fisheries. Theturtle excluder device,
orTED, isagridthatisplaced inashrimp trawl nettocreate a"trap door" through which seaturtles
escape. When usedproperly, TEDs allow upto97percent ofcaptured turtles toescape, withvirtually
nolossofshrimp. Thisremarkable device isalsoremarkably cheap: atypical TEDcosts lessthan
US$400.00.
Foralmost adecade, theUSG hasrequired commercial shrimp trawl vessels under U.S.
jurisdiction thatoperate inareas andattimes when there isalikelihood ofintercepting seaturtles
touseTEDS. Wedopermit verylimited exceptions tothisrequirement.
U.S.law,through thisregulation ofshrimp imports intotheU.S., alsoencourages shrimp
fishermen inother nations touseTEDS. Under thislaw,wecertify harvesting nations iftheyhave
programs toprotect seaturtles thatarecomparable totheU.S.program. Thecertification process
takesintoaccount allmanner ofmeasures aharvesting nation maytakeinthisregard. Wealsocertify
harvesting nations iftheirfishing environment doesnotposeathreat toseaturtles, either because
thewaters aretoocoldtoberegularly frequented byseaturtles orbecause theirfishermen onlyuse
gearthatposes nothreat toseaturtles.
TheUSGhasworked hardtotransfer TEDtechnology toshrimp fishermen inother countries,
throughnumeroustrainingworkshopsandseminars.Wehavealsomadeclearourwillingnesstoevaluate
anyevidence other nations mayhavetoestablish thatshrimp trawling doesnotposeathreat tosea
turtles intheirwaters. Sofar,nonation haspresented aproperly designed scientific study ofadequate
scope andduration thatestablishes this.
12. According totheU.S.Government, thelegislative basis foritsaction iscontained inSection
609(b) oftheEndangered Species Act. Wenote, however, thatSection 609(a) ofthatActcallson
theSecretary ofState, inconsultation withtheSecretary ofCommerce, ‘toinitiate negotiations for
thedevelopment ofbilateral andmultilateral agreements withother nations fortheprotection and
conservation ofseaturtles, andundertake co-operative activities topromote these objectives ’.
- CantheU.S.elaborate onitsactivities under Section 609(a) ofthelegislation?
- HastheU.S.continued discussions since theembargo toaddress co-operative approaches to
turtle conservation, including toidentify theparticular circumstances ofthevarious countries
which haveseaturtle population?
Following several years ofnegotiations involving theU.S.and22other States oftheWestern
Hemisphere, theInter-American Convention ontheProtection andConservation ofSeaTurtles was
adopted onSeptember 5,1996. TheConvention isnowopenforsignature byStates intheWestern
Hemisphere. Thetreaty requires thatallcommercial shrimp trawl vessels operating intreaty waters
useTEDs toreduce theincidental capture ofseaturtles, aswellasother measures toprotect and
conserve these important endangered animals. Wehave encouraged nations outside theWestern
Hemisphere toconsider adopting similar agreements fortheirregions. Also, theConvention contains
aprovision thatcalls forthecreation ofprotocols forapplication toregions outside theWestern
Hemisphere.WT/TPR/M/16/Add.1
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13. On8October 1996, theU.S.Court ofInternational Trade made aruling todisallow importation
ofshrimp harvested using TEDS from countries thathavenotbeencertified bytheusashaving a
comparable seaturtle protection regime.
- What criteria willbeusedtodetermine whether turtle protection regimes are‘comparable ’?
- Does theU.S.believe thattherelevant provisions oftheendangered species act-ascurrently
interpreted byU.S.courts andapplied bytheU.S.Government -apply equally toU.S.and
foreign shrimp harvesters?
TheDepartment ofState'sguidelines implementing P.L.109-162 setforththestandards used
bytheUSGindetermining whether aprogram adopted byaforeign government iscomparable tothe
U.S.program. Basically, suchprograms mustrequire allcommercial shrimping boats equipped with
types offishing gearthatmight harm seaturtles touseturtle excluder devices, andmustprovide for
proper supervision andenforcement oftherequirement. Aforeign program neednotbeidentical to
theU.S.program, merely comparable.
Legislation withextraterritorial application
14. BoththeHelms-Burton andd’Amato/Gilman legislation include provisions which impact on
theinterests ofother states, including onthelegitimate trading interests ofthose states’nationals and
companies.
- CantheU.S. explain what steps ithastaken toaccommodate theinterests andconcerns of
other states intheformulation andadministration ofthese pieces oflegislation?
- CantheU.S. explain what consideration ithasgiven toidentifying means ofpursuing its
objectives which would notadversely affect theinterests ofother states?
Wehavemade clear ourintention toimplement theActinawaythatmaximizes thepressure
ontheCuban government while minimizing frictions withourallies. There havesofarbeenonlytwo
determinations under TitleIV.Weareproceeding carefully.
TheActdoesnotbanallforeign trade withorinvestment inCuba. Itisnarrowly focused.
Itapplies sanctions onlytowhose whoprofit fromconfiscated U.S.properties inCuba forwhich no
compensation haseverbeenpaid.
Trade andenvironment
15. TheU.S.hasbeeninconflict withmany ofitstrading partners inregard tosome requirements
imposed onthirdcountries toadopt domestic U.S.environmental production andprocessing standards
iftheywishtoexport totheU.S.
CantheU.S.advise thedomestic policy formulation anddecision-making processes involved
inreaching decisions onsuchmatters, including inter-agency consultation, consultation withNGO’s
andwith third countries, together withthefactors taken intoaccount inreaching decisions on
environmental measures withtrade effect?
TheUnited States points toitsperformance withrespect totheOECD Procedural Guidelines
onTrade andtheEnvironment. Among thestepstheU.Shastaken toimplement these guidelines are
theestablishmentofanumberofinter-governmentalandadvisorymechanismstopromotecommunication
between thetrade andenvironment communities. Most U.S.agencies haveestablished committeesWT/TPR/M/16/Add.1
Page14
composed ofrepresentatives ofvarious private sector groups toprovide advice onissues within each
agency ’spurview. Forexample, inMarch 1994, thePresident established aTrade andEnvironment
Policy Committee (TEPAC) toprovide policy advice totheU.S.Trade Representative ’sOffice andthe
Environmental Protection Agency onissues involving trade andtheenvironment.
Other agencies withresponsibility forenvironmental issues alsomaintain various advisory
committees. TheNational Oceanographic andAtmospheric Administration (NOAA) haseightRegional
Fishery Management councils, aswellasformal advisory committees. AllofNOAA ’scommittees include
representatives fromboththebusiness community andenvironmental groups.
More broadly, theOffice ofManagement andBudget hastheresponsibility ofcoordinating
Administration input intothereview andcomment ofenvironmental legislation being developed in
Congress. Trade agencies actively participate inthisprocess when there isaclear anticipated impact
oninternational trade.
Inaddition, U.S.lawsestablish specific administrative procedures forobtaining advice from
thepublic onvarious Executive Branch regulatory activities, including thenegotiation ofmultilateral
environmental agreements. Allregulatory activity isnormally governed bynotice andcomment role
making requirements, under which thepublic andother interested parties aregiven advance notice
ofandanopportunity tocomment onrules andregulations astheyaredeveloped, andbefore they
areofficially promulgated. These transparent procedures ensure thattheviews ofallinterested parties--
including those offoreign governments--can beexpressed during therolemaking process.
URUGUAY ROUND IMPLEMENTATION
Textile Rules ofOrigin
16. Werefertothechange inRules ofOrigin forcertain textile imports emanating fromtheU.S.
implementing legislation fromtheUruguay Round -theUruguay Round Agreements Act(URA) enacted
on8December 1994. Wenotethat,although thechanged rulesonapparel result incloser alignment
ofU.S.practice witprevailing international practice, thenewrulesoforigin onhome textiles represent
adeparture from practices utilized byamajor international producing countries.
- WilltheU.S. -intheinterests ofcloser harmonization ofRules ofOrigin arrangements -
consider reverting toprevious arrangements forhome textile imports?
- Intheinterests oftransparency, willtheU.S. provide detail ontheoutcome ofbilateral
consultations thathavetaken place todateunder theaegis ofArticle IVoftheAgreement on
Textiles andClothing (ATC)?
TheU.S.rules oforigin nowineffect ontextiles werelegislated under theUruguay Round
Agreements Actof1995. Wedonotanticipate revisions tothatactinthisarea.
Under theATC, theoutcome ofallagreements resulting frombilateral consultations, including
thoserelevant torulesoforigin, arenotified totheTextile Monitoring BodyinGeneva, andareavailable
forreview byWTO member countries.
17. Wewould beinterested intheU.S.Government ’sreasoning forthedifferences listed below
relating totheimplementation ofthesubsidies agreement:
TheURA incorporates much oftheUruguay Round agreement ’sdefining specificity inthe
context ofsubsidies, butitchanges thetextdefining defacto specificity. TheUruguay Round statesWT/TPR/M/16/Add.1
Page15
that‘...ifthere isreason tobelieve asubsidy isspecific, other factors maybeconsidered ’(subsidies
agreement article 2.1(c)), theURA, ontheother hand, states ‘where there arereasons tobelieve that
asubsidy maybespecific asamatter offact,thesubsidy isspecific ifoneormore ofthefollowing
factors exist... (M.R.5110 S251 (a)amending 19U.S.C. toaddsubsection 5a(d)iii).
Another example relates towhether ornottheDepartment ofCommerce must findthatan
alleged subsidy hassome discernible effect, ordistortion inthemarket inorder toconstitute a
countervailing subsidy. TheUruguay Round doesnotaddress theissue ofmarket distortion inthe
supplying country. TheURA includes aprovision stating: ‘...the administering authority (commerce)
isnotrequired toconsider theeffect ofthesubsidy indetermining whether asubsidy exists under
(countervailing dutylaw)... ’(H.R. 5110 S251 (tobecodified at19U.S.C. S1667(5)(c)).
Inarticulating thespecificity testoftheSubsidies Agreement inourdomestic law,theUnited
States wanted tobalance anumber ofimportant goals. Among themostimportant ofthese wasto
reflect asclosely aspossible thelanguage oftheAgreement, while providing asmuch predictability
aspossible toexporters andothers which musttakeaccount ofhowthelawwillbeinterpreted and
applied inconducting their business. Weagree thatthesection ofthelawcited byAustralia
(771(5A)(d)(iii)) doesdiffer slightly fromthelanguage oftheSubsidies Agreement. However, webelieve
thatitimplements faithfully boththesubstance andintent oftheAgreement, andmuch ofthedifference
canbeexplained byU.S.statutory drafting conventions thatareintended tomake themeaning ofthese
provisionsasclearaspossible,recognizing(asdoestheAgreement)thattheirapplicationwillnecessarily
require ameasure ofjudgment andaccommodation tothefactsofeachcase. Thisismade clear when
onereads theStatement ofAdministrative Action inconjunction withthelaw. Forexample, theSAA
makes clearthattheadministering authority willbeexpected toseekandconsider information relevant
toallofthesefactors...[but that}theweight accorded toparticular factors willvaryfromcasetocase.”
Withrespect tothesecond observation, wenotethatitisabsolutely correct thatthe"Uruguay
Round [Subsidies Agreement] doesnotaddress theissueofmarket distortion inthesupplying country ”,
anditwasthatveryfactwhich theUnited States wished tobeclearly reflected andrecognized inits
domestic law.Incertain pastU.S.countervailing dutyproceedings, theissuehasarisen thataparticular
market distortion inthesubsidizing country wasanecessary precondition totheexistence and
identificationofacountervailablesubsidyunderU.S.law.Whileitisreasonabletoassumethatsubsidies
ultimately andinsome wayaremarket-distortive, theWTO Subsidies Agreement innowayrequires
thatanysuchdetermination orconsideration beanelement ofsatisfying thelegalconditions forfinding
apotentially countervailable subsidy. Rather, onemustonlydetermine whether aparticular measure
meets thedefinition ofasubsidy setforthinArticle 1andisspecific within themeaning ofArticle 2.
(Ofcourse, inorder forcountervailing measures tobetaken, onemustalsosatisfy therelevant injury
andcausation requirements.) Itisthisprinciple which theU.S.statute implements inthelanguage
referred tobyAustralia.
MFA Phase-Out Plan
18. TheWTO Agreement onTextiles andClothing requires thephased adoption ofGATT 1994
rules byfixed percentages ofthe1990 import volume oftextiles andclothing.
- CantheU.S. explain whyitsannounced timetable forthephased adoption ofGATT 1994
discriminates against wool inregard toother fibres duetodelayed up-take ofWHO rulesfor
wool asopposed tocotton?
- Given thatunder thecurrent U.S.timetable fortherelease ofproducts fromquotas themajority
ofwool products willbereleased simultaneously on21December 2004, howdoestheU.S.
intend toavoid invoking thetransitional safeguard clause oftheAgreement onTextiles andWT/TPR/M/16/Add.1
Page16
Clothing, noting thatArticle 1.6states ‘members should allow forautonomous industrial
adjustment andincreased competition intheirmarkets ’?
Asnoted above, thewoolproduct sector isaparticularly sensitive sector intheUnited States.
TheUruguay Round Agreements Actof1995 stipulates thatthemostsensitive (textile) products will
beintegrated last.
TheUnited States intends toinvoke thesafeguard clause oftheATCwherever necessary toforestall
serious damage oractual threat thereof toU.S.industry.
ACTIVITIES OFSUB-CENTRAL GOVERNMENTS
19. WhateffortshastheU.S.administrationundertakentomonitorthenatureandcontentofpractices
undertaken bystateandmunicipal governments which maycontravene theprovisions oftheSubsidies
andCountervailing Measures Agreement?
TheU.S.federal government hasanongoing consultation process withthestategovernments
concerning their obligations under theSCM Agreement aswellasalltheother Uruguay Round
Agreements.
20. Thereiswidevariationbetweenstatesinrelationtoestablishmentrestrictionsandrighttopractice
forforeign professional firms inaccounting, engineering, architectural andlegalservices.
DoestheU.S.haveplans toreview theregulatory restrictions atthestatelevelfortheseforeign
professionalfirms,eithertoimprovethetransparencyofregulationsortomovetowardgreateruniformity
among thestates?
IntheUnited States, regulation oftheprofessions istheresponsibility ofstategovernments.
Interms oftransparency, information ispublicly available ineachstateonregulations pertaining to
theestablishment offoreign professional firmsandthelicensing requirements forindividuals topractice
theabove-mentioned professions. Information onstate regulations alsoispublished bynational
associationsrepresentingtheregulatorybodiesandtheprofessions.Throughthesenationalassociations,
thestates andtheprofessions exchange information anddevelop model laws, leading toward uniformity.
Uniformexaminationsaregivennationwideinaccounting,architectureandengineering.U.S.Government
officials meetperiodically withstategovernment officials invarious intergovernmental groups. Aspects
ofinternational trade agreements relating toprofessional services havebeendiscussed atsuchmeetings
overthelastseveral years. Fortheinformation ofWTO Members forGATS purposes, theU.S.
Government hassubmitted totheSecretariat copies ofpublications which summarize thestatelaws
andother measures applicable tothese fourprofessions.
AGRICULTURAL TRADE REFORM
21.The1996 Federal Agricultural andReform Act(FAIR) represented asignificant stepforward
indecoupling agricultural support fromproduction intheUnited States. There havebeenreports that
President Clinton, ifelected toasecond term, intends toimprove thesafety netprovided tofarmers
under theAct. TheActalready provides generous direct payments tofarmers during thecourse of
thenextseven years.
- What typeofsafety netdoestheU.S.intend toputinplace tobolster these payments?
TheFAIRActprovidesthatanewcommissioncalledtheCommissionon21stCenturyProduction
Agriculture beestablished byOctober 1,1997, toconduct acomprehensive review ofeffects oftheWT/TPR/M/16/Add.1
Page17
FAIR Actlegislation, thefuture ofproduction agriculture, andtheappropriate roleoftheFederal
Government inproduction agriculture. TheCommission ’sreport istobesubmitted toCongress by
June1,1998, andasubsequent review, withrecommendations forlegislation, shallbecompleted by
January 1,2001. Weexpect thecommission ’sreport toaddress theabove question.
22. Thereport bytheU.S.Government saysthatasaresult oftheFAIR Act,planting decisions
andcommodity prices willbedetermined bymarket forces, notgovernment incentives. Itistrueto
saythatmarket forces willplayagreater roleinplanting decisions andcommodity prices. However
loanratesstillapply toasignificant proportion ofU.S. farmers, subsidies arestillpaidonexports
ofkeycommodities, andsome commodities willbeprotected byprohibitive TRQ arrangements.
- Could theU.S.comment ontheextent towhich thesepolicies arelikely tocontinue toinfluence
commodity prices andhence farmers ’planting andinvestment decisions?
Thescope forfurther influence ofpolicy uponprices andproduction issignificantly reduced,
since, eventhough loanratescontinue, there isnoprice floorandnogovernment stock accumulation.
- Could theU.S.elaborate ontheassistance provided under theFAIR ActtotheDairy Export
Trading Companies andtheForeign Market Development Cooperation Program?
TheFAIR Actprovides thattheSecretary ofAgriculture shall, consistent withtheobligations
oftheUnited States asamember oftheWorld Trade Organization, provide necessary advice and
assistance totheU.S.dairy industry toenable ittoestablish andmaintain oneormore export trading
companies under theExport Trading Company Actof1982, forthepurpose offacilitating the
international market development forandexportation ofdairy products produced intheUnited States.
WithregardtotheForeignMarketDevelopmentCooperatorProgram,thelegislationformallyauthorizes
theprogram todevelop andmaintain foreign markets forU.S.agricultural commodities andproducts,
andauthorizes necessary appropriations tocarry outtheprogram forFY1996 -2002, butdoesnot
specify funding levels.
- Could theUSelaborate onthe"Fund forRural America", inparticular thetypes ofresearch
andrural development covered bytheprogram?
TheFund ForRural America creates acompetitive research grant program forresearch, and
funding forarange ofrural development activities, including rural business enterprise grants, direct
loans, loanguarantees, grants towater andwaste water projects, distance learning andtelemedicine
loans andgrants, self-help housing, andrural housing preservation. Ontheresearch side,theFund
ForRural America creates acompetitive research grant program for"...research, extension, and
education toincrease international competitiveness, efficiency, andfarmprofitability; reduce economic
andhealth risks; conserve andenhance natural resources; develop newcrops, newcropuses, andnew
agricultural applications ofbiotechnology; enhance animal agricultural resources; preserve plant and
animal germplasm; increase economic opportunities infarming andrural communities; andexpand
locally-owned value-added processing."
- How doestheU.S.consider itsreform measures inagriculture willaffect U.S.trade?
TheFAIR Actwillmake farmers more responsive tomarket forces andweenvision U.S.
agriculture toremain competitive intheworld market.
23. TheU.S.hasaURcommitment toincorporate apolarity adjustment intotheover-quota tariff
rateonsugar.WT/TPR/M/16/Add.1
Page18
- Hasthiscommitment beenincluded intheU.S.Schedule XXtotheMarrakesh Protocol?
No,thiscommitment isnotyetpartofSchedule XX.Implementation ofthiscommitment requires
legislative andexecutive approval. TheU.S.intends toseeklegislative approval inthenewCongress.
24. CantheU.S.confirm that,inlinewiththeintention ofArticle 9oftheAgriculture Agreement,
itwould notcarry forward shortfalls inexpenditure intofuture years?
TheUnited States believes itwould bedisruptive toworld markets andtofuture multilateral
agricultural negotiations ifexporting countries weretocarry forward shortfalls inorder tosubsidize
above their annual Uruguay Round commitment levels. Aslongasourcompetitors respect their
scheduled annual ceilings, sowilltheUnited States.
25. Although export subsidies arebudgeted tocontinue andweacknowledge thattheymayreturn
tothemaximum levels intheUnited States ’Uruguay Round Schedule, doestheU.S. envisage the
continuing suspension ofexport subsidies inthelightofmarket developments overthenextyear?
International market conditions willdetermine theextent towhich theU.S.applies itsexport
subsidies. TheU.S.believes thatcontinuous world trade liberalization isthekeytoeventual elimination
orsuspension ofexport subsidies. TheU.S.iscommitted toitsWord Trade Organization (WTO)
obligations, andwillcontinue toabide byallitsinternational agreements andcommitments.
26. HowdoestheAdministration interpret theprovision intheFarm BillthatUSDA begiven "sole
discretion" fortheadministration oftheDEIP, andwhatimpact willthishaveontheroleoftheTPRG
which wasestablished byPresidential order?
Wearecurrently reviewing thelegalimplications ofthe1996"Farm Bill"before weimplement
anypolicy decisions affecting theDEIP. Weintend tooperate theDEIP consistent withourWTO
commitments.
- HowdoestheAdministration viewprogress todateintheimplementation oftheFarm Bill,
andhowhavefarmers responded totheBillanditsmarket oriented reforms?
Atthispoint inthebill'simplementation, itisdifficult tomeasure theeffects ofthelegislation,
especially inviewofthecurrent highcommodity prices. Ingeneral, wedon'texpect major changes
inprices andproduction inresponse totheincreased flexibility intheprogram.
- What impact doestheAdministration foresee onproduction from changes introduced inthe
operation oftheConservation Reserve Program (CRP), andgiven thatconsiderable acreage
isscheduled toleave theprogram overthenextfewyears, howmuch isexpected tobeenrolled
inproduction flexibility contracts?
Upto36.4million acres havebeenenrolled intheCRPandsome cropland thatotherwise
wouldhavebeeninproductionhasbeenidled.UnderaproposedruleimplementingFAIRActprovisions,
there willbeagreater emphasis onenroling cropland thatyields thehighest environmental benefits
whilelesserodibleandenvironmentallysensitivecroplandpreviouslyenrolledintheCRPwillbereturned
toproduction. While theFAIR Actauthorizes a36.4million acrecaponCRPacreage, future enrolment
isuncertain atthistimeandwilldepend onhowmany producers offercropland forenrolment, the
environmental sensitivity ofcropland offered forentry, rental rates offered byproducers, andother
factors.WT/TPR/M/16/Add.1
Page19
- What prospects areenvisaged forfurther U.S.agricultural reform, andinparticular reform
(elimination) ofthesugar andpeanut programs (which onlynarrowly escaped reform during
theFarm Billdebate) andthestep2provisions ofthecotton program?
TheFAIRActprovidesthatanewcommissioncalledtheCommissionon21stCenturyProduction
Agriculture beestablished byOctober 1,1997, toconduct acomprehensive review ofeffects ofthe
FAIR Actlegislation, thefuture ofproduction agriculture, andtheappropriate roleoftheFederal
Government inproduction agriculture. TheCommission ’sreports istobesubmitted toCongress by
June1,1998, andasubsequent review, withrecommendations forlegislation, shallbecompleted by
January 1,2001. Weexpect thecommission ’sreport toaddress theabove question.
- Where domatters stand ontheAdministration ’sreview ofthefuture operations oftheEEP
andDEIP? When canaconclusion tothereview beexpected? Towhatextent willtheU.S.
nowusethisreview tobegin theprocess ofremoving these programs?
TheU.S.Administration review oftheoperations oftheEEPandDEIP isongoing. Anychanges
intheoperation ofthese programs willbemade inaccordance withourWTO commitments.
