RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/160 
15 February 2006  
 
(06-0579) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
UNITED STATES 
 
 
  
 
This report, prepared for the eighth Trade Policy Review of the United States, 
has been drawn up by the WTO Secretariat on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from the United States on its 
trade policies and practices. 
 
Any technical questions arising from this  report may be addressed to Mr. Angelo 
Silvy (tel. 022 739 5249), Mr. Karsten Steinfatt (tel. 022 739 6759), and 
Mr. Raymundo Valdés (tel. 022 739 5346). 
 
Document WT/TPR/G/160 contains the policy statement submitted by the 
United States. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
 session of the meeting of the Trade Polic y Review Body on the United States. United States WT/TPR/S/160 
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CONTENTS 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC DEVELOPMENTS  vii 
 (2) T RADE POLICY DEVELOPMENTS  vii 
 (3) M ARKET ACCESS IN GOODS  viii 
 (4) E XPORT MEASURES  ix 
 (5) O THER MEASURES AFFECTING TRADE  x 
 (6) A CCESS CONDITIONS IN SERVICES  xi 
I. RECENT ECONOMIC DEVELOPMENTS 1 
 (1) O VERVIEW  1 
 (2) O UTPUT AND EMPLOYMENT  1 
 (3) M ONETARY AND EXCHANGE RATE POLICIES  3 
 (4) F ISCAL POLICY  4 
 (5) B ALANCE OF PAYMENTS  7 
 (6) D EVELOPMENTS ON TRADE AND INVESTMENT  10 
 (i) Merchandise trade 10 
 (ii) Trade in services 10 
 (iii) Foreign direct investment 11 
 (7) O UTLOOK  12 
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY 13 
 (1) O VERVIEW  13 
 (2) I NSTITUTIONAL AND POLICY FRAMEWORK  13 
 (i) Institutions and recent changes 13  (ii) Policy objectives 14 
 (iii) Legislative developments 15 
 (3) P
ARTICIPATION IN THE WTO 15 
 (4) P REFERENTIAL AND OTHER ARRANGEMENTS  16 
 (i) Introduction 16 
 (ii) Free-trade agreements 17  (iii) Unilateral preferences and other trade arrangements 20 
 (5) F
OREIGN INVESTMENT REGIME  22 
III. TRADE POLICIES AND PRACTICES BY MEASURE 24 
 (1) O VERVIEW  24 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  25 
 (i) Customs procedures and rules of origin 25  (ii) Tariffs 30 
 (iii) Other charges affecting imports 35 
 (iv) Anti-dumping and countervailing actions 36 
 (v) Safeguards 44 
 WT/TPR/S/160 Trade Policy Review 
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  Page 
 (vi) Quantitative restrictions and controls 47 
 (vii) Standards and technical regulations 48 
 (viii) Sanitary and phytosanitary measures 54  (ix) Trade-related environmental regulations 58 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  60 
 (i) Export restrictions and controls 60  (ii) Section 301 and related actions 62 
 (iii) Export assistance 62 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  64 
 (i) Other government support including subsidies 64 
 (ii) Competition policy 67  (iii) Government procurement 71 
 (iv) Trade related intellectual property rights 76 
IV. TRADE POLICIES BY SECTOR 84 
 (1) O
VERVIEW  84 
 (2) A GRICULTURE  85 
 (i) Legal framework and overall support 85  (ii) Border measures 87 
 (iii) Domestic programmes 88 
 (iv) Export subsidies, credit, insurance, and guarantees 92  (v) Food aid 93 
 (3) F
INANCIAL SERVICES  94 
 (i) Recent market developments 94  (ii) Legislative and regulatory framework 95 
 (4) T
ELECOMMUNICATION SERVICES  102 
 (i) Institutional framework and market access 102  (ii) Selected regulatory issues 104 
 (5) M
ARITIME TRANSPORT  108 
 (i) Main features and competition policy considerations 108 
 (ii) Domestic water-borne trade 108 
 (iii) International water-borne trade 109  (iv) Port services 111 
 (v) Shipbuilding and ship repairs 112 
 (6) A
IR TRANSPORT SERVICES  113 
 (i) Main features 113 
 (ii) Regulatory framework 114 
 (iii) International agreements 115 
REFERENCES   117 
APPENDIX TABLES  123 
 United States WT/TPR/S/160 
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CHARTS 
 
  Page 
I. RECENT ECONOMIC DEVELOPMENTS  
I.1 Fiscal accounts,1991-04 5 
I.2 Current account of the balance of payments, 1991-04 8  
IV. TRADE POLICIES BY SECTOR 
 IV.1 Government payments to agricultural producers, 1993-05 86 
 
