WORLD TRADE        WT/TPR/M/16  
          30 January 1997 
ORGANIZATION  
          (97-0339)   
 
Trade Policy Review Body   
11-12 November 1996  
   TRADE POLICY REVIEW 
  UNITED STATES 
 
MINUTES OF MEETING 
 
Chairperson:  H.E. Ms. Anne Anderson (Ireland) 
  
    Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 2  II.OPENING STATEMENT BY THE REPRESENTATIVE OF    THE UNITED STATES 3  III. STATEMENT BY THE FIRST DISCUSSANT 7  IV. STATEMENT BY THE SECOND DISCUSSANT 11  V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 14  VI. REPLIES BY THE UNITED STATES REPRESENTATIVE AND  ADDITIONAL COMMENTS 33  VII. CONCLUDING REMARKS BY THE CHAIRPERSON 53  WT/TPR/M/16 Trade Policy Review 
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
 
1. The Trade Policy Review of the United Stat es was held on 11 and 12 November 1996.  The 
Chairperson welcomed the delegation of the United St ates, headed by Deputy U.S. Trade Representative 
Ambassador Jeffrey Lang, and the discussants, Am bassador Nacer Benjelloun-Touimi (Morocco) and 
Ambassador Nobutoshi Akao (Japan).  2. The Chairperson recalled the purpose of the Tra de Policy Reviews and the main elements of the 
procedures for the meeting.  The report by the Go vernment of the United States was contained in 
document WT/TPR/G/16 and that of the WTO Secretariat in document WT/TPR/S/16 and 
corrigendum one to that document.  Copies of wri tten questions submitted by  Australia, Canada, Cuba, 
European Union, Hong Kong, and New Zealand had b een transmitted to the delegation of the United 
States;  Japan had also submitted writte n points shortly before the meeting. 
 3. It was decided that, on the basis of the ad ho c arrangements, the Trade Policy Review Body invite 
the EBRD, EFTA, FAO, IMF, OECD, UNCTAD and the World Bank, which had requested observer 
status, to its next meeting. United States WT/TPR/M/16 
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE UNITED STATES 
 
4. On behalf of his delegation, the representative  of the United States expressed his honour to 
represent his country at the fourth Review of U.S. trade policy.  His statement would be a brief summary 
of major developments on the macroeconomic front sinc e the last U.S. Review, together with U.S. interests 
in international trade and the WT O-anchored multilateral trading sy stem.  He would not attempt to 
summarize in detail the many developments on the trad e policy front in the two years since the last U.S. 
Review, which were contained in back ground materials provided by the Secretariat and the Report of the 
United States.  He would like to highlight several important economic liberalization actions recently 
adopted by the United States, and would attempt to respond to comments from the discussants and 
delegations, including to some of the writte n questions which were received in advance. 
 5. High-income countries like the United States, as well as middle and lower income economies, 
pursued many similar economic goals of more rapid expansion of productivity, higher-wage employment, 
improved living standards, and strengthened econom ic growth.  These shared aspirations created a 
common interest between the United St ates and other members of the WTO. 
 6. The U.S. Government had focused on trade po licy as one of the principal tools available to 
achieve the goal of expanding domestic economic oppo rtunities.  Various studies had shown that wages in 
jobs directly and indirectly supported  by exports were 13 to 16 per cent h igher than the average wage in the 
U . S .  e c o n o m y ,  r e f l e c t i n g  b o t h  h i g h  l a b o u r  p r o d u c tivity in export-oriented sectors and the typically 
expansionary postures of such indu stries within the national economy. 
 7. Fairly traded imports likewise benefited the United  States by expanding the range of choice in the 
U.S. market; making available for purchase imported goods and services at a lower cost than at home;  
providing low cost, high quality inputs into U.S. do mestic production; and fostering healthy competition. 
 8.  The U.S. economy had recently entered its si xth year of economic expansion.  Real gross 
domestic product was currently 14 per cent higher than  in 1991;  real disposable income per capita had 
risen by roughly US$1,200 in constant 1992 dollars.  GD P growth had averaged a 3 per cent annual rate 
over the last three quarters.  9. Manufacturing was running at high levels of ca pacity utilization.  Since the beginning of 1993, net 
employment had expanded by 10.7 million, or nearly  10 per cent, with the unem ployment rate currently 
at 5.2 per cent.  Even with this relatively high degr ee of resource utilization, there were few signs of any 
build up in inflationary pressures.  In such an envi ronment, and in light of the strong domestic investment 
performance during this recovery, as well as unusually strong growth of industrial capacity, there was good 
reason for optimism that the U.S. expansion would continue.  10. The U.S. federal budget deficit had been redu ced to its lowest nominal dollar level since 1981, 
due to fiscal management by the current Administratio n, legislative reform and ongoing economic growth.  
In 1995, the deficit represented US $107 billion, 1.4 per cent of GDP. 
 11. The U.S. trade deficit in goods and services had risen significantly in 1994, to US$104.4 billion, 
up from US$72 billion in 1993.  However, the increase  in 1995 had been very sm all, to US$105.1 billion, 
or 1.4 per cent of GDP.  In the first eight months of  1996, the deficit  was down by 5 per cent relative to 
the same period of the previous year.  The rise of the goods and services trade deficit in recent years 
reflected the strength of the U.S. economy and weakness in a number of major export markets. 
 12. Of great importance was the fact that the volume  of U.S. trade had grown rapidly.  Exports plus 
imports of goods and services (inclu ding earnings on foreign investment ) had risen from a value equal to WT/TPR/M/16 Trade Policy Review 
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25 per cent of GDP in 1992 to one equal to nearly  30 per cent in 1995 - from US$1.6 trillion to US$2.1 
trillion.  As was well known, the United States was the world's largest exporting and importing nation. 
 13. The motor vehicles sector deserved special a ttention for its recent export growth.  The U.S. 
vehicle sector was one of the most open in the world.   This openness, together with the ingenuity of U.S. 
manufacturers, had resulted in a h ighly competitive U.S. industry wo rld wide.  U.S. exports of motor 
vehicles and parts to Japan had increased by 38 per cent in 1995, from US$3.4 billion in 1994 to 
US$4.7 billion in 1995.  In the first eight months of 1996, exports were up another 11 per cent.  In the 
meantime, imports of motor vehicles  and parts from Japan had droppe d by 6.8 per cent in 1995, from 
US$40.7 billion in 1994 to US$37.9 billion in 1995.  They  were down another 16 per cent so far in 
1996.  As a result, the U.S. bilateral trade defici t with Japan had fallen by 11 per cent in 1995, from 
US$37.3 billion in 1994 to US$33.2 billion in 1995.  To date, it was down anot her 19 per cent in 1996. 
 14. The openness of the U.S. market and increasi ng openness of foreign markets had undoubtedly 
contributed to the growth of U.S. tr ade and the overall robust health of the U.S. economy in recent years.  
The U.S. commitment to an increasin gly open multilateral trading system and an open U.S. market, were 
anchored in the faith of the U.S. authorities in the domestic economic benefits which were promoted by 
trade liberalization.  The U.S. author ities had done their part since the last U.S. Review to continue the 
progress of a truly open global trading system.  The U.S.  perspective was firmly grounded in the belief that 
only by pursuing open markets, both at home and abroad, could the United States continue to be so 
prosperous.  15. U.S. barriers were already very low and continued to decline.  Remaining trade restrictions as well 
as other aspects of the U.S. trade policy régime were also extremely transparent.   The U.S. authorities 
believed, in fact, that the United States maintained one of the most transparent and accessible trade policy 
régimes in the world.  An example of this was the st anding request of the U.S. Trade Representative to the 
U.S. independent International Trade Commission to report publicly every two years on the economic 
effects of remaining U.S. import rest rictions.  The transparency of the U.S. system reflected the high value 
which was in the United States placed on public disc losure in matters of government policy.  It also 
facilitated outside reviews of U.S. po licy, such as this one, and the U.S.  development of strategic policies to 
a fully free and fair multilateral trading system.  16. The United States was also a leader in open ing its domestic market to increased access and 
increased competition.  The representative of the United States believed that this had been amply 
demonstrated by the Secretariat Re port in this Trade Policy Review.  For example, the United States 
already had among the lowest tariff rates in the worl d even prior to the Urug uay Round.  The average 
m.f.n. applied tariff was 4 per cent, according to th e WTO Integrated Data Ba se.  After Uruguay Round 
tariff reductions were to be fully implemented, the average bound m.f.n. tariff would fall to 3 per cent. 
Even this did not tell the whole story.   As a result of the Uruguay Round, duty-free or low-tariff access to 
the U.S. market was even more extensive than implied by the average m.f.n. tariff rate.  In 1994, the last year before the Uruguay Round tariff reduction phase-i n began, U.S. tariffs, as collected, had been only 
3.12 per cent as a percentage of im ports - over 30 per cent lower than implied by m.f.n. rates.  A large 
share of commodities entered the United States  duty-free under NAFTA, the U.S.-Canada Auto 
Agreement, the Generalized System of Preferences,  the Andean Trade Preferences Act, the Caribbean 
Basin Initiative and the U.S.-Israel Free Trade Agreem ent.  The average actual applied tariff in future 
years would drop even further as Uruguay Ro und commitments were fully phased in.    
 17. The U.S. authorities had also adopted substantial reforms in several key sectors since the last U.S. 
Trade Policy Review.  Thus, the agricultural sector wa s being restructured throug h the Federal Agricultural 
Improvement and Reform Act of 1996.  For the next se ven years, economic support to farmers would be 
completely delinked from commodity prices.  A declin ing level of payments would be made, based solely 
on historical programme participation and the number of farmers who signed up for the new contracts.  United States WT/TPR/M/16 
Page 5 
Planting decisions and commodity prices would be  determined by market forces, not government 
incentives.  This action, along with export subsid y caps approved by Congress, would leave U.S. 
agricultural support expenditures well be low U.S. Uruguay Round commitment levels. 
 18. Another example was the telecommunications sector.  In early 1996, President Clinton had 
signed into law the most important reform of U.S. telecommunication laws in 62 years.  The 
Telecommunications Act of 1996, which was passed by the U.S. Congress with overwhelming bipartisan 
support, would open the way to greate r competition, lower prices, and ne w services which were yet to be 
imagined.  It reflected a bipartisan conviction that it was in every nation's self-interest to aim for the 
speediest possible transition to greater relianc e on private investment and competition in 
telecommunications services.  On the basis of this new legislation, the United States had revised its 
conditional offer in the WTO to include local exchange markets, further opening the U.S. 
telecommunications services market to foreign comme rcial trade and investment.  The U.S. conditional 
offer would allow up to 100 per cent ownership in foreign commercially operated investment in all 
operations of telecommunications facilitie s and services in the United States. 
 19. Through international trade negotiations, the Un ited States had pursued a consistent policy of 
seeking a world of increasingly open markets and expanded trade since the first Reciprocal Trade 
Agreement Act passed by the U.S. Congress in 1934.   In the 1930s, constrained by global political 
conditions, U.S. trade policy had fo cused especially on the negotiatio n of reciprocal tariff reducing 
agreements with other countries in the Western He misphere.  During and immediately following the 
Second World War, U.S. policy had focused on the cr eation of a rules-based, truly multilateral trading 
system geared toward the removal of impediments an d the creation of opportunity for all.  Through 50 
years and eight successful multilateral trade rounds under the GATT, the U.S support for the multilateral 
trading system and U.S. leadership in securing a truly open and fair global trading system had never flagged. 
 Those efforts, however, had had to be tailored to specific conditions and challenges which had evolved 
over time.  The representative of the United States emphasized two over-riding challenges and 
opportunities.  20. First, rapidly changing technologies in communi cations, transportation and other areas were 
increasing the global potential for welfare-enhancing tr ade in goods and services.  With this tremendous 
expansion of trade potential, howeve r, had come a substantial increase in the complexity of trade policy 
i s s u e s .   T h i s  c o m p l e x i t y  c a m e  b o t h  f r o m  a n  e x panded scope for trade and increased potential for 
non-traditional trade and tr ade-related measures to restrict or di stort trade flows.  The Uruguay Round 
represented a major step forward in matching global trad e structures and disciplines to current realities of 
international trade.  However, the U. S. authorities also recognized that much work remained to be done in 
the years ahead.  21. Second, the movement over the last ten years of many low and middle income countries towards 
becoming freer markets at home with less restrictive policies at the bord er was of fundamental importance 
for the shaping of future trade flows and issues.  So me 85 per cent of the world's population lived in 
countries with low and middle per capita incomes.  With freer markets and gr eater outward orientation 
many of these countries were, or wo uld soon be, experiencing high rate s of growth in output, incomes and 
trade.  From a U.S. perspective, th is was one of the most positive developments imaginable on the global 
economic front, both for the new economic opportunit ies that would be generated for large segments of 
the world's population where such opportunities had b een scarce, and for the expansion of trade potential 
these developments created for high-income countries like the United States.  Substantial effort on the 
trade policy front would be required  to help encourage and nurture su ch trends, to address remaining 
barriers, and hasten adjust ment in all economies. 
 22. In an era of low-cost, instantaneous commu nication, globalized production and increased 
recognition of the economic benefits of freer markets, the multilateral system remained as relevant to U.S. WT/TPR/M/16 Trade Policy Review 
Page 6 
trade and economic interests as ever.  Past achievemen ts under the multilateral trade system had helped to 
create and shape the modern American economy into on e characterized by unprecedented levels of output 
and rapidly expanding economic opportunity.  The ov erall performance of the U.S. economy in recent 
years was excellent and only served to reconfirm the U.S. conviction in the benefits of free markets.  
Likewise, U.S. trade policy was premis ed on the conviction that if th e promise of the Uruguay Round and 
the move toward more open markets - both internal and at the border - was to realize its full potential, an 
expanded and further strengthened multilatera l trading system had to be the foundation. 
 23. U.S. policy, like that of other countries, was clearl y motivated by its view of national self-interest.  
But the pursuit of U.S. national interests in open ma rkets reflected the profound belief, widely held on a 
bipartisan basis in the United States, that open globa l markets benefited all trade partners.The expansion of 
trade through the removal of barriers and distortions was not a "zero-sum game", it was a "positive sum" 
endeavour, in which the gains from better use of nati onal resources and the enhancements to investment 
and growth were available to each country, not at  the expense of others.  The U.S. Government was 
strongly committed to making the WTO the centrepiec e of multilateral open market disciplines.  The 
U.S. Government had also offered its leadership in  regional fora, such as APEC and the FTAA, in an 
effort to buttress and complement  these multilateral disciplines. 
 24. Despite the high level of per capita output an d income which was already achieved in the United 
States, the U.S. public had legitimate concerns abou t job security and living standards.  The American 
people sought to assure expanded economic and a ttractive employment opportunities in the future;  
spread such opportunities more widely among the population;  and prepare better for the material 
responsibilities of an aging population.  While a number  of purely domestic economic initiatives had been 
pursued in order to address these concerns, the U.S. Government had also consid ered trade policy as an 
integral part of efforts to develop U. S. national economic interests and to  help meet these public concerns.  
By working to expand the scope of open markets globally  and to invest at home in people and knowledge, 
as well as plant and equipment, the U.S. Government wa s fully committed to contributing to the creation of 
economic opportunity and prosperity in the United States and abroad through the multilateral trading 
system, as embodied in the WTO. United States WT/TPR/M/16 
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 III. STATEMENT BY THE FIRST DISCUSSANT 
 
25. The first discussant (Ambassador Nacer Benje lloun-Touimi) noted that the United States'  
economy had shown impressive growth since the last  Trade Policy Review in 1994 and that the rate was 
even more impressive in view of the fact that in vestment in the United States represented a small 
p e r c e n t a g e  o f  G D P  c o m p a r e d  t o  o t h e r  c o u n t r i e s .   H e  attributed this to a very efficient allocation of 
investment that had led to higher returns on investme nt than in other OECD co untries.  He stressed the 
rôle of foreign trade and open markets in  generating such high returns.    
 26. He noted that a liberal trade regime had facilitat ed specialization in U.S. production, so as to 
exploit its comparative advantage.  In  turn, a liberal investment climate, supplemented by efficient financial 
markets, had allowed U.S. companies to take adva ntage of such an open trade régime.  However, 
investments were made in the face of uncertainty, an d a rise in uncertainty would lead to a decline in 
i n v e s t m e n t .   H e  o b s e r v e d  t h a t  t h e r e  w e r e  g o o d  a n d  l e s s - t h a n - g o o d  w a y s  t o  r e d u c e  u n c e r t a i n t y .   I n  t h e  WTO, there could be no doubt that one of the be st and most reliable ways to reduce uncertainty 
associated with potential policy changes, wa s to bind policies under WTO commitments. 
 27. Binding commitments, previously in the GATT and now in the WTO, had made an enormous 
contribution to U.S. economic develo pment by ensuring that businesses felt secure to trade and invest.  As 
international trade in goods and services extended to  an increasingly broad range of activities, it was 
important to extend bindings to ne w policy areas.  In this context, market access bindings in services 
sectors were partic ularly important. 
 28. Foreign trade had also been an important macr o-economic stabilizer.  In the early 1990s, exports 
had softened the impact of the recession. Since then , the trend had been reversed, and net imports had 
increased as expansion of consumption and investment  exceeded production growth.  This had reduced 
pressures on inflation and interest  rates.  In addition, the contribution of U.S. trade to world 
macro-economic stability had benefited both the United States and its trading partners, some of which had 
suffered recessions or slow growth  during the period that U.S. demand had expanded rapidly. 
 29. In the context of high capital-utilization rates and low unemployment, prod uctivity increases were 
the key to GDP growth.  Productivity changes in manufa cturing were frequently used as an indication of 
the competitiveness of the U.S. economy.  However, the Secretariat report had shown that manufacturing 
represented less than 20 per cent of GDP, while around two-thirds of GD P was created by private services. 
 Productivity growth in services was thus far more im portant to U.S. standards of living than a similar rate 
of productivity growth in manufacturing.  Thus, an important question was, what could the U.S. 
government do to foster efficiency in the services  sector?  The answer appeared to be; implementing 
policies which promoted investment and competition acro ss the board in all sectors, including the services 
sectors, on a non-discriminatory basi s.  As noted above, an appropriate element of this was to bind U.S. 
policy commitments in the WTO.    30. Services were also important inputs into manu facturing, agriculture, fishing and mining, with  
financial services and telecommunications particularly s ignificant.  Productivity gains in these sectors were 
expected to benefit the competitive position of U. S. merchandise output and exports.  Open market 
access, bound under WTO agreements, in financial services and telecommunications was expected to 
contribute to further competitiven ess of U.S. merchandise exports. 
 31. It appeared that foreign direct  investment had played an increasingly important rôle in the delivery 
of services and had made a significant contribution to  productivity gains in that  sector.  The Secretariat 
report noted that there had been a shift from cross- border supply of services to delivery through foreign 
direct investment.  He invited the U. S. delegation to comment whether it saw such a shift as desirable, and 
how incentives extended at the federal or the St ate level had served to promote such a shift. WT/TPR/M/16 Trade Policy Review 
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32. The discussant complimented the United States  on the implementation of its Uruguay Round 
offer through the Uruguay Round Agreements Act.  The Trade Policy Review highlighted some of the 
far-reaching changes made through this Act in U.S. trade legislation, including important tariff reductions, 
"zero- for-zero" provisions, applicatio n of the Agreement on Agriculture, acceptance of the new rules of the 
WTO, extension of intellectual pr operty right protection and adherence to the new unified Dispute 
Settlement Mechanism.  In addition, the Act had implemented some outstanding GATT Panel 
recommendations.    33. The press had reported extensively on the role of "fast track" authority in facilitating passage of the 
Uruguay Round Agreements Act through Congress.  Su ch authority had not been renewed since then.  
Although this did not impede the U.S.  Administration from starting negoti ations, it could be more difficult 
to gain Congressional approval for required legisla tive changes following the conclusion of a so called 
"Executive Agreement".  He invited the U.S. delegation  to comment whether the absence of "fast track" had 
impeded passage through Congress of the implementing legislation of any trade agreement, such as, for 
example, the OECD Shipbuilding Agr eement.  Furthermore, what would be required for re-authorization 
of "fast track" authority, for example for NAFTA accession negotiations with Chile which had been 
discontinued by the authorities of Chile?  34. The United States had four very active cha nnels of trade policy making: the multilateral WTO 
setting, regional agreements, bilateral agreements and un ilateral trade actions.  Both the Secretariat and the 
Government Report clearly saw the WTO as the centre of U.S. trade policy making.  So far the evidence 
was on balance, good.  The United States was an ac tive participant in all WTO fora. It had taken its 
notification requirements seriously and was the most frequent user of the disp ute settlement provisions.  
Members were waiting for the implementation, as indica ted by the U.S. authoritie s, of the Appellate Body's 
ruling concerning the case "Standards for reformulated and conventional gasoline". 
 35. NAFTA was clearly the most important regiona l agreement involving the United States.  The 
Secretariat had reported that, unde r the older U.S.-Israel Free Trade Agreement, only 44 per cent of 
imports from Israel currently received tariff preference s as compared to over 88 per cent of imports from 
Mexico, in spite of the fact that NAFTA was not yet fully implemented.  He congratulated the Parties of 
the NAFTA Agreement as the Agreement was practically  comprehensive, covering politically sensitive 
sectors such as agriculture, textile s and clothing.  He compared the Ag reement thus very favourably with 
many of the other regional agreements discussed in  the Committee on Regional Trading Arrangements.   
 36. However, there were some notable border measures which would remain even when NAFTA 
would be fully implemented.  Examples were: complianc e with the very restrictive rules of origin required 
substantial paperwork to be policed at the border; and protection against parallel imports from both 
Canada and Mexico did not go beyond m.f.n. meas ures.  Furthermore, although the NAFTA provided 
for ongoing consultations, there did not appear to be an  instrument to extend it into new areas, which were 
at the time of speaking not covered by the Agreemen t.  He invited comments from the U.S. delegation 
regarding whether they expected the NAFTA member states to cover new ground in their quest for 
regional integration.        37. In general, the impact of regional trading arra ngements had been difficult to measure, even if 
expressed in relatively straightforward  terms such as trade creation and tr ade diversion.  Tables I.7 and I.8 
of the Secretariat Report did not su ggest that there had been significan t trade diversion;  Canada's and 
Mexico's share in U.S. imports had increased somewhat  and Canada's share in U.S. exports had declined 
during 1993-95 while that of Mexico had increased up to 1994 but had declined in 1995.  In this context, 
the discussant raised questions whether there were any estimates of the impact of NAFTA on the U.S. 
economy, had significant impacts been identified in some sectors and what was the U.S. Administration's 
view on these issues.   United States WT/TPR/M/16 
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38. In addition to the free trade agreements with Ca nada, Israel and Mexico, the United States granted 
unilateral trade preferences to selected developing countries under its GSP, Caribbean Basin Economic 
Recovery Act and Andean Trade Preference Act.  Thes e preferences were important to the recipients, as 
expressed on numerous occasions in both the WTO and elsewhere.  However, the United States had also 
used the withdrawal, or threat of withdrawal, of preferen ces as leverage to obtain non-trade objectives.  As 
recipient countries could not rely on these preferen ces, they had become less useful;  the consequent 
uncertainty of access was clearly a major concern to coun tries affected.  He invited the U.S. delegation to 
comment on two alternative solutions, either bind ing of GSP rates in the WTO Schedule or, possibly 
more realistic and in keeping with WTO principles, further extension of m.f.n. duty-free access on 
products which were exported by  the developing countries.  
 39. The United States was the world's largest trading nation and its economic and political leverage was 
clear, including in the number of bilateral agreements which it had co ncluded.  If made prior to the 
conclusion of the Uruguay Round, such agreements ha d generally been integrated into the country's WTO 
commitments and therefore implemented on an m.f.n.  or, in the case of the Government Procurement 
Agreement, on a plurilateral basis.  As such, thes e agreements had played an important rôle in the 
conclusion of the Uruguay Round.  However, followin g the conclusion of the Round, some agreements 
appeared to cover policy areas currently beyond WTO commitments.  He invited the U.S. delegation to 
comment whether all bilateral agreements were implemen ted on an m.f.n. basis and, if not, why this was 
not the case.    40. Furthermore, under the Cana da-U.S. Softwood Lumber Agreem ent, the United States was 
committed to abstain from using anti-dumping and co untervailing measures against imports of softwood 
lumber from Canada for a five year period, in return  for export taxes which were  levied by Canada under 
particular conditions.  He invited the U.S. delegati on to comment on the point that the Agreement might 
appear questionable under the safe guards procedures of the WTO. 
 41. He noted that some unilateral trade actions were  clearly a matter of conc ern.  Here, he made a 
distinction between permanent and temporary meas ures.  The administration had recently shown 
remarkable restraint in the use of temporary re lief from import compet ition. Following the WTO 
implementation, Section 301 actions were generally conducted in parallel to WTO dispute settlement 
proceedings;  the number of anti-dumping and counte rvailing petitions had also dropped since the last 
Trade Policy Review.  However, such self-restraint  was much easier in a positive macroeconomic 
environment - as in the last few years - than it was expected to be  during a recession.  
  42. Although many acts had been changed by the Uruguay Round Agreements Act, the already noted 
tuna embargo was still there.  Furthermore, envi ronmental standards were unilaterally imposed on 
countries which wished to export shrimp to the United States and on countries which used large-scale drift 
nets.  Although protection of turt les and other animals was a very laudable aim, the WTO consistency of 
these measures might be questionab le.  Clearly the Administration un derstood the problems with these 
measures, as they were enforced only upon court order and the Administration had supported legislation 
which would have permitted imports of tuna from co untries currently under em bargo.  The discussant 
encouraged the U.S. Administration to  find a solution so as to make these measures acceptable to U.S. 
trading partners.  43. The recently enacted Helms-Burton Act and othe r acts were also mentioned under the heading of 
unilateral trade measures.  These Acts, because of thei r extraterritorial coverage, were a matter of grave 
concern for many U.S. trading partners.  In view of the very significant interests at stake, the hope was 
expressed that a solution could be found to this i ssue.  As the matter had already been raised in the 
Dispute Settlement Body, the formal and legal disc ussion of this matter was left to that Body. 
 WT/TPR/M/16 Trade Policy Review 
Page 10 
44. The discussant concluded on a positive note .  The United States had made great economic 
progress in the last two  years.  It had implemen ted its WTO commitments and indicated that it would 
respect dispute settlement rulings as well as decisions by the TMB.  In this co ntext he congratulated the 
United States for its positive record in WTO implemen tation over the past two years and he expressed the 
hope that it would be the beginning of a tr end in which all WTO members would observe WTO 
provisions "fully and faithfully".    United States WT/TPR/M/16 
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IV. STATEMENT BY THE SECOND DISCUSSANT 
 
45. The second discussant (Ambassador Nobutosh i Akao) complimented the United States on its 
initiatives taken during the Uruguay Round which had resu lted in tariff elimination in ten sectors, as well as 
its current efforts to conclude an Information Technology Agreement wit h its major trading partners.  He 
invited the U.S. delegation to comment whether it intended to further pursue  similar "zero-for-zero" 
initiatives.  If so, how would it select the sectors fo r conducting such negotiations?  The discussant noted a 
tendency that each participating Member would select sectors advantageous to itself.  Therefore such an 
initiative was rather limited and not necessarily a fair approach to further tariff reductions.  
 46. He noted that the average U.S. tariff rate had come  down to a comparatively low level as a result of 
several rounds of GATT negotiations.  However, tariff peaks remained in  several areas, such as textiles 
and clothing, footwear, ceramics, gla ss, trucks, tobacco and agricultural  products.  He invited the U.S. 
delegation to comment whether it envisaged any possib ility to rectify such a tariff structure in the near 
future.  47. Concerning anti-dumping and countervailing measures the discussant mentioned that many 
exporting countries had in the past expressed se rious concerns regarding the possible "abuse" of 
anti-dumping and countervailing measures by the United States as disguised protectionism.  Such concerns 
continued to be the case;  although the Urugua y Round Agreements Act (URAA) had modified old 
provisions to make them more co nsistent with the WTO Agreements, so me rules in the URAA, such as 
anti-circumvention, went beyond the WTO Agreements.  The applicat ion and operation of the revised 
rules would be carefully watched by  interested parties as the implementation of anti-dumping and 
countervailing legislation in a WTO consis tent manner was strongly desired.   
 48. In this connection he invited comment s whether the anti-circumvention and the 
individual-to-average price comparison s provided for in its new anti-dumping legislation had already been 
used.  He observed that at the end of 1995, 292 an ti-dumping measures and 62 countervailing measures 
remained in force and asked when the "sunset clause" would be applied to these measures.  He noted that 
acceleration of the revocation of old measures was st rongly desired and expected prior to five years after 
the entry into force of the WTO Ag reements, that was at the end of 1999.  He complemented the U.S. 
delegation on the sharp decline in the number of anti-dumping cases filed and invited comment on the 
main causes for this decline; was the new legislation  or the U.S. economic recovery a more important 
factor?  49. The discussant noted the discriminatory and tr ade-distorting nature of the various Buy-America 
laws at both the federal and the State level.  He observed that many countr ies had expressed serious 
concerns over the continued existe nce of the wide-ranging preferences maintained under these laws.  Of 
course, such preferences were not necessarily a vi olation of the plurilateral Government Procurement 
Agreement, but this was no excuse to justify such measures.  The Unit ed States would most likely have 
complained if it was treated in the same way by  other governments.  Under both the 1979 and the 1994 
plurilateral Government Procurement Agreements, the Un ited States had exempted "set asides on behalf 
of small and minority businesses".  As no definition was provided in the Agreement he invited the U.S. 
delegation to comment on this issue.  50. The discussant noted the extra-territorial nature of environmental regulations contained in the U.S. 
Marine Mammal Protection Act of 1972, the U.S. High  Seas Driftnet Fisheries Enforcement Act of 1992, 
Section 609 of Public Law 101-162, the Pelly Amendmen t to the Fisherman's Protective Act of 1967 and 
other such regulations beyond those covered in the Secr etariat Report.  He observed that these regulations 
might be in violation of GATT/WTO Agreements.  The import bans which were enforced upon 
yellowfin tuna and shrimps could be interpreted as an attempt to enforce U.S. values on other countries.  WT/TPR/M/16 Trade Policy Review 
Page 12 
He invited the U.S. delegation to comment whether any in itiative was foreseen, such as an early abolition of 
measures, which would mitigate the impact of these regulations on the exporting countries. 
 51. The discussant noted that under the Forest Re source Conservation and Shortage Relief Act of 
1990, the United States had banned the export of logs harvested from federal fore sts and from some State 
forests.  The Act did not restrict domestic trade of logs harvested from these forests and might therefore 
be incompatible with Article XX of GATT 1994 as it di scriminated against foreign users.  If so, there 
might be a need to dismantle or amend the Act.  52. The discussant observed that the Americ an Automobile Labelling Act (AALA) required 
mandatory labelling of passenger cars and other light vehi cles, to indicate the proportion of U.S./Canadian 
made parts and the final point of assembly.  This  entailed tremendous cost for non-North American 
manufacturers of automobiles and constituted an u nnecessary barrier to trade.  It might also be 
inconsistent with the Agreement on Technical Barriers to Trade.    53. Section 337 of the Tariff Act of 1930 had been mo dified by the Uruguay Round Agreements Act, 
according to the U.S. authorities, to bring the procedures into conf ormity with its national treatment 
obligations under GATT 1994. The implementation of this amendment, however, would be carefully 
monitored to see that there would be no discriminatory  treatment against foreign firms.  He further noted 
that the United States maintained a unique patent re gistration system which was based on the first-to-invent 
system.  To promote world-wide harmonization of pate nt systems, so as to resolve interface problems, 
early U.S. conversion to the first-to-file system, wh ich was followed by the rest of the world, was much 
desired.   54. Any change in U.S. agricultural policy was cons idered a matter of strong interest and concern for 
its trading partners.  The Federal Agricultural Im provement and Reform (FAIR) Act of 1996 instructed 
the Secretary of Agriculture to develop an export st rategy to increase U.S. exports of high value and 
value-added agricultural products.  The discussant rais ed the question whether th is would imply a shift in 
the U.S. strategy from traditional promotion fo r bulk commodities under the Export Enhancement 
Program (EEP) to the promotion of high value-adde d products.  Questions were also raised how the 
conversion of domestic production su pport into direct income support wo uld affect agricultural production 
and trade.    55. The discussant noted that out-of-quota import ta riffs were on average 50 per cent, as compared to 
in-quota import tariffs of around 10 per cent.  Tariff quotas were nevertheless underutilized.  The rôle of the quota allocation was ques tioned in this context. 
 56. It was observed that since the implementation  of the Uruguay Round Agreement on Textiles and 
Clothing, the United States had issued more quot a calls than any other WTO member.  While it was 
welcome that the number of such calls had declined  from 24 in 1995 to one in 1996, it was not clear why 
these calls had not been issued ear lier so that they would have been integrated into the Agreement on 
Textiles and Clothing.  The fact that they were issued during the recent  period of economic expansion was 
even more surprising as the use of other trade reme dy measures, such as anti-dumping and countervailing 
duties, had declined during this period.  57. On 1 July 1996, the United States had changed th e rules of origin applied to imports of textile and 
clothing products.  This changes in the rules of origin  had affected a significant number of U.S. trading 
partners.  He expressed an interest  to hear whether the United States  had developed any initiatives to 
mitigate the impact of these changes on its trading partners.  58. The United States had played a key rôle in the services negotiations duri ng the Uruguay Round.  
However, the U.S. rôle in the post-Uruguay Round ne gotiations was somewhat lukewarm.  In the financial United States WT/TPR/M/16 
Page 13 
services negotiations the United States had taken a broad m.f.n. exemption to GATS Article II.  It had 
not submitted an offer in the negotiations on maritime  transport.  Its attitude  in the telecommunications 
negotiations remained to be seen.  59. When the negotiations on financial services we re to resume in early April 1997, it was strongly 
hoped that this time the United States would be a re liable partner to the final agreement on a m.f.n. and 
national treatment basis.  In this regard, attempts to  pass such legislation as the so far unsuccessful "Fair 
Trade in Financial Services Bill" should not succeed , as it was incompatible with the GATS m.f.n. and 
national treatment principles.  60. In maritime services, there were numerous domestic laws which called for "ship American" 
provisions, "reciprocity or retaliation  against foreign discriminatory treatm ent" as well as the Jones Act.  All 
these domestic laws made it more difficult for the Un ited States to enter into any meaningful multilateral 
agreement in this sector.  The U.S. delegation was invi ted to state how it would make these laws consistent 
with the objective of the maritime services negotiations.  61. The problems with the negotiations on teleco mmunications services could be similar to those 
existing in the financial services.  Furthermore, it was noted that it could be argued that the United States 
had violated its standstill commitment by the introducti on of the "ECO-Sat" test in the telecommunications 
area, and the Section 28 of the Mineral Leasing Act, as  amended, which lifted a ban on exports of Alaskan 
oil under the condition that it would be shipped on U.S.-flagged and manned vessels. 
 62. The discussant stressed that the United States , as the largest economy in the world had great 
influence on the world trading environment and system.  It also had great responsibilities to maintain and 
strengthen the multilateral trading system as em bodied in the WTO.  WT O members expected the 
United States to continue to play a leading rôle fo r the further promotion of trade liberalization on all 
fronts and in the fight against any form of protectionis m.  The United States should be the last Member to 
weaken the system.    WT/TPR/M/16 Trade Policy Review 
Page 14 
V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 
 
63. The representative of the European Union expresse d regret that he did not have as much time to 
study the document as he would have liked.  In addi tion to written questions submitted earlier, more 
written questions would be submitted over the course of the day in the light of the discussion.  He hoped 
that following the recent re-election of President Clinton, the United States would work closely with its 
trading partners in the WTO.  He was pleased to no te that the U.S. Governme nt was strongly committed 
to building a world of truly open markets with the WTO as the centre of the market disciplines.  In this 
context he welcomed the use by the United States of the WTO dispute resolution system in recent years.  
The European Union aspired to the same values of transparency, openness and the rule of law as the 
United States, as well as the vision that open world markets benefited all trading partners.  European trade 
policy was also based on the same premise that the re moval of barriers and distor tions was a positive-sum 
game.   64. He agreed that import tariffs in the United St ates were on average low.   However, the averages 
tended to conceal tariff peaks;  he would welcome U. S .  i n i t i a t i v e s  t o  r e d u c e  s u c h  p e a k s .   H e  d r e w  
attention to the cooperation between the United Stat es and the European Union to reduce tariffs and 
non-tariff barriers in the information technology sector.   65. Having mentioned these developments he noted two areas of concern to the European Union.  
The first was the issue of extraterritorial aspects of U.S. law, where bilateral relations between the United 
States and the European Union had recently been so ured by the Helms-Burton Act and the D'Amato Act. 
 The European Union had consistently expressed its opposition, as a matter of law and of policy, to 
extraterritorial applications of U.S. jurisdiction which would also have the effect of  restricting EU exports of 
goods and services.  The EU had thus no choice bu t to act on all fronts against such unjustifiable 
encroachment upon its sovereignty, including a tab ling in the WTO of a request for a panel.  These 
developments were unacceptable and had clouded the cooperative atmosphere created in the aftermath of 
the Marrakesh Agreement and in bilateral terms afte r the adoption of the new Trans-Atlantic Agenda.  
The EU was still not entirely sure how to interpre t the Helms-Burton and D'Amato phenomena;  these 
laws were not the first expressions of extraterritorial U.S. trade legislation, but th ey were the most serious, 
up to date.  It remained to be seen whether they were one-off phenomena or whether they were the start 
of a new trend in U.S. policy.  66. The representative noted a tendency toward un ilateralism as a second worrisome aspect.  This 
took the form of unilateral pressures, sanctions or retaliatory measures agains t offending countries or 
companies.  These measures were based on an exclusiv ely U.S. appreciation of the behaviour, legislation 
or administrative practices of a foreign country wit hout reference to and sometimes in defiance of 
multilaterally agreed rules.  In certain sectors, this approach could also lead to bilateral agreements or 
managed trade with discriminatory elements.  While th e United States had used its unilateral trade policy 
arsenal more sparingly in the recent past - the Koda k-Fuji case was a good example of bringing a dispute 
into WTO procedures - the scope for unilateralism pers isted in full.  The repres entative thus remained 
concerned that unilateralism in the United States ri sked undermining the global system which the United 
States, as well as the European Union, ha d contributed to build and to promote.  
 67. In addition to the above mentioned policies, in recent months there had been a third element 
which had caused concern.  In the immediate af termath of the Marrakesh Agreement the European 
Union has worked very hard to bring to a positive  conclusion the unfinished business of the Uruguay 
Round.  The representative regretted the approach  which the United States had taken in services 
negotiations and expected that in the telecommunications and financial se rvices negotiations a satisfactory 
agreement could be found during 1997.  In this respec t, he hoped that a successful meeting in Singapore 
would provide for further momentum for those negotiatio ns as well as an impetus to move the whole work 
of the organization forward. United States WT/TPR/M/16 
Page 15 
 
68. He also alluded to specific trade problems an d irritants between the United States and the EU.  
The European Union had reported on these periodic ally as the United States had reported on the 
problems it perceives with the European Union.  In re cent times, bilateral trade issues had spanned such 
areas as technical barriers to trade,  public procurement (covering Buy-Am erican legislation and barriers at 
the federal and State level), intellect ual property, peak tariffs, agricultur e and fisheries, air and maritime 
transport and financial services.  Some significant se ctors and products were involved, ranging from pasta 
to wine, ball and roller bearings, pharmaceuticals, shi pping and banking.  These were important issues 
which were pursued at both the bilateral and the multila teral level.  Such frictions, alas, would always be 
present event in the healthiest of relationships.  Th ey did not worry the representative of the European 
Union unduly.   69. The representative of Cuba referred to some aspe cts of the U.S. Government  report.  This report 
mentioned the common interest of the United Stat es and the remaining members of the WTO in the 
implementation of the Agreements already achieved as  well as moving forward in removing distortions and 
impediments to global trade and investment flows.  Reference was made to application of a policy for 
more than 50 years directed to given support to  the multilateral trade system which had become 
increasingly fairer and more open.  Reference was al so made to enhancing more open markets as well as 
strengthening the multilateral trading system which was to the benefit off all Memb ers.  Finally, reference 
was also made to the commitment by the U.S. Govern ment to contribute to the creation of economic 
opportunities and prosperity, not only for the United States.  All these as pects were of vital importance for 
the development of the multilateral trade system as  commonly agreed.  But, he said, it would be 
appropriate for the U.S. delegation to explain how these policies and statements could be combined with 
the continued and systematic application of unilateral and coercive measures for political reasons in the 
ambit of external relations.  Specifically, he invi ted the U.S. delegation to comment on the unilateral 
economic and financial blockage of Cuba for over 35 years as well as the strengthening, deepening and 
amplification of its extraterritorial measures th rough the Torricelli Act in 1992 and thereafter by the 
so-called Helms-Burton Act in early 1996.    70. The representative of Hong Kong welcomed the reaffirmation of the U.S. commitment to the 
multilateral trading system.  He said that Hong Ko ng had submitted some written questions and looked 
forward to receiving the U.S. comme nts thereon.  He would like to h ighlight some of the questions here, 
concerning textiles and clothing, an ti-dumping measures, 301 actions an d services.  He noted that the 
Agreement on Textiles and Clothing provided for th e return of this sector to GATT disciplines.  
However, a good agreement was only of value if implemen ted faithfully and effectively.  In this regard, he 
expressed disappointment that none of the products which had been previously restricted under the MFA 
quota had been included in the stage one integration lis t, while the second and thir d stages of integration, 
announced by the U.S. authorities in May 1995, di d not provide significan t improvements for WTO 
Members exporting textile and clothing  products.  He noted that over tw o-thirds of products under U.S. 
quotas in 1996 would not be liberalized until the ye ar 2005.  He asked whether the U.S. government 
considered this the most appropri ate policy to serve the progressive  liberalization objective of the 
Agreement on Textiles and Clothing.    71. He also questioned the new U.S. rules of origin  covering textiles and clot hing, noting that under 
Article 4.2 of the Agreement on Textiles and Clothing, Members agreed that the introduction of changes in 
practices or rules in the implementation or administra tion of restrictions on te xtiles and clothing imports 
should not upset the balance of rights and obligation s under the Agreement.  He inquired whether the 
U.S. government had taken steps to ensure that the new rules of origin for impo rted textiles and clothing 
introduced in July 1996, would not result in upsetti ng the balance of rights and obligations under the 
Agreement.    WT/TPR/M/16 Trade Policy Review 
Page 16 
72. He noted that the number of anti-dumping cases initiated in the United States declined from some 
43 cases in 1993-94 to 14 cases in 1995.  He said th at despite the decrease, the sheer number of 
anti-dumping actions was a cause for concern.  He recalled that a study conducted by the U.S. 
International Trade Commission showed that anti-dum ping actions were extremely trade disruptive and 
costly to both the U.S. and exporting economies.  He urged the U.S. government to exercise utmost 
caution in initiation of anti-dumping actions.    73.  He noted that there were four cases of Sect ion 301 actions in 1994, 5 cases in 1995, increasing to 
7 cases in the first half on 1996.  He urged the U.S.  government to show its commitment and belief in the 
multilateral trading system by not resorting to unila teral actions.  The WTO dispute settlement would be 
appropriate to address any perceived trade problems.  74. The representative of Hong Kong expressed disappointment with the U.S. stance in the past 
financial and maritime services negotiations.  He si ncerely looked forward to U.S. leadership in the 
various services negotiations, in particular, on basic telecommunicati ons and financial services.    
    75. The representative of Australia recognized the enormous contribution that the United States has 
made to the WTO, and the GATT before it, and encourag ed the United States to continue showing strong 
and beneficial leadership in the multilateral trad ing system through the application of policies and 
approaches that supported the rules-based system; suppo rted the trade liberalising objectives of the WTO; 
 and encouraged a forward looking and ambitious trade reform agenda. 
 76. He hoped that a number of important issues wo uld be addressed by the new U.S. administration, 
including a successful and ambitious Singapore Ministerial Meeting;  key WTO accession negotiations and sectoral services negotiations;  the need to continue  to build domestic support for trade liberalisation and 
reform; and to maintain and enhance broad political  and community support for the multilateral rules 
based system.  77. While congratulating the United States for initia tives taken in sectoral tariff packages both during 
and after the Uruguay Round negotiations, he expre ssed concern about the limitations of the sectoral 
approach and stressed the need to begin to think abou t further broadly based tariff negotiations by the end 
of the decade.  In addition to written questions su bmitted in advance, he raised the following points 
considered of wider interest: in the maritime sector, the application of the Jones Act by the United States, 
and the authority for the United States to take unila teral action to address foreign shipping practices 
affecting U.S. carriers;  discriminatory application of  excise on wine and beer;  import duties on wool 
textiles and apparel;  and the COMSAT monopo ly on key satellite links to INMARSAT and 
INTELSAT.  He welcomed the U.S. moves towards regu latory reform in the banking sector and invited 
the U.S. delegation to provide inform ation on U.S. plans to allow greater participation by foreign banks in 
the U.S. financial sector.  78. He noted the United States' confidence in th e operation to date of the WTO dispute settlement 
mechanism, evidenced by the U.S. resort to form al procedures on more than 20 occasions since 
January 1995.  He referred specifically to the statemen t of Acting U.S. Trade Representative Barshefsky 
(to a Congressional hearing on 11 Septem ber) that the DSU was "proving to be a very effective tool to open 
other nations' markets".  In this context he inquired about the rôle of "Section 301" actions where the issue 
falls within the ambit of rules and obligations covered by the WTO Agreement.  79. He also raised concerns about the 1 May 1996 unilateral embargo on the import of wild shrimp 
from countries that did not require th e use of turtle excluder devices, an d about extraterritorial aspects of 
U.S. laws, such as the Helms-Burt on and D'Amato-Gilman legislation. 
 United States WT/TPR/M/16 
Page 17 
80. The representative of Australia also noted that  the Federal Agricultural Improvement and Reform 
Act (FAIR) Act reforms had placed the United States in  a strong position to pre ss for further international 
agriculture reform.  He welcomed the greater market -oriented direction of U. S. agricultural policies 
represented by the new legislation and the encouragem ent this would give to further multilateral reform.  
Disappointment was expressed about some aspects of the FAIR Act, as substantial need for reform 
remained in the cotton, peanuts, sugar and dairy sect ors.  Support for these sectors continued to impose 
costs on both consumers in the United States and producers in other countries.  Australia would welcome assurances from the U.S. delegation that it woul d continue to move forwar d with further reforms to 
improve the efficiency and openness of the U.S. agri culture and food sectors.  Questions concerning 
specific elements, including future safety-net provisio ns and loan rates, had been forwarded to the U.S. 
delegation in writing.   81. In conclusion, the representative encouraged th e United States to look to coherence among its 
trade policy approaches at multilateral, regional and b ilateral levels.  He hoped that the U.S. authorities 
would place the highest priority on ensuring that its bilateral and regional trade initiatives were consistent 
with the rules of the multilateral trading system.  82. The representative of Canada recalled that Ca nada and the United States shared the largest 
bilateral trade relationship in the world.  The two economies were well integrated and had, since 1989, 
operated under a free trade régime which had proved mutually beneficial.  He had taken note of the 
positive remarks made in the Secretariat Report for wh ich the United States could rightly take credit; in 
particular about the strength of the U.S. economy, it s general openness and its ra nking by reputable studies 
as the most competitive nation in the world;  the impl ementation of significant reforms, removing domestic 
restrictions, which went beyond WTO obligations;  th e U.S. leadership role du ring the Uruguay Round; 
its restraint in using available domestic instruments and its acceptance of WTO rulings. The main body of 
the Secretariat Report noted that "U.S . trade barriers are at a historic low" . This was reflected in the positive 
state of the bilateral U.S.-Canada relationship where relatively few problems had emerged over the past 
couple of years, but with some well-known and notabl e exceptions.  The intervention focused on four 
themes:  the trade inhibiting effects of U.S. anti-d umping and countervailing legislation, the disruptive 
effect of responding to special interests, the tren d toward unilateral use of trade sanctions, and the 
increasing demand for reciprocity in trade relations.   83. The Secretariat report and the Government statem ent drew attention to the increasing importance 
of international trade to the fortun es of the U.S. economy. Much of  the Administration's attention and 
policies in the past two years had quite appropriatel y focused on the opening of markets abroad and the 
expansion of exports.  But because of  the focus at the political level wit hin the United States on bilateral 
trade deficits, one had to search hard to find references  to the importance of imports as a key ingredient to 
the continued success of the U.S. economy.  In fact, the notion purveyed in so me quarters that exports 
were good and imports were bad ha d at times struck a resonant chord in certain U.S. trade policy 
decisions.  84. He noted that the approach within the United Stat es to the use of its trade remedy laws continued 
to have a negative effect both on the U.S. economy and on its trading partners.  The impact on the U.S. 
economy had been detailed by a U.S. Government Ag ency - the International Trade Commission (ITC) - 
in its June 1995 study.  As the most important tradin g partner of the United States, Canada had had long 
experience with this impact.  It was true that th e United States had not initiated an anti-dumping 
investigation against Canadian exports since 1994. But one new countervailing duty investigation had been 
initiated since that time on hardwood flooring.  An d more importantly, the Canadian experience showed 
that the very existence of these laws  could deter trade.  Canada was not claiming that the United States was 
acting contrary to its WTO obligations by having recour se to its anti-dumping or countervailing duty law.  
The United States had acted to implement the Uruguay Round agreements in this area, as the Secretariat WT/TPR/M/16 Trade Policy Review 
Page 18 
Report noted, and considerable e ffort had been made to update th e governing regulations.  But the 
concern was about the overall use of this law as a protectionist device. 
 85. Strong forces had lobbied Congress to make trad e remedy laws easier to apply and their impact 
more onerous. Congress had favoured these interests ov er those of the exporting community in the United 
States.  The law, in turn, left ample scope for discre tion by the Administration in terms of methodologies 
t o  b e  u s e d  i n  i n v e s t i g a t i o n s .   T h e  C a n a d i a n  e x p e r i e n c e  s h o w e d  t h a t  t h i s  d i s c r e t i o n  c o u l d  o f t e n  b e  deployed in favour of the complaining party.  So it had been that protectionist interests within the United 
States, by threat of invoking the revised trade remedy law, contribute d to the Canadian Government's and 
the softwood lumber industry's decision, to accept the a pplication of fees to export s of these products to the 
United States above a specific volume.  The result had been an extensive administrative and disruptive 
burden on Canadian exporters and a significant increase  in cost to the U.S. consumer of these products. 
This was cited as an example to explain why it rema ined an important objective for Canada to pursue 
negotiations to reduce the use and application of trade remedy law. 
 86. The Secretariat report noted "that it is in the Un ited States' own best interest to keep its markets 
securely open" and the "importance for the United Stat es that its producers have secure, liberal access to 
foreign markets, within a strong, rule s-based multilateral system".  These sentiments were also expressed in 
the U.S. Government statement.  Despite such sent iments, there had been nume rous instances in which 
the Administration and Congress had chosen to respond to the pleading of special interests rather than 
initiate an objective assessment of the impact of the imported products.   
 87. In addition to the dispute over softwood lu mber, other examples of this tendency by the 
Administration and by Congress could be found in the ag riculture sector.  In this instance, the Secretariat 
could update its report by noti ng that on 17 September 1996, the United States had extended the 
monitoring of imports of Canadian wheat and barley  for another year, until September 11, 1997. It was 
instructive to note that in a communi cation from the Administration it had been observed that the fact that 
Canada's exports of barley to the Unit ed States were down was "positive".  
 88. Another example concerned the importation of pe rishable agricultural products.  Members of the 
Goods Council would recall the interventions on the pr oposed legislation to amend U.S. safeguard law for 
imports of perishable agricultural  products. The product of immediate  concern had been tomatoes but 
the impact of the law would have been wider.  The Administration had supported this proposed law.  
Fortunately, Congress, in the end,  had not enacted this  proposed bill, perhaps in the realization that U.S. 
export interests could become susceptible to similar action in other countries.  
 89. There were a number of other instances where U. S. domestic policy appeared to be at odds with 
the goal of creating a stronger and more competitiv e U.S. economy.  This point was captured in the 
Secretariat report which stated that "in the context of a generally open trading environment, non-border 
measures increase in relative importance".  Do mestic support programmes, technical barriers and 
restrictive government procurement po licies were examples of this.  He  believed that the report should 
have provided more analysis on how some U.S. dome stic policies were themselves the source of trade 
disputes.   90. One of the U.S. domestic policies of great in terest to Canada was government procurement.  
Public expenditure as a percentage of GDP in the Un ited States during the period 1990-95 was lower than 
i n  m o s t  o t h e r  O E C D  c o u n t r i e s .   T h i s  d i d  n o t  m a s k  the fact that, in absolute terms, U.S. government 
procurement was the largest of the OECD countries.  The United States was to be commended on its 
commitment to increased procurement coverage un der the plurilateral Agreement on Government 
Procurement.  The expansion of entity coverage at the federal government level and the inclusion of a 
number of sub-central governments an d public utilities provided a signific ant increase in potential access to 
the U.S. procurement market. United States WT/TPR/M/16 
Page 19 
 
91. However, despite these enhancements, the United States continued to maintain an extensive list of 
exclusions and exemptions, such as small business set-as ides, which restricted significantly trading partners' 
access to the U.S. market.  The application of these set-asides appeared to be increasing, rather than 
decreasing, contrary to the suggestion which was made  in the Secretariat Report .  Increased emphasis on 
sub-contracting to U.S. small busine sses was also becoming apparent, part icularly in defence procurement.  
Recent and proposed changes in U.S. procuremen t regulations, while attempting to simplify the 
procurement process for U.S. suppliers, may have had a restrictive effect on market access for foreign 
suppliers.  The U.S. Government should give further consideration to the elimination and circumscription 
of these exclusions and exemptions.  Enhanced covera ge under international agreements was only effective 
when the security of market  access could be guaranteed. 
 92. The representative of Canada noted that the Se cretariat report, referring to the Cuban Liberty and 
Democratic Solidarity (LIBERTAD) Act,  cryptically noted "the extraterri torial application of U.S. trade 
laws has attracted significant attention".  Few were probab ly unaware of this particular piece of legislation.  
This initiative of the U.S. Congress was regarded very  seriously by Canada and ma ny other trading partners 
of the United States.  The representative of Canada ex pressed concern that it could reflect a trend in U.S. 
trade policy, not simply to resort to  extraterritorial actions but also to  use trade sanctions for foreign policy 
and social policy purposes.  He urged the United States to repeal this legislation and hoped, in the interim, 
that the U.S. President would continue to susp end the application of Title III provisions.   
 93. The Helms-Burton Act was not a unique exampl e.  The U.S. Government had targeted several 
countries for such treatment.  The use of such inst ruments was worrying.  It reflected the continuing 
tendency to resort to unilateral rather than multilatera l solutions to problems.  Th is seemed to be at odds 
with the stated U.S. position of working towards a stro nger multilateral trading system and the growing stake 
of millions of U.S. workers in a healthy multilateral tr ading system as the guarantor of open markets.  He 
would welcome efforts within the United States to prom ote greater awareness of the benefits of exports to 
the U.S. economy, generally and employment in particul ar.  As long as the U.S. public remained unaware 
of its stake in open markets and multilateralism, Cong ress and the Administration would find it difficult to 
reject the use of extra-territorial and unilatera l trade actions to achieve domestic goals.  
 94. The U.S. Government made reference to "fairly traded imports" in its report.  The notion of 
fairness was one that all could probably endorse.  In th e abstract, it was what was sought by the application 
of negotiated rules, and subjecting such practices to review by objective dispute settlement procedures.  In 
the U.S. context, however, the emphasi s on "fair" rather than "free" trad e took on a different complexion.  
The problem was that "fair" was a subjective and flui d concept where the United States often unilaterally 
played both judge and jury in determinin g whether this objective had been met. 
 95. In this regard, one important theme which th e Secretariat report only touched on was the 
increasing tendency on the part of the United States to  press for reciprocity from its trading partners.  This 
approach was contrary to fundamental elements of  the multilateral system and could have serious 
consequences for the trading system in the future.  For example, as th e Secretariat report noted, in the 
telecommunications sector the United States had face d the challenges of technology and of globalization 
and had encouraged the liberalizatio n of telecommunications services. Canada had taken significant steps 
in that direction and welcomed the same process in the United States.  While the report was correct to 
highlight developments in that regard, most notabl y the Telecommunications Act of 1996, it underplayed 
some of the continuing difficulties experienced by foreign firms seeking to enter the U.S. market.  
Foremost was the lack of transparency and predictabilit y of licensing resulting in part from the discretion 
retained by the Federal Communications Commission  (FCC) to defer to unrelated Administration 
concerns, as part of the FCC's 'public interest' dete rmination. Canada had recent experience with this, 
where the Administration in a July 1 letter, had interv ened to withhold the FCC from deciding on certain 
applications for licences by firms using Canadian satellit es.  At the same time, the continuing difficulty of WT/TPR/M/16 Trade Policy Review 
Page 20 
ensuring, in the basic telecommunications negotiations, that the m.f.n. results were not undermined by the 
reciprocity-based FCC "effective comp etitive opportunities" ['ECO'] test  showed the extent to which the 
adoption of these rules in November 1995 ha d changed the ground for negotiations.  
 96. The representative emphasized that a consistent theme in both reports was that trade has become 
much more important to the health of the U.S. ec onomy.  This was a theme which the Administration 
had been advancing for many months and the numbers certainly supported it. The growing importance of 
trade, and particularly export growth, had significant implications for trade policy.   On the basis of these 
economic trends, and recognizing the historic leadersh ip of the United States in building the multilateral 
trading system, he hoped that the U.S. Government would redouble its efforts and work with its trading 
partners here in the WTO and elsewhere to strengthen the multilateral trading system. One early sign of its 
intention to do so would be an announcement by th e Administration of its intention to seek fast-track 
negotiating authority early in the 105th Congress.   97. The representative of Japan hoped that the tr ade policy during the seco nd Clinton Administration 
would continue to strengthen the multilateral free trad e system of the WTO.  He expressed high esteem 
for the leadership of the United States in initiatives to strengthen the multilatera l free trade system, and, in 
particular, for the rôle played by the United Stat es during the Uruguay Round negotiations.  In the 
preparation of the Singapore Ministerial Conference, Japan would continue to cooperate with the United 
States to make the WTO even more effective.  As detailed questions had been submitted in writing and 
more written questions would be added over the course  of the day, he focused on a limited number of 
issues.    98. There were still some examples of the United St ates resorting to unilateral sanctions.  As these 
were well known, he did not dwell on them.  He welcomed the increasing reliance of the United States on the WTO dispute settlement mechanism.    99. He noted that the extraterritorial aspects of the Helms-Burton Act and the Iran Libya Sanctions 
Act were unacceptable under international law and could be inconsistent with commitments undertaken 
under the WTO.  He called upon the U.S. government to be extremely cautious in the implementation of these laws.  He also drew attention to  extraterritorial aspects of U.S. an ti-trust law which also covered acts 
committed outside the U.S. jurisdiction and infringe d upon the sovereignty of the country where the 
alleged act had taken place.  He hoped that this practice would not be pursued.     
 100. He expressed concern about a recent deve lopment, announced on 6 November 1996 by the 
Federal Maritime Commission of the United States, proposing to impose a new sanction against three 
Japanese shipping companies, pursuant to the Merc hant Marine Act of 1920.  The sanctions involved a 
fee on these companies upon each entry of their ships in to a U.S. port, on the alleged ground that the prior 
consultation for the use of Japanese ports created cond itions unfavourable to the U.S. shipping industry.  
The Japanese authorities could not yield to such  a unilateral measure.  He called on the U.S. 
representative to explain this action.    101. With reference to the discussions in the Anti -dumping Committee, he expressed his concern over 
anti-circumvention, de minimis, accumulation and we ighted-average-comparison pr ovisions as well as the 
sunset clause.  Specifically he referred to the pr ocedures followed after a U.S. government agency 
announced its intention to purchase of a supercom puter from a Japanese company.  He expressed 
concern that the U.S. Department of Commerce interven ed in an ongoing transaction by providing what it 
called "estimates", showing that the Japanese company was engaged in dumping.  He hoped that the U.S. 
Department of Commerce and the U.S. International Trade Commission would carry out their duties in 
accordance with the WTO Agreements and in a just and transparent manner.  
  United States WT/TPR/M/16 
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102. He expressed concern that in his experience, the United States would not make offers during 
negotiations until the other party had made an offer, cl aiming that the U.S. market in question was already 
the most open.  Such an attitude was not appropriat e for the leadership rôle expected from the United 
States, as such an attitude made prog ress in negotiations more difficult.   
 103. The representative of Japan stressed that regiona l agreements should be implemented in a way not 
detrimental to the interests of countries outside the region, and should be cons istent with WTO rules, in 
particular the m.f.n. clause.  He expressed conc ern that some of the NAFTA rules of origin might 
constitute a barrier to international trade.  He invited a more detailed explanation on the current status of 
the efforts to establish a Free Trade Area of the Amer icas by 2005.  With reference to the reports by the 
U.S. Government and the Secretar iat, he stressed an important di fference between APEC and NAFTA.  
APEC subscribed to open regionalism and achievements realized in APEC  would be guided by the m.f.n. 
principle and therefore be to the bene fit of the world trading community.   
 104.  Before concluding, he commented on the descri ption of U.S. Japan agreements in the Secretariat 
Report.  He stressed that the object ive of the U.S-Japan Framework talks as conducted during the previous 
three years, was not only improved market access to Japan.  It was an undertaking by the two sides to 
jointly pursue ways to better contri bute to the world economy and had been guided by the notion of two 
way flows.  Furthermore, he emphasized that all settl ements reached between the United States and Japan 
were guided by the m.f.n. principle.   105. The representative of Mexico noted the frequent  contacts between the United States and Mexico 
in the WTO as well as in the context of their geog raphically adjacent positi ons and other contractual 
commitments involving both countries.   He invited the U.S. delegation to comment on the current status, 
and the short-term prospect for a solution in line with international obligations, of the following issues:  the 
adoption of the panel report which dealt with Mexi can cement exports to the United States;  the 
recognition of the fact that Mexican avocadoes m ight be brought into the United States without 
phyto-sanitary problems;  the final de termination that corn brooms could not be subject to the application 
of safeguards; the lifting of the tuna embargo and the relevant amendments in the area of labelling; and the 
suspension, and he hoped elimination, of the so-called Helms-Burton law. 
 106. The representative of Venezuel a raised three issues;  the tuna embargo, the case of gasoline and 
unilateral and extraterritorial aspects of U.S. trade policies.  Since 1991 Venezuelan tuna exports had been 
under U.S. embargo.  This was a matter of great conc ern to the Venezuelan Gove rnment, in particular as 
no account had been taken of all the efforts made, together with the United St ates, to accommodate the 
agreed goals in the framework of the Inter-Am erican Commission on Tropical Tuna which has 
substantially reduced the dolphin catch through tuna fish ing.  The level of incidental catch agreed in this 
context went well beyond the very pa rameters established by the Law for Protection of Marine Mammals.  
Even in 1996 the United States had not found it possibl e to enact the legislative changes which would have 
put an end to this embargo which was totally unjustifie d in the areas of trade and environment.  He invited 
confirmation from the U.S. delegation that once th e electoral process had been completed in the United 
States, the Administration would support  the required legislative changes.  In this context he also invited 
the United States to modify its labelling requirements for such products.  With reference to the case of 
gasoline, he hoped that the recomme ndations of the WTO panel would be  p u t  i n t o  e f f e c t  a s  s o o n  a s  
possible.  He also expressed concern about the extra-territorial application of domestic laws and the use of 
unilateral measures.  107. The representative of Chile noted that the Un ited States was one of the main builders of the 
multilateral trading system at the end of the second wo rld war, a rôle which it had continued to play since 
then.  In this context she expre ssed concern about a possible weakenin g or loss of confidence in the 
application of the basic principles of the multilateral trading system, such as unconditional application of 
the m.f.n. clause and national treatment.  She re ferred to the commitments undertaken by the United WT/TPR/M/16 Trade Policy Review 
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States at the State and municipal level, where she observed some asymmetry in relation to other WTO 
members.  The United States was complimented on  being one of the most open economies in the 
OECD, as illustrated by average import tariffs at 6.4 per cent.  However, this figure did not reflect the 
implicit selectivity in U.S. trade polic y.  For example higher levels were observed in the agricultural sector, 
fluctuating between zero and 350 per cent ad valorem, th us forming a great distortion versus the average.  
In addition, various subsidies dist orted international markets and were  particularly damaging to small 
economies such as Chile.  Similar situations were observed in the textile, clothing, tobacco and dairy 
sectors.    108. Great selectivity was observed through various preferential schemes which could be very trade 
distortive, in particular if they were  combined with restrictive rules of or igin, which were also very costly to 
administer.  She expressed concern with the contin ued use of Section 301, Super 301, and Special 301 
and questioned their compatibility with the principles  of WTO.  She noted that the current dispute 
settlement provisions made it unnecessa ry to have unilateral measures.   
 109. In the area of services, the representative of  Chile questioned how the application of measures 
under the Exon-Florio amendment to the Omnibus Trade and Competitiveness Act of 1988 could be 
compatible with market access and national treatm ent obligations undertaken under the GATS.  In 
addition, she expressed concern about the negotiating strategies followed in the GATS negotiations dealing 
with financial services, telecommunications and maritime  transport.  Although Chile was interested in 
market-access offers from a large number of WTO me mbers, it respected the principle of progressive 
liberalization and national policy objectives as ensh rined in the GATS.  Provisional results reached in 
these negotiations had formed a solid basis for fu ture negotiations, and would have given GATS the 
required prestige and credibility.  She also expressed concern about pote ntial discriminatory treatment by 
the banking legislation, existing restrictions which we re applied to foreign direct investment in basic 
telecommunication companies, and certain criteria for the operation of these companies.  She hoped 
these questions would be dealt with appropriately in the context of present and future negotiations.  In the 
case of maritime transport services,  the case was more complex as there was a deliberate absence of a 
U.S. offer which would have served as a basis for th e negotiations.  The conseq uences for the future of 
GATS were serious in view of the non-application of th e m.f.n. clause in this se ctor and the non-existence 
of substantial commitments and the existenc e of subsidies which distorted trade.  
 110. She invited the U.S. delegation to comment on the prospects for renewal of fast-track negotiation 
authority for FTAA negotiations and in rela tion to the accession of Chile to NAFTA. 
 111. The representative of Thailand, speaking on  behalf of ASEAN, noted the contribution of 
allocative efficiency to the U.S. economic performance.   The main conditioning factor appeared to be the 
openness of the U.S. market.  Such openness also furt hered the interests of the multilateral trading system. 
 As the world's largest single trading nation in both goods and services, the U.S. was advised to be cautious 
in planning and implementing its trade policy.  The United States had increasingly relied on multilateral 
rules and disciplines in the WTO, including dispute settlement and adherence to panel or appellate body 
rulings.   However, in several cases the United States  had taken initiatives in reaction to unfavourable 
situations by exercising its own me asures.  These measures were inconsistent with internationally accepted 
rules and their use had vast repercu ssions for U.S. trading partners.  In this regard, she expressed concern 
with the unilateral and extra-territorial application of re cent U.S. legislation as linked to environmental and 
political objectives.  These laws authorized sanctions on countries or enterprises which the United States 
deemed to have violated U.S. domestic statutes.  The unilateral and extraterritorial application of U.S. law 
to other countries was considered unacceptable un der international law and created the possibility of 
damaging economic interests not only of third countries but also of the United States itself.  Such action 
threatened to violate the spirit of  the WTO Agreements whose principle was to promote fair and equitable 
trade.    United States WT/TPR/M/16 
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112. Great importance was attached to U.S. textile policy and the implementation of the Agreement on 
Textiles and Clothing (ATC).  When it came to textiles, U.S. officials perhaps still lacked the 
understanding that gradual liberaliz ation was required in the textile sector.  The integration plan put 
forward by the United States left much to be desire d.  Under the ATC, textile and apparel products were 
supposed to be gradually integrated in normal GATT di sciplines through a three stage process.  However, 
the structure of the U.S. integration plan was heavily  backloaded, deferring most of the integration of 
products under quota until the end of the ten-year tran sition period.  It was a matter of great concern that 
under the first stage of the integration which went in to effect on 1 January 1995, not one single product 
subject to a quota under the Multi-Fibre Arrangement had been integrated into normal GATT rules.  The 
U.S. integration plan suggested that over 90 per cent of the significant apparel quotas would be retained 
during the first seven years of the transition period.  Although there was a ten-year period, long enough for 
gradual elimination of quotas, still th ere appeared to be a strong pref erence to opt for the last-minute 
adjustment.  By that time the backloaded integrat ion would be traumatic to the U.S. industries.   
 113. In 1995 the United States had invoked 20 safe guard calls on 14 developing WTO Members.  
Such actions were clearly not in conformity with the pr inciple of "sparing use" embodied in the Agreement 
on Textiles and Clothing.  Mo reover, the procedural approach and the integrity of data used in those calls 
had been highly questionable.  Such views had been co nfirmed by a recent panel report concerning a U.S. 
transitional safeguard action taken by the United States .  She felt strongly that there was a need for a major 
policy reform and a serious review of the textile and clothing policy as run by the Committee for the 
Implementation of Textile Agreements (CITA).  The policy of CITA had conferred a protectionist image 
to the U.S. Administration.    114. On the first of July 1996, the United States had implemented a new set of rules for determining 
the country of origin for all textile and apparel produc ts imported on and after that date.  She expressed 
great concern, not only concerning th e disruption to trade caused by th e unilateral imposition of this new 
rule, but also concerning the apparent inconsistency of this action with the WTO Agreements on Rules of 
Origin and Textiles and Clothing.  The Agreement on  Rules of Origin set forth the procedures, time 
tables and disciplines to be respected by members du ring the transition period until the work programme 
for the harmonization of the rules of origin is complete d.  Article 2 of the Agreement on Rules of Origin 
specifically stated that rules of origin should not be used as instruments to purs ue trade policy objectives, 
directly or indirectly, and that ru les of origin should not themselves create restricting, distorting or 
disruptive effects on international trade.  She belie ved that the changes in the U.S. rules of origin had 
created a situation that this particular article soug ht to avoid.  Halfway th rough the three-year work 
programme of the Agreement on Rules of Origin, this ch ange was a unilateral action by the United States, 
which preempted the process and goals of the Agr eement on Rules of Origin.  The new rules were 
published by the United States on 5 September 1995 and notified to WTO memb ers in November 1995.  
They had not been completely clarified as to wh at constituted the most important assembly or 
manufacturing process for determining the country or  origin in case of a number of products.  She 
referred to a senior official of the United States wh o indicated as late as May 1996 that the United States 
was still seeking an appropriate definition and applicat ion of this term.  She expressed concern that the 
new rules might reflect a stated belief by the U.S. Cu stoms Service that a large portion of multi-country 
processing was unnecessary (comme nts published in a Federal Registe r Notice of 5 September 1995).  
Thus the new rules were aimed more at a trade policy that will inhibit the sharing of comparative 
advantages among producing countries and th us be contrary to WTO principles.   
 115. The timing of the implementation of the ne w rules of origin on 1 July 1996 was unreasonable, 
considering that quotas under the Agreement on Text iles and Clothing were administered on a calendar 
year basis.  The implementation of these new rules was retroactively applied to trade subject to quantitative restrictions.  Formerly, the textile re strictions maintained by the United States were administered on a date 
of export basis, which was mainly a calendar re straint period.  Neverthe less, the United States 
implemented these new rules in the middle of the restra int period and on a date of import basis.  The WT/TPR/M/16 Trade Policy Review 
Page 24 
United States had provided no data required to measure the disruption of trade.  The concept of 
retroactivity applying to the new rules to restricted goods that could be in production or in transit was 
inconsistent with the disciplines contained in th e Agreement on Rules of Origin, Article 2 and the 
Agreement on Textiles and Clothing, Article 4.  116. Article 4 of the Agreement on Textiles and Cl othing required consultations between members 
when changes such as those to the rules of origin were  being introduced.  The consultation should be held 
prior to implementation and should result in appropri ate and equitable adjustments to avoid disruption to 
trade covered by the Agreement.  These commitments and obligations were reaffirmed by the United 
States, however the information needed for this consul tations was required to be submitted by the United 
States in quarters, the so-called mult iple country import declaration.  This had not been provided by the 
United States to any Member.  Moreover, the United States placed the burden of proof on exporters who 
were not in a position to give accurate details which the United States was supposed to possess.  Without 
such information it was difficult, if not impossible, for exporting countries to assess the impact of the 
change in the rules of origin.     117. In the area of services, ASEAN Members were of the opinion that  it was important for the 
United States to submit an offer in the next roun d of Maritime Services negotiations and confirm its 
commitment to proceed according to the agreed conclusions.  On fina ncial services she reminded the 
United States of the principle of progressive liberalizat ion, that was the flexibility to liberalize fewer services 
sectors and transactions and extend market access co mmensurate with members' de velopmental situation.  
The United States had not come forward with any high -level commitment and such action could preclude 
the attainment of balanced package of commitments in the negotiations.    118. In addition to the stated points, she forwarde d questions in writing through the WTO Secretariat 
to the U.S. delegation.  119. The representative of Pakistan expressed great satisfaction with the economic developments in the 
United States over the last four ye ars.  The United States was a major trading partner of Pakistan and as 
such Pakistan had a deep interest in the uninterrupted  expansion of the U.S. economy.  He welcomed the 
retroactive renewal of the U.S. GSP scheme which wa s suspended in August 1995.  However, he deeply 
regretted that there had been some moves to suspen d GSP benefits for some im ports from Pakistan on 
account of perceived inadequate protection of workers rights.  Consultations between the two governments were underway.  He expressed the ho pe that as a result of these cons ultations the United States would 
refrain from taking recourse to trade me asures to achieve non-trade objectives. 
 120. The representative of Norway congratulate d the U.S. delegation on the U.S.economic 
performance.  The United States was the only major industrial economy operating close to estimated full 
capacity, and had been particularly successful in ac hieving a high level of employment and maintaining 
growth at a point close to the leve l compatible with low inflation.  He  welcomed the shift in U.S. trade 
policy away from limiting imports towards export prom otion.  Appreciation was expressed for the decline 
in the number of anti-dumping investigations launched, but it was noted that the cause of this decline was 
not clear.    121. He asked whether the rapid rise in U.S. exports was the result of a more aggressive policy by the 
U.S. authorities to open foreign markets, and what th is could imply for international trade more generally.  
As the United States had negotiated more than 200 trad e agreements over the past  four years, of which 20 
with Japan alone, it was invited to comment whether there were any implications in terms of m.f.n. 
treatment.  He was concerned with the lack of U.S. enthusiasm for the services negotiations that have 
taken place so far, particularly regarding maritime se rvices.  The question was raised whether this was a 
temporary or a structural-permanent  phenomenon.  He inquired whethe r the United States intended to 
notify sub-federal subsidies in its next full noti fication.  He expressed serious concern with the United States WT/TPR/M/16 
Page 25 
extraterritorial aspects of U.S. tr ade policy legislation and noted that, the sooner the United States would 
get away from this tendency, the better, both for th e bilateral relations between Norway and the United 
States and for the relations between the mu ltilateral system and the United States. 
 122. The representative of the Czech Republic stre ssed the importance of the United States to the 
world trading system.  Since the previous Trade Polic y Review the United States had demonstrated on a 
number of occasions its key rôle in the world trad ing system and its responsibility for keeping  world 
markets open.  In the context of the demonstrated U. S. commitment to the WTO, he drew attention to a 
number of issues, in particular the use of unilateral meas ures by the U.S. authorities.  Referring to specific 
Czech interests, he remarked that market oppo rtunities for cheese were still rather limited;  
implementation of the Uruguay Round did not signif icantly increase opportunities to expand export 
volumes.  SPS measures, such preven tive controls known as Hazard Analysis and Critical Control Points 
(HACCP) might further restrict agri cultural exports to the United St ates.  Secondly, market access for 
textile and clothing items provided by  the United States to Czech exporter s continued to be quite restricted. 
 The quotas were, in some instances, so low that it  was very difficult for exporters to find appropriate 
importers or distributors in the Unit ed States.  He hoped that the accelerated removal of the quotas would 
take place in the near future.    123. The representative noted that regulations on es tablishment or settlement, as applied by the U.S. 
authorities, continued to be quit e restrictive.  These regulation s hampered, or might even make 
impossible, the entrepreneurial activity due to resi dence permit rules and qualification requirements, 
including those applied to joint ventures staff.  Remo val of these restrictions would improve bilateral trade 
between the United States and the Czech Republic.  He expressed appreciation for the inclusion of the 
Czech Republic in the U.S. GSP scheme.  He hoped that the scheme would be extended and made more predictable since the necessity of frequent renewals of its validity at short intervals resulted in unpredictable 
sales conditions.  124. The representative of Argentina noted that so me bilateral agreements with Japan had not been 
notified to the WTO, althou gh they covered issues under its purvie w, such as construction services and 
cellular telephones.  He specifically inquired about th e incentives for foreign direct investment provided 
under the U.S.-Japan Agreement dated 20 June 1995.  Referring to the proposal by the U.S. Treasury 
concerning the adoption of uniform rules of origin, he no ted that this initiative had apparently not received 
support in Congress or among indust rial sectors.  He inquired whet her the U.S. Treasury continued to 
consider the adoption of uniform rules of origin and what had been the argument s put forward against this 
initiative.  125. Referring to the right of U.S. workers to petiti on an anti-dumping investigation, the representative 
of Argentina invited the U.S. delegation to elaborat e the legal justification of  this provision under WTO 
Agreements.  He sought clarification whether the Un ited States applied the de minimis rule based on 
volume (3 per cent of the total imports of the like pr oduct).  He sought further clarification whether the 
U.S. legislation contemplated the multilateral rules about the permissible minimum level of subsidized 
imports from developing countries (4  per cent of the total imports of the like product).  He inquired 
about the status of a bill introduced in Congress whic h would have required the U.S. International Trade 
Commission to define an industry on  the basis of seasonal competition.  What would be the meaning of 
such definition?  126. Concerning marketing support, he invited the U.S.  delegation to provide details of the national 
support strategy announced by the President in Se ptember 1993 as a broad gove rnment plan for export 
promotion, which appeared to be part of the 1988 Export Enhancement Act intended to promote and 
protect U.S. trading interest abroad, including services.  He invited the U.S. delegation to provide data on 
the estimated amount of annual assistance and what conditions had to be complied with in order to have 
access to such assistance. WT/TPR/M/16 Trade Policy Review 
Page 26 
 