27. TheReport bytheSecretariat (page 116,para21)mentions anumber ofanti-dumping actions
which arecurrent inforce foragricultural products. Theoldest ofthese isananti-dumping measure
oncanned Bartlett pears from Australia. Thismeasure hasbeeninplace since March 1973.
- After 23years ofprotection, whatarethejustifications forcontinuation ofanti-dumping duties
oncanned pears from Australia?
Inaccordance withArticle 11oftheAntidumping Agreement, theU.S.antidumping lawprovides
areview mechanism which allows forrevision and/or termination ofanexisting dumping duty. Ifa
foreign exporter makes salestotheUnited States, itmayannually request arevised dutyratethrough
theadministrative review process. Ifdumping isnolonger occurring, thedutywillberemoved. New
exporters andproducers thatshipforthefirsttimecanrequest “newshipper ”reviews which can
commence prior totheannual review cycle.
Theconditions fortermination oftheantidumping order oncanned Bartlett pears werenot
metforthisproduct.
28. Wenotethatearlier thisyear, theAdministration expressed support forlegislative efforts to
narrow thedefinition ofdomestic industry totakeaccount ofregional andseasonal factors indetermining
injury.
- CantheU.S.explain howitbelieved suchadefinition ofindustry would beconsistent with
Article 4oftheagreement onimplementation ofArticle VIoftheGATT 1994?
- DoestheU.S.propose tore-examine thisissuewithaviewtoaltering thedefinition ofdomestic
industry inthefuture?
Thedraftlegislation regarding thedefinition ofdomestic industry pertained toSection 201of
theTrade Actof1974, nottotheantidumping statute. Thus, itwasnotinconsistent withtheAgreement
onImplementation ofArticle VIoftheGATT 1994.
Thedraft legislation ultimately wasrejected bytheCongress. There arecurrently noplans
toresubmit arevised version ofthebill.WT/TPR/M/16/Add.1
Page20
29. United States domestic government procurement policies appear tobeamixofsocial policy
(small andminority business), domestic preferences (buyAmerica andbalance ofpayments provisions),
reciprocal trade policy (trade agreements act),strategic security policy andadministrative purchasing
policy (such asvalue formoney).
- Leaving aside strategic defense purchasing, cantheU.S. provide adescription ofthebasis
ofitsdomestic procurement policy andtheinter agency processes which determine its
procurement policy, together withtheweighting given totrade andtrade related factors.
- Australia isalsointerested intheconsultative arrangements between federal andstateagencies
ongovernment procurement, together with advice ofanyapproaches directed towards
coordinating policies andpractices atthedomestic andinternational level.
Thegeneral ruleapplied inU.S.procurement policies, bothattheFederal andsubfederal levels,
isfullandopen competition. Theemphasis isonensuring transparency throughout theprocess.
Procedures generally arepredictable, evenwhencertain BuyAmerican preferences apply, andinterested
suppliers, bothdomestic andforeign, canreadily assess under whatcircumstances theyarebidding
andtheirprospects forsuccess. Forexample, attheFederal level, theCompetition inContracting
Actrequires thatcriteria foraward ofacontract besetforthinthesolicitation. Ifanagency changes
thecriteria without advising allinterested suppliers, theprocurement maybeprotested.
U.S.Federal procurement policy isestablished through aninteragency process withleadroles
fortheOffice ofFederal Procurement Policy, theDepartment ofDefense, theGeneral Services
Administration andNASA. Ontrade-related matters, theOffice oftheU.S.Trade Representative
coordinates withprocuring agencies andother trade agencies.
QUESTIONS FROM BRAZIL
TRADE POLICY INSTRUMENTS
Anti-dumping andcountervailing measures
USisamain userofcommercial defense instruments, with 292anti-dumping and62
countervailing measures inforce asatDecember 1995. Since theapproval oftheURAA-Uruguay
Round Agreement Act,theUSisdiscussing newmethods toimplement theAgreements onADand
CVM. CantheUSpresent themain changes ofthisnewregime?
Thechanges made intheU.S.antidumping andcountervailing dutylawslawasaresult of
theUruguay Round Agreements werefullysetforthinsubmissions totheWTO andreviewed indetail
intheCommittee onAnti-Dumping Practices andtheCommittee onSubsidies andCountervailing
Measures. Aswaspointed outintheCommittee review processes, virtually allthesignificant changes
made totheU.S.antidumping lawandcountervailing dutylawsintheUruguay Round Agreements
Act(URAA) weretobring thoselawsintofullconformity withthenewAgreements. Proposed regulations
implementing thechanges made totheU.S.antidumping lawwerepublished onFebruary 27,1996.
Those proposed regulations andthecomments received onthemarestillbeing reviewed. Proposed
regulations toimplement thecountervailing dutyprovisions oftheURAA areexpected tobepublished
shortly. Once finalregulations arepublished theywillbeprovided promptly totheresponsible WTO
Committees.WT/TPR/M/16/Add.1
Page21
Rules oforigin
TheUSisanimportant partner toseveral freetrade agreements, where rules oforigin are
oneofthemostrelevant tradeinstruments. CantheUSpresent themaincharacteristic ofthisinstrument
andhowcompatibility among them isachieved ?
Themain characteristic oftherulesoforigin utilized forpreferential trade agreements isone
oftransparency, withprocedures implementing theserulesoforigin thatareinaccord withtherelevant
disciplines setoutintheWTO Rules ofOrigin Agreement. Several freetrade agreements havebeen
separately negotiated; therefore, these agreements mayemploy differing standards ofpreference.
However, theimplementation ofeachagreement 'srulesoforigin involves atransparent rulings process
thatprovides bothcertainty andpredictability tothetrading community.
GSP-Generalized System ofPreference
GSPscheme offered bytheUShasnowintroduced some important newfeatures as"workers
rights" and"protected intellectual property rights". CantheUSexplain themainaspects ofthese new
requirements introduced inthescheme?
These arenotnewfeatures. TheyhavebeenapartofGSPforoveradecade, andarestatutory
criteria legislated byCongress. TheGeneralized System ofPreferences (GSP) program grants duty-free
treatment todesignated eligible articles thatareimported from designated beneficiary developing
countries. Toqualify forGSPprivileges, eachbeneficiary country mustcomply withanumber of
eligibility requirements. Twosuchrequirements arethatthebeneficiary country mustbe“taking steps”
(i.e., making progress) toprovide "internationally recognized worker rights ”andtheextent towhich
thecountry isproviding adequate andeffective protection ofintellectual property rights.
TheGSP statute defines "internationally recognized worker rights" as:(1)Theright of
association; (2)theright toorganize andbargain collectively; (3)aprohibition against anyformof
forced orcompulsory labour; (4)aminimum agefortheemployment ofchildren; and(5)acceptable
conditions ofworkwithrespect tominimum wages, hours orworkandoccupational safety andhealth.
Each year, theAdministration conducts apublic review process inwhich abeneficiary ’scompliance
withtheeligibility requirements canbereviewed.
Inmaking adetermination about acountry ’sprotection ofintellectual property rights, itis
necessary toconsider theextent towhich abeneficiary country isproviding adequate andeffective means
under itslawsforforeign nationals tosecure, toexercise, andtoenforce exclusive rights inintellectual
property, including patents, trademarks andcopyrights.
Section 301,Super 301andSpecial 301
Section 301isatrademeasure usedtoenforce USrights under international trade agreements
andtorespond tounfair foreign practices. Super 301isaimed toidentify foreign country practices
whose elimination islikely tohaveasignificant impact toincrease USexports. Special 301isused
against alleged infringements ofUSintellectual property rights. CantheUSexplain howthe
compatibility ofthese measures withtheobligations ofaWTO member isassured ?
Super 301andSpecial 301bothcanleadtotheinitiation ofaSection 301investigation. Section
301requires thatwhen theUnited States considers thatacountry isviolating itsWTO obligations,
wemustproceed toWTO dispute settlement. Ofthe15investigations initiated since theWTO came
intoforce, 11involved resort toWTO dispute settlement procedures orGATT 1994 Article XXVIII
procedures.WT/TPR/M/16/Add.1
Page22
Theinitiation ofasection 301investigation doesnotrepresent athreat ofretaliation. Out
ofthesection 301investigations thathavebeenconcluded since theWTO came intoforce, retaliation
hasbeen usedonlyonce andthatwasagainst anon-WTO member. TheUnited States hasnever
determined unilaterally thatanother country hasviolated itsGATT orWTOobligations; wehavealways
based suchdeterminations onaGATT orWTO panel finding ofsuchviolation.
Many WTO members havelawsonthebooks thatauthorize, butdonotrequire, measures that
could beWTO-inconsistent. Suchlawsarenot,perse,WTO-illegal. Ifanytrade action taken under
theauthority ofsection 301should contravene theWTO, thataction canbeexamined byaWTO panel
todetermine whether itdoesviolate theGATT.
REGIONALISM
TheUSisengaged inthenegotiation oftwoextra -region trade agreements -APEC inthe
Pacific areaandtheTransatlantic Marketplace withtheEuropean Union. What arethemain points
ofthese initiatives andhowaretheconditions imposed byArticle XXIV assured?
Wewillprovide separately information onAPEC andtheTransatlantic Marketplace. Wewould
alsonotethatneither ofthese regional agreements arefreetrade areas. However, ifatsome point
theybecome regional agreements inthesense ofArticle XXIV, wewillofcourse comply withits
requirements.
QUESTIONS FROM CANADA
U.S.Trade Policy Making
Could youexplain howthe“simple principle ofreciprocity ”contained inthe1996Trade Policy
Agenda ofthePresident isreconciled withgranting “unconditional m.f.n. treatment ”asrequired by
therules oftheWTO?
Without more specific reference tothe1996 Trade Policy Agenda ofthePresident, wewould
reiterate thattheUnited States iscommitted tothemultilateral system andtoobservance ofitsrules.
Question regarding thereconciliation ofparagraph 13(page 25)andparagraph 21(page 27):
Could theUnited States reconcile thequalification ofitsmultilateral commitments onthemovement
ofnatural persons withaction taken under TitleIVoftheHelms-Burton Act?
TheUnited States isunaware ofanyrespect inwhich theapplication ofTitleIVoftheLibertad
Actisinconsistent withmultilateral commitments onthemovement ofnatural persons. Webelieve that
theLibertad Actisconsistent withourinternational obligations.
Agriculture
TheFederal Agricultural Improvement andReform Actof1996 (1996 Act)states thatthe
Commodity Credit Corporation (CCC) monthly interest ratesshallbeonepercent higher thantherate
determined inOctober 1,1995. How istherateforCCC loans determined?
Effective May1,1996, theinterest rateon1996 andsucceeding cropyearcommodity loans
willbe1percentage point higher thanwould havebeenthecaseunder theformula which wasused
tocalculate commodity loans secured prior tofiscal year1997. Thus, CCC'smonthly commodity loan
interest rateforanygiven month willbe1percentage point higher thanCCC'scostofmoney forthatWT/TPR/M/16/Add.1
Page23
month. CCC'scostofmoney foragiven month istheratecharged CCC bytheU.S.Treasury for
funds borrowed fromtheU.S.Treasury tofinance commodity loans.
Willinterest ratesbedetermined from thedatealoanisissued, from theOctober 1,1995,
datesetoutinthe1996 Act,orbytheSecretary ofAgriculture incaseofmarketing loans?
Theinterest rateapplicable toagiven commodity loanmade byCCCtoaproducer istheU.S.
Treasurylendingrateinthemonththecommodityloanismade,plusonepercentagepoint.TheSecretary
ofAgriculture hasnodiscretion regarding theinterest ratethatischarged forCCCcommodity loans
toproducers.
Iftherateislower thantherateofOctober 1,1995, howwillthelosses beabsorbed?
TheOctober 1,1995, datethatisnoted intheU.S.statute isnotareference tointerest rates
inplace asofthatdate, butrather totheformula usedasofthatdate. Theformula asofthatdate
wasasfollows:CCCchargedarateofinterestonCCCcommodityloanstoproducersthatwasequivalent
totherateCCCwascharged forborrowing suchfunds fromtheU.S.Treasury. Commodity loanrates
foramonth (ormonths) overthelifeofthe1996Act(1996 through 2002) maypossibly belower than
rates charged onOctober 1,1995, butsuchrates willnotbelower thantheCCCcosts ofborrowing
suchmoney plusonepercentage point.
HastheSecretary oftheDepartment ofAgriculture begun todevelop anexport strategy to
increase U.S.exports ofhighvalue andvalue-added agricultural? Ifyes,whatdoesthestrategy entail,
andwhich "high-value andvalue-added agricultural products" willbepromoted?
TheSecretary ofAgriculture hasnotimplemented astrategy solely forpromoting theexport
ofhighvalue orvalue-added products, Thestrategy implemented bytheUnited States Department of
Agriculture (USDA) isoriented towards assisting American agriculture toincrease thevalue ofall
agricultural exports. TheFY1996Long-term Agricultural Trade Strategy proposes guidelines forpolicy
makers tousetoincrease U.S.exports ofagricultural products, including highvalue andvalue added
products.
TheSecretariatReportnotesthatagriculturalimportsarealsoeligiblefortrade-remedyprotection
andcontinue toreceive preferences under public procurement. Which agricultural imports (by
commodity, country andvolume) receive trade remedy preferences under public procurement?
Trade remedies andpublic procurement aretwoseparate issues. There isnoU.S.policy that
combines theminanyway.
TheAnimal andPlant Health Inspection Services oftheU.S.Department ofAgriculture has
proposed tochange itsregulations toestablish criteria forforeign regions based onriskclasslevels
andallow certain unloading/reloading procedures formeatotherwise prohibited fromentry intheU.S.
When arethenewprocedures scheduled totakeeffect?
These procedures willtakeeffect when thefinalruleispublished, butweareunable toprovide
adefinite timetable forthistooccur. Comments received ontheproposed rulearecurrently being
reviewed. Thetimeinvolved inthisprocess depends onthenumber andcomplexity ofthecomments
received andtheextent ofchanges which mustbemade inthefinalruleasaresult ofthese comments.
After development ofthefinalrule, there isareview process within theDepartment which mustbe
completed before theruleispublished.WT/TPR/M/16/Add.1
Page24
What arethecriteria thatwillbeusedforforeign regions?
Under theproposed rule,aregion could beanational entity, partofanational entity, ora
group ofnational entities combined intoasingle trading block. Thecriteria forassigning arisk
classification toagiven region areoutlined intheproposed rule,i.e.,Docket No.94-106-1, which
waspublished intheFederal Register onApril 18,1996,
Willthenewprocedures onlyapply tomeatorwilltheyaffect other commodities aswell?
Theproposed ruleapplies totheimportation ofliveruminants andswine, andproducts derived
fromruminants andswine, including meat, hides andskins, casings, meatmeal, bonemeal, andother
animal by-products.
Trade Remedy Law
Could theU.S.indicate howitscircumvention provisions asdescribed inpage59areconsistent
withtheWTO AntiDumping Agreement?
TheUnitedStatesbelievesthatthepreventionofcircumventionofantidumpingandcountervailing
duties isconsistent withboththeletter andthespirit ofArticle VIoftheGATT 1994andtheAntidumping
andtheSCMAgreements. Article VIoftheGATT clearly establishes therightofaMember toimpose
antidumping orcountervailing duties inorder tocounteract theeffects ofdumped orsubsidized imports
found tobecausing injury. Thisright would beundermined ifduties could beevaded bythesimple
actofshifting limited operations ofminimal commercial significance tothecountry ofimportation
ortoathirdcountry, acircumstance made morelikely bytheincreasing globalization ofinternational
production.
Inourview, theMinisterial Decision onAnti-Circumvention serves toreinforce thevalidity
ofanti-circumvention measures under Article VI.Itrecognizes theexistence oftheproblem of
circumvention andthedesirability ofuniform anti-circumvention rules. Quite obviously, theMinisters '
viewthatharmonization ofpractices isdesirable carries theclear implication thatitislegitimate for
Members totakeactions todealwiththisproblem.
Could theU.S.indicate howtheorigin determination reached withrespect ofitscircumvention
rules maydiffer from thatreached bytherules oforigin usedbytheCustoms Department when the
WTO Rules ofOrigin callsfortheharmonization ofsuchrules?
Asstated inArticle 1.2oftheAgreement onRules ofOrigin, theharmonized rules oforigin
willapply toAD/CVD matters aftertheharmonized rules oforigin areagreed upon andareputinto
effect.
Section 301
With regard tothepowers conferred toUSTR bySection 301oftheTrade Atof1974, and
which mayinclude thesuspension oftradeagreement benefits, doesSection 301require thatanyaction
taken inrespect toWTO covered agreement conform totherequirements ofArticle 22oftheDispute
Settlement Understanding onthesuspension ofconcessions?
Regarding Special 301remedies, would thepriority listing ofacountry berestricted tothe
unacceptability, fromaU.S.perspective, ofaspecific feature ofthatcountry ’sIPlaws/practices which
isnotcovered bytheTRIPS Agreement orcould itbebased onanaspect ofthatcountry ’sIPregime
which conforms totheTRIPS butdoesnotsatisfy theU.S.’sTRIPS-plus objectives?WT/TPR/M/16/Add.1
Page25
TheUnited States hasalways maintained itcanadminister Section 301consistent withitsWTO
obligations, including theobligations inArticle 22oftheDSU .Section 301gives theU.S.Trade
Representative authority tosuspend trade agreement concessions, andpermits theUSTR totakeaction
consistent withtherequirements ofArticle 22.Forexample, section 301permits theUSTR toforego
trade sanctions evenifanother country hasbeenfound tohaveviolated itsWTO obligations iftheother
country eliminates orphases outtheWTO-inconsistent measure oragrees toanimminent solution to
theeconomic harm caused byit,oragrees toprovide compensatory trade benefits. Section 301also
requires thatintaking action withrespect totrade agreement violations, including violations ofthe
WTO, theaction mustbeinanamount equivalent totheburden orrestriction being imposed bythat
country onU.S.commerce. Wehaveinterpreted thisrequirement inamanner consistent withDSU
Article 22.
Competition Policy
Thereport states thatexport associations maybechallenged under foreign competition law.
Could theU.S.clarify thebasis onwhich achallenge maybeundertaken?
Itisdifficult toprovide ageneral response tothisquestion. U.S.lawprovides noimmunity
fromprosecution under foreign antitrust lawstobusiness associations engaged incollective export
sales.Moreover,theUnitedStatesmaintainsnostatutewhichwouldblocktheenforcementorapplication
offoreign antitrust lawsinsuchcircumstances. Thus, thebasis foranysuchchallenge would depend
entirely ontheexistence andnature ofantitrust lawintheforeign jurisdiction inquestion.
Foreign Aid
AsitisCanada ’sunderstanding ofthe“Helsinki package ”thataidfunds areonlyallowed for
projects thatarefinancially non-viable andtheSecretariat report seems toindicate thattheU.S.has
adifferent view, could youplease clarify yourposition withregards totheprovision ofaidtolong
termprojects which arefinancially viable?
TheUSG hasanunwavering commitment totheterms oftheHelsinki Arrangement. This
commitment isoverseen bytheU.S.Department oftheTreasury.
Thebilateral assistance programs administered byUSAID areprimarily grant-funded. The
objectives aretopromote sustainable development andprovide forhumanitarian assistance.
USAID provides bilateral assistance foractivities thataredevelopmentally sound andnotfor
activities thatshould befunded bythecommercial sector. There are,however, other USGagencies
thatprovide funding forcommercially-oriented activities.
Financial Services
Intheareaoffinancial services Canada notes thatareference ismade toamoratorium, When
isitanticipated itwillbelifted?
TheEconomicGrowthandRegulatoryPaperworkReductionActof1996removedthemoratorium
onexamination feesthatweretobecharged bytheFederal Reserve Board onforeign banks without
being charged onstatemember banks; itrequires theBoard tocollect examination feesfromforeign
banks onlytothesameextent asfeesarecollected bytheBoard fortheexamination ofanystatemember
bank.WT/TPR/M/16/Add.1
Page26
Canada hasconcerns astothepresent regime which imposes taxesonforeign insurers asnoted
inofthereport. When isitanticipated thatsuchtaxschemes willbeeliminated?
There arenoplans atthistimetoeliminate thistax.
CanTexas ’sunset provision beextended?
Texas opted outofbranching bymerger, which otherwise would berequired byJune1,1997.
Thesunset permits Texas toreconsider itsdecision.
Isopting-in aone-time process? Canastatethathasopted-in subsequently opt-out?
Interstate branching denovoisavailable onlyifastateoptstopermit branching; there isno
timelimit. Interstate branching bymerger isavailable afterJune1,1997, unless astateoptsoutbefore
thatdate. Nofurther opportunity tooptoutisprovided under current law.
Canada alsoseeks clarification about thestatement inpara. 130that34States haveopted-in
to“some sortofinter-state branching bymerger. ”What typeofrestrictions havebeenplaced onentities
wishing tobranch bymerger?
Interstate banking bymerger takes effect June1,1997, unless astatepasses legislation toopt
outbefore thatdate. Astatethatopts-in early mayimpose non-discriminatory conditions solongas
theconditions arenotpreempted byfederal lawanddonotrequire performance beyond May31,1997.
Inaddition, states mayrequire acquisition ofanentire bankandnotjustaportion ofanin-state branch
network, andtheymayimpose aminimum agerequirement ofupto5years ontheacquired bank.
TheReport refers totheUnited States anditsobligations concerning financial services with
another country inamultilateral (e.g.NAFTA) ofbilateral agreement andthatagreement authorizes
sanctions tobeapplied butonlyasaresult ofadispute settlement process. Thisraises thequestion
ofhowisaunilateral procedure bytheUnited States pursuant totheFairTrade inFinancial Services
Act,imposing sanctions forthebreach ofthose same obligations consistent withthemultilateral or
bilateral agreement?
TheFairTrade inFinancial Services billintroduced inCongress inearly 1995 would have
required anyimposition ofsanctions tobeconsistent withanyU.S.bilateral ormultilateral obligations
concerning financial services. Inother words, thelanguage affirms thattheUnited States would live
uptoitsmultilateral commitments, including itsWTO commitments.
IstheUnited States nowprepared tobinditsfinancial services regime onanm.f.n. basis?
TheU.S.willrespond toquestions ofnegotiating parties inthecontext ofupcoming negotiations
andwill,ofcourse, haveitsownrequests todirect toeachofitsnegotiating parties atthattime.
IftheUnited States doesnotbinditsfinancial services regime onanM.F.N. basis, isitprepared
tomake acommitment toWTO members thatfuture bilateral agreements inthisareawillbeapplied
onanm.f.n. basis aswasthecaseoftheOctober 1994 agreement withJapan?
U.S.commitments infinancial services intheWTO arebound onanMFN basis. TheMFN
exemption oftheUnited States permits butdoesnotrequire ittodifferentiate among countries interms
ofthetreatment accorded theirfirms intheU.S.market withrespect tonewentrants, expansion of
operations, ornewactivities.WT/TPR/M/16/Add.1
Page27
Government Procurement
Could theUnited States include theshare ofthecontract dollars thatforeign firms winin
Graph III.8andTable III.6?
Existing datawould notgiveanaccurate measure ofthepercentage ofcontract dollars won
byforeign firms.
