United States WT/TPR/S/160 
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II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY 
(1) OVERVIEW  
1. The United States considers that the multilatera l trading system and WTO membership are at 
the core of U.S. international trade relations.  Multila teral trade negotiations are a stated priority of the 
Administration, in particular, the successful co mpletion of the Doha Development Agenda (DDA) 
before the end of 2006.  The United States has also made progress in implementing several WTO rulings calling for changes to U.S. legislation but a few rulings have not been fully implemented. 
2. The Administration views the Trade Promotion Authority (TPA), a successor to "fast-track" 
authority, as an essential instrument to attaining its  trade objectives and on 1 April 2005 requested and 
obtained the extension of this Authority to 1 July 2007.  The TPA legislation provides a means for the 
United States to promote a wide array of U.S. values  through its trade agenda.  It also brings greater 
predictability to the various trade negotiations the United States is currently conducting.   
3. The United States is committed to a strategy of trade liberalization at the multilateral, 
regional, and bilateral levels, thus  exerting its leverage for openness.  In pursuit of this strategy, the 
United States has increased the number of count ries with which it has concluded free-trade 
agreements (FTAs) from three at the start of the cu rrent Administration in early 2001, to 15 by late 
2005.  Of these, six FTAs have been implemente d (with Israel, NAFTA, Jordan, Chile, Singapore, 
and Australia).  As of January 2006, agreements w ith 12 other countries were being negotiated.  The 
United States also grants unilate ral preferences to developing countries under a number of schemes;  
these preferences may be conditional on complianc e with various U.S. policy objectives.   
4. The United States maintains a policy of nationa l treatment for foreign direct investment, 
subject to some sector-specific restrictions, such  as in energy, mining, and fishing as well as air, 
maritime, and financial services.  Restrictions to na tional treatment apply with respect to eligibility for 
certain official support programmes.  Moreover, in  a limited number of cases, FDI is subject to 
reporting requirements or review to ta ke account of national security concerns. 
(2) I
NSTITUTIONAL AND POLICY FRAMEWORK  
(i) Institutions and recent changes 
5. The Office of the United States Trade Representa tive (USTR), which is part of the Executive 
Office of the President, is responsible for devel oping and coordinating U.S. international trade, 
commodity, and direct investment policy, and over seeing negotiations with other countries.  The head 
of USTR is the U.S. Trade Representative, a Cabinet member who serves as the President's principal 
trade advisor, negotiator, and spokesperson on trad e issues.  USTR consults with other government 
agencies on trade policy matters through the Trade Policy Review Group and the Trade Policy Staff 
Committee, administered and chaired by USTR a nd composed of 19 federal agencies and offices.  
The National Economic Council (NEC), chaired by  the President may consider important or 
controversial trade-related issues. 
6. USTR works in close consultation with Congress.   Under the U.S. Constitution (Article I, 
Section 8), Congress has the ultimate authority to regulate trade with foreign nations, while the 
President has the responsibility and authority to unde rtake negotiations and conc lude agreements with 
foreign governments.  USTR provides regular briefings for the Congressional Oversight Group, composed of members from several congressional co mmittees, and chaired by the Chairman of the 
House Ways and Means Committee and of  the Senate's Finance Committee. WT/TPR/S/160 Trade Policy Review 
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7. The Committee on Foreign Investment in the United States (CFIUS) implements the Exon-
Florio provision of the Omnibus Trade and Competitiveness Act of 1988, which authorizes the President to restrict FDI that threatens national security.  The CFIUS is an inter-agency body whose 
membership comprises the Departments of Commerce,  Defense, Homeland Security, Justice, State, 
and the Treasury;  the Council of Economic Adviso rs; the National Security Council;  the National 
Economic Council;  the Office of Management and Budget;  the Office of Science and Technology 
Policy; and the USTR.  The CFIUS is chaired by the Treasury Department. 
8. Trade policy formulation also receives i nputs from the private sector through a policy 
advisory committee system consisting of the Presi dent's Advisory Committee for Trade Policy and 
Negotiations (ACTPN), administered by USTR;  four  policy advisory committees;  and 22 technical 
and sectoral advisory committees.
1 
(ii) Policy objectives 
9. The United States continues to pursue a policy of  advancing open markets and the rule of law 
as part of a broader global security objective.  The United States considers that opening foreign 
markets to U.S. products and services will enhance ec onomic growth and prosperity.  Reflecting these 
perspectives, the main U.S. negotiating objective with respect to international trade is the removal of 
trade barriers in goods, services, and foreign invest ment as well as the extension of the rules-based 
trading system.  This broad objective is accompanied by a range of policy priorities, including the protection of intellectual property, enhancing transp arency, the avoidance of regulatory measures as a 
means to advantage domestic producers, liberal  conditions for electronic commerce, and the 
continued incorporation of governme nt procurement, labour, and envi ronmental issues into future 
U.S. trade agreements. 