127. The issue of set asides for small and minority  owned businesses was raised as it represented 
approximately 13 per cent of government procurement co ntracts in the United States.  He inquired about 
the prospects for a phasing out of these set asides after the three year moratorium period which was 
announced by the President.  He invited the U.S. delega tion to provide statistical data on the participation 
of developing countries in U. S. government procurement. 
 128. He noted the extensive list of  commitments of the United States under the GATS and inquired 
whether there was any prospect of removing the restri ctions on movements of natural persons.  He noted 
that taxes and subsidies adopted at the sub-central level,  had an impact on the predictability and certainty of 
the U.S. schedule under the GATS and, in particular, in relation to the interpretation of national treatment. 
 He expressed appreciation for the U.S. explanatio n provided during the many informal consultations 
within the framework of the Council on Trade in Servic es.  Nevertheless, he stre ssed that it was important 
to find a solution which was fully compatible with GATS provisions.   
129. The representative of Poland commended  the recent U.S. macroeconomic economic 
performance.  He invited the U.S delegation to state whether it considered a risi ng current account deficit 
a threat to popular support for a lib eral trade policy.  He noted that intra-industry trade had become an 
increasingly important engine of growth for U.S. fore ign trade.  The indicator was usually associated with 
the level of income and openness of the economy.  Th e measured values for intr a-industry trade for U.S. 
trade with the European Union, Japan and the NAFTA  member states were raising rapidly.  He 
questioned whether the same pattern could be observ ed in trade relations with developing countries and 
with countries in transition.  130. He noted that tariff quotas had been allocated to  selected trading partners and he inquired whether 
the U.S. delegation could provide more details regard ing the allocation of tariff quotas for agricultural 
products;  specifically, whether unused portions of the tariff quotas were available to other WTO 
members.  He observed that ther e were about 150 free-trade zones in the United States.  He inquired 
about: the main economic rationale for the establishm ent of these zones; the U.S. economic experience 
with this type of institutional setting; and the acti vities which took place in these zones other than 
automobile manufacturing.    131. He complemented the U.S.  Administration for the sharp decline in anti-dumping and 
countervailing investigations.  On the other hand it was indicated in the Secretariat report that the cost of 
anti-dumping and countervailing actions was not negligib le.  It would therefore be interesting to hear 
whether the U.S. authorities were ready to discuss as pects of anti-dumping measures in the framework of 
competition policy.  He further ex pressed concern that the United St ates could name countries under 
"Special 301" in spite of full comp liance with the TRIPS Agreement.  
 132. The representative of Colombia expressed regret that he did not have sufficient time to study the 
background material as the Spanish version was not av ailable on time and that, therefore, his authorities 
could not react in the manner they would have liked.  He noted many positive developments in U.S. trade 
policy while others were a matter of concern.  Some of the norms and standards incorporated in the trade 
legislation of the United States did not seem to be in  line with the multilateral objectives that were at the 
foundation of the WTO.  In this context he noted in  particular the extraterritorial nature and unilateral 
aspects of certain U.S. trade laws, such as Section 301, Super 301 and Special 301.  As the United States 
was Colombia's largest trading partner these laws were of particular concern and they tended to dominate 
the bilateral trade policy environment.  In this context, the representati ve of Colombia placed particular 
emphasis on adherence to multilateral disciplines.   133. The representative of The Republic of Kore a expressed concern that the document was not 
available on time and noted that written questions were still to be submitted.  Issues raised concerned tariff 
measures, fees imposed on customs procedures, anti-d umping measures concerning colour televisions, United States WT/TPR/M/16 
Page 27 
labelling requirements on automobile s, deregulation of the size of  alcoholic beverage containers, 
government procurement, and in agricult ural tariff quotas and SPS restrictions. 
 134. In the context of general low tariff rates, he  expressed concern with the rising importance of 
anti-dumping and countervailing measur es.  He referred to a specific colour television case which was to 
be reviewed on de minimis grounds as well as on ground  of suspension of exports.  The delay in response 
to this request was perceived as a violation of the relevant WTO Agreement.  Regarding the same 
agreement he raised the issue of anti-circumvention pr ovisions in U.S. legislation.  Such provisions were 
not included in the WTO Agreement.   He welc omed the review process, based on change of 
circumstances, of outstanding anti-dumping measur es, which was initiated June 1996 in response to a 
request by the Korean authorities of July 1995.  He noted that the use of anti-dumping measures and the 
slow review process had formed a se rious impediment to foreign trade and was in his view an abuse of 
these measures.     135. The representative raised the issue of f ees on customs procedures.  The 1990 Customs and 
Trade Act of the United States contained certain st ipulations for the commercial operation of customs 
offices, which imposed monetary char ges for customs procedures.  He re called in this regard that a GATT 
panel of November 1987 called upon the U.S. government to limit these charges to the cost of the services 
rendered.  Since then the charge rates and the charge  ceiling have increased continuously.  As a result, 
charges increased beyond the level of the costs of the se rvices rendered.  He invited the U.S. delegation to 
explain its position on this phenomenon and expressed concern that charges were being increased in order 
to compensate for declining tariff revenue since th e completion of the Uruguay Round negotiations.  
Furthermore he inquired whether the United States had any further plans to increase these charges again. 
 136. He noted that the U.S. Department of Agricu lture had invited comment on the impact of the 
removal of some selected SPS measures.  In this cont ext he inquired about the status of these measures. 
 137. The representative of Switzerland noted that th e United States was Switzerland's most important 
non-European trading partner; bilateral relations had traditionally been very good and did not face major 
problems.  In this context, he raised two points; the new U.S. rules of origin for textiles and the 
Helms-Burton Act/Iran-Libya Sanctions Act.  He noted that since 1 July 1996 the origin of a fabric 
determined the origin of the transformed fabric even if  the transformation was deemed to be substantial.  
This was a departure from the general rule of substant ial transformation.  Switzerland held the view that 
this approach was not compatible with the harmonizat ion of the rules of origin as agreed under the WTO 
Agreement on Rules of Origin, in particular with regard to Article 9, paragraph 1. b.  He noted, however, 
that, as of 1 July 1996, foreign fabr ics embroidered, dyed or printed in  Switzerland no longer conferred 
Swiss origin by the U.S. customs authorities.  The new regulation posed severe problems for the Swiss 
textile industry.  The labour-intensive and high valu e-added finishing of imported textile fabrics was no 
longer sufficient to confer Swi ss origin in the United States.  On the other hand, Swiss fabrics 
embroidered, dyed or printed in an other country were conferred Swiss or igin.  Under such circumstances, 
the Swiss name and reputation could be widely used without any control from Swiss producers.  This 
situation was detrimental to Swiss products.  The argu ment put forward by the United States that the new 
rules avoided trans-shipment of pr oducts under quota and reduced circ umvention of quota limits seemed 
rather weak especially since after the phase-out of  the Multi-fibre Arrangement (MFA) there would no 
longer be a quota system.  He encouraged the United  States to bring the new rules into conformity with 
the WTO Agreements.  138. He expressed his concern over the extraterri torial nature of the Helms-Burton Act and the 
Iran-Libya Act.  He noted that thes e laws contributed to insecurity on the part of foreign investors and 
hampered the investment climate in general.  Further, it could also create obstac les and restrictions to free 
trade.    WT/TPR/M/16 Trade Policy Review 
Page 28 
139. He noted that the U.S. economy had benefited from a generally open trade policy integrated in 
the multilateral trading system.  His authorities were thus confident that the Un ited States would always 
endeavour to maintain this openness not only in the ar ea of goods, but also in intellectual property and 
services sectors.   140. The representative of Brazil expressed regret th at the relevant documents were circulated late 
during a period when most WTO delegations were already overburdened with meetings.  He expressed 
Brazil's concern with unilateral trade practices by the Unit ed States and extraterritorial application of U.S. 
trade laws.  He welcomed the U.S. commitment to the multilateral tradin g system and to the strengthening 
of the WTO.  He encouraged the U.S. delegation to co ntinue exerting an important leadership rôle in this 
process by refraining from unilatera l actions that are WTO inconsistent. 
 141. He noted that, unlike other Se cretariat reports, the issue of subsidies was not covered under a 
separate heading in the Secretariat report, in spite of the voluminous U.S. notification on this topic.  In this 
context he would be interested in a analysis of the im pact of subsidies per sector.  The impact of subsidies 
at the sub-federal level could be of pa rticular interest as they were not a ddressed in the U.S. notification on 
this topic.  He observed that dispute settlement was explicitly covered in the Secretariat Report, but he 
would have appreciated somewhat more explicit inform ation on this topic as the United States was the 
largest user of the WTO dispute settl ement provisions.  In this contex t, he inquired when the United 
States planned to implement the fi nal finding concerning gasoline. 
 142. He noted that the United States was the main user of anti-dumping and countervailing measures.  
Since the approval of the Uruguay Round Agreements  Act, the United States authorities had been 
discussing new regulations to implement such measures.  He invited the United States to present the main changes of this new régime.  He also noted that the United States was an import ant partner in several free 
trade agreements where rules of origin were one of th e most relevant trade instruments.  He invited the 
United States to present the main characteristics of  its origin rules and how compatibility among them was 
achieved.  He also raised the issue of changes in the U.S. GSP scheme which had now introduced some 
important non-trade features, such as  worker rights and protected intelle ctual property rights as the basis 
for granting generalized preferences.  He invited the United States to explain the aspects of these 
requirements.  He noted that he would submit additional written qu estions to the U.S. delegation. 
 143. The representative of India congratulated the U. S. delegation on the economic revival which had 
taken place in the United States since the last Trade  Policy Review.  That this achievement stemmed from 
the use of trade policy as a principal tool in the nati onal economic policy of the United States was a matter 
of considerable encouragement to WT O Members, and in particular to de veloping countries that were still 
grappling with the challenges and problems emanatin g from the implementation of the Uruguay Round 
Agreements.  As foreign trade had served as a ma croeconomic buffer she expr essed the hope that the 
multilateral trading system would secure a ccess to such buffers for all WTO members. 
   144. She welcomed the reaffirmation by the U.S. au thorities to their earlier commitment to build a 
world of truly open markets.  Her understanding of this reaffirmation was that temporary and safeguard 
measures, which had been significantly changed by the Uruguay Round Agreements Act, were to be 
implemented in the manner and spirit of the WT O Agreements.  She expr essed concern about the 
incorporation of anti-circumvention  provisions in U.S. law which had no sanction under the Uruguay 
Round Agreements.  Such unilateral actions created pr ecedents and were reactionary in the process of 
evolution of the multilateral system.  It was her belie f that "Section 301" militated against multilateralism 
and the principles of the WTO.  145. Another area of concern was the increased use of  trade measures to achi eve non-trade objectives 
by enactment of new laws.  She also noted the struct ural developments in the U.S. economy which guided 
domestic regulatory developments affecting trade po licy and the U.S. assertion that underpinning these United States WT/TPR/M/16 
Page 29 
developments was a philosophical change from rules-ba sed to performance-based domestic regulations.  
She expressed concern that laws wit h extra-territoriality aspects had been enacted in the interest of 
protecting consumers and the environm ent, thereby vitiating the very atmo sphere of international trade.  
She stressed that there was a need for restraint in enacting such laws.  
 146. The increased use of bilateralism by the United  States after the adoption of the Uruguay Round 
Agreements was an irritant to multilateral principles .  The United States was also a player in several 
regional trade arrangements.  The parallel adherence of  the United States to unilateralism, bilateralism, 
regionalism and multilateralism was sending confusing signals to the international trading community. 
 147. She expressed the belief that no intervention by  India on U.S. trade policies could be concluded 
without expressing concern about the state-of-play of the relations between the United States and textile 
exporting countries.  U.S. import tariffs on te xtile and clothing products were well above the 
manufacturing average.  Yet, countr y-specific import quota were maintained by the United States under 
the provisions of the Agreement on Textiles and Clothi ng.  The implementation of the first phase of the 
integration of textiles and clothing products, though wit hin legal requirements, fell short of the expectations 
and the spirit of the Agreement.  The recent changes in the rules of origin used to administer textile and 
clothing quota had adversely affected a large number of countries, including India.  She also announced 
that she would submit written questi ons at the end of the session.   
 148. The representative of Hungary complemented  the U.S. delegation on the macroeconomic 
performance of the U.S. economy.  In this context he noted that important ar eas of the U.S. economy 
remained largely isolated from the widely acknowledged  beneficial effects of international competition.  
One such area was the textile and clothing sector wh ere, in addition to import tariffs well above the 
manufacturing average, the United St ates maintained country specific import quotas.  The distortion of 
trade flows were further aggravated by frequent recourse to the transi tional safeguard contained in the 
Agreement on Textiles and Clothing an d recent changes in the rules of or igin applied to imports of textiles 
and clothing.    149. He noted that in recent times the number of anti-dumping investigations had dropped sharply.  
However, since the last Trade Policy Review, the number  of anti-dumping orders in effect had continued 
to grow.  He expressed the hope that the change s in the rules applied to the revocation of the 
anti-dumping measures, which were introduced as a re sult of the Uruguay Round, would ensure that those 
measures are only used as a trade re medy instrument and would ultimately  lead to a decline in the number 
of outstanding anti-dumping measures.    150. He hoped that the new Administration would demonstrate strong lead ership to bring the 
negotiations in service areas where an agreement was still outstanding to a successful conclusion.  
  151. He welcomed the fact that unilateral trade me asures were now firmly grounded on multilateral 
rules as far as they concerned measures covered by  WTO rules and disciplines.  He shared the concern 
about extraterritorial application of U.S. domestic jurisdiction as this might threaten the multilateral trade 
disciplines embodied in the WTO.    152. The representative of the Slovak Republic stat ed that the U.S. contribu tion to the multilateral 
trading system was crucial to the effective operation of  the WTO and its rules.  From this perspective, any 
U.S. action or initiative was considered very import ant and very closely monitored by all members.  He 
observed that the U.S. trade regime was generally op en, as measured by the low average tariff level and 
continued elimination of non-tariff barriers resulting fr om the Uruguay Round.  However, high tariff peaks 
remained in some areas, especially in agriculture, an d some sectoral liberalization initiatives contrasted to 
protectionist behaviour in ot her sectors such as textile and clothing.  The frequent use of anti-dumping and WT/TPR/M/16 Trade Policy Review 
Page 30 
SPS measures was also a matter of concern.  He wa s particularly concerned ab out measures applied by 
legislation which was not fully in the spirit of WTO rule s, such as unilateral and extraterritorial measures.   
 153. The United States played a key rôle in the serv ices negotiations as it did previously in other 
negotiations.  He noted that the success of unfinished negotiations in other areas depended to some extent 
on U.S. positions.  Progress made on a multilateral basis could limit a bilateral reciprocity approach.   
 154. The representative of New Zealand welcomed the increased reliance by the United States on 
multilateral mechanisms for the resolution of trade di sputes, and the adjustment planned to agricultural 
subsidies which went beyond the requirements of th e Uruguay Round.  He hoped that the trend toward 
greater openness in the U.S. economy would be maintain ed and encouraged the United States to take the 
lead as the world's largest economy and accelerate an d expand the scope of its trade liberalization.   
155. The ending of the ban on the export of Alaska n oil was a welcome milestone.  He also welcomed 
the firm stance which was taken by the Administration agai nst calls for restraints on cereal exports at a time 
of short supply.  Such restraints could have weakened  the faith of importing nations in the security of 
supply offered by the international trading system.  The hope was expressed that other exporting nations 
would follow the example shown by the United States on this occasion. 
 156. He welcomed the reduction in the resort to anti -dumping measures and expressed the hope that it 
would continue.  Disappointment was expressed that the United States had chosen to implement the 
sunset clause on existing anti-dum ping measures at five years after implementation of the Uruguay Round 
rather than five years from the date of the original  anti-dumping orders.  This would keep in place 
measures which unfairly perpetuate rest rictions on access to the U.S. market. 
 157. He noted that, unlike in other Se cretariat reports, no section was in cluded covering state trading.  
As it was not clear whether there was an absence of State Trading Enterprises at the federal and the State 
level, this issue deserved future attention.  158. He noted that export associations could be exempted from challenge under the Webb-Pomerene 
Act and the Export Trading Company Act of 1982 and that in 1994 six and in 1995 five such exemptions 
were granted.  He expressed interest in knowing whic h export associations were granted such exemptions, 
what trades they were involved in, and on which grounds the exemptions were justified. 
 159.   He noted that the Federal Agricultural Im provement and Reform (FAIR) Act of 1996 appeared 
to mark the start of a significant shift in the nature of government support for agriculture.  The de-linking 
of support from production and the move away from  reliance on set-aside were considered as very 
important developments.  The representative of Ne w Zealand hoped that, over time and with further 
refinement, the Act would bring about far-reaching chan ge and increase the capacity of the U.S. farming 
sector to respond to the needs of international markets.  160. However, the U.S. agricultural  sector still remained highly prot ected.  The Secretariat report 
noted the high level of out-of-quota tariffs, averaging 54. 5 per cent.  It also recorded that the out-of-quota 
tariffs in a number of cases exceeded the tariff equi valents which were earlier calculated.  He observed 
that, while the United States might have felt it was altering its methodology on some products to match 
those which were used by other countr ies, others had cited U.S. practice in this respect as justification for 
them to do likewise.  Whoever had started, the net re sult was excessive levels of out-of-quota tariffs on 
some products, as well as minimum access at below the level expected.  This should be recalled during the 
next negotiations as a reason in favour of accelera ted reduction of high protective tariff rates in the 
agricultural sector and rapid expansion of tariff quotas in cases where there was minimum access. 
 161. The underutilization of tariff quotas suggested a n eed for review of administration of such quotas.  
Allocation of import licences in small amounts by  lottery for example was hardly conducive to the United States WT/TPR/M/16 
Page 31 
development of commercial trade.  Another factor that should be reviewed was the level of in-quota tariff 
rates.  These were supposed to be zero or minimal to ensure that they would not act as an inhibition on 
the small amount of trade which was allowed in through the tariff quotas.  In fact their simple average was 
9.9 per cent, significantly higher than the simp le average U.S. tariff rate of 6.4 per cent. 
 162. The continued availability of high levels of ex port subsidies and export credits was evident from 
the Secretariat report which showed a virtually cons tant provision for the Export Enhancement Program 
(EEP) and the export credit guarantee programs.  He hoped that the United States would re-engage 
constructively in the effort to conclu de negotiations on internationally ag reed disciplines on export credits, 
in accordance with the pledge incorporated in the WTO Agreement on Agriculture.  The fact that the 
actual utilization of export subsidies was running s ignificantly below WTO commitment levels was to be 
welcomed and suggested a recognition of the detrimen tal effect which export subsidization had on world 
markets.  163. The FAIR Act provisions reducing the size of  the Dairy Export Incentive Programme (DEIP) did 
not go as far as free traders like New Zealand would have  liked to see.  In addition, the Act appeared to 
have widened the scope of the programme and allowe d for the possibility of reducing the inter-agency 
consideration that was given to its effects.  Duri ng 1996 a number of changes had been made to the 
operation of both DEIP and EEP.  While some of thes e changes were positive, the representative of New 
Zealand was concerned to see that the market deve lopment provisions of th e DEIP seemed to be 
increasingly targeted on the Asia-Pacific region.  He also noted that milk continued to receive the largest 
transfer as measured by producer subsidy equiva lents, US$8,649 million in 1995, almost four times the 
amount available to the next most supported commodity , maize.  Although the per tonne support for milk 
was to be reduced, the FAIR Act would do so only  gradually, from US$228 per tonne this year to US$218 
per tonne in 1999.  The key thing to monitor would be the effective level of support when the change was 
made thereafter from price support to recourse loans. 
 164. Although the FAIR Act terminated some Federa l Marketing Orders and called for the aggregation 
of milk marketing orders to between 10 and 14, ther e was clearly still a long way to go to achieve an 
unrestricted internal market for milk and some other products.  The Secretariat Report noted the 
existence of 73 marketing orders, of which 38 currently  for milk.  It also recorded that there were a 
number of authorities for product-spec ific levies at the federal and State level.  The potential for misuse of 
such levies was a real concern.  The representative  of New Zealand registered the difficulties with the way 
in which "checkoff" schemes were some times implemented in the U.S. agricu ltural sector, in particular their 
application to imports and their use in a discriminato ry way to finance the promotion of U.S. product. 
 165. The representative of New Zealand noted the rece nt significant revision of U.S. meat and poultry 
regulations which required that countries exporting to  the United States would be expected to implement 
the new regulation, within the required time frames or  to demonstrate the equivalent of their inspection 
systems to the Hazard Analysis and Critical Co ntrol Points (HACCP) system and the performance 
standards.  Non-acceptance (or dela y in acceptance) or equivalent wit h the new U.S. system could have 
serious implications for exporters to the United States .  The representative of Ne w Zealand trusted that in 
implementing new regulations the United States woul d proceed in a manner which was not disruptive of 
trade, and was in accordance with WTO provisions.  166. As a last point, the representative of New Zeal and noted that the United States had an enormous 
influence on trade policy around th e world, both through the position s it advocated and the example it 
offered.  The listed comments were put forward in a constructive spirit in the knowledge that any 
improvement in the U.S. performance was likely to be reflected in a greater effort by all WTO members.  WT/TPR/M/16 Trade Policy Review 
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VI. REPLIES BY THE U.S. REPRESENTATIVE AND ADDITIONAL COMMENTS 
 