Could theUnited States clarify howthefollowing provisions nowinplaceunder thenewFederal
Acquisition Streamlining Act(FASA) of1994 andtheproposed changes totheFederal Acquisition
Reform Act(FARA) of1995willliberalize theU.S.procurement market andareconsistent withWTO-
AGP obligations?
Since April 1993NASA hashadprocedures inplacesimilar tothose ofthe$100,000 Simplified
Acquisition Threshold, forallcontracts $25,000 to$50,000 invalue. NASA procedures forthese
mid-range contracts include thesame mandatory set-asides forcontracts uptoavalue of$1million
asdoestheSAT. Moreover, these contracts canberenewed uptofourtimes ayear-effectively a
$5million threshold inaccordance withWTO guidelines forcontract evaluation. These mid-range
procurements arenotadvertised through theCommerce Business Daily, asrequired bytheWTO.
Could theU.S.comment ontheconsistency ofthisprogram withitsWTO obligations?
FASA, FARA andNASA -inrecent years, theUnited States hasinitiated procurement reform
totakeadvantage ofnewtechnologies andreduce theadministrative andregulatory burden ofFederal
procurement procedures. These reforms havebeeninitiated largely through theFederal Acquisition
Streamlining Actof1994 andtheFederal Acquisition Reform Actof1995. Additionally, NASA has
implemented apilotprogram forcertain procurements toutilize simplified procedures. Despite the
increasing useofsimplified procedures, therehasbeennochange inapplication ofsetaside programs,
assome havesuggested. Small business subcontracting programs alsoarerestricted toproducts of
U.S.origin andarenotapplied withrespect toforeign products, creating asituation inwhich suppliers
offoreign products havealesser administrative burden thansuppliers ofdomestic products. The
utilization ofsimplified procedures andnewinformation technologies inU.S.Federal procurement
reflect atrend thatisoccurring allovertheworld. Atthesame time, theUnited States hassought
toimplement thesereforms consistently withourinternational obligations, including through increasing
useofnotices ofplanned procurement forwhich shorter deadlines areauthorized under boththeGPA
andNAFTA. Additionally, mostsignatories totheGPA already recognize thattheGPA should be
updated toreflected newcommercial practices ingovernment procurement, andtheGPACommittee
hasalready agreed topursue work onupdating theAgreement inthisway.
Could theUnited States elaborate onthelist,anddollar value, ofdomestic preferences contained
intheTPR? Forexample, atthefederal level, additions tothelistshould include theByrnes Tollefson
Act(restrictingshipbuildingandrepairtoU.S.companies)theBerryAmendment(Requiringthepurchase
ofmilitary uniform andcombat boots from U.S.companies). Atthestatelevel, there arenumerous
restrictions, which differ fromonestatetoanother, including: theprocurement ofcomputer software,
lumber andwood products, andstateprogrammes which duplicate those tothefederal government,
suchasthesmall business set-aside.
Preferences andSet-Asides -withafewexceptions, particularly thatofsmall andminority
business setasides, BuyAmerica requirements arewaived forproducts fromsignatories totheWTO
Government Procurement Agreement andNAFTA. Asreflected inthose agreements, thePresident has
broadauthorityundertheTradeAgreementsActof1979towaiveBuyAmericanrestrictionsforcountries
thatmake reciprocal commitments toapply transparent andcompetitive procurement procedures.
Restrictions generally donotapply toprocurement ofservices. Asaresult ofcoverage under theWTOWT/TPR/M/16/Add.1
Page28
GPA, BuyAmerican restrictions apply toarelatively small portion ofFederal contracts --only those
forgoods under theGPAthreshold of130,000 SDRs ($190,000). Forthose contracts covered under
theGPA, BuyAmerican preferences arewaived forsignatories, butapurchasing prohibition applies
toproducts from countries thatarenotsignatories. TheUnited States alsoapplies anumber of
restrictions limited strictly toprocurement bytheDepartment ofDefense, suchasthose covered by
theso-called "Berry Amendment". TheUnited States maintains exceptions under theGPAandNAFTA
fortheseitems, including those thataresensitive fornational security reasons, justasother signatories
maintain theirowndefense-related restrictions through similar negotiated exceptions.
TheUnited States hasalsonegotiated exceptions totheGPA andNAFTA forsmall and
minority-owned business (SMB) set-asides andhasnoplans tophase-out theseset-asides. Asexceptions
totheGPA, U.S.legislation onset-asides iscompatible withitsobligations. Set-asides serve an
important socio-economic function while being limited inscope toarelatively small portion ofcontracts.
Historically, theyhaveaffected between sixandseven percent ofthetotalvalue ofU.S.coverage under
theTokyo Round GPA. Itistooearly totellwhether theimpact maybeincreased astheresult of
coverage ofservices, including construction, under theWTOGPA, sincestatistics haveyettobereported
under thenewagreement. Despite thefactthattheUnited States hasnegotiated exception, ithasalways
sought toapply themonatransparent, predictable basis. TheUnited States expects tocontinue to
discuss withother GPAsignatories howtransparency andpredictability associated withsetasides can
beenhanced. However, oneaspect ofawards made toSMBs should notbeoverlooked. Many ofthese
awards aremade through afullandopencompetitive procurement process andnotthrough setasides.
Often ourtrading partners havecitedinflated statistics thatinclude contracts awarded onacompetitive
basis.
Transportation BuyAmerican -theUnited States hasexcluded Federally-funded transportation
projects, undertaken atstateandmunicipal levels, fromcoverage under theGPA. Nevertheless, the
United States hasunilaterally initiated liberalization measures evenforthese projects, byraising the
threshold above which BuyAmerican restrictions apply. Since there hasbeennodefacto change in
application ofSMBsetasides, contrary towhathasbeensuggested, thisliberalization doesoffernew
procurement opportunities forsuppliers offoreign products.
QUESTIONS FROM CUBA
Onreading thereport submitted bytheGovernment oftheUnited States foritsTrade Policy
Review, document WT/TPR/G/16 of21October 1996, inSection 1,“TheUnited States inthe
Multilateral System, ”wenotereferences tothefollowing aspects...:
Thedelegation oftheUnited States sought toexplain howitreconciles theimplementation
ofthese tenets orpolicies, inthelight oftherules andobligations entered intounder theWTO
Agreements, withthecontinuing andsystematic application ofunilateral andcoercive measures, for
political purposes intheareaofforeign relations.
Thus, howdoesitexplain, inthecaseofCuba, theunilateral economic, trade andfinancial
blockade imposed forover35years, aswellasthestrengthening, deepening andwidening ofitsextra-
territorial nature, firstwiththe“Torricelli Act”in1992, andsubsequently withthe"Helms-Burton
Act"inearly 1996?
When some ofthelawsandregulations related totrade withCuba wereraised previously by
Cuba intheGATT, theUnited States expressly justified themasmeasures taken inpursuit ofessential
U.S.security interests.WT/TPR/M/16/Add.1
Page29
TheUnited States remains strongly committed tofacilitating atransition todemocracy inCuba.
TheCuban Liberty andDemocratic Solidarity ("Libertad" or"Helms-Burton") Actof1996 andthe
Cuban Democracy Actof1992 arebothintended topromote thisobjective.
President Clinton signed theLibertad Actintolawintheaftermath oftheCuban Government 's
shootdown oftwoU.S.unarmed civilian aircraft inbroad daylight andwithout justification. Thatattack,
which wasinblatant violation ofinternational lawandresulted inthedeaths ofthree U.S.citizens
andonepermanent resident, wasonlythelatest inaseries ofactions bytheCuban Government over
35years thathavedirectly affected theinterests oftheUnited States.
QUESTIONS FROM THE EUROPEAN COMMUNITY
General comments
Duetotheverylaterelease ofthedocuments oftheSecretariat andoftheUSGovernment
concerning the1996USTrade Policy Review Mechanism, theEuropean Community anditsMember
States onlyhadaweek todevote totheassessment ofthese documents. TheEuropean Community
requests forthefuture astrict compliance bythecounty under review andbytheSecretariat withthe
internal rules oftheTrade Policy Review Body, namely chapter VIpara. 9which stipulates that
documents shallbereleased atlest4weeks inadvance ofthemeeting.
Weagree thatallparties should endeavour toimprove upon thetimeliness ofthereceipt of
documentation. Forexample, wenotethatother WTO members had24daystorespond totheReport
oftheEuropean Commission intheSummer of1995.
Report oftheSecretariat
Page19-32:Onforeign investment, theattempts torelax allforeign ownership restrictions
wasdropped some months ago. TheEuropean Community anditsMember States would welcome
anyfurther information fromtheU.S.astowhether thisdebate could bereopened oranewproposal
tabled.
Itisdifficult torespond tothequestion because wearenotclear which restrictions onforeign
ownership arebeing referred toandwhatproposal torelax restrictions wasdropped. However, in
general wecansay:
- Anopen investment policy hasbeen oneofthemost enduring oftheUnited States '
international economic policies.
- IthasbeenU.S.policy toprovide national treatment, withonlylimited exceptions fornational
security inareas suchastelecommunications, shipping, airtransport, andatomic energy.
- Atthesame time, theUnited States hasworked toliberalize investment regimes abroad.
- President Clinton articulated U.S.investment policy inFebruary, 1993, amonth aftertaking
office, whenhestated inaspeech thatwewelcome foreign investment inourbusinesses knowing
thatwithitcome newideas aswellascapital, butaswewelcome thatinvestment, weinsist
thatourinvestors should beequally welcome inother countries.
- Bothprongs, welcoming investment intheUnited States, andinsisting onequal treatment for
U.S.investors abroad, arepartofourinvestment policy.
TheECanditsMember States wonder towhatextent theregulatory reform haseffectively
increased ordecreased thepossibilities forforeign participation inthedifferent sectors? Arerestrictions
forforeigninvestmentinbroadcastingandtelecommunicationsstillbased,ultimately,onnationalsecurity
grounds asapparently implied bythereport?WT/TPR/M/16/Add.1
Page30
What roledoreciprocity requirement playintheaward ofbroadcasting oncommon carrier
radio licenses toforeign controlled companies?
Regulatory reform hasbeenapplied intheUnited States onanational treatment basis. To
theextent thatithasopened upnewpossibilities forU.S.financial services providers, forexample
todobanking interstate, ithasopened upthesame possibilities forforeign financial services firms
inlikecircumstances.
TheU.S.licensing system isnotbased onreciprocity butonapolicy thatforeign controlled
companies arenotpermitted toholdbroadcasting licenses. IntheGATS, theUnited States tooka
market access limitation thatradio andtelevision licenses maynotbeheldby:aforeign government;
acorporation chartered under thelawofaforeign country orwhich hasanon-US citizen asanofficer
ordirector ormore than20percentofthecapital stockofwhich isowned orvoted bynon-US citizens;
acorporation chartered under thelawoftheUnited States thatisdirectly orindirectly controlled by
acorporation more than25percentofwhose capital stock isowned bynon-US citizens oraforeign
government oracorporation ofwhich anyofficer ormore than25percentofthedirectors arenon-US
citizens.
Whyistherestriction oncabotage inshipping setatthehighlevelof75percent USownership?
Whyisadomestic carrier forcabotage andexercise ofUSinternational airrights defined asonein
which nomore than25percent oftheshares areheldbyforeign interests. Whydoesthedirector and
twothirds oftheboard havetobeUScitizens inorder toqualify asadomestic aircarrier?
The75-percent citizen ownership requirement forvessels operating inU.S.cabotage trades
isbased onsection 38oftheMerchant Marine Actof1920, which amended section 2oftheShipping
Actof1916. U.S. flagcarrier representatives have reaffirmed their support fortheinvestment
requirements ofthislongstanding legislation, stressing their concern about theability offoreign
companies tocircumvent U.S.environmental, safety, andlabour lawsandstandards. TheUnited States
isamong several countries thatreserve theircoastwise trades tonational-flag vessels, owned bydomestic
interests andcrewed bynational citizen seamen.
Theinvestment criteria fortheaviation sector remain unchanged since theiradoption inthe
CivilAeronautics Actof1935. These investment criteria havebeenreviewed fromtimetotimeinthe
United States asinother countries.
Whyaretheeligibility criteria forfinancial assistance under theAdvanced Technology Program
(ATP) subject toatriple reciprocity clause forforeign investors? Same question inrelation toforeign
access tofunds under theEnergy Policy Act.
These criteria arelikewise required bystatute, andhavebeenreviewed periodically.
Page23-6:Trade inservices covered byState law(sub-federal regulation) isofparticular
importance. TheECwould welcome precision concerning thedivision ofcompetencies inthedifferent
service sectors aswellasthesupervisory andregulatory agencies which mustimplement andguarantee
theWTO commitments oftheFederal Government. These precisions would beparticularly necessary
inrelation totaxmeasures, subsidies, andqualifications applicable tothesupply ofservices.
IntheUnited States anumber ofservices sectors areregulated wholly orpartially atthestate
level. These include professional services, financial services, anddistribution, truck transport, real
estate, construction, andeducation. With respect toqualifications, state governments setthe
qualifications forlicensing ofprofessionals, usually acombination ofeducation, experience, and
examinations forthemajor professions. Candidates forlicensure mustapply tothelicensing boardWT/TPR/M/16/Add.1
Page31
inthejurisdiction inwhich theywanttopractice. States alsohaveindependent authority totaxand
provide incentives.
Page 26-17:Alegislative proposal afterpassage ofthe“USUruguay Round Agreement
Act”(URAA) required theestablishment ofaPanel offivefederal judges thatwillreview panel and
appellate bodyreports todetermine whether theyhavecomplied withtheirterms ofreference, orhave
alerted therights andobligations oftheUSunder theWTO. TheEuropean Community anditsMember
States would liketoknow ifthislegislation hasbeenpassed toandifthepanel hasbeencalled on.
Thelegislation didnotpass.
Page26-18:In1996 theUSTR established aMonitoring andEvaluation Unittowatch the
implementation oftradeagreements byUSpartners. Likewise theDepartment ofCommerce established
theTrade Compliance Centre (TCC) todevelop adatabase andperform research andanalysis on
compliance issues. Willtheseagencies directly contact interested governments, tradebodies oragencies
inthecourse oftheirmonitoring activity?
USTR ’sMonitoring andEnforcement unithasfocused onimplementation ofUruguay Round
Agreements andinthatcontext hasdirectly contacted governments, inaddition torelevant international
organizations. TheDepartment ofCommerce ’srecently established Trade Compliance Center (TCC),
willbuild upon andcomplement thework ofUSTR ’sMonitoring andEnforcement Unit. TheCenter
will(1)collect information ontrade compliance, (2)develop acomputerized database andinformation
retrieval system and(3)perform focused research andanalysis oncompliance issues, including
developmentofmethodologiesforevaluatingcompliancewithtradeagreements.Inthecourseoffulfilling
itsmandate, TCCstaffwilldraw upon allresources attheirdisposal, including direct contact, as
necessary, withinterested governments, trade bodies oragencies.
Page30-35:TheECunderstands thattheUSauthorities intend toextend freetrade status
ofIsrael totheareas under control ofthePalestinian Authority. Willthisimply thattheU.S.enter
intoanAgreement withthePalestine Authority?
OnOctober 2,1996, thePresident signed legislation giving himauthority toproclaim duty-free
treatment ofproducts fromtheWestBank andGaza Strip. OnNovember 13,thePresident signed the
proclamation tomodify theHarmonized Tariff Schedule inorder toinitiate theduty-free treatment.
Thesigned Proclamation wentintoeffect three daysafteritspublication intheFederal Register on
November 17,1996. TheProclamation contains nosunset clause norrenewal date; itwillremain
ineffect atthePresident ’sdiscretion. ThePresident retains theauthority tomodify, suspend orterminate
theagreement unilaterally.
ThePresident tookthisunilateral action inorder torestore benefits previously accorded the
Palestinians under theU.S./Israel FreeTrade AreaAgreement, butwhich werelosttothemaspart
oftheimplementation ofthe1994Declaration ofPrinciples ofInterim Self-Government. Therestoration
ofthisduty-free status forallproducts isakeyelement oftheAdministration ’seffort tostimulate the
Palestinian economy and,more generally, tosupport theMiddle Eastpeace process.
Under theproclamation allduties havebeeneliminated forPalestinian goods. ThePalestinian
Authority hasconfirmed totheU.S.itsintent toprovide reciprocal treatment forU.S.products entering
theregion. ThePalestinians alsostipulate thattheywillassist theU.S.inverifying compliance with
U.S.trade laws, andthattheywillsupport allefforts toendtheArab League Boycott ofIsrael inall
respects.WT/TPR/M/16/Add.1
Page32
Israel alsohasprovided theU.S.anassurance ofitscommitment totheprinciples embodied
inthisproclamation. Thisaction bythePresident doesnotextend oramend theU.S./Israel FTA.
Therefore, itdoesnotincorporate thespecific provisions oftheFTA. Theproclamation doesprovide
thatarticles ofIsrael canretain theirIsraeli origin, eveniftheyareshipped totheU.S.fromtheWest
Bank, Gaza, oraqualifying industrial zone. Thelawandproclamation alsotreatproducts oftheWest
Bank andGaza which areshipped totheU.S.viaIsrael asiftheywere"imported directly" fromthe
WestBankandGaza. Therefore, Israeli goods shipped outoftheWestBankandGaza canstillbenefit
under theFTAandmaynowadditionally enjoy theuniversal dutyfreestatus established under the
Proclamation. Furthermore, products oftheWestBankandGaza transshipped outofIsrael canbenefit
under theGaza Proclamation orunder theU.S.-Israel FTA. Thisprocess of"cumulation" encourages
existing andfuture commercial tiesbetween Israeli andPalestinian businesses .
Page30-36:Concerning theNAFTA Agreement andtheimplementation measures related
toitcould theUStellwhich measures havebeennotified totheWTO? DoestheUSbelieve thatNAFTA
Agreement covers services totheextent required byArticle VoftheGATS?
TheNAFTA wasnotified totheCouncil onTrade inServices onMarch 1,1995. AWorking
Party isnowengaged inanexchange ofinformation ontheprovisions oftheagreement. Ashasbeen
stated intheWorking Party, itistheviewoftheUnited States andtheother NAFTA Parties thatthe
agreement meets thecriteria foran“economic integration agreement stipulated inGATS Article V.
Specifically,theNAFTAmeetstherequirementsinGATSArticleV:1regardingsubstantialsectoral
coverage andabsence orelimination ofsubstantially alldiscrimination, inthesense ofArticle XVII.
Onlyoneservices sector --civil aviation --isnotcovered bytheNAFTA. (TheGATS alsoexcludes
thatsector). Allother sectors arecovered, subject toindividual country reservations incertain sectors.
Boththebreadth anddepth ofservices sector commitments under theNAFTA aregreater thanthose
under theGATS. Inaddition, asrequired byArticle V,nomode ofsupply isapriori excluded; that
is,theagreementcoversallfourGATSmodes:cross-bordertradeandconsumptionabroad(Chapter12),
commercial presence (Chapter 11),andmovement ofpersons (Chapter 16).Chapter 14onfinancial
services alsocovers allfourmodes.
Moreover, NAFTA services commitments mustbeevaluated, asoutlined inArticle V:2,aspart
ofawider framework ofeconomic integration. Inaddition toservices, theNAFTA covers, interalia,
goods, investment, competition policy, andgovernment procurement.
Fortrade ingoods theincrease ofUSexports toNAFTA-Members waslessthantheincrease
ofUSglobal exports from1993to1996. Could theUSprecise whattheincrease intrade inservices
was?WT/TPR/M/16/Add.1
Page33
U.S.imports andexports ofservices (cross-border; inbillions ofdollars)
1993 1994 1995 Pct.chge.
Canada
Exports 16.4 17.3 18.1 +10.4
Imports 8.6 11.7 12.6 +46.5
Mexico
Exports 8.4 8.9 N/A +6.0
Imports 8.3 8.4 N/A +1.2
World
Exports 186.1 195.8 210.6 +13.2
Imports 125.5 134.1 142.2 +13.3
Page31-37:Intheevent ofinconsistencies between NAFTA andtheobligations assumed
bytheUSintheWTO framework thelatter mustgivewaytotheformer. Howwould therights of
theECanditsMember States under theWTO Agreements besafeguarded inthese circumstances?
Wehaveimplemented, andwillcontinue toimplement, ourregional trade agreements consistent
withtheWTO.
Page35-48:TheFreeTrade AreaoftheAmericas (FTAA) andtheAsiaPacific Economic
Cooperation Council (APEC) (“Boger Declaration ”andOsaka Agenda) developed aframework for
consultations between Members butnoformal agreement. Inparticular, theECanditsMember States
understand thatworking groups onservices havebeensetupandwould liketoknow thecontent of
thedebates andifanyconclusions havebeenreached. Isittheintention oftheUSthatAPEC and
FTAA develop asfullyfledged FreeTrade Areas, andfulfiltheconditions ofArticle VoftheGATS?
IntheFTAA process, working groups havebeenestablished inanumber ofsectors. TheFTAA
working group onservices, chaired byChile, iscurrently conducting thenecessary analytical work
toprepare foreventual negotiations. Noworking group onservices exists inAPEC, although groups
existforfoursectors: energy, telecommunications, transportation, andtourism. Themandates for
these groups aresetoutintheOsaka Action Agenda. Allbilateral andregional trade agreements to
which theU.S.isaparty willbeconsistent withtherelevant WTO provisions.
Page38-58:Anewbilateral agreement withJapan oninsurance andother financial services
willbeapplied onanMFN basis toallWTO members. TheEuropean Community anditsMember
States would liketoobtain details onthecontent andnature ofthisagreement.
OnDecember 15,1996 theUnited States andJapan reached agreement onapackage of
supplementary measures tothe1994U.S.-Japan insurance agreement. These measures, fullyconsistent
withthe1994 agreement, willbenefit bothforeign insurance providers andJapanese consumers by
opening upJapan ’sinsurance market tofargreater competition andinnovation thanpreviously existed.
TheUnited States hasbriefed WTO members andhasprovided copies oftheagreement tothemand
torepresentatives oftheEUanditsMember States attheirrequest.
Page39Table II.2:Twootheragreements covering services havebeenconcluded lately between
theUSandJapan: oneonConstruction Services, andoneoncivil aviation, finalized inMarch 27,WT/TPR/M/16/Add.1
Page34
1996. These agreements havenotbeennotified totheWTO. TheECanditsMember States would
liketoobtain information ontheircontents andscope.
TheU.S.-Japan construction agreement, signed onJanuary 18,1994, isdesigned tofurther
increase foreign access toJapan ’spublic construction market. Allmeasures willbeapplied onan
MFN consistent basis.
TheU.S.andJapan concluded anagreement onanumber ofspecific cargo services issues
earlier thisyear. Further discussions oncargo andpassenger services willcontinue atalaterdate.
Page 43-71:With China aUSTR proposal (1994) forabilateral trade agreement onthe
liberalization oftelecommunication value-added services (VAS) isstillunder review. Hasthere been
anyprogress since then? Onother accounts, bilateral transport talksended onApril 1996. Have those
brought anyfurther opening ofmarkets which might berelevant fortheECanditsMember States?
TheUnited States hasbeenpursuing theissueoftelecommunications value-added services (TVA)
andtransportation services inthecontext ofChina ’saccession totheWorld Trade Organization (WTO).