10. To achieve its trade policy objective of dism antling trade barriers, the United States is 
engaging in a policy of pursuing free-trade initiatives globally, regionally, and bilaterally.  In its 2005 
Trade Policy Agenda, USTR noted that these initiati ves reinforce each other, and that "by pursuing 
multiple free trade initiatives, the Un ited States has created a competition for liberalization, launching 
new global trade negotiations, providi ng leverage to spur new nego tiations and solve problems, and 
establishing models of success in areas such as in tellectual property, e-commerce, environment and 
labor, and anti-corruption".
2 
11. Multilateral trade negotiations are a priority of the Administration in its quest to open markets 
and strengthen rules.  The Administration believes that market access issues,  including agricultural 
reform and liberalization, expanded market acces s for trade in manufactures and services and new 
rules on trade facilitation, form the basis of a ne gotiation that can achieve significant gains for U.S. 
interests and the global economy.  Accordingly, the Administration has made advancing the WTO's 
Doha Development Agenda (DDA ) a top priority, as well as bringing the negotiations to a successful 
conclusion before the end of 2006.3 
12. The Administration considers Trade Promotion Au thority an essential instrument to attaining 
its trade objectives.  The Bipartisan Trade Prom otion Authority Act of 2002 sets out specifically a 
variety of overall trade negotiating objectives that ca ll for future U.S. trade agreements to:  (i) open 
markets by eliminating or reducing barriers to and distortions of trade and creating market 
opportunities, in particular for small businesses;  (ii) further strengthen international trading 
disciplines;  (iii) foster economic growth in th e United States and globally;  and (iv) promote 
                                                      
1 More details on the role of advisory comm ittees are available on line at:  www.ustr.gov. 
2 USTR (2005a). 
3 Executive Office of the President (2005b). United States WT/TPR/S/160 
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environmental and worker rights policies in the cont ext of trade.  The Act also provides guidance on 
specific objectives and identifies congressional priorities. 
(iii) Legislative developments 
13. The Trade Act of 2002 (PL 107-210) contains the Bipartisan Trade Promotion Authority Act 
of 2002 (TPA), which granted trade promotion authority to the Executive.  Under the TPA, when 
considering legislation approving and implementi ng a new trade agreement, Congress can approve or 
reject the legislation, but must do so without amendment and within a fixed period.  Under the Trade Act of 2002, the TPA could be extended until 1 July 2007 if the President requested an extension and 
Congress did not disapprove.  On 1 April 2005, the Administration requested such an extension, 
which is effective until 1 July 2007.  Although any agreement undertaken under TPA must be signed 
before 1 July 2007, there is a requirement to i ndicate to Congress the intention of signing a trade 
agreement 90 days before this deadline (i.e. no late r than 1 April 2007), and to identify and report to 
Congress the range of proposals advanced in the nego tiations that may be in the final agreement and 
could require changes in trade legislation 180 days before signature (i.e. no later than 31 December 
2006).  TPA authority extends to cover the passage of the required implementing legislation for such 
agreements. 
14. Section 125 of the Uruguay Round Agreements  Act mandates that, beginning 1 March 2000, 
and every five years thereafter, the report on WTO activities transmitted by the President to Congress, 
must include an analysis of the value of  continued U.S. participation in the WTO.
4  Following the 
submission of the report, Congress can withdraw  its approval of the WTO Agreement.  On 
1 March 2005, Congress received the second five-y ear report.  On 2 March 2005, House Joint 
Resolution 27 to withdraw the approval of th e Congress from the Agreement establishing the WTO 
was introduced and referred to the Committee on Wa ys and Means.  The Administration strongly 
opposed H.J. Resolution 27.5  On 9 June 2005, the House of Re presentatives voted by 338 to 86 to 
support continued U.S. participation in the WTO, defeating H.J. Resolution 27.6 
(3) PARTICIPATION IN THE WTO 
15. The United States continues to be one of the ke y participants in all areas of WTO activity, 
including the current Doha Development Agenda  trade negotiations.  The United States was an 
original signatory to the GATT and is an original  Member of the World Trade Organization.  The 
WTO Agreement was implemented in U.S. dom estic law through the Uruguay Round Agreements 
Act.  In the context of this Review, the author ities reaffirmed their strong support of the multilateral 
trading system, which they consider to be at the co re of U.S. international trade relations.  They see 
the role of the United States in this system as important to ensuring growth and contributing to a more stable and secure world. 
16. In the view of the U.S. authorities, the reco rd of U.S. participation in the WTO clearly 
demonstrates that continued engagement in the glob al trading system is vital, and that through the 
WTO, trade barriers have been lowered, helping to drive a 63% increase in U.S. exports of goods and 
services between 1994 and 2004.
7  The United States also considers that its efforts in the WTO have 
helped to extend a system of trade rules globally that protect innovation, provide for certainty and 
                                                      
4 Section 124 of the URAA requires the USTR to submit to Congress, by 1 March of each year a report 
on a wide range of WTO activities, and administrative aspects of WTO operations during the preceding year. 