167. Replies by the representative of the United St ates were divided into four themes:  economic 
conditions and regional trading arrangements;  strate gies for conducting trade;  trade measures; and  
sectoral issues.    (1) Economic conditions and regional trading arrangements 
 168. The representative of the United States noted th at this group of comments had centred on the rôle 
of trade and trade policy in the United States.  He wo uld discuss a number of these issues, including some 
aspects of the rôle of trade in contributing to U.S. economic success, his views on imports, the trade deficit 
and U.S. public support for the mult ilateral trade system, services trade issues and the economic effects of 
NAFTA.  169. It was certainly true that U.S. trade policy ha d strengthened the rôle of trade in acting as a 
counter-cyclical stabilizer for the United States and other economies.  The U.S. trade deficit had shrunk 
prior to the last recession, softening the drop in a ggregate demand.  He emphasized, however, that as 
useful a rôle as trade might have played as a counter- cyclical stabilizer, the more important effect of markets 
that were guaranteed open by reason of WTO bindings  was in helping to assure efficient structures of 
production and to strengthen growth potential thro ugh enhanced investment re turns and related dynamic 
effects.  These structural gains outlasted any busine ss cycle and made trade obligations an investment in 
long-term growth and prosperity for any country.    170. The discussion of the rôle of trade in U.S. ec onomic achievements was welcomed in view of the 
nature of the forum.  The U.S. view was that bene fits came from the connection between an internally 
open and competitive environment guaranteed by dome stic law, matched with open borders guaranteed by 
international agreements.  This seemed to be the objective toward which many low and middle income 
countries were moving, to their benefi t;  he certainly saw it as one of the keys to U.S. economic success.  
Formally open borders with restrictive internal policie s, or efforts to maintain an internal competitive 
environment in the face of high border protec tion were inferior approaches to growth.  
 171. A point had been made about the concentration of U.S. trade rhetoric on ex ports, to the exclusion 
of the value of imports.  The United States, with its nearly US$900 billion in im ports in 1995, the world's 
highest level by a large margin, did not have an excl usionary policy with respect to imports.  Excluding 
intra-EU trade, some 21% of global imports were purc hased by the United States.  The range of benefits 
from importing had been stressed in the U.S. polic y statement and the opening statement made on the 
previous day.  172. The question had been raised whether the U.S. authorities feared that the macroeconomic-related 
trade deficit would erode public support for an op en trade policy and the multilateral system.  The 
representative stressed that there had been a good deal of progress on the deficit issue.  At that time, an 
advanced point in the business cycle, the trade deficit as a share of GDP was less than half its level at the 
previous peak of 1987 (1.4% versus 3.3%).  Within 6 months of the record de ficit in 1987, Congress had 
enacted the Trade Act of 1988, which had enabled the Un ited States to participate fully in the Uruguay 
Round.  173. It was also stressed that a g ood deal of progress had been made  in reducing the federal budget 
deficit, which was the U.S. government 's most direct relationship with the overall saving rate, and, therefore, 
with the trade deficit.  The recent rise in the trade deficit had reflected an economic expansion in which 
investment had played a larger role than in previous economic recoveries.  Indust rial capacity had recently 
been rising at rates close to 4 per cent per year, rates not seen in al most three decades.  With such a United States WT/TPR/M/16 
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resurgence in the economy, the U.S. market had beco me a significant magnet for foreign capital, with net 
capital inflows helping to expand ou tput and offset the trade deficit. 
 174. The representative noted the concern about domestic U.S. trad e politics.  Many Americans had 
endured great stress in the restructuring of the U.S.  economy.  In every area of federal government 
responsibility in the United States there was both the obligation and the desire to be concerned about 
public opinion.  Fortunately, the President was an extremely effective communicator, particularly so when 
it came to explaining the relevance of trade and the glo bal economy to the average U.S. citizen.  Also, U.S. 
authorities had been careful in terms of speaking about the benefits of open markets, largely irrespective of 
the considerations of the overall trade balance.  There was an un derstandable suspicion of international 
institutions, such as the WTO, in th at they did not discuss these adjustment pressures.  This concern was 
why every American President since Ei senhower had urged consideration of  core labour standards in trade 
discussions, as the current Administration was doin g in the preparation for the Singapore Ministerial 
Meeting.  175. Some questions had focused on services in the U.S. economy.  With services employing over 70 
per cent of the workforce, the productivity growth of  service workers was crucial.  Efforts at internal 
deregulation in a number of service sectors had rais ed, and would probably continue to raise, sectoral 
productivity.  Success in GATS negoti ations would also help. Productivity performance of service workers 
was critically important to future living standards.  He added that one of the main issues with regard to 
services productivity was the great difficulties the U.S. authorities had in its measurement;  he believed that 
productivity gains by service workers in the United St ates were possibly considerab ly much lower than their 
actual increase.  As the workforce shifted from good s producing industries, where output per hour worked 
was fairly easy to calculate, to service indust ries, such mis-measurement may have created many 
unfortunate wrong impressions about everything from relative economic performance to changes in living 
standards.  176. A question was raised concerning foreign serv ice delivery in the U.S. market, which had shifted 
somewhat from cross-border transact ions to delivery through foreign in vestment.  This issue was whether 
this shift was due to an increase in state investment incentives.  There appeared to be no reason why this 
should be so, in particular in view of the nature of service industries and the predominant U.S. policy 
toward investment.  On the one hand, the U.S. had on e of the most open foreign  investment regimes in 
the world.  On the other hand, the delivery of many tr ans-border services required a local presence, such 
as the sale of customer-based insurance or accounting services, or legal services.  This was why all service 
negotiations discussions extended to investment i ssues.  When a foreign country provided a service 
through an affiliated firm in the United States, one sh ould not assume that this displaced exports to the 
U.S. market.  The size of the whole market could have grown for foreign providers, with the foreign 
affiliates being indirectly responsible for much of the U. S. cross border imports.  U.S data for goods trade, 
for example, showed that foreign affiliates in the Unit ed States accounted for one-third of goods imports. 
 177. The macroeconomic environment had also b een raised with respect to anti-dumping and 
countervailing duty actions  --  an area which was to be  discussed at greater length later.  The macro issue 
had been whether such actions would increase, if the Un ited States entered into a cyclical downturn.  The 
honest answer was that the authorities did not kn ow.  Anti-dumping and countervailing duty actions 
resulted from private decisions, not from government  policy.  However, U.S. laws would be faithfully 
implemented in a WTO consistent fashion, no matter what the point in the business cycle. 
  178. Did the U.S. authorities study in tra-industry trade?  He did not want to enter into the academic 
debate over the proper interpretation of such meas ures, and he was not even qualified to do that.  
However, intra-industry trade had not played a large ro le in U.S. trade analyses.  His concern was that no 
trade classification, including the 4-digit SITC, wa s homogeneous with respect to factors or product WT/TPR/M/16 Trade Policy Review 
Page 34 
characteristic relevant to explaining trade flows -- making interpretation of such statistics somewhat 
problematic.  179. The United States' representative noted that all studies done at the time of the implementation of 
NAFTA had suggested very small, but positive gains to the United States.  This had been the case because 
of the prior existence of a free trade arrangement with Canada, because pre-NAFTA tariffs on Mexican 
imports had been very low and because imports from Me xico were very small relative to the size of the 
U.S. economy.  In retrospect the benefits of NAFTA to  the United States, to Mexico and to the rest of the 
world might have been considerably larger than had been picked up in those early modelling exercises.  
Mexico had been a leader in the pro-market economic  reform movement for over a decade.  Sustaining 
pro-market reforms in the face of an extremely di fficult balance-of-payments problem and, in 1995, its 
worst recession in this century had been difficult but critically important to Mexico's ultimate economic 
success, to the trade interests of Mexico's trade partne rs and to all with an interest in the success of the 
market-oriented economic reform movement of middle and low income countries.  He would be the last to seek to deflect any credit from the courageous efforts of the Mexican government over the last two years. 
 But, he did believe that NAFTA, along with internatio nal financial efforts, had been positive factors in 
helping Mexico sustain the reform movement  --  an d avoiding new barriers.  Although there was no 
specific quantitative evidence,  NAFTA was likely to have created more trade than any potential 
diversionary effect, because of the huge market.  Specif ically, the low level of the U.S. m.f.n. tariff against 
third countries meant that the margin  of preference was slight, and the rapid growth of U.S. imports from 
most suppliers in recent years was evidence that any diversion was overwhelmed by growth. 
 180. The Chairperson referred to the discussion in th e U.S. presentation of the stresses and pressures 
experienced by the American people as a result of the major restructuring and adjustment, and a certain 
sense of frustration that the WTO did not appear to discuss or take acco unt of these.  She noted that the 
Trade Policy Review Body was a forum where those pr essures and strains were discussed and recognized. 
 181. The first discussant thanked the representative of the United States for reiterating its commitment 
to the multilateral trading system in general and spec ifically to applying the U.S. legislation in a WTO 
consistent manner.  He noted that in the face of pub lic opinion pressures, U.S. authorities endeavoured to 
accommodate the down-side of open markets and libera lization.  In this cont ext the issue of labour 
standards was raised.  However, the question of labo ur standards should not be dealt with in the WTO 
but in another forum.  The WTO was not re ady to deal with this kind of issue. 
 182. The second discussant observed that macroecono mic and political cycles played an important rôle 
in the development of U.S. trade policy.  Protection ist pressures had somewhat abated during the recent 
period which was characterized by a good macroecono mic performance.  However, he expressed concern 
that protectionist pressures might re -emerge during a period of slow gr owth, or when the current account 
d e f i c i t  w a s  t o  r i s e  a g a i n .   H e  f u r t her expressed an interest in more de tails of trade diversion effects of 
NAFTA, as caused by the rules of origin.    183. The representative of the European Union ra ised the issue of the Free Trade Area of the 
Americas and the APEC forum.  He expressed an interest in the work of the working groups which had 
been established under these fora to deal with services ;  specifically, in the substance of their work and 
their relation to Article V of the GATS.    184. The representative of Norway noted that, as th e largest economy in the world, what the United 
States said or did had an impo rtant and direct impact on the policies of other countries.   
 185. The representative of New Zealand inquired whether the regional arrangements which included 
the United States covered all sectors.  He noted that  the United States had given particular attention to United States WT/TPR/M/16 
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some key bilateral trade balances in spite of the fact that the U.S. current account deficit was very low by 
international standards, and was furthermore offset by inward investment flows.    
 186. The representative of the Republic of Korea no ted that his authorities viewed APEC as a loose 
consultation body.  However, there had been some attempts to work out a bi nding trade régime.  He 
invited the U.S. delegation to give its view on the rôle of APEC in its future trade régime. 
 187. The representative of the United States note d that the present current account deficit was in 
absolute terms a record.  Nevert heless, current trade policies were  not affected.  The FTAA working 
group on services, chaired by Chile,  was conducting  analytical work.  There was no working group on 
services in APEC although existi ng groups covered energy, teleco mmunications, transportation and 
tourism.  The mandates for the AP EC working groups had been specif ied in the Osaka Action Agenda.  
However, at this point they were discussions, witho ut prejudice to the general goals of APEC or FTAA, 
and did not raise concerns regarding Article V of GA TS.  Concerning the comment that U.S. policies had 
a direct influence on the policies of its trading partners  he noted that the lively discussions in Geneva were 
an indication that WTO Members pursued their own interests.  He noted that NAFTA coverage was 
comprehensive.  Over the last days, the United St ates had reached agreement with Israel extending the 
coverage of the U.S.-Israel Free Trade Agreement to th e agricultural sector.  Bilateral trade imbalances 
were a matter of political concern in so me quarters and could not be ignored. 
 (2) Strategies for conducting trade 
 188. The representative of the United States stressed that good trade agreements led to an exchange of 
benefits between trading partners, in  other words deals that were good for the United States were also  
good for U.S. trading partners, because these were the de als that stick.  He recognized that because of the 
U.S. economic position it had leadership responsibilitie s.  But this did not imply the obligation to nurture 
free riders.  He strongly believed that free ridership was not only unpopular with the people of the 
countries that were not free riders, but that it did no t help the free rider to improve its economic outlook.  
Rather, he believed leadership required the United States to identify its pr iorities early, to devote resources 
and thought to the negotiations before it, and to make as ambitious offers as its interests would allow.  He 
did not think the United States had an obligation to init iate, nor even to participat e, in every negotiation, 
but to do so whenever and wherever it could identify a national interest of the United States, including the 
U.S. interest in the overall success of negotiations  and of the WTO.  He also believed that trade 
agreements should be adhered to, which was why th e U.S. authorities relied heavily on all types of 
compliance and enforcement activities.  189. He noted the concerns concerning so-called U. S. unilateralism in trade and the continued use of 
Section 301.  He stressed, first, that Section 301 created a means fo r U.S. exporters to communicate 
concerns to the U.S. government about foreign practices which may be  restricting market access.  All 
governments had mechanisms, formal or  informal, to hear the concerns of domestic exporting companies. 
Second, Section 301 had, from its inception, always required the U.S. govern ment to use multilateral 
dispute settlement mechanisms, when such mechanisms had been available to deal with the complaint.  
The principal issue for the authorities in pursuit of  the U.S. trade interests under Section 301 had been 
that, until the inception of the WTO, GATT dispute settlement did not cover many of the barriers faced 
by U.S. exporters.  Third, no country had worked harder since the conclusion  of the Tokyo Round for 
the expansion of multilateral trade disciplines and a strengthened dispute settlement mechanism than the 
United States.  The United States had called for a ne w round of multilateral trade negotiations to achieve 
these ends in 1982, a call that had been rejected by the contracting parties in that year.  The Uruguay 
Round had not been launched until four years later.  Fourth, after 1982, the use of Section 301 resulting in 
bilateral negotiations outside the GATT had been al most exclusively in areas where GATT had had little 
or no competence and in which ther e had been considerable resistance  to expanding existing GATT trade 
disciplines -- areas such as agriculture, services, inte llectual property rights en forcement and trade related WT/TPR/M/16 Trade Policy Review 
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investment measures.  The U.S. authorities would ha ve preferred in those years to use a multilateral 
dispute settlement mechanism -- in fact, Section 301 woul d have required the U.S. authorities to so -- but 
none had been available.  In the absence of agreed  international rules and dispute settlement procedures, 
countries had no recourse but individual means to address problems in their international commercial 
relations.    190. The U.S. authorities were confirmed multilatera lists in trade and were committed not only to the 
system in its current state, but to its expansion and im provement as well.  The representative of the United 
States believed that, at a minimum, the pursuit of U. S. trade interests under Se ction 301 in areas without 
multilateral discipline had helped demonstrate the case for such disciplines and had contributed 
measurably to the successful outcome of the Uruguay Round.  Thus, while U.S. policy had not changed, 
U.S. actions had.  The Uruguay Round and the WT O had given the United States and the world a 
multilateral recourse which formerly had not existed and had increased the rule of law in trade. The U.S. 
authorities were proud of this achievement, they were  using the mechanisms fully, abiding by the rules and 
encouraging others to do so.  This was apparent in  the fact that all Section 301 actions with respect to 
WTO members since the entry into force of the WTO had been pursued under the Dispute Settlement 
Understanding.      191. Regarding the criticism from other delegations wit h respect to the so-called extraterritoriality of 
U.S. trade policy and its perceived application in rece nt legislation, such as th e "Helms-Burton" Act, he 
mentioned that these matters were th e subject of WTO dispute settlement.  Therefore he though it was not 
appropriate for him to discuss them any fu rther in the Trade Policy Review Body.  
 192. He had listened with considerable interest and some concern to the various interventions about 
the positions of the United States on services, in  particular those taken in the post-Uruguay Round 
negotiations in several sectors.  Some of these interv entions had suggested that the U.S. position in these 
negotiations was somehow dictated by pre-election co nstraints, and that the Adm inistration should now be 
able to bind its laws and other measures in telecommu nications and financial systems on an m.f.n. basis.  
This was not a correct reading of the policy objectives that, from the outset, had governed the position of 
the United States in thes e extended negotiations. 
 193. The U.S. position continued to be guided by on e basic principle:  the achievement of substantive 
commitments to market access and national treatment by  a wide range of countries in these sectors.  The 
Administration did not believe that objective had b een achieved under the previous deadlines.  The 
representative of the United States strongly belie ved that opening markets and encouraging competition 
would benefit all countries in the critical sectors of financial services and basic telecommunications services. 
 The goal was predictability and transparency of an  open system bound in WTO commitments, as stressed 
the previous day by Ambassador Benjelloun.  WTO Memb ers could be sure that the United States would 
continue its very active rôle in the concluding phase  of the telecommunications negotiations, and would see 
a similar level of commitment by the U.S. Government  in 1997 in the negotiations on financial services. 
 194. He was particularly disturbed to  hear one intervention that ques tioned the precision of the U.S. 
objectives in the ongoing negotiations  on basic telecommunications.  As he had said at the outset of this 
part of the negotiation, he did not see leadership as extend ing m.f.n. benefits to free riders that were 
obviously capable of undertaking obligations.  The Unit ed States would lead by putting in good offers 
early.  That this constituted leadership was demonstrated by the fact that so few did so. 
 195. In telecommunications and financial services, the U. S. authorities had been specific at all times in 
its objectives, and had negotiated tirelessly at all le vels.  When the end game of these negotiations had 
started, there should have been no doubts  about the position of the United States. 
 United States WT/TPR/M/16 
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196. A number of interventions had reminded the U. S. delegation of the principle of "progressive 
liberalization", to underscore that full liberalization was not expected of countries through one round of 
negotiations.  What the United States was seeking,  in financial services and basic telecommunications 
services, was a meaningful "down payment" of liberalizatio n in this first round.  He rejected the notion that 
the U.S. objectives had been excessive.  To the cont rary, they had been reasonable and had taken into 
account particular situations in countries.  197. What the United States would not accept was a set of commitments by countries that provided for 
a modicum of market access opportunities in these sector s, or no access guarantees at all.  He strongly 
urged that countries re-examine th eir offers and commitments in thes e sectors and assess the extent to 
which they provided real access to foreign services pr oviders.  Without such re -examination, no successful 
result would be realized.  198. A number of delegations had asked whether the U.S. Administration would seek renewal of 
fast-track negotiating authority.  This would requir e extensive consultations with the Congress.  As was 
clear from press reports, the Administration was st ill being formed and Congress would not meet until 
January 1997.  As soon as the consulta tions could go forward they would be started.  U.S. trading partners 
would be informed of this process.    199. The first discussant drew attention to the impact of the United States on the world trading system.  
He referred to the possibility that if the United States  invoked a national, or political, security exemption 
other countries might follow, thus undermining the predictability of the system.  He described the 
comments on Section 301 as helpful but would welcome further detail on the use of the GSP scheme in 
relation to the use of other trade measures.  200. The second discussant noted that Section 301 and WTO dispute settlement provisions might be 
compatible.  The compatibility of Section 301 and WT O dispute settlement might explain the active use 
by the United States of WTO dispute settlement pr ovisions.  However, Section 301 actions remained 
feasible against policies which were not covered by  the WTO and against non-WTO members.  Section 
301 might also remained valid as an instrument to implement sanctions authorized by the WTO Dispute 
Settlement Body.   He inquired whether it was a co rrect assessment that the United States would not 
resort to unilateral measures against WTO memb ers if such policies were covered by the WTO 
Agreements.  He pointed to the resurrection of  "Super 301" by Executive Order and asked the 
representative of the United States whether this was also an instrument to facilitate communication between 
the authorities of the United States and its trading pa rtners.  He was interested when the United States 
intended to implement the recommendation of the Appella te Body concerning the gasoline case.  He also 
expressed concern about the initiative in Congress to establish a Commission to monitor, and advise upon, 
the outcomes of the WTO dispute settlement pa nel reports involving the United States.  
  201. The representative of Canada expressed concern regarding initiatives during the last session of 
Congress to introduce a WTO Commission which would monitor the outcome of dispute settlement cases 
involving the United States.  He encouraged the U.S. Adm inistration to resist such initiative should it be 
taken up again during the new Congress.   202. The representative of New Zealand invited the U.S. delegation to identify the most important 
areas in the telecommunications sector, where changes of  policies and regulations were expected to lead to 
increased liberalization of market access for fore ign suppliers of telecommunications services.   
203. The representative of the European Union welc omed the U.S. statement regarding Section 301.  
He expressed concern that the laws were retained and thus still allowed for an element of unpredictability.  
He inquired whether the Helms-Burton Act was part of  a trend toward unilateral actions and noted that the 
Iran Libya Sanctions Act was at present not subject to  dispute settlement proceedings.  Regarding services 
he reiterated his regret that the United States had no t tabled an offer in the maritime negotiations.  He WT/TPR/M/16 Trade Policy Review 
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shared the U.S. objective to get as  wide as possible a deal in telecommu nications but noted that there might 
a point where the perfect might become an enemy of th e good.  In this context he welcomed the statement 
that the U.S. was not seeking full lib eralization, but a meaningful down payment, although it was somewhat 
unclear what this would consist of, and what the co ncept of "critical mass" entailed.  He shared the 
concerns about the establishment of a Congressional Commission to monitor and evaluate the outcomes of 
WTO dispute settlement proceedings.  He would welcom e some technical amendments to the Secretariat 
report as suggested by hi s delegation in its written questions.      
 204. The representative of Cuba raised the issue of  the compatibility of a unilateral trade embargo by 
the United States with its multilateral obligations.  In this context he inquired specifically about the WTO 
compatibility of the Torricelli Act of 1992 and the Helms-Burton Act of 1996.  He welcomed the discussion of the Helms-Burton Act in the Disput e Settlement Body, but would appreciate comments on 
the previous embargoes which were not taken up in dispute settlement procedures.     
 205. The representative of Japan invited further comme nts on the issue of extraterritorial aspects of 
U.S. anti-trust laws.  His delegati on had submitted additional written questions concerning this point.  
Concerning Section 301, he noted that Japan's experi ence was somewhat more complex than shown by the 
presentation of the representative of the United St ates.  In writing he also proposed some technical 
amendments to the Secretariat report.  206. The representative of Norway asked what pr ospects existed for future  liberalization in the 
maritime transport sector. 
 207. The representative of Australia noted the U.S. acknowledgement that the WTO had broader 
applicability in the area of dispute settlement than GA TT.  In this context she inquired whether it was 
necessary to retain the authority under Section 19 of the 1920 Merchant Marine Act to take unilateral 
action to address foreign shipping pr actices affecting U.S. carriers.   
 208. The representative of United States comment ed on the implementation of the reformulated 
gasoline decision, the U.S. authorities had notified th e DSB of its intention to implement the decision.  
Under U.S. law this required a period of notice and comment because the matter arose by reason of 
administrative regulation.  The U.S.  Administrative Procedure Act required such a period for notice and comment before the new regulation was formulated.  More detail would be provided as the regulatory 
process developed.  209. He could not predict whether a Commission to review decisions of the WTO Dispute Settlement 
Body, also known as the Dole Commission, would be re -introduced on the agenda of the new Congress.  
He stressed that those who believed that the WTO Di spute Settlement Understanding functioned fairly 
had nothing to fear from the estab lishment of such a Commission, as it would uphold decisions that were 
resolved on a sound basis, reinforcing politic al support for the dispute settlement system. 
 210. Super 301 was not so much a way of informing U. S. trading partners as a way of formulating the 
U.S. authorities' own priorities.  It was in the inte rest of the U.S. trading partners to have a clear 
understanding of U.S. trade policy priorities.  211. The United States did not have extensive barriers to trade in external mari time services as about 
95 per cent of U.S. ocean-bound foreign trade was ca rried on foreign vessels.  The United States would 
participate in the maritime negotiations as they resu med in future.  However, the extent that countries 
wished to engage in negotiations reflected their choice of priority sectors;  the United States had its own 
priorities, for example audiovisual services.  As in other sectors the outcome of maritime negotiations 
would depend on whether the objectives of the Mini sterial Decision with respect to this subject at 
Marrakesh were realized, i.e., whether a significant numb er of countries would bind significant openings in United States WT/TPR/M/16 
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their markets.  This had clearly been absent in the maritime negotiations in th e Uruguay Round and in the 
extended negotiations.  The U.S. au thorities remained open to these ne gotiations as part of the build-in 
agenda.  Prior to a conclusion of such negotiations, the United States would maintain the rights codified 
under Section 19 of the 1920 Merchant Marine Act.  212. The U.S. authorities also sought meaningful mark et openings in telecommunications.  As part of 
the negotiations, the United States would make clear to its partners, delegation by delegation, what were the 
U.S. objectives.  The United States did not seek "the perfect" offer from every country in the negotiations.  
In general, the U.S. authorities sought meaningful down payments on the process of market opening, 
including commitments to pro-comp etitive regulatory principles, cross-border market access and 
investment access which is essential to delivering servic es effectively.  The ques tion on extra-territorial 
aspects of anti-trust legislation would be answered in writing.  
 213. The representative of Cuba noted that the U.S. delegation had not responded to its question.  He 
inquired whether a reply was forthcoming in writing or whether he should consider this as another 
expression of the U.S. blockade against Cuba for over 35 years. 
 214. The representative of New Zealand inquired whet her his question would be answered in writing. 
 