TABLES 
 
I. RECENT ECONOMIC DEVELOPMENTS 
 I.1 Selected macroeconomi c indicators, 1998-05 2 
I.2 Selected monetary and exchange rate indicators,
 1998-05 4 
I.3 Selected fiscal indicators, FY 1998-05 6 
I.4 Current and capita l accounts, 1998-05 8 
 III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Requirements for the advance transmission of electronic cargo information 27 III.2 Structure of the tariff schedule of the United States, 1998-04 32 
III.3 Anti-dumping investigations, 1980-04 39 
III.4 Countervailing duty investigations, 1980-04 41 III.5 Trade concerns raised regarding U.S. SPS measures, 2005 54 
III.6 Ex-Im bank loan, guarantee,  and insurance activities, 1999-04 63 
III.7 Federal programmes notified to the WTO, fiscal year 2002 65  
IV. TRADE POLICIES BY SECTOR 
 IV.1 Government payments, 2001-05 89 
APPENDIX TABLES 
 
I. RECENT ECONOMIC DEVELOPMENTS 
 
AI.1 Merchandise exports and re-exports by group of products, 1998-04 125 
AI.2 Merchandise imports by group of products, 1998-04 126 
AI.3 Merchandise exports and re-exports by trading partner, 1998-04 128 AI.4 Merchandise imports by trading partner, 1998-04 129 
AI.5 Cross-border trade in services, 2000-04 130 
AI.6 Major indicators of U.S. inbound and outbound direct investment by selected  country and sector, 2004 131 
 
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY  
AII.1 Status of dispute-related WTO matters involving the United States, July 2003 to October 2005 132 
AII.2 Notifications under WTO Agreements, July 2003 to October 2005 135 WT/TPR/S/160 Trade Policy Review 
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  Page 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 AIII.1 Preferential rules of origin 137 
AIII.2 Summary analysis of the U.S. MFN tariff, 2004 138 
AIII.3. Summary analysis of U.S. tariffs u nder selected preferential agreements, 2004 139 
AIII.4 TBT provisions of selected U.S. bilateral free-trade agreements, 2005 140 
 
IV. TRADE POLICIES BY SECTOR  
AIV.1 Products covered by tariff quotas, 2004 141 
 
 United States WT/TPR/S/160 
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SUMMARY OBSERVATIONS 
1. The United States has undergone solid 
economic growth since its last Trade Policy Review in early 2004.  This has been aided by 
the openness and transparency of its trade 
regime, which has supported the continuous drive for change and efficiency characteristic of the U.S. economy as a whole.  During the period under review, the United States made 
incremental changes to its trade regime, 
including liberalization on an MFN and preferential bases.  Trading partners benefited as the United States remained the world's largest single importer and a key engine of global growth.  Nonetheless, market access 
barriers and other distorting measures, 
notably subsidies, persist in a few but important areas.  Addressing these distortions would benefit U.S. consumers and taxpayers, and help strengthen the global economy. 
(1) E
CONOMIC DEVELOPMENTS  
2. Since the last Review of the 
United States in early 2004, accommodative fiscal and monetary policies have supported the solid performance of  its economy.  Imports 
have helped to keep U.S. prices down in a 
context of strong private consumption, while 
large inflows of foreign capital have financed wide current account deficits.  However, in the context of wide fiscal and current account deficits, a low savings rate, and signs of 
overheating in the housing market, the 
authorities have more recently adopted measures to curtail spending and tighten monetary policy. 
3. The United States is the world's 
largest import market and its economy has 
continued to support global growth by maintaining its market la rgely open.  In turn, 
this openness is one of the factors that foster U.S. growth, as it allows U.S. producers and consumers to access required goods, services, 
and capital from abroad at the best conditions.  
It is therefore important to maintain this openness by pre-empting possible protectionist sentiment.  Achieving this may require efforts in the United States, including through a reduction in public sector absorption, and in 
the rest of the world, through increased spending. 
(2) T
RADE POLICY DEVELOPMENTS  
4. The United States continues to pursue 
a policy of advancing open markets and the rule of law, as part of a broader global security objective.  In this context, the United States places the multilateral trading 
system at the core of its international trade 
relations.  Multilateral trade negotiations are a stated priority of the Administration, in particular, the successful completion of the Doha Development Agenda before the end of 2006.  The United States has made a large 
number of proposals in various committees 
and other bodies, and participates actively in the dispute settlement system.  In this respect, it has made progress in implementing several WTO rulings calling for changes to U.S. 
legislation but a few rulings have not yet been 
fully implemented. 
5. The Administration views the Trade 
Promotion Authority (TPA), a successor to 
"fast-track" authority, as an essential instrument in attaining its trade objectives;  in 2005 it requested and obtained the extension of this authority.  The TPA legislation brings greater predictability to U.S. trade 
negotiations while promoting a wide array of 
U.S. objectives.  The expiry of TPA thus represents an important future milestone in the U.S. trade agenda:  Congress must be advised of the range of proposals advanced in the 
negotiations that may be in the final 
agreement and could require changes in trade legislation 180 days before signature (by 31 December 2006), and of the Administration's intention to sign any new 
agreement under TPA by 1 April 2007 at the 
latest.  Any agreement must be signed by the United States before TPA expires on 1 July 2007.
 