TheUnited States considers attainment ofmarket access forTVAservices andservice providers tobe
akeyobjective fortheaccession process .Similarly, theUnited States isseeking broad commitments
inthedistribution sector, including wholesaling, retailing andassociated activities suchastransport
ofrelevant goods. China hasrecently submitted arevised services market access schedule totheWorking
Party onitsaccession (WT/ACC/CHN/4--4 December 1996). Wecontinue toseeksignificant
improvements inChina ’sofferinthese andother services sectors.
Pages 59-61, -25-31: TheDepartment ofCommerce more andmore frequently uses“Best
Information Available ”(BIA) when determining dumping margins. Thishasbeendonerecently even
incases when theexporter hasbeenfullycooperative andprovided theinformation requested. One
recent example concerns cuttolength steelplatefromSweden (Case A-401-805). Inthelastreview,
suddenly, theDepartment ofCommerce changed toBIAafterhaving usedtheinformation from the
exporter inprevious reviews andalsointheoriginal investigation. TheEUwould welcome an
explanation ofthispractice.
Afurtherexampleofquestionableadministrativeburdensputontheexporterandthegovernment
intheexporting country canbefound intheCVD caseonViscose Rayon Staple Fiber from Sweden
(case C-401-056). Areview hasbeeninitialled regardless ofthefactthatintheprevious review the
countervailable amounts were found tobenegligible i.e.lessthan0.5percent.
Forallantidumping andcountervailing dutycases, interested parties havetheopportunity to
comment throughout theadministrative process. Those comments areconsidered andaddressed in
thefinaldetermination. Finally, ifaninterested party disagrees withadecision, thatparty hasrecourse
tojudicial review. Onthegeneral issue offactsavailable asabasis foradetermination, theUnited
States willnotabaseadetermination onfacts available iftheexporter provides theinformation
requested, inatimely manner, intheformat requested, andtheinformation isverifiable. Simply
providing information isnotsufficient under either theUSortheEU’slaw. Theinformation must
beaccurate andverifiable.
Certain information isrequired forconducting anantidumping orcountervailing duty
investigation, andweunderstand thatproviding thatinformation isburdensome. However, inthose
cases where wemayrequest information thattheexporter believes isnotnecessary orthatimposes
asignificant burden inthatparticular case, wehope theexporter willcontact theDepartment of
Commerce andexplain thesituation. Ifthere isalessburdensome wayofproviding theinformation
necessary forconducting theinvestigation, wewillconsider it.Onthelastissued raised, wedonotWT/TPR/M/16/Add.1
Page35
consider itunreasonable toallow arequest foranadministrative review simply because theprevious
review showed ademinimis levelofsubsidization; noristhere abasis intheWTO agreement for
declining arequest forareview onsuchagenda.
Page70-44-45: The“section 301"family oflegislation provides themoststriking example
ofunilateral tradelegislation inthesense thatthesemeasures arebased onanexclusively USappreciation
ofthetraderelated behaviour ofaforeign country orislegislation without reference toagree multilateral
rules. Agood example ofsuchunilateral measures canbefound inthe“Hormones ”dispute. In
response toaCommunity banontheuseofcertain hormones intheproduction oflivestock, theUS
imposed unilateral retaliation measures increasing dramatically duties onimports ofcertain agricultural
producers since 1989. Following consultations withtheEUunder theWTO dispute settlement
mechanism, theUSfinally removed thesemeasures inJuly1996.Page 72-141:Thedescription made
ofthe1984Drug Price Competition andPatent Restoration Actisnotentirely accurate since thisAct
contains aunique feature (theso-called “Roche/Bolar amendment ”)which allows pre-patent expiry
testing ofgeneric medical products, something which istoallowed inthemaintrading partners ofthe
USwhere generic manufacturers havetowaituntilthepaten hasexpired tobegin theirtesting activities.
TheECanditsMember States would liketoknow hatistheperception oftheUSgovernment ofthe
application ofthisclause since 1984.
Withrespect totheEU’sobservation regarding theU.S.withdrawal ofitsretaliation inresponse
totheEUbanonmeatproduced fromanimals treated withgrowth hormones, theU.S.onlyimposed
thesanctions aftertheEUblocked U.S.attempts toresolve thematter through thedispute settlement
procedures under theTokyo Round Agreement onTechnical Barriers toTrade. Astherearenoweffective
WTO procedures toaddress thematter oftheEU’srestrictions onimports ofU.S.meat, theUnited
States canterminate theincreased duties.
Theapplication oftheso-called “Roche/Bolar ”amendment inU.S.patent lawisconsistent
withtheUnited States ’obligations under theTRIPS Agreement. Thatamendment permits theuseof
apharmaceutical patent forthesolepurpose ofseeking regulatory approval ofageneric formofthe
pharmaceutical product, thereby enabling thesuccessful generic applicant toputitsproduct onthe
market assoonasthepatent expires. Other pre-expiration commercial activity using thepatented
pharmaceutical product remains prohibited. Ifpre-grant usetoseekFDAapproval werenotpermitted,
thetermofthepatent would beeffectively extended toinclude thestatutory grant andtheyears ittakes
forgeneric competitors toseekandreceive marketing approval fromtheFDA. Because thisamendment
avoids effective extensions ofthepatent term intheunique context ofregulatory approval for
pharmaceutical products, anddoesnotshorten orimpinge ontheeffective lifeofthepatent inany
way,itisapermissible limitation onthegrant ofapatent under Article 30oftheTRIPS Agreement.
Thispoint isstrengthened bythefactthatatthesame timethe"Roche/Bolar" exception wasadopted,
pharmaceutical patent owners weregiven theopportunity toseekandreceive actual extensions intheir
patent terms tocompensate fordelays intheFDAregulatory approval process.
Page98-118:TheUSpatent system istheonlyoneintheworld based ontheprinciple of
first-to-invent rather thanfirst-to-file. TheTransatlantic Business Dialogue recommends thattheUS
seriously takeintoconsideration thepossibility tomove tofirst-to-file system andtoharmonize their
lawonthisimportant point. TheEUwould beinterested toknow whether suchpossibility hasbeen
seriously considered.
TheTRIPS Agreement doesnotmandate theadoption ofafirst-to-invent system orafirst-to-file
system, andleaves ituptoindividual WTO members todecide which isappropriate fortheirpatent
system. TheUnited States hasconsidered moving fromafirst-to-invent system toafirst-to-file system,
butdoesnotconsider itappropriate todosoatthistime.WT/TPR/M/16/Add.1
Page36
Page102-130:Although theUSgovernment argues thattheamendments made totheSection
337oftheTariff Actof1930“brings itintoconformity withTRIPs requirement ”,theEUhasconstantly
saidthatitdoesnotconsider thesemodifications tobesufficient. Thecoexistence oftwoparallel actions
inthefederal district courtandbefore theInternational Trade Commission continues under themodified
Section 337. Thismakes itnecessary fortherespondent todefend hisrights intwofora,which causes
double effort andexpense. Therefore, theEUremains oftheview thatSection 337isstillnotin
compliance withtheGATT panel findings of1989.
TheURAA amendments tosection 337oftheTariff Actof1930 bring itintoconformity with
theUnited States ’obligations under theWTO Agreements, including article IIIoftheGATT 1994and
therelevant provisions oftheTRIPS Agreement. Thesignificant differences between proceedings in
theITCandintheFederal district courts havebeeneliminated. Furthermore, theburden ofparallel
proceedings hasbeengreatly lessened by(1)allowing arespondent inbothproceedings tostaythe
Federal district court proceeding untiltheITCproceeding hasconcluded, thereby eliminating theneed
toaddress anissue intwoforaatthesame time, and(2)allowing therecord intheITCproceeding
tobetransferred totheFederal district court foritsuse,withtheintended benefit ofeliminating
duplication ofeffort onsuchissues. Thissetofamendments tosection 337substantially reduces double
effort andexpense thatmight otherwise takeplace, while retaining whatinsomecases istheonlyeffective
wayofenforcing intellectual property rights attheborder.
Page102-133:TheUSsystem of“government use”ofpatented inventions operates ina
verynon-transparent manner. EUcompanies haveoften complained totheCommission thatthey
arenotevenaware thattheirpatented invention isbeing usedbyfederal authorities, letalone being
financially compensated.
TheU.S.system ofgovernment useofpatented inventions operates inatransparent manner.
Totheextent thatgovernment agencies become aware oftheiruseofpatented technology, theyare
expected tonotify thepatent owner. Wehavenoevidence thatthisisnotactually taking place.
Page147-92:How hasthedomestic development (“explosion ”}inthetelecommunications sector
affected thepositions taken bytheUSintheNegotiations (NGBT) andGroup (GBT) onBasic
Telecommunications?
TheexperienceoftheUnitedStatesisthatgreaterrelianceonprivateinvestmentandcompetition,
fostered bypro-competitive regulatory practices, willcreate agrowing pieoftelecommunications goods
andservices tothebenefit ofindustry andconsumers. TheUnited States already maintains oneof
theworld ’smostopenandcompetitive markets. Ourobjective inthisnegotiation istoobtain similar
levels ofopenness toforeign investment andcompetition inthemarkets ofother major trading partners,
mostofwhich aredominated bysingle providers.
Page147-95TheECanditsMember States would request details fromtheUSGovernment
ontheAmerican Mobile Satellite Corporation monopoly fordomestic satellite based mobile services.
Inparticular, howlongwillthemonopoly last? Howwasthefrequency spectrum allocation decided?
AmericanMobileSatelliteCorporation,AMSC,isnotamonopoly.Itcompetesagainstterrestrial
mobile service operators, andinfuture AMSC willcompete against newBigLeoandLittle Leomobile
service operators. AMSC ’slicense wasgranted bytheFCConthebasisofnon-discriminatory, objective
award procedures.
Page148-96:Also, theEuropean Community anditsMember States would liketoobtain
more details ontheconcept andexamples oftheso-called ‘defacto’monopolies. What aretheWT/TPR/M/16/Add.1
Page37
obligationsimposedtodominantsuppliers?Howaredominantsuppliersdefined?Isthereapresumption
thatallforeign suppliers aretobeconsidered ‘dominant suppliers ’?
Thematter ofdominant carrier regulation isbestsummarized bytheproposed Reference Paper
onRegulatory Principles, adopted sofarbythirty-one countries intheGBT, including theUnited
States andtheE.U. Thedefinition of"major supplier" intheReference Paper conforms withtheU.S.
definition ofa"dominant carrier". Thedefinition isobjective anditisnotnationality-based. Itstates:
Amajor supplier isasupplier which hastheability tomaterially affect theterms ofparticipation (having
regard toprice andsupply) intherelevant market forbasic telecommunications services asaresult
of:
(a) control overessential facilities; or
(b) useofitsposition inthemarket.
Page150-99:Could theUSprovide details ontheregulation andpractice ofinterconnection
forrural networks?
Inorder tofulfiltheuniversal service objectives oftheTelecommunications Actof1996, state
regulatory bodies mayexempt rural local exchange carriers frominterconnection obligations. The
purpose oftheexemption istostrengthen universal service byavoiding excessive regulation ofthese
small companies. Today, carriers controlling onlyfourpercent ofU.S.local exchange phone lines
qualify fortheexemption. Thatpercentage isshrinking, however, asconsolidation takes place among
themore than 1800 local exchange carriers, thanks tothederegulatory emphasis ofthe
Telecommunications Act.
Rural local exchange carriers maybeexempted byastateregulatory authority foralimited
period oftimefrominterconnection obligations withcompeting localexchange carriers. Rural telephone
companies donothavetoprovide interconnection tocompeting localexchange carriers untilordered
todosobyastateregulatory authority.
Page150-100:TheSubmarine Cable Landing Actisnotonlyapotential national treatment
limitation butalsoarealmarket access one. What aretheconditions fortherestrictions listed inthe
statute tobeapplicable? Aretherefixedadministrative criteria forlanding concessions? What adegree
ofdiscretionary power dothese givetotheUSauthorities?
Presidential authority, under theAct,isdelegated totheState Department andtheFederal
Communications Commission. These agencies aresubject totheAdministrative Procedures Actin
deciding theaward oflicenses. Their discretion intheaward oflicenses isguided bythestatute, of
which animportant partis"that thePresident maywithhold orrevoke (asubmarine cable) license
when heshallbesatisfied afterduenotice andhearing thatsuchaction willassist insecuring rights
forthelanding oroperation ofcables inforeign countries, orinmaintaining therights orinterests
oftheUnited States ofitscitizens inforeign countries...."
Page151-103:TheReport comments extensively onthedifferent competencies oftheFederal
Communication Commission (FCC). However, theECanditsMember Statewould require information
onsub-federal regulatory agencies andtheircompetencies toadminister federal and/or statelaw.
Wefindthisquestion toogeneral toanswer inthiscontext.
Page152-105:TheWTO Secretariat Report doesnotindicate that,ifthetelecoms negotiations
succeed, theECO testwillneedtobemodified andmade ifcompatible withMFN (sowillneedtoWT/TPR/M/16/Add.1
Page38
bemade theECO-Sat ifapproved). Sofar,theSecretariat Report onlyindicates thatsuchmeasures
might needtobelisted asanMFN exemption. TheECanditsMember Statehaveanessential interest
inthismatter andrequest precise details astotheUSintention aspect.
Page152-106:Inrelation totheECO-Sat, could theUSprovide more indications astowhat
arethecurrent regulatory options oroverall intentions oftheGovernment inthisfield. Atpresent
theECanditsMember States areonlyaware ofdraftlegislation. When willitbeready? Does the
USconsider thelegislation tobecompatible withtheMFN principle?
TheTelecommunications Actof1996opened localexchange markets tocompetition andended
prohibitions oncross-entry affecting thelocalexchange telephone industry, theinter-exchange telephone
industry, andthecable television industry.
TheFederal Communications Commission 'srulemaking onMarket Entry andRulemaking of
Foreign-Affiliated Carriers, adopted inNovember 1995, codified anobjective setofcriteria forcase-by-
casedecisions onissuance ofradio licenses andlicenses toprovide international services, based on
adejureanddefacto examination ofeffective competitive opportunities inthehome market ofthe
applicant.
TheFederal Communications Commission ’sNotice ofProposed Rulemaking (NPRM) inthe
matter ofDomestic andInternational Satellite Consolidation Order --II(DISCO-II) proposes anobjective
setofcriteria forcase-by-case decisions onlicensing ofU.S.earth stations tousenon-U.S. licensed
satellites. TheFCChasnottaken action ontheproposal andwecannot speculate astowhen itmay
doso.Comments fromforeign governments andforeign operators havebeenreceived andwelcomed
bytheCommission.
TheUnitedStates'conditionalofferintheWTOGrouponBasicTelecommunicationsistoreplace
these existing andproposed (respectively) case-by-case processes byaWTO commitment toprovide
effectively unlimited market access andnational treatment forallbasic telecom sectors, including
satellite-based services. Theofferisconditional onacritical massofhighquality offers byother trade
partners.
TheTelecom ActandtheFCC’srecent actions haveincreased thepossibilities forforeign
participation inthedifferent sectors bycodifying rulesandproviding incentives forother governments
tomatch theUnited States ’demonstrated willingness toopenitsmarket further toprivate investment
andcompetition. TheUnited States ’conditional offerinthese negotiations takes thesame approach,
contingent onmore andbetter offers fromourtrading partners.
Page 152-106:TheECanditsMember States would needalsomore details onsatellite
regulation. CanInmarsat provide services intheUS?Comsat istheonlyUSsignatory toINTELSAT
andInmarsat. Wasthisdecided byStatute orbyanadministrative decision?
Direct access toInmarsat andIntelsat intheUnited States isthemonopoly ofComsat. This
isnotamatter ofdenial ofnational treatment, insofar asAT&T isComsat 'slargest customer. Comsat 's
monopoly isnotunder review atthepresent time.
Page155-116:TheForeign Bank Supervision Enhancement Actof1991(FBSEA) imposed
supervisory feespayable byforeign banks established, intheUS.TheInterstate Banking andBranching
Efficiency Actof1997 setamoratorium onthecollection ofthese feesuntilJuly1997. Arethere
plans toreconsider thismoratorium inparticular inlightofthenegotiations onfinancial services to
beheldnextyear?WT/TPR/M/16/Add.1
Page39
U.S.lawhasbeenchanged; theEconomic Growth andRegulatory Paperwork Reduction Act
of1996 removed themoratorium onexamination feesthatweretobecharged bytheFederal Reserve
board onforeign banks without being charged onstatemember banks; itrequires theboard tocollect
examination feesfromforeign banks onlytothesame extent asfeesarecollected bytheBoard forthe
examination ofanystatemember bank.
Page156-120:Theapplication oftheGlass-Steagall Act(GA1933) toforeign banks ’branches
andsubsidiaries isensured through theInternational Banking Actof1978 (IBA) andconstitutes a
limitation onnational treatment. TheECanditsMember States haveaninterest inmaintaining, and
ifpossible expanding, theFederal Reserve Board ’sprogressive interpretation ofGASection 20.Could
itbeincorporatedtotheforthcomingnegotiationsonfinancialservicesnextyear?Whatotherpossibilities
would ensure itscontinued application?
Wedonotregard application oftheGlass-Steagall Acttoforeign banks ’branches and
subsidiaries asalimitation onnational treatment. Itshould benoted thattheFederal Reserve Board
hasrecently decided toraisethelimitonrevenues thatmaybegenerated byunderwriting anddealing
incorporate securities from10percent to25percent. Inaddition, theFedhasproposed forcomment
aregulation thatwould modify current rules (firewalls) restricting transactions between banks and
theirsecurities affiliates. Anysuchmodifications would apply equally toforeign anddomestic banks.
Pages 160-135:Itisnotcorrect tosaythatGATS financial services negotiations areexpected
toresume towards theendof1997. Onthecontrary, theCommittee onTrade andFinancial Services
hasagreed onitsmeeting of22October toholditsfirstmeeting inearly April nextyear, andtouse
thisopportunity tore-launch bilateral negotiations. Therefore, thefirstsentence ofpar.135should
read: theGATS financial services negotiations areexpected toresume early in1997. ”
Thesecond sentence should beredrafted inparticular asregards thereference to“substantially
fullmarket access andnational treatment. ”Thisreflects theUSmaximalist approach. Thisparagraph
should therefore beredrafted tostateclearly whattheUSobjective isasopposed toallother WTO
Members ’objective which stoachieve higher levels ofliberalization commitments onanMFN basis.
Weagree thattheSecretariat 'sreport doesnotincorporate therecent agreement reached in
theCommittee onTrade inFinancial Services toresume negotiations inearly April 1997.
Withregard tothesecond comment thattheSecretariat 'sreport should beredrafted soasnot
toreflect theU.S.“maximalist approach, ”wefindthestatement inquestion tobeabalanced statement.
Whether WTO Members, including theUnited States, willtakeanm.f.n.-based obligation under the
GATS toguarantee substantially fullmarket access andnational treatment toforeign financial services
suppliers willmostcertainly beafocal point ofinterest totheUnited States. Wesincerely hopethat
allofournegotiating partners willaimforahighlevelofcommitments inthenextround ofnegotiations.
Page160-44-45: How hasregulatory reform inthefinancial services sector affected the
overall possibilities offoreign service providers tobeactive ontheUSmarket?
Regulatory reform hasbeenapplied intheUnited States onanational treatment basis. To
theextent thatithasopened upnewpossibilities forU.S.financial services providers, forexample
todobanking interstate, ithasopened upthesame possibilities forforeign financial services firms
inlikecircumstances.
Exporters ofpotted plants fromseveral EUMember States, amongst others theNetherlands,
experience difficulties inentering theUSmarket duetotheapplication ofthephoto-sanitary legislation
PQ37 bytheUSAnnual andPlant Health Inspection Service (APHIS). Thislegislation isapplicableWT/TPR/M/16/Add.1
Page40
topotted plants grown insoil. However, agrowing number ofEUexporters usessterile materials
togrown potted plants. Forthese plants thereisnoreason toblock ordelay importation intotheUSA
onthebasisofPQ37. DoestheUSgovernment share theEUopinion andisitwilling toactaccordingly?
Under current U.S.law(7CFR319.37-8), theAnimal andPlant Health Inspection Service
(APHIS) isrequired toconduct apestriskanalysis (PRA) inorder toevaluate requests toallow the
importationofnewtaxaestablishedingrowingmedia.WorkingwithEUsuppliers,APHIShascompleted
thenecessary PRAs andapproved theimportation ingrowing media offiveplant genera. APHIS is
nowmoving forward withPRAs onadditional plant genera, including those thatEUmember states
haveidentified ashighpriorities.
Additional questions andcomments
Several European companies havereceived letters fromtheStateofMassachusetts (Secretary
ofAdministrationandFinance),whichreferstoChapter130oftheMassachusettsActof1966,informing
them thattheircompanies willbeplaced ontoarestricted arestricted purchase listunless theycan
prove thattheyarenotdoing business withBurma.
- Could theUSprovide further details onthismatter? Does thetreatment apply toalldomestic
andforeign firms inthesame way?
- DoestheUSconsider thisaction compatible withitscommitments under theGPAandthe1995
bilateral US-EU procurement agreement which covers government entities ofthestateof
Massachusetts (including theExecutive Office forAdministration andFinance)?
Weareaware oftherecent action bytheStateofMassachusetts regarding thelawinquestion.
Based ontheinformation available toU.S.authorities, thislawisnotdiscriminatory, norisitaimed
atforeign businesses. Itapplies equally toU.S.andforeign companies. Wehavebeenconsulting
withstateofficials about thelawanditsimplementation. Wearealsoconsidering theextent towhich
thelawisconsistent withtherequirements oftheGPA.
InParagraph 50oftheUSgovernment Report itisnoted thatwhile “theUruguay Round
represents amajor stepforward inmatching global structures anddisciplines tocurrent realities of
international trade, ...much work ...remains tobedoneintheyears ahead. ”Itwould beinteresting
iftheUScould expand onthispoint andexplain howitseesthe“NewTrade Agenda ”develop inthe
nextfewyears.
OnJanuary 29,1997, Ambassador andUSTR-Designate Barshefsky testified before theSenate
Finance Committee. Herremarks address theUnited States trade agenda, andareavailable onUSTR ’s
Website athttp://www.ustr.gov/index.html.
Itwould beuseful iftheUSGovernment could expand ontherecent changes intherules of
origin fortextile andclothing products.
Theobjective oftheamended rulesoforigin wastoaidtheUnited States incombating illegal
transshipment. Inlarge part, therules alsohelpbring U.S.origin rules inthissector intolinewith
those ofother major trading countries. TheAdministration ’sstatement ofAdministrative Action
specifically defines theintent asfollows:
(i) toreflect theimportant roleassembly plays inthemanufacture ofapparel products
(ii) tohelpcombat transshipments byWT/TPR/M/16/Add.1
Page41
(a) lessening confusion resulting fromdifferences between U.S.practices andthe
practices ofother major trading countries;
(b) facilitating theuseofmore effective labelling requirements; and
(c) focusing onpractices more easily subject toinspection bytheU.S.Customs
Service;
(iii) tobring theU.S.rulesoforigin inlinewithrulesemployed byother major importing
countries, suchastheEuropean Union andCanada.