215. The representative of Honduras noted that  two WTO panels had recommended the DSB to 
decide against the position advocated by the United States.  He inquired about consequences for U.S. 
participation in the WTO.  216. The representative of Colombia inquired abou t the implementation of the U.S. GSP scheme.  
 
217. The representative of the United States noted that additional liberalization in the 
telecommunications sector would open local exchange  markets to competition and end prohibitions on 
cross-entry between the local exchan ge telephone industry, the inter-ex change telephone industry (called 
long-distance in the United States) and the cable tele vision industry.  There were only minor changes to 
foreign ownership which were reflected in the U.S. offer in the negotiations.  Those changes were now 
being implemented by the releva nt regulatory authority.   
 218. Regarding the Helms-Burton Act, he was aware of  the often un-recognized function of the Dispute 
Settlement Process in promoting conciliation.  He did not want to do anything that would disturb that 
process.  219. Concerning the question from the representative of Honduras, he  noted that there may have been 
a misunderstanding on how the proposed commission wa s to operate.  The legis lative proposals (which 
were no longer before Congress) only related to decisions that were seen as unjustifiable in terms that were 
consistent with the Dispute Settlement Understanding.  So it did not appear that those who believed in the 
system of the Dispute Settlement Understanding should feel threatened by such process. 
 220. He proposed to answer the qu estion regarding GSP in writing. 
 WT/TPR/M/16 Trade Policy Review 
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(3) Trade measures 
 