6. The United States pursues a strategy 
of trade liberalization through negotiations at 
the multilateral, regional,  and bilateral levels.  
In pursuit of this strategy, the United States WT/TPR/S/160 Trade Policy Review 
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has increased the number of countries with 
which it has concluded free-trade agreements (FTAs), from three at the start of the current Administration in early 2001 to 15 by 
late 2005.  Of these, six FTAs had been 
implemented:  with Israel, NAFTA, Jordan, Chile, Singapore, and Australia.  As of January 2006, agreements with 12 other countries were being negotiated.  The 
United States considers that FTAs are a step 
toward, and may help advance, multilateral liberalization.  However, the increasing number of FTAs in which the United States participates raises concerns about administrative resources being distracted 
away from the multilateral system, trade or 
investment diversion, and interests being created that could complicate multilateral negotiations. 
7. The United States grants unilateral 
preferences to developing countries under a 
number of schemes;  these preferences may be conditional on compliance with various U.S. policy objectives.  In February 2005, the United States requested waivers in the WTO for three of its preference schemes (AGOA, 
ATPA, and CBERA).  In late 2005, the matter 
was under discussion in the Council on Trade in Goods. 
(3) M
ARKET ACCESS IN GOODS  
8. 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.  The new 
regulations implement requirements to, among 
other things:  transmit information pertaining to U.S.-bound cargo prior to departure;  notify the Food and Drug Administration of all U.S.-bound food consignments;  and register food manufacturing and handling facilities 
that export to the United States.  An 
assessment of the economic impact of the new regulations would be valuable to ascertain their actual costs and benefits. 9. The United States accords MFN tariff 
treatment to all but one WTO Member (Cuba).  All except two tariff lines are bound.  Applied MFN tariffs are at the bound rates, lending 
predictability to the U.S. tariff regime.  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;  in both 2004 and 2005 
the average rate excluding AVEs, was 4.2%.  
Close to 38% of all tariff items entered the United States duty free in 2004, compared with 31% in 2002.  The average applied MFN tariff on agricultural products was 9.7%, compared with 4.0% on other products.  
Tobacco, whey, sour cream, peanuts, and 
footwear, among others receive tariff protection in the 50-350% range.  The share of non-ad valorem tariffs declined to 10.6% in 2004.  Tariff quotas cover around 2% of all 
tariff lines.  High out-of-quota tariffs are one 
of the main forms of import protection for certain agricultural prod ucts.  Imports are 
subject to additional charges including a merchandise processing fee and a fee on port use, both ad valorem. 
10. Additional tariff preferences became 
effective during the period under review as a result of the entry in force of FTAs with Australia, Chile, and Singapore.  The United States did not exclude any product 
from tariff elimination in the context of the 
FTAs with Chile and Singapore;  its FTA with Australia excluded a small number of goods from tariff elimination, such as dairy and sugar products.  The different origin 
requirements contained in these and other 
U.S. FTAs add complexity to the trade regime. 
11. Most non-tariff 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. 
12. Anti-dumping (AD) duties continue to 
be an important, albeit declining, measure applied on certain imports into the 
United States, and to generate an element of United States WT/TPR/S/160 
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uncertainty for foreign exporters.  As at 
June 2005, 274 AD measures were in force, affecting mainly iron and steel, 
chemicals,  pharmaceuticals, agricultural, and 
forestry  products.  However, anti-dumping 
investigation initiations decreased in 2004 and 
the first half of 2005.  This should mitigate concerns that investigation initiations may affect exporters to the U.S. market, as most 
investigation initiations involve the imposition 
of preliminary duties.  Moreover, the trade coverage of AD duties has been declining in recent years:  investigations initiated in 2002 and 2003 covered an import value of some 0.1% of total U.S. imports in each year, 
compared with 0.85% of imports for initiations 
in 2001.  U.S. exporters are the target of about 55 AD measures imposed in some 13 foreign markets. 
13. Certain U.S. AD and countervailing 
(CV) rules and methods have been found 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.  Another case concerns the Continued Dumping and Subsidy 
Offset Act of 2000, also known as the 
Byrd Amendment, which channels proceeds from AD and CV duties to successful petitioners and resulted in the disbursement of over US$1 billion betw een 2001 and 2004, 
about half of which went to five companies.  
By early February 2006, legislation to repeal the Byrd Amendment had been passed by both houses in Congress, and was awaiting signature by the President, which was 
expected at an early date. 
14. The United States notified to the WTO 