5 U.S. Government (2005a). 
6 House Republican Conference online inform ation.  Available at:  http://www.gop.gov/ 
Committeecentral/bills /hjres27.asp. 
7 USTR (2005a). WT/TPR/S/160 Trade Policy Review 
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predictability, and form the vital legal infrastructure for enforcement.  The United States is also of the 
view that the ongoing DDA negotiations can provide even greater economic benefits. 
17. In the context of the discussion in the Hou se Ways and Means Committee on continued U.S. 
participation in the WTO, it was noted that a suc cessful conclusion of the DDA would bring benefits 
equivalent to an US$18 billion tax cut for U.S.  consumers and manufacturers while expanding the 
U.S. economy by US$95 billion.  However, the Comm ittee also noted that ther e were some aspects of 
the multilateral trading system that needed rectif ication:  (i) the increasing use of non-tariff trade 
barriers in various forms such as discriminatory inte rnal taxes, standards or SPS measures;  (ii) the 
consensus-based structure of the WTO, which ga ve some Members the ability to dilute trade 
liberalizing efforts;  and (iii) the "gap filling" by  panels that read more exacting, and sometimes 
impractical, requirements into the WTO agreements, pa rticularly with respect to trade remedy laws.8 
18. The United States has made numerous contributions in the various WTO bodies during the 
period under Review, in particular in the context of the ongoing DDA negotiations.  The contributions 
or proposals by the United States cover a wide range of trade topics discussed in the WTO, including 
agriculture, market access for industrial goods and services, anti-dumping, subsidies, and intellectual 
property.  The United States has also made sever al proposals regarding the WTO dispute settlement 
mechanism;  these have dealt mainly with the transparency and flexibility of DSB procedures.9 
19. The United States has also continued to be an active participant in the WTO dispute 
settlement mechanism.  Since the inception of the WTO, the United States has been complainant in 80 
disputes and respondent in 89.  From mid 2003 to mid 2005, the United States was a complainant in 
six dispute settlement cases, requesting the establishm ent of a panel in four (Table AII.1).  The 
United States was respondent in ten cases during th e same period.  Contingency measures affecting 
steel products were the subject of most complaints (see also Chapter III(2)(v)). 
20. The United States has made progress in implementing WTO DSB decisions during the period 
under review.  It has repealed the anti-dumpi ng provisions of the Revenue Act of 1916, more 
commonly known as the Antidumping Act of 1916, and the extraterritorial income provisions of the 
FSC/ETI case.  However, a few ruli ngs have not yet been implemente d, including those relating to the 
Byrd Amendment and the Section 211 of the U.S.  Omnibus Appropriations Act of 1998 case.  The 
authorities note that the Administration rema ins committed to implementing these decisions. 
21. The United States has met most of its notification obligations over the review period.  
However, a few notifications were outstanding as at  October 2005, particularly on domestic support to 
agriculture, state trading activities, and statistics for government procurement (Table AII.2).  The 
authorities noted that the United States would subm it the relevant procurement reports when the 
replacement of its procurement data  collection system was completed.10 
(4) PREFERENTIAL AND OTHER ARRANGEMENTS  
(i) Introduction 
22. The United States has free-trade agreements in force with Canada, Mexico, Israel, Jordan, 
Chile, Singapore, and Australia;  the latter three ha ve entered into force since the previous U.S. 
                                                      
8 109th Congress 1st Session.  House of Representatives.  Report 109-100, Withdrawing the Approval 
of the United States from the Agreement Establishing the World Trade Organization , 26 May 2005. 
9 WTO documents TN/DS/W/13, 22 August 2002, TN/DS/W/28, 23 December 2002, TN/DS/W/52, 
14 March 2003, and WTO document TN/DS/W/79, 13 July 2005. 
10 The new system, the Federal Procurement Data System, will be accessible at:  http://www.fpds.gov. United States WT/TPR/S/160 
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Review.  FTAs have been completed but are not yet in  force with Bahrain;  the five members of the 
Central American Common Market (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the Dominican Republic;  Morocco;  and Oman ( as at October 2005).  The United States is also 
conducting negotiations to create FTAs with:  the memb ers of the Southern African Customs Union;  
Panama;  Colombia, Ecuador, and Peru ;  Thailand;  the United Arab Em irates;  and Qatar.  Unilateral 
preferences in favour of developing countries have also been expanded since 2003, notably through the new AGOA provisions. 
23. The U.S. authorities hold the view that U.S. FTAs can promote innovation, provide 
participating countries with trade capacity build ing to develop negotia ting skills, and promote 
investment, job creation, and higher business standard s.  They also consider them as a means to 
advance work and negotiations of multilateral agreements.  On the other hand, concerns exist in 
relation to the capacity of potential partners to part icipate in multiple agreements and to the impact 
that these FTAs may have on third countries, for example through possible trade diversion.