QUESTIONS FROM HONG KONG
Government Procurement
Federal Preference Programmes
Wenotethatinaddition totheBuyAmerican Act,theUSgovernment procurement market
issubject toalargenumber offederal, stateandlocallawsandregulations. These could create market
access problems forforeign suppliers bothinterms ofdiscrimination (preference margin forlocal
suppliers) andinterms oftransparency (difficulties arising fromtheneedtowork through complicated
maze offederal, stateandlocal lawsandregulations). Does theUSgovernment haveanyplanto
improve thesituation?
Set-Asides
Wenotethat"setasides" ongoods, services andconstruction could equal some 12.5%of
federal procurement covered bytheWTO GPA. Wewelcome thePresident 'sannouncement ofathree
yearmoratorium on"new federal programmes thatreserve some contracts forcompanies owned by
minorities andwomen" (WT/TPR/S/16, p.88, para.86).Set-aside programmes distort faircompetition
togovernment procurement contracts. DoestheUSAdministration hasanyplantophase-out set-aside
programmes?
Withafewexceptions, particularly thatofsmall andminority business setasides, BuyAmerica
requirements arewaived forproducts fromsignatories totheWTOGovernment Procurement Agreement
andNAFTA. Asreflected inthose agreements, thePresident hasbroad authority under theTrade
Agreements Actof1979 towaive BuyAmerican restrictions forcountries thatmake reciprocal
commitments toapply transparent andcompetitive procurement procedures. Restrictions generally
donotapply toprocurement ofservices. Asaresult ofcoverage under theWTO GPA, BuyAmerican
restrictions apply toarelatively small portion ofFederal contracts --onlythose forgoods under the
GPAthreshold of130,000 SDRs ($190,000). Forthosecontracts covered under theGPA, BuyAmerican
preferences arewaived forsignatories, butapurchasing prohibition applies toproducts fromcountries
thatarenotsignatories. TheUnited States alsoapplies anumber ofrestrictions limited strictly to
procurement bytheDepartment ofDefense, suchasthose covered bytheso-called “Berry Amendment. ”
TheUnited States maintains exceptions under theGPAandNAFTA forthese items, including those
thataresensitive fornational security reasons, justasother signatories maintain theirowndefense-
related restrictions through similar negotiated exceptions.
TheUnited States hasalsonegotiated exceptions totheGPAandNAFTA forsmall andminority-
owned business (SMB) set-asides andhasnoplans tophase-out these set-asides. Asexceptions tothe
GPA, U.S.legislation onset-asides iscompatible withitsobligations. Set-asides serve animportant
socio-economic function while being limited inscope toarelatively small portion ofcontracts.
Historically, theyhaveaffected between sixandseven percent ofthetotalvalue ofU.S.coverage under
theTokyo Round GPA. Itistooearly totellwhether theimpact maybeincreased astheresult ofWT/TPR/M/16/Add.1
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coverage ofservices, including construction, under theWTOGPA, sincestatistics haveyettobereported
under thenewagreement. Despite thefactthattheUnited States hasnegotiated exception, ithasalways
sought toapply themonatransparent, predictable basis. TheUnited States expects tocontinue to
discuss withother GPAsignatories howtransparency andpredictability associated withsetasides can
beenhanced. However, oneaspect ofawards made toSMBs should notbeoverlooked; many ofthese
awards aremade through afullandopencompetitive procurement process andnotthrough setasides.
Itisimportant thatSMBset-aside statistics notbeexaggerated through theaddition ofdataconcerning
contracts awarded onacompetitive basis.
Textiles andClothing
Under Article 4.2oftheAgreement onTextiles andClothing (ATC), Members agree thatthe
introduction ofchances, suchaschanges inpractices, rules, etcintheimplementation oradministration
ofrestrictions ontextiles andclothing imports should notupset thebalance ofrights andobligations
under theAgreement. TheUSGovernment introduced newrules oforigin forimported textiles and
clothing inJuly1996. HastheUSGovernment taken stepstoensure thatthechanges would notresult
inupsetting thebalance ofrights andobligations under theAgreement onTextiles andClothing ?
Theintegration programmes under theATCpromulgated bytheUSGovernment reveal atrend
ofbackloading themore "sensitive" products tothelatest moment possible. Does theUSGovernment
consider thatthisapproach would bestserve theprogressive liberalization objectives oftheATC ?
Wewould alsoliketoknow whatpolices andmeasures havebeentaken orbeing planned bytheUS
Government tohelpthedomestic textiles andclothing sector toprepare fortheirfullexposure tothe
market mechanism.
TheUnited States hasheldconsultations withanumber ofcountries withrespect tothepotential
effects ofU.S.rulesoforigin. TheUnited States remains ready toconsult withcountries which believe
thattheymayhavebeenimpacted bytherules. TheUnited States remains committed tocarrying out
theliberalizing provisions oftheWTO Agreement onTextiles andClothing, including efforts toopen
upforeign markets toensure thatourindustry hasthemaximum opportunity tocompete inthose markets
onafairandequitable basis.
Notification inrelation totheJones Act(WT/TPR/S /l6,p.164 para. 150)
Paragraph 3(c)ofGATT 1994requires thatthestatistical notification should include information
ontheaverage ofactual andexpected deliveries ofrelevant vessels andinformation ontheuse,sale,
leaseorrepair ofrelevant vessels. Thenotifications submitted bytheUSinrespect oftheJones Act
on20December 1994and20December 1995respectively didnotseemtocover thelatter requirement.
Wehaveearlier raised ourconcern andwould liketohaveclarifications from theUS. Moreover,
theeconomic costoftheJones Actishuge. Itwould beuseful toknow whether theUSwillcontemplate
reform oftheJones Act.
Withrespect tonotifications, thereason thisdatawasnotprovided isthattheUnited States
doesnotmaintain thisinformation. Ifavessel isbuiltinaU.S.shipyard andisregistered under the
U.S.flag,thenitcanoperate, withlimited exceptions, ineither thedomestic trade ortheinternational
trade. Vessel itineraries arenottracked. Vessel useisidentified moregenerally inthereport byvessel
type, indicating thepurpose forwhich thevessel wasbuilt. Ownership information isavailable and
isprovided inthereport, butinformation onleasing arrangements iseither proprietary orsimply not
available. Similarly wedonotcollect vessel repair data.
The104th Congress considered substantial changes totheShipping Actof1984 (1984 Act),
including theclosing oftheFederal Maritime Commission (FMC orCommission), which administersWT/TPR/M/16/Add.1
Page43
the1984 Act.Thiswasinresponse toacompromise worked outbyshippers andU.S.-flag carriers.
Among other things, thisproposal maintained thecarriers ’antitrust immunity, ended tarifffiling, and
permitted negotiation ofconfidential agreements between shippers andcarriers. Withtheclosing of
theFMC, itsresidual functions would havebeencontinued intheDepartment ofTransportation or
some other government organization.
Ifthecompromise proposal isreintroduced inthe105th Congress insubstantially thesame
formandeventually incorporated intothe1984Shipping Act,theinternational shipping trades inand
outoftheU.S.would bedramatically deregulated. Regarding thelikely future direction ofmaritime
reform, there arearange ofviews ontheproposed legislation. TheAdministration isready towork
withthenewCongress onthismatter. Thereform oftheShipping Actof1984doesnotextend tochanges
intheJones ActorU.S.cabotage lawsinproposals made inthelastCongress tomodify orrepeal
theJones Act. Twoofthese proposals called forthegrant ofreciprocal domestic trading privileges
forcarriers ofother countries, butthere wereother concerns thatwerenotaddressed, suchasforeign
subsidies, taxincentives, lower safety standards andnational security. Noproposals wereenacted,
andtheAdministration reaffirmed itsstrong support oftheJones Act.
Basic Telecom
Weunderstand thattheFederal Communications Commission (FCC) iscontemplating the
introduction ofbenchmarks foraccounting ratesforUScarriers tofollow. Wewould liketoknow
more details oftheproposal including theproposed levelofthebenchmarks andthecalculations behind
them; implementation date;(whether andifsohowtheFCCislinking thistotheWTO negotiation).
TheFCChasnotissued aformal notice ofproposed rulemaking (NPRM) onthissubject, and
itwould beinappropriate tocomment onwhatmayormaynotbeinsuchaNPRM untiloneisissued.
When aNPRM isissued, comments fromforeign governments andother foreign parties arewelcomed
andconsidered intherulemaking process. Adecision bytheFCCisrendered intheformofalegally
binding "Report andOrder", which explains thenewrules against thebackground oftheNPRM and
thepublic comments received.
Weareaware ofthebackground about thedifficulty oftheUSinremoving the20%direct
foreign ownership capinrespect ofradio licence. TheUSnowargues thatsince theyhaveremoved
the25%indirect foreign ownership cap,there should notbeanyforeign ownership restriction fora
telecom company since foreign service suppliers cannowfullycontrol thatcompany through aparent
company. However, itwould stillbefarmore straight-forward forforeign service supplier ifthe20%
direct foreign ownership restriction canberemoved through legislative amendment. Wewould like
toknow whether theUSwould revisit theissue again inthenearfuture.
There areNOcapsonforeign ownership intheUnited States except withrespect tocommon
carrier radio licenses. While theU.S.retains theability toseeklegislative changes forimplementation
ofanytrade agreement, thatisnotnecessary withrespect toimplementation oftheconditional offer
oftheUnited States inthebasic telecom services talks. TheUnited States 'conditional offerinthe
WTOGroup onBasic Telecommunications istoprovide effectively unlimited market access andnational
treatment forallbasic telecom sectors. Theofferisconditional onacritical massofhighquality offers
byother trading partners.
Environmental Process Regulations
TheUSGovernment hasannounced itsintentions toaddress ininternational forums likethe
Commission forSustainable Development 'sIntergovernmental Panel onForests trade issues suchas
timbercertificationandlabelling(WT/TPR/S/16,p.94,para.101).WewouldliketoknowwhatspecificWT/TPR/M/16/Add.1
Page44
actions theUSintends tousetoaddress thetrade issues? Dotheyinclude anytrade measures? Ifyes,
whataretheyandwhatistheirrelationship withtheUSobligations under theWTO ?
Trade andenvironment issues related toforests, including timber certification, arepartofthe
terms ofreference oftheIntergovernmental Panel onforests. (IPG). While theU.S.isamember of
thepanel, wehaveannounced noparticular intentions to“address international forums ”onsuchissues.
Rules ofOrigin andLabelling Requirements
TheSecretariat Report quoted theUSInternational Trade Commission asreporting thatthe
USconsidered tohaveoneofthemorebroad andcomplex marking regimes among industrialized nations
andthecosttotheGovernment ofadministering andenforcing thecountry-of-origin marking are
estimated tohavebeenintherange ofUS$3.3to3.6million. Thecompliance costtocertain industrial
sectors could alsobehigh. Theinitiative bytheUSTreasury toconsider theadoption ofuniform rules
hasnotreceived widespread support. What istheUSGovernment 'sresponse totheITCreport ?What
istheUSGovernment 'spolicy onadoption ofuniform rules ororigin andruleoforigin marking ?
Inparticular, would preferential rules andnon-preferential rules besubject todifferent treatments ?
PursuanttoArt.3.1oftheWTOAgreementoilRulesofOrigin,ContractingPartiesarerequired
toapply theharmonized rules oforigin equally forallpurposes assetoutinArt.3.1Inviewofthe
lackofwidespread support fortheUSTreasury, would theUSGovernment expect anydifficulty in
implementing Art.3.1oftheAgreement, andwhether considerations havebeengiven toovercome
these difficulties?
ThereferencedreportbytheU.S.InternationalTradeCommission(Country-of-OriginMarking:
Review ofLaws, Regulations andPractices, July, 1996) wasissued inresponse toaCongressional
inquiry. Thereport represents theanalysis ofanindependent U.S.government agency. TheU.S.
policies onadoption ofuniform rules oforigin areconsistent withWTO obligations. Similarly, the
U.S.implementation ofpreferential rules oforigin areincompliance withthedisciplines setforthin
theAnnex IIoftheWTO Agreement onRules ofOrigin.
TheU.S. isactively participating inthereferenced WTO work program leading tothe
harmonization ofnon-preferential rulesoforigin. Withregard toArticle 3.1,theUSintends tocontinue
itscompliance withobligations under theWTO Agreement onRules ofOrigin.
Anti-dumping Measures
WenotethattheUSadopts different deminimis dumping margins fororiginal investigations
andinvestigations inthecontext ofadministrative reviews (WT/TPR/S/16, p.60, para.29). What is
thepolicy reason foradopting different standards?
Article 5.8oftheAntidumping Agreement states thataninvestigation shall beterminated if
thelevelofdumping isdetermined tobedeminimis andstates thatamargin lessthantwopercent
shallbeconsidered deminimis. Although theAgreement requires nolevelofdeminimis forareview,
theUnited States haschosen towaive collection ofduties ifthemargin ofdumping inareview isless
than0.5percent.
Similarly, wenotethattheUSestablishes dumping margins byindividual-to-individual price
comparisonsfororiginalinvestigationsandbyindividual-to-averagepricecomparisonsforinvestigations
inthecontext ofadministrative reviews (WT/TPR/S/16, p.61, para.34). Thishasthepossible effect
ofsignificantly increasing theassessed dutymargins. What isthepolicy reason foradopting different
standards ?WT/TPR/M/16/Add.1
Page45
Article 2.4.2 oftheAntidumping Agreement specifically states thecomparison methodology
tobeused "intheinvestigative phase". TheAgreement however issilent astothecomparison
methodology tobeusedinanadministrative review. Consistent withtheAgreement theUnited States
hascontinued itsprevious practice ofcomparing average normal values toindividual export prices
inadministrative reviews.
AUSITC study iscitedasestimated thatin1991theremoval ofAD/CVD orders would have
yields awelfare gainofUS$1.6billion or0.03% ofUSGDP (WT/TPR/S/16, p.65, para.41). What
istheUSGovernment 'sresponse tothisITCstudy ?
Theflaws oftheITCreport havebeenwidely discussed by,among others, anumber ofthe
Commissioners themselves. Wetoohaveconcerns about thereport. First, theamount oftheclaimed
welfare lossisinsignificant inrelation totheoverall U.S.economy. Secondly, thereport failed to
consider theloss,botheconomic andsocial, duetojobslostbecause ofunfair trade.
WenotetheADduties enforced byCanada andMexico often cover thesame sectors asUS
measures inplace onimports oftheir products (WT/TPR/S/16, p.67, para. 43)andthat21% of
outstanding andnewly enforced ADandCVmeasures inNAFTA upto2.5.96 were appealed to
binational panels (p.63, para. 37). What arethepossible reasons forthecross-enforcement ofAD
measures inNAFTA markets covering thesame sectors? Would theUSconsider thatitsmarkets of
certain sectors areprotected, oritscompanies areengaging inpredatory practices? Would theUS
consider thattheuseofADmeasures byCanada andMexico could adversely affect thecompetitive
position ofUSsuppliers intheCanadian andMexican markets?
While theNAFTA wentveryfarineliminating tariffs andreducing trade barriers, theNAFTA
countries continue tohaveantidumping cases among themselves because themarkets arenotcompletely
integrated. USaswellasforeign firmsmaypricediscriminate between markets foranumber ofreasons.
Ifthatprice discrimination isinjurious, theantidumping lawprovides aremedy. Wedonotobject
togovernments taking action against injurious dumping, inconformity withGATT Article VIandthe
ADAgreement. Thefactthatanindividual firmmayfinditscompetitive position impaired isnotrelevant
tomembers exercising theirWTO rights.
What istheUSGovernment 'spolicy towards itssuppliers which haveexports being subject
toADactions forforeign governments, inparticular when suchsuppliers suspect thattheirforeign
competitors petition forADactions onlyinanattempt torestrict ordelay theiraccess toforeign markets?
Ontheother hand, ifUSfirms petitioned theUSGovernment fortheuseoftrade remedy lawsonly
inafrivolous attempt torestrict ordelay foreign competitors 'access totheUSmarket, would these
USfirms becaught under USantitrust laws?What istheUSGovernment 'spolicy onthis?
TheUSgovernment makes every effort toensure thattherights ofourexporters under theAD
Agreement areupheld. Ifafrivolous caseisfiled(i.e.adequate proof ofdumping andinjury isnot
shown) thenweexpect, consistent withtheADAgreement, thattheforeign government would notinitiate
theinvestigation. Likewise, theUSgovernment willnotinitiate anantidumping investigation ifthe
petition doesnotmeettherequirements oftheADAgreement andU.S.law. Ingeneral, aperson
hastherighttopetition thegovernment forrelief (under theNoerr-Pennington doctrine); however this
right canbeabused andabuse oftheright could beactionable under the"sham" exception tothat
doctrine. (California Motor Transport v.Trucking Ltd. 404U.S.508(1978)). More specifically,
there iscaselawtosuggest thatabuse ofthedumping lawcould beactionable under theantitrust law.
(Outboard Marine Corp. v.Pezetel, 461Fed.Supp.. 384,USDist. Court ofDel.(1978)).WT/TPR/M/16/Add.1
Page46
QUESTIONS FROM JAPAN
USTrade Policies byMeasures
Tariffs
Does theUSintend tofurther pursue "zero-for-zero" initiatives?
Although theaverage tariff rateoftheUShascome down toacomparatively lowlevelasa
result ofseveral rounds ofGATT negotiations, peaktariffs remain inseveral areas, suchastextiles
andclothing,footwear,ceramics,glass,trucks,tobaccoandagriculturalproducts.DoestheUSenvisage
anypossibility torectify suchtariff structures inthenearfuture?
Asprovided intheUruguay Round Agreements Act,theUnited States hascontinuing negotiating
authority topursue anumber ofzero/zero initiatives. Wehavebeenpursuing these initiatives actively,
andwillcontinue todoso.
TheU.S.tariff regime ischaracterized byminimal tariffs. BytheendoftheUruguay Round
implementation period, more than70percent ofU.S.lineswillbelessthanorequal to5percent and
morethan40percent oftarifflineswillbedutyfree.Inaddition, theUnited States hasbound itstariffs
atapplied rates, withtheexception ofonlytwotariff lines. Thatsaid, theUnited States doesstill
havesome tariff peaks incertain sectors. So-called tariff peaks playaminimal roleintheU.S.tariff
profile (3.8percent of1996 lines) andwillcontinue todecline asUruguay Round tariff concessions
arephased in(tolessthan2.5percent oflinesin2004). Bycontrast, many ofourWTO partners,
bothdeveloped anddeveloping, havehighceiling bindings andapplied rates thatrange from10to
50percent.
U.S.proposals intheUruguay Round contributed tothesubstantial liberalization achieved
inmany areas. TheUnited States alsocontributed toliberalization inallareas ofthetariff schedule,
including sectors thatwere priorities forother WTO members. Wearecontinuing efforts attariff
liberalization. Theproposed ITApromises toserve asastepping stone toacontinuous process for
further tariffliberalization. However, oneimportant aspect offurther liberalization mustbethebinding
oftariffs onabroad basis bydeveloped anddeveloping countries alike.
Anti-dumping andcountervailing measures
Manyexportingcountrieshaveexpressedinthepastseriousconcernsregardingpossible"abuse"
ofanti-dumping andcountervailing measures bytheUSasdisguised protectionism. Such concerns
continue tobethecase,although theUruguay Round Agreement Act(URAA) modified oldprovisions
tomake themmore consistent withWTO Agreement. Some rulesinURAA suchasanti-circumvention
gobeyond WTO Agreement.
- Wewanttowatch carefully howthenewly revised ruleswillbeactually applied andoperated.
Their implementation inamanner consistent withWTO Agreement isstrongly desired. In
thisconnection, Ishould liketoaskiftheUShasalready usedtheanti-circumvention and
individual-to-average pricecomparison ofitsanti-dumping legislation. What istheexperience
withthese provisions?
292anti-dumping measures and62countervailing duties remain inforce asof31December,
1995. Howsoonwillthesunset clause begin tobeapplied tothese cases? Acceleration ofrevocation
ofoldmeasures isstrongly expected without waiting untilfiveyears aftertheentry intoforce ofthe
WTO Agreement (thatis,after1999).WT/TPR/M/16/Add.1
Page47
Wecompliment theUSonthesharp decline inthenumber ofanti-dumping cases filed. What
arethemainreasons forthis;newlegislation fortheimplementation ofUR,economic recovery, etc?
TheU.S.believes thatbothitsstatute anditsimplementation ofthestatute areinfullconformity
withtherequirements oftheWTO Antidumping Agreement. Theanti-circumvention provisions ofU.S.
lawarenotinconsistent withtheWTO Agreement, fortheAgreement issilent onthequestion ofanti-
circumvention measures andnothing inU.S.lawcontravenes anyspecific provision oftheAgreement.
Indeed, theMinisterial Decision attheconclusion oftheUruguay Round specifically recognized the
problem ofcircumvention andurged theparties toagree onauniform method ofdealing withthis
problem. Efforts toreach suchanagreement areonlyatanearly stage atpresent.
TheAgreementmandates,withsomeexceptions,theuseofaverage-to-averagepricecomparisons
onlyintheinvestigation phase ofanantidumping proceeding. U.S. lawfaithfully reflects this
requirement. TheAgreement issilent about comparison methods tobeusedinconducting reviews
ofanexisting antidumping order. Indeed, during theUruguay Round negotiations theU.S.specifically
refused toagree toanacross-the-board requirement touseaverage-to-average comparisons Thus,
thecontinued U.S.useofindividual-to-average comparisons when conducting reviews cannot besaid
tobeinconsistent withtheAgreement. Todate, theU.S. hasnothadoccasion toimplement the
circumvention provisions ofthelegislation implementing theUruguay Round Agreements (theURAA).
Individual-to-average price comparisons havebeenmade inallreviews conducted under thelaw.
U.S.lawmandates initiation ofsunset reviews ofpre-existing orders fiveyears fromtheeffective
dateoftheURAA, January 1,1995. Itpermits initiation tobegin 18months before January 1,2000,
andtheU.S.government fullyintends toinitiate sunset reviews assoonaspossible, tomake more
manageable thesignificant burden theywillimpose. Todate, nospecific schedule forsuchreviews
hasbeencreated. Once ithas,itwillbemade public.
BecauseU.S.antidumpingandcountervailingdutylawsarecharacterizedbyobjectivestandards
andimpartial administration, theincreased ordecreased usage oftheselawsderives fromthepresence
ofinjurious dumping orsubsidization rather thantheexercise ofanypolicies onthepartofthelaws’
administrators. TheU.S.government isunaware ofspecific reasons forthereduction inthenumber
ofnewantidumping petitions andbelieves thatthere likely aremany causes forthis. Assuch, wedo
notchoose tospeculate exactly whatthereasons maybe.
Government Procurement
Various Buy-American laws, bothatFederal andState/local levels, areclearly discriminatory
against foreign firms andextremely distort trade. Many countries haveserious concerns overthe
continued existence ofsuchwide-ranging Buy-American laws. Early correction isstrongly desired.
(Ofcourse, theymaynotbeinviolation ofPlurilateral Agreement onGovernment Procurement, but
there isnoexcuse tojustify suchpractices. TheUSnormally complains strongly ifitistreated in
thesame waybyother governments.)
- TheUSexempted "set-asides onbehalf ofsmall andminority businesses" under boththe1979
and1994 Agreements. What isthedefinition ofsuchbusinesses?