the termination in December 2003, over a year ahead of expiry, of the safeguard measures on ten steel products, which the DSB had found inconsistent with WTO rules.  Since then, the 
United States has introduced no general 
safeguard measures.  However, under the safeguard mechanism for textiles and clothing contained in the Report of the Working Party on the Accession of China, in 2005 the 
United States applied transitional safeguards 
on certain textiles and clothing products from China.  In November 2005, the United States and China reached an understanding with 
respect to the application of increasing yearly quotas on Chinese exports to the U.S. market  
covering various textiles and clothing products 
during 2006-08. 
15. Technical regulations, standards, and 
sanitary and phytosanitary measures play an important role in ensuring safety and quality.  Some WTO Members have raised concerns 
about specific U.S. technical regulations and 
sanitary and phytosanitary measures, but none have been followed by formal dispute settlement.  There is no information on the extent to which U.S. (voluntary) standards are based on standards developed by international 
organizations. 
(4) E
XPORT MEASURES  
16. A central objective of U.S. trade 
policy is to expand markets for U.S. exporters.  In this respect, trade statutes such as the 
Section 301 family of laws are aimed at 
monitoring foreign measures that may affect U.S. exports or impair U.S. rights under trade agreements.  The application of these statutes to WTO Members must conform with WTO dispute settlement provisions in areas covered 
by multilateral rules. 
17. A number of export assistance 
schemes are in place.  The United States provides insurance and export financing through its official export credit agency (the 
Export-Import Bank).  A duty drawback 
programme is in place.  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 
that the new legislation failed to implement fully previous WTO rulings on U.S. tax provisions. 
18. Export restrictions and controls are 
maintained for national security or foreign 
policy purposes, or to ensure sufficient 
domestic supply.  Exports controls can result from U.S. domestic policy decisions or U.S. participation in non-binding export control regimes, as well as in the context of WT/TPR/S/160 Trade Policy Review 
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United Nations embargoes.  During the period 
under review, the level of controls on  
commercial exports to Iraq was reduced, licensing requirements for the export of some 
items to Bulgaria, Estonia, Latvia, Lithuania, 
Romania, Slovakia, and Slovenia were terminated, and controls on exports to Cuba and Syria were tightened. 
(5) O
THER MEASURES AFFECTING 
 T RADE  
19. As the United States is among the 
world's largest producers, exporters, and importers, domestic su pport although not 
targeted at exports may significantly affect trade.  Assistance to domestic producers takes 
the form of federal and sub-federal tax 
exemptions, financial outlays, and credit programmes.  In its latest notification to WTO, in October 2003, the United States listed 45 federal and 330 sub-federal programmes 
providing subsidies.  The agriculture and 
energy sectors received the largest number of notified federal subsidy programmes.  During the period under review, the American Jobs Creation Act of 2004 introduced tax deductions, including a one-time tax break to 
U.S. companies that repatriate foreign 
earnings.  Assistance to business is also available through the Trade Adjustment Assistance for Firms programme, part of a broader scheme that provides assistance to 
businesses, workers, and farmers adversely 
affected by import competition. 
20. In agriculture, overall government 
support is well below the OECD average.  Government payments to agricultural 
producers as a share of net farm income fell 
from 48% in 2000 to 16% in 2004.  This decline occurred despite  an increase in the 
share in total government payments of counter-cyclical and loan programme payments since the enactment of the Farm 
Security and Rural Investment Act of 2002.  
Under both programmes, assistance increases when prices fall;  some of this assistance may 
affect international trade when supported output finds its way into markets.  Ad hoc 
emergency payments supplement other 
government payments and government-sponsored crop insurance.  Certain imported 
agricultural products must meet quality and other requirements comparable to those established for domestic products under 
marketing orders. 
21. In July 2005, the Department of 
Agriculture announced that it had sent to Congress proposed statutory changes to comply with the panel and Appellate Body 
decisions on the WTO compatibility of a 
number of U.S. agricultural support measures for upland cotton.  The Department of Agriculture also announced that from 2005 it would use a "risk-based fee structure" in its export credit guarantee programmes, in 
response to a finding by the WTO that such 
programmes had been provided at premium rates.  In early February 2006, Congress passed legislation eliminating the Step 2 export subsidies on upland cotton effective 
1 August 2006.  The P resident was expected to 
sign this legislation into law forthwith. 
22. Competition policy enforcement has 