11 
24. While each of the FTAs concluded by the United States so far has specific characteristics, 
some elements are common in all or most of them.12  They have all sought to eliminate from the start 
duties on as many products as possible while providing adjustment periods and safeguards for 
"sensitive" products.  They also provide for th e elimination of agricultural export subsidies on 
bilateral trade, unless the export country believes th at its partner's market is being supplied by 
subsidized exports from a third country.  They contain provisions on rules of origin, customs 
procedures, cooperation on SPS matters, governme nt procurement, and safeguard procedures 
(including special textile/apparel safe guards).  In all of them, elimina tion of barriers to the supply of 
services is sought through a "negative list" approach.13  Most agreements include provisions on 
foreign investment, also on a "negative list" basi s.  Finally, all U.S. FTAs contain provisions to 
increase regulatory transparency, to address bribery a nd corruption, to settle disputes, to enforce panel 
decisions, and on labour a nd environmental matters. 
25. All recent U.S. FTAs but one have involved develo ping countries.  By virtue of their legally 
binding nature, FTAs have enhanced the predictability  of the already largely open U.S. trade regime, 
including unilateral preferences for developing countri es.  In turn, U.S. trading partners have been 
required to liberalize and modernize their trade polic ies and practices.  In some cases, U.S. partners 
have brought their legal systems into conformity with WTO rules as part of the negotiating process.  
By their nature, U.S. FTAs have also resulted in U.S. partners accepting commitments that go beyond 
multilateral requirements.  For example, in the area of services, national treatment and market access 
provided under FTAs are generally much more liber al than GATS commitments, and in intellectual 
property rights protection, FTAs go beyond the commitm ents of the TRIPS Agreement, notably with 
respect to patents and copyright. 
(ii) Free-trade agreements 
(a) Agreements in force before 2004 
26. NAFTA provisions covering trade in goods we re notified to the GATT in 1993;  those 
covering trade in services were notified to the WTO in 1995.14  Canada and Mexico remain the 
United States' two main single-country trading partne rs for trade in goods (see also Chapter I(6)(i)).  
                                                      
11 U.S. International Trade Commission (2003). 
12 The information contained in this paragraph is ba sed on Executive Office of the President (2005b). 
13 Under a negative list approach trade is considered free of restrictions unless included in countries' 
lists of reservations.  This approa ch differs from the GATS architecture,  which takes a positive list approach. 
14 WTO documents L/7176, 1 February 1993 and S/C/N/4, 1 March 1995. WT/TPR/S/160 Trade Policy Review 
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U.S. tariffs on Canadian imports have been eliminat ed on virtually all trade, except for certain out-of-
quota tariff rates, while tariff elimination with Mexico , also very significant, continues through staged 
phase-outs for the few remaining products (Chapter III(2)(ii)). 
27. The U.S.-Israel FTA in industrial products was notified to the WTO in 1985 under GATT 
Article XXIV.15  This agreement was complemented in 1996 by an Agreement on Trade in 
Agricultural Products (ATAP), which expired at the end of 2001, but whose benefits were extended 
until the end of 2003 to allow the parties time to negotiate a new agreement.  A new ATAP, approved 
in July 2004, applies retroactively from 1 January  2004 until 31 December 2008.  The parties agreed 
to start negotiating a new agreement no later than  1 June 2007.  Under the ATAP, most Israeli 
agricultural products have duty-free access to the U.S. market;  other products of Israel are subject to 
duty-free tariff rate quotas.16 
28. The U.S.-Jordan Free Trade Agreement en tered into force in December 2001.17  T h e  
Agreement was notified to the WTO unde r GATT Article XXIV and GATS Article V.18  T h e  
agreement provides for duty-free imports into the Un ited States for most goods within four stages of 
implementation, and contains provisions on trad e and environment, trade and labour, electronic 
commerce, and services.  The FTA contains no provisions on investment as the United States and 
Jordan already have a bilateral investment treaty.   The liberalization of services under the agreement 
follows a positive-list approach.  No significant cha nges with respect to this agreement have taken 
place during the period under review. 
(b) Agreements in force since 2004 
29. The U.S.-Singapore FTA, the first between the United States and a South-east Asian country, 
entered into effect in January 2004.  It provi des for duty-free access for most goods upon entry into 
force of the agreement, and the remaining tariffs to be phased out over a four to ten year period.19  The 
FTA includes provisions on trade and environment, trade and labour issues, electronic commerce and services, intellectual property rights, rules of origin, and investment.  All core provisions can be enforced through the agreement's dispute settlement  provisions.  The FTA contains commitments on 
the transfer of capital and the avoidance of capital controls;  any restrictions that "substantially 
impede transfers" may be subject to damages cl aims.  The agreement was notified to the WTO under 
GATT Article XXIV and GATS Article V in 2003.