221. The representative of the United States reiter ated that the United States had one of the most 
transparent and predictable trading systems in the worl d.  U.S. trade measures were applied according to 
relevant legislation and regulations,  with very little scope for governmental discretion.  For example, trade 
remedy provisions in U.S.  law and regulations ge nerally included detailed procedures for conducting 
investigations, whether they be anti -dumping, countervailing duty or safe guards, and all interested parties, 
including foreigners, had ample opportunity to present their views on the subject matter.  Decision makers 
could be, and occasionally were, overturned in dome stic courts for failing to take account of such 
comments.  222. Many delegations had raised questions or conc erns in oral statements and written questions 
regarding a number of U.S. trade measures, which he  would seek to respond to more fully during the 
course of the day.  However, given the volume an d complexity of many of the written questions his 
delegation had received, he would not attempt to answer all of these in his comments.  Detailed, 
meaningful responses were better le ft to written comments, which woul d be provided at a later date. 
 223. In this part of the discussion, he would conc entrate on tariffs, anti-dumping and countervailing 
duties, government procurement, rules of origin and environmental measures. 
 224. The Secretariat report noted that the United  States had fully implemented its Uruguay Round 
tariff commitments.  Since the Uruguay Round had ende d, the United States had led efforts to pursue 
further tariff liberalization, most notably through th e proposed Information Technology Agreement.  He 
rejected the criticism that the United States only did de als that helped itself.  The United States did pursue 
its own interests, but also made deal s of mutual benefit to both sides. 
 225. The U.S. tariff régime was characterized by low rates and minimal tariff escalation.  By the end of the Uruguay Round implementation period, more than 70 per cent of U.S. tariff lines would be less than 
or equal to 5 per cent and more than 40 per cent of tariff lines will be duty free.  In addition, the United 
States had bound its tariffs at applied rates, with the exception of only two tariff lines.  Several delegations 
had pointed out that the United States still had some ta riff peaks in certain sectors.  So-called tariff peaks 
played a minimal rôle in the U.S. tariff profile (3.8  per cent of 1996 lines) and would continue to decline 
as Uruguay Round tariff concessions were phased in (to less than 2.5 per cent of lines in 2004).  By 
contrast, many of U.S. WTO partners, both develo ped and developing, had high ceiling bindings and 
applied rates that range from 10 to 50 per cent.  226. U.S. proposals in the Uruguay Round had contri buted to the substantial liberalization which was 
achieved in many areas.  The United States had also contributed to liberalization in all areas of the tariff 
schedule, including sectors that we re priorities for other WTO member s.  The U.S. authorities were 
continuing their efforts in the area of tariff libera lization.  The proposed IT A promised to serve as a 
stepping stone to a continuous proc ess for further tariff liberalization.  One important aspect of further 
liberalization had to be the binding of tariffs on a br oad basis by developed and de veloping countries alike. 
 227. Turning next to anti-dumping and countervailin g duties, many delegations had acknowledged the 
recent decrease in the number of new investigation s and orders.  He added that no WTO member had 
requested formation of a dispute settlement panel with respect to any new U.S. action.  The WTO 
Anti-dumping Agreement provided a number of im provements over the Tokyo Round Agreements, and 
he believed that U.S. law had  faithfully implem ented those agreements.  The primary objective in 
drafting legislation had been to ensure that it woul d be consistent with the letter and spirit of the WTO  
Agreements.  Some delegations had commented on the U.S. interpretations of these agreements and the 
length and complexity of U.S. laws.  The U.S. respon se was that the level of detail in U.S. legislation 
enhanced the certainty and transparency of U.S. proceedings.  While the WTO Agreements were more United States WT/TPR/M/16 
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specific than previously had been the case, they  still provided only a framework for conducting 
investigations and review.  Exporters needed to be ab le to ascertain with some predictability when they 
would be found to be dumping;  under what conditions would dumped imports be found injurious;  how subsidies investigations would be conducted;  and how to challenge a finding before an independent 
judicial body.  U.S. legislation  prov ided much of this predictability.   
 228. Anti-dumping regulations were under revision, and when that revi sion was completed shortly, it 
would increase the level of clarity of U.S. procedures .  The new countervailing duty regulations, drafts of 
which would be published soon, would further explain the methodologies.  This openness carried over to 
the administrative process.  Every aspect of U.S. proceedings was public and open for comment.  At the 
end of this process, findings were subject to judi cial review.  All the information upon which U.S. 
determinations were based had to be  based on the official record.  In fact, he hoped that other WTO 
members would seek to assure the same degree of op enness and predictability in their anti-dumping and 
countervailing duty actions.  229. Several delegations had raised the question of  why the number of new investigations and orders 
had decreased since the entry into force of the WTO.   T h a t  q u e s t i o n  w a s  d i f f i c u l t  t o  a n s w e r .   U . S .  
authorities did not control the volume of cases since these trade remedies could not and should not be a 
means for managing the general level of trade.  The vo lume of cases was determined by petitions from the 
private sector, which were subject to certain evidenti ary hurdles, not Government discretion.  That said, 
the overall impact on U.S. imports of anti-dumping and countervailing duties was extremely limited.  As 
noted by the Secretariat, the actual value of imports a ffected by such orders was a small percentage of total 
U.S. merchandise trade.  230. A number of delegations had raised concerns with U.S. government procurement practices, while 
ignoring the fact that only a small proportion of WTO members had even subm itted themselves to WTO 
disciplines on their government procurement practice s.  The United States had clearly staked out a 
leadership rôle on this issue, both in the plur ilateral Government Procurement Agreement and more 
broadly in preparations for the Sing apore Ministerial.  He did not s ee this as a one way street.  The 
United States was committed to liberalization of gove rnment procurement practices in the WTO, including 
continuous expansion of U.S. coverage.  That was wh y the U.S. authorities were  leading the effort for a 
decision launching a transparency negotiation at the Singapore Ministerial.  That agreement could be a 
stepping stone for many developing countries to consider joining the plurilateral Government Procurement 
Agreement (GPA).  231. The general rule applied in U.S. procurement po licies, both at the Federal and sub-federal levels, 
was full and open competition.  The emphasis was on ensuring transparency throughout the process.  
Procedures were generally predictable, even when  certain Buy American preferences applied, and 
interested suppliers, both domestic  and foreign, could readily assess un der what circumstances they were 
bidding and their prospects for success.  232. As a result of coverage under the plurilate ral Government Procurement Agreement (GPA),  
Buy-American restrictions applied to a relatively sma ll portion of Federal contracts - only those for goods 
under the GPA threshold of 130,000 SDRs ($190,000).  The United States also applied a number of 
restrictions, which were limited strict ly to procurement by the Department  of Defense, such as those which 
were covered by the so-called "Berry Amendment" , but maintained exceptions under the GPA and 
NAFTA for these items, including those that were sens itive for national security  reasons, just as other 
signatories maintained their own defense-related restri ctions through similar negotiated exceptions.  The 
United States had also negotiated exceptions to  the GPA and NAFTA for small and minority-owned 
business set-asides.  They served an  important socio-economic function while being limited in scope to a 
relatively small portion of contracts.   Historically, they had affected between 6 and 7 per cent of the total 
value of U.S. coverage under the Tokyo Round GPA.  Despite the fact that the United States had a WT/TPR/M/16 Trade Policy Review 
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negotiated exception, it had always sought to apply set-asides on a transparent,  predictable basis.  The 
United States expected to continue to discu ss with other GPA signatories how transparency and 
predictability associated with set-asides could be enhanc ed.  However, one aspect of awards made to small 
and minority businesses should not be overlooked.  Ma ny of these awards were made through a full and 
open competitive procurement process and not through set-asides.  Often U.S. trading partners had cited 
inflated statistics that included cont racts awarded on a competitive basis. 
 233. As the result of requests from U.S. tradin g partners in negotiations on the WTO GPA, the 
Federal government had sought commitments from st ate governments to submit their procurement for 
coverage under the GPA.  Through these efforts, 37 St ates, including most of the largest - California, New 
York, Florida, Texas and so on, had agreed to cover certain of their procurement under the GPA.  State 
coverage was estimated to cover nearly US$50 b illion annually.  States had either eliminated 
discriminatory restrictions or had bound themselves to not apply new di scriminatory requirements on this 
procurement.  He noted that the one GPA signator y that had been most vocal in criticizing U.S. 
procurement restrictions was also the only signator y that had yet to commit to any coverage of its 
sub-central procurement, despite very substant ial discriminatory measures at this level. 
 234. The representative stated that the United St ates was actively participating in the WTO work 
programme leading to the harmonization of non-preferen tial rules of origin;  the authorities also intended 
to continue to comply with obligations under the WTO Agreement on Rules of Origin.  U.S. policies on 
adoption of uniform rules of origin were consis tent with WTO obligations.  Similarly, the U.S. 
implementation of preferential rules of origin were in compliance with the disciplines set forth in Annex II 
of the WTO Agreement on Rules of Origin.  As to the questions raised with respect to textiles, he would 
addressed that issue when the discu ssion turned to sectoral matters. 
 235. He emphasized the importance of the pioneerin g efforts of the U.S. authorities to promote 
communication between the trade and environment communities.  In March 1994, the President had 
established a Trade and Environment Policy Advisory Committee to provide polic y advice to the U.S. 
Trade Representative's Office, the Environmental Pr otection Agency and the Executive Office of the 
President on issues involving trade and the environment.  At the same time, the United States had sought 
to engage other countries on recognizing the linkage s between these two issues.  The U.S. authorities 
preferred a multilateral approach for a ddressing many of the problems it fa ced in its efforts to protect other 
species and prevent environmental degradation.  Clearl y more work needed to be done in this area.  
Recent examples related specifically to turtles and do lphins, species that the United States had sought to 
protect through trade measures.  But the United States experienced other trade measures in other sectors, 
which affected U.S. agricultural exports for example, that were supposed to be motivated by environmental 
purposes.  Following several years of negotiations invo lving the United States and 22 other nations in the 
Western Hemisphere, the Inter-American Convention on  the Protection and Conservation of Sea Turtles 
had been adopted on 5 September 1996.  The year be fore, the United States had signed the Panama 
Declaration, which strengthened and formalized th e International Dolphin Protection Program of the 
International Tropical Tuna Commission .  He expressed the hope to cont inue to be able to work with 
U.S. trading partners and U.S. enviro nmental partners on the expansion of the environmental rule of law.  
 236. The first discussant recognized that there was du e process in the U.S. trade remedies regulations.  
The question was how to find the r ight balance between the predictability of the rule of law and the very 
detailed and complicated legislation used in the United  States.  Although the legislation would certainly 
appear transparent in the eyes of experienced lawyers,  it might appear a factor of great complication to 
those who were trying to trade with the United States.    237. Concerning tariffs, he queried whether there were  any further zero-for-zero initiatives planned.  
On the environment, he noted the United States woul d prefer a multilateral approach to addressing these United States WT/TPR/M/16 
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questions, but was it possible for the United States to develop any initiative which would mitigate the impact 
of these environmental standards on the exporting countr ies, while work at the multilateral level continued? 
 238. The second discussant agreed that no U.S. an ti-dumping measures had been appealed to a WTO 
panel and he recognized that a lot of the new provisio ns in the area anti-dumping measures contained in 
the WTO Agreements had been translat ed into U.S. law.  He noted, ho wever, that some provisions in 
U.S. trade remedy legislation did not exist in the WTO Ag reement.  For example anti-circumvention law 
had been in the "Dunkel draft" but had been deleted fr om the Agreement after very intensive discussions.  
This provision in U.S. law could become a source of  controversy in the near future.  Other examples 
which might prove controversial in future included the de minimis provisions and individual-to-average 
price comparisons.  He hoped that the U.S. anti -dumping legislation woul d be very cautiously 
implemented and take into account the concerns of U. S. trading partners as expressed during the Uruguay 
Round as well as the various concer ns expressed in the WTO bodies. 
 239. He expressed appreciation for the U.S. init iative in negotiating proposed arrangement on 
government procurement.  He would welcome an ex pansion of the membership  of this Agreement.  
Nevertheless, the continued existence and possible widening of some very old provisions, such as 
Buy-America provisions at the federa l, State and municipal level, was a matter of concern, in spite of the 
coverage of such procurement by the plurilate ral Government Procurement Agreement.     
 240. He appreciated the initiative of the United States  in the area of trade and environment.  However, 
the extraterritorial nature of some U.S. environmenta l laws was inconsistent with international law and went 
beyond the possible violation of WTO Agreements.  Another matter was the prohibition on export of logs harvested from federal and State fore sts.  Such export prohibitions we re considered inconsistent with the 
U.S. policy to pursue zero-for-zero negoti ations in the forest products area.   
 241. The representative of the Republic of Korea noted that, in spite of detailed provisions in U.S. laws 
and regulations, implementing officials had substantial discretion in implementing anti-dumping measures.  
In response to the U.S. encouragement of other countr ies to seek similar openness in their legislation he 
noted that anti-dumping was not a problem in most other countries.  However, the perceived abuse of 
anti-dumping measures was not a prob lem unique to the United States, it was also raised in consultations 
with representatives of the European Union.  He encour aged the representatives of large economic entities 
to be very cautious in their initiation of anti-dumpi ng measures.  A recent U.S.  General Accounting Office 
study stated that the U.S. Government had abused th e safeguard measures in the implementation of the 
Agreement on Textiles and Clothing.  He wondered  whether a similar conclusion could be reached 
concerning the implementation of the Agreement on Anti-dumping Measures  The representative also 
expressed concern about the buy-Am erica provisions and the anti-cir cumvention provisions of U.S. 
legislation.  He would welcome written answers to the previously-raised issues of labelling requirement in the automobile sector, regulations co ncerning alcoholic beverage containe rs and the definition of "small- 
and minority-owned businesses" as applied to government procurement preferences.  
  242. The representative of Colombia raised the issu e of the tuna import embargo for the protection of 
dolphin and other fisheries.  As indicated in the U.S.  statement, the United States had reached agreement 
on the administration of certain environmental standa rds with Colombia and a number of other countries.  
Colombia complied with the agreed standards.  He  asked what Colombia could expect from the 
Administration on the topic of the tuna embargo.    243. The representative of Japan inquired about the us e of the sunset clause as applied to anti-dumping 
measures in place.  He also referred to a writte n question on the issue of government procurement 
security reservations coveri ng services  rendered under management  and cooperation contracts to the U.S. 
Department of Energy and NASA.  He inquired specifically whether suppliers involved in the WT/TPR/M/16 Trade Policy Review 
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development of these projects were allowed to tender for the products in the development of which they 
had previously been involved.  244. The representative of Venezuela inquired under what conditions the tuna embargo would be lifted 
from countries like Venezuela which complied with the se curity measures agreed with the United States.  
Venezuelan producers were also in accordance  with norms established in U.S. legislation.  
  245. The representative of Poland raised the issue of  foreign trade zones; what was the main economic 
rationale for these zones, what was the U.S. economic ex perience with this type of institutional setting, what 
other activities apart from automob iles were developed in these zones; and what incentives, if any, were 
applied with respect to operators acting in these zones.    246. The representative of the European Union refe rred to two of the written questions concerning 
government procurement at the sub-federal level and one in relation the problem of the "Berry 
Amendment".  He hoped that if no detailed answer could be given, it could be provided in a written reply.     247. The representative of the United States comme nted that he U.S. Administration retained broad 
authority for zero-for-zero negotiatio ns sought in the Uruguay Round.  In this context he welcomed the 
expansion of these negotiations be yond the Information Technology Ag reement to the pharmaceutical and 
other sectors, provided that such  extension fell within the existing Congressional authority.     
 248. He noted that the U.S. authorities actively so ught to maintain a balance between the level of 
minimum regulation required and due process.  During  the past four years, the regulatory process had 
been substantially simplified.  The process of stream lining regulations would continue wherever consistent 
with due process.  Existing regulations, including th ose covering the implementa tion of the anti-dumping 
legislation, existed to prevent abuse.   Therefore, these measures were not abused as asserted during the 
discussion.    249. The U.S. authorities considered  anti-dumping legislation, and specifically the anti-circumvention 
provisions, to be consistent with bo th the letter and the spirit of Ar ticle VI of GATT 1994, the Agreement 
on Implementation of Article VI of GATT 1994, an d the Agreement on Subsidies and Countervailing 
Measures.  The rights established unde r Article VI could be evaded by th e simple act of shifting assembly 
operations of minimal commercial sign ificance to the country of importat ion or to a third country.  Such 
shifting was made more likely by the increased globa lization of international production.  It was a well 
established principle of customs enforcement that auth orities could take action to prevent the evasion of 
validly imposed duties and that substance should preva il over the form of the tran saction.  He was further 
of the opinion that the Ministerial Decision on anti -circumvention served to reinforce the validity of 
anti-circumvention measures under Article VI of GA TT 1994.  It recognized the existence of the problem 
of circumvention and the desirability of uniform anti-c ircumvention rules.  Harm onization of practices was 
desirable and, therefore, it was legitimate for memb ers to take action to deal with the problem.   
 250. He was not familiar with the study on the safegu ards applied under the Agreement on Textiles and 
Clothing (ATC), but he thought it could be a study by the General Accounting Office.  If the Korean 
delegation provided some more deta ils where to find the study he woul d be happy to respond to the issue 
raised.  However, an alleged abuse of safeguards  under the ATC did not imply that anti-dumping 
measures were misused.   251. Regarding government procurement he noted that  Buy-America when it applied was not nearly as 
restrictive as non-transparent practices used by many U.S. trading partners.  The United States would obey 
its obligations under the plurilateral Go vernment Procurement Agreement.   
 United States WT/TPR/M/16 
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252. He did not discuss the shrimp and turtle policies as they were the subject of dispute settlement and 
he did not want to do anything to impair that process.   Regarding the export restrictions on logs, he noted 
that if Japan did not apply import restrictions on wood products the United States would not need the 
export restrictions on logs.  253. In general, the impact of foreign trade zones wa s to increase market access, because if products 
had been manipulated in the zones then the importer had the right to choose the lower of the original duty 
to the United States or the duty on the product with value added.   
 254. He was happy to respond in writing to questi ons regarding auto labellin g, beverage containers, 
government procurement, procurement for NASA servic es contracts.  The "sunset" provisions of the 
anti-dumping legislation would probably become effe ctive in about a year's time, but this would be 
confirmed in writing.  The question on sub-federa l procurement and the "Berry Amendment" had been 
answered but he would consider whether more deta ils could be provided in the light of the written 
question.    255. The second discussant reiterated his statement th at the export prohibition of logs harvested from 
federal and state forests was ques tionable under Article XX of GATT 1994 because domestic users were 
not subject to the same prohibition.    256. The representative of Korea noted that the repres entative of the United St ates considered the U.S. 
anti-circumvention provisions in a ccordance with the letter and spirit of the WTO Agreements.  However, 
during the Uruguay Round this issue had been the subj ect of extensive negotiatio ns but no consensus could 
be reached.  In this context he did not feel comfor table with the explanation of the U.S. delegation.    
 (4) Sectoral issues 
 257. The representative of the United States stated that he had already commented on services in the 
earlier discussions.  The U.S. authorities would prov ide written responses to the detailed written questions 
it had received on specific services sectors.  With re spect to other sectoral issues , he focused on agriculture 
and textiles.  In all countries, some sectors were more open than  others.  One of the greatest 
achievements of the Uruguay Round had been to begin  integration into the multilateral system of two 
sectors, agriculture and textiles, which had traditio nally been excluded from the WTO system in most 
respects, for most countries.  258. Starting with agriculture, the U.S. Federal Agriculture Improvement and Reform Act of 1996 was 
just what its acronym suggests - FA IR.  It decoupled income support payments from current commodity 
prices.  It would move the U.S. agricultural sect or towards a more market-oriented approach, going 
beyond obligations agreed in the Uruguay Round.  Farmers now had much greater flexibility in making 
planting decisions, which should increase their inte rnational competitiveness.  Some questions had been 
raised about loan rates that may still apply, subsidies on exports of key commodities and tariff rate quotas.  
However, the scope for further influence of such me asures on prices and production was significantly 
reduced.  Even though loan rates continued, th ere was no price floor and no government stock 
accumulation.  International market conditions woul d determine the extent to which the United States 
applied its export subsidies.  He be lieved that continuous world trade liberalization was the key to eventual 
elimination or suspension of these export subsidies.   The United States was presently engaged in OECD 
negotiations concerning the establishment of disciplines for agricultur al export credits.  U.S. participation 
in those negotiations was indicative of its commitment to  agricultural liberalization in the multilateral trading 
system.  259. There were also some questions about U.S. policies with respect to value-added agricultural 
products.  U.S. farmers were highly productive, and th e FAIR legislation encouraged them to innovate in WT/TPR/M/16 Trade Policy Review 
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their businesses.  Many would turn to value-added oper ations to diversify.  This was regarded as  no 
more than their exercising their inhere nt economic power as economic actors. 
 260. Regarding textiles and clothing, he noted that th ere had been general agreement that United States 
actions in these sectors were scrupulously within the U.S. Uruguay Round phase-in obligations.  But, there 
was also a concern that the United States had not done more. He believed that a little perspective was 
called for on this issue.    261. From the beginning of the Uruguay Round negoti ations, the U.S authorities had considered that 
the success of the negotiations would ultimately depe nd, in part, on the collective ability to integrate 
agriculture, and textiles and apparel into the normal rules of the multilateral trading system.  The U.S. 
authorities were indeed champions of such integration, despite the fact that the textile and particularly the 
apparel sectors were among the most sensitive in th e U.S. economy.  The U.S. apparel sector was an 
employer of many economically vulnerable American  workers who had come to symbolize to some degree 
the potential plight of modestly skilled U.S. workers in international competition.   
 262. Despite these sensitivities, the U.S. authorities had made great e fforts to assure that textiles and 
apparel, along with agriculture, had been part of th e final Uruguay Round package and that an enlightened 
U.S. Congress had implemented the Uruguay Round Ag reements fully, as negotiated, with appropriate 
phase-in provisions.  The U.S. authorities had scru pulously abided by its commitments and, at a 
minimum, would continue to do so until the complete integration obliga tions had been put into effect.  
While doing more than had been currently announced was not out of the question , any such consideration 
would depend on the willingness of other countries in volved in textile and apparel trade to undertake 
commensurate additional efforts.  263. What often was lost in the public debate on in tegration of this sector was the size of the U.S. 
market already open for imports.  Excluding intra-EU  trade, the United States took in approximately 
33 per cent of exports of clothing worldwide.  As noted in the Secretariat Report, the United States 
absorbed textile and clothing imports from a wide ra nge of countries - according to U.S. data, over 180 
countries, territories, and entities.  Despite protecti on accorded to the sector which was permitted under 
WTO rules and widely used by major importing countrie s, imports in the period  under review continued 
to increase in both the textile and clothing categori es.  The Secretariat report noted the significant degree 
of import penetration, especially in the clothing sect or at 50 per cent (although domestic estimates arrived 
at a higher figure - 60 per cent).  264. The United States was committed to transparent,  stable and careful implementation of the quota 
phase out program established in the Agreement on  Textiles and Clothing, and the authorities had 
prepared and notified a comprehensiv e product integration schedule for th e full transition period - beyond 
what was required by the Agreement - so as to ensure  stability in its market an d for its trading partners. 
 265. As to comments on the U.S. rules of origin, wh en this rule was codified, the U.S. authorities 
provided 18 months of prior notice and the opportunit y for public comment.  The U.S. system of rules of 
origin under the Uruguay Round Agreements Act was completely transparent, and brought the 
overwhelming majority of its rules into line with thos e used by other major importing countries.  The use 
of the safeguard mechanism was in line with the requir ements of Article 6 of the Agreement on Textiles 
and Clothing and had been rigorously reviewed by the Textiles Monitoring Body and dispute settlement 
panels.  266. There were significant challenges ahead to the U. S. ability to successfully make the transition to an 
"integrated" sector - that is, quota free régime - required by the Agreemen t on Textiles and Clothing.  First, 
the U.S. authorities needed to make sure that U.S. trading partners' mark ets were as open to U.S. exports 
as the U.S. market was to theirs.  The "achievement" of real market access for textiles and clothing in the United States WT/TPR/M/16 
Page 47 
world market had been a key element of the WTO Agr eement for the United States.  While U.S. exports 
in the sector had been growing (as noted in the Secret ariat report), they were st ill very low, particularly 
when compared to U.S. import levels .  According to the data presented by  the Secretariat, U.S. exports in 
the sector were one-fourth the level of U.S. imports.  To ensure a stable transition, U.S industries had to 
have the opportunity to compete in world markets.  The experience, on the contrary, was that since the 
implementation of the WTO, there had been a lack of transparency, burdensome new requirements for 
imports and violations of tariff bindin gs in other markets.  Second, the U.S. authorities needed to ensure 
that the disciplines in the Agreement on Textiles and Clothing regarding qu ota circumvention were 
effective and adequate to remedy this significant problem.  Unfortunately, illegal transshipment was 
growing rather than lessening.   267. The first discussant noted that in view of the rôle  of the United States in the agricultural, textile and 
clothing sectors, U.S. trading partne rs had a legitimate expectation that the United States would  have been 
more forthcoming in its agricultural and textile and clothing policies.  He welcomed that the representative of the United States had stated that more might be done in the future.   
 268. The second discussant interpreted the U.S. positi on on services as a type of negotiating tactic, 
designed to get concessions from other partners.  However, it unde rmined the domestic credibility of 
WTO negotiators; they convinced their colleagues in othe r ministries to agree to an offer on the basis of 
the U.S. offer, but were forced to convince them again on the need for further concessions in the light of 
the U.S. negotiating tactics.  He invited the U.S. ne gotiators to keep this pred icament of their colleagues 
from other countries in mind.   269. The representative of Colombia noted that there were no signific ant bilateral disputes between the 
United States and Colombia.  Colombia exported ar ound US$400 million of textile and clothing items to 
the United States and it was also a very important importer.  In 1995 an agreement was reached following a U.S. safeguard call under the Agreement on Textiles and Clothing.  He echoed the concerns of many 
countries exporting textiles and clothi ng items, to some extent as Chai rman of the International Textiles 
and Clothing Board.  This organization, with 22 de veloping exporting countr y members, had followed 
closely the implementation of the Agreement on Textile s and Clothing.  The change in the rules of origin 
had been transparent and there had been extensive consultations with im porters and other parties involved. 
 However, none of the warnings and comments made  during these consultations had been taken into 
account.  He noted that the United States had stri ctly observed its obligations under the Agreement on 
Textiles and Clothing from a legal point of view.  Howe ver, the spirit of the Agreement had been violated, 
as there should be a significant comme rcial effect over the course of th e implementation of the Agreement. 
 There was a significant risk in the backloading of the integration of products under the Agreement.  
Leaving adjustment to the end of the transition period might, at that stage, endanger the implementation of 
the Agreement.  Such risk was not unique to the Unit ed States as similar situations might develop in the 
other countries implementing the Agreement on Te xtiles and Clothing.  He called upon the U.S. 
authorities to review the implementation phase-i n of the Agreement of Textiles and Clothing.  
 270. The representative of the Republic of Kore a referred to the Uruguay Round Agreements Act, 
Article 404, paragraph (a), which stipulated that the U.S. government may take measures to prevent the 
tariff quota levels of imported agri cultural products from disrupting orderly marketing within the States.  
He invited the U.S. delegation to comment on the mean ing of "orderly marketing"  in this context and to 
provide information on measures taken pursuant to this Article.  Korean  exporters of textile and clothing 
products could not fill their import quotas in the United States as Korea was losing its comparative 
advantage in textile and clothing pr oduction.  Nevertheless,  he could understand the concerns of other 
delegations representing textile expo rting countries regarding U.S. mark et access for textiles and clothing 
products.  WT/TPR/M/16 Trade Policy Review 
Page 48 
271. The representative of Japan echoed the concer n of many delegations about the negative stance 
taken by the United States in the maritime sector.  He  hoped that substantive offers would be presented by 
the United States when the negotiations resumed a t  t h e  W T O .   H e  a l s o  i n v i t e d  c o m m e n t  o n  U . S .  
protective measures in maritime transp ort, such as a recent action to re sort to unilateral sanction measures 
under the Merchant Maritime Act of 1920; discriminato ry treatment for shipment of Alaskan north-slope 
oil; and the newly implemented Maritime Safety Ac t of 1996, introducing subsidies to U.S. shipping 
industry to compensate the cost difference with foreign ships.   
 272. The representative of New Zealand commended th e actions that the U.S. authorities had taken in 
implementing the Federal Agricultural Improvement Act (FAIR) Act of 1996.  He remained concerned 
about a number of aspects of U.S. agricultural policies, such as the administration of tariff quotas and 
export credits, but he recognized  that the FAIR Act had fundamentally reformed U.S. policies in the 
agricultural sector and demonstrat ed U.S. leadership in this area .  He would closely monitor the 
implementation of the reform, as it involved larg e sums of money affecting a enormous amount of 
production and exports.  Further he  expressed the hope that  a meaningful agreement concerning export 
credits for agricultural products could be reached in the near future at the OECD. 
 273. The representative of the European Unio n  inquired how, during the forthcoming 
telecommunications negotiations, the United Stat es would deal with the "Effective Competitive 
Opportunities" (ECO) test.  He further inquired about SPS measures  applied to potted plants, as specified 
in the phyto-sanitary legislation PQ37 which was, in theo ry, applicable to potted plants in soil, but was also 
applied to potted plants in sterile material.  274. The representative of Thailand, speaking on be half of ASEAN, noted that the U.S. Committee for 
the Implementation of Textile Agreements (CITA) had caused many unnecessary problems that could 
perhaps have been avoided.  He had taken note of th e statement that the U.S. had scrupulously abided by 
its commitments within the Uruguay Round Agreements .  However, the success of the implementation 
also depended on the ability of the United States to  fully respect the rules and disciplines of the these 
Agreements.  In the first six months of 1995 the CITA issued 24 calls on developing exporting countries.  
A number of these calls were eventually unnecessary;  some ended up in the Dispute Settlement Body and 
one panel had reported.  This made it appear that CITA had made its policy within its own world.  He also questioned the procedural approach of, and the relia bility of data used by, the U.S. authorities when it 
issued these transitional safeguard calls.  His questi on was supported by a report by the U.S. General 
Accounting Office which questioned the integrity of the data used by CITA.  This perhaps called for a 
serious review of the recent policy undertaken by this part icular U.S. Agency.     
 275. Concerning the change in the rules of origin he noted that the representative of the United States 
stated that the United States had abided by th e 18 months compliance obligation.  According to the 
representative of Thailand's record, it did not appe ar so.  The new rules were  published on 5 September 
1995 and implemented on 1 July 1996.  The rules were  notified to WTO memb ers in November 1995.  
As late as May 1996 the U.S. authorities were still seek ing appropriate definitions of the new rules.  The 
new rules of origin were part of the Uruguay Ro und Agreements Act (URAA), Section 334 and could 
therefore be changed only by a Congressional Act.  The changes in the rules of origin applied to textiles 
and apparel had not been put forward in negotiations in Brussels, perhaps becaus e U.S. negotiators could 
not negotiate changes in these rules in good faith.  He questioned whether th e U.S. negotiators had any 
authority to make changes to the URAA, Section 334, and if so, whethe r the U.S. Administration had the 
Congressional fast-track authority to negotiate and make  the necessary changes in the U.S. rules of origin in 
textiles and apparel.  With reference to the Agreemen t on Rules of Origin, Article (2)(b), he questioned 
whether trade policy objectives had motivated the chan ges in the rules of origin in textiles and apparel. 
 276. The representative of Hong Kong expressed concern about the changes in the rules of origin 
applied to textiles and clothing announced by the United  States earlier this year.  He noted with interest United States WT/TPR/M/16 
Page 49 
the earlier statement by the U.S. representative that no rmally  a notification peri od of 18 months would be 
allowed before any changes in the rules of origin took effect.  Unfortunately, this had not been the case 
with regard to the recent changes and this had adve rsely affected Hong Kong's trading interest.   
277. The representative of Poland noted that tariff qu otas for agricultural products were allocated to 
selected trading partners and asked whether the unut ilized portions of the above mentioned tariff quota 
were available to other WTO members.  278. The representative of India noted that U.S. se nsitivity to trade liberaliz ation in the textile and 
clothing sector stemmed from 656,000 vulnerable workers.  She did not trivialize these sensitivities by 
raising the issue of allocative efficiency or by recalling the number of employees in this very sensitive sector 
in India.  However, she noted that the issues  raised by India had not sufficiently answered. 
 279. The representative of Australia inquired when th e United States expected to be in a position to 
allow foreign users access to satellite links to INMA RSAT and INTELSAT.  She noted that the possible 
enactment of the Fair Trade in Financial Services Bill which was introduced to Congress in early 1995 would enact measures which were incons istent with the m.f.n. principle.  
 280. The representative of the United States stated th at the U.S. request for "critical mass" in the offers 
of its trading partners was not primarily a negotiating tactic.  It was not designed to get concessions from 
countries without having a reason for needing the conce ssions.  It was a statement of fact that the United 
States was not able to make commitments when  important countries did not reciprocate those 
commitments.  He did not have a problem if countrie s could not make a commitment in the face of their 
own political environment.  However, if countries could not make such commitm ents, the United States 
could not to make commitments it had specified in the leading offers, as these were conditional.  He also 
appreciated the situation of governments that took polit ical risks in order to upgrade the quality of their 
offers, only to find that others' offers were not adeq uate and therefore the negoti ation could not go forward. 
 All countries were in this together  and the critical mass concept simply stated the reality that all major 
players in the system needed to find  the ability to make offers in these important negotiations, so that the 
U.S. authorities could bind their commitments at the am bitious levels of their  initial offers.  The U.S. 
authorities would work with all delegations to find ways around their particular problems.  He was 
reasonable confident that his authorities could explai n these problems to its Congress and justify excepting 
such offers.  It was very difficult though, to accept a situation in which major players either did not make 
offers, or did not make offers of a level of ambi tion commensurate with their stage of development. 
  281. All WTO members maintained at this stage an  m.f.n. exemption to basic telecommunication 
services.  The U.S. Federal Communications Commission (FCC) had set out a year earlier a set of criteria 
of case-by-case decisions on the i ssuance of radio licences and licenses to provide international services, 
which were essentially based on both de jure and de facto exam ination of effective competitive 
opportunities for foreigners in the home market of th e applicant.  The FCC's no tice to proposed rules 
making in domestic and international satellite cons olidation orders, which was called DISCO II in the 
United States, proposed similarly an objective set of criteria for case-by-case decisions on licensing U.S. 
earth stations that received signals from non-U.S. licen ces satellites.  In this case the FCC had not yet taken 
action on the proposal and he had not idea when they  would be able to do so.  Comments from non-U.S. 
governments and foreign operators had been receiv ed and apparently welcomed by the Commission.  
Both the foreign carrier order and DISCO II affirm that the Executive Branch can advice the FCC of 
concerns related to security, law enforcement, foreign  policy, trade policy and in ternational agreements.  
The U.S. conditional offer in the Group on Basic Telecommunications (GBT) was designed to remove 
any consideration of reciprocity as part of the proce ss of granting a licence.  It would provide effectively 
unlimited market access and national treatment for all basic telecom sectors, including satellite based 
services on a m.f.n. basis.  But again the offer was co nditional upon a critical mass of high-quality offers by 
other WTO Members.  But both the Telecom Act and these recent actions had actually increased the 
possibilities for foreign participation in the different se ctors.  First the U.S. au thorities had codified the WT/TPR/M/16 Trade Policy Review 
Page 50 
rules, and second the rules provided incentives fo r other governments to match the U.S. willingness to 
open its market.  The conditional offer took the same approach.    282. As there had been elaborate discussions in the Group on Basic Telecommunications about the 
problems of satellites, he referred the question on access by non-U.S. companies to satellite links to 
INMARSAT to those negotiations, where concessions could be exchanged.  Concerning access to 
INTELSAT it was unlikely that the U.S. authorities would change anything about the concept monopoly, 
although he noted that there were discussions in  the appropriate international organizations about 
rechartering.  This could be helpful in the resoluti on of these problems.  A written answer would be 
provided to the banking services question if it could be submitted in writing.  
 283. He noted that the number of workers in th e textile and clothing sector was approximately 
1.5 million.  U.S. trading partners should not question the good faith of the U.S. authorities regarding 
policies this sector.  He appreciate d the seriousness of the many comments on U.S. policies in this sector 
and would possibly have further wri tten comments on this subject.   
 284. He appreciated New Zealand's comments on the FAIR Act.  The question of reallocation of tariff quotas for agricultural products was somewhat comp licated and would be addressed in a written answer. 
Concerning the question of potted plants he observed th at the United States had very particular laws about 
animal and plant trade, one of which was PQ37 referre d to in the discussion.  The U.S. government was 
interested in cooperating on this issue with other in terested parties and was prepared to show a willingness 
to approve for an evaluation additional ge nera of plants in the growing media.  
   285. The representative of Cuba noted that the repr esentative of the United States had declined to 
embark on an analysis of the unilateral and extraterrito rial measures enforced by the United States against 
Cuba, on the understanding that this would be deal t with shortly in the Dispute Settlement Body.  He 
expressed the hope that in the words of the representative of the United States there was a positive signal 
sent out.  However, he reminded the U.S. delegation to answer the written questions submitted by Cuba in writing.   286. The representative of Thailand (on behalf AS EAN) reminded the U.S. delegation that it had 
submitted written questions and that it woul d appreciate if they could be answered. 
 United States WT/TPR/M/16 
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VII. CONCLUDING REMARKS BY THE CHAIRPERSON 
 
287. This meeting of the Trade Policy Review Body ha s now completed the fourth review of the United 
States' trade policies and practices.  These remarks, which are made on my own responsibility, summarize 
the main points of discussion.  They are not intend ed to substitute for the collective evaluation and 
appreciation of U.S. trade policies and practices.  Details of the discussion will be reflected in the minutes of the meeting.  288. The discussion developed under four main themes:  (i) Economic conditions and regional trading arrangements; (ii) U.S. strategies for conducting trade po licies;  (iii) trade policy measures; and (iv) sectoral 
issues.  289. A very large number of questions has been raised in written form;  many of these cover 
overlapping issues.  We look forward to re ceiving the replies from the United States. 
 (i) Economic conditions and regional trading arrangements 
 290. WTO members complimented the United Stat es on its strong economic performance, 
characterized by high growth and low inflation.  No ting the rising share of trade in U.S. GDP, they 
emphasized the key rôle played by securely open ma rkets for goods, services and investment in U.S. 
economic development and resource allocation.   Bi nding of market access conditions by the United 
States was also regarded as important to the world tr ading system.  The United States was thus urged to 
exercise leadership in the WTO to  bring negotiations on financial services, telecommunications and 
maritime transport to a successful conclusion.  291. During the period under revi ew, net imports had increased and the current account had widened 
somewhat.  It was recognized that this net import expansion was taking place during a period of slack 
demand in other developed markets, thus helping to  stabilize world economic conditions.  Some fears 
were expressed that a rising current  account deficit might contribute to  renewed protectionist pressure in 
the United States.  292. Some members commented on the importance of services to the U.S. economy, recognizing that 
productivity gains in that sector were crucial to impr ovements in living standards.   In that context, they 
noted the shift in the delivery of service imports from cross-border to establishm ent and asked if this was 
related to State investment incentives.  293. Members remarked that, in the period under review, regionalism had not been a main motor for 
the expansion of U.S. foreign trade;  trade with Canada and Mexico had increased at a similar pace as that 
with other trading partners.   294. In response, the representative of the United States emphasized the importance of open markets 
in helping to assure efficient production structures .  The benefit to the United States came from the 
connection between an open, competitive domestic envi ronment and open borders.  He added that many 
in the United States had endured st ress in restructuring the economy;  these adjustment pressures had led 
to the United States, over many years, urging cons ideration in the WTO of core labour standards. 
 295. In addressing concerns that the U.S. saving -investment imbalance, and associated trade and 
current account deficits, might erode public support for open trade policies, he no ted that the trade deficit 
as a share of GDP was now less than half the level of its previous peak in 1987.  Moreover, there had been 
considerable progress in reducing the federal budget deficit, which was the Government's most direct link 
with savings and therefore the trade deficit.  A recent  rise in the trade deficit reflected U.S. economic WT/TPR/M/16 Trade Policy Review 
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expansion, in which investment had played a greater rôle  than in the past.  In this expansion, the United 
States had also been a significant pole of attraction for foreign capital.  296. On services, the representative noted that intern al deregulation in a number of sectors had raised, 
and would continue to raise sector al productivity.  Success in GATS negotiations would also help.  He 
believed that the openness of the U.S. foreign investme nt régime, and the practical requirement for a local 
presence to deliver many services, underlay the shift from cross-border transactio ns to foreign investment, 
rather than State investment incentives.  297. On regional trade links, the representative said  that the overall benefits of NAFTA might be 
considerably larger than originally  thought.  NAFTA was likely to ha ve created more trade than any 
potential diversionary effect, because of the huge ma rket and its support for wider economic reforms;  
specifically, the low level of the U.S. m.f.n. tariff me ant that the margin of NAFTA preference was slight, 
and the rapid growth of U.S. imports from most supplie rs in recent years was evidence that any diversion 
was much less than growth.  (ii) Strategies for conducting trade  298. Members noted the strong interaction in U. S. trade policy making between multilateralism, 
bilateralism and unilateralism.  Evidence that WTO co mmitments were at the centre of U.S. trade policy 
making was seen in its frequent use of dispute settl ement provisions;  however, a general dissatisfaction 
with the continued unilateralism inherent in "Section 301" legislation was expressed.  Members inquired 
when the United States planned to implement th e Appellate Body ruling concerning "Standards for 
reformulated and conventional gasoline" which was adopted by the Dispute Settlement Body.  
 299. Questions were raised about the implementation  of the WTO Agreements at the State and local 
level, including the notification of sub-fe deral subsidies by the United States.    
 300. Members noted that the United States was cu rrently without "fast-trac k" authority for trade 
negotiations.  Participants asked the U.S. delegation to comment on the impact of the absence of such  
authority.  301. The large number of bilateral agreements concluded by the United  States was a matter of concern. 
 Questions were raised whether such agreements were  implemented on a m.f.n. basis and whether all were 
notified to the WTO.  The representative of Japan st ated that the bilateral U.S.-Japan measures under the 
Framework Agreement involved policy changes by both the United States and Japan and were 
implemented on a m.f.n. basis.  The representative of Canada noted that the possibility of U.S. use of its trade remedy law had played a rôle in reaching the bilateral Softwood Lumber Agreement.  Participants 
stressed that reciprocity clauses cont ained in bilateral agreements could be fundamentally at odds with the 
m.f.n. provisions of the multilateral trading system. 
 302. A number of delegations expressed their ob jections to the unilateral use of trade policy 
instruments for non-trade-policy object ives.  In this context, the "Hel ms-Burton Act" and the Iran-Libya 
Trade Sanctions Act were particularly mentioned and the WTO consistency of these measures was 
strongly questioned.  The extra-territorial use of en vironmental standards applied to imports of tuna and 
shrimp was also criticized.  Some members querie d the non-trade conditions for application of GSP 
preferences.  303. Concerning trade in services, participants stre ssed the importance of an open trading environment 
for the development of an efficient services sector  and noted with regret that the United States had 
introduced a broad m.f.n. exemption to it s financial services offer in 1995.     
 United States WT/TPR/M/16 
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304. Although members welcomed the liberalization under the new telecommunications legislation, 
several noted possible deviations from  m.f.n. treatment to foreign serv ices providers, as contained in 
reciprocity clauses, as well as conc ern with the application of the "public interest" test by the Federal 
Communications Commission.  It was also noted that COMSAT had a monopoly on key satellite links.   
305. Participants expressed disappointment that the Un ited States had not submitted an offer under the 
Maritime Transport Negotiations.  They noted vari ous restrictive measures applied to domestic and 
international maritime transport services.  It was also  stated that the United States had taken unilateral 
measures under domestic legislation, as well as viol ating its standstill commitment by lifting a ban on 
exports of Alaskan oil under the condition that it  be shipped on U.S. fl agged and manned vessels.  
 306. Concerning the movement of persons, member s noted the restrictive use of immigration and 
residence provisions applied by the United States.    307. In reply, the U.S. representative emphasized that good trade agreements should involve an 
exchange of benefits.  "Free ridership" was not helpfu l, and leadership required clear identification of 
priorities.  Enforcement of trade agreemen ts was important in ensuring adherence. 
 308. In this context, he saw Section 301 as a mean s for communication of exporters' concerns:  he 
emphasized that Section 301 was integrally linked to the multilateral dispute settlement mechanism.  Since the entry into force of the WTO,  all Section 301 actions concerning WTO members had been pursued 
under the DSU.  309. The representative declined to comment on the ex tra-territorial application of U.S. legislation, as 
this was under consideration in  Dispute Settlement procedures. 
 310. The representative noted that the U.S. aim in services negotiations wa s to achieve substantive 
commitments to market access and national treatment by a wide range of countries.  The United States 
would thus continue its active rôle in telecommunica tions and financial services, through putting in good 
offers early.  In turn, meaningful down-payments were required from other Members, providing real 
access to foreign service providers and reflecting fu lly the principles of market access, national and 
most-favoured-nation treatment.  311. He stated that the renewal of fast-track negoti ating authority would requir e extensive consultations 
with the new Congress, yet to be formed;  the U.S. would keep Members informed of progress in this 
regard.    (iii) Trade measures  312. While welcoming the low average of U.S. tariffs, Members noted the high tariff peaks in particular 
sectors.  It was noted that zero-for -zero initiatives would contribute to further reduction of tariff averages.  
Questions were raised about increases in the rate of the customs user fee, and whether the fee substituted 
for declines in tariff revenue.    313. Developments in U.S. anti-dumping and counterv ailing legislation and their application to specific 
cases were raised by many participants.  While we lcoming the reduction in the number of new cases, 
members questioned the U.S. concept of  "fair" trade, the definition of "national industry", the use of de 
minimis provisions, the timeframe for application of the sunset clause, the use of anti-circumvention 
measures, and the relationship of AD/CVD measur es to competition policy.  The high cost of 
anti-dumping and countervailing measures to the U.S. economy and trading partners was emphasized.     
314. Members also saw a lack of consistency between rules of origin and labelling requirements used to 
administer preferential treatment under various regio nal trade agreements.  In this context, the U.S. 
delegation was invited to comment on the status of a U.S. Treasury proposal to unify the rules of origin.   WT/TPR/M/16 Trade Policy Review 
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315. Members commended the United States for it s commitment to expanding procurement coverage 
under the plurilateral Government Procurement Agreem ent and for seeking greater transparency in this 
area.  However, many questions were raised conc erning conditions of access to U.S. government 
procurement.  "Buy-American" and "Buy-State" provis ions were criticised as being wide ranging and non 
transparent.  Members cons idered that set-asides for small and mi nority-owned busine sses were becoming 
more important over time and sought  clarification on these areas.   
 316. Standards and technical regulations were raised by  many members as an area of concern.  Issues 
raised included the application of environmental process standards to imports of tuna, shrimp and 
gasoline.  The question of the Corporate Average Fu el Economy (CAFE) Act was also critically noted. 
 317. In reply, the U.S. representative recalled the co ntribution made by the United States to overall 
tariff liberalization;  these efforts would continue, in ter alia, through the proposed Information Technology 
Agreement.  Binding of tariffs on a broad basis by all Members was very important. 
 318. He welcomed the improvements in anti-dumping  and countervailing provisions contained in the 
WTO Agreements.  A revision of anti-dumping and countervailing regulations underway would increase 
the level of clarity of U.S. procedur es.  Anti-circumvention provisions were, in his view, consistent with the 
enforcement provisions of the releva nt Agreements and Ministerial Decisions.  It was not easy to say why 
the level of new investigations had declined, as this was largely determined by private sector actions. 
 319. The representative noted in passing that only  a few Members had undertaken WTO disciplines in 
Government procurement.  The United States wa s committed to liberalizatio n in this area:  the 
transparency negotiation to be proposed at Singapor e could be a stepping stone for wider membership of 
the GPA.  U.S. policies were predictable and transpar ent, even when Buy Americ an preferences applied.  
Restrictions under these provisions  and set-aside procedures applied to a small share of procurement 
covered by the successive Agreements:  their importance had in some cases been exaggerated.  National 
security exceptions were maintained in the same fram ework as those by other trading partners.  37 States 
had agreed to GPA commitments.  320. The United States was participating actively in WTO work on rules of origin;   U.S. policies on 
adoption of uniform rules and application of prefer ential rules were consistent with WTO obligations.  
The representative also emphasized the linkages, both  domestically and multilaterally, that the United 
States sought to promote between trade and enviro nmental issues, referring particularly to recent 
international conventions on protec tion of sea turtles and dolphins. 
 (iv) Sectoral issues  321. The enactment of the Federal Agricultural Im provement and Reform (FAIR) Act was welcomed.  
However,  Members noted the high average level of tariffs applied to  products for which quantitative 
restrictions had been tariffied under the WTO Agreem ent on Agriculture.  Alth ough much lower tariffs 
were applied to imports under tari ff quota, many of these quotas re mained underutilized, leading to 
questions concerning the allocation of quotas to trading partners.  Members expressed regret that export 
subsidies continued to be available under the FAIR Ac t - and even expanded in some areas -and queried 
the targeting of certain export su bsidy provisions on particular re gions.  SPS measures and proposed 
changes to these measures were also critically reviewed.  322. The U.S. implementation of its commitmen ts under the WTO Agreement on Textiles and 
Clothing (ATC) was an important issue for many partic ipants.  It was noted that tariffs in this sector 
remained high.  Some Members expressed considerab le disappointment that no items previously under 
quota had been included in the first integration phase and that the U.S. integration of textile and clothing United States WT/TPR/M/16 
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products over four phases, as required by the ATC, was heavily backloaded.  It was considered that this 
violated the spirit of a gradual phasing-in of the pr oducts covered by the Agreement and could inhibit the 
adjustment process in the U.S. market.  The change in  the rules of origin applied to textiles and clothing 
was also criticized as being disruptive to international trade, while the use of the safeguard provisions of the 
ATC was considered by some members to be excessive.  323. In reply, the U.S. representative noted that th e FAIR Act would move the U.S. agricultural sector 
towards a more market-oriented approach, going beyo nd obligations agreed in the Uruguay Round.  The 
further influence of such measures as loan rates, su bsidies and tariff quotas on prices and production was 
significantly reduced.  On loan rates, there was no price floor or government stock accumulation;  
international market conditions would determine the extent to which the United States applied export 
subsidies, with world trade liberalizatio n the key to eventual elimination or  suspension of export subsidies. 
 324. On textiles and clothing, the representative noted that the sectors were among the most sensitive in 
the U.S. economy;  clothing, in particular, employed  many economically vulnerable American workers.  
The U.S. market was the world's largest, with high impo rt penetration.  The United States had made great 
efforts to ensure that both sector s were part of the Uruguay Round package and that the U.S. Congress 
implemented the Uruguay Round fully, as negotiated, with appropriate phase-in provisions.  The United 
States had scrupulously abided by its commitments an d, at a minimum, would continue to do so.  Going 
beyond currently announced plans was not out of the question but any such co nsideration would depend 
on the willingness of other countries involved in textiles and clothing to undertake commensurate 
additional efforts.  He added that the United Stat es had notified a comprehe nsive product integration 
schedule for the full transition period - beyond what  was required in the Agreement - so as to ensure 
stability in the U.S. market and for its partners.  325. On rules of origin for textiles and clothing, wh en the United States codified its rules it had 
provided 18 months for public comment.  The system was completely transparent, and the overwhelming 
majority of U.S. rules were in line with those used by  other major importers.  The U.S. use of safeguards 
was in accord with the ATC and had been reviewed  by the Textiles Monitoring Body and dispute 
settlement panels.  326. There were significant challenges ahead to the successful transition to an integrated, quota-free 
textiles and clothing sector, as required by the Agreement.  First, th e United States would need to be sure 
that its trading partners' markets were as open to U.S.  exports as the U.S. market was to imports.  Second, 
the United States would need to ensure that discip lines in the Agreement on quota circumvention were 
effective and adequate to remedy  the significant problem.   
 
  
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Overall remarks 
 
327. Members noted various positive  developments in the U.S. econ omy over the past two years, 
including a significantly increased volume and share of trade.  They particularly welcomed the passage of 
the Uruguay Round Agreements Act,  the entry into force of the pl urilateral Government Procurement 
Agreement, the substantial reform measures in the agricultural and telecommunications sectors, and a 
decrease in use of anti-dumping measures.  328. However, continuing concerns were expressed on a number of issues.  Contradictory signals were 
noted.  Despite the stated commi tment to multilateralism, and freq uent invocation of WTO dispute 
settlement procedures, a resort to unilateral approach es is still in evidence.  A continuing emphasis on 
strict bilateral reciprocity sits uneasily with the stated attachment to multilateralism.  Criticisms of legislative 
provisions with extra-territorial  effect were widely shared. 
 329. Among the sectoral issues raised, a strong co ncern about the United States textile régime was 
registered by textile-exporting countrie s.  In the services sector, it was hoped that the United States would 
demonstrate a strengthened commitm ent to completing the unfinished business of the Uruguay Round. 
 330. Members are conscious of the weight which the United States carries within the world trading 
system and the leverage which it cons equently exercises.  They seek rea ssurance that the re lative restraint 
in resort to trade remedies which characterizes peri ods of economic buoyancy will prove durable.  Most 
importantly, they are concerned to en sure that the United States is a consistent and reliable proponent of 
multilateralism, with a long term commitment which will be  strong enough to withstand pressures that may 
arise.