remained focused on the activities of international cartels.   Other areas addressed 
by the antitrust agencies include 
anticompetitive mergers and non-merger 
enforcement in key sectors, such as health care and energy.  Changes to competition policy legislation, including penalties for violating the Sherman Act, took effect in 2004.  
The U.S. economy's good performance has 
been linked to regulatory reform efforts in a broad range of industries, but it has also been noted that competition policy could be improved by eliminating antirust exemptions, 
enhancing competition at the sectoral level 
and clarifying assignments of responsibility among different enforcement officials. 
23. U.S. policy with respect to market 
access for government procurement is to grant reciprocal national treatment.  The 
United States participates in the WTO 
plurilateral Agreement on Government Procurement (GPA), which covers a substantial share of the procurement at the federal level.  The Un ited States maintains a 
number of domestic purchasing requirements 
for procurement not covered by the GPA, United States WT/TPR/S/160 
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NAFTA, the WTO plurilateral Agreement on 
Trade in Civil Aircraft, and FTAs that cover government procurement.  For example, the Buy American Act restricts the purchase of 
supplies and construction materials by 
government agencies to those defined as "domestic end-products", in accordance with a two-part test that must establish that the article is manufactured in the United States, 
and that the cost of domestic  components 
exceeds 50% of the cost of all the components.  The Trade Agreements Act of 1979 waives the application of the Buy American Act to the end-products of designated countries, which now include the parties to the previously 
mentioned agreements, CBERA beneficiaries 
and least developed countries.  U.S. procurement policy also seeks to increase the participation of small and other businesses through set-asides and other preference 
programmes.  Some States apply domestic or 
State-specific preferences. 
24. The United States is a major producer 
of goods and services that embody knowledge and other intellectual developments.  It is committed to a policy of promoting increased 
IPR protection, and is advancing this 
protection through a variety of mechanisms, including FTAs, intellectual property agreements, and memoranda of understanding.  Various regulatory changes 
took place during the period under review, 
particularly in the areas of patents, trade marks, copyright, and enforcement.  The U.S. Patent Office is implementing a programme to expand the quality review of patent 
applications, among other things.  The 
United States has yet to implement the DSB ruling with respect to Section 211 of the U.S. Omnibus Appropriations Act of 1998. 
25. The United States maintains a liberal 
foreign investment regime, providing generally 
open market access and national treatment, 
with some sector-specific restrictions, such as in energy, mining, and fishing as well as air, maritime, and financial services.  The few restrictions to national treatment apply in 
areas such as official support programmes.  
Also in a limited number of cases, foreign direct investment is subject to reporting requirements or review to take account of 
national security concerns. 
(6) A
CCESS CONDITIONS IN SERVICES  
26. There have been only relatively minor 
changes in U.S. legislation with respect to  
financial services since the last Review of the United States.  Among the changes, a new rating system became effective on 1 January 2005 to enhance the supervision of 
financial conglomerates that include a bank.  
The United States grants, in general terms, open market access and national treatment to foreign banks.  In insurance, firms are regulated primarily at the State level, but steps towards uniformization have continued. 
27. The U.S. telecommunications market 
is open to foreign participation and highly competitive.  In December 2004, the Federal Communications Commission adopted new regulations that redefine the extent to 
which incumbent firms are required to make 
elements of their network available to other carriers. 
28. No significant policy or legislative 
changes have taken place with respect to maritime transport since 2004.  The Jones Act 
reserves cargo service between two points in 
the United States for ships that are registered and built in the United States and owned by a U.S. corporation, and on which 75% of the employees are U.S. citizens.  Domestic 
passenger services are subject to similar 
requirements.  The U.S. international maritime transport market is generally open to foreign competition although some cargo preferences are in place;  most international maritime 
transport takes place in foreign vessels. 
29. There have been no significant 
legislative changes with respect to the air transport sector.  Market access restrictions remain in the form of U.S. ownership and control requirements.  The provision of 
domestic air services is permitted only by U.S. 
carriers.  The Fly America Act requires government-financed transportation to be, in principle, on U.S.-flag air carriers.  Financial problems have continued to affect several U.S. 
airlines.