WT/TPR/S/235/Rev.1 Trade Policy Review 
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IV. DEVELOPMENTS IN SELECTED SECTORS 
(1) AGRICULTURE  
(i) Agriculture production 
1. Agriculture production contributed slightly less than 0.8% to U.S. GDP in 2009 while total 
employment in the sector was about 1.4% of the civilian labour force.  Agriculture products 
represented 6% of total exports and about 3% of total imports.  Thus, agriculture is an important part 
of the U.S. economy and, for some individual states, it is one of the main economic activities. 
2. The value of agricultural production in the United States increased from US$195 billion in 
crop year 2002 to US$311 billion in 2007 as a result of high commodity prices and increased 
production.1  It declined to about US$287 billion in 2009 as a result of lower international prices.  The 
United States is the world's biggest producer of  several agriculture products including soybeans, 
maize, beef, chicken meat, and milk.  It is also th e second or third biggest producer of barley, wheat, 
sugar beet, and several fruits and vegetables.2  Although a wide range of products are produced, five 
commodities contributed more than half of the total value of production (Table IV.1). 
Table IV.1 
Value of production, 2007-09 
(US$ million and %) 
 2007 % 2008 % 2009 % 
Total value of production (at farm gate) 311,228 100 315,597 100 287,022 100 
of which:     
Maize 54,667 17.6 49,313 15.6 48,489 16.9 
Dairy products 35,666 11.5 34,977 11.1 24,200 8.4 
Cattle and calves 35,973 11.6 34,859 11. 0 30,757 10.7 
Soybeans 26,974 8.7 29,458 9.3 31,760 11.1 
Broilers 21,514 6.9 23,112 7.3 21,677 7.6 
Hay 16,842 5.4 18,639 5.9 14,990 5.2 
Wheat 13,289 4.3 16,626 5.3 10,626 3.7 
 
Note: Figures for 2009 are estimates. 
 
Source : U.S. Census Bureau (2009), The 2010 Statistical Abstract, The National Data Book .  Viewed at:  
http://www.census.gov/compendia/statab/cats/agriculture.htm l, except for total value of production, reported by 
the authorities and based on National Agricultural Statistics Service (NASS) data, and ERS cash receipts data for 
commodities not available from NASS. 
3. The United States is the world's largest exporter of  agriculture products and one of the biggest 
importers and consumers.  For a number of produ cts, a large proportion of production is exported, 
representing a large proportion of world trade (Table  IV.2).  Because the United States accounts for a 
significant share of the global market for a number of agriculture products, the measures it takes that 
support production and trade can affect world prices and, thus, international trade.  The authorities 
pointed out that import measures, such as high tariffs, taken by other countries that account for a significant share of world consumption, can have similar effects on world prices and markets. 
                                                     
 
1 Crop year varies from one commodity to another. 
2 Online data from FAOStat.  Viewed at:  http://f aostat.fao.org/site/339/default.aspx [July 2010]. United States WT /TPR/S/235/Rev.1 
 Page 81 
 
 
Table IV.2 
Production and exports of selected commodities, selected years 
(Million tonnes unless otherwise stated) 
 2005 2008 2009 
 
Prod. Exports % of world 
exports Prod. Exports % of 
world 
exports Prod. Export % of 
world 
exports 
Wheat 57.0 27.4 24.1 68.0 27.6 19.3 60.3 23.5 18.8 
Maize 282.0 56.1 67.9 307.1 47.2 55.9 333.5 48.3 56.1 
Soybeans 84.0 25.6 40.1 80.8 34.9 44.4 91.4 39.3 47.7 
Rice, milled basis 7.1 3.9 13. 2 6.5 3.0 10.4 7.0 3.3 11.0 
Cotton (million bales) 19.2 13.7 35.5 12.8 13.3 44.1 12.2 12 35.1 
 
Source:  World Agriculture Supply and De mand Estimates, USDA, April 2010. 
(ii) Agriculture policies 
4. Most agriculture policies in the United States are set out in the Food, Conservation, and 
Energy Act of 2008, which authorizes agricultural programmes for 2008-2013.3  There is a large body 
of legislation underlying the Farm Act, much of which is incorporated into it.  Some of the 
programmes have their roots in legislation going back many years, although they have evolved 
significantly over time and new programmes have  been introduced, existing ones amended or 
dropped. 
5. The Farm Act of 2008, like its predecessor, w as prepared and passed in Congress.  In 2008, 
passage of the Farm Act had to overcome two Pres idential vetoes.  The current law provides for a 
series of wide-ranging policies that cover almost al l agriculture production but with very different 
programmes in different areas, not all of which provi de support to producers.  The Act, like previous 
Farm Acts, has a limited duration.  In theory, if a new Act is not passed before the current one expires 
(in 2013) the legislation reverts to the permanent le gislation, most of which is in the Agricultural 
Adjustment Act of 1938, the Agriculture Act of 1949, and the Commodity Credit Corporation Charter 
Act of 1948.  However, in the past, the existi ng Act has been extended in these circumstances. 
6. In many respects, the 2008 Farm Act is divide d into a number of Titles, which set out the 
programmes run by the USDA and other government agencies.  It covers more than support to 
agriculture:  the largest budgetary outlays are domestic food aid programmes. 
7. What follows is a summary of the main Titl es of the Farm Act, including other relevant 
information under the same heading. 
(a) Title I (Commodity Programs) 
Direct payments 
8. Farms that used to produce cereals, cotton, p eanuts and oilseeds are eligible for Direct 
Payments, which are based on historic planting and yields and are decoupled from current production 
and prices.  The 2008 Farm Act lowered payments to 83.3% of base acres for 2009-2011 from 85% in 
the 2002 Act.  However, the payment rates remain the same.  (Table AIV.2) 
                                                      
3 The Farm Act of 2008.  Viewed at:  http:// frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname= 
110_cong_bills&docid=f:h2419enr.txt.pdf [February 2010]. WT/TPR/S/235/Rev.1 Trade Policy Review 
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Marketing assistance loans and loan deficiency payments 
9. Marketing assistance loans are available from the Commodity Credit Corporation (CCC) to 
eligible producers of the covered commodities.4  After harvest, a producer may obtain a marