WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 24 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) OVERVIEW  
1. The United States accords MFN tariff treatment to all but one WTO Member (Cuba).  All 
except two tariff lines are bound.  Close to 38% of all tariff items entered the United States duty free 
in 2004, compared with 31% in 2002.  In 2004 (the latest year for which ad valorem  equivalents were 
available), the average applied MFN tariff was 4.9% , marginally lower than in 2002.  The average 
MFN tariff on agricultural products was 9.7%;  around 2%  of all tariffs are subject to tariff quotas.  
The share of non- ad valorem  tariffs declined to 10.6% in 2004;  non- ad valorem  tariffs afforded 
higher average protection than ad valorem  rates.  Imports are subject to additional charges including  a 
merchandise processing fee and a fee on port use, both  ad valorem . 
2. Additional tariff preferences became effectiv e during the period under review as a result of 
the entry in force of FTAs between the Unite d States and Australia, Chile, and Singapore. 
3. Since its previous Review, the United States has taken additional steps to incorporate security 
considerations into its import procedures, notably by  promulgating regulations in relation to the Trade 
Act of 2002 and the Bioterrorism Act.  Most non-ta riff restrictions are maintained for non-commercial 
purposes, including a ban on imports of marine mammal products, shrimp, and tuna from countries 
found not to be in compliance with U.S. environmental provisions. 
4. As at June 2005, 274 anti-dumping (AD) measures were in force, affecting mainly iron and 
steel, chemicals, pharmaceuticals, agricultural, an d forestry products;  anti-dumping investigation 
initiations decreased in 2004 and the first half of 2005.  In turn, U.S. exporters are the target of about 
55 AD measures imposed in some 13 foreign markets.  Certain U.S. AD and countervailing (CV) 
rules and methods have been found by the DSB to be WTO inconsistent, leading to changes in U.S. 
statutes.  One case addressed during the period under review led to the repeal of the Anti-Dumping 
Act of 1916.  However, the Continued Dumping and Subsidy Offset Act of 2000, also known as the Byrd Amendment, remained in place.  The Byrd  Amendment channels proceeds from AD and CV 
duties to successful petitioners;  disbursements have reached just over US$1 billion since the 
Amendment came into force. 
5. No general safeguard measures were in force as at end 2005.  However, that year, the 
United States applied transitional safeguards on certain  textiles and clothing products from China;  the 
United States and China also reached an understa nding to limit Chinese exports to the U.S. market 
covering various textiles and clothing products during the period 2006-08. 
6. Standards play an important role in ensuring the safety and quality of products in the 
United States.  The United States has made numerous notifications under the TBT and SPS 
Agreements but there is no information on the extent  to which U.S. standards are based on standards 
developed by interna tional organizations. 
7. To support exports, the United States provides insurance and export financing through its 
official export credit agency (the Export-Import Bank).  The United States adopted legislation to 
repeal the U.S. tax code's extraterritorial income  provisions, which had been found to be inconsistent 
with WTO rules.  A compliance panel concluded th at the new legislation failed to implement fully 
previous WTO rulings on U.S. tax provisions. 
8. Export restrictions and controls are mainta ined for national security or foreign policy 
purposes, or to ensure sufficient domestic supply.  Exports controls can result from U.S. domestic United States WT /TPR/S/160/Rev.1 
 Page 25 
 
 
policy decisions or U.S. participation in non-binding  export control regimes, as well as in the context 
of United Nations embargoes. 
9. Government assistance to domestic producers tak es the form of federal and sub-federal tax 
exemptions, financial outlays, and cr edit programmes.  In its latest notification to WTO, in October 
2003, the United States listed 45 federal and 330 s ub-federal programmes pr oviding subsidies.  
During the period under review, the American Jobs  Creation Act of 2004 introduced tax deductions, 
including a one-time tax break to U.S. multinationals that repatriate foreign earnings. 
10. Competition policy enforcement has continued to focus on the activities of international 
cartels.  Changes to competition policy legislation took effect in 2004, in cluding to penalties for 
violating the Sherman Act.  U.S. policy with resp ect to market access for government procurement is 
to grant national treatment based on the principle of reciprocity.  The United States maintains a 
number of domestic purchasing requirements for proc urement not covered by the GPA, NAFTA, the 
WTO plurilateral Agreement on Trade in Civil Aircra ft, or bilateral trade agreements.  Procurement 
policy also seeks to increase the participation of  small and other businesses through set-asides and 
other preferences programmes. 
11. Various regulatory changes regarding U.S. IP R protection were introduced during the period 
under review, particularly in the areas of patents,  trade marks, copyright and enforcement.  The 
United States has yet to implement the DSB ruling w ith respect to Section 211 of the U.S. Omnibus 
Appropriations Act of 1998. 
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures and rules of origin 
(a) Customs procedures 
12. The agency in charge of administering and enforcing customs regulations is Customs and 
Border Protection (CBP), part of the Department  of Homeland Security.  CBP began operations in 
early 2003.  It combines the functions of the Customs Service, Immigration and Naturalization Service, Border Patrol, and part of the Animal and Plant Health Inspection Service, all of which were 
transferred to the Department of Homeland Secu rity following the enactment of the Homeland 
Security Act in 2002.  The principal mission of CBP is to prevent terrorists and terrorist weapons from entering the United States, while facilitating the flow of legitimate trade and travel.
1 
13. Imports of goods into the United States must be  accompanied by entry documents as specified 
in the Customs Regulations.2 
14. A customs modernization programme has been  under way since 2001.  It began with the 
introduction of the Automated Commercial Environm ent (ACE), which is intended to operate as a 
single Internet portal for the processing of imports.  Through ACE, users will be able to interface not 
only with CBP, but also with other government agen cies involved in import (and export) procedures.  
ACE will replace the Automated Commercial System  currently used by CBP to process imports. 
                                                      
1 CBP online information.  Available at:  http://www.cbp.gov/xp/cgov/toolbox/about/mission/cbp.xml 
[11 November 2005]. 
2 For a description of the requirements that appl y to the entry of imported goods see Customs and 
Border Protection (2004). WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 26 
 
 
15. As at early 2005, nearly 400 ACE accounts had been created for importers, brokers, and 
carriers, representing around one third of fiscal 2003 imports.3  Also at that time, ACE was being 
tested at the port of Blaine, Washington.  Upon completion of the tests, ACE will be implemented in neighbouring ports.  CBP intends to deploy ACE to all U.S. land, sea, and air ports.  According to 
CBP, ACE should be fully operational by 2009.
4 
16. Since the 2004 Trade Policy Review of the Un ited States, the capabilities of ACE have been 
expanded.  Importers and brokers  using ACE can make payments of duties and fees to CBP on a 
monthly rather than shipment-by-shipment basis.  Also, in support of the requirements introduced by 
the Trade Act of 2002, truck carriers can use ACE to file advanced electronic truck manifests. 
17. The main developments affecting customs pro cedures since mid 2003 are the promulgation of 
regulations providing for the advance electronic transmission of cargo information to CBP under the Trade Act of 2002, and the expansion of several initiatives aimed at enhancing the security of the 
United States. 
(b) Electronic transmission of cargo information 
18. CBP published the Trade Act of 2002 final regulations in the Federal Register  in 
December 2003.
5  The regulations, which became effective in January 2004, provide for the advance 
electronic transmission of cargo information to CBP.  CBP was required to promulgate such 
regulations under section 343 of the Trade Act of 2002, as amended by section 108 of the Maritime 
Transportation Security Act.  According to CBP, "receiving advance electronic cargo information from all modes of transportation will allow CBP to identify and intercede with high-risk cargo before 
the cargo enters the commerce of the United States...".
6  CBP has further indicated that "by identifying 
high-risk cargo at an early stage, the movement of low risk imports will be facilitated".7 
19. One of the main tools used by CBP to iden tify high-risk cargo is the Automated Targeting 
System (ATS).  This is a computer system th at analyses cargo information through the use of 
weighted rules, assigning a level of risk to each  shipment.  The National Targeting Center of the 
Department of Homeland Security analyses cargo information further. 
20. Following the adoption of the Trade Act regula tions, the vessel cargo declaration information 
(CBP Form 1302) must be sent to CBP in electr onic format through the Sea Automated Manifest 
System;  paper submissions will no longer be accepte d.  There are two ways of sending data to CBP 
electronically in the Automated Manifest System.  One is to send the data to a service centre or port authority, many of which can receive data via the Internet.  Service centres or port authorities then 
transmit the information to CBP.  The second option is to establish a direct interface with CBP. 
21. Importers may request that their names and a ddresses (and those of their shippers) appearing 
in vessel cargo declarations be treated as confidential.
8  To this end, importers must file a certification 
                                                      
3 CBP online information, "ACE Frequently As ked Questions and Answers".  Available at:  
http://www.cbp.gov /xp/cgov/toolbox/about/modernizati on/ace/ace_faq.xml [1 4 April 2005]. 
4 Customs and Border Protection (2005). 
5 Federal Register , 68 FR 68140, 5 December 2003. 
6 CBP online information, "Summary of Final Trade Act Regulations sent to Congress for Review".  
Available at:  http://www.cbp.gov/xp/cgov/import/communications_to_trade/advance_info [11 November 2005]. 
7 CBP online information, "Summary of Final Trade Act Regulations sent to Congress for Review".  
Available at:  http://www.cbp.gov/xp/cgov/im port/communications_to_trade/advance_info. 
8 19 CFR 103.31. United States WT /TPR/S/160/Rev.1 
 Page 27 
 
 
with CBP.  Certifications are valid for two years and can be renewed.  The press may copy but not 
publish certified information. 
22. Under the Trade Act regulations, CBP must receive, by way of a CBP-approved electronic 
data interchange system, information pertaining to  cargo before the cargo is brought into (or sent 
from) the United States by any mode of commercial transportation (sea, air, rail, or truck).  The time 
limit for sending the cargo information to CBP de pends on the mode of transportation used 
(Table III.1).  Cargo passing through the United States that is not destined to be unloaded in a U.S. 
port is also subject to the requirement for the a dvance transmission of electronic cargo information.  
Failure to provide CBP with advanced electronic car go information within the established time limits 
may be punishable by a US$5,000 fine for a first vi olation, and a US$10,000 fine for any subsequent 
violations.9  In the context of this Review, the U.S. authorities indicated that the number of fines 
assessed for violations of section 343 of the Tr ade Act of 2002 was not public information. 
Table III.1 
Requirements for the advance transmission of electronic cargo information 
Mode of 
transportation Transmission system Time limit for transmission Parties responsible for 
transmission Implementation 
date or period 
Air Air Automated Manifest 
System (AMS) 4 hours prior to arrival in the 
Unites States, or at "wheels 
up" from western hemisphere 
airports north of the equator Carrier, importer or 
customs broker, express 
consignment facility, 
other air carriers 13 August to 
13 December 2004 
Rail Rail AMS 2 hours prior to arrival in the 
United States Carrier 12 July 2004 to 
9 September 2004 
Sea Vessel AMS 24 hours prior to lading at 
foreign port (containerized 
and break bulk cargo) Carrier, non-vessel-
operating common 
carrier 4 March 2004 
Truck Free and Secure Trade (FAST) 
programme, Pre-arrival 
Processing System (PAPS), Border Release Advanced 
Screening and Selectivity 
(BRASS) programme, or Customs Automated Forms 
Entry System (CAFES) FAST:  30 minutes prior to 
arrival in the United States 
Non-FAST:  1 hour prior to 
arrival in the United States Carrier, importer, 
customs broker 15 November 2004 
to 14 January 2005 
 
Source: Federal Register , 68 FR 68140, 5 December 2003;  and Customs and Border Protection online information, 
 "Frequently Asked Questions on the Trade Act of 2002:  Mandatory Advanced Electronic Cargo Information".  
 Available at:  http://www.cbp.gov/linkhandler/cgov/im port/communications_to_industr y/advance_info/tpa_faqs. 
 ctt/tpa_faqs080304.doc. 
23. CBP requires Automated Manifest System participants (including carriers, importers, customs 
brokers, or express consignment carrier facilities) to submit cargo information that is "reasonably 
necessary" to enable the identif ication of high-risk shipments.10  In practice, CBP requires information 
on the weight of the cargo and a description of the cargo that is precise enough to allow CBP to identify the shape and other physical characteris tics of the cargo.  For example, the description 
"computer monitors" would be acceptable, but  the description "electronics" would not.
11 
24. An analysis by CBP reveals that the costs from meeting the requirements of the Trade Act 
regulations will be "substantial" for air carrier s (U.S. and foreign) that fly cargo into the 
                                                      
9 19 USC 1436. 
10 Federal Register , 68 FR 68140, 5 December 2003. 
11 CBP online information, "Frequently Asked Questions on the Trade Act of 2002:  Mandatory 
Advanced Electronic Cargo Information".  Available at:  http://www.cbp.gov/xp/cgov/import/communications_ 
to_trade/ advance_info [14 April 2005]. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 28 
 
 
United States.12  On the other hand, the costs for trucks from Canada and Mexico are likely to be 
offset by faster movement across the border, resulti ng in net savings for this sector.  The impact on 
vessels and railroads was estimated to be insigni ficant, because these carriers are making widespread 
use of electronic filing already. 
(c) Container Security Initiative 
25. The Container Security Initiative (CSI) was a nnounced in January 2002.  It involves the 
screening and inspection of U.S.-bound, high-risk containers at the port of departure and the use of tamper-evident seals.  Under the CSI, CBP officers are deployed to participating ports, where they 
identify high-risk containers.  Host country o fficers inspect these containers using non-intrusive 
inspection equipment, physical inspection, or both , and CBP officers observe the inspections.  CBP 
pays for the expenses of CBP officers stationed in  foreign ports.  The number of foreign seaports 
where CSI is operational has almost doubled since March 2004, from 18 to 35.
13  The U.S. authorities 
indicate that the CSI was authorized on the basis of  Executive authority, rather than by statute, and 
that they did not envisage issuing regulations for the CSI. 
26. Only ports that have "regular, direct, and subs tantial" container traffic to seaports in the 
United States are eligible to participate in CSI.14  Seaports must have "non-intrusive inspection 
equipment" such as gamma or X-ray imaging equipm ent, and radiation detection equipment to be 
eligible for CSI participation.  In addition, CSI ports must commit to:  establishing an automated risk 
management system, sharing data with CBP, r esolving the security vulnerabilities of their 
infrastructure, and maintaining personnel integrity programmes. 
27. According to CBP, U.S.-bound cargo inspected at a CSI port will not be inspected upon 
arrival in the United States, unless additional info rmation changes the initial risk assessment (i.e., 
intelligence is received), or the integrity of a container seal is found to have been compromised.15 
28. In April 2004, the United States and the Europ ean Union signed an agreement that expands 
their existing Customs Mutual Assistance Agreemen t to include co-operation on container security 
and related matters. 
(d) Customs-Trade Partnership Against Terrorism 
29. New security guidelines for importers became effective in March 2005 under the Customs-
Trade Partnership Against Terrorism (C-TPAT), a voluntary public-private initiative launched in 
May 2002.  Under C-TPAT, businesses conduct a co mprehensive self-assessment of their supply 
chain using C-TPAT guidelines deve loped jointly with CBP.  Participating businesses must also 
provide CBP with relevant information about their trucks, drivers, cargo, suppliers, and routes.  In 
exchange, C-TPAT participants benefit from less frequent cargo inspections by CBP.  According to 
                                                      
12 Federal Register , 68 FR 68165, 5 December 2003. 
13 As at April 2005, the CSI was operational in:  Be lgium (Antwerp and Zeebrugge);  Canada (Halifax, 
Montreal, and Vancouver);  France (Le Havre and Marse ille);  Germany (Bremerhaven  and Hamburg);  Greece 
(Piraeus);  Hong Kong, China;  Italy (Genoa, Gioia Tauro, La Spezia, Livorno, and Naples);  Japan (Kobe, Nagoya, Tokyo, and Yokohama);  Korea (Pusan);  Malaysia (Port Klang and Tanjung Pelepas);  the Netherlands 
(Rotterdam);  South Africa (Durban);  Spain (Algeciras);  Singapore;  Sweden (Gothenburg);  Thailand (Laem 
Chabang);  the United Arab Emirates (Dubai);  and the United Kingdom (Felixstowe, Liverpool, Southampton, Thamesport, and Tilbury). 
14 CBP online information, "CSI Fact Sheet".  Available at:  http://www.cbp.gov/xp/cgov/border 
_security/ international_activities/csi [14 April 2005]. 
15 CBP online information, "CSI Fact Sheet". United States WT /TPR/S/160/Rev.1 
 Page 29 
 
 
CBP, C-TPAT participants are six times less likel y to undergo a security-related examination.16  
According to the U.S. authorities, C-TPAT was aut horized by Executive Order and no regulations for 
C-TPAT have been issued. 
30. The C-TPAT guidelines for importers cover:  contai ner security;  physical access to facilities;  
personnel;  processes relevant to the transportation,  handling, and storage of cargo;  information 
technology;  security training and threat awarene ss;  and the selection of business partners.  The 
guidelines will be implemented in three phases betw een March and September 2005.  CBP plans to 
revise the security guidelines applied to other sectors eligible for participation in C-TPAT. 
31. Around 9,400 companies are enrolled in C-TPAT (August 2005).17  Participation is open to 
U.S. importers18;  international air and sea carriers;  U.S. licensed customs brokers;  consolidators;  
U.S., Canadian, and Mexican border crossing land carri ers;  and U.S. ports a nd terminal operators.  
Mexican manufacturers may also participate:  around 400 Mexican manufacturers have enrolled.  Other foreign manufacturers may only participate if i nvited to do so by CBP.  Invitations are extended 
on the basis of supply-chain factors, including specif ic security concerns, st rategic threat posed by 
geographic regions, or strategic import volume. 
32. Trucks approved under C-TPAT can make use of dedicated lanes at certain border crossings.  
Dedicated lanes are being implemented as part of  the Free and Secure Trade (FAST) bilateral 
programmes that the United States maintains with Cana da and Mexico.  To qualify, truck drivers must 
be in possession of a FAST Commercial Driver Regi stration ID Card, and the truck must fulfil the 
Border Highway Carrier Application Process requ irements.  The importer, and in the case of 
shipments from Mexico, the manufacturer, must also be C-TPAT approved. 
33. The FAST programme with Canada was la unched in December 2002 and operates at 
11 border crossings.  The programme with Mexico  began in September 2003 and operates at 7 border 
crossings.  CBP envisages the expansion of th e FAST programme to 14 additional northern and 
southern border crossings by July 2005.
19 
(e) Rules of origin 
34. The United States applies non-preferential and pref erential rules of origin.  The preferential 
rules of origin maintained by the United Stat es under several bilateral free-trade agreements 
concluded after 1997 have yet to be  notified to the WTO (October 2005).20 
35. Non-preferential rules of origin are applied for purposes of MFN treatment, government 
procurement, country of origin marking, a nd may be used for anti-dumping and countervailing 
measures.21  Determination of origin relies on self-certification. 
                                                      
16 CBP online information, "Frequently Asked Ques tions Regarding Minimum Security Criteria for 
Importers".  Available at:  http://www.cbp.gov/xp/cgov /import/commercial_enforcement/ctpat [14 April 2005]. 
17 CBP online information, "Message from the Commissioner Announcing C-TPAT Importer Security 
Criteria".  Available at:  http://www.cbp.gov/xp/cgov/import/commercial_enforcement/ctpat/criteria_importers/ 
commi_importer_criteria.xml [18 April 2005]. 
18 CBP defines a U.S. importer as a U.S. company (which may be a U.S. subsidiary of a foreign 
company) that is authorized to import into the United Stat es as the "importer of record" by posting a single entry 
or continuous entry bond. 
19 CBP online information, "FAST-Free and Secure  Trade".  Available at:  http://www.cbp.gov/ 
xp/cgov/import/commercial_enforcemen t/ctpat/fast [14 April 2005]. 
20 The U.S. notifications pertaining to rules of origin are contained in WTO documents 
G/RO/N/1/Add.1, 22 June 1995;  G/RO/N/6, 19 December 1995;  G/RO/N/12, 1 October 1996;  and G/RO/N/18, 3 November 1997. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 30 
 
 
36. Non-preferential rules of origin also apply to textiles and clothing, and are maintained "for 
purposes of the customs laws and the administration of quantitative restrictions".22  CBP issued 
revised interim rules of origin for textiles and cl othing in October 2005, to reflect changes brought 
about by the expiry of the WTO Agreement on Textiles and Clothing.23  Under the new rules, the 
requirement that imports of textiles and clothing prod ucts be accompanied by a textile declaration has 
been eliminated and replaced with a requirement that importers identify the manufacturer of such 
products through a "manufacturer identification code".  In general, this code c onsists of the ISO code 
for the country of origin, and certain characters from the name and address of the manufacturer. 
37. In general, non-preferential rules of origin employ the "wholly obtained" and "substantial 
transformation" criteria.  Accordingly, an article is c onsidered to have been pro duced in a country if it 
is wholly the growth, product, or manufacture of that  country or it has been substantially transformed 
into a new and different article of commerce with a name, character, or use distinct from that of the 
article or articles from which it was so transformed.24  However, the U.S. authorities indicated that 
these general standards may be adapted and interprete d further by agencies other than CBP to fit the 
needs and purposes of the particular context in which non-preferential rules are applied. 
38. Preferential rules of origin are maintained unde r free-trade agreements and unilateral tariff 
concessions (Table AIII.1).  U.S. free-trade agre ements use the "wholly obtained" criterion.  
Alternatively, they rely primarily on specified cha nges of tariff classification to determine eligibility, 
and to a lesser extent, regional value content criteria,  either separately or in combination.  For some 
products, these rules also establish certain production requirements. 
39. Rules of origin under unilateral tariff concessi ons and some free-trade agreements require 
goods that do not meet the wholly obtained criterion to fulfil local-content requirements to qualify for preferential tariff treatment.  The value of imported inputs may be counted toward satisfying the local-
content requirement if the inputs have been substan tially transformed into a new and different article 
of commerce before being used to produce the good th at is imported into the United States.  This 
criterion is known as double substantial transformation. 
40. Since January 2003, the United States has applied lib eralized rules of origin to certain imports 
from Canada under the NAFTA.
25  The products in question are:   alcoholic beverages, crude 
petroleum, esters of glycerol, pearl jewellery , headphones with microphones, chassis fitted with 
engines, and photocopiers.  Imports from Mexico are subject to the previous rules of origin. 
(ii) Tariffs 
41. The United States levies customs duties on the basis of the f.o.b. value of imports at the point 
of export. 
                                                                                                                                                                     
21 The legislation on non-preferential rules of origin is contained in:  19 USC 1304 and General Note 3 
to the U.S. Harmonized Tariff Schedule (MFN treatment);  19 USC 2511 et seq., 19 USC 3592, and 19 CFR 
177.21 (government procurement);  19 CFR 102.0, and 19 CFR 134 (country of origin marking);  and 19 CFR 
102.21 (textiles and clothing). 
22 19 USC 3592. 
23 Federal Register , 70 FR 58009, 5 October 2005. 
24 19 USC 2518. 
25 Federal Register , 68 FR 3163, 23 January 2003. United States WT /TPR/S/160/Rev.1 
 Page 31 
 
 
42. The Harmonized Tariff Schedule of the Unite d States was enacted by the Trade and 
Competitiveness Act of 1988 and became effective in January 1989.  It is based on the Harmonized 
Commodity Description and Coding System, (HS).26 
43. The 2004 Harmonized Tariff Schedule reflects the 2002 amendments to the HS.  It comprises 
10,304 tariff lines at the HS 8-digit level (Chapters 1-97).27 
(a) MFN trading partners 
44. The general policy of the United States, embodied in Section 126 of the Trade Act of 1974, is 
to grant MFN tariff treatment to all its trading partners.28  The United States may adopt laws that deny 
MFN tariff treatment to particular countries:  it applies MFN tariff treatment to all but one WTO 
Member (Cuba).  In addition, the Democratic People's Republic of Korea does not receive MFN tariff 
treatment from the United States.  Imports from these tw o countries are subject to the "statutory rate", 
which is the rate imposed by the Smoot-Hawley Tariff Act of 1930, as amended.  The statutory rate is 
shown in column 2 of the Harmonized Tariff Schedule.   MFN tariff treatment was restored to Serbia 
and Montenegro in December 2003, and to Lao People's Democratic Republic in February 2005.29 
45. The United States accords MFN tariff treatment on a temporary and conditional basis to the 
following countries, all of which have entered in to bilateral commercial agreements with the 
United States:  Azerbaijan, Belarus, Kazakhstan,  Russia, Tajikistan, Turkmenistan, Ukraine, 
Uzbekistan, and Viet Nam.30  These countries are denied permanent, unconditional MFN tariff 
treatment on the basis of Title IV of the Trade Act of 1974, which requires that the U.S. President deny MFN tariff treatment to any non-market econom y that was ineligible fo r such treatment as of 
3 January 1975, the date of the legislation's enactmen t, and that denies or seriously restricts the rights 
of its citizens to emigrate.  This provision is known as the Jackson-Vanik amendment.
31 
(b) Applied MFN tariff rates 
46. The following analysis is based on the 2004 Ha rmonized Tariff Schedule of the United States.  
Although the 2005 Harmonized Tariff Schedule was available at the time of preparing this report, ad valorem  equivalents of non- ad valorem  tariff rates were available only for 2004.
32  Excluding the 
non-ad valorem  rates, the simple average applied MFN ta riff in 2005 is 4.2%, the same as in 2004. 
47. The simple average applied MFN tariff, including the ad valorem  equivalents of specific and 
compound rates declined from 5.1% in 2002 to 4.9%  in 2004 (Table AIII.2).  The average applied 
tariff for agriculture (WTO definition) in 2004 w as 9.7%, and remained virtually unchanged with 
respect to 2002.  The average applied tariff for non-agricultural products was 4% in 2004, down from 
4.2% in 2002.  The decline in the non-agricultural average partly reflects the implementation of the 
final stage of Uruguay Round bound tariff reduction co mmitments for textiles and clothing and other 
                                                      
26 The Harmonized Tariff Schedule is included in a document produced and updated regularly by the 
International Trade Commission and available on line at:  http://www.usitc .gov/tata/hts/index.htm. 
27 The tariff lines corresponding to the in-quota and out-of-quota rates applied to the same product are 
counted as one. 
28 19 USC 2136. 
29 Federal Register , 68 FR 64410, 13 November 2003, and 70 FR 7319, 11 February 2005. 
30 19 USC 2434. 
31 19 USC 2432. 
32 The ad valorem  equivalents of non- ad valorem  tariff rates were provided by the U.S. authorities in 
the context of this Review. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 32 
 
 
products, as applied tariff rates we re reduced in tandem with bound rates.  In 2004, duty-free lines 
represented 38% of all tariff lines,  up from 31% in 2002 (Table III.2). 
48. The share of non- ad valorem  tariff lines has declined from 12.2% of all lines in 2002 to 
10.6% in 2004.  Although slightly more than half of comparable non- ad valorem  tariff lines recorded 
declined between 2002 and 2004, on average non- ad valorem  tariffs continue to afford higher 
protection than ad valorem  duties.  In 2004, the average of ad valorem  equivalents of non- ad valorem  
tariff rates was 10.7%, compared with 4.3% for ad valorem  duties.  Non- ad valorem  tariff rates apply 
mainly to agricultural products, footwear and headgear, watches, and precision tools. 
Table III.2 
Structure of the tariff schedule of the United States, 1998-04 
  1998 2000 2002 2004 
1. Total number of tariff linesa 9,997 10,001 10,297 10,304 
2. Non- ad valorem tariffs (% of all tariff lines) 14.0 12.4 12.2 10.6 
3. Non- ad valorem  with no AVEs (% of all tariff lines) 0.0 0.0 0.0 0.0 
4. Tariff quotas (% of all tariff lines)b 2.0 2.0 1.9 1.9 
5. Duty-free tariff lines (% of all tariff lines) 18.6 31.5 31.2 37.7 
6. Dutiable lines tariff average rate (%) 7.2 8.0 7.4 7.8 
7. Domestic tariff "peaks" (% of all tariff lines)c 4.9 5.3 5.6 7.1 
8. International tariff "peaks" (% of all tariff lines)d 7.7 7.0 6.6 5.5 
9. Bound tariff lines (% of all tariff lines) 100.0e 100.0e 100.0e 100.0e 
 
a Chapters 1-97, at 8-digit level, excluding in-quota tariff lines. 
b Tariff quotas are referred to as "tar iff rate quotas" in U.S. regulations. 
c Domestic tariff peaks are defined as those exceed ing three times the overall average applied rate. 
d International tariff peaks are defined as those exceeding 15%. 
e Two lines applying to crude petroleum are not bound.  
Source:  WTO Secretariat calculati ons, based on data provided by the U.S. authorities. 
49. Some 5.5% of all tariff lines had MFN rates exceed ing 15% in 2004.  The products subject to 
the highest ad valorem  or ad valorem  equivalent rates were tobacco (350%), whey (284%), sour 
cream (177%), and peanuts (164%);  in the non-agri cultural sector, the highest rate was applied to 
footwear (58%). 
50. Tariff quotas cover slightly less than 2% of all tariff lines (see Chapter IV(2)). 
(c) WTO bindings 
51. Following the Uruguay Round, the United States bound all tariff lines in Chapters 1-97, 
except two lines covering crude petroleum. 
52. By January 2004, virtually all tariff lines ha d reached their final bound MFN tariff rate.33  
Products with bound MFN tariff reduc tions in 2004 included textiles and clothing, chemicals, paints, 
plastics, leather products, ceramics, glass products, a nd steel products, all of which were subject to 
staged annual reductions in bound MFN tariffs over a ten-year period.  The reduction in bound MFN 
tariffs was carried out over five years for most industrial products (1995-99), and six years for most 
agricultural products (1995-00). 
                                                      
33 Only one tariff line – artificial waxes and prepared waxes of poly (oxyethylene) (polyethylene 
glycol), 3404.2000 – is subject to scheduled bound MFN tariff reductions after January 2004. United States WT /TPR/S/160/Rev.1 
 Page 33 
 
 
53. The WTO certified U.S. Schedule of Concessi ons reflecting the 1996 changes in the HS 
became effective in March 2005.34  The United States has also amended its Schedule of Concessions 
to implement the 2002 changes in the HS.  The WT O Secretariat has reviewed the changes proposed 
by the United States using electronic verification, in line with the procedure agreed to by WTO 
Members in 2001 to introduce the 2002 changes in the HS to the schedules of concessions.35 
(d) Preferential tariffs 
54. Tariff preferences may be granted by the United States either unilaterally or in the context of 
bilateral or regional free-trade agreements. 
Unilateral tariff preferences 
55. The United States grants unilateral preferential tariff treatment to countries qualifying under 
the U.S. Generalized System of Preferences (G SP), the Caribbean Basin Economic Recovery Act 
(CBERA), as amended by the Caribbean Basin Trad e Partnership Act (CBTPA), the Andean Trade 
Preference Act (ATPA), as amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA), and the African Growth and Opportuni ty Act (AGOA).  Products of the U.S. insular 
possessions, freely associated states, and the West Bank and Gaza Strip are also eligible for unilateral 
tariff preferences.
36  According to the U.S. authorities, least -developed countries are eligible for duty-
free access on 83% of the products in the U.S. ta riff schedule.  The main provisions of these 
programmes have been described in detail in th e Secretariat Reports for previous Trade Policy 
Reviews of the United States.37  This section focuses on the principal changes since mid-2003 
affecting the level or coverage of tariff preferences under these programmes. 
56. All products eligible under the GSP benefit fro m duty-free treatment.  In 2004, the simple 
average tariff on imports from GS P beneficiary countries was 2.6% (T able AIII.3).  GSP preferences 
granted to Antigua and Barbuda, Bahrain, and Barb ados will be terminated as of 2006, following the 
"graduation" of these countries under the U.S. GSP.38  With the entry into force of the United States-
Chile free-trade agreement in January 2004, Chile no longer qualifies for GSP preferences;  and the 
Czech Republic, Estonia, Hungary, Latvia, Lith uania, Poland, and Slovakia no longer qualify 
following their accession to the European Union in May 2004.39  During 2004-05 Algeria, Iraq, and 
Serbia and Montenegro became GSP beneficiaries.40 
57. In July 2004, the President signed the AGOA Acceleration Act of 2004, which extends the 
preferences available under AGOA until 2015.41  The Act extends through September 2007 U.S. duty-
free treatment for limited quantities of clothing prod uced in lesser developed AGOA beneficiaries, 
regardless of the origin of the fabric used to produce the clothing.42  Since December 2003, Angola 
                                                      
34 WTO document WT/LET/493, 17 May 2005. 
35 WTO document WT/L/407, 26 July 2001. 
36 See Harmonized Tariff Schedule general notes 3(a), 4, 7, 10, 11, 16, and 17 for the provisions of 
these preferential programmes. 
37 See, for example, WTO (2004), Chapter III(2)(iii)(d). 
38 Federal Register , 69 FR 10131, 4 March 2004. 
39 Federal Register , 69 FR 10131, 4 March 2004.  See 19 USC 2461(b)(1). 
40 Federal Register , 69 FR 10131, 4 March 2004, 69 FR 54739, 9 September 2004, and 70 FR 37959, 
30 June 2005. 
41 Section 7, AGOA Acceleration Ac t of 2004, Public Law 108-274.  The 37 AGOA beneficiaries are 
listed in Chapter II(4)(iii). 
42 Section 7, AGOA Acceleration Act of 2004.  The bene ficiaries of the "third-country fabric rule" are 
Benin, Botswana, Cameroon, Cape Verde, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 34 
 
 
and Burkina Faso have been added to the list of  eligible countries for AGOA preferences, while the 
Central African Republic, Côte d'Ivoi re, and Eritrea have been removed.43  Under AGOA, a country's 
eligibility for benefits depends on the fulfilment of specific criteria, including the protection of worker 
rights and progress toward political pluralism.44 
58. No major changes affecting the level or coverage  of tariff preferences have been introduced to 
the CBERA or the ATPA since the 2004 Trade Policy Review of the United States (see also Chapter II(4)(iii)). 
Free-trade agreements 
59. The United States grants preferential tariff treat ment to originating goods under the free-trade 
agreements with Australia, Canada and Mexico, Ch ile, Israel, Jordan, and Singapore.  This section 
describes the scope of tariff preferences under the ag reements that have entered into force since mid 
2003.  Other agreements have been covered in th e Secretariat Reports for previous Trade Policy 
Reviews of the United States.
45 
60. The United States-Australia free- trade agreement entered into force in January 2005.  Under 
the agreement, U.S. tariffs on originating goods are eliminated upon the agreemen t's entry into force, 
or within 4, 5, 8, 10, 11, or 18 years.  Tariffs subject to phase-out periods are generally reduced in 
equal annual instalments, although cuts on some tari ffs, mostly those applied to certain out-of-quota 
agricultural imports, are back-loaded, with no reduc tions in the initial years of the phase-out period.  
Other tariffs (applied to textiles and clothing) are subject to a ceiling throughout the phase-out period. 
61. The United States has excluded sugar, and so me sugar-containing and dairy products from 
tariff elimination.  For a limited number of goods, including beef, dairy products, peanuts, tobacco, 
cotton, and avocados, immediate market access  is provided through th e creation and gradual 
expansion of tariff quotas.  Tariff quotas for dairy pr oducts will remain in place indefinitely, although 
the in-quota quantities that enter duty free will grow  at annual rates of be tween 3% and 6%.  The 
agreement also offers duty-free treatment for in-quot a imports of beef and dairy products reserved for 
Australia under WTO tariff quotas. 
62. Under the free-trade agreement with Chile, th e simple average tariff on imports from Chile 
was 1.3% in 2004 (Table AIII.3).  Most tariffs were  eliminated upon the agreement's entry into force 
in January 2004.  The remainder will be phased out ove r 2, 4, 8, 10, or 12 years.  The elimination of 
tariffs on some products is also back-loaded.  Th e United States has not excluded any products from 
tariff elimination. 
63. The agreement creates transitional tariff quotas fo r a limited number of goods, including beef, 
dairy products, sugar, tobacco, avocados, processed  artichokes, poultry, tyres, copper, and certain 
chinaware.  These tariff quotas will be replaced wi th unlimited, duty-free access to the U.S. market 
after the expiry of the corresponding phase-out period. 
64. The simple average tariff on imports from Singapore under the United States-Singapore free-
trade agreement was 2.2% in 2004 (Table AIII.3).  Most U.S. tariffs were eliminated upon the 
                                                                                                                                                                     
Mauritius, Mozambique, Namibia, Niger, Nigeria, Rw anda, Senegal, Sierra Leone, Swaziland, Tanzania, 
Uganda, and Zambia.  See chapter 98 (subchapter XIX) of the Harmonized Tariff Schedule. 
43 USTR (2005b). 
44 The AGOA eligibility criteria are set forth in secti on 104(a) of AGOA and sections 502(b) and (c) of 
the Trade Act of 1974. 
45 See, for example, WTO (2004), Chapter III(2)(iii)(d). United States WT /TPR/S/160/Rev.1 
 Page 35 
 
 
agreement's entry into force in January 2004.  Th e remainder will be phased out over four, eight, or 
ten years.  All tariffs will be reduced in equa l annual instalments over the phase-out period.  The 
United States has not excluded any products from tariff elimination. 
65. Like the agreement with Chile, the agreemen t with Singapore provides immediate access to 
the U.S. market for a limited number of goods, in cluding beef, dairy products, peanuts, sugar, 
tobacco, and cotton, through tariff quotas with duty -free in-quota rates.  All tariff quotas will be 
replaced with unlimited, duty-free access as of the tenth year of the agreement. 
(iii) Other charges affecting imports 
66. Imports valued at more than US$2,000 are s ubject to a merchandise processing fee collected 
by Customs and Border Protection.46  The fee is set at 0.21% of the import value;  the statutory 
minimum and maximum are US$25 and US$485.  Originating imports under the free-trade agreements concluded between the United States an d Australia, Canada and Mexico, Chile, Israel, and 
Singapore are exempt.  Eligible imports from le ss developed countries and CBERA beneficiary 
countries are also exempt, as are certain products imported under the GSP.  The application of the 
merchandise processing fee has been extended until September 2014, following the adoption of the 
American Jobs Creation Act of 2004. 
67. According to the U.S. authorities, Congress intended the merchandise processing fee to 
approximate the cost to CBP of pro cessing the entry of imported merchandise.
47  They have also 
noted that the merchandise processing fee's statutor y ceiling was introduced in part "to address GATT 
concerns".48  The American Jobs Creation Act of 2004 requires the Secretary of the Treasury to 
conduct a study of all the fees collected by the Department of Homeland Security, by September 
2005, and make recommendations concerning fees to be eliminated and the rate of fees to be 
retained.49 
68. Water-borne imports valued at more than US$2, 000, and unloaded at a port receiving federal 
funds for maintenance are subject to a harbour maintenance fee regardless of their origin.50  Water-
borne domestic cargo valued at more than US$1,000,  and loaded or unloaded at one of these ports is 
also subject to the fee.  The fee, which  can only be  charged once for the same cargo, is set at 0.125% 
of the value of the cargo and is collected by Cust oms and Border Protection.  The U.S. authorities 
indicated that the purpose of the harbour maintena nce fee is to "have the businesses that benefit 
directly from the use of U.S. harbours ... bear  the cost of maintenance of those harbours".51 
69. Exported cargo is exempt from the harbour maintenance fee following a 1998 decision by the 
U.S. Supreme Court.52  Specifically, the Court held that the harbour maintenance fee bore "the indicia 
of a tax", and that the value of the export cargo – the basis on which the fee is determined – did not 
"correlate reliably with the federa l harbour services, facilities, and benefits used or usable by the 
                                                      
46 19 USC 58c. 
47 WTO document WT/TPR/M/126/Add.3, 22 November 2004. 
48 WTO document WT/TPR/M/126/Add.3, 22 November 2004. 
49 Section 892(e), American Jobs Creation Act of 2004. 
50 This charge, enacted as part of the Water Resources Development Act of 1986 (26 USC 4461) is 
referred to as a "tax" in the Act, and as a "fee" in th e regulations (19 CFR 24.24).  The list of ports receiving 
federal funds for maintenance is contained in 19 CFR 24.24. 
51 WTO document WT/TPR/M/126/Add.3, 22 November 2004. 
52 United States v. United States Shoe Corp., 523 US 360 (1998), 31 March 1998.  Section 11116(b)(1) 
of the Safe, Accountable, Flexible, Efficient Transportation Equity Act (P.L. No. 109-59) amended the harbour 
maintenance tax to exempt exports. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 36 
 
 
exporter".  Thus, the Supreme Court determined th at the harbour maintenance fee, as applied to 
exports, violated the U.S. Constitution's Export Clause.53 
70. In June 2004, Brazil and the United States no tified the WTO Dispute Settlement Body that 
they had reached a mutually satisfactory soluti on to the matter concerning the "equalizing excise 
tax".54  This tax was imposed by the State of Florida on the processing of imported citrus products.  
Previously, Brazil had requested the establishment of a panel.55 
(iv) Anti-dumping and countervailing actions 
(a) Legislation and administration 
71. Title VII of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 
contains the main U.S. AD and CVD laws.  The Trade and Tariff Act of 1984, the Omnibus Trade and 
Competitiveness Act of 1988, and the Uruguay Rou nd Agreements Act of 1994 (URAA) introduced 
further modifications to AD and CVD legislation. 
72. The International Trade Administration (ITA)  in the U.S. Department of Commerce 
(USDOC) and the United States International Trad e Commission (USITC) are responsible for the 
administration of laws and agreements with r espect to anti-dumping (AD) and countervailing duty 
(CVD) measures in the United States.  The ITA is r esponsible for the determin ation of the existence 
and margin of dumping and subsidy in AD and C VD investigations, while the USITC determines 
whether there is material injury or threat thereo f to the domestic industry r esulting from imports of the 
dumped or subsidized products.  The ITA's AD/ CVD Petition Counseling and Analysis Unit assists 
U.S. companies with respect to the recourse to U.S. unfair trade laws.  Assistance provided includes 
help to understand legislation and regulations and to file petitions  requesting the initiation of an 
investigation.56 
73. AD and CVD investigations are initiated by the USDOC, generally at the request of 
petitioners, based on written applica tions;  although the USDOC has the authority to self-initiate 
investigations, it seldom does.  Petitions must be filed simultaneously with the USDOC's ITA and the 
USITC.  The USITC subsequently makes a prelimin ary injury determination:  if negative, the 
investigation is terminated, if affirmative, the IT A issues a preliminary determination of dumping or 
subsidization.  Whether the ITA's preliminary determination is affirm ative or negative, the 
investigation continues.  In the case of an affirm ative determination, provisional measures may be 
applied.  If the ITA's final determination finds a margin of dumping or a subsidy rate above the 
de minimis level, the USITC issues a final injury determin ation:  if affirmative, the ITA issues an 
order imposing AD or CVD duties, if negative, the investigation is terminated, no order is issued, 
provisional measures are lifted and bond and cash deposits returned. 
74. The Continued Dumping and Subsidy Offset Act of 2000 (CDSOA), also known as the Byrd 
Amendment, introduced a system under which AD an d CV duties assessed are distributed to members 
of the affected U.S. industry who supported the petition for investigation.57  Under the CDSOA, 
affected domestic producers may receive a portion of  the assessed AD or CVD duties to cover certain 
                                                      
53 The Export Clause states:  "No Tax or Duty sha ll be laid on Articles exported from any State".  
Article I, Section 9, The United States Constitution. 
54 WTO document WT/DS250/3, 2 June 2004. 
55 WTO document WT/DS250/2, 19 August 2002. 
56 ITA online information.  Available at:  http://ia.ita.doc.gov/pcp/pcp-index.html. 
57 Title X of the Agriculture, Rural Development,  Food and Drug Administration, and Related 
Agencies Appropriations Act of 2001 (P.L No. 106-387).  Available online at:  http://thomas.loc.gov. United States WT /TPR/S/160/Rev.1 
 Page 37 
 
 
qualifying expenditures.  Allocations under the CD SOA are distributed on a fiscal-year basis, in 
proportion to qualifying expenditures.  A report on allocations under the CDSOA, on uncollected 
duties and on clearing account balances is made pub lic every year by the U.S. Customs and Border 
Protection (CBP).58  CDSOA deposits in the Clearing Account were US$3.95 billion on 
1 October 2004, of which US$1.93 billion corr esponded to AD cases, and US$2.02 billion to CVD 
cases.  Some 73% of all CDSOA deposits (US $2.9 billion) were from the AD and CVD cases on 
softwood lumber from Canada.  In FY 2004, the estimated value of disbursements was US$284 million, while total disbursements since FY 2001 were US$1.03 billion.
59  In a recent study, 
the GAO showed that the disbursements were concentr ated in a few companies;  about half went to 
five companies, and some 80% to 39 out of 770 beneficiary companies.60 
75. New guidelines for determining continuous  bond requirements for importers of 
agriculture/aquaculture merchandise subject to AD or  CVD cases were issued by the CBP in July 
2004.61  The measures were adopted after the CBP de tected difficulties in collecting the AD duties 
assessed at liquidation, in particular for agriculture/aquaculture merchandise.62  Under previous 
guidelines, minimum continuous bond amounts were estab lished at 10% of the duties, taxes, and fees 
paid by the importer during the previous year;  when new AD/CVD duties were applied, the duties 
were not taken into account to determine the bond.  The CBP found that ther e were cases where the 
bonds were insufficient to cover increases in dumpi ng margins that occurred between the time of 
deposit and the time of final liquidation.  The greates t fluctuations have been seen in cases related to 
agriculture and aquaculture products.  Port Director s are now required to review continuous bonds for 
importers who import agriculture/aquaculture merchandise subject to AD/CVD cases and obtain 
larger bonds where necessary.  Any increase in bond  liability will become effective when the USDOC 
issues its Order on the case;  using the importers pr evious 12 months import value of merchandise 
subject to the case, the continuous bonds will be increased by the rate th at the USDOC issues at 
Order.63 
76. There are also new guidelines to prevent circ umvention:  if, after the USDOC issues a 
preliminary affirmative determination in an agri culture/aquaculture case, the CBP detects sudden 
changes in declared values, claimed country of orig in, or declared classification, the CBP is mandated 
to increase the importer's continuous bond.  The CBP will continue to monitor AD and CVD cases for 
                                                      
58 The report for FY 2004 is available in CBP online information, at:  http://www.cbp.gov/xp/cgov/ 
import/add_cvd/cont_dump/cdsoa_04/fy2004_annual. 
59 Disbursements were US$230 million in FY 2001;  US$330 million in FY 2002;  US$190 million in 
FY 2003;  and US$284 million in FY 2004.  The disbursements for FY 2003 do not include US$50 million 
pending the outcome of a court case.  CBP online information.  Available at:  http://www.cbp.gov/xp/cgov/ 
import/add_cvd/cont_dump. 
60 GAO (2005b). 
61 The Commissioner of Customs is entitled, pursuant to Treasury Department Order No. 165 Revised, 
as amended (T.D. 53654, 19 FR 7241, 6 November 1954), to require, by regulation or specific instruction, such 
bonds or other security considered n ecessary for the protection of the revenue  or to assure compliance with any 
pertinent law, regulation, or instruction, as well as th e form and conditions of these bonds (Customs bonds).  
This is also done in the case of import duties and AD and CV duties.  Bond applications can be posted for single 
or multiple transactions (continuous bonds). 
62 CBP online information.  Available at:  http://www.cbp.gov/xp/cgov/import/add_cvd/bonds/ 
07082004.xml, "Amendment to Bond Directive 99-3510-004 for Certain Merchandise Subject to Anti-
dumping/Countervailing Duty Cases", 9 July 2004. 
63 If an importer has merchandise subject to an AD case with a value of US$1 million during the 
previous 12 months, and the USDOC rate is 30%, the continuous bond will be increased by US$300,000. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 38 
 
 
all commodities.  If the CBP determines any comp arable risk with other commodities, a similar 
review of bond covera ge will be performed.64 
77. Certain aspects of the AD and CVD system challe nged in the WTO were resolved during the 
period under review.  The challenge of the Anti- Dumping Act of 1916 (anti-dumping provisions of 
the Revenue Act of 1916) resulted in an Appellate  Body report recommending that the United States 
bring the 1916 Act into conform ity with its WTO obligations.65  On 3 December 2004, legislation 
repealing the 1916 Act, the Miscellaneous Trade a nd Technical Correction Act of 2004 (P.L. No. 108-
429), was signed by the President.66  The repeal does not affect actions under the 1916 Act started 
before the enactment of the 2004 Act and pending on such date. 
78. Eleven WTO Members challenged the CDSOA and in January 2003 the Appellate Body 
affirmed a Panel's findings that certain aspects of  the CDSOA were not cons istent with multilateral 
rules.67  The "reasonable period of time" for implementa tion was determined by arbitration to expire 
on 27 December 2003.68  In June 2003, legislation to bring the CDSOA into conformity with U.S. 
WTO obligations was introduced in the U.S. Senate  (S. 1299).  In January 2004, eight complaining 
parties requested WTO authorization to retaliate, while three agreed to extend the implementation 
period to 27 December 2004.  In August 2004, the Ar bitrators determined that each complainant could 
retaliate, on a yearly basis, covering the total va lue of trade not exceeding 72% of the amount of 
disbursements under the CDSOA of duties paid on imports from each party. 
79. In January 2005, three parties announced that  they had reached an understanding with the 
United States and would not at that stage request authorization from the DSB to suspend obligations.69  
In April 2005, the EU notified the DSB that it was suspending, as of 1 May 2005, the application of 
concessions and related obligations  under GATT 1994 on imports of cer tain products originating in 
the United States.  For the first year, an ad valorem  additional duty of 15% would be imposed on 
these products, and the EU noted that the suspen sion represented 72% of US$38.63 million collected 
from EU exports and disbursed to U.S. companies in the distribution under the CDSOA Annual Report.
70  The EU issued Council Regulation (EC) No. 673/2005 of 25 April 2005 to 
implement these measures.71  In its May 2005 implementation report, the United States noted that in 
March 2004, a bill to repeal the CDSOA had been  introduced in the Hou se of Representatives 
(H.R. 3933), that in February 2005, the U.S. Administration had proposed repeal of the CDSOA in its budget proposal for FY 2006, and that in March 200 5 a bill that would repeal the CDSOA had been 
introduced in the House of Representatives (H.R. 1121).
72  Legislation to repeal the CDSOA was 
approved by both the House of Representatives and th e Senate;  however, the United States notified to 
the WTO in January 2006 that, because the Senate modified the legislation after it was approved by 
                                                      
64 CBP online information.  Available at:  http://www.cbp.gov/xp/cgov/import/add_cvd/bonds/ 
07082004.xml. 
65 WTO documents WT/DS136/R, 31 March 2000, and WT/DS136/RC1, 25 April 2000;  and 
WT/DS162/R, 29 May 2000 and WT/DS162/R/Add.1, 25 September 2000. 
66 U.S. Government Printing Office online information.  Available at:  http://thomas.loc.gov/cgi-
bin/toGPO/http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_public_laws&docid=f:pub14 
29.108.pdf. 
67 WTO documents WT/DS217/1, 9 January 2001, and WT/DS217/R, 16 September 2002, and 
WT/DS217/AB/R and WT/DS234/AB/R, 16 January 2003. 
68 WTO document WT/DS217/14, WT/DS234/22, 13 June 2003. 
69 WTO documents WT/DS217/44, 6 January 2005, WT/DS217/45, 10 January 2005, and 
WT/DS217/46, 12 January 2005. 
70 WTO document WT/DS217/47, 4 May 2005. 
71 Information available at:  http://trade-info.cec.eu.int/doclib/html/122952.htm 
72 WTO document WT/DS217/16/Add.15, and WT/DS234/24/Add.15, 8 April 2005. United States WT /TPR/S/160/Rev.1 
 Page 39 
 
 
the House of Representatives (on an unrelated pr ovision), the House would need to vote on the 
modified legislation before it c ould be presented to the President.73 
80. In the context of the Negotiating Group on Rules (NGR), the United States has noted that it 
considers trade remedies as an integral part of th e current rules-based international trading system.74  
The United States has suggested i ssues under the AD and SCM Agreements that may be appropriate 
for clarification and improvement as part of the negotiations.75  For example, in February 2005, the 
United States presented a communication stating the need for clarifications and improvements to the AD and SCM Agreements with regard to the pr oblem of evasion of AD and CV measures through 
circumvention.
76 
(b) Anti-dumping 
81. After an increase in 2001, in response to petitions  in particular from the steel industry, the 
number of AD investigation initiations decreased considerably in 2002 and stabilized in 2003 
(Table III.3).  The 71 investigations initiated in  2002 and 2003 covered a combined import value of 
some 0.2% of total U.S. imports.  In 2004, only 26  new investigations were initiated;  two new AD 
investigations were initiated in the first quarter of 2005.77 
Table III.3 
Anti-dumping investigations, 1980-04 
Year 1980-90 1991-99 2000 2001 2002 2003 2004 
Initiations 418 370 45 77 34 37 26 
Preliminary determinations 336 327 22 61 44 21 37 
Final determinations 283 286 35 34 58 22 25 
Duty orders 188 161 20 30 26 16 14 
Revocations 69 134 57 8 9 1 12 
 
Source : U.S. Department of Commerce. 
82. Of the 71 investigations initia ted in 2002 and 2003, 38 (54% of the total) resulted in the 
imposition of provisional measures.  In 2004, alt hough the number of investigations initiated was 
smaller, the incidence of provisional measures increa sed:  24 of the 26 investigations initiated resulted 
in the application of provisional measures;  the USITC made a preliminary negative determination of 
injury in one case, and the USDOC made negative prel iminary and final determinations in another.  
Over 2002-04, 56 new AD duty orders were issued;  41% of investigations initiated in this period led 
to final duty orders, where final disposition had been determined by the end of March 2005. 
83. At end 2004, AD orders were applied to im ports from 44 countries, down from 48 countries 
in mid 200378;  273 AD duty orders were in effect, compared with 271 in June 2003.  Of these, some 
                                                      
73 WTO document WT/DS217/16/Add.23, WT/DS234/24/Add.23, 10 January 2006. 
74 WTO document TN/RL/W/27, 22 October 2002, "Basic Concepts and Principles of the Trade 
Remedy Rules:  Communication by the United States". 
75 WTO documents TN/RL/W/98 , 6 May 2003, TN/RL/W/130, 20 June 2003, and other TN/RL 
documents. 
76 WTO document TN/RL/GEN/29, 8 February 2005. 
77 International Trade Administrati on online information.  Availabl e at:  http://ia.ita.gov/stats/inv-
initiations-2000-2004.htlm. 
78 WTO document G/ADP/N/126/USA, 8 March 2005.  The main trading partners subject to AD 
measures in December 2004 were:  Ch ina (20.1% of the total);  EU Member States (19.4%);  Japan (10.6%);  
Korea (7%);  Chinese Taipei;  Brazil (5.1%);  India (4.4%);  Canada (3 .3%);  and Mexico (3.3%).  By region, 
56.4% of the measures were applied to partners in Asia;  26.7% in Europe;  and 15.4% in the Americas. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 40 
 
 
55.7% were applied on iron and st eel products, 13.9% on chemicals and pharmaceuticals, and 7.7% 
and agricultural and forestry products;  the rest we re applied on imports of a number of industries, 
including minerals and metals, m achinery and equipment, textiles and clothing.  At end June 2005, 
274 orders were in effect.79  Imports subject to AD investiga tions in FY 2002 and FY 2003 totalled 
US$1.1 billion, and US$1 billion.  Affirmative determinations were made on imports totalling 
US$330 million and US$530 million80, representing 0.03% and 0.04% of total imports in 2002 and 
2003, respectively.  The value of imports a ffected by AD measures between 1980 and 2003 was 
US$6 billion, or 0.4% of total imports. 
84. In mid 2005, U.S. products were subject to so me 56 anti-dumping measures, including a price 
undertaking in foreign markets.  The measures were  adopted by 13 trading partners, but orders by 
China, Mexico, and India represented almost two thirds of the measures in place.  A substantial number of these AD measures were on chemicals,  followed by agricultural and steel products.
81 
85. Aspects of investigations, procedures, and find ings of U.S. AD measures were challenged or 
continued to be active in the WTO during the pe riod under review.  A Panel requested by Canada 
regarding procedural aspects of a USITC AD and CVD investigation on softwood lumber found some 
USITC procedures in its final threat of injury determination inconsistent with the AD and SCM 
Agreements.82  In late 2004, the USITC issued a new in jury determination, and the USDOC amended 
the AD and CV duty orders.  Considering these new measures to be inconsistent with U.S. WTO 
obligations, in February 2005 Canada requested th e establishment of a Panel and authorization to 
suspend concessions with respect to the United Stat es.  The DSB referred the dispute regarding the 
USITC injury determination to the original Pa nel, composed in March 2005 in accordance with 
Article 21.5 of the DSU.83  The Panel found that the USITC's Section 129 injury determination was 
not inconsistent with the AD and SCM Agreements , and it considered that the United States had 
implemented the decision of the Panel, and the DSB,  to bring its measure into conformity with its 
obligations under the AD and SCM Agreements.84 
86. In November 2004, the EC requested consultati ons with the United States with respect to 
Section 776 of the Tariff Act of 1930, as amende d, and the particular circumstances in the 
determination of dumping by the USDOC in its i nvestigation of Stainless Steel Bar from the 
United Kingdom.85 
87. The USDOC's practice of not offsetting dumping margins with negative margins of dumping 
(often referred to as "zeroing") in determining we ighted average dumping margins was challenged in 
three cases during the period under review:  in Apri l 2005 a Panel was established at the request of 
Japan86;  in December 2004 Thailand requested consultations87;  and in January 2005 Mexico requested 
consultations88.  In a previous case, regarding the final AD measure on softwood lumber from Canada, a 
Panel, established in January 2003, rejected some of  Canada's arguments, but ruled that the USDOC's 
                                                      
79 WTO document G/ADP/N/132/USA, 16 September 2005. 
80 USITC (2004a). 
81 USDOC online information.  Available at:  http ://ia.ita.doc.gov/trcs/foreignadcvd/index.html;  and 
notifications to the WTO. 
82 WTO document WT/DS277/R, 22 March 2004. 
83 WTO document WT/DS277/12, 10 March 2005. 
84 WTO document WT/DS277/R/W, 15 November 2005. 
85 WTO document WT/DS319/1, G/L/712, G/ADP/D57/1, 9 November 2004. 
86 WTO documents WT/DS322/1, G/L/720, G/ADP/D58/1, 29 November 2004, and WT/DS322/9, 
19 April 2005. 
87 WTO document WT/DS324/1, G/L/726 , G/ADP/D59/1, 14 December 2004. 
88 WTO document WT/DS/325/1, G/L/727, G/ADP/D60/, 10 January 2005. United States WT /TPR/S/160/Rev.1 
 Page 41 
 
 
use of "zeroing" in the softwood lumber investig ation was inconsistent with the AD Agreement.89  The 
Appellate Body upheld the Panel's findings  on "zeroing" in that investigation.90  Both reports were 
adopted in August 2004.  It was ag reed that the reasonable period of time for implementation would 
expire on 15 April 2005.  In May 2005, the United States informed the DSB that it had implemented 
the DSB's recommendations and rulings;  Canada info rmed the DSB that it did not consider that the 
United States had implemented them properly.91  Subsequently, Canada and the United States reached 
an understanding whereby the matter would be referred to arbitration.92 
88. Also on the matter of "zeroing", and in a pr evious case concluded during the period under 
review, the EC requested consultations with the Un ited States in June 2003 with respect to, among 
other things, the methodology used by the USDOC  for determining the dumping margin in new 
investigations and in administrative reviews.93  A Panel was established in March 2004, and 
composed in October.  In October 2005, the Pane l found that the USDOC's practice of not offsetting 
dumping margins with negative margins of dumpi ng in determining weighted average dumping 
margins in administrative reviews was not inconsis tent with the AD Agreement, while the use of 
"zeroing" by the USDOC in original investiga tions was inconsistent with the AD Agreement.94 
(c) Countervailing duties 
89. The number of CVD investigation initiations d eclined during the period under review.  There 
were only eight initiations betwee n 2002 and 2003, compared with 18 in 2001 (Table III.4);  some 
two thirds resulted in the imposition of provisional measures.  During the same period, 12 final CVD 
orders were issued, most correspondi ng to investigations initiated in 2001.  Three new investigations 
were initiated in 2004, re garding live swine from Canada, and PET resin (bottle-grade) from India and 
Thailand.95  Two duty orders were issued  in 2004, regarding pre-stressed concrete steel wire strand 
from India, and Carbazol Violet Pigment 23, also fr om India.  Five duty orders were revoked in 2004 
and two in the first half of 2005.96 
Table III.4 
Countervailing duty investigations, 1980-04  
Year 1980-90 1991-99 2000 2001 2002 2003 2004 
Initiations 240 64 7 18 3 5 3 
Preliminary determinations 210 56 0 15 6 4 4 
Final determinations 176 54 7 11 14 2 1 
Duty orders 107 32 6 6 10 2 2 
Revocations 84 66 21 0 0 0 5 
 
Source : U.S. Department of Commerce. 
90. Duty orders issued in 2002-04 affected impor ts from:  Brazil, Canada, France, Germany, 
Hungary, India, Indonesia, Italy, Korea, the Netherlands, South Africa, Thailand, and the 
United Kingdom.  Overall, there were 55 final CVD or ders in place as of 30 June 2005, two less than 
                                                      
89 WTO document WT/DS264/R, 13 April 2004. 
90 WTO document WT/DS264/AB/R, 11 August 2004. 
91 WTO documents WT/DS264/16, 20 May 2005, and WT/DS264/17, 20 May 2005. 
92 WTO documents WT/DS264/18, 30 May 2005, and WT/DS264/19, 1 June 2005. 
93 WTO document WT/DS294/1, G/L/630, G/ADP/D49/1, 19 June 2003. 
94 WTO document WT/DS294/R, 31 October 2005. 
95 WTO documents G/SCM/N/113/USA, 7 October 2004, and G/SCM/N/122/USA, 3 March 2005. 
96 WTO documents G/SCM/N/113/USA, 7 October 2004, G/SCM/N/122/USA, 3 March 2005, and 
G/SCM/N/130/USA, 15 September 2005. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 42 
 
 
reported in the previous U.S. review;  almost half involved an EU member, while Asian countries 
accounted for almost one third.  Two thirds of CVD orders in place related to  steel products.  No new 
duty order was imposed in the first half of 2005.97  Imports subject to CVD investigations in FY 2002 
and FY 2003 totalled US$370 million and US$410 million, affirmative determina tions were made on 
imports totalling US$210 million and US$390 million.98 
91. Certain aspects of investigation and determina tion procedures of U.S. CV measures have been 
challenged by U.S. trading partners in the WTO.  They include challenges to the USDOC's "change-
in-ownership" methodologies in cases of CVD duti es applied with respect to pre-privatization 
subsidies.  The Appellate Body, upholding some panel findings, recommended that the DSB request 
the United States to bring its "same person" met hodology into conformity with the SCM Agreement.99  
In June 2003, the USDOC modified the manne r in which it analyses whether a subsidized, 
government-owned company remained subsidized after it was "privatized".100  In October 2003, the 
USDOC issued final revised determinations for each of the 12 CV determinations that were at issue.  The EC considered unsatisfactory the measures taken by the United States and requested the 
establishment of a Panel, which was conformed in October 2004. 
92. In a July 2003 complaint by Korea concerning USDOC preliminary and final subsidy 
determinations and USITC preliminar y injury and subsequent determin ation in CVD investigations on 
dynamic random access memory semiconductors, th e Panel found an aspect of the USITC's final 
injury determination inconsistent with Article  15.5 of the SCM Agreement, and found USDOC's 
subsidy determination to be incons istent with the SCM Agreement, but rejected or decided not to 
address most of Korea's other claims.
101  In March 2005, both the United States and Korea appealed 
certain issues of law and legal inte rpretations developed by the Panel.102  On 27 June 2005, the 
Appellate Body issued its report and reversed the Panel's findings with respect to USDOC's subsidy 
determination.103  In November 2005, the United States and Korea notified the DSB that the 
implementation period woul d expire on 8 March 2006.104  In April 2004, Canada requested 
consultations with the United States concerning th e review of the CVD order on certain softwood 
lumber products from Canada.105  The case is at the consultation stage (October 2005). 
(d) Suspension agreements 
93. AD and CVD investigations may be suspended,  under some circumstances, based on an 
agreement with the exporter to eliminate the injuri ous effect.  Under suspension agreements, exporters 
accounting for substantially all of the imports of th e merchandise under investigation, or in the case of 
a subsidy, the Government alleged to be providing the subsidy, agree to eliminate the subsidy or 
dumping, to completely offset the net subsidy,  or to cease exports of the merchandise to the 
United States through export limits or price undert akings by firms.  An agreement with a WTO 
Member to suspend an AD investigation may invo lve only price undertakings;  agreements with 
respect to CVD investigations may also involve quantitative restrictions. 
                                                      
97 WTO document G/SCM/N/130/USA, 15 September 2005. 
98 USITC (2004a). 
99 WTO documents WT/DS212/R, 31 July 2002, and WT/DS212/AB/R, 9 December 2002. 
100 See Department of Commerce (2003). 
101 WTO document WT/DS296/R, 21 February 2005. 
102 WTO documents WT/DS296/5, 1 April 2005, and WT/DS296/6, 11 April 2005. 
103 WTO document WT/DS296/AB/R, 27 June 2005. 
104 WTO document WT/DS296/11, 8 November 2005. 
105 WTO document WT/DS311/1, G/L/679, G/SCM/D60/, 19 April 2004. United States WT /TPR/S/160/Rev.1 
 Page 43 
 
 
94. As at 31 December 2004, six suspension agreements  were in place with Mexico, the Russian 
Federation, and Ukraine;  four of the agreements re late to steel;  they all refer to AD investigations.106 
Two of the six agreements involve price undertakin gs (with Mexico and the Russian Federation) and 
four involve export limits (with the Russian Fe deration and Ukraine).  During the period under 
review, three suspension agreements were terminat ed, relating to hot-rolled flat-rolled carbon-quality 
steel products from Brazil (countervailing measure);  and cut to length carbon steel plate from China 
and South Africa (anti-dumping measures);  no new su spension agreements were entered into by the 
United States during the period under review. 
(e) Administrative reviews 
95. Administrative reviews of AD and CV duty orde rs are conducted to determine the amount of 
duty to be finally assessed on imports during the review  period, and to re-calculate the amount of net 
countervailable subsidy or dumping margin for merchandise under the outstanding CV or AD duty 
order, to establish the deposit rate for ensuing peri ods.  Administrative reviews may be requested by 
interested parties every 12 months.  If no review is  requested for a particular 12-month period, final 
duties are assessed in the amount deposited for that  period.  In 2002 and 2003, 146 administrative 
reviews were completed of AD duties and 17 of CV orders.107 
(f) Sunset reviews 
96. Section 751 (c) of the U.S. Tariff Act of 1930,  as amended by the URAA, require that the 
USDOC and the USITC conduct sunset reviews no later than five years after an AD or CV duty order 
is issued, to determine whether its revocation would be likely to lead to continuation or recurrence of 
dumping or countervailable subsidies (USDOC) and of  material injury to the industry (USITC).  
Sunset reviews are order-specific (country- and pro duct-specific).  Suspension  agreements are also 
subject to sunset review.108  The policies for USDOC's conduct of sunset reviews are contained in the 
USDOC's Sunset Policy Bulletin (SPB), which provides guidance on methodological or analytical issues not explicitly addressed by statutes and regulations.
109  The United States treats as de minimis  
any countervailable subsidy or AD margin rate that is less than 0.5%, which is also the de minimis  
rate for administrative reviews;  for initial inv estigations the rates are 1% for CVDs (2% for 
developing countries) and 2% for AD duties (3%). 
97. The determination of likelihood of continua tion or recurrence of dumping in case of 
revocation is made on an order-wide basis, c onsidering the weighted-average dumping margins 
determined in the investigation and subsequent reviews.  Under the SPB, the USDOC will normally 
determine the revocation of an AD order where dumping was eliminated after issuance of the order, 
and import volumes remained steady or increased;  continued margins of dumping at any level would 
lead to a finding of likelihood of continuation or recurrence of dumping.  In the case of CVDs, the likelihood determination is  based on the net counterva ilable subsidy determined  in the investigation 
and subsequent reviews, and whether any change  in the programme that gave rise to the net 
countervailable subsidy determined in the investiga tion and subsequent reviews has occurred that is 
likely to affect that subsidy. 
                                                     
 
106 WTO documents G/ADP/N/126/USA, 8 March 2005, and G/SCM/N/122/USA, 3 March 2005. 
107 International Trade Administration online information.  Available at:  http://ia.ita.doc.gov/ 
stats/adrev1.htm. 
108 Sunset review procedures an d rules are contained in the Federal Register , Vol. 63, 5 June 1998, and 
are available online at:  ftp://ftp.usitc.gov/pub/notices/sunrules.pdf. 
109 Department of Commerce, International Trade Administration, Policies Regarding the Conduct of 
Five-year (Sunset) Reviews of Antidumping and Countervailing Duty Orders, Federal Register, 16 April 1998, Volume 63, Number 73, pp. 18871-18877. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 44 
 
 
98. All AD and CV duty orders in existence on 1 Ja nuary 1995 were reviewed starting July 1998, 
at the initiation of a three-year transition period finalized on 30 June 2001.  These reviews are called First Round Transition Reviews.  All 309 review s were initiated before 31 December 1999 and 
completed by 2001;  146 orders we re revoked and 163 continued.
110  Orders issued after 1 January 
1995 are reviewed five years after they become effective. 
99. From January 2000 to June 2005, 20 7 sunset reviews were initiated;  of the 133 that had been 
completed by 31 August 2005, 57 orders were revoke d and 76 were continued.  Products for which 
duties were revoked include iron and steel, textile and apparel and agricultural goods.  Duties were 
continued on iron and steel, chemical, industr ial textiles, and agricultural products.111 
100. Some U.S. sunset review procedures and regulatio ns have been challenged in the WTO.  In a 
case dealing with an EC complaint regarding the sunset review of CVD orders on certain steel 
products from Germany, the Panel and the Appellate Body found that the United States had failed to 
make the proper determination of the likelihood of continuation or recurrence of subsidization.112  In 
April 2004, the United States informed the DSB that it had revoked the CVD order at issue.113  In a 
January 2002 challenge by Japan of the final de terminations of the sunset review concerning 
corrosion-resistant carbon steel flat products, the Pa nel upheld all aspects of the determination that 
Japan challenged;  the Appellate Body upheld most of the Panel's findings, but determined that the 
SPB can be challenged in WTO dispute settlement.114 
101. In a complaint by Argentina regarding the final de terminations in sunset reviews of imports of 
oil country tubular goods, the Panel found that certa in U.S. provisions regarding waivers in sunset 
reviews and certain provisions of the SPB were inco nsistent with U.S. obligations under the ADA, but 
that standards used by the USITC for the like lihood of continuation or recurrence of injury 
determinations in sunset reviews were not inconsis tent with the ADA.  The Appellate Body reversed 
the Panel's finding against the SPB and upheld the other findings.115  In September 2004, a Panel was 
established to consider Mexico's challenge to the s unset review of AD measures on oil country tubular 
goods.116  The Panel found that the USDOC's and USITC' s determinations were consistent with the 
ADA on all the grounds raised by Mexico, but determ ined that the SPB established an "irrebuttable 
presumption" of likelihood of continuation or recu rrence of dumping and, as such, was inconsistent 
with the AD Agreement.117  In November 2005, the Appellate Body circulated its report, which 
reversed the panel's find on the latter point.118   
(v) Safeguards 
(a) Global safeguards 
102. Global safeguard legislation is contained in S ections 201-204 of the U.S. Trade Act of 1974, 
as amended by the URAA.  Under Section 201(Global Safeguard Investigations ), domestic industries 
                                                      
110 For a complete list of cases terminated by the ITA see USITC online inform ation, "Sunset Review 
Schedule and Disposition".  Available a t:  http://www.usitc.gov/ussunset.htm. 
111 For further information on sunset reviews see ITA online information.  Available at:  
http://ia.ita.doc.gov/sunset/ssy2krev.htm, and http://ia.ita.doc.gov/sunset/ssy2kcon.htm. 
112 WTO documents WT/DS213/R, 3 July 2002, and WT/DS213/AB/R, 28 November 2002. 
113 WTO document WT/DS/OV/21, 30 June 2004. 
114 WTO documents WT/DS244/R, 14 August 2003, and WT/DS/OV/23, 7 April 2005. 
115 WTO documents WT/DS268/R, 16 July 2004 and WT/DS268/AB/R, 29 November 2004. 
116 WTO documents WT/DS282/2, 8 August 2003, and WT/DS282/3, 8 September 2004. 
117 WTO document WT/DS282/R, 20 June 2005. 
118 WTO documents WT/DS282/AB/R, 2 November 2005. United States WT /TPR/S/160/Rev.1 
 Page 45 
 
 
seriously injured or threatened with serious in jury by increased imports may petition the USITC for 
import relief.  The USITC determines whether an  article is being imported in such increased 
quantities that it is a substantial cause of serious in jury, or threat thereof, to the U.S. industry 
producing a like or directly competitive article.  If the USITC makes an affirmative determination, it 
recommends to the President relief that would addr ess the serious injury or threat thereof, and 
facilitate the adjustment of the domestic industr y to import competition.  The President makes the 
final decision whether to provide relief and the fo rm and amount of relief within 60 days.  Since a 
safeguard measure requires Presidential action, an af firmative determination of injury is a necessary 
but not sufficient condition for its application. 
103. Safeguard measures may be applied for a period of four years, renewable for another four.  In 
practice, however, the United States has applied saf eguard measures for a maximum of three years.  
Under U.S. law, safeguard measures may include tariffs, quantitative restrictions, or tariff quotas, 
import licensing, and other measures as listed in Section 203 of the Trade Act of 1974.  The maximum applicable tariff is limited by law to no more than 50% ad valorem  above the rate existing 
at the time the action is taken;  quantitative rest rictions must not limit imports to less than their 
average level in the last three y ears that the President finds representative of U.S. imports from that 
country.
119  NAFTA countries are excluded from the application of safe guard measures, unless they 
individually account for a substantial share of tota l imports, and it is shown that they make an 
important contribution to serious injury. 
104. Since 1998, the United States has made use of quantitative restrictions and tariff increases 
once, of tariff quotas twice, and of a combination of tariff rate quotas and increased duties in another.  
No new section 201 cases have been initiated duri ng the period under review;  the last global 
safeguard investigation (steel products) dates from 2001.  The safeguard measures applied in the four 
investigations initiated between  1998 and 2001 had expired or b een terminated by end 2003. 
105. The United States notified to the WTO the termination on 5 December 2003, of the safeguard 
measures on ten steel products applie d since March 2002, over a year ahead of expiry and pursuant to 
Presidential Proclamation No . 7,741 of 4 December 2003.120  These measures consisted of tariffs or a 
tariff rate quota applied to imports from all countri es, except Israel, Jordan, Canada and Mexico, and 
developing countries with a market share of less th an 3% for each product.  The measures had been 
challenged in the WTO;  a Panel Report issued in July 2003 concluded that the safeguard measures 
were inconsistent with WTO rules.121  The Appellate Body upheld so me of the Panel's conclusions.122 
106. A December 2003 Presidential proclamation con tinued the Steel Monitoring and Analysis 
(SIMA) system established in 2002 until the earlier of  21 March 2005, or such time as the Secretary 
established a replacement programme.123  However, in March 2005, the USDOC issued an interim 
final rule extending the SIMA system for an additional four years, until 21 March 2009.124  T h e  
interim final rule also modified the SIMA's produc t coverage to cover all basic steel mill products, 
while certain downstream steel products were removed from the system and the licensing 
requirements.  For those basic steel mill products  already covered, licensing requirements continued 
uninterrupted following publication of the interim final rule in the Federal Register ;  for basic steel 
mill products not previously covered, licensing re quirements apply as from 9 June 2005.  Licensing 
requirements for downstream steel products removed fr om the SIMA applied until the same date.  The 
                                                      
119 USITC online information.  Available at:  ftp://ftp.usitc.gov/pub/reports/studies/PUB3125.pdf. 
120 WTO document G/SG/N/10/USA/ 6/Suppl.8, 12 December 2003. 
121 WTO document WT/DS248/R, 11 July 2003. 
122 WTO documents WT/DS248/AB/R, 10 November 2003, and WT/DS/OV/21, 30 June 2004. 
123 Proclamation No. 7,741, published in the Federal Register  of 8 December 2003, at 68 F.R. 68483. 
124 Federal Register , 11 March 2005 (Vol. 70, No. 47). WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 46 
 
 
authorities indicate that SIMA is an automatic, web-based licensing system and that licences are 
provided at no charge. 
(b) Special safeguards 
107. The USITC is also responsible for some country  or region-specific safeguard investigations 
(special safeguards).  Under section 421 of the Trade Act of 1974, the USITC conducts "China 
safeguard investigations" to dete rmine (following Section 16.1 of Part I of the Protocol on the 
Accession of the People's Republic of China to the WTO) whether a product from China is being 
imported into the United States in such increased quantities or under such conditions as to cause or 
threaten to cause market disruption to the domestic producers of like or directly competitive products.  
If the USITC makes an affirmative determination, it proposes a remedy, and sends its report to the 
President, who makes the final remedy decision.  These safeguard investiga tions may be conducted on 
any product, including textiles and clothing. 
108. As at mid 2005, five section 421 investigations had been initiated by the USITC, with respect 
to pedestal actuators;  steel wire garment hangers ;  brake drums and rotors;  ductile iron waterworks 
fittings;  and innersprings  Two led to a negative determination by the USITC;  after each of the three 
affirmative USITC determinations, the United States  requested consultations with China pursuant to 
Article 16.1 of China's Protocol of Accession, and notified these requests to the WTO Committee on Safeguards.
125  However, in each case, the President dete rmined that provision of import relief was 
not in the national economic interest of the United States. 
109. The Report of the Working Party on the Accessi on of China provides for a specific safeguard 
mechanism for textiles and clothing until 31 Decemb er 2008.  Under Paragraph 242 of the Working 
Party Report, the United States and other WTO Member s may request consultations with China with a 
view to easing or avoiding market disruption.  The Committee for the Implementation of Textile 
Agreements (CITA), an interagenc y group chaired by the USDOC, is responsible for matters affecting 
textile trade policy and supervising the implementati on of all textile trade agreements.  The USDOC's 
Office of Textiles and Apparel (OTEXA) provides the staff support for the CITA, monitors all 
agreements, and provides economic analysis and re levant data upon which th e CITA relies in taking 
action.126  
110. The procedures followed by the CITA were published in the Federal Register  in May 2003.127  
The CITA publishes notices in the Federal Register  seeking public comments regarding each product 
subject to safeguard proceedings.  If the CITA makes an affirmative determination that Chinese origin 
textile and apparel imports are contributing to the disruption of the U.S. market, it requests 
consultations with China with a view to easing or avoiding such market disruption.128  A quota is 
imposed to limit U.S. imports of the product on th e date such consultations are requested.  The 
quantitative limit ends on 31 December of the year in which consultations were requested, or where 
three or fewer months remained in the year at th e time of the request for consultations, 12 months 
after the request;  they may not remain in eff ect beyond one year, without reapplication, unless 
                                                      
125 WTO documents G/SG/N/16/USA/1, 2 May 2005, previously circulated as G/SG/56, 
31 October 2002;  G/SG/N/16/USA/2, 2 May 2005; previously circulated as G/SG/60, 5 February 2003;  and G/SG/N/16/USA/3, 2 May 2005, previously circulated as G/SG/69, 20 January 2004. 
126 OTEXA online information.  Available at:  http://www.otexa.ita. doc.gov/cita.htm. 
127 Committee for the Implementation of Textile Agreements, Procedures for Considering Requests 
from the Public for Textile and Apparel Safeguard Actions on Imports from China , 19 May 2003, 
Federal Register , Vol. 68, No. 98, 21 May 2003. 
128 DOC online information.  Available at:  http://www.commerce.gov/opa/press/Secretary_Gutierrez/ 
2005_Releases/April/04_CITA.htm. United States WT /TPR/S/160/Rev.1 
 Page 47 
 
 
otherwise agreed between the United States and Chin a.  Reapplication may only take place if the 
CITA makes a new affirmative de termination.  The quantitative limits are 7.5% (6% for wool 
products) above the amount of Chinese origin textile and apparel products subject to the request for 
consultations entered into the United States during th e first 12 months of the most recent 14 months 
preceding the month in which the request for consultations was made.129  The CITA may initiate 
investigations at the petition of the industry, or on its own initiative. 
111. In the first ten months of 2005, CITA made dete rminations of market disruption and/or threat 
of market disruption under the China textile saf eguard mechanism, and imposed quotas on Chinese 
origin imports of nine text ile and apparel categories, corresponding to 16 "products".130  The value of 
Chinese imports of these nine categories totalled some US$1.8 billion in 2004, compared with 
US$930 million for the four categories (including thr ee merged product categories) subject to China 
textile safeguards in 2003 and 2004.131 
112. The United States reached a bilateral understanding with China in November 2005 to limit 
Chinese exports of textiles and a pparel (Memorandum of Understandi ng Between the Governments of 
the United States of America and the People's Repu blic of China Concerning Trade in Textile and 
Apparel Products).  The MOU resulted from negotia tions under paragraph 242 of the Report of the 
Working Party on the Accession of China.  The  M OU goes into effect on 1 January 2006, when the 
quotas introduced in 2005 expire, and ends on 31 December 2008.  The understanding places 
increasing yearly quotas on 34 products, corresponding to 21 merged categories.132  It also contains 
carryover and carryforward provisions.  The U.S. au thorities consider that the MOU's broad product 
coverage and three-year lifespan will allow private- sector stakeholders to plan in a more stable and 
predictable environment.133  An electronic visa system will be put in place to facilitate the 
implementation of the MOU.134  A Memorandum of Understanding was subscribed in November 
2005 with an agreed level of restraint for socks for the 1 November 2005-31 December 2005 period.
135 
(vi) Quantitative restrictions and controls 
113. Most U.S. quantitative restrictions and contro ls on imports are designed to ensure national 
security, safeguard consumer health, or protect public  morals or the environment.  These restrictions 
                                                      
129 These are the limits mentioned in para. 242 of WTO document WT/MIN(01)/3, 10 November 2001. 
130 The term category used for the application of quotas and in the MOU includes part categories and 
merged categories.  The nine categories for which quotas were applied in 2005 include:  338/339, cotton knit shirts and blouses;  347/348, cotton trousers;  352/652, cotton/mmf underwear;  301, combed cotton yarn;  
340/640, men's and boy's cotton and mmf shirts, not knit;  349/649, cotton and mmf brassieres and other body 
supporting garments;  638/639, mmf knit shirts and blouses;  620, other synthetic filament fabric;  and 647/648, mmf trousers.  In 2004, a quota was applied on category 332/432/632, cotton/wool/man-made fiber (mmf) 
socks.  In 2003, quotas were applied on categories:  349/649, cotton and mmf brassiers;  350/650, cotton and 
mmf dressing gowns and robes;  and 222, knit fabric. 
131 OTEXA online information.  Available at:  http://www.otexa.ita.doc .gov/safeguard05.htm. 
132 The products covered belong to categories 200/301, 222, 2229, 332/432/632pt (plus baby socks), 
338/339pt, 340/640, 345/645/646, 347/348, 349/649, 352/652, 359S/659S, 363, 443, 447, 619, 620, 622, 
638/639pt, 647/648pt, 666pt, and 847. 
133 USTR (2005c). 
134 The full text of the agreement is available online at:  http:// www.ustr.gov/assets/World_Regions/ 
North_Asia/China/asset_upload_file91_8344.pdf. 
135 Statement by USTR Special Trade Negotiator David Spooner Regarding Quotas on Chinese Socks.  
Available at:  http://www.ustr.gov/document_Library/Press_Releases/2005/November. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 48 
 
 
and controls are implemented through licensing requi rements for fish and wildlife, narcotic drugs, 
alcoholic beverages, tobacco, firear ms, explosives, and nuclear facilities.136 
114. The United States bans imports from certain countries for foreign policy purposes.  Most 
imports from Cuba, the Democratic People's Repub lic of Korea, Iran, Myanmar, and Sudan are 
subject to bans or approval requirements.137  The Office of Foreign Assets Control of the Department 
of the Treasury is responsible for administering these measures. 
115. In general, imports of natural gas or liquefied  natural gas are authorized only if they are 
consistent with the public interest.138  One exception relates to gas from U.S. free-trade agreement 
partners.  In this case, import authorizations  are granted "without modification or delay".139  T h e  
Department of Energy is responsib le for authorizing imports of natu ral gas or liquefied natural gas 
into the United States. 
116. Quantitative restrictions on imports are in place for commercial purposes mainly in the 
textiles and clothing sector.  However, with the elimination of bilateral quotas on imports from WTO 
Members in January 2005 as part of the impl ementation of the WTO Agreement on Textiles and 
Clothing, the number of countries facing quantitative rest rictions on their textile and clothing exports 
to the United States has fallen sharply.  In the firs t half of 2005, textile a nd clothing quotas applied to 
four countries (Belarus, China, Ukraine, and Vi et Nam), compared with 45 countries in June 2003.140  
Textile and clothing quotas are applied to Chin a (see section (v)(b) above), and to non-WTO 
Members under bilateral agreements betw een the United States and these countries. 
(vii) Standards and technical regulations 
(a) WTO participation and preferential trade agreements 
117. Title IV of the Trade Agreements Act of 1979 as amended provides the legal basis on which 
the WTO Agreement on Technical Barriers to Trad e (TBT Agreement) is implemented in the 
United States.141  The U.S. enquiry point and notification authority under the TBT Agreement is the 
National Center for Standards and Certification Info rmation of the National Institute of Standards and 
Technology (NIST). 
118. The United States made 78 notifications under the TBT Agreement between July 2003 and 
June 2005.142  The largest number of notifications we re from the Environmental Protection Agency 
(25 notifications), the Food and Drug Administration (21), and the Department of Transportation (18).  
None of the notifications related to proposed sub-federal measures.  The authorities note that 
procedures are in place to notify such measu res but that none have been identified. 
                                                      
136 A detailed description of the U.S. licensing system is contained in WTO document 
G/LIC/N/3/USA/3, 9 November 2000. 
137 Cuban Assets Control Regulations (31 CFR 515), Arms Export Control Act (22 USC 2797), Iranian 
Transactions Regulations (31 CFR 560), Burmese Sanctio ns Regulations (31 CFR 537), and Sudanese Sanctions 
Regulations (31 CFR 538). 
138 15 USC 717. 
139 15 USC 717. 
140 CBP online information, "Textile Status Report for Absolute Quotas".  Available at:  
http://www.customs.gov/xp/cgov/im port/textiles_and_quotas /textile_status_rpt [10 June 2005]. 
141 WTO document G/TBT/2/Add.2, 19 February 1996. 
142 WTO documents G/TBT/N/USA/46-123. United States WT /TPR/S/160/Rev.1 
 Page 49 
 
 
119. Since its last Trade Policy Review, the Unite d States has notified to the WTO one mutual 
recognition agreement, relating to certificates of conformity for marine equipment from the 
European Union.143 
120. Between July 2003 and July 2005, several WT O Members raised trade concerns in the 
Committee on Technical Barriers to Trade regarding a U.S. safety standard for refillable lighters, the 
Bioterrorism Act, and the country-of-origin labe lling programme authorized by the 2002 Farm Act 
(see below).144 
121. All of the U.S. free-trade agreements that entered into force between mid 2003 and mid 2005 
(Australia, Chile, and Singapore) c ontain provisions on technical barriers to trade (Table AIII.4). 
(b) Technical regulations145 
122. There are two main documents with informa tion on the federal Government's regulatory 
programme.  The Unified Regulatory Agenda su mmarizes the regulations (including technical 
regulations and standards and phyt osanitary measures) that each agen cy expects to issue during the 
next six months.  The Regulatory Plan lists regulat ory priorities and contains  additional details about 
the most important regulations that agencies expect to adopt in the coming year.146 
123. In developing a rule, federal government agenci es must follow the procedures established by 
the Administrative Procedure Act.147  The term "rule" encompasses technical regulations (and sanitary 
and phytosanitary measures).  Under the Act, an agency must publish a notice of proposed rulemaking, provide interested persons (regardless  of nationality) an opportunity for comment, and 
publish a notice of final rulemaking at least 30 days be fore the effective date of the rule.  The notice 
of final rulemaking must respond to all substantive comments recei ved.  Agencies may also seek 
general comments on an issue prior to formulating a specific regulatory proposal.  This is done through an advance notice of proposed rulema king.  Rulemaking notices are published in the 
Federal Register ;  final rules are indexed and published in the consolidated Code of Federal 
Regulations.
148 
124. Title IV of the Trade Agreements Act of  1979 as amended prohibits  federal government 
agencies from using standards, technical regulations, or conformity assessment procedures as 
unnecessary obstacles to trade.149  Standards-related activities are not deemed to constitute an obstacle 
to trade "if the demonstrable purpose of the sta ndards-related activity is to achieve a legitimate 
domestic objective, including ... the protection of legitimate health or safety, essential security, environmental, or consumer interests, and if such activity does not operate to exclude imported 
products which fully meet the objectives of such activity".
150 
                                                      
143 WTO document G/TBT/10.7/N/46, 21 July 2004. 
144 WTO documents G/TBT/M/30, 19 August 2003;  G/TBT/M/32, 19 April 2003;  G/TBT/M/33, 
31 August 2004;  G/TBT/M/34, 5 January 2005;  and G/TBT/M/35, 24 May 2005. 
145 An overview of U.S. regulato ry practice provided by the United States to the TBT Committee is 
contained in WTO document G/TBT/W/258, 26 October 2005. 
146 Both documents are available online at:  http://reginfo.gov. 
147 5 USC 551 et seq. 
148 Both are available online at:  http://www.gpo access.gov/fr/index.html;  and http://www.gpoaccess. 
gov/cfr/index.html. 
149 19 USC 2532. 
150 19 USC 2531. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 50 
 
 
125. Executive Order 12866 of September 1993 requir es the Office of Management and Budget 
(OMB) to review all "significant" rules by fede ral government agencies (excluding independent 
regulatory agencies) prior to their publication in the Federal Register  as proposed or final rules.  
Significant rules are defined as having an annual effect on the economy of US$100 million or more, 
or adversely affecting "in a material way th e economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, local, or tribal governments or 
communities".151  To this end, agencies must submit to OM B's Office of Information and Regulatory 
Affairs an assessment of the benefits and costs of the proposed rule and of "potentially effective and 
reasonably feasible" alternatives.  The Regulat ory Flexibility Act requires federal government 
agencies to analyse the anticipated effects of a pr oposed rule on small entities and identify alternative 
approaches unless they certify that the rule will not have a "significant economic impact on a substantial number of small entities".
152 
126. Under the Final Information Quality Bulletin fo r Peer Review, which became effective in 
June 2005, scientific findings that represent the o fficial position of a federal government agency and 
that could eventually serve as the basis for the formulation and adoption of a technical regulation are 
subject to peer review.153  The Bulletin establishes special p eer review procedures for "highly 
influential scientific assessments", defined as scie ntific assessments that "could have a potential 
impact of more than US$500 million in any year", for example through the costs or benefits of a 
regulation adopted on the basis of such assessment.154  Each agency must submit to OMB an annual 
report with a summary of the peer reviews conducte d.  Various types of information are exempted 
from the requirement to undergo peer review, incl uding health and safety information whose release 
cannot be delayed. 
127. Interested persons, including foreigners, can pe tition for the issuance, amendment, or repeal 
of a rule.  Although federal government agencies act on such petitions at their discretion, they must 
respond to all.  Under the Congressional Review Act, Congress may overturn a rule.155  In addition, all 
rules may be judicially reviewed. 
128. Technical regulations may also be adopted by  the States in their areas of competence, 
including all areas not expressly pre-empted by fe deral legislation.  States may delegate their 
regulatory authority to regional, local, or municipa l governments.  The U.S. authorities have indicated 
that they are unaware of any State that does not ha ve in place the necessary infrastructure to fulfil the 
transparency and other obligations under the WTO TBT Agreement.156 
129. The U.S. authorities have indicated that the U. S. Government does not maintain centralized 
statistics on the extent to which U.S. technical regulations are based on international standards.157 
130. A number of technical regulations establish requirements for the labelling of goods.  For 
example, under the Tariff Act of 1930, imported items must be conspicuously a nd indelibly marked in 
English to indicate to their "ultimate purchaser" their country of origin.158  Exceptions to this 
requirement include articles that cannot be marked  or for which the cost of marking would be 
                                                      
151 Executive Order 12866-Regulatory Planning and Review, 30 September 1993.  Federal Register , 
58 FR 51735, 4 October 1993. 
152 5 USC 605. 
153 Office of Management and Budget (2004). 
154 Section III, Final Information Quality Bulletin for Peer Review. 
155 5 USC 801 et seq. 
156 WTO document WT/TPR/M/126/Add.3, 22 November 2004. 
157 WTO document WT/TPR/M/126/Add.3, 22 November 2004. 
158 19 USC 1304. United States WT /TPR/S/160/Rev.1 
 Page 51 
 
 
"economically prohibitive".  Also exempt are items  that were "imported in substantial quantities 
during the five-year period immediately preceding 1 January 1937, and were not required during such 
period to be marked to indicate their origin".159  These include vegetables, fruits, nuts, berries, 
animals, fish, and birds.160  However, the "immediate containers" of these products must have 
country-of-origin labels. 
131. Regulations issued under the Federal Meat Insp ection Act and the Poultry Products Inspection 
Act require that the country of origin appear in English on the immediate containers of all meat and 
poultry products entering the United States.161  When imported bulk meat or poultry products are 
processed in the United States, the processed product or  its container does not need to be labelled. 
132. Under the 2002 Farm Act, retailers must notify their customers of the country of origin of 
beef, lamb, pork, fish, shellfish, perishable agricultural commodities and, from September 2004, 
peanuts.  Commodities that are ingredients in processed food are exempt.  The Act specifies the criteria that commodities must meet to bear a "United States" label. 
133. The 2004 Appropriations Act delayed until Sept ember 2006 the application of the labelling 
requirement in the 2002 Farm Act for all commodities except fish and shellfish.  The Department of 
Agriculture issued an interim final rule for th e country-of-origin labelling programme for fish and 
shellfish in September 2004.
162  The rule became effective in  April 2005.  The Department of 
Agriculture estimates that total first-year costs rela ted to the implementation of the interim final rule 
will be US$89 million, of which US$44.6 million w ould be for record-keeping and related costs.163  
Record-keeping costs in subsequent years were est imated at US$24.4 million.  According to the WTO 
notification of the interim final rule, the objectiv e of the country-of-origin labelling programme is 
prevention of deceptive practices.164  Two WTO Members have raised concerns in the TBT 
Committee in respect of the programme.165 
134. The American Automobile Labeling Act require s that new passenger cars, pickup trucks, 
vans, and sport utility vehicles have labels specifying the percentage value of their U.S. and Canadian 
parts content, the country where they were assembled, and the countries of origin of their engine and 
transmission.166 
135. Textiles must be labelled to show their country of origin in accordance with the Textile Fiber 
Products Identification Act.167 
136. The Agricultural Marketing Agreement Act of 1937 requires that imported commodities meet 
the same or comparable grade, size, quality, an d maturity requirements as those established for 
domestic products under federal mark eting orders (Chapter IV(2)). 
                                                      
159 19 USC 1304(a)(3)(J). 
160 19 CFR 134.33. 
161 Federal Meat Inspection Act, 21 USC 601 et seq. , and Poultry Products Inspection Act, 21 USC 451 
et seq. 
162 Federal Register , 69 FR 59708, 5 October 2004.  An interi m final rule has the full force and effect 
of law.  However, before the interim final rule is re vised or confirmed as a fina l rule, the agency concerned 
requests comments on specific aspects of it. 
163 Federal Register , 69 FR 59727, 5 October 2004. 
164 WTO document G/TBT/N/USA/83 and Corr.1, 8 October 2004 and 15 October 2004. 
165 WTO document G/TBT/M/35, 24 May 2005. 
166 49 USC 32304.  The regulations to implement the Act are contained in 49 CFR 583. 
167 15 USC 70.  The regulations to implement the Act are contained in 16 CFR 303. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 52 
 
 
(c) Standards 
137. Compliance with standards is not a legal require ment, but in practice the U.S. market often 
provides strong incentives for imported and domestic pr oducts to meet certain standards.  Under the 
Trade Agreements Act of 1979, federal government ag encies are required to "take into consideration" 
international standards when developing standards,  and if appropriate, to base the standards on 
international standards.168  The recognized exceptions that jus tify a departure from an international 
standard include national security requirements;  prevention of deceptive practices;  protection of 
human health or safety, animal or plant life or h ealth, or the environment;  fundamental climatic or 
other geographical factors;  and fundamental technological problems.169  The Act defines an 
international standard as any standard that is pr omulgated by an organization "the membership of 
which is open to representatives, whether public or pr ivate, of the United States and at least all [WTO] 
Members and that is engaged in intern ational standards-related activities".170 
138. Title IV of the Trade Agreements Act of 1979 also calls upon the U.S. President to "take such 
reasonable measures as may be available to prom ote the observance by State agencies and private 
persons, in carrying out standards -related activities, of requirements equivalent to those imposed on 
federal agencies, and of procedures that provide for notification, participati on, and publication with 
respect to such activities".171 
139. The National Technology Transfer and Advancem ent Act of 1995 directs federal government 
agencies to adopt "voluntary consensus standards"  in lieu of government-developed standards as a 
means to carry out policy objectives, except when doi ng so would be inconsistent with the law or 
otherwise impractical.172  Voluntary consensus standards are standards developed by domestic or 
international organizations using agreed-upon procedures.  Such procedures must meet criteria for 
openness, balance, and due process, and must provide  for an appeal process.  Voluntary consensus 
standards need not be adopted by unanim ity, but rather by "general agreement".173  The Act further 
directs federal government agencies to participate in the development of voluntary consensus standards. 
140. According to OMB Circular A-119, the heads of  federal government agencies must provide 
OMB (through NIST) with the reasons for using government standards rather than voluntary consensus standards.  Agencies must also s ubmit information on their participation in the 
development of voluntary consensus standards.  NIST prepares an annual report based on this 
information.
174  According to the latest report, at least 72 government-developed standards were being 
used by 25 federal government agencies in fiscal year 2003.175  At the same time, federal agencies 
have adopted nearly 2,500 private- sector standards, which include volun tary consensus standards.  In 
fiscal year 2003, federal government agencies substituted 185 private-sector standards for government-developed standards. 
                                                     
 
168 19 USC 2532.  In addition to legislation, regulatory guidance issued by the Office of Management 
and Budget includes obligations to consider the trade impact and evaluate the merits of using relevant 
international standards.  See WTO document G/TBT/W/258, 26 October 2005. 
169 19 USC 2532. 
170 19 USC 2571. 
171 19 USC 2533. 
172 15 USC 272. 
173 Office of Management and Budget Circular A-119, revised, 10 February 1998. 
174 The most recent report covers fiscal year 2003.  The reports are available at:  http://standards.gov/ 
NTTAA/index.cfm?do=NTTAAReports.main. 
175 This figure does not include gove rnment-developed standards that we re in place prior to fiscal year 
1997.  McIntyre and Moore (2004). United States WT /TPR/S/160/Rev.1 
 Page 53 
 
 
141. The American National Standards Institute (ANS I) is a private, non-profit organization that 
brings together businesses, professional societies and trade associations, standards-development 
organizations, government agencies, a nd consumer and labour representatives.176  ANSI is responsible 
for coordinating the voluntar y consensus standards system.  It accredits organizations whose standards 
development process meets ANSI requirements:  there are some 270 accredited organizations. 
142. ANSI is the U.S. member body to the Intern ational Accreditation Forum, International 
Organization for Standardization, International El ectrotechnical Commission, Pacific Area Standards 
Congress, and the Pan American Standards Commissi on.  ANSI indicated its adherence to the WTO 
TBT Code of Good Practice for the Preparation, Adop tion, and Application of Standards on behalf of 
the standards organizations it has accredited.177 
143. In September 2005, the United States and th e EC reached agreement on wine-making 
practices and labeling of wine, aimed at facilitating bilateral trade in wine.  The agreement provides 
for:  (a) recognition of existing current wine-m aking practices;  (b) a consultative process for 
accepting new wine-making practices;  (c) the United States limiting the use of certain semi-generic 
terms in the U.S. market;  (d) the EU allowing under specified conditions for the use of certain 
regulated terms on U.S. wine exported to the EU;  (e) recognizing certain names of origin in each 
other’s market;  (f) simplifying certification require ments;  and (g) defining parameters for optional 
labeling elements of U.S. wines sold in the EU market.  The agreement also provides for a second 
phase of negotiations to address other outstanding U.S.-EU wine trade issues.178 
(d) Conformity assessment 
144. Recognition of the results of conformity assessment rests with the U.S. regulator concerned. 
145. The United States relies on a broad range of instruments to assess the conformity of domestic 
and imported products with techni cal regulations.  The most common is supplier's self-declaration of 
conformity.  Alternatively, regulators may rely  on independent (mostly private) testing and 
certification bodies.  Bodies fulfilling the criteria sp ecified by the regulator, regardless of their 
location, are accredited or otherwise recognized to perform conformity assessment of U.S. technical 
regulations.  Conformity assessment may also be done  directly by federal government agencies, or by 
state and local governments. 
146. The U.S. authorities have indicated that there are no centralized data on the extent to which 
U.S. regulators have recognized foreign regula tions or the results of conformity assessment 
procedures performed abroad.179  Five notifications have been submitted to the WTO concerning 
agreements involving the acceptance by the United Stat es of foreign conformity assessments of U.S. 
regulations (see above). 
                                                      
176 ANSI online information.  Available at:  http ://www.ansi.org/about_ansi/overview/overview.aspx? 
menuid=1 [19 August 2003]. 
177 WTO document G/TBT/CS/N/83, 9 July 1998. 
178 USTR, Press Release 15 September 2005, United States and European Community Reach 
Agreement on Trade in Wine.   Available at: http://www.ustr.gov/Document_Library/Press_Releases/2005/ 
September/ United_States_European_Community_Reach_Agreement_on_Trade_in_Wine.html. 
179 WTO document WT/TPR/M/126/Add.3, 22 November 2004. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 54 
 
 
(viii) Sanitary and phytosanitary measures 
(a) Participation in WTO and preferential agreements 
147. The United States made 345 notifications under the WTO Agreement on the Application of 
Sanitary and Phytosanitary Measures (SPS Agreement)  between July 2003 and July 2005.  The U.S. 
enquiry point under the Agreement is the Office of Food Safety and Technical Services in the Foreign 
Agricultural Service of the Department of Agriculture.180 
148. WTO Members have raised concerns in the WTO SPS Committee regarding certain U.S. SPS 
measures (Table III.5).  None of the concerns raised  have been followed by formal dispute settlement. 
149. SPS provisions are contained in two of the three U.S. free-trade agreements that entered into 
force between mid 2003 and mid 2005 (Australia, Ch ile, and Singapore).  The provisions, in the 
agreements with Australia and Chile, are broadly si milar.  One of their objectives is to enhance the 
parties' implementation of the WTO SPS Agreement.  Both agreements call for the establishment of a 
Committee on Sanitary and Phytosanitary Matters.  Disputes related to SPS measures are not subject to dispute settlement under either  free-trade agreement.  The FTA with Singapore does not contain 
specific SPS provisions. 
Table III.5 
Trade concerns raised regarding U.S. SPS measures, 2005a 
Measure Relevant notification or source 
documentb Date raised Solution 
Suspension of imports of Ya pears from China G/SPS/R/36 March 2005 Not reported 
Import measures applied to potted plants from the 
European Union G/SPS/R/36 July 2001, March and June 
2005 Not reported 
Prohibition on the use of materials derived from 
cattle in human food;  record keeping requirement 
for manufacturers of human food and cosmetics 
containing material from cattle G/SPS/N/USA/933-934 October 2004 Not reported 
Suspension of France's e ligibility to export meat 
and meat products G/SPS/R/35 March, June, October 2004 Resolved 
Prohibition on the use of "specified risk materials" 
for human food and requirements for the disposition of non-ambul atory disabled cattle G/SPS/N/USA/844 March 2004 Not reported 
Measures applied to imports of citrus fruit from 
North-western Argentina G/SPS/R/25 November 1999, June 2000, 
July and October 2001, 
March 2004 Resolved 
Import requirements for Chinese penjing in 
growing media G/SPS/N/USA/431 and 
431/Add.1 November 2002, March 
2004 Not reported 
Implementation of the international standard 
"Guidelines for Regulating Wood Packing Material 
in International Trade" G/SPS/N/USA/705 October 2003 Not reported 
Restrictions on pigmeat G/SPS/N/USA/214/A dd.1 March 2002, October 2003 Not reported 
 
a Covers concerns raised, addressed, or resolved between mid 2003 and mid 2005. 
b Only most recent source document is cited. 
Source: WTO Secretariat. 
                                                      
180 WTO document G/SPS/EN Q/18, 20 December 2004. United States WT /TPR/S/160/Rev.1 
 Page 55 
 
 
(b) Legal and institutional framework 
150. SPS measures are subject to the same administrative rulemaking procedures as technical 
regulations (see section (vii)(b) above).  In additi on to the legislation listed in that section, the 
establishment of sanitary and phytosanitary measure s is governed by the Federal Food, Drug, and 
Cosmetic Act;  the Public Health Service Act;  the Food Quality Protection Act;  the Animal Health 
Protection Act;  the Federal Plant Protection Act;  th e Federal Insecticide, F ungicide, and Rodenticide 
Act;  and the Toxic Substances Control Act. 
151. Four agencies share responsibility for impl ementing these laws:  the Food and Drug 
Administration (FDA) of the Department of Hea lth and Human Services;  the Food Safety and 
Inspection Service (FSIS) and the Animal and Pl ant Health Inspection Service (APHIS) of the 
Department of Agriculture;  and the En vironmental Protection Agency (EPA). 
152. APHIS regulates imports of plants, animals, a nd their products into the United States.  
Following the enactment of the Homeland Security Ac t of 2002, the functions traditionally carried out 
by APHIS at U.S. ports of entry were transferred to Customs and Border Protection. 
153. APHIS develops import regulations on the basis of  risk assessment, whic h takes into account 
the product and its place of origin.  APHIS has publ ished guidelines for pest-risk assessment, which 
follow those by the International Plant Protecti on Convention (IPPC) and the North American Plant 
Protection Organization.181  According to the U.S. authoriti es, APHIS applies the concept of 
regionalization where appropriate in its evaluations , and reflects the IPPC standard on requirements 
for the establishment of pest-free areas to evaluate  requests for such areas.   The requirements for 
recognizing a pest-free area for fruits and vegeta bles are contained in the Code of Federal 
Regulations.182  No specific guidelines exist regarding p est-free areas for grains, nursery stock, or 
lumber. 
154. APHIS has published guidelines for assessing the disease risk of imports of animals and 
animal products.183  These follow risk analysis guidelines est ablished by the World Organization for 
Animal Health.  APHIS' general policy is to eval uate hazards based on "the disease risk associated 
with the region from which [animals and animal product s] are exported, rather than on 'disease free' or 
'non-disease free' statuses determined on a country-by-country basis".184  In this context, APHIS has 
developed guidelines for evaluating and recognizing re gions within or straddling other countries as 
being safe sources for imports.185  The evaluation process usually involves visits by APHIS officials 
to relevant areas.  APHIS makes available a list of countries or areas that it recognizes as free of 
specific livestock and poultry diseases.186 
155. In general, imports of plants, animals, and th eir products require an import permit issued by 
APHIS.  The permit outlines the conditions of entry for the product.  Importers can submit 
applications for permits online via the Import Authorization System.187  Importers may also use this 
system to check the status of an exis ting application and to submit changes. 
                                                      
181 U.S. Department of Agriculture (2000). 
182 7 CFR 319.56-2. 
183 Federal Register , 62 FR 56027, 28 October 1997. 
184 Federal Register , 62 FR 56028, 28 October 1997. 
185 APHIS, (2004). 
186 APHIS online information.  Available at:  http://www.aphis.usda.gov/vs/ncie/country.html. 
187 APHIS online information.  Available at:  https://web01.aphis.usda.gov/ias.nsf. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 56 
 
 
156. The process from APHIS' determination to assess the risk presented by imports of a particular 
product to the issuance of an import licence can take several years, depending on the quality of the data received for the risk assessment, among other factors.
188  In most cases, the process also involves 
the promulgation of a rule in conformity with the Administrative Procedure Act and other laws 
(see section (vii)(b) above).  Once the regulations al low imports of a product from a particular area, 
APHIS issues import permits without the need to carry  out additional risk assessments for a particular 
shipment. 
157. FSIS has specific responsibility for the safety of meat, poultry, and egg products.  Meat, 
poultry, and egg products imported into the Un ited States must meet all U.S. food safety 
requirements.  Upon request, FSIS evaluates whethe r a country's regulatory system for meat, poultry, 
or egg products attains the same level of protecti on as the United States.  To this end, FSIS reviews 
the pertinent laws and regulations, and conducts on-site aud its.  If the country's regulatory system is 
deemed equivalent, U.S. regul ations are amended accordingly.189  FSIS has published the process 
whereby it assesses the equiva lence of foreign meat and poultry regulatory systems.190  T h e  s a m e  
process is used to determine the equivalence of a c ountry's egg products inspection system.  To ensure 
continued compliance with U.S. safety standards,  FSIS conducts periodic a udits of foreign meat, 
poultry, or egg products inspection systems and pe riodically inspects imported products at U.S. ports 
of entry. 
158. The United States has recognized 34 foreign systems as equivalent to the U.S. meat, poultry, 
and/or egg products regulatory systems.191  Only meat, poultry, and egg products from facilities 
certified by the inspection service of the FSIS-recognized system can be imported into the 
United States.192 
159. The EPA is responsible for ensuring complia nce with federal envi ronmental laws and 
regulations in the United States.  All pesticides intended for use in the United States, including 
imported pesticides, must be registered with the EP A;  in addition, imports of pesticides must be 
notified to the EPA.  Prior to granting registration, the EPA evaluates the pes ticide to ensure that it 
will not have unreasonable adverse effects on humans,  the environment, or non-target species.  The 
EPA also sets limits on the amount of pesticides that  may remain in or on foods ("tolerances").  
Tolerances are set based on a risk assessment and ar e enforced by the FDA.  Under federal law, the 
EPA must review the safety of around 9,700 tolera nces by August 2006.  The U.S. authorities noted 
that this is being accomplished by reviewing a ll existing uses of a pesticide when a new use is 
proposed, and by revoking tolerances for pesticide uses that have been cancelled.  The authorities also 
indicated that after 2006, the EPA is required to estab lish a system for periodic review of all pesticide 
registrations, with the goal of ensuring that all p esticides meet standards for safety testing and public 
health and environmental protection. 
160. The FDA has primary responsibility for the safety of  all other foods, and of veterinary drugs, 
and for to enforcing the Federal Food, Drug, and Cosmetic Act, and othe r related federal laws. 
                                                      
188 APHIS (2004). 
189 The lists are contained in 9 CFR 327.2 for meat, and 9 CFR 381.196 for poultry. 
190 U.S. Department of Agriculture (2003). 
191 Argentina;  Australia;  Austria;  Belgium;  Brazil;  Canada;  Costa Rica;  Croatia;  Czech Republic;  
Denmark;  Finland;  France;  Germany;  Honduras;  Hong Kong, China;  Hungary;  Icel and;  Ireland;  Israel;  
Italy;  Japan;  Mexico;  Netherlands;  New Zealand;  Nicaragua;  United Kingdom and Northern Ireland;  
Poland;  Romania;  Slovakia;  Spain;  Sweden;  Switzerland;  and Uruguay. 
192 The list of certified facilities is available on line at:  http://www.fsis.u sda.gov/Regulations_&_ 
Policies/Eligible_Foreign_Establishments/index.asp. United States WT /TPR/S/160/Rev.1 
 Page 57 
 
 
(c) The Bioterrorism Act 
161. The Public Health Security and Bioterro rism Preparedness and Response Act of 2002 
(Bioterrorism Act) requires that:  domestic and fo reign facilities that manufacture, process, pack, and 
hold food for consumption in the United States regist er with the FDA;  the FDA receive notice prior 
to the entry of food that is imported or offered for import into the United States;  and that persons 
involved in the manufacture, distribution, and receipt of food in the United States establish and maintain records that identify th e immediate previous sources and immediate subsequent recipient of 
that food.  The Bioterrorism Act also gave the FDA the authority to administratively detain any food 
for which there is credible eviden ce or information that the food presents a threat of serious adverse 
health consequences or death to humans or anim als.  Since mid 2003, the FDA has promulgated 
various regulations to implement these requirements.
193 
162. The registration requirement of the Bioterrorism  Act can be completed online and is free of 
charge.194  It is required once for each facility, but th e information provided must be updated if it 
changes.  Overseas facilities must d esignate a U.S. agent at the time of registration.  The agent must 
live or maintain a place of business in the United States and be physically present there.  
Approximately 238,000 facilities have registered with the FDA.195  Of these, some 55% were overseas 
facilities. 
163. Under the prior notice requirement of the Biote rrorism Act, all food imports must be notified 
to the FDA using CBP's Automated Commercial System or the FDA's Prior Notice System 
Interface.196  Food subject to the prior notice requirement covers some 2,076 HS tariff lines at the ten-
digit level and includes dietary supplements, in fant formula, beverage s (including alcoholic 
beverages), and pet food.197  Another 868 lines corresponding to  products with food and non-food 
uses may be subject to the prior notice requirement .  There are time limits for sending the notice of 
food import to the FDA, based on the mode of transportation used:  eight hours for food arriving by water, four hours by air or rail, and two hours by road. 
164. The FDA carried out economic impact analyses of  the Bioterrorism Act regulations prior to 
their entry into force, as required by federal law.
198  The Secretariat was not able to ascertain the trade 
effects of these regulations following their entry into force, primarily because no information was 
available on important indicators such as the value of  imports refused due to lack of compliance with 
them. 
                                                      
193 The regulations are contained in:  Federal Register , 68 FR 58975, 10 October 2003 (registration and 
prior notice);  Federal Register , 69 FR 71561, 9 December 2004 (establi shment and maintenance of records);  
and Federal Register , 69 FR 31659, 4 June 2004 (administrative detention). 
194 The Food Facility Registration Module is av ailable online at:  h ttp://www.access. fda.gov. 
195 FDA online information, "Compliance Information:  Registration".  Available at:  http://www.cfsan. 
fda.gov/~furls/ffregsum.html [25 August 2005]. 
196 The Prior Notice System Interface can be accesse d online at:  http://ww w.access.fda.gov.  The 
mandatory information to be submitted to FDA includes the identification of the article of food (e.g., FDA product code);  manufacturer and registration number;  name and address of importer, owner, and ultimate 
consignee;  shipper and registration number;  port and time of arrival and planned shipment information (e.g. 
airway bill or bill of lading number, container number, vessel name and voyage number or flight number). 
197 FDA online information, "Prior Notice of Imported Food:  Harmonized Tariff Schedule 
Codes Flagged with Prior Notice Indicators".  Availa ble at:  http://www.cfsan.fda.gov/~dms/htsguid3.html 
[25 August 2005]. 
198 See, for example, Federal Register , 68 FR 58946, 10 October 2003. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 58 
 
 
(d) Agricultural biotechnology 
165. Agricultural biotechnology products are regulated  according to their intended use and must 
conform with the standards set by State and Fede ral statutes, including the Federal Food, Drug and 
Cosmetic Act, the Federal Plant Protection Act, th e Federal Insecticide, Fungicide, and Rodenticide 
Act, the Toxic Substances Control Act, and State seed certification laws.  There are no national 
requirements for varietal registration of new crops. 
166. The agencies responsible for regulating agri cultural biotechnology in the United States are 
APHIS, EPA, and FDA.  Under APHIS regulations , organisms and products  altered or produced 
through modern biotechnology that are or are believ ed to be plant pests are subject to a permit or 
notification requirement prior to being imported into  the United States, moving across States, or being 
released from an area of physical confinement into the environment. 
167. The EPA regulates the distributio n, sale, use, and testing of plants and microbes that produce 
pesticidal substances.  It establishes tolerances  for residues of herbicides used on novel herbicide-
tolerant crops.  It regulates micro-organisms inte nded for commercial use that contain or express new 
combinations of traits, including "intergeneric micr oorganisms" formed by deliberate combinations of 
genetic material from di fferent taxonomic genera. 
168. The FDA regulates foods and feed derived from new plant varieties.  FDA policy is based on 
existing food law, and requires genetically engineer ed foods to meet the sa me safety standards as 
other foods.  FDA treats substances intentionally ad ded to food through genetic engineering as food 
additives if they are significantly different from su bstances currently found in food, in structure, 
function, or amount.  If foods derived from biotec hnology differ significantly from their conventional 
counterparts in terms of, for exampl e, nutritional content or potential to  cause allergic reactions, this 
must be indicated in their label.199  The fact that food was developed using biotechnology is not 
required to be indicated in the label.  As at  December 2005, only two foods developed through 
biotechnology had had to be labelle d following a material change in their attributes.  The FDA has 
developed draft guidelines for industry on vo luntary labelling of biotechnology products.200 
(ix) Trade-related environmental regulations 
169. EPA works with the States, other federal govern ment agencies, and foreign governments to 
ensure compliance with the laws governing the importa tion of materials that may pose a risk to human 
health and the environment. 
170. The United States in some instances applies tr ade measures to enforce U.S. environmental 
provisions, notably those governing the use of ma rine resources.  The enforcement of these 
environmental regulations is the task of two ag encies:  the Bureau of Oceans and International 
Environmental and Scientific Affairs of the Depa rtment of State, and the National Oceanic and 
Atmospheric Administration (NOAA) of the Depa rtment of Commerce.  NOAA enforces both the 
Marine Mammal Protection Act (MMPA), to protect  marine mammals, and the Endangered Species 
Act (ESA), which protects all six species of sea turtles in the United States. 
171. The MMPA prohibits the importation of marine mammals and their parts or products into the 
United States.  However, the Secretary of Commer ce may issue permits allowing for the importation 
                                                      
199 Section 201(n), Food, Drug, and Cosmetic Act. 
200 FDA online information, "Guidance for Industry Voluntary Labeling Indicating Whether Foods 
Have or Have Not Been Developed Using Bioengineerin g".  Available at:  http://www.cfsan.fda.gov/~dms 
/biolabgu.html [28 August 2005]. United States WT /TPR/S/160/Rev.1 
 Page 59 
 
 
of living marine mammals for purposes of scientific research, enhancement, or  public display.  Parts 
and products may be imported for the purpose of scientific research. 
172. Under the MMPA yellowfin tuna from the easter n tropical Pacific can only be imported into 
the United states if it comes from a country with an "affirmative finding".201  Four countries have 
received such a finding:  Ecuador, El Salvador, Mexico, and Spain.  Tuna from these countries can 
only be labelled as "dolphin safe" if caught without  the chase and encirclement of dolphins in the 
entire trip and without killing or seriously injuring any dolphins in the set in which the tuna was caught.  In December 2002, the Secretary of Comme rce determined that the intentional chase and 
encirclement of dolphins was not having a "signi ficant adverse impact" on any depleted dolphin 
stocks in the eastern tropical Pacific.
202  As a result of the finding, the definition of dolphin-safe would 
have changed to allow tuna caught by the chase a nd encirclement of dolphins to be considered 
dolphin-safe, as long as there were no observed dolphin mortalities or serious injury.  However, several litigants filed an injunction preventing the cha nge in definition.  The U.S. District Court for 
the Northern District of California overturned th e Secretary's decision in August 2004.  The U.S. 
Government filed an appeal to reverse the Court's decision in August 2005 
173. The United States prohibits imports of shrimp and shrimp products harvested with technology 
that may adversely affect sea turtle species.
203  Exempt from the ban are products from countries that 
have been certified by the Department of State "a s having taken certain spec ific measures to reduce 
the incidental taking of sea turtles" or as having a fishing environment that does not pose a threat to 
sea turtles.204  Certification takes place annually.  Shrimp  harvested in cold-water regions is also 
exempt.  In April 2005, the Department of State certified 37 sources as meeting the requirements for 
export of shrimp to the United States. 
174. The Pelly Amendment to the Fisherman's Pr otective Act of 1967 authorizes the U.S. 
Secretary of Commerce to certify a country as carryi ng out activities that diminish the effectiveness of 
an international fishery conservation programme.205  Certification triggers a process for the President 
to consider the imposition of import restrictions ag ainst that country.  No regulations have been 
promulgated to implement the Pelly  Amendment.  The Secretary of  Commerce certified Iceland under 
the Pelly Amendment in June 2004.206  Japan has been certified since 2000.  However, neither country 
has been subject to import restrictions under the Pelly Amendment. 
175. The Energy Policy and Conservation Act of 1975  established car fuel economy standards for 
passenger automobiles and light-duty trucks.207  Compliance with the standards is measured by 
calculating a sales-weighted mean of the fuel econom ies of a given manufacturer's product line, with 
domestically produced and imported vehicles measured separately (two-fleet rule).  The National Highway Traffic Safety Administration published an  advance notice of proposed rulemaking, in 
December 2003, soliciting comments on various issu es relating to the structure of the fuel economy 
programme.
208  According to the advance notice domestic manufacturers believe that the elimination 
of the two-fleet rule would not have a major im pact on manufacturers' actions, and that the scheme 
                                                      
201 The requirements to obtain an affirmative finding are contained in 50 CFR 216.24(f). 
202 NOAA Fisheries online information.  Available at:  http://www.nmfs.noaa.gov/pr/international/ 
aidcp.htm [2 September 2005]. 
203 16 USC 1537. 
204 16 USC 1537. 
205 22 USC 1978. 
206 NOAA, "Commerce Secretary Evan s Certifies Iceland for its Wh ale Hunt".  Available at:  
http://www.publicaffairs.noaa.gov/ releases2004/jun04/noaa04-065.html [1 September 2005]. 
207 49 USC 32901 et seq. 
208 Federal Register , 68 FR 74908, 29 December 2003. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 60 
 
 
might have encouraged the sourcing of non-domes tic parts.  Foreign manufacturers and trade 
associations generally believe that the two-fleet ru le is outdated and may constitute a trade barrier. 
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Export restrictions and controls 
176. Export restrictions and controls are mainta ined for national security or foreign policy 
purposes, or to ensure sufficient domestic supply.  Exports controls can be based on U.S. domestic 
legislation, policy decisions or on U.S. participatio n in four non-binding export control regimes:  the 
Wassenaar Arrangement, which focuses on controls of conventional arms and dual-use exports, the 
Missile Technology Control Regime (MTCR), the Nu clear Suppliers Group (NSG), and the Australia 
Group (AG, chemical and biological non-proliferation), as well as in the context of United Nations 
embargoes.  The United States participates in th e Chemical Weapons Convention (CWC).  Export 
controls are implemented through a licensi ng system;  they also cover re-exports.  
177. The main legal provisions on control exports ar e contained in the Export Administration Act 
(EAA) of 1979, as amended.  Although the EEA author ity has expired, its provisions are carried out 
pursuant to Executive Order No. 13,222 of 17 August 2001 issued under the authority of the 
International Emergency Economic Powers Act (IEEPA), which is re newed annually.  Export controls 
for nuclear materials, facilities, and equipment used  for civil purposes are contained in the Atomic 
Energy Act of 1954, as amended (AEA).  These controls are administered by the U.S. Nuclear Regulatory Commission (NRC). 
178. The USDOC's Bureau of Industry and Security  (BIS) is charged with formulating and 
implementing U.S. export control policy on dual- use items (with commercial and possible military 
use), software, and technology.
209  The BIS issues regulations setting forth licensing policy and 
requirements for the export and re-export of dual-use items and related services. 
179. BIS regulations governing exports of dual- use items are contained in the Export 
Administration Regulations (EARs).210  Items that have dual uses are listed on the Commerce Control 
List (CCL);  these are subject to general export prohibitions, unless allowed by an export licence or 
other authorization, based upon the item classification, the destination, the end-user, and the end-use.  
The EARs include a country chart, which lists the reasons stated for control of a given item, and 
specifies whether exports of certain items to a given country require a licence.  Licences have a 
standard term of 24 months.  The BIS also issu es Special Comprehensive Licenses (SCLs) in place of 
individual export licences to exporters that routinely participate in export and/or re-export transactions 
involving multiple destinations.  Under an SCL, e xports are approved for a four-year period.  In 
addition, the BIS maintains "catch all" controls  for items not specifically listed on the CCL but 
shipped to a sensitive end-use or end-user, such as a nuclear weapons programme.  Exporters in these 
cases must apply for a licence for all items sh ipped, regardless of their classification. 
180. The BIS regularly updates its controls to reflect  geopolitical developments .  In 2004, the BIS 
received licensing responsibility for exports to Ira q and Libya from the U.S. Department of the 
Treasury, reduced the level of controls on commerci al exports to Iraq, ended licence requirements for 
the export of low-level items to Li bya, and updated controls  for Cuba and for Syria.  In June 2004, the 
BIS published a rule removing the licence requireme nts for certain items destined to Bulgaria, 
                                                      
209 See also USDOC, "Guiding Principles of the BIS".  Available at:  http://www.bis.doc.gov/about/ 
bisguidingprinciples.htm. 
210 15 CFR, Chapter 7, available online at:  http ://www.bis.doc.gov/PoliciesA ndRegulations/index.htm. United States WT /TPR/S/160/Rev.1 
 Page 61 
 
 
Estonia, Latvia, Lithuania, Romani a, Slovakia, and Slovenia to reflect  the accession of those countries 
to NATO. 
181. In FY 2004, the BIS completed the review  of 15,534 licence applications covering 
transactions valued at approximately US$15.3 bill ion, an increase of about 25% with respect to 
FY 2003, with an average processing time of 36 days.211  The, BIS approved 13,058 applications 
worth US$13.8 billion, returned 2,181 wit hout action, denied 272, and revoked 23. 
182. The Department of State controls the export of defence articles, services, and related 
technological data under the authority of the Arms Export Control Act (22 U.S.C. 2751).  These are specified on the U.S. Munitions List (USML), whic h was reviewed in 2004, especially in areas such 
as launch vehicles, guided missiles, military electronics, fire control, and spacecraft.  As part of this 
process, items determined to have predominantly commercial uses are moved to the CCL.  This requires Congressional approval. 
183. Under the authority of the IEEPA, the Trading with the Enemy Act, the United Nations 
Participation Act, and other au thorities, the Department of Treasury's Office of Foreign Assets 
Control (OFAC) administers economic and trade sancti ons, and may in this capacity restrict exports to 
countries, entities, and individuals that are subject to such sanctions.  WTO Members that are subject 
to economic sanctions administered by OFAC are Cuba and Myanmar.  The specific economic 
sanctions may differ depending upon the country or issue.
212  In April 2004, the application of the Iran 
and Libya Sanctions Act (ILSA) was terminated with respect to Libya.  Licensi ng jurisdiction for the 
export of items subject to the EAR was transferred back to the BIS.  The EAR was amended and new 
licence requirements were set. 
184. In June 2004, the BIS amended the EAR to re vise the export and re-export restrictions to 
Cuba, tightening eligibility requirements for gift parcels and travellers' accompanying baggage.  In 
FY 2004, the BIS processed approxi mately 600 export applications for Cuba;  roughly one third 
involved authorizations for food and other agricu ltural items.  In July 2004, Executive Order 13350 
terminated the national emergency with respect to Iraq and ended the Department of the Treasury's 
authority to maintain export controls;  export licen sing jurisdiction reverted to BIS.  In September 
2004, the President terminated the national emerge ncy with respect to Libya to similar effect. 
185. The EAA allows the monitoring and restriction of exports in short supply.  The BIS is 
responsible for determining whether it is necessary to restrict the export of commodities in short 
supply, implementing the EAA policy.  In addition, the BIS administers export controls under the 
Energy Policy and Conservation Act, the Mineral Leasing Act, the Naval Petroleum Reserves 
Production Act, the Outer Continental Shelf Lands Act, and the Forest Resources Conservation and 
Shortage Relief Act, as amended.  Domestically  produced crude oil and certain unprocessed timber 
harvested from federal and state lands are controlled for reasons of short supply. 
186. During FY 2004, the BIS approved 24 licences for the export of crude oil, amounting to 
901 million barrels;  no licences were approved for the export of unprocessed timber.  No licenses 
were denied in either category.  In April 2004,  the BIS received a short-supply petition requesting the 
imposition of monitoring and controls  on exports of recyclable metallic materials containing copper, 
but determined that these were not necessary.  The BIS also conducts technical reviews of encryption exports.  In FY 2004, the BIS received over 1,520 te chnical review requests for over 2,500 controlled 
encryption products:  some 84% of these were deemed not to require an export licence. 
                                                     
 
211 Bureau of Industry and Security (2004). 
212 Additional information about OFAC's economic sanctions programme is available online at:  
http://www.treas.gov/offices/enforcement/ofac/sanctions/. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 62 
 
 
187. The BIS engages in various bila teral and regional export contro l activities.  The Transhipment 
Country Export Control Initiative (TECI) seeks to strengthen compliance with international export norms and with U.S. export control laws in global trans-shipment hubs by co untering illegal diversion 
of controlled goods.  Under the terms of the CWC, whereby certain commercial chemical facilities are 
required to submit information on chemical producti on, processing, consumption, export, and import 
levels, the BIS received and verified in 805 decl arations and reports FY 2004 from 623 U.S. plant 
sites.  In May 2004, the BIS published a rule correcting the description of certain precursor chemicals on the CCL list to make it consistent with the CWC. 
188. The NRC is responsible for licensing exports of  nuclear materials, facilities and equipment 
used for civil purposes pursuant to the Atomic Energy Act of 1954, as amended (AEA).  In July 2005, 
NRC published a final rule amending its licensing re gulations (contained in 10 CFR Part 110) and 
establishing a new category of specific licensing requirements for certain radioactive materials deemed to be of concern for potential use in a radiological dispersion device.  The new specific 
licensing requirements, effective as of 28 December  2005, are designed to make U.S. export/import 
controls consistent with the guidance adopted by th e International Atomic Energy Agency (IAEA) in 
the Code of Conduct on the Safety a nd Security of Radioactive Sources. 
(ii) Section 301 and related actions 
189. Sections 301-310 of the Trade Act of 1974 (commonly known as Section 301) provide the 
United States with the authority to enforce trade agreements, resolve trade disputes and open foreign 
markets to U.S. goods and services.  Section 301 is implemented by the USTR to investigate foreign 
trade practices that are considered  to affect U.S. exports of goods and services or impair U.S. rights 
under international trade agreements.  Under S ection 301, the United States may impose trade 
sanctions on foreign countries that either violate such  agreements or maintain such practices.  When 
an investigation involves an alleged violation of a trade agreement, such as the WTO, the USTR must 
follow the consultation and dispute settlement proce dures set out in that agreement.  No new cases 
have been initiated under Section 301 since th e previous Review of the United States. 
190. The “Special 301” provisions of the Trade Act of  1974, as amended, require USTR to identify 
foreign countries that deny adequate and effective pr otection of intellectual property rights or fair and 
equitable market access for U.S. persons that rely  on intellectual property protection.  The USTR 
conducts yearly and out of cycle reviews and announces the results (section (4)(iv)). 
(iii) Export assistance 
(a) Finance, insurance, and guarantees 
191. The United States provides export financing through its official export credit agency, the 
Export-Import Bank (Ex-Im Bank).
213  Ex-Im Bank is mandated to provide guarantees, insurance, and 
credit at rates and terms that are fully compe titive with those supported by governments in the 
principal countries whose exporters compete with U.S. exporters.214  Ex-Im Bank accepts risks that 
the private sector is unwilling or unable to take215;  however, Ex-Im Bank suppor t is contingent upon a 
finding of "reasonable assurance of repayment".  Congress must renew Ex-Im Bank activities 
                                                      
213 The mission and mandates of Ex-Im Bank are codified in the Export-Import Bank Act of 1945, as 
amended. 
214 12 USC 635, subchapter I, b (1) (A). 
215 Export-Import Bank of the United States online information.  Available at:  http://www.exim.gov/ 
about/mission.html [8 August 2005]. United States WT /TPR/S/160/Rev.1 
 Page 63 
 
 
periodically;  in June 2002, it authoriz ed Ex-Im Bank activities until September 2006.216  The latest 
U.S. subsidy notification at the WTO refers to Ex-Im Bank programmes.217 
192. Ex-Im Bank provides export financing through various loan, guarantee, and insurance 
programmes, including:  short-term and medium-ter m export credit insurance;  working capital loan 
guarantees to exporters;  medium and long-term lo an guarantees to financial institutions lending to 
foreign buyers;  and medium and long-term direct loans to overseas buyers.  The risk premiums charged under these programmes are set in accordan ce with OECD disciplines.  Ex-Im Bank is 
required to estimate the cost of its programmes, and to seek an appropriation from Congress to cover 
that cost.  This cost, known as the subsidy cost, is  the net present value of cash flows to the U.S. 
Government resulting from Ex-Im Bank programmes,  including estimates for expected defaults 
(Table III.6). 
Table III.6 
Ex-Im bank loan, guarantee, and insurance activities, 1999-04 
(US$ million) 
Fiscal year Financed export value Amounts authorized Subsidy cost 
1999 16,709 13,068 656 
2000 15,548 12,637 902 
2001 12,526 9,242 824 
2002 12,950 10,034 714 
2003 14,311 10,507 334 
2004 17,834 13,321 279 
 
Source : WTO document G/SCM/N/95/ USA, 31 October 2003, and Export-Impor t Bank of the United States (2004), 
 2004 Annual Report .  Available at:  http://www.exim. gov/about/reports/ar/ar2004/index.html. 
193. Goods and services must be shipped from th e United States and meet U.S. content 
requirements to be eligible for Ex-Im Bank fina ncing.  Specifically, for medium and long-term 
financing support is limited to the lesser of:  85% of  the value of eligible goods and services in a U.S. 
supply contract;  or 100% of the U.S. content in eligible goods and services in that contract.  Ex-Im 
Bank's U.S. content requirements are not statutory re quirements;  rather they reflect "a concerted 
balance between organized labor and industry interests".218  Ocean-borne cargo financed by Ex-Im 
Bank loans or long-term guarantees exceeding US$20 million must be transported on U.S. flag 
vessels, unless a waiver is obtained from the U.S. Maritime Administration.219 
194. In fiscal year 2004, Ex-Im Bank  authorized US$13.3 billion in support for export activities, 
almost 30% more than a year earlier (Table III. 6).  Of total 2004 support, 64% was provided as 
guarantees, 34% as export credit insurance, and 2%  as loans.  Close to 40% of total Ex-Im Bank 
exposure is in the aircraft sector, followed by pow er projects, and oil and gas, each accounting for 
10% of total exposure in 2004.  The principal d estinations of Ex-Im Bank support in 2004 were, in 
decreasing order of importance Mexico, India, the Netherlands, and Canada. 
                                                      
216 Export-Import Bank Reauthorization Act of 2002. 
217 WTO document G/SCM/N/95/USA, 31 October 2003. 
218 Export-Import Bank of the United States, "Competitiveness Report for 2003".  Available at:  
http://www.exim.gov/about/rep orts/compet/index2003.htm. 
219 Public Resolution No. 17 of the 73rd Congress. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 64 
 
 
(b) Duty drawback 
195. The United States maintains a duty drawback programme.  Customs duties and certain 
internal taxes and fees resulti ng from importation are refunded follo wing the export of either the 
imported product or the article ma nufactured from the imported product.220 
(c) Tax exemptions and extraterritorial income 
196. Certain U.S. tax provisions applying to exports  have been the object of WTO disputes.  In 
October 2004, the President signed the American Jo bs Creation Act of 2004, which repeals the U.S. 
tax code's extraterritorial income (ETI) provi sions.  These provisions, and the Foreign Sales 
Corporation provisions that preceded them, were found to be inconsistent with the Agreement on 
Subsidies and Countervailing Measures.  ETI provisions allowed U.S. firms to exclude certain 
"foreign trade income" from their taxable income.  Repeal of the ETI provisions is subject to transition rules.  Taxpayers can claim 80% of ETI benefits for transactions during 2005, and 60% for 
2006 transactions.  No ETI benefits are available subsequently, except that full ETI benefits are 
maintained for transactions "pursuant to a binding contract" with an unrelated person in effect on 
17 September 2003 and binding thereafter.
221  It has been argued that this "grandfathering" provision 
favours exporters of capital goods that have long delivery times.222  According to Congressional 
Budget Office estimates, the repeal of the extrate rritorial income provisions will increase Government 
revenue by US$49.2 billion over 2005-14.223 
197. A WTO compliance panel was established in Ma y 2005 to examine the extent to which the 
United States had implemented previous rulings in  the FSC/ETI dispute by enacting the American 
Jobs Creation Act of 2004.  The panel report, issued in September 2005, concluded that the 
United States had failed to implement fully previ ous rulings by continuing to grant prohibited 
subsidies through the transition and grandfathering me asures of the American Jobs Creation Act of 
2004.224 
198. In June 2005, the European Union requested the establishment of a WTO panel to examine 
the WTO compatibility of a number of measures affec ting trade in large civil aircraft, including tax 
measures contained in the American Jobs Creation Act of 2004.225 
(4) OTHER MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Other government support including subsidies 
(a) Overall support 
199. As at October 2005, the latest U.S. full notif ication under Article XVI:1 of the GATT 1994 
and Article 25 of the Agreement on Subsidie s and Countervailing Measures dated back to 
                                                      
220 19 USC 1313.  The definition of duties, taxes, and fees subject to drawback is contained in 19 CFR 
191.3 and includes customs duties, marking duties, and internal revenue taxes "which attach upon importation".  
It does not include the harbour maintenance fee.  The provisions relating to drawback of certain excise taxes are contained in 26 USC 5062. 
221 Section 101(f), American Jobs Creation Act of 2004. 
222 Daly (2005). 
223 Congressional Budget Office on line information, "H.R. 4520:  American Jobs Creation Act of 
2004".  Available at:  http://www.cbo.gov/showdoc.cfm?index=6007&sequence=0 [3 August 2005]. 
224 WTO document WT/DS108/RW2, 30 September 2005. 
225 WTO document WT/DS317/2, 3 June 2005. United States WT /TPR/S/160/Rev.1 
 Page 65 
 
 
October 2003.226  The notification lists around 375 progra mmes providing subsidies, 45 at the federal 
level and the rest at the sub-federal level (Table III.7). 
200. In the context of its notification, the United States received and replied to questions by two 
Members.227  The questions relate to sub-federal progr ammes, energy conservation programmes, and 
assistance to agriculture, aerospace and aeronautics, and fisheries. 
201. The Federal Budget is an add itional source of information on government assistance to 
business.  The Congressional Budget Act of 1974 requir es that a list be included in the budget with 
the "revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, 
exemption, or deduction from gross income or which provide a special credit, a preferential rate of 
tax, or a deferral of liability".228  These revenue losses are known as "tax expenditures".  The largest 
corporate tax expenditures by function are in ge neral science, space, and technology research and 
experimentation.  They are estimated at US$7.8 billion for fiscal year 2006, up US$3.8 billion from the previous year.  The second largest corporate ta x expenditures relate to deferral of income from 
U.S.-controlled foreign corporations (US $7.4 billion in fiscal year 2006) (see below).
229 
Table III.7 
Federal programmes notified to the WTO, fiscal year 2002a 
Sector Number of 
programmes Forms of support Total amount 
(US$ million) 
Aerospace and aeronautics 1 Cost-sha re contracts and technology know-
how transfer from NASA laboratory 19.4 
Energy development, storage and 
transportation 6 Grants and cooperative research and 
development agreements 1,637.2 
Other energy and fuels 8 Tax concessions 4,060 
Fisheries 4 Grants (3 programmes) and loans 
(1 programme) 127b 
Lumber and timber 3 Tax concessions 470 
Medical 2 Tax concessions a nd manufacture and sale of 
isotope products 164 
Metals, minerals, and extraction 5 Ta x concessions (4 programmes) and 
guarantees (1 programme) 297.5c 
Textiles 1 Grants 2.9 
Timepieces and jewellery 1 Duty-f ree entry to watch and jewellery 
producers in the U.S. insular possessions 4.2 
Others 4d Tax concessions (3 programmes) and grants 
(1 programme) 1,488.5 
 
a Excludes subsidy programmes to agriculture, discussed in Chapter IV(2). 
b Excludes loans. 
c Excludes guarantees. d Excludes assistance provided through Ex-Im Bank, discussed in section (3)(iii)(a). 
 
Source: WTO document G/SCM/N/95/ USA, 31 October 2003. 
                                                      
226 WTO document G/SCM/N/95/USA, 31 October 2003. 
227 The questions by Canada are contained in WTO document G/SCM/Q2/USA/28, 24 February 2004, 
and those by the European Union in WTO document G/SCM/Q2/USA/29, 19 January 2004.  The answers by the 
United States are contained in WTO document G/SCM/Q2/USA/30, 17 March 2004. 
228 2 USC 622. 
229 CBO (2005a), Table 19-2. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 66 
 
 
202. As noted in the 2004 Trade Policy Review of the United States, information on government 
assistance to business is also available in the Catal og of Federal Assistance, a database of all federal 
programmes available to business and other entities.230 
203. In September 2004, the Supreme Court announced that it had agreed to review a federal 
appeals court ruling that certain Ohio tax credits  granted to business as an incentive to expand 
operations in the state violated the Co mmerce Clause of the U.S. Constitution.231  The federal appeals 
court reached its conclusion on the grounds that the economic effect of the Ohio tax credit is to 
encourage further investment in-state at the expense of development in other states and that the result 
is to hinder free trade among the states. 
(b) Tax measures 
204. The American Jobs Creation Act of 2004 pr ovides a one-time tax deduction to U.S. 
companies that repatriate foreign earnings from cont rolled foreign corporations .  The deduction equals 
85% of certain "cash dividends" received from cont rolled foreign corporations in excess of a base-
period amount.  It can be applied to the company's first tax year beginning on 22 October 2004, or the last tax year beginning before that date. 
205. The amount of the dividends eligible for th e deduction is limited to the greatest of:  
(1) US$500 million;  (2) the amount of earnings shown as permanently reinvested outside the United States on the taxpayer's most recently audi ted financial statement certified on or before 
30 June 2003;  and in cases where this financia l statement does not show a specific amount of 
earnings, but shows the tax liability attributable to  such earnings, (3) the amount equal to the tax 
liability divided by 0.35.  Repatriate d funds must be invested in the Un ited States.  This is pursuant to 
a reinvestment plan approved by the company's senior management and board of directors.  Examples 
of activities for which repatria ted funds may be used include worker hiring and training, 
infrastructure, research and development, capital in vestments, or the financial stabilization of the 
company for purposes of job retention or crea tion.  Funds may not be used for executive 
compensation. 
206. The American Jobs Creation Act of 2004 also introduced a phased-in, 9% tax deduction for 
certain producers, including:  manufacturers;  soft ware companies;  film production companies;  
electric, gas, and water companies;  construction comp anies;  and engineering and architectural firms.  
The deduction is a percentage of the lesser of "qualified production activities income" or taxable 
income, and is limited by wages.
232  Eligible companies may claim a deduction of 3% in 2005-06, 6% 
in 2007-09, and 9% thereafter.  The Congressiona l Budget Office estimates the cost of the tax 
deduction for producers at US$76.5 billion over 2005-14. 
(c) Foreign-trade zones 
207. The Foreign-trade Zones Act of 1934, as amende d, authorizes the establishment of foreign-
trade zones in the United States.233  Foreign and domestic goods may be sent to a foreign-trade zone 
for any operation not prohibited by law, including st orage, exhibition, and manufacturing.  Foreign 
goods admitted into a foreign-trade zone are exempt  from customs duties and certain excise taxes, but 
                                                      
230 CFDA online information.  Available at:  http://www.cfda.gov. 
231 Charlotte Cuno v. DaimlerChrysler, Inc., et al., 383 F.3d 379, amended by 386 F.3d 738 
(6th Cir. 2004). 
232 Section 199(c), American Jobs Creation Act of 2004. 
233 19 USC 81.  The Customs and Border Protection regulations regarding foreign-trade zones are 
contained in 19 CFR 146. United States WT /TPR/S/160/Rev.1 
 Page 67 
 
 
not from the merchandise processing fee.  Customs duties (and all other applicable taxes and fees) are 
paid when goods are sent to the U.S. customs terri tory.  In this case, the importer can pay customs 
duties on either the finished good or its foreign inputs.  Manufacturers of goods that are subject to "inverted tariffs" (lower tariff rates on the finished  product than on its foreign input) might benefit 
from establishing in a foreign-trade zone.  If the goods are re-exported from the zone, no duties are 
paid. 
208. The U.S. authorities have indicated that there are no income tax advantages related to foreign-
trade zone operations, and that zones are subject to all other federal, state, and local regulations and 
taxes.  Local property taxes on inventory are the onl y exception, since they are not applied to foreign 
or export-bound domestic merchandi se held in a foreign-trade zone. 
209. There are around 250 foreign-trade zone projects throughout the United States.  The value of 
domestic and imported goods transf erred to foreign-trade zones w as US$247 billion in fiscal year 
2003, the latest year for which data are available.
234  Close to two thirds of the total consisted of 
domestic products.  Exports from foreign-trade zon es (to destinations outside the United States) 
amounted to some US$19 billion.  There are 155 foreign- trade zones with at least one site in operation 
(January 2005).  Around 100 foreign-trade zones ha ve so-called subzones, which are separate sites for 
operations that cannot be accommodated in a gene ral-purpose zone (for example, oil refining and 
automobile manufacturing).  There are approximately 450 subzones. 
(d) Trade adjustment assistance 
210. Financial assistance to business is availabl e through the Trade Adjustment Assistance 
Programme for Firms, which is part of a broader programme that also provides assistance to workers 
and farmers (see also Chapter IV(2)).  The Trade Ac t of 2002 extended Trade Adjustment Assistance 
until September 2007 and made available US$80 million over five years to assist firms affected by import competition.
235  The Economic Development Administration of the Department of Commerce 
administers the programme.  It funds 12 regional Trade Adjustment Assistance Centers. 
211. To apply for benefits, a firm must be certifie d by the Economic Development Administration.  
To this end, a firm must demonstrate that imports  have contributed importantly to declines in its 
employment (or to the threat thereof), and in sales or production.236  Once certified, a firm has two 
years to develop a business recovery plan.  In general,  75% of the cost of preparing a plan is covered 
by the Trade Adjustment Assistance Center serving th e firm's region.  The plan must be approved by 
the Economic Development Administration.  Trade Adjustment Assistance Ce nters also fund up to 
50% of technical assistance projects identified in a business recovery plan, subject to a ceiling of 
US$75,000 per firm.  The most commonly funded ac tivities are marketing strategy development, 
technology identification, and standards certification.237 
(ii) Competition policy 
212. The main U.S. antitrust laws are the Sherman Antitrust Act (15 U.S.C. Sections 1-7), the 
Clayton Act (15 U.S.C. Section 12 et seq.), and the Federal Trade Commission Act, although 
provisions with respect to the trade aspects of co mpetition policy are also included in other Acts.238  
                                                      
234 Foreign-trade Zones Board (2005). 
235 Section 131, Trade Act of 2002. 
236 19 USC 2341(c). 
237 Economic Development Administration online information.  Available at:  http://www.eda.gov/ 
Research/TradeAdj.xml. 
238 WTO (1999), Chapter III(4)(vii). WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 68 
 
 
Federal antitrust legislation covers a ll types of activities, including those related to U.S. foreign trade.  
U.S. antitrust law provides for enforcement actions  by aggrieved private parties as well as by the 
Antitrust Division of the Department of Justice (DOJ, criminal and civil enforcement), and the 
Federal Trade Commission (FTC) (civil enforcement).  Private lawsuits may lead to treble damages 
and/or, where appropriate, injunctive relief.  There is  also antitrust legislation in nearly all States. 
213. The Sherman Act outlaws all contracts, combin ations, and conspiracies that restrain trade 
among the states or with foreign countries, as well as the monopolization of any part of the trade or commerce among the states or with foreign countries.   However, the Sherman Act and FTC Act do 
not apply to conduct involving trade or commerce, ot her than import trade or commerce, with foreign 
nations unless the conduct has a direct, substantial,  and reasonably foreseeable effect on domestic or 
import commerce or on export trade or commerce.  Where jurisdiction is based on export trade or 
commerce the antitrust laws apply to that conduc t "only for injury to export business in the 
United States." 
214. The Clayton Act prohibits mergers and acquisiti ons and other types of conduct that may be 
likely to lessen competition substantially.  Section 2 of the Clayton Act, also known as the Robinson-
Patman Act, outlaws certain domestic price discrimination for goods (except for non-profit 
institutions).  Section 3 of the Act prohibits th e lease or sale of goods or commodities conditioned 
upon the purchaser's agreement not to use the produc ts of a competitor if this activity leads to 
lessening competition or to creating a monopoly.  Sec tion 7 of the Clayton Act prohibits any merger 
or acquisition of stock or assets that lessens competition substantially, or tends to create a monopoly.  
Section 7A, called the Hart-Scott-Rodino Antitrus t Improvements Act of 1976 (15 U.S.C. 18a), 
contains provisions to facilitate  enforcement of antitrust laws with  respect to anti-competitive mergers 
and acquisitions.  The Clayton Act allows for private la wsuits to be brought in any U.S. district court 
in which the defendant resides, is found or has an agent;  the Act also allows for the recovery of 
threefold the damage inflicted to the aggrieved party plus the cost of the suit.  Foreign individuals or 
companies are granted national treatment with respect  to private lawsuits and may sue for the same 
amount;  foreign states, however, may recover only an  amount equal to the damage inflicted plus the 
cost of the lawsuit. 
215. The Federal Trade Commission Act gives the FTC the authority to define and prohibit unfair 
methods of competition or deceptive acts or practices in  commerce;  generally, this refers to violations 
of the Sherman or the Clayton Act or of any other antitrust law.  The International Antitrust 
Enforcement Assistance Act of 1994 (15 U.S.C. Secti ons 46 et al.) authorizes the DOJ and the FTC to 
enter into mutual assistance agreemen ts with foreign antitrust authorities. 
216. Some U.S. statutes grant limited immunity from antitrust laws in specified cases or for 
specified activities.
239 
217. The Hart-Scott-Rodino Act requires parties to notify the FTC and DOJ, and observe a waiting 
period before undertaking certain acquisitions of vot ing securities or assets, in order to give those 
agencies the opportunity to obtain effective prelim inary relief against anti-competitive mergers and 
thereby prevent harm to competition and consumer s.  Regulations implementing the HSR Act have 
been amended on several occasions.  In February 2005,  the rules were amended to reconcile treatment 
of unincorporated entities (e.g. pa rtnerships and limited liability companies) with treatment of 
                                                      
239 Including the Capper-Volstead Agricultural Producers' Associ ations Act,  the Agricultural 
Marketing Agreement Act of 1937, the Fishermen's Collective Marketing Act, the McCarran-Ferguson 
Insurance Regulation Act, the Need-Based Educationa l Aid Act, the Webb-Pomerene Act, and the Gramm-
Leach Bliley Act.  For details, see WTO (2004) , Trade Policy Review:  United States, Geneva, 
Chapter III(4)(i)(a). United States WT /TPR/S/160/Rev.1 
 Page 69 
 
 
corporate entities.240  There is a "size of transaction" threshold and a "size of person" test, setting sales 
or assets thresholds for reportable transactions.  Me rgers or acquisitions of foreign assets or voting 
securities by U.S. or foreign persons or businesses mu st also be reported if their nexus with the 
United States reaches or exceeds a certain threshold. 
218. In January 2005, the FTC and DOJ announced re vised thresholds for the HSR Act pursuant to 
statutory provisions requiring annual adjustment for inflation.  The reporting thresholds were 
increased to US$53.1 million (size-of-transaction or  U.S. nexus), US$212.3 million (transactions 
reportable without regard to "size of person" ), US$106.2 million and US$10.7 million ("size of 
person" test).241  The number of transaction peaked at 4,926 in FY 2000, decreasing to 1,454 in 
FY 2004.242  The decrease in the number of reportable tr ansactions is, to a considerable extent, the 
result of legislation that took effect in February  2001, raising the size-of-transaction threshold from 
US$15 million to US$50 million. 
219. Changes to competition policy legislation we re introduced by Public Law No. 108-237, 
signed on 22 June 2004, which includes the Antitrust Criminal Penalty Enhanc ement and Reform Act 
of 2004 (ACPERA) and the Standards Develo pment Organization Advancement Act of 2004 
(SDOAA).  The ACPERA increased the maximum pot ential Sherman Act fines and penalties, as 
described below, in line with those for other financ ial crimes with similar harmful effect.  The Act 
also strengthens the Antitrust Division's Corporate Le niency Policy, which offers cartel participants 
the chance to avoid criminal prosecution by exposi ng the cartel and cooperating with the investigation 
and prosecution, and by also limiting the cartel partic ipant's private damages exposure, if it cooperates 
with plaintiffs in the private lawsuit, to the amount actually inflicted by its own conduct (compared 
with treble damages for other cartel participants ) and in private legal actions.  The SDOAA extends 
the protection provided by the National Cooperativ e Research and Production Act of 1993 (NCRPA) 
(de-trebling of damages, rule-of-reason analysis, a nd attorneys fees to the substantially prevailing 
party) to standards development organizations th at satisfy specified openness, voluntariness, and due 
process requirements.243 
220. Under the Sherman Act, price fixing, bid rigging, and market allocation by companies and 
individuals are felonies punishable by fines, impris onment or both.  Following the enactment of the 
ACPERA, the maximum penalties were increased:  for offences committed on or after 22 June 2004, the maximum corporate fine is US$100 million, the maximum individual fine is US$1 million, and the maximum jail term is ten years.  Violations are also subject to alternative fine provisions that 
permit a fine of up to twice the gross financial loss or gain resulting from a violation. 
221. In 2004 and 2005, competition policy enforcemen t by the DOJ continued to focus on the 
activities of international cartels.  Other area s addressed by the antitrust agencies include 
anticompetitive mergers and non-merger enforcement in key sectors such as health and energy.  After 
record fines in FY 1999, fines declined to US$103 million in FY 2002, but increased to 
US$141.2 million in FY 2004.
244  Cases that resulted in substan tial fines imposed during FY 2003 and 
2004 included a US$160 million fine to Infineon Tec hnologies AG of Germany in the area of DRAM 
semiconductors, and a US$66 million fi ne against Bayer AG, also of Ge rmany, for rubber chemicals.  
                                                      
240 Federal Trade Commission, 16 CFR Parts 801, 802 and 803, Premerger Notification; Reporting and 
Waiting Period Requirements .  Final Rules, 23 February 2005.  Available online at:  http://www.ftc.gov/ 
os/2005/02/050223premergerfrn.pdf. 
241 FTC online information, "Revised Jurisdictional Thresholds for Section 7A of the Clayton Act", 
FTC Notice, 25 January 2005.  Available at:  http://www .ftc.gov/os/2005/01/050125revised7aclaytonactfrn.pdf. 
242 See Federal Trade Commission/Department of Justice (2004). 
243 OECD (2005a). 
244 This amount rises to over US$330 million if fines agreed to by defendants during FY 2004, but not 
yet imposed by the court are taken into account. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 70 
 
 
In early 2005, Dupont Dow Elastomers L.L.C. of the United States was fined US$84 million for 
fixing the prices of rubber chemicals sold in the United States and elsewhere.245  U.S. courts fined five 
companies more than US$200 million between early  2004 and mid 2005 in DOJ investigations of 
price fixing of various rubber chemicals, a market with sales of some US$1 billion annually in the 
United States. 
222. The outcome of antitrust cases in the courts h as a considerable impact on competition policy 
implementation in the United States, particularly when  such cases reach the U.S. Supreme Court.  For 
example, among the four antitrus t and related cases on which the S upreme Court decided in FY 2004, 
in Intel Corp. v. Advanced Micro Devices, Inc., the Court interpreted U.S.C. § 1782(a) providing that, 
on the request of any interested person, a U.S. distri ct court "may order" a pe rson to give testimony or 
produce a document for use in a proceeding in a foreign or international tribunal.  Advanced Micro Devices (AMD) filed a complaint against Intel with  the Directorate-General for Competition of the 
EC Commission alleging an abuse of Intel's dominant  position and then petitioned a U.S. district court 
to require Intel to produce certain documents in su pport of its complaint.  The Court, among other 
things, held that the statute authorized but did not automatically require a court to order such 
discovery. 
223. The F. Hoffman-LaRoche Ltd. v. Empagran S.A.  case addressed the extent to which foreign 
plaintiffs may bring suit under the Sherman Act for injuries suffered from a cartel that as a whole had 
a direct, substantial and reasonably foreseeable eff ect on U.S. commerce, but where the plaintiffs' 
claims did not arise from those domestic effects.  The Court ruled that the Foreign Trade Antitrust 
Improvements Act (FTAIA) does not allow antitrust claims  arising solely out of a foreign injury that 
is independent of the domestic effect s of the challenged anticompetitive conduct.
246  In the 
United States Postal Service v. Flamingo Industries, the Supreme Court unanimously held that the Postal Service is not subject to suit under the fede ral antitrust laws.  In Verizon Communications Inc. 
v. Law Offices of Curtis V. Trinko, the Court he ld that, while the Telecommunications Act of 1996 
requires an incumbent local exchange carrier to share facilities with competitors, the Sherman Act 
does not.
247  The Supreme Court emphasized the need  for caution with respect to government 
intervention against single firm conduct, especially in imposing antitrust obligations on firms to assist 
competitors and share resources, since they risked  chilling the very competition that antitrust laws 
were intended to protect. 
224. Based on an index of regulations affecting pr oduct market competiti on constructed for the 
purpose of international comparison, the OECD not es that the United States has one of the least 
restrictive regulatory systems in th e OECD;  this is reported to have  resulted in robust product market 
competition, favouring flexible adaptation in la bour markets, and the adoption of productivity 
enhancing technologies.248  The report links the U.S. economy's good performance for more than a 
decade to regulatory reform efforts in a broad range of industries, but notes that competition policy 
could be improved by measures such as terminating the antitrust immunity of government enterprises 
and eliminating anomalous exemptions.  The report also suggests adopting measures at the sectoral level to enhance competition, including in telecommuni cations and electricity.  In another report, the 
                                                     
 
245 USDOJ Press Release, 19 January 2005.  Availa ble online at:  http://www.usdoj.gov/atr/public/ 
press_releases/2005/207231.htm. 
246 The Court remanded the case back to the D.C. Cour t of Appeals to consider the plaintiffs' alternate 
theory that their foreign injury was not independent and the anticompetitive conduct's domestic effects were 
linked to the foreign harm.  On remand, the Court rejected the plaintiffs' alternative argument and held that the FTAIA requires a proximate cause connection between the fo reign injury and the domestic effects.  F. Hoffman-
LaRoche, Ltd. Empagran S.A., No. 01-7115 (D.C. Cir. 28 June 2005). 
247 OECD (2005a). 
248 OECD (2005c). United States WT /TPR/S/160/Rev.1 
 Page 71 
 
 
OECD recommends the adoption of further measures to strengthen U.S. competition policy, including 
to:  clarify assignments of responsibility among differe nt enforcement officials, particularly between 
the federal and state levels;  avoid overlap and duplication;  eliminate unnecessary antirust 
exemptions and make antitrust la w generally applicable to all ec onomic sectors;  and undertake a 
comprehensive study of the extent and effect of the state action doctrine.249   
225. The United States has antitrust cooperation agreem ents with Australia, Brazil, Canada, the 
European Union, Germany, Israel, Japan, and Mexico.250  These agreements do not override 
provisions of domestic law that protect the confiden tiality of investigative information, nor does the 
OECD's Recommendation concerning Co-operatio n between Member countries on Anticompetitive 
Practices affecting International Trade, to which th e U.S. antitrust agencies adhere.  The International 
Antitrust Enforcement Assistance Act (15 U.S.C. sec tion 6211) authorizes the U.S. Department of 
Justice and the Federal Trade Commission to en ter into bilateral antitrust mutual assistance 
agreements with foreign governments that authori ze the agencies to share confidential information 
obtained in the agencies' investigations and to  gather evidence on behalf of foreign antitrust 
authorities.  Since this legislation was passed in 1994,  the United States has ente red into only one such 
agreement, with Australia. 
226. The United States also has a number of mutual legal assistance treaties, which permit the 
exchange of information in criminal matters;  these agreements are particularly important for 
international cartel investigations.  The U.S. antitrus t agencies also cooperate informally with foreign 
agencies, including through the exchange of public information, as well as the exchange of 
confidential materials submitted to the agencies by parties that have expressly granted waivers of 
confidentiality rights.  The authorities noted that th is increasingly occurs in merger investigations. 
227. Under the Regulatory Reform Initiative, a part of the U.S.-Japan Economic Partnership for 
Growth, the United States and Japan exchange re form recommendations that serve as a basis for 
annual reports specifying reform measures to be take n by each Government.  The Third Report to the 
Leaders on the U.S.-Japan Regulatory Reform a nd Competition Policy Initiative was issued in 
June 2004.251 
(iii) Government procurement 
(a) Overview 
228. The United States is a party to the WTO Agreement on Government Procurement (GPA).  
The list of central government agencies covered by the GPA is included in Annex I of Appendix I of 
the Agreement;  the list of the 37 states and of th e sub federal bodies applying the GPA is included in 
Annex 2.  In January 2004, the United States circul ated proposed modifications to Appendix I of the 
Agreement as regards the United States, to reflect re cent changes in the administrative structure of the 
Federal Government.252  The main change was the proposed a ddition of the Department of Homeland 
Security (DHS) to the list, and the deletion of the Federal Emergency Management Agency, which 
was transferred into DHS.  The communication also listed all organizational elements and functions 
transferred to DHS from other entities, and noted th at the proposed modifications would not reduce 
                                                      
249 OECD (2005d). 
250 USDOJ online information.  Available at:  http://www.usdoj.gov/atr/public/international/int_ 
arrangements.htm. 
251 These reports are available online at:  http ://www.ustr.gov/World_Regions/North_Asia/Japan/ 
Regulatory_Reform_Initiative/Section_Index.html. 
252 WTO document GPA/MOD/USA/1, 15 January 2004. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 72 
 
 
the level of the mutually agreed coverage provi ded under the Agreement.  Initially objections by 
Canada and Japan were later withdrawn.253 
229. In December 2004, the United States submitted a communication in the context of the GPA 
Negotiations on Extension of Cove rage and Elimination of Discriminatory Measures and Practices.254  
The communication contains generic requests (to all parties) including:  changes to the structuring of 
the appendices to include a goods annex that would be comparable to the services annex in the parties' 
appendices, and would state that a ll goods procured by the listed entities are covered by the GPA, 
except for any goods excluded for specific entities;  converting a party's positive list of covered 
services in Annex 4 to a negative list;  conver ting a party's positive list of covered construction 
services in Annex 5 to a negative list;  and moving excl usions that relate to a specific annex from the 
General Notes to the relevant annex.  The comm unication also contained specific requests of other 
parties for expansion in market access under th e GPA.  In December 2005, the United States 
submitted an initial offer in the context of the negotiations. 
230. In January 2002, the United States submitted to the WTO the statistical information required 
under Article XIX:5 of the GPA for the years 1996-99.255  The submission for 1999 reported 56,598 
contracts with a value of more than US$205 billion.256  No new submission has been made since then. 
231. Up-to-date statistics on the procurement activities of the main agencies at the federal level are 
maintained by the United States' Federal Procurem ent Data System (PDS).  The PDS publishes an 
annual report with the procurement activities of some  50 federal agencies, and produces statistics on 
federal awards by department.257  In FY 2004, the total procurement of these agencies was 
US$327.2 billion, up from US$305.5 billion in FY  2003;  68% is Department of Defense 
procurement.258  In value terms, 23.6% of the contracts reported were awarded to small businesses in 
FY 2003;  over a third of these were small disadvantaged businesses.259  Procurement by U.S. 
agencies outside the United States totalled US$27.6 billion in FY 2004, of which 69.9% was in Asia 
and 17.6% in Europe.260  The 100 top federal contractors account ed for 57.1% of federal procurement 
in FY 2003;  the majority are U.S. or  foreign-based multinational companies. 
232. The value of U.S. government consumpti on expenditure and gross investment was 
US$2.18 trillion, or some 18.6% of GDP in 2004, up from 17.5% of GDP in 2000.  Of this, US$810 billion corresponded to federa l spending and US$1.37 billion to state spending.  At the 
federal level, defence consump tion expenditure on goods and services totalled US$548 billion in 
2004;  non-defence expend iture totalled US$262 billion.
261 
                                                      
253 WTO documents GPA/MOD/USA/2, 21 June 2004, and GPA/MOD/USA/3, 1 October 2004. 
254 WTO document GPA/O/US A/1, 23 December 2004. 
255 WTO documents GPA/21/Add.3, GPA/22/Add.4, GPA/29/Add.4, GPA/40/Add.4, 30 January 2002. 
256 WTO document GPA/40/Add.4, 30 January 2002. 
257 FPDS online information, Federal Procurement Report FY 2003 .  Available at:  
http://www.fpdc.gov/fpdc/FPR2003a.pdf;  and FY 2004 Federal Awards by Department .  Available at:  
http://www.fpdsng.com/downloads/top_reques ts/total_federal_spending_by_dept.pdf. 
258 Four agencies comprised over 84 % of the total in FY 2003:  the Departments of Defense and of 
Energy, the National Aeronautics an d Space Administration, and the Ge neral Services Administration. 
259 FPDS online information, Federal Procurement Report . 
260 Federal Procurement Report FY 2004.  Available at:  http://www.fpdsug.com/downloads/FPR: 
Reports/Fpr_section_federal=views.pdf. 
261 See CBO (2005a). United States WT /TPR/S/160/Rev.1 
 Page 73 
 
 
(b) Institutional and legal framework 
233. U.S. procurement legislation was notified to the WTO in 1996.262  The GPA is implemented 
in U.S. law at the federal level primarily th rough the Trade Agreements Act (TAA) of 1979, as 
amended, which provides authority for the President  to waive discriminatory purchasing requirements 
(such as the Buy American Act, see below), designa te eligible countries, and bar procurement from 
non-designated countries.  At the state level, the GP A is implemented through laws and regulations in 
each of the 37 states listed in Annex 2 of the United States' GPA Schedule. 
234. Procurement at the federal level is decentra lized, through the various executive agencies' 
procurement systems.  The Office of Manage ment and Budget (OMB) oversees and coordinates 
federal procurement, and review s proposed regulations for compliance with policy guidance, through 
the Office of Federal Procurement Policy (OFPP).263  The Federal Acquisition Regulation (FAR) 
regulates all federal executive agencies' acquisitions  of supplies and services with appropriated funds.  
Agency-specific procurement regulations supplement the FAR.  The FAR system allows individual 
executive agencies and their sub-agencies to develop specific internal guidelines.  Part 25 of the FAR 
provides policies and procedures for acquiring forei gn supplies, services, and construction materials.  
It also implements trade agreemen ts and other laws and regulations. 
235. With certain exceptions, federal government agencies are required to publish notices of 
proposed procurement opportunities in excess of US$25,000 in the online federal-government-wide 
point of entry (GPE), Federal Business Opportunities (FedBizOpps).  There are certain exceptions to 
this requirement, such as the purchase of perishable  subsistence supplies or if the publication of a 
notice could result in serious injury to the Government.264  Notices of proposed procurement must be 
published in the GPE at least 15 days before a request  for bids;  prospective suppliers have at least 
30 days to submit bids from that date.  State governments that are covered by the GPA are also required to publish invitations to tender in their own publications. 
236. The FAR is occasionally amended through Federa l Acquisition Circulars (FACs);  several 
changes have been introduced during the period under review.
265  Several of the amendments are 
related to the implementation of preferential acces s conditions granted to small businesses, veterans, 
and prison inmates;  some are intended to simpli fy and clarify procedures and definitions, while 
others propose changes in the bidding process and th resholds.  Several of the amendments are linked 
to the implementation of new legislation.266 
237. U.S. regulations allow for the preparation of  lists of suppliers by a federal government 
agency, provided the agency prepares a written justif ication explaining the circumstances for the need 
of such a list.  These non-exhaustive lists may incl ude both national suppliers and potential foreign 
suppliers from countries that are parties to the GP A or other international agreements.  Lists of 
qualified or registered suppliers are made public.  In terested suppliers can apply for inclusion on such 
lists at any time.  States and ot her sub-federal bodies may also main tain lists of suppliers for their 
procurement;  in this respect, a number of the 37  States covered by the GPA use lists of qualified 
suppliers when tendering for certain types of procurement. 
                                                      
262 WTO document GPA/W/23, 17 July 1996. 
263 Information on the OMB is available online at:  http://www.whitehouse.gov/omb/;  and on the 
OFPP at:  http://www.whitehouse.gov/omb/procurement/ index.html. 
264 FedBizOpps online information.  Available at:  http://www.fedbizopps.gov/. 
265 Information on the FAR and its amendments is available online at:  http://www.arnet.gov/far/ 
facsframe.html. 
266 For example, to implement provisions in the Veterans Benefit Act of 2003, the Consolidated 
Appropriations Act of 2005, and the Services Acquisition Reform Act of 2003. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 74 
 
 
238. Contractors are required to register online in the Central Contracting Registration (CCR), the 
primary vendor database for the U.S. Federal Government.267  As of August 2005, there were some 
373,000 government vendors registered with the CCR, of which 10,030 were foreign firms. 
239. At the sub-federal level, procurement is govern ed by state or other sub-federal government 
laws and procurement regulations.  In some cases, where procurement is funded with federal money, 
states must comply with certain federal statutor y requirements.  Local governments have their own 
procurement agencies, as well as their own procurem ent policies.  In some states, preferences are 
granted to local suppliers, and local-content re quirements are applied under certain conditions.268  
Reciprocal preferences are used among states. 
(c) Access conditions 
240. U.S. policy with respect to market access for government procurement is to grant reciprocal 
national treatment.  The United States maintains a number of domestic purchasing requirements for 
procurement not covered by the GPA, NAFTA, th e WTO plurilateral Agreement on Trade in Civil 
Aircraft, and bilateral trade agreements.  The Trad e Agreements Act of 1979, as amended, authorizes 
the President to grant waivers from the Buy American Act and other procurement restrictions;  the 
President delegated this authority to the USTR. 
241. The Buy American Act of 1933 restricts the pur chase of supplies and construction materials 
by government agencies to those defined as "domes tic end-products", in accordance with a two-part 
test that must establish that the article is manufact ured in the United States, and that the cost of 
domestic components exceeds 50% of the cost of all the components.  The Act does not apply to 
services.  Exceptions to the Buy American Act can be granted if it is determined that domestic 
preference is inconsistent with the public inter est, in case of U.S. non-availability of a supply or 
material, or for reasonableness of cost.  In the latte r case, the cost of the domestic offer is considered 
unreasonable if the cost of the foreign (non-eligible ) product, inclusive of import duty and a 6% added 
margin, is below the lowest domestic offer when th is offer is from a large business concern.  If the 
lowest domestic offer is from a small business con cern, the added margin considered is 12%.  For 
purchases by the Department of Defense the price difference must be of at least 50%. 
242. Annual appropriation and authorization bills  sometimes include domestic preference 
requirements.  Some states also apply domestic or state-specific preferences.269  The non-statutory 
Balance of Payments Program, applies provisions similar to those of the Buy American Act to Department of Defense
 contracts over US$100,000 for end-products for use outside the 
United States.270 
243. The Trade Agreements Act of 1979 waives the a pplication of the Buy American Act to the 
end-products of designated countri es, which now include the parties to the GPA, NAFTA, and other 
bilateral agreements that cover government procurement, CBERA be neficiaries and least-developed 
countries (see below).  For designated countries and fo r CBERA countries, the thresholds are those of 
the GPA;  for NAFTA countries, Australia, Chile, Israel, and Singapore, the thresholds are those 
stipulated in each agreement.  Eligible produc ts are granted non-discriminatory treatment.  The 
provisions of the Buy American Act are also waived fo r civil aircraft and related articles that meet the 
                                                      
267 FAR 4.1102, 1 October 2003.  CCR online information.   Available at:  http://www.ccr.gov. 
268 WTO (2004), Table AIII.2. 
269 For a list of these preferences, see WTO (2004), pp. 184-187. 
270 Federal Register Vol. 67, No. 83, 30 April 2002.  FAC 01-07 online.  Available at:  http://www. 
acqnet.gov/far/FAC/fac2001-07.pdf. United States WT /TPR/S/160/Rev.1 
 Page 75 
 
 
substantial transformation test of the Act and orig inate in parties to the WTO Agreement on Trade in 
Civil Aircraft. 
244. FAC 2004-027, implementing the procurement provisions contained in the FTAs with 
Australia and Morocco (P.L. No. 108-286 and 108-3 02), entered into effect on 1 January 2005 for 
Australia and is targeted to enter into effect on 1 January 2006 for Morocco.  It exempts procurement 
from these countries from domestic purchase requirement s (see below) for some foreign supplies and 
construction materials.271  The rule also included a table of excluded services.  FAC 2004-027 also 
revised the NAFTA threshold for Canadian ser vices, correcting it from US$25,000 to US$58,550 
(FAR 25.402(b)).  FAC 2004-027 revised the list of designated countries, to include countries with 
which the United States has an FTA, and Caribbean Basin countries.  The FAR was also amended to 
modify the definition of eligible product to incl ude construction materials.  The list of designated 
LDCs was revised partly following a U.N. revision of the list of Least-developed Countries.272 
245. Given that the TAA does not determine any proc urement thresholds, different thresholds may 
apply to procurement exempted from domestic pur chase requirements under FTAs;  as noted, the 
thresholds are updated regularly through FACs.  Thr esholds for procurement contracts in SDRs have 
remained unchanged since the GPA entered into effect  on 1 January 1996.  Thre sholds in U.S. dollars, 
however, are revised periodically (generally every two years) by the USTR.273  In addition to the 
purchases under the GPA and the FTAs, the Department of  Defense also waives the restrictions of the 
Buy American Act/Balance of Payments Program for the acquisition of defence equipment produced 
in any "qualifying country" (countries with which there is a reciprocal procurement agreement or 
Memorandum of Understanding).274 
246. Access conditions for procurement at the state level vary according to the State.  As noted, 
37 States participate in the GPA.  Among, the stat es that do not participate, some, like Alabama, 
restrict foreign participation in biddings;  others Al aska and New Mexico, offer preferences to in-state 
suppliers;  or apply domestic purchase requireme nts (Indiana and South Carolina).  The U.S. 
Administration has adopted a new reciprocity appr oach to sub-federal procurement in two FTAs 
under negotiation.275  The Administration has written to Governors requesting that state governments 
consider voluntarily covering their procuremen t under the U.S.-Panama and U.S.-Andean FTAs under 
a new reciprocity policy, to benefit from new export opportunities.  This approach does not apply to 
states' previous commitments under the GPA and other FTAs. 
247. Procurement policy also seeks to increase the participation of small businesses, veteran-
owned small businesses, small disadvantaged busin ess (SDBs), and women-owned small businesses.  
The Department of Commerce (DOC) determin es annually the authorized SDB procurement 
mechanisms and application factors (percentages) .  The Small Business Act (P.L. No. 85-536), as 
amended, requires, in principle, each contract with an anticipated value greater than US$2,500 but 
                                                      
271 Federal Register Vol. 69, No. 248, 28 December 2004. 
272 As a result, Botswana was removed from the list and Afghanistan, Angola, Cambodia, the 
Democratic Republic of Congo, Eritrea, Ethiopia, Laos, Madagascar, Mauritania, Senegal, the Solomon Islands, 
East Timor, and Zambia were added. 
273 WTO document GPA/W/285/Add.3, 8 January 2004 contains the thresholds notified to the WTO for 
2004-05.  Threshold under the NAFTA may be found in FAR Subpart 25.4-Trade Agreements 25.406, available 
at http://www.arnet.gov/far/;  and under the FTAs with Australia, Chile and Singapore in Federal Register  
Vol. 69, No. 192, 5 October 2004, p. 59698. 
274 Australia, Belgium, Canada, Denmark, Egypt, Fr ance, Germany, Greece, Israel, Italy, Luxembourg, 
the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.  Products 
from Austria and Finland may also be ex empted, on a purchase-by-purchase basis. 
275 USTR (2005e). WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 76 
 
 
less than US$100,000 to be reserved exclusively for small business concerns.  The Small Business 
Administration (SBA) manages five main programme s to promote the ability of small businesses to 
compete for federal procurement contracts.276  The SBA also administers two business assistance 
programmes for SDBs.277 
248. The Veterans Benefits Act of 2003 (VBA, P.L. No. 108-183), established a procurement 
programme for Service-Disabled Veteran-Owned  Small Business Concerns (SDVOSBC), which 
allows federal contracting officers to restrict competition to SDVOSBCs and award a sole source or set-aside contract where certain criteria are met.  A number of other set-asides and pricing preferences are in place, such as the HUBZone Empowerment Contracting Program and the Small Business 
Competitiveness Demonstration Program.
278 
249. In certain cases imported supplies for use in government contracts may be exempted from 
customs duties.  These goods are listed in sub-chapte rs VIII and X of Chapter 98 of the U.S. tariff 
schedule.  Other supplies may also be granted duty-free entry;  in this case, the contract price must be 
reduced by the amount of duty that would be payable if the supplies did not enter duty free.  Supplies (excluding equipment) for government-operated v essels or aircraft may be imported duty free.
279 
250. Under Section 305(g) (1) of the Trade Agreem ents Act of 1979, the United States has applied 
sanctions, since May 1993, to certain Member Stat es of the EU considered to discriminate against 
U.S. products and services in their government procurement practices.280  The sanctions apply to end-
products and construction material s not covered by the GPA, to all service contracts below GPA 
thresholds, and to a range of service contracts of  any value, and exclude Department of Defense 
contracts or contracts awarded and performed outside the United States. 
(iv) Trade-related intellectual property rights 
(a) Overview 
251. U.S. laws and regulations on trade-related aspect s of intellectual property rights were notified 
to the WTO in 1996;  the notification was supplemented in 1998.281  Updates of the copyright and 
patent legislation, including am endments presented in a consolidated text, have been notified 
subsequently.282  The United States is a member of the World Intellectual Property Organization 
(WIPO), and participates in several internationa l conventions and treaties related to intellectual 
property rights (IPRs).283 
                                                      
276 Prime Contracting Assistance;  Subcontracting Assi stance;  Government Prop erty Sales Assistance;  
Certificate of Competency;  and Service-Disabled Veteran-Owned Small Business Concerns programme.  Code 
of Federal Regulations Title 13, Volume 1, revised as of 1 January 2005. 
277 The two are the 8(a) Business Development Program and the Small Disadvantaged Business 
Certification Program.  For further information see FAR Sub-Part 19.8, available online at:  
http://www.arnet.gov/far /;  and SBA (2004). 
278 Information on the HUBZone Empowerment Contracting Program may be found in SBA (2004).  
Details on the Small Business Competitiveness Demonstration Program is available online at:  
http://www.arnet.gov/far/. 
279 FAR Subpart 25.9.  Available online at:  http ://www.arnet.gov/far/curre nt/pdf/FAR.book.pdf. 
280 Austria, Belgium, Denmark, Finland, France, Ire land, Italy, Luxembourg, the Netherlands, Sweden, 
and the United Kingdom. 
281 WTO documents IP/N/1/USA/1, 21 January 1997, and IP/N/1/USA/U/2, 6 October 1998. 
282 WTO documents IP/N/1/USA/C/3 and IP/N/1/USA /I/1, 9 February 2004; and IP/N/1/USA/I/2, 
9 February 2004, and  IP/N/1/USA/I/3, 20 February 2004. 
283 WIPO online information.  Available at:  htpp://www.wipo.org. United States WT /TPR/S/160/Rev.1 
 Page 77 
 
 
252. The United States has signed 22 bilateral intell ectual property agreements or memoranda of 
understanding.284  IPR protection issues were also incl uded in the FTAs signed and approved by 
Congress with Australia, Chile, Jordan, and Singapore.285  The U.S.-Central America-Dominican 
Republican Agreement, as well as the agreements with Bahrain, Morocco, and Oman, also contain a 
chapter on IPRs.  The United States is committed to a policy of promoting increased IPR protection, 
and is advancing this protection through a variety of mechanisms, including FTAs.286 
253. The United States is a major producer of goods and services that embody knowledge and 
other intellectual developments.  In this respect, intellectual property has been recognized in Congress 
as the backbone of U.S. economic competitiveness;  its  contributions to grow th and innovation have 
been noted, but also the challenges it faces.287  The United States considers that the ability of 
innovative industries to continue to develop ne w products depends largely a strong and effective 
intellectual property system and the capacity to ma rket new products effectively during the period of 
time when exclusive IPRs exist.288 
254. The United States traditionally posts a cons iderable balance-of-payments surplus in 
intellectual-property-related trade, as measured by  royalties and licence fees.  In 2004, net receipts 
were US$28.4 billion and gross r eceipts totalled US$51.3 billion. 
(b) Patents 
255. U.S. patent law is codified in Title 35 of the U.S. Code (35 U.S.C.), as amended.289  Patents 
are granted by the United States Patent and Trademar k Office (USPTO) using the first-to-invent rule;  
the United States is the only WTO Member to use this rule.  Patents for inventions (utility patents) are 
protected for 20 years from the filing of the first U.S. non-provisional patent application.  Design 
patents are protected for 14 years from the date of  issuance.  The United States is member of the 
WIPO Patent Cooperation Treaty (PCT). 
256. For Federal Government-owned inven tions, under the Technology Transfer 
Commercialization Act of 2000 (P.L. No. 106-404), a federal agency may grant an exclusive or 
partially exclusive licence if necessary to attract the investment needed to bring the invention to 
practical application.  The U.S. Government has sp ecific statutory authority in some cases to allow 
compulsory licensing of the subject matter of a patent, for example under the Atomic Energy Act and the Clean Air Act;  however, these provisions have not been used for over 20 years. 
257. During the period under review, the USPTO conti nued to apply it 21st Century Strategic Plan, 
a five-year plan devised in 2002 to enhance th e electronic processing of patent applications and 
streamline the patent application process, reducing the pendency time of appli cations.  In its annual 
performance report, the USPTO noted that 88% of pa tent applications were electronically processed 
in FY 2004 compared with a goal of 70%.
290  Access to patent information is now available through 
                                                      
284 With the Bahamas, Bulgaria, Cambodia, China, Chinese Taipei, Ecuador, Hungary, Jamaica, Japan, 
Korea, Latvia, Nicaragua, Paraguay, Pe ru, the Philippines, Sri Lanka, Trinidad and Tobago, and Viet Nam.  
USDOC online information, Intellectual Property Agr eements.  Available at:  http://www.tcc.mac.doc.gov/. 
285 USTR online information.  Available at:  h ttp://www.ustr.gov/Trade_Ag reements/Bilateral/Section 
_Index.html. 
286 USTR (2005d). 
287 109th Congress, House of Representatives Resolutio n 210, 12 April 2005.  Available online at: 
http://thomas.loc.gov/. 
288 USTR, 2005 Special 301 Report, Executive Summary, p. 9. 
289 Most recently notified in WTO documents IP/N/1 /USA/I/1, and IP/N/1/USA /I/2, 9 February 2004, 
and  IP/N/1/USA/I/3, 20 February 2004. 
290 USPTO (2004). WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 78 
 
 
the private and public Patent Application Informat ion Retrieval systems (PAIR);  the private PAIR 
system allows applicants access to  the entire file history of their applications, while the public PAIR 
system allows anyone, anywhere in the world, access to the entire file history and images of an application not covered by confidentiality laws. 
258. Few substantial modifications to U.S. pate nt law were introduced during the period under 
review.  Title VII of the Consolidated Appropria tions Act, 2005 (P.L. No. 108 -447) established patent 
and trade mark fees for FY 2005.  U.S. patent la w was amended to facilita te the patentability of 
inventions developed under joint agreements .  The Cooperative Research and Technology 
Enhancement (CREATE) Act of 2004 (P.L. No. 108- 453), provides that patentability is not precluded 
on the basis of obviousness where subject matter that qualifies as prior art is developed by a person 
different from the person claiming the invention, under certain conditions. 
259. Title XI of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 
(Access to Affordable Pharmaceutical s) introduced modifications to U.S. patent law to allow for more 
competition from generic drugs and lower prices of pharmaceuticals.  In particular, the Act amended 
the Federal Food, Drug, and Cosmetic Act to revise  provisions (the Hatch-Waxman Act) with respect 
to abbreviated new drug applications (ANDAs) to , among other things, accelerate their approval by 
the FDA, and require the ANDA applicant to su bmit a more detailed statement when filing a 
paragraph IV certification than previously mandated.   The Act creates the possibility for pharmacists 
and wholesalers to import prescription drugs from Cana da once regulations have been put in place, 
and for the granting of waivers of the prohibition of importation of a prescr iption drug or device to 
individuals for an approved prescription drug impor ted from Canada, under cert ain conditions.  As a 
result of the Act, the approval process for generi c products as well as the purchase of medication from 
less expensive sources, including imports, would be facilitated.  However, no regulation had been 
prepared as at October 2005, and no imports under the Act had taken place. 
260. In March 2005, the United States submitted to the TRIPS Council a communication with 
respect to the decision of 30 August 2003 on Implem entation of Paragraph 6 of the Doha Declaration 
on the TRIPS Agreement and Public Health.
291  The United States stated its support to the solution 
agreed in August 2003 that waived the export r estriction in TRIPS Article 31(f), under certain 
conditions, so medicines purchased under compulso ry licences could be supplied to countries that 
have insufficient or no manufacturing capacity for pharmaceuticals. 
261. In FY 2004, 376,810 patent applica tions were filed, and 187,170 patents were granted;  the 
average pendency period was 27.6 months.  Applica tions received and patents granted have continued 
to increase;  the figures for FY 2004 were respectiv ely, 62% and 52% higher than in FY 1997.  The 
share of patents issued by the USPTO to non-r esidents has continued to increase in recent years, 
although their share in total applications remains br oadly unchanged.  In FY 2004, non-U.S. resident 
inventors (mostly corporations) accounted for almo st 48% of all patents issued, up from 46% in 
FY 2001;  Japan (43% of total patents issued to foreigners) and Germany (13%), remained the top 
recipients.  Among the top ten recipients, reside nts of Chinese Taipei, and Korea have displayed 
substantial increases in recent years.  The top ten private-sector patent recipients in 2004 were four 
U.S, five Japanese, and one Korean corporations.292 
262. In its annual report, the USPTO has stat ed its focus on increasing patent quality.293  Patent 
quality is also one of the issues identified in a r ecent report by the Federal Trade Commission (FTC) 
                                                      
291 WTO document IP/C/W/444, 18 March 2005. 
292 USPTO online information:  http://www.uspto.gov/web/offi ces/com/speeches/05-03.htm. 
293 USPTO (2004). United States WT /TPR/S/160/Rev.1 
 Page 79 
 
 
reviewing the U.S. patent system.294  The FTC notes that the U.S. pa tent system for the most part 
achieves a proper balance with competition policy but th at participants in and observers of the patent 
system have expressed concerns with respect to pa tent quality and legal standards and procedures that 
inadvertently may have anti-competitive effects and increase costs.  To ad dress these issues, the FTC 
recommends, among other things:  new administrative procedures to allow post-grant review of and 
opposition to patents, enhancing th ird-party participation in pate nt re-examinations;  enacting 
legislation to specify that challenges to the valid ity of a patent are to be determined based on a 
"preponderance of the evidence";  improving certain le gal standards used to evaluate whether a patent 
is obvious;  considering possible ha rm to competition before extending the scope of patentable subject 
matter;  and enacting legislation to require publicatio n of all patent applications, including those filed 
only in the United States, 18 months after filing. 
263. The issue of patent quality is also ra ised by a National Academies report.295  While 
highlighting that the U.S. patent system has shown flexibility in accommodating new technologies, 
the report expresses concern about the quality of issued  patents, as well as the resources available to 
the USPTO to keep pace with change and the volume of  applications, features of U.S. law that inhibit 
the dissemination of information contained in pate nts and that raise the cost and uncertainty of 
litigation over patent validity and infringement, acc ess to patented research technologies for basic 
non-commercial research, and redundancies and incons istencies among national patent systems that 
raise the cost of global intellectual property protection. 
264. Under U.S. law, parallel imports  of goods containing patent a nd other protected intellectual 
property may be restricted by the holder of the right .  Under 35 U.S.C. 154(a), the patent grants "the 
right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the Un ited States."  In a recent case dealing with this 
matter, Fuji filed a complaint with the USITC alleging that 27 companies, including Jazz Photo, had infringed its 15 patents relating to disposable cameras.   A district court ruled that U.S. patent rights 
are not exhausted with respect to products that have  entered the market abroad.  In 2003, after nearly 
five years of litigation, Fuji Photo Film Co. won a US$25 million verdict in its bid to recover damages 
for patent infringement, as its patent rights were c onsidered not exhausted.  In January 2005, the U.S. 
Court of Appeals for the Federal Circuit affirmed the verdict.
296 
(c) Trade marks 
265. Trade mark protection in the United States arises  from the actual use of the mark.  Additional 
protection is provided by federal and state laws.  Fe deral registration is not required to establish rights 
to a mark, or to use it, but grants the holder additional rights in the mark, such as the legal 
presumption of ownership and the entitlement to use the mark in connection with the goods or 
services identified in the registration.  Federal re gistration of marks, which include trade marks, 
service marks, collective marks, and certification ma rks, is governed by the Trademark Act of 1946, 
as amended, and its implementing re gulations.  Applications for federal trade mark registration are 
filed with the USPTO;  registration is for an initial term of ten years, renewable indefinitely for ten-
year periods, provided statutory and regulatory requi rements are met.  Although it is not required that 
a trade mark be used commercially before an a pplication for federal registration is filed, the 
registration will be cancelled unless an affidavit of  use or acceptable non-use is provided between the 
fifth and sixth year following the date of registration. 
                                                      
294 Federal Trade Commission (2003). 
295 Merrill et al. (2004). 
296 United States Court of Appeals for the Federal Circuit, Opinions, Decisions and Orders, Docket 03-
1324, -1331 online information.  Available at:  http://fedcir.gov/opinions/03-1324.pdf. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 80 
 
 
266. Following implementation of the Madrid Protocol  in the United States in 2003, the owner of 
either a pending trade mark application or of a tr ade mark registration granted by the USPTO, who is 
either a U.S. national or resident, or has an  industrial or commercial establishment in the 
United States, may file an international appli cation with the USPTO.  The USPTO published new 
regulations in September 2003 to establish a process of  international trademar k registration under the 
Madrid Protocol Implementation Act.  Holders of international registrations based on U.S. 
registrations may request extensions of protection in other Madrid Protocol member states from the 
International Bureau of the WIPO or the USPT O.  The USPTO received 1,572 international 
applications and 4,822 requests for extension of  protection or subsequent designation from the 
International Bureau in the first 11 months of implementation of the Madrid Protocol.297 
267. Section 211 of the U.S. Omnibus Appropriations Ac t of 1998, which refers to the registration, 
renewal or enforcement in the United States of trade marks, trade names, and commercial names associated with confiscated assets in Cuba, was challenged in the WTO by the EU in July 1999.  The 
WTO DSB adopted the Appellate Body and panel repor ts, which found that parts of Section 211 were 
inconsistent with the national treatment and MFN obligations of the United States under the TRIPS 
Agreement, but rejected most of the EU's other claims.
298  In December 2004 the United States' period 
of implementation of the WTO's recommendations  and rulings was extended to 30 June 2005.299  On 
30 June 2005, the EU and the United States notifie d the WTO that they had reached an understanding 
with regard to the dispute, by which the EU woul d not at that stage request authorization from the 
DSB to suspend concessions or other obligations pursu ant to Article 22.2 of the DSU, but retained its 
right to do so at any future date;  the United Stat es would not seek to block this request, but retained 
the right to object to the level of suspension propos ed, or to claim that the principles and procedures 
set forth in Article 22.3 of the DSU had not been  followed, and to have the matter referred to 
arbitration under Article 22.6 of the DSU.300 
268. Trade mark registrations declined in FY 2004, compared with the previous two fiscal years, 
despite an increase in the number of applications ;  the number of active certificates of registration 
exceeded 1.2 million.  An increasingly larger num ber of applications we re handled through the 
Trademark Electronic Application System (TEAS):  in  FY 2004, 73% of trade ma rk applications were 
filed electronically. 
(d) Geographical indications 
269. The United States offers protection for geographical  indications (GIs), through its trade mark 
system, including collective marks and certification ma rks.  Protection for GIs, whether of domestic 
or foreign origin, is provided for all classes of goods.301 
270. In the negotiations under the TRIPS Agreement on the implementation of Article 23.4, the 
United States, together with other countries has submitted a proposal for a multilateral system for 
notification and registration of GIs for wines and spirits.302  A communication answering some 
questions with respect to this proposal was submitted in April 2004.303  The proposal suggests 
registration of all GIs for wines and spirits notified by participating Members in a searchable 
                                                      
297 USPTO (2004). 
298 WTO documents WT/DS176/R, 6 August 2001 and WT/DS176/ABR, 2 January 2002. 
299 WTO document WT/DS176/15, 21 December 2004. 
300 WTO document WT/DS176/16, 1 July 2005. 
301 USPTO online information.  Available at:  http://www.uspto.gov. 
302 WTO document IP/C/W/386, 8 November 2002. 
303 WTO document TN/IP/W/9, 13 April 2004. United States WT /TPR/S/160/Rev.1 
 Page 81 
 
 
database, available on the WTO Internet site, and updated as required.  Participation in the system 
would be voluntary. 
271. In September 2005, the United States and th e EC reached agreement on wine-making 
practices and labeling of wine, which, among other thi ngs, limits the use of certain semi-generic terms 
in the U.S. market and recognizes certain names of or igin in each other's market (section(2)(vii)(a)).  
The Agreement specifies, however, that the articles re ferring to names of origin and the use of certain 
terms on wine labels sold in the United States, "shall not be construed in and of themselves as 
defining intellectual property or as obligating the Parties to confer or recognize any intellectual 
property rights" (Article 12).304 
(e) Copyright 
272. Copyright is protected by federal law, under the Copyright Act of 1976, as amended 
(17 U.S.C.).  Regulations pertaining to copyright are codified in Code  of Federal Regulations, Title 37-
Patents, Trademarks, and Copyrights.  The United States grants automatic protection to copyrighted works, including software, from all WTO Members,  Berne Convention signatories, and others.  The 
term of copyright protection for works created afte r 1 January 1978 is the life of the author plus 
70 years;  for anonymous works, pseudonymous wo rks, and works made for hire, protection is 
95 years after publication, or 120 years from creation, whichever is the shorter.  The Copyright Office 
is the registry of claims to copyright, and administ ers the mandatory deposit provisions of the copyright 
law and the various compulsory licensing provisions of  the law.  Additionally, the Copyright Office and 
the Library of Congress administer the Copyright Arbitration Royalty Panels (CARPs), which meet to 
adjust rates and distribute royalties for statutory and compulsory licences. 
273. The United States is a member of the WI PO Copyright Treaty and Performance and 
Phonograms Treaty, implemented through the Digita l Millennium Copyright Act of 1998, and extends 
protection under U.S. law (since 2002) to works fr om foreign countries that have ratified these 
treaties.  The United States is a party to the Geneva Phonograms Convention, but not to the Rome 
Convention, as U.S. copyright law does not use the term "neighbouring rights" separate from 
copyright.  Hence, neighbouring rights are protected through the application of the U.S. Copyright 
Act.  However, public performance rights for sound r ecordings are limited, generally applying only to 
digital transmissions other than over-the-air broa dcasts.  Live musical performances are protected 
against unauthorized fixation by Federal law. 
274. The U.S. Copyright Act provides for several statutory licences and other remuneration for 
right-holders in the areas of cable and satellite re transmissions, mechanical reproductions of musical 
works, digital audio transmission services, and digi tal recording devices and media.  Rates and terms 
for the statutory licences and distribution of funds collected under them are set by voluntary negotiations between the interested parties or, un til May 2005, by a Copyright Arbitration Royalty 
Panel (CARP).  The Copyright Royalty and Di stribution Reform Act of 2004 (P.L. No. 108-419) 
replaced provisions authorizing and governing CARPs with provisions providing for the appointment 
of Copyright Royalty Judges (CRJs), and for adjudi cation of the CRJs royalty rates for compulsory 
licenses under the Copyright Act.  The Act requires the Librarian of Congress, after consultation with the Register of Copyrights, to appoint three CRJs, one of them as the Chief Copyright Royalty Judge.  
As at September 2005, these judges had not yet been appointed, but the authorities expected them to 
be appointed shortly;  an interim judge had been  appointed who would reta in his position until a final 
determination on the CRJs was made.  The provisi ons of the Act became effective on 30 May 2005. 
                                                     
 
304 Agreement between the United States and the Eu ropean Community on Trade in Wine.  Available 
at:  http://www.ustr.gov/assets/Document_Librar y/Fact_Sheets/2005/asset_upload_file917_8030.pdf. WT/TPR/S/160/Rev.1 Trade Policy Review 
Page 82 
 
 
275. The Artists' Rights and Theft Prevention Act of 2005 (ART Act), Title I of the Family 
Entertainment and Copyright Act of 2005 (Public La w No. 109-9), amended the U.S. Federal criminal 
code to prohibit the unauthorized, knowing use or a ttempted use of a video camera or similar device 
to transmit or make a copy of a copyrighted audiov isual work from a performance of such work in a 
movie theatre.  The Act also established criminal penalties for wilful copyright infringement by the 
distribution of a computer program, musical or audiovisual work, or sound recording being prepared for commercial distribution by making it knowingly available on a computer network accessible to members of the public for commercial distribution.  To protect works prior to their release, the Act 
directs the Register of Copyrights to issue regulatio ns to establish procedures for pre-registration of a 
work that is being prepared for commercial distri bution and has not been published.  The Copyright 
Office is currently preparing regulations to establis h a pre-registration procedure.  The Family Movie 
Act of 2005, Title II of P.L. Law No. 109-9, creates an exemption from copyright and trade mark infringement for the editing of limited portions of audio or video content of a motion picture for 
private home viewing from an authorized copy of the motion picture. 
(f) Enforcement activities 
276. In accordance with Section 182 of the Omni bus Trade and Competitiveness Act of 1988, 
19 U.S.C. § 2242 (Special 301) the USTR conducts  annual reviews examining the adequacy and 
effectiveness of intellectual property protection in foreign countries, and their effect on market access 
for U.S. persons.  The 2005 Special 301 exercise reviewed 90 countries.  The USTR identified 
14 trading partners on the Priority Watch List fo r intellectual property protection.  In addition, 
38 countries were placed on the Watch List.  On e country was identified as a Priority Foreign 
Country, and had its GSP benefits withdrawn, a nd two countries were designated for Section 306 
monitoring to ensure compliance with the commitment s of bilateral intellectual property agreements.  
In its 2005 review, the USTR devoted special at tention to the need for significantly improved 
enforcement against counterfeiting and piracy.  Th e USTR also conducts out-of-cycle reviews. 
277. Under Section 337 of the Tariff Act of 1930, cer tain unfair practices related to IPRs, unfair 
methods of competition, and unfair acts in the import ation and sale of products in the United States 
are considered unlawful import practices.
305  Section 337 investigations are initiated by the USITC;  
administrative law judges make an initial determination of whether there is an infringement/contravention of the law, which is then reviewed by the USITC.  If the USITC 
determines that a Section 337 violation exists, it can issue exclusion orders or cease and desist orders, 
or both.  Exclusion orders direct the U.S. Customs to bar entry into the United States of infringing 
goods from whatever source (general exclusion orde rs) or from specifically identified manufacturers, 
importers, and producers (limited exclusion orders).
306  The President may disapprove a USITC order 
within 60 days of its issuance. 
278. Between 1 January 2003 and 30 Ap ril 2005, 54 new Section 337 i nvestigations were initiated;  
47 investigations involved allegati ons of patent infringement.  Inv estigations covered products from 
27 trading partners.307  Many investigations involved more th an one partner.  Investigations are 
generally terminated within 15 months from the date  of initiation.  By 30 April 2005, 22 of these 
cases had been completed and 32 were pending.  Among completed cases, in several instances the 
complaints were withdrawn, a consent order was issu ed, or a settlement was reached.  In 2004 and the 
first four months of 2005, the USITC issued si x limited exclusion orders, together with cease and 
                                                      
305 The infringement of a registered U.S. patent, U.S. copyright, trade mark, or mask work, or of a boat 
hull design are considered unlawful import practices per se;  there is no injury determination requirement. 
306 USITC (2004b). 
307 Further information is available online a t:  http://info.usitc.gov/ ouii/public/337inv.nsf. United States WT /TPR/S/160/Rev.1 
 Page 83 
 
 
desist orders in three investigation.308  There are 61 outstanding exclus ion orders, affecting imports 
from a range of products, mostly machinery and e quipment, but also some durable consumer goods, 
glasses, soft drinks, and cigarettes. 
279. The Intellectual Property Protection and Courts  Amendments Act of 2004 (P.L. No. 108-482), 
amended federal criminal code provisions regarding traffick ing in counterfeit labels.  The Act 
prohibits knowingly trafficking in  a counterfeit or illicit label affi xed to an audiovisual work, a 
computer program, literary work, or pictorial, gra phic, or sculptural work, and provides for forfeiture 
or destruction of illicit, as well as counterfeit, labels and of  any equipment, device, or material used to 
manufacture, reproduce, or assemble th e counterfeit labels or illicit labels. 
                                                      
308 Imports were subject to the deposit of a bond equivalent to 100% of their value awaiting 
Presidential review.  USITC online information.  Ava ilable at:  http://info.usitc.gov/ouii/public/337inv.nsf/ 
RemOrd/505/$File/337-TA-505.pdf?Open Element.