20 
30. The U.S.-Chile FTA came into effect in January 2004.  The agreement provides for 
immediate duty-free access for more th an 90% of two-way trade in goods.21  Most remaining tariffs 
and quotas are to be eliminated in four years and all tariffs and quotas in up to 12 years.  The FTA 
includes provisions on trade and environment, trade and labour issues, electronic commerce and 
services, intellectual property rights, rules of orig in, investment, and government procurement.  All 
core provisions can be enforced through the ag reement's dispute settlement provisions;  the FTA 
                                                      
15 WTO document L/5862, 13 September 1985. 
16 For further information see USTR online information.  Available at:  http://www.ustr.gov/assets/ 
Trade_Agreements/Bilateral/Israe l/asset_upload_file899_7902.pdf. 
17 USTR online information.  Available at:  http://www.ustr.gov/regions/eu-med/middleeast/US-
JordanFTA.shtml. 
18 WTO documents WT/REG/134/1, 5 March 2002 (goods), and S/C/N/193, 8 October 2002 (services). 
19 USTR online information.  Available at:  http://www.ustr.gov/new/fta/Singapore/consolidated_texts 
.htm. 
20 WTO document WT/REG161/N/1, S/C/N/263, 19 December 2003. 
21 USTR online information.  Available at:  http://www.ustr.gov/new/fta/chile.htm. United States WT/TPR/S/160 
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includes provisions for monetary assessments to back  up dispute panel decisions.  The agreement was 
notified to the WTO under GATT Article XXIV and GATS Article V in 2003.22 
31. The U.S.-Australia FTA, was notified to the WTO in 2004.23  The FTA entered into effect on 
1 January 2005.  Australia is the United States ' 14th largest goods market.  The FTA includes 
provisions on trade and environment, trade and labour issues, electronic commerce and services, 
intellectual property rights, rules of origin, inv estment, and government procurement.  Under the 
agreement, most tariffs on manufactured goods we re eliminated on two-way trade the day the FTA 
took effect;  this was the single largest immedi ate tariff elimination fo r industrial goods provided 
under any U.S. FTA.24  The U.S.-Australia FTA is the firs t U.S. FTA to include non-market-access 
provisions relating to public health and pharmaceutical s, including requirements for Australia's health 
programmes to apply transparent procedures in lis ting new pharmaceuticals for reimbursement.  The 
FTA calls for the parties to work together in several areas of the WTO agriculture negotiations. 
(c) Agreements not yet in force (December 2005) 
32. In June 2004, the United States signed an FTA  with Morocco.  The United States-Morocco 
FTA was the first agreement signed under the Middle East FTA initiative (MEFTA), aimed at 
creating a U.S.-Middle East free-trade area by 2013.25  The U.S. Congress approved the Morocco 
FTA in August 2004 and the President signed the impl ementing legislation shortly thereafter.  The 
Moroccan Parliament ratified the agreement in Janua ry 2005, and it entered into force on 1 January 
2006.  The FTA provides for more than 95% of bila teral trade in consumer and industrial goods to 
become duty-free on the day the agreement enters into  force.  The FTA also contains provisions with 
respect to agricultural liberalization, services, tr ansparency and anti-corruption, labour rights, and 
environmental cooperation. 
33. On 14 September 2004, the United States signed an  FTA with Bahrain, and the U.S. Congress 
approved the agreement in December 2005.  Two-wa y trade was nearly US$900 million in 2003.  On 
the day the agreement enters into effect, two-wa y trade on 100% of consumer  and industrial products 
and most agricultural exports is to be duty free.  The elimination of the remaining tariffs will be 
completed over ten years;  the United States w ill apply preferential tariff-rate quotas on certain 
sensitive agricultural products.  The FTA includes provisions on trade and environment, trade and 
labour issues, electronic commerce and services, intellectual property rights, rules of origin, investment, and government procurement. 
34. The United States began FTA negotiations with th e United Arab Emirates and with Oman in 
November 2004.  The negotiations with Oman were completed in October 2005.
26  Coverage is 
similar to that of the agreement with Bahrain:  100% of bilateral trade in  industrial and consumer 
products will become duty free immediately upon its entry into force.27 
                                                      
22 WTO document WT/REG160/N/1, S/C/N/262, 19 December 2003. 
23 WTO document WT/REG184/N/1, S/C/N/310, 23 December 2004. 
24 USTR online information.  Available at:  http://www.ustr.gov/new/fta/australia.htm. 
25 The MEFTA initiative is designed to deepen U.S. trad e relationships with all countries of the region.  
Apart from the FTAs concluded with Morocco and Bahrain, under the MEFTA the United States has signed 
trade and investment framework agreements (TIFAs) wi th Saudi Arabia, the United Arab Emirates, Kuwait, 
Qatar, Yemen, and Oman.  The United States alread y had TIFAs with Egypt, Algeria, and Tunisia. 
26 http://www.ustr.gov/Document_Library/Press_Releases/ 2005/October/_Oman_Conclude_Free_Trade_ 
Agreement.html. 