Withafewexceptions, particularly thatofsmall andminority business setasides, BuyAmerica
requirements arewaived forproducts fromsignatories totheWTOGovernment Procurement Agreement
andNAFTA. Asreflected inthose agreements, thePresident hasbroad authority under theTrade
Agreements Actof1979 towaive BuyAmerican restrictions forcountries thatmake reciprocal
commitments toapply transparent andcompetitive procurement procedures. Restrictions generally
donotapply toprocurement ofservices. Asaresult ofcoverage under theWTO GPA, BuyAmericanWT/TPR/M/16/Add.1
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restrictions apply toarelatively small portion ofFederal contracts --onlythose forgoods under the
GPAthreshold of130,000 SDRs ($190,000). Forthosecontracts covered under theGPA, BuyAmerican
preferences arewaived forsignatories, butapurchasing prohibition applies toproducts fromcountries
thatarenotsignatories. TheUnited States alsoapplies anumber ofrestrictions limited strictly to
procurement bytheDepartment ofDefense, suchasthose covered bytheso-called “Berry Amendment. ”
TheUnited States maintains exceptions under theGPAandNAFTA forthese items, including those
thataresensitive fornational security reasons, justasother signatories maintain theirowndefense-
related restrictions through similar negotiated exceptions.
TheUnited States hasalsonegotiated exceptions totheGPAandNAFTA forsmall andminority-
owned business (SMB) set-asides andhasnoplans tophase-out these set-asides. Asexceptions tothe
GPA, U.S.legislation onset-asides iscompatible withitsobligations. Set-asides serve animportant
socio-economic function while being limited inscope toarelatively small portion ofcontracts.
Historically, theyhaveaffected between sixandseven percent ofthetotalvalue ofU.S.coverage under
theTokyo Round GPA. Itistooearly totellwhether theimpact maybeincreased astheresult of
coverage ofservices, including construction, under theWTOGPA, sincestatistics haveyettobereported
under thenewagreement. Despite thefactthattheUnited States hasnegotiated exception, ithasalways
sought toapply themonatransparent, predictable basis. TheUnited States expects tocontinue to
discuss withother GPAsignatories howtransparency andpredictability associated withsetasides can
beenhanced. However, oneaspect ofawards made toSMBs should notbeoverlooked; many ofthese
awards aremade through afullandopencompetitive procurement process andnotthrough set-asides.
Itisimportant thatSMBset-aside statistics notbeexaggerated through theaddition ofdataconcerning
contracts awarded onacompetitive basis.
Environmental Process Regulations
Environmental process regulations contained insuchlawsastheUSMarine Mammal Protection
Actof1972, theUSHigh SeasDriftnet Fisheries Enforcement Actof1992, Section 609ofPublic
Law101-162, andthePelly Amendment totheFisherman 'sProtection Actof1967areextraterritorial
applications ofUSlawandinviolation oftheWTO/GATT Agreement. Currently applied toyellowfin
tunaandshrimps, itisoften pointed outthatitisanattempt toenforce USvalue judgements onother
countries, which arenotshared universally.
Does theUSforesee anyinitiatives, including early abolition ofthese WTO-inconsistent
provisions, which would mitigate theimpact ofthese standards onexporting countries?
TheUnitedStatesdoesnotagreethatthemeasuresmentionedbyJapaninthiscategoryconstitute
“extraterritorial applications ofU.S.law”orthattheyare“inviolation oftheWTO/GATT Agreement. ”
Wedo,however, recognize thatsome other governments haveraised concerns about oneormore of
these measures. Ingeneral, weshare thewidely accepted viewthatitispreferable toaddress
international environmental problems through multilateral approaches.
Marine Mammal Protection Actof1972; forexample, theUnited States favours addressing
dolphin conservation issues multilaterally. TheUnited States, along withother members oftheInter-
American Tropical Tuna Commission (IATTC) andother States whose vessels fishfortunawithpurse
seine netsintheeastern tropical Pacific Ocean, hassupported theIATTC ’senormously successful
International Dolphin Protection Program, which isresponsible forreducing annual dolphin mortality
tolessthan4,000 inthisfishery. TheAdministration strongly supports changes inU.S.legislation
thatwillendembargoes onimportation oftunafromthisfishery intotheUnited States andformalize
theIDPP. Thislegislation hasbeenintroduced intheCongress.WT/TPR/M/16/Add.1
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Section 609ofP.L.101-162.
Almost allnations recognize theimportance ofpreserving seaturtles, allspecies ofwhich are
endangered orthreatened. U.S.regulations require commercial shrimp trawl vessels operating inU.S.
waters touseseaturtle excluder devices (TEDS), which haveproven remarkably effective inpreventing
theaccidental death ofseaturtles inshrimp trawl nets,amajor cause oftheirmortality. TheUnited
States favours multilateral solutions totheproblem ofpreserving seaturtles, suchastheInter-American
Convention fortheProtection andConservation ofSeaTurtles. Thistreaty, signed bytheU.S.in
December,1996,requiresshrimptrawlvesselstouseTEDsandprovidesforotherimportantconservation
measures. Wehavemade clear oursupport ofsimilar treaties forAsiaandother regions.
High SeasDriftnet Fisheries Enforcement Actof1992
TheUnited States, along withmany other States, actively supported theadoption byconsensus
ofUnited Nations General Assembly Resolution 46/215, which called foramoratorium ontheuseof
large-scale pelagic driftnets onthehighseas, effective January 1,1992. TheU.S.HighSeasDriftnet
Fisheries Enforcement Actwasenacted toreinforce thatmoratorium, byprohibiting theimportation
ofcertain products fromnations identified asacting inconsistently withthemoratorium. Nonation
haseverbeensubject toimport restrictions under thislegislation.
ThePelly Amendment totheFishermen ’sProtective Act
Byitsownterms, thePelly Amendment totheFishermens ’Protective Actcanonlyresult in
import prohibitions totheextent thatsuchprohibitions aresanctioned bytheGeneral Agreement on
Tariffs andTrade.
Export BanofLogs
Under theForest Resource Conservation andShortage Relief Actof1990, theUShasbanned
theexport oflogsfrom Federal forests andrestricted suchexport from State forests. TheActdoes
notrestrict domestic tradeoflogsfromtheseforests and,therefore, cannot bejustified under Article 20
ofGATT1994andconstitutesdiscriminationagainstforeignusers.Thereisaneedforeitherdismantling
oramendment oftheAct.
Determinations made in1990, following thelisting ofthenorthern spotted owlasathreatened
species under theEndangered Species Act,andconcern overtheharvesting ofoldgrowth timber, were
thecatalysts forthepassage oftheForest Resources Conservation andShortage Relief Act(ofthe
Customs andTrade Actof1990, asamended in1993) thatrestricted theexport ofmostlogsharvested
frompublic landinthewestern continental United States. TheForest Resources Conservation and
Shortage Relief Act,signed bythePresident onAugust 20,1990, made permanent thetemporary
prohibition onlogexports fromtheFederal lands intheregion. TheActalsoplaced asimilar restriction
onlogsharvested fromstatelands, except fortheStateofWashington, which wasallowed tocontinue
exporting upto25percent ofitsharvest.
TheUnited States iscommitted tominimizing, asmuch aspossible, anyimpact ontrade that
mayresult fromtheexport restrictions. Japan stillhasunrestricted access toover200million m3of
logsthatareharvested annually intheUnited States (50million inthefivemain exporting states).
Rules ofOrigin andLabelling Requirements
TheAmerican Automobile Labelling Act(AAA) makes itmandatory forpassenger carsand
other lightvehicles tobelabeled withtheproportion ofUS/Canadian made parts andthefinalpointWT/TPR/M/16/Add.1
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ofassembly. Thisentails tremendous costfornon-North American manufacturers ofautomobiles and
constitutes anunnecessary barrier totrade andpossible inconsistency withtheAgreement. Wewould
liketorequest clarification oftheUSviewonthisinconsistency.
TheUnited States AutoLabelling Actwasenacted forthepurpose ofproviding consumers
informationnecessarytomakeawellinformeddecisionwhenpurchasinganautomobile.Theinformation
itrequires isinformation which mustbeprovided foralmost allproducts inmany countries intheworld.
Farfrompreventing consumers frommaking rational economic choices based onindividual needs and
theinherent quality ofaproduct, theresult ofabarrier totrade, theActactually facilitates thatprocess
byincreasing theamount ofinformation available onwhich consumers canbasetheirdecisions.
Article IIoftheTBTAgreement acknowledges prevention ofconsumer deception asoneofthe
"legitimate objectives" forwhich anewtechnical regulation canbeadopted. Thelabelling requirements
weredesigned tobeconsistent withexisting lawsandregulations andhavebeenimplemented bythe
National Highway Traffic Safety Administration (NHTSA) attheDepartment ofTransportation ina
manner believed tobetheleastburdensome possible formanufacturers bothathome andabroad.
Thelabelling isnotdiscriminatory anddoesnotconstitute abarrier totrade, since bothdomestic and
foreign manufacturers mustprovide thesame information.
Gasoline Ruleunder theClean AirAct
When andhowistheUSgoing toimplement thereport oftheAppellate Body?
AstheU.S.advised theDispute Settlement Body, wehaveagreed onafifteen-month period
forimplementing theresults ofthisdispute. Thedayafterthereport wasadopted bytheDSB, weinitiated
aregulatory review process which hasincluded opportunity forpublic comment. U.S.implementation
ofthisreport willcontinue tobeanopenprocess .
TRIPS
Thefamous Section 337oftheTariff Actof1930 hasbeenmodified, according totheUS
authorities, tobring USprocedures intoconformity withnational treatment obligations under GATT
1994. Westillneedtowatch carefully theactual operation ofthemodified lawtoensure thatthere
willbenodiscriminatory treatment against foreign firms.
TheURAA amendments tosection 337oftheTariff Actof1930 bring itintoconformity with
theUnited States ’obligations under theWTO Agreements, including article IIIoftheGATT 1994and
therelevant provisions oftheTRIPS Agreement. Thesignificant differences between proceedings in
theITCandintheFederal district courts havebeeneliminated. Furthermore, theburden ofparallel
proceedings hasbeengreatly lessened by(1)allowing arespondent inbothproceedings tostaythe
Federal district court proceeding untiltheITCproceeding hasconcluded, thereby eliminating theneed
toaddress anissue intwoforaatthesame time, and(2)allowing therecord intheITCproceeding
tobetransferred totheFederal district court foritsuse,withtheintended benefit ofeliminating
duplication ofeffort onsuchissues. Thissetofamendments tosection 337substantially reduces double
effort andexpense thatmight otherwise takeplace, while retaining whatinsomecases istheonlyeffective
wayofenforcing intellectual property rights attheborder.
TheUSmaintainsauniquepatentsystem;"first-to-invent."Topromoteworld-wideharmonization
ofpatent system andtoresolve interface problems, earlyUSconversion toa"first tofile"system would
bedesirable. What istheUSviewonthis?WT/TPR/M/16/Add.1
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TheTRIPS Agreement doesnotmandate theadoption ofafirst-to-invent system orafirst-to-file
system, andleaves ituptoindividual WTO members todecide which isappropriate fortheirpatent
system. TheUnited States hasconsidered moving fromafirst-to-invent system toafirst-to-file system,
butdoesnotconsider itappropriate todosoatthistime.
USTrade Policies bySector
Agriculture
Anychange intheUSagricultural policy isamatter ofstrong interest aswellasconcern for
itstrading partners. TheFederal Agricultural Improvement andReform (FAIR) Actof1996instructs
theSecretary ofAgriculture todevelop anexport strategy toincrease USexports ofhighvalue and
value-added agricultural products. Does thismeans thattheUSstrategy willshiftinthefuture tothe
promotionofhighvalue-addedproductsfromtraditionalbulkcommoditiesundertheExportEnhancement
Program?
TheSecretary ofAgriculture hasnotimplemented astrategy solely forpromoting theexport
ofhighvalue orvalue-added products. Thestrategy implemented bytheUnited States Department
ofAgriculture (USDA) isoriented towards assisting American agriculture toincrease thevalue ofall
agricultural exports. TheFY1996Long-term Agricultural Trade Strategy proposes guidelines forpolicy
makers tousetoincrease U.S.exports ofagricultural products, including highvalue andvalue added
products.
FAIR converts mostdomestic production support intodirect income support. What arethe
specific details ofthedirect income support? HowdoestheUSconsider thatthischange affects the
USagricultural supply andagricultural trade?
The1996 Actremoves thelinkbetween income support payments andcurrent commodity prices and
production. Iteliminates deficiency payments andtheAcreage Reduction Program (ARP). Constraints
onindividual farm decision-making imposed bypastprograms aregreatly reduced oreliminated.
Farmers havemuch greater flexibility inmaking planting decisions andthefreedom toplant anycrop
oncontract acres andreceive payments, except forlimitations onfruits andvegetables. (Insomecases,
fruits andvegetables canbeplanted withnoreduction inpayments oraone-to-one reduction inpayment
acres). TheFAIR Actspecifies totalannual payments forproduction flexibility contracts from1996
through2002.PaymentlevelsareallocatedamongcontractcommoditiesaccordingtoFAIRAct-specified
percentages.
Atthispoint inthefirstyearofthebill'simplementation, itisdifficult tomeasure theeffects
ofthelegislation, especially inviewofthecurrent highcommodity prices. Ingeneral, wedon'texpect
major changes inprices andproduction inresponse totheincreased flexibility intheprogram.
Itisunderstood thattheUSauthorities regard thisdirect income support asgreen boxinthe
form ofdecoupled income support. Want toknow howitsatisfies the"requirements ofgreen box.
The1996Actauthorizes annual “production flexibility contract payments ”which participating
producers mayreceive independent offarmprices andproduction. Toreceive payments, farmers who
haveparticipated inthewheat, feedgrains, rice,andupland cotton programs inanyoneofthepast
5years (1991-1995) mayenter into7-year production flexibility contracts forthe1996-2002 crops.
Theymustcomply withconservation requirements andkeepcontract acres inagricultural orrelated
uses(production isnotrequired, e.g.,vegetative cover). Payments inanyyeardonotaffect andare
notaffected byaproducer ’smarginal decision about whatcontract commodity should beplanted. TheWT/TPR/M/16/Add.1
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eligibility requirements toparticipate intheprogram arecompatible withdecoupled income support
conforming toAnnex 2,paragraph 6oftheUruguay Round Agreement onAgriculture.
Out-of-quota import tariffs forproducts which aresubject totariff-rate quota areonaverage
50%ascomparedtoin-quotatariffsofaround10%.Nevertheless,certaintariffquotasareunderutilized.
Why? What role,ifany,doestheallocation ofquotas playinthisregard?
Some quotas wereunderutilized in1995 because ofmarket conditions andlackofinterest on
thepartofimporters. U.S.prices, particularly forbutter andbutter oil,werenearorbelow world
prices, making theU.S.market lessattractive compared toother destinations. Forquotas subject to
licensing requirement, U.S.regulations require thatunused licenses bereallocated under moreflexible
terms. ThiswasdoneinAugust of1995, butthere wereveryfewapplicants forthese licenses.
Textiles andClothing
Since theimplementation oftheURAgreement onTextiles andClothing, theUShasissued
more quota callsthananyother WTO Member. While itiswelcomed thatthenumber ofsuchcalls
declined from24in1995toonlyonein1996, whywerethesecallsnotissued earlier, when theycould
havebeenintegrated intotheAgreement? Andwhyaretheyissued during thisperiod ofeconomic
expansion which contributed toadecline intheuseofothertraderemedy measures suchasanti-dumping
andcountervailingduties?Thechangeintherulesoforiginappliedtotheimportsoftextilesandclothing
affects asignificant number ofUStrading partners. Which initiatives hastheUSdeveloped tomitigate
theimpact ofthischange?
TheU.S.rulesoforigin nowineffect ontextiles werelegislated under theUruguay Round Agreements
Actof1995. Wedonotanticipate revisions tothatactinthisarea. TheUnited States hasheld
consultations withanumber ofcountries withrespect tothepotential effects ofU.S.rules oforigin.
TheUnitedStatesremainsreadytoconsultwithcountrieswhichbelievethattheymayhavebeenimpacted
bytherules. TheUnited States remains committed tocarrying outtheliberalizing provisions ofthe
WTO Agreement onTextiles andClothing, including efforts toopenupforeign markets toensure that
ourindustry hasthemaximum opportunity tocompete inthose markets onafairandequitable basis.
Services
Inmaritime services, there arenumerous domestic lawscalling for"ship American" reciprocity or
retaliation against foreign discriminatory treatment ”etc.,aswellastheJones Act. Allthese make
itlogically difficult fortheUStoenterintoanymeaningful multilateral agreement inthissector. What
doestheUSGovernment intend todotomake thisdomestic legislation consistent withtheobjective
ofthemaritime services negotiation?
LastJuly,theNegotiating Group onMaritime Transport Services agreed tosuspend negotiations
untiltheyear2000, thenextround ofcomprehensive multilateral services negotiations under theWTO.
Itwillberecalled thatduring theUruguay Round, negotiators agreed nottoinclude cabotage inthe
scope ofthemandate ofthenegotiations. While itispremature todiscuss negotiating positions for
anegotiation thatisthree years away, there isnoreason, atthistime, toexpect theU.S.position to
change inthenextround. Thatistosaythattheoutcome willdepend inlarge partonthewillingness
ofother maritime nations, including Japan, tocommit tosubstantial liberalization ofmaritime
transportation services.WT/TPR/M/16/Add.1
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QUESTIONS FROM JAPAN
(p29) OECD Shipbuilding
According tothereport, implementing legislation wasunder preparation intheHouse Ways
andMeans Committee andtheSenate Finance Committee. Weunderstand thatthe104th session of
Congress hascome toaclose andasyetthislegislation hasnotbeenpassed. Werequest theUSto
present itsintended schedule forfulfilling itsobligations under theshipbuilding agreement.
Asweindicated atthelastOECD Shipbuilding Working Party meeting onOctober 17-18, 1996,
weregret thatthe104th Congress failed toenact implementing legislation prior toitsadjournment.
TheHouse ofRepresentatives passed legislation thatwasinconsistent withtheAgreement andtheSenate
wassubsequently unable todevelop compromise legislation thatwould appease bothsupporting and
opposing Members.
TheAdministration continues tostrongly support theOECD Shipbuilding Agreement andhas
undertaken toprovide theother Agreement signatories anupdated assessment, afterconsulting with
interested Members ofCongress, industry andlabour, oftheoutlook forpassage ofsatisfactory
implementing legislation byMarch, 1997 atthenextOECD Working Party meeting.
(p59-70) AntiDumping
USlegislation hasbeenamended inresponse tothenewADAgreement. However, there are
stillsome measures inconsistent withtheAgreement ashasbeenstated intheADCommittee bymember
parties,measuresincludingcircumvention,deminimisassessmentinthereviewprocess,crosscumulation
ofmaterial injury caused byimports subjected toADandCVD investigation, andtheproblem of
comparing averages toindividual cases. Inaddition, wewould liketonotethattheconsistency of
symmetrical price adjustments andtheimplementation ofthesunset clause inaccordance withtheAD
Agreement arebothofgreatinterest toJapan, andwould liketorequest theUSGtoclarify theirstance
onthismatter, andthescheduling oftherevocation ofADmeasures inplace.
Theconcern about anti-circumvention provisions, price comparison methodology, andthe
implementation ofsunset reviews isaddressed intheresponse toquestion 2,above. Withregard to
thedeminimis ruleinreviews ofantidumping orders, theantidumping agreement requires onlythat
the2percent standard apply tooriginal investigations. TheU.S.applies the2percent deminimis
standard oftheAgreement inallinvestigations. Alower standard of.5percent isapplied inreviews.
Since theAgreement issilent about thestandard forreviews, the.5percent standard cannot beviewed
asinconsistent withtheAgreement. Withregard tocross-cumulation forinjury determination purposes
inantidumping andcountervailing dutyinvestigations, therelevant agreements, onceagain, aresilent
onthequestion. Accordingly, U.S.law,which permits suchcross-cumulation incertain well-defined
circumstances, isnotinconsistent withtheAgreements. TheU.S.alsoasserts thatprice adjustments
made inantidumping proceedings areproperly symmetrical andinfullconformity withtheAgreement.
Wewould liketoasktheUSG'sviews ontheAntiDumping caseontheLarge Newspaper
Printing Press inwhich theUSexpanded thescope ofADmeasures aftertheinvestigation hadbeen
concluded. IntheUSview, istheexpansion ofthescope ofproducts after theconclusion of
investigations inconformity withtheADAgreement?
Withregard totheantidumping investigation oflarge newspaper printing presses fromJapan,
thescope ofthatinvestigation wasnotexpanded aftertheconclusion oftheinvestigation. Theexact
scope wasspecified infulldetail onlyatthetimeofthefinaldetermination, inorder thatanumber
ofcomplex questions could beadequately researched andaddressed bytheparties totheproceeding.WT/TPR/M/16/Add.1
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AntiTrust (p77-78)
IntheareaofAntiTrust Policy, theDepartment ofJustice hasexpressed itsintent toapply
itsanticompetition lawsincases where thebenefits ofUSexporters areatstake. Inourview, this
constitutes excessive extraterritorial application ofUSdomestic laws, andwould liketheUStoshow
itsopinions ontheGATT consistency ofthesemeasures andwhether ithasanyintentions ofamending
these regulations.
TheDepartment ofJustice hasfromtime-to-time confirmed itsintention toapply theUnited
States ’antitrust lawsinaccordance withlongstanding statutory provisions andjudicial interpretations
under which anticompetitive conduct thatimpedes U.S.export trade can,insome circumstances, be
actionable. Wedonotconsider these lawsoractions taken pursuant tothem tobeinanyway
inconsistent withGATT orWTO rules.
Exports (p78-81)
What isthecurrent situation regarding theexport restrictions onlumber, atboththeFederal
andState level. Doyouhaveanychanges under consideration atthistime?
Wehavenoexport restrictions onlumber. Therestrictions onlogsaredescribed above under
question 5.
International Agreements (p84-89)
TheUSGhasmaintainedsignificantreservationsundertheGovernmentProcurementAgreement
forsetasides forsmall andminority enterprises. Under thisarrangement, anygovernment tender shall
bereserved forsmall business participation when there isareasonable expectation thatoffers willbe
obtained from atleasttwosmall business andawards willbemade atfairprices. Thisarrangement
forces suppliers ofother countries tobeartheriskofbeing excluded fromtenders. Does theUShave
anyintentions ofclarifying themeaning of'reasonable expectation 'under thisarrangement, andhow
thisisassessed? Does theUShaveanyplans torevoke these reservations?
Thisquestion wasaddressed intheanswer toquestion 3,above.
Government Procurement (p8l-88)
TheUSmaintains reservations forprocurement ofservices rendered under administration
consignment contracts between theDepartment ofEnergy andNASA andother agencies, private
enterprises anduniversities (seeAnnex IthetablefortheUS4,4.)Aresuppliers whowereinvolved
inthedevelopment ofthese research anddevelopment projects allowed totender fortheproducts that
theydeveloped?
Forthemostpart, U.S.procurement ofservices atalllevels ofgovernment arefreeofBuy
American typerestrictions. However, there areexceptions tothis,particularly inthetransportation
sector (e.g., theCargo Preferences Act). AstoU.S.interpretation ofservices exclusions fromthe
GPA, suchasR&D, theanswer appears obvious. Procurements thatareexempted fromcoverage are
notsubject toanyoftheGPA’sobligations.