27 http://www.ustr.gov/assets/Docum ent_Library/Fact_ Sheets/2005 /asset_upload_file189_8115.pdf. WT/TPR/S/160 Trade Policy Review 
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35. The U.S. Free Trade Agreement with Central America and the Dominican Republic (CAFTA-
DR), including Costa Rica, El Salvador, Guatem ala, Honduras, and Nicaragua, and the Dominican 
Republic was signed on 5 August 2004.  The U.S. Congress approved the CAFTA-DR in June 
(Senate) and July (House of Representatives) 2005.   As of November 2005, all of these trading 
partners except Costa Rica had ratified the agreement.  Under the CAFTA-DR, most tariffs on 
consumer and industrial goods will be  set to zero from the outset;  this consolidates the access to the 
U.S. market for most CAFTA-DR products since most already enjoy duty-free market access to the 
United States.  The elimination of the remaining ta riffs, mostly agricultural goods, will be phased out 
over ten years.  The FTA includes provisions on intellectual property rights, rules of origin, 
investment, trade and environment, trade and la bour issues, electronic commerce, and government 
procurement.  It also includes liberalization in ag riculture;  and textiles and apparel that meet the 
FTA's regional origin rules will become duty-free as soon as the agreement takes effect.  The FTA 
provides comprehensive market access in a number of service areas, including telecommunications, 
express delivery services, computer and related services, financial services, and insurance.  The agreement also disciplines the us e of dealer protection regimes in the CAFTA-DR countries.  The 
agreement is the first FTA to establish a Trad e Capacity Building Committee (TCB) to identify 
priorities and coordinate trade capacity building efforts in the region and to include a public 
submissions process on environmental enforcement. 
36. As at November 2005, the United States was al so holding formal FTA negotiations with the 
five members of the SACU, Thailand, the United Arab Emirates, Panama, and with three Andean 
countries (Colombia, Ecuador, and Peru), with Bolivia participating as an observer.  At the same time, 
the Administration is continuing to press for a mark et-opening Free Trade Area of the Americas, but, 
as at late 2005, the negotiations were stalled. 
(iii) Unilateral preferences and other trade arrangements 
37. Under its Generalized System of Preferences (GSP) programme, the United States grants 
unilateral preferences to GSP-eligible exports from be neficiary developing countries.  The granting of 
preferences may be subject to compliance with various U.S. policy objectives.  The GSP, which 
expired in September 2001 and was renewed retroactively by Congress in August 2002, is authorized 
through 31 December 2006.
28 
                                                      
28 As of November 2005, GSP beneficiaries that are independent countries were:  Afghanistan, 
Albania, Algeria, Angola, Antigua and Barbuda, Argentina, Armenia, Bahrain, Bangladesh, Barbados, Belize, 
Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Bo tswana, Brazil, Bulgaria, Burkina Faso, Burundi, 
Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Colombia, Comoros, Congo (Republic of), 
Congo (Democratic Republic of), Costa Rica, Cote d’Iv oire, Croatia, Djibouti, Dominica, Dominican Republic, 
Ecuador, Egypt, El Salvador, Equatorial Guinea, Er itrea, Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, 
Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti,  Honduras, India, Indonesia, Iraq, Jamaica, Jordan, 
Kazakhstan, Kenya, Kiribati, Kyrgyz stan, Lebanon, Lesotho, Former Yugoslav Republic  of Macedonia, 
Madagascar, Malawi, Mali, Mauritania, Mauritius, Mo ldova, Mongolia, Morocco, Mozambique, Namibia, 
Nepal, Niger, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, the Philippines, Romania, 
Russia, Rwanda, St. Kitts and Nevis, Saint Lucia, Sa int Vincent and the Grenadines, Samoa, Sao Tome and 
Principe, Senegal, Serbia-Montenegro, Seychelles, Sierra Leone, Solomon Islands, Somalia, South Africa, 
Sri Lanka, Suriname, Swaziland, Tanzania, Thailand, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, 
Tuvalu, Uganda, Uruguay, Uzbekistan, Vanuatu, Venezu ela, Yemen, Zambia, and Zimbabwe.  GSP-eligibility 
is also extended to:  Anguilla, British Indian Ocean Terr itory, Christmas Island (Australia), Cocos (Keeling) 
Islands, Cook Islands, Falkland Islands (Islas Malvin as), Gibraltar, Heard Island and McDonald Islands, 
Montserrat, Niue, Norfolk Island, Pitcairn Islands, Saint Helena, Tokelau, Turks and Caicos Islands, 
British Virgin Islands, Wallis and Futuna, West Bank and Gaza Strip, and the Western Sahara. United States WT/TPR/S/160 
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38. The Caribbean Basin Economic Recovery Act ( CBERA), enhanced by the Caribbean Basin 
Trade Partnership Act (CBTPA), which was implem ented in October 2000, and further improved by 
the Trade Act of 2002, provides duty-free access for most goods from CBI beneficiary countries.29  
While the CBERA is permanent, CBTPA bene fits are available until September 2008. 