RegardingNCAR,theDepartmentofCommercesentalettertoNCARexpressingthepossibility
ofdumping, regarding NEC computers. What isthelegalbasis forsuchaction? Arethere examples
inwhich theDepartment ofCommerce hasissued notice regarding thepossibility ofdumping inasimilar
manner? Arethere examples where other competent departments suchastheDepartment ofJusticeWT/TPR/M/16/Add.1
Page55
sentasimilar notice? Isthere regulation thatauthorizes thegovernment toprohibit government
procurement when dumping hasbeenfound? Arethereregulations thatprohibit anticompetitive pricing
ingovernment procurement inthecaseofdomestic suppliers?
There arenoregulations thatprohibit government purchases fromcompanies incases where
dumping hasbeenfound.
(para 90-94) Itisstated inthereport that"product safety requirements canchange overnight
astheproduct liability insurance market makes anewassessment ofwhatwillberequired forinsurance
purposes". Could theUSGexplain howtheUSGensures thatchanges inproduct safety requirements
arenotmore restrictive thannecessary within themeaning ofArticle 2.2oftheTBTAgreement?
First, wewould liketonotethatthestatement quoted inthisquestion,("product safety
requirements canchange overnight astheproduct liability insurance market makes anewassessment
ofwhatwillberequired forinsurance purposes"), doesnotreflect ourviews onthesubject, butrather
reflects theconcerns voiced byourtrading partners.
Second, theUnited States hasalonghistory ofinstitutionalized mechanisms toachieve quality
regulation. Thecurrent Administration ’sbasic philosophy andprinciples forregulatory planning and
review aredetailed inthePresident ’seconomic reports toCongress, andinExecutive Order 12866,
‘Regulatory Planning andReview. ’Inhis1996report toCongress, thePresident emphasized theneed
tosolveproblems using flexible andnon-bureaucratic means; totakeanewlookatregulations toensure
thattheymeetlegitimate social needs, and,where necessary, tochange bothcontent andprocess to
improve efficiency andeffectiveness. Inaddition toderegulation, questions arebeing raised asto"how"
toregulate. Forexample, there hasbeenashiftinemphasis fromprescribing methods ofcompliance
tospecifying desired outcomes.
Finally, theOffice oftheU.S.Trade Representative retains overall responsibility fornational
implementation oftheTBTAgreement. Compliance withthatAgreement requires making provision
forpublic comment onandreview ofanynewregulations. TheUnited States hasprocedures inplace
which meetourobligations under thatAgreement, which areoutlined intheUnited States ’Statement
onImplementation. (G/TBT/2/Add.2)
(para 105)What products dotheterm‘selected products ’inline3para105referto?Does
theword ‘government ’refer toFederal Governments only, ordotheyinclude State governments?
Aretesting laboratories restricted tolaboratories situated inside theUS,ordotheyinclude laboratories
situated abroad? Ifthere arelimitations, whatarethereasons forthese notations?
Theterm"selected products" inline3ofparagraph 105refers tothose products orconformity
assessment procedures forwhich thegovernment performs conformity assessment. Thisisdoneonly
onanexceptional basis intheUnited States.
(Para 108)Itisstated inthereport that"With theUSfirms themselves being involved in
establishing andmodifying USstandards, thetimetaken toobtain certification ofcompliance withthese
standards forforeign made products isgenerally much longer thanforlocalproducts". Could theUS
giveitsviews ontheconsistency ofitsstandards regime withAnnex 3Substantive provision Dwhich
states that"With respect tostandards, thestandardizing body shall accord treatment toproducts
originating intheterritory ofanyother member oftheWTO nolessfavourable treatment thanaccorded
tolikeproducts ofnational origin"? Specifically, isopportunity provided toforeign manufacturers
tocomment onstandards before standards aremade? Ifso,inwhatmanner? Ifnot,whatisthereason?WT/TPR/M/16/Add.1
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[Wewereunable tolocate thefirstquote intheSecretariat ’sReport ontheUnited States ’trade
regime.]
MostU.S.standards aredeveloped andadopted onavoluntary basis. Many ofthesevoluntary
standards areestablished through individual co-operation under theauspices oftheAmerican National
Standards Institute (ANSI). ANSI (andother U.S.standards bodies) havedeveloped guidelines for
theestablishment andmanagement ofthestandards process inafairandopenmanner. Thestandards
setting process ismonitored bytheFederal Trade Commission andtheJustice Department forcollusion
andunfair ordeceptive practices thatmayproduce anti-competitive effects. Notonlyarenotices of
proposed standards published indraftforpublic comment, mostU.S.standards bodies gobeyond WTO
obligations toallow forthedirect participation offoreign individuals inthestandards development
process.
Intellectual Property (p98-106)
(para 135)Could theUSstateitsintention onwhether itwilljointheRome Convention, and
ifnot,thereason fornotdoing so?
TheU.S.doesnotintend tojointheRome Convention because theprotection available to
performers ’andproducers ’rights intheUnited States isnotprovided inaformcompatible withthe
requirements oftheRome Convention. Inaddition, certain provisions oftheRome Convention involve
reciprocal treatment which theU.S.Government doesnotsupport. Finally, theU.S.strongly supports
theefforts under theWIPO tonegotiate andconclude aProtocol totheBerne Convention andaNew
Instrument todealwithissues involving performers ’andsound recording producers ’rights.
TheU.S. accepted theGATT panel decision onsection 337oftheTariff Actof1930, and
hasmade amendments bytheURAA. However, theamendment merely stipulates thattheUSITC
issue afinaldetermination within afixed period oftime, anddepending onhowlongthatperiod is,
thismaystillconstitute aburden onforeign enterprises. Could theU.S.giveitsviews onwhatthe
"fixed period oftime" ispresumed tobe?
Within 45daysofinitiating aninvestigation, theUSITC mustestablish atarget dateforissuance
ofitsfinaldetermination. Thetarget datechosen depends upon, among other things, thecomplexity
ofthecaseinvolved.
CantheUScomment onwhether itisgoing, tosetatimeframe fortheprovision oflicenses?
(cf.Theapplication byKDD regarding theresale ofinternational private linestookmore thanone
year.)
TheU.S.hasincorporated intoitsGBTofferthereference paper onregulatory principles,
which requires thatlicenses beissued inatimely manner. IftheGBTnegotiations aresuccessful, the
U.S.willensure thattheFCCissues licenses inaccordance withitsobligations.
TheECO testandtheECO-SAT testarebothpre-examinations regarding reciprocity, which
leave alotofdiscretion tothecompetent authorities, andhavetheability ofimpeding international
competition. After theconclusion ofnegotiations inthetelecommunications sector, these measures
which areagainst theMFN principle should berevoked, andshould notbemaintained asanMFN
exemption. DoestheUShaveanyplans torevoke thismeasure, andwhatistheUSviewonthismatter?
TheTelecommunications Actof1996opened localexchange markets tocompetition andended
prohibitions oncross-entry affecting thelocalexchange telephone industry, theinter-exchange telephone
industry, andthecable television industry.WT/TPR/M/16/Add.1
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TheFederal Communications Commission 'srulemaking onMarket Entry andRulemaking of
Foreign-Affiliated Carriers, adopted inNovember 1995, codified anobjective setofcriteria forcase-by-
casedecisions onissuance ofradio licenses andlicenses toprovide international services, based on
adejureanddefacto examination ofeffective competitive opportunities inthehome market ofthe
applicant.
TheFederal Communications Commission ’sNotice ofProposed Rulemaking (NPRM) inthe
matter ofDomestic andInternational Satellite Consolidation Order --II(DISCO-II) proposes anobjective
setofcriteria forcase-by-case decisions onlicensing ofU.S.earth stations tousenon-U.S. licensed
satellites. TheFCChasnottaken action ontheproposal andwecannot speculate astowhen itmay
doso.Comments fromforeign governments andforeign operators havebeenreceived andwelcomed
bytheCommission.
TheUnitedStates'conditionalofferintheWTOGrouponBasicTelecommunicationsistoreplace
these existing andproposed (respectively) case-by-case processes byaWTO commitment toprovide
effectively unlimited market access andnational treatment forallbasic telecom sectors, including
satellite-based services. Theofferisconditional onacritical massofhighquality offers byother trading
partners.
TheTelecom ActandtheFCC’srecent actions haveincreased thepossibilities forforeign
participation inthedifferent sectors bycodifying rulesandproviding incentives forother governments
tomatch theUnited States ’demonstrated willingness toopenitsmarket further toprivate investment
andcompetition. TheUnited States ’conditional offerinthese negotiations takes thesame approach,
contingent onmore andbetter offers fromourtrade partners.
Transport Services
Itisreported thattheUSGmitigates thecargo preference provisions ofproject cargoes resulting
fromloans made bytheExport-Import Bank oftheUnited States. What istheconcrete schedule for
this?
TheJapanese question isunclear. TheU.S.doesnot“mitigate ”itscargo preference provisions
andthere isnoschedule fordoing sothatweareaware of.
WeareseriouslyconcernedbytheUnilateralactionoftheUSGonMaritimeTransportServices.
What aretheconcrete conditions under which theFederal Maritime Commission (FMC) istotake
action based ontheMerchant Marine Actof1920, theso-called “Jones Act?”Itisreally regrettable
thatonNovember 6,theFMC proposed toimpose anewsanction against Japanese shipping companies.
WecallontheUSG forexplanations onthis(paras 153and154).
TheFederal Maritime Commission isconsidering imposing sanctions onJapanese linervessel
operators serving theJapan-U.S. trade inresponse toadverse conditions affecting U.S.carriers in
Japanese ports. Japanese harbour restrictions havebeenraised bytheUnited States forthepast16
years andonlyrecently hasJapan ’sMinistry ofTransport taken amore active rolethatmayleadto
aswiftresolution ofthese longstanding difficulties.
ThenewUSlegislation favouring U.S.-flag shipsintransportation ofAlaskan oilisanoutright
violation ofWTO Ministerial decision. WewanttoseektheUSviews onthisproblem.
TheUnited States continues todisagree withtheassertion byJapan thatthismeasure isa
violation oftheWTO Ministerial Decision. Themeasure innowayaddstothenegotiating leverage
oftheU.S.position noworwhen negotiations onacomprehensive services agreement result intheWT/TPR/M/16/Add.1
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year2000. Over95percent ofallU.S.bulkimports andexports arecarried onforeign flagvessels,
anindicator oftheopenness oftheU.S.international commercial maritime market. TheAdministration
continues tosupport openaccess tointernational commercial cargoes andopposes extending cargo
preference requirements tosuchshipments. Given theoverall liberalization ofU.S.maritime trade
resulting fromlifting theexport ban,wedonotbelieve thattheprovision ofthelegislation withregard
toforeign-flag vessels signals achange inthatpolicy. TheAdministration carefully considered its
treaty obligations andother obligations before lifting theban.
Wearedeeply concerned thatthenewprogramme contained intheMaritime Safety Actof
1996, maintaining subsidy tocompensate costdifferences between USandforeign operators, distorts
fairconditions ofcompetition; thishasadverse effect oninternational shipping services. Willthispoint
beelaborated?
TheUSGcarefully considered itsinternational obligations prior toadopting thenewsubsidy
program, known astheMaritime Security Program. Thenewprogram replaces anexisting subsidy
differential program atalower leveloffunding andcovers fewer vessels. Thepurpose oftheprogram
istopermit theUnited States tomaintain acorefleetofmilitarily useful commercial vessels toprovide
sealift support intimeofwarornational emergency.
QUESTIONS FROM KOREA
Tariff Measures
With respect tofeesimposed oncustoms procedures
The1990 Customs andTrade ActoftheUnited States, andthe1990 Omnibus Budget
Reconciliation contain certain stipulations forthecommercial operation ofcustoms offices.
- These stipulations impose monetary charges forcustoms procedures.
Irecall inthisregard thattheGATT Panel findings ofNovember 1987called upontheUnited
States tolimitthecharges tothecostoftheservices rendered.
However, wehavenoted thattheimport charge asapercentage ofthevalue oftheimported
goods hasrisen since thisPanel finding, asfollows:
- 1987 -.17%
- 1992 -.19%
- 1995 -.21%
Furthermore, theceiling charges havecontinued tobeincreased.
Asaresult ofboththeincreased rateandtherising ceiling charges, thecharges associated
withimportation wentsofarastoexceed theactual costofproviding theservices rendered.
Iwould therefore asktheAmerican delegation toexplain itsposition onthisphenomenon, and
toaddress theconcern thatthecharges arebeing increased inorder tocompensate forDeclining tariff
revenues since thecompletion oftheUruguay Round.
Secondly, Iwould askiftheU.S.hasanyfurther plans toincrease charges again?WT/TPR/M/16/Add.1
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Increases intheMerchandise Processing Fee(MPF) in1992 and1995 aresolely related to
adjustments forinflation. Infact,theincreases arelessthantheinflationary rateoverthepast10
years. TheMPF isauthorized bystatute (19U.S.C. 58c)andistobeusedto“offset thesalaries and
expenses thatwilllikely beincurred bytheCustoms Services intheprocessing of...entries andreleases
[ofmerchandise] during thefiscal yearinwhich suchcosts areincurred. ”Because theMPF rateis
prescribed byStatute (19U.S.C. 58c), andfurther changes intheMPFratewould needtobeenacted
byCongress. Customs isnotaware ofanyproposals atthistimetochange therate.
Antidumping Measures withrespect toKorean made Colour TV's
Since 1984, theUnited States administration hasconsistently applied antidumping measures
tocolour TV’sfrom theRepublic ofKorea.
TheKorean hasrequested theU.S. government toreview itsantidumping measures onthe
grounds ofthedeminimus clause andthefactofsuspension ofexports. However, theU.S.government
hasrejected ourrequest, ordelayed theprocedures, which violates, inourview, Paragraphs 1and
2ofArticle IIoftheAntiDumping Agreement.
Also, theU.S.government initiated aninvestigation onallegations ofcircumvention onthe
partofSamsung colour TV'smanufactured inMexico.
- However, Iwould notethatthere isnorulewhatsoever ofcircumvention intheAntidumping
agreement atthisstage.
Oneencouraging development isthatlastJunetheUSgovernment started thereview procedures
based onchange ofcircumstances, eventhough much belated, inresponse toourrequest ofJuly1995.
Itisourbelief thattheexcessive useofantidumping measures onthepartoftheUnited States
government, andthefrequent andfrustrating delays inreviewing thetermination ofsuchmeasures
haveposed serious impediment tosmooth trade flow.
Inconclusion, thepresent practices oftheUSGovernment isclearly anabuse ofantidumping
measures.
TheDepartment ofCommerce hasconducted administrative reviews ofColor Televisions (CTVs)
fromKorea instrictaccordance withU.S.lawandregulations, which, inturn,comply withinternational
obligations under theGATT andWTO antidumping agreements. Reviews areconducted toassess the
continued needforexisting dumping orders; suchassessments arebased onshipments ofthesubject
merchandise totheU.S. market andmayresult inrevised dutyrates orrevocation ofanorder.
Revocation ofanorder willoccur where there isnodumping occurring andthere isnolikelihood that
dumping willrecur. Interested parties areprovided withample opportunity topresent information
tobeconsidered inboththeinvestigation andreview processes.
Unlikeanantidumpinginvestigation,acircumventioninquiryisnotdesignedtodeterminewhether
merchandise isbeing soldatlessthanfairvalue orwhether suchsales injure domestic industry. A
circumvention inquiry isdesigned todetermine whether particular merchandise isproperly within the
scope ofanexisting order. Suchaninquiry isfullyconsistent withtheWTO antidumping agreement,
which issilent onanti-circumvention measures. Moreover, aMinisterial Decision attheconclusion
oftheUruguay Round specifically recognized circumvention asavalid concern under thedumping
agreement andurged agreement onuniform rules governing anti-circumvention measures.WT/TPR/M/16/Add.1
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TheU.S.isnotengaging in"excessive useofantidumping measures". Antidumping proceedings
areinitiated strictly according toWTO obligations, andorders areapplied onlywhere bothdumping
andinjury (orthreat thereof) occur.
NonTariff Measures
Labelling requirements ofautomobiles
AsofJanuary 1994, allvehicles arerequired tobearamarking oftheratioofAmerican or
Canadian parts, aswellas,interalia,theplace offinalassembly, andtheorigin oftheengines.
These stipulations aredelineated intheUnited States Auto Labelling Act. Theintroduction
ofthisActstates thatthereason forsuchregulations istoprovide relevant information toconsumers
andtoenhancetransparencyforconsumerdecisionmaking.Effectively,however,suchlabelsencourage
consumers tobuyUS-made autos.
Thissituation maybeinviolation ofArticle 2oftheAgreement onTechnical Barriers toTrade,
given thatsuchtacitencouragement tobuycertain products imposes, forallpractical purposes, abarrier
totrade against imported vehicles.
Wewould therefore asktheU.S. delegation iftheyareabletoconfirm thatthere willbea
positive refinement ofthiscontentious legislation, tobring itintoconformity withboththeletter and
thespirit oftheTBTAgreement?
Ifno,please explain thejustification forthatregulation assetoutinparagraph 5oftheTBT
Agreement.
- Para5ofTBTAgreement stipulates thatMember shall explain thejustification of
conformity ofanymeasures totheAgreement, ontherequest oftheother trading
partners.
TheUnited States AutoLabelling Actwasenacted forthepurpose ofproviding consumers
informationnecessarytomakeawellinformeddecisionwhenpurchasinganautomobile.Theinformation
itrequires isinformation which mustbeprovided foralmost allproducts inmany countries intheworld.
Farfrompreventing consumers frommaking rational economic choices based onindividual needs and
theinherent quality ofaproduct, theresult ofabarrier totrade, theactactually facilitates thatprocess
byincreasing theamount ofinformation available onwhich consumers canbasetheirdecisions.
Article IIoftheTBTagreement acknowledges prevention ofconsumer deception asoneofthe
"legitimateobjectives"forwhichanewtechnicalregulationcanbeadopted.Thelabellingrequirements
weredesigned tobeconsistent withexisting lawsandregulations andhavebeenimplemented bythe
National Highway Traffic Safety Administration (NHTSA) attheDepartment ofTransportation ina
manner believed tobetheleastburdensome possible formanufacturers bothathome andabroad.
Thelabelling isnotdiscriminatory anddoesnotconstitute abarrier totrade, since bothdomestic and
foreign manufacturers mustprovide thesame information.
Regulation ofthesizeofalcoholic beverage containers
TheUnited States Federal Alcohol Administration Actregulates thesizeofalcoholic beverage
containers. Thejustification provided inthetextoftheActisthatsuchmeasures arenecessary to
"prevent theproliferation ofthesizeandshapes which could cause consumer confusion anddeception".WT/TPR/M/16/Add.1
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- TheActtherefore limits thesizeofsuchcontainers toseven different design categories.
Bytheway,thisisasystem thatisunique totheUnited States, existing nowhere else
intheworld.
TheU.S.administration hasresponded tocomplaints regarding thissystem byclaiming that
anyindividual andcompany mayrequest exemption from thisregulation, ifnecessary.
Itwould seem tousthatsuchbottling requirements actasanimpediment tofreetrade, and
thusviolate theTBT Agreement. Wewould therefore asktheUSdelegation tobothprovide the
justification according toParagraph 5ofArticle 2oftheTBTAgreement, andciteanyrelevant examples
ofexemptions which havebeengranted.
- Wewould alsoaskwhether foreign companies areabletofilesuchapplications for
exemption. Iftheresponse ispositive, howlongdoesittaketogetpermission for
suchexemptions.
TheUnited States, notunlike many other countries intheworld, has,attherequest of
manufacturers anddistributors, adopted requirements forcontainers forallalcoholic beverages except
beer. Inthecaseofbeer, themanufacturer isfreetousesafecontainers ofanysizeandshape tobest
market andpreserve theproduct.
Forother alcoholic beverages itisnecessary toconform tothepackaging standards outlined
intheFederal Alcohol Administration Act. These standards havebeenadopted inorder tomitigate
problems withpacking andstoring alcoholic beverages ofmany different sizes, problems withdisplay
atthedistribution sightforthesame reason, andinadequate ordeceptive consumer information which
maybeconveyed through bottles ofmany different shapes andsizes. Without theexisting regulations,
tocitejustoneexample, compliance withlawsstating thatdistributors mustgiveequal space ontheir
shelves toequal volumes ofeachdistinctive label theycarry would bemuch more difficult. Thatlaw
wasdesigned toprotect competition intheindustry among domestic andforeign producers alike by
preventing distributors fromwithholding information about allthevarious labels available forpurchase.
Exemptions tothebottling requirements havebeengranted onlytwice, andthenonlytorespond
toindustry wideconcerns asopposed totheneeds ofasingle firm. TheBureau ofAlcohol Tobacco
andFirearms,theregulatoryauthorityforalcoholicbeveragecontainers,openeditscontainerregulations
forpublic comment through theFederal Register review process twice inthelastfiveyears inorder
toaddress concerns thatthebottling requirements wereunnecessarily restrictive. Theconsensus at
theendofthosecomment periods wasthatthecontainer regulations servethevalidpurpose ofprotecting
consumers frommaking misleading assumptions about quantity andvalue thatmayarise fromalack
offamiliarity withamyriad ofdifferent containers andoffacilitating storage anddistribution processes.
Government Procurement
The1993 BuyAmerican Act,andthe1954 Executive Order number 10582 actively promote
so-called "buy American campaigns".
State procurement
Stategovernments within theUnited States purchase almost 50%ofU.S.totalofgovernment
procurement. However, only24American States aresubject toGPA. Only 24States outof50is
arelatively narrow scope ofcoverage compared toother countries.WT/TPR/M/16/Add.1
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Wewould therefore askifthere isanyintention onthepartoftheUnited States toexpand
thescope ofcoverage inthecontext ofthefurther negotiations, which aredelineated according toArticle
24(7)oftheGPA?
TheU.S.Small Business Program stipulates thatfederal government procurement should have
acontract withsmall andminority owned businesses according toPublic Law95-507.
- Ourquestion is,whatisthescope anddefinition ofsuchsmall andminority owned
businesses? What isthesizeandnature offederal procurement under thisprovision?
What istheopinion oftheU.S.delegation astothecompatibility ofsuchlegislation with the
GPA?
Withafewexceptions, particularly thatofsmall andminority business setasides, BuyAmerica
requirements arewaived forproducts fromsignatories totheWTOGovernment Procurement Agreement
andNAFTA. Asreflected inthose agreements, thePresident hasbroad authority under theTrade
Agreements Actof1979 towaive BuyAmerican restrictions forcountries thatmake reciprocal
commitments toapply transparent andcompetitive procurement procedures. Restrictions generally
donotapply toprocurement ofservices. Asaresult ofcoverage under theWTO GPA, BuyAmerican
restrictions apply toarelatively small portion ofFederal contracts --onlythose forgoods under the
GPAthreshold of130,000 SDRs ($190,000). Forthosecontracts covered under theGPA, BuyAmerican
preferences arewaived forsignatories, butapurchasing prohibition applies toproducts fromcountries
thatarenotsignatories. TheUnited States alsoapplies anumber ofrestrictions limited strictly to
procurement bytheDepartment ofDefense, suchasthose covered bytheso-called “Berry Amendment. ”
TheUnited States maintains exceptions under theGPAandNAFTA forthese items, including those
thataresensitive fornational security reasons, justasother signatories maintain theirowndefense-
related restrictions through similar negotiated exceptions.
TheUnited States hasalsonegotiated exceptions totheGPAandNAFTA forsmall andminority-
owned business (SMB) set-asides andhasnoplans tophase-out these set-asides. Asexceptions tothe
GPA, U.S.legislation onset-asides iscompatible withitsobligations. Set-asides serve animportant
socio-economic function while being limited inscope toarelatively small portion ofcontracts.
Historically, theyhaveaffected between sixandseven percent ofthetotalvalue ofU.S.coverage under
theTokyo Round GPA. Itistooearly totellwhether theimpact maybeincreased astheresult of
coverage ofservices, including construction, under theWTOGPA, sincestatistics haveyettobereported
under thenewagreement. Despite thefactthattheUnited States hasnegotiated exception, ithasalways
sought toapply themonatransparent, predictable basis. TheUnited States expects tocontinue to
discuss withother GPAsignatories howtransparency andpredictability associated withsetasides can
beenhanced. However, oneaspect ofawards made toSMBs should notbeoverlooked; many ofthese
awards aremade through afullandopencompetitive procurement process andnotthrough set-asides.
Itisimportant thatset-aside statistics notbeexaggerated through theaddition ofdataconcerning
contracts awarded onacompetitive basis.
Procurement intheUnited States isdecentralized withstates andlocalities freetopursue their
ownprocurement policies. Nevertheless, mostofthese subfederal jurisdictions havewell-established
procurement systems thatmirror thetransparent andcompetitive practices employed attheFederal
level. Many alsoapply discriminatory requirements tofavour localsuppliers. Astheresult ofrequests
fromourtrading partners innegotiations ontheWTO GPA, theUnited States Federal government
sought commitments fromstategovernments tosubmit theirprocurement forcoverage under theGPA.
Through these efforts, 37states (asopposed to24,assuggested inthequestion), including mostof
thelargest --e.g.,California, NewYork, Florida, Texas, agreed tocover certain oftheirprocurements
under theGPA. State coverage isestimated tototalnearly $50billion annually. States haveeitherWT/TPR/M/16/Add.1
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eliminated discriminatory restrictions orbound themselves tonotapply newdiscriminatory requirements
onthisprocurement. TheFederal government andthese 37state governments havedeveloped an
extremely cooperative relationship ontrade-related procurement issues asaresult ofGPAcoverage.
Weexpect thatefforts todatearejustastarting point andthatadditional states andmunicipalities
willbeaddressed infuture negotiations under Article XXIV:7.
Agriculture
Tariff ratequotas
According toArticle 404(a) oftheUnited States ActImplementing theUruguay Round, the
United States government maytakemeasures toprevent thetariffquota levels ofimported agricultural
products from disrupting orderly marketing within theUnited States.
- What exactly isthemeaning of"orderly marketing "inthiscase?
- Please provide thedetails oftheconcrete measures thattheUnited States government
hasundertaken pursuant tothisArticle.
There isnostandard definition of"orderly marketing" fromaregulatory perspective, inthis
case. Thetermisunderstood tomean that,withrespect toimports ofitems subject toTRQs, theU.S.
wouldtakemeasurestoensurethattheseimportsdonotdisrupttheinternalmarketbysharplyinfluencing
prices orsupply. Thetwomajor measures related tothisarelicenses fordairy imports andthesugar
import process.
SPSrestrictions
Inpara33ofthesummary observations oftheSecretariat 'sReport ontheUnited States Trade
Policy Review itismentioned thattheUnited States Department ofAgriculture "hasinvited comment
ontheliberalization ofaselection ofother outstanding SPSrestrictions."
- What arethespecific details oftheU.S.Department ofAgriculture 'splanregarding
thesolicitation ofopinions onSPSrestrictions?
Thesolicitation ofopinions onSPSrestrictions istwo-fold. From adomestic perspective, USDA
islooking intotheexpansion oftheU.S. enquiry point toinclude private sector companies and
associations. Thiswould alsoentail aproject tomaketheenquiry notifications available ontheInternet.
U.S.notifications would alsobecome partoftheexpanded enquiry point dissemination process for
thefirsttime(only foreign notifications havebeendisseminated inthepast).
Thesecond aspect oftheplanned solicitation process would involve increased participation
ofprivate sector, consumer organizations, andtrade associations aspartofU.S. delegations to
international standards bodies, suchasCODEX andtheWTO.
QUESTIONS FROM MEXICO
Weappreciate thereports from theSecretariat andfrom theUnited States. Inasmuch aswe
maintain veryfrequent contacts withtheUnited States bothhereandbyvirtue ofourgeographic
proximity andother contractual commitments between us,ourcontribution willbeextremely brief.WT/TPR/M/16/Add.1
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Wewould liketheUnited States delegation toinform usofthecurrent status andtheshort-term
prospects forresolving thefollowing matters, incompliance withU.S.international tradeobligations:
- Adoption ofthereport bytheSpecial Group reviewing thecaseofMexican cement
exports totheUnited States;
- Recognition thatMexican avocados canbeimported intotheUnited States without
causing plant health problems;
- Final determination thatmillet brooms [broomcorn brooms] shallnotbesubject to
safeguards;
- Liftingofthetunaembargoandthecorrespondingamendmentswithrespecttolabelling;
and
- Suspension and,wehope, rapid abrogation ofthe"Helms-Burton" Law.
Cement
Thestatusofthe1992panelreport"UnitedStates-AntidumpingDutiesonGrayPortlandCement
andCement Clinker fromMexico" wasdetermined inthefinalmeeting oftheTokyo Round Committee
onAntidumping Practices which washeldonDecember 18,1996. Atthismeeting, theCommittee
concluded thatthere wasnoconsensus toadopt thispanel report. Atthemeeting, theUnited States
reiterated thatthepanel report wasseriously flawed inseveral respects, interalia,thepanel hadgiven
Mexico theopportunity toraise arguments which hadnever been raised intheunderlying U.S.
antidumping investigation; thepanel hadinappropriately interpreted theTokyo Round Antidumping
Agreement asincluding arequirement thatforanantidumping investigation tohavebeenproperly
initiated thepetition hadtohavebeensubmitted onbehalf ofalloralmost alloftheproduction inthe
regional market; and,contrary tothebounds ofauthority traditionally respected byGATT panels, the
panel haderred byrecommending aspecific andretroactive remedy. Accordingly, theCommittee
concluded thatthere wasnoconsensus fortheadoption ofthispanel report.
Avocados
OnJuly3,1995,followinganextensivequantitativeriskassessment,USDApublishedaproposed
rulethatwould allow Mexican avocados tobeimported intonortheastern states under certain prescribed
conditions. Thecomment period ended October 16,1995. Alarge number ofcomments werereceived.
Under U.S.administrative procedures, allcomments mustbereviewed priortodecision making. USDA
hasworked diligently toassess themore than2,000 comments. TheDepartment remains committed
toresolving theissue based onappropriate procedures andprinciples thatarefullyconsistent with
WTO obligations.
Broom Corn Brooms
Attached isthenotification oftheaction assubmitted totheWTO:
Notifications pursuant toArticle 12.1(c) andArticle 9,footnote 2
oftheAgreement onSafeguards
Pursuant totheabove-referenced provisions oftheAgreement onSafeguards, andinlightoftheagreed
format fornotifications (G/SG/1, 1July1996), theUnited States provides thefollowing notifications
totheCommittee onSafeguards.
A. Notification totheCommittee onSafeguards under Article 12.1(c) upon taking adecision
toapply asafeguard measure:WT/TPR/M/16/Add.1
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1.-2. Thisinformation wasprovided inaprevious notification. SeeG/SG/N/8/USA/1, 24July1996).
3.Provide aprecise description oftheproduct involved. Broom cornbrooms, provided forin
subheadings9603.10.50and9603.10.60oftheHarmonizedTariffScheduleoftheUnitedStates(HTSUS).
4.Provide aprecise description oftheproposed measure. Themeasure isanincrease intariffs on
imports ofbroom cornbrooms, asfollows:
HTSUS
subheadingCurrent bound
rateYEAR 1:
Nov. 28,1996 to
Nov. 27,1997YEAR 2:
Nov. 28,1997 to
Nov. 27,1998YEAR 3:
Nov. 28,1998 to
Nov. 27,1999
9603.10.50 32¢each 33¢each 32.5¢ each 32.1¢ each
9603.10.60 32%advalorem 33%advalorem 32.5% advalorem 32.1% advalorem
Anannual quantity ofbroom cornbrooms provided forinsubheading 9603.10.60 maybeentered free
oftheabove-described increase induties, asfollows:
Country from which
product originatesYEAR 1:
Nov. 28,1996 to
Nov. 27,1997YEAR 2:
Nov. 28,1997 to
Nov. 27,1998YEAR 3:
Nov. 28,1998 to
Nov. 27,1999
Mexico 100,000 dozen 100,000 dozen 100,000 dozen
Panama 41,000 dozen 41,000 dozen 41,000 dozen
Honduras 37,000 dozen 37,000 dozen 37,000 dozen
Colombia 12,000 dozen 12,000 dozen 12,000 dozen
AllOthers 2,000 dozen 2,000 dozen 2,000 dozen
Themeasure doesnotapply toimports fromCanada, Israel, orfromdeveloping countries described
inthenotification under Article 9,footnote 2,provided below.
5.Provide theproposed dateofintroduction ofthemeasure. Themeasure wasintroduced onNovember
28,1996.
6.Provide expected duration ofthemeasure. Themeasure isexpected tolastthreeyears; i.e.,through
November 27,1999.
7.Notapplicable.
8.Iftheexpected duration isoveroneyear, provide expected timetable forprogressive liberalization
ofthemeasure. Thetariffs willdecrease inyears 2and3,assetoutinthetable above.
9.Notapplicable.
B. Notification under Article 9,footnote 2ofthenon-application ofsafeguard measures to
developing countries under Article 9.1oftheAgreement onSafeguards:
1.Specify themeasure. Themeasure isatemporary increase intariffs described intheabove
notification under Article 12.1(c).
2.Specify theproduct subject tothemeasure. Broom cornbrooms, provided forinsubheadings
9603.10.50 and9603.10.60 oftheHarmonized Tariff Schedule oftheUnited States.WT/TPR/M/16/Add.1
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3.Specify thedeveloping countries towhich themeasure isnotapplied under Article 9.1ofthe
Agreement onSafeguards, andtheimport shares ofthese countries individually andcollectively.
Thedeveloping countries towhich themeasure doesnotapply arethose listed ingeneral note4(a)
totheHTSUS, asthatnoteexisted onNovember 28,1996, thataccount forlessthan3percent ofimports
oftheproducts atissue. Alistofthecountries ingeneral note4(a)isattached tothisnotification.
Thecountries listed ingeneral note4(a)thataccount formore than3percent ofimports, andthus
towhich themeasure doesapply areasfollows:
HTSUS subheading Country Share ofimports
(average 1994-95)
9603.10.50 Panama 19.65%
9603.10.60 Panama 21.14%
9603.10.60 Honduras 19.33%
9603.10.60 Colombia 6.31%
Theshare ofimports oftheremaining countries listed ingeneral note4(a)arecollectively lessthan
onepercent for9603.10.50 and2.86percent for9603.10.60.
4.Notapplicable.
Tuna legislation
TheUnited States remains committed tosupporting international efforts toprotect dolphins andother
marine lifeintheEastern Tropical Pacific.
TheAdministration engaged inconsiderable efforts toobtain passage oflegislation toimplement the
Panama Declaration lastyear, andweweredeeply disappointed when wewereunable tosecure its
finalpassage. Passage oflegislation toimplement thePanama Declaration remains atoppriority
fortheAdministration. Weareworking withmembers ofthebipartisan coalition supporting thePanama
Declaration onpassage oftheimplementing legislation, which hasbeenreintroduced intheU.S.
Congress.
5.Status of“Helms-Burton ”Law
TheUnited States believes thattheLibertad Actisconsistent withourinternational obligations. We
willcontinue toimplement it.Atthesametime,wewillcontinue toworkwithtrading partners tomanage
ourdifferences overtheAct.
TheActpermits thePresident tosuspend theright tobring lawsuits under TitleIIIoftheActfora
six-month period. ThePresident exercised thisauthority inJuly1996 when hesuspended theright
tofilelawsuits forsixmonths fromAugust 1.OnJanuary 3,1997, thePresident again exercised this
authority tosuspend theright tofilelawsuits forsixmonths fromFebruary 1.
QUESTIONS FROM NEW ZEALAND
TheUnited States Government seestheWTO system as"thebaseupon which regional
arrangements might bebuilt, provided thatsucharrangements gofurther inthecause ofliberalization"
andalso"supports regional agreements thatareconsistent withWTO rules". (G/16 para. 28).WT/TPR/M/16/Add.1
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- Howmuch further towards liberalization should regional arrangements goinareassuch
asagriculture, textiles andother often highly protected sectors forsucharrangements
tobeconsistent withWTO rules?
- Would theUnited States support thenotion thatallregional arrangements ought to
include provisions thatwould eventually ensure free(andfair)tradeinallgoods sectors?
Wewould notliketospeculate atthemoment onwhat would beadvisable forother WTO
members, solongastheirarrangements areWTO consistent. FortheUnited States, however, our
arrangements todatehavebeenfreetrade agreements thatcover substantially alltrade, including
agriculture andtextiles andapparel. Theyalready meetthestandard laidoutinthesecond partof
thequestion.
Export Credits
TheFAIR ActaskstheUnited States Department ofAgriculture todevelop anexport strategy
toincrease USexports of“high”value andvalue-added agricultural products ”inorder toraisethe
USshare ofworld trade insuchproducts (S/16, para13,p.112).
- How doestheUnited States reconcile continuing useofgovernment financed export credit
andexport guarantee programmes withthestatement thatits[trade] policy ispremised onthe
removal ofbarriers anddistortions toglobal trade(G/16, para48)andtheUSclearattachment
totheconcept of"fairtrade" (G/16, page1)?
Ourgoalistheremoval ofbarriers anddistortions totrade. Thisgoalisfarfrombeing met.
Aslongasourexporters facecompetition from, orareunfairly abetted by,foreign governments, we
willnotunilaterally dismantle ourprograms.
Suchprogrammes arecurrently subject todiscussions intheOECD inorder todevelop effective
disciplines ontheiruse.
- Inlinewithitsapparent policy objectives, willtheUnited States bejoining theemerging
consensus infavour ofmultilateral disciplines?
TheU.S. ispresently engaged intheOECD negotiations concerning theestablishment of
disciplines foragricultural export credits. Ourparticipation inthose negotiations isindicative ofour
commitment tothemultilateral trading system. Wecannot prejudge thefinaloutcome ofthenegotiations.
Tariff quota administration
Some oftheUnited States ’"new" or"minimum access" tariffquotas committed intheUruguay
Round havebeenallocated bylottery (S/16, para18,p.116)
- What istheUnited States ’response tocriticisms thatsuchanallocation mechanism provides
nocontinuity ofaccess, doesnotallow thedevelopment ofvalue-added trade, anddoesnot
provide TQaccess quantities which arecommercially attractive?
Uruguay Round TRQquantities forcheese areissued as"lottery" (nonhistorical) import licenses
when thegovernment ofthesupplying country doesnotdesignate importers. Fornon-cheese dairy
products, theUruguay Round Agreement didnotprovide forcountry specific allocations orpermit
designation ofimporters. Therefore, nonhistorical licenses providing forentry fromanycountry are
issued forsuchimports. However, under therevised Import Regulation, published onOctober 9,1996,WT/TPR/M/16/Add.1
Page68
nonhistorical licenses issued forbutter in1997 andin1998 maybeconverted tohistorical licenses
if90percent oftheoriginal license quantity isutilized during theyearitisissued.
Inaddition, thenewrulereplaced therandom lottery system witharank-order lottery system
which isintended toincrease anapplicant ’sprospects ofreceiving alicense forthesame article in
consecutive years. Furthermore, thenewruleincreased theminimum sizeofmostnonhistorical licenses
tomake themmore economically viable. Theminimum sizeinmostcases willmore thandouble the
sizeunder theprevious rule. Since theTRQamount arefixed, thesystem mustbalance thesizeof
thelicense withthelarge number ofrequests forlicenses. Theminimum license sizesinthiscontext
aredeemed reasonable.
Recent changes toUnited States dairy tariff ratequote licensing provide forexemptions from
licence performance requirements when alicense cansimply demonstrate thatthecountry towhich
thelicence applies maintains anexport monopoly.
- HowdoestheUnited States justify sucharbitrary treatment ofthetrade ofexport monopolies
intheabsence ofanyevidence ofthenature ofsuchentities ’behaviour?
TheImport Regulation requires licensees toenter atleast85percent ofthequantity foreach
license issued foradairy product (excluding amounts surrendered andincluding amounts added to
alicense during theyear). Anylicensee thatfailstomeetthe85percent requirement shallnotbeeligible
toreceive thesame license nextyear(i.e., willnotbeabletoreceive alicense toimport thesame
article fromthesame country). TheImport Regulation provides certain exceptions tothe85percent
requirement. Alicensee mayapply tohavethe85percent requirement waived when thecountry of
origin onahistorical ornonhistorical license maintains orpermits anexport monopoly tocontrol the
export ofthedairy article under license. Anexport monopoly isdefined asaprivilege vested inone
ormore persons consisting oftheexclusive right tocarry ontheexportation ofanyarticle ofdairy
products from acountry totheUnited States. Alicensee thatpetitions theU.S. Department of
Agriculture (USDA) foranexception willberequired tosubmit evidence thatthecountry maintains
anexport monopoly.
Asindicated intheFederal Register onJanuary 18,1995, thisprovision replaced andmodified
anexception intheprevious Import Regulation. Under theprevious rule, ifitwasshown tothe
satisfaction ofUSDA thatthecountry specified onalicense discriminated against alicensee, thelicensee
would notbepenalized forfailure touse85percent ofalicense and/or thelicense could beglobalized.
Thisprovision wasinplace for16years andwasnever invoked.
Therevised provision isintended tobeadministratively narrower andsimpler. Potential use
ofsuchameasure would notbecontrary toUruguay Round obligations. There isnonullification or
impairment inthattheprovision doesnotprevent utilization ofthefullTRQamount. Itisapplied equally
toexportmonopoliessanctionedbyanycountryandthusisnotdiscriminatory.Inreviewingtheexception
tothe85percent utilization requirement itisimportant toremember thatmostlicensees areableto
meetthe85percent requirement because oftheirability tosource fromalternative suppliers, particularly
whenspecific products arenotavailable fromasingle source. Therule’sexception isnotdiscriminatory,
butinstead applies regulatory treatment tolicensees dealing withexport monopolies thatisnomore
favourable thanthetreatment afforded licensees trading incompetitive markets. Thepurpose ofthe
ruleistoensure thatTRQs arefilled andontheother handtorecognize theneedtobefairtolicensees
whocannot meetthe85percent requirement forreasons beyond theircontrol. Finally, therulefully
implementsthecommitmentsmadewithregardtolicensinginthebilateralagreementsundertheUruguay
Round byproviding forexporting country designation ofU.S.importers.
State trading enterprisesWT/TPR/M/16/Add.1
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NomentionismadeintheSecretariat’sreportofstatetradingenterprisesinagriculture,although
theUnited States notified theCommodity Credit Corporation totheWorking Party onStateTrading
Enterprises in1995.
- Given thatCCCfinances oradministers arange ofexport credit orexport subsidy programmes,
howdoestheUnited States justify itsretention under theprovisions ofArticle XVII.1(b) of
theGATT 1994 which require thatsuch enterprises make purchases orsales "solely in
accordance withcommercial considerations"?
Thecredit andassistance programs referred toabove areadministered bytheCCC. Under
theabove programs, purchases andsalesaremade byprivate entities whose decisions arebased solely
oncommercial considerations. TheCCC alsoretains theauthority toliquidate stocks. Thestocks
acquired byCCCthrough pricesupport programs areindependent ofitscommercial export programs.
When CCC liquidates stocks through domestic orforeign sales, withtheexception oftheFood Aid
program,itsdecisiontodosoisbasedoncommercialconsiderationswiththeprimaryintentofprotecting
theassets ofCCC.
TheUnited States recently provided information toNewZealand ontheoperations ofthe
California Kiwifruit Commission andtheWashington Apple Commission. Wewereinterested inthe
advice thattheauthorized activities oftheCommissions wereentirely self-funding andinclude research,
promotion, consumer education andquality standards. Theroleofthegovernment istoprovide
"administrative guidance" andtoensure thatthestatutory provisions areadhered to.
- What isthenature oftheFederal Government legislation/regulation which provides the
framework forstate-level authorization ofsuchCommissions?
Theauthority restswiththeU.S.Constitution. There arenootherFederal Government statutory
orregulatory authorities.
- Arethere anyother significant activities thatthese orother state-level bodies areengaged in?
Weareunaware ofanyStateCommissions controlling thequality ofproduct. Stategovernments
mayestablish minimum quality requirements. State governments areinvolved inmany activities. It
maybeeasier toaddress amore specific question.
- What doestheterm"administrative guidance" referto?
TheState governments oversee theoperations ofthecommissions toensure thattheyoperate
within theconfines ofstatelawsandregulations. Some examples ofadministrative guidance activities
mayinclude budget oversight andapproval, enforcement, andcontract review.
- Arethere anystate-level bodies which haveexclusive rights tocontrol exports fromthestate
inquestion?
SomeStategovernmentssetminimumqualitystandardsforshipmentsoffreshfruitsandvegetables
which mayinclude domestic andexport shipments orjustexport shipments. State Commissions do
notcontrol exports, norarethereanyStatebodies thathaveexclusive control overthesalesormarketing
ofproduct.
Checkoff schemesWT/TPR/M/16/Add.1
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Could theUnited States confirm thatpromotional andresearch activities funded bycheckoff
levies willapply onageneric basis, regardless oftheorigin oftheproduct?
Should thestatute foraNational research andpromotion program contain aprovision toassess
imports aswellasdomestic product, theassessment isapplied equally regardless oftheorigin ofthe
product.
Telecommunications
There haverecently beenextensive changes toUnited States policy andregulation inanumber
ofsectors. Could theUnited States please identify themostimportant areas where changes topolicy
andregulations areexpected toleadtoincreased liberalization ofmarket access forforeign suppliers
oftelecommunications services.
TheTelecommunications Actof1996 opened local exchange markets tocompetition without
anylimits onmarket access ornational treatment.
TheFederal Communications Commission 'srulemaking onMarket Entry andRulemaking of
Foreign-Affiliated Carriers codified anobjective setofcriteria forcase-by-case decisions onissuance
ofradio licenses andlicenses toprovide international services, based onadejureanddefacto
examination ofeffective competitive opportunities inthehome market oftheapplicant.
TheUnitedStates'conditionalofferintheWTOGrouponBasicTelecommunicationsistoreplace
thatcase-by-case process byaWTO commitment toprovide effectively unlimited market access and
national treatment forallbasic telecom sectors. Theofferisconditional onacritical mass ofhigh
quality offers byother trade partners.