39. The provisions of AGOA, enacted in May 2000 and authorized until September 2008, were 
amended in the 2002 Trade Act, to change rules on te xtiles.  In July 2004, th e President signed into 
law the AGOA Acceleration Act of 2004, extendi ng AGOA's authorization until 2015, including its 
special third-country fabric provision until Se ptember 2007.  The Act also mandated increased 
technical assistance, and amended some technical provisions.  Under AGOA, the President determines 
annually which sub-Saharan African countries are eligible for be nefits.  In 2005, 37 countries met the 
Act's requirements.30  Twenty-four sub-Saharan African count ries are eligible for AGOA's apparel 
provisions and, as of November 2005, 13 of these countries also qualified for the provisions for handloomed and handmade articles.
31 
40. The Andean Trade Promotion and Drug Eradication Act (ATPDEA), part of the Trade Act of 
2002, renewed and extended the ATPA until Decemb er 2006, increased the number of eligible duty-
free products, and expanded benef its in the apparel sector.  Bolivia, Colombia, Ecuador, and Peru 
have been designated full beneficiaries of the ATPA. 
41. The United States was granted a waiver for CBERA by the General Council, pursuant to 
Article IX:4 of the WTO Ag reement, until 31 December 2005.32  The waiver granted to the 
United States for the implementation of ATPA  expired on 4 December 2001.  Thus, as of 
October 2005, ATPA, ATPDEA, and AGOA preferences were not covered by WTO waivers.  In 
February 2005, the United States asked to widen the scope of the existing waiver for CBERA, as 
amended by the CBTPA, and to extend the waiver through 30 September 2008.33  Also in February 
2005, the United States requested waivers for th e AGOA preferences, and for the ATPA, as amended 
by ATPDEA, through 30 September 2015 and 31 December 2006, respectively.34  Comments and 
questions on the waiver request have been raised  by:  China, India, and Pakistan;  and Brazil.35  The 
granting of the waivers was discussed in the Council on Trade in Goods on 15 July 2005.36  N o  
decision with respect to these waiv ers has been made (October 2005). 
42. The United States has continued its participati on in other multilateral fora, such as the Asia 
Pacific Economic Cooperation (APEC).37  Progress towards liberalization is "measured" on the basis 
                                                      
29 Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Costa Rica, Dominica, 
Dominican Republic, El Salvador, Grenada, Guatemal a, Guyana, Haiti, Honduras, Jamaica, Montserrat, 
Netherlands Antilles, Nicaragua, Panama, St. Kitts and Ne vis, Saint Lucia, Saint Vincent and the Grenadines, 
Trinidad and Tobago, and British Virgin Islands receive benefits under CBERA.  Barbados, Belize, Costa Rica, 
Dominican Republic, El Salvador, Guatemala, Guya na, Haiti, Honduras, Jamaica, Nicaragua, Panama, 
Saint Lucia, and Trinidad and Tobago also receive benefits under CBTPA. 
30 Benin, Burkina Faso, Botswana, Cameroon, Cape Verde, Central African Republic, Chad, Republic 
of Congo, Democratic Republic of Congo, Djibouti, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-
Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, 
Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, 
Tanzania, Uganda, and Zambia. 
31 USTR (2005). 
32 WTO document WT/L/104, 24 November 1995. 
33 WTO document G/C/W/508, 1 March 2005. 
34 WTO documents G/C/W/509 and G/C/W/510, 1 March 2005. 
35 WTO documents G/C/W/516, 13 April 2005, and G/C/W/527, 20 July 2005. 
36 WTO document G/C/M/81, 1 August 2005. 
37 APEC online information.  Available at http://www.apecsec.org. WT/TPR/S/160 Trade Policy Review 
Page 22 
 
 
of Individual Action Plans, prepared annually by each APEC member and submitted for periodic peer 
review.38 
(5) FOREIGN INVESTMENT REGIME  
43. The United States maintains a liberal fore ign investment regime, providing non-
discriminatory treatment with a few sectoral exceptions.  Restrictions on FDI relate to only some 
specific areas:  atomic energy operations;  rights of  way for oil pipelines, or for mining coal, oil or 
certain other minerals;  and certain fishing operations .  Most other federal-level sectoral measures that 
limit FDI, or subject it to reciprocity, relate to services, notably air and maritime transport services, and financial services (see Chapter IV).  Restrictions  to national treatment may apply with respect to 
the eligibility for public funding for R&D;  emer gency loans for agricultural purposes;  and loans, 
guarantees, and political-risk insurance for investment.
39  Restrictive measures are also applied at the 
State level, in particular on real estate and financial services. 
44. FDI into the United States is subject to reporting requirements under the International 
Investment and Trade in Services Survey Act.  There are also specific requirements regarding the 
reporting of foreign acquisitions of agricultural land,  contained in the Agricultural Foreign Investment 
Disclosure Act.  Although FDI is generally no t subject to review, under Section 721 of the  Defense 
Production Act of 1950, commonly known as the Exon- Florio amendment, the President may take 
action on national security grounds with respect to any foreign acquisition, merger or takeover of a 
corporation engaged in commerce in the United States, including suspending or prohibiting a 
proposed transaction or requiring divestment of a completed transaction.  Exon-Florio does not define 
"national security" but sets out certain factors that  the President may consider in determining the 
effects on national security of a foreign acquisition. 
45. The Committee on Foreign Investment in the United States (CFIUS) determines if a formal 
investigation under Exon-Florio is warranted.  Once the CFIUS has submitted a report to the 
President, he has 15 days to make his determination.   In practice, the CFIUS initiates investigations 
only in a limited number of cases:  during 2004, the CFIUS initiated investigati ons of two acquisitions 
out of a total of 50 notified to it over the year.40  No action was taken as a result of these 
investigations. 
46. The United States has bilateral investment treaties in force with 39 other countries.41  Among 
the main characteristics of U.S. bilateral investment treaties are:  a broad coverage;  national and MFN treatment both pre- and post-establishment, subject to agreed sectoral exceptions;  the 
observance of certain standards of treatment and prot ection with regard to cove red investments;  rules 
concerning expropriation and compensation;  free transf er of funds;  prohibition of certain mandatory 
performance requirements;  settling of disputes throug h international arbitration.  The NAFTA and the 
                                                     
 
38 The 2004 IAP for the United States is available at:  http://www.apec-iap.org./document/ 
US_2004_IAP.htm. 
39 See WTO (2004), Chapter II(5) for further details. 
40 GAO (2005a). 
41 With Albania (1998), Argentina (1994), Armenia (1996), Azerbaijan (200), Bahrain (2001), 
Bangladesh (1989), Bolivia (2001), Bulgaria (1994), Cameroon (1989) Congo, Democratic Republic (1989), 
Congo, Republic (1994), Croatia (2001), Czech Republic (1992), Ecuador (1997), Egypt (1992), Estonia (1997), 
Georgia (1997), Grenada (1989), Honduras (2001), Jordan (2003), Jamaica (1997), Kazakhstan (1994), Kyrgyzstan (1994), Latvia (1996), Lithuania (2001), Moldova (1994), Mongolia (1997), Morocco (1991), 
Mozambique (1998), Panama (1991), Poland (1994), Romania (1994), Senegal (1990), Slovakia (1992), Sri 
Lanka (1993), Trinidad and Tobago (1996), Tunisia (1993), Turkey (1990), and Ukraine (1996).  Agreements with Belarus, El Salvador, Haiti, Russia, Uruguay, and Uz bekistan have been signed but are not yet in force. United States WT/TPR/S/160 
 Page 23 
 
 
recently signed FTAs between the United States and Australia, CAFTA-DR, Chile, Morocco, Oman, 
and Singapore contain separate ch apters on foreign investment, which generally go beyond the 
provisions of the United States' bilateral investment tr eaties.  The United States is also a party to the 
OECD Code of Liberalization of Capital Movement s, and the OECD National Treatment Instrument, 
which is not legally binding. 
47. The United States has concluded 36 trade a nd investment framework agreements, which 
establish an institutional framework for consulta tion on ways to promote bilateral trade and 
investment.42  Typically they provide that the parties undertake to adopt measures to encourage and 
facilitate trade in goods and services, and to secure  favourable conditions for long-term investment, 
development, and diversificati on of trade among their respective nationals and companies.  In 
addition, they provide for consideration of further agreements regarding trad e, taxation, intellectual 
property, labour, transfer of technology, technical  cooperation, and investment issues.  Under the 
Middle East Free Trade Initiative, the United States offered to negotiate new trade and investment 
framework agreements with countries in the re gion and to deepen those already in place. 
                                                      
42 With Afghanistan (2004), Algeria (2001), Bahrain (2002), Brunei Darussalam (2002), Chinese 
Taipei (1994), Common Market for Eastern and Southern Africa (2001), Egypt (1999), Ghana (1999), Indonesia 
(2005), Iraq (2005), Kazakhstan (2004), Kyrgyzstan (2004), Kuwait (2004), Malaysia (2004), Mongolia (2004), Morocco (1995), Mozambique (2005), New Zealand (1992), Nigeria (2000), Oman (2004), Pakistan (2003), the 
Philippines (2005), Qatar (2004), Singapore (1991), South Africa (1999), Sri Lanka (2002), Tajikistan (2004), 
Thailand (2002), Tunisia (2002), Turkey (1999), Turkmenistan (2004), United Arab Emirates (2004), Uruguay (2004), Uzbekistan (2004), West African Economic and Monetary Union (2002), and Yemen (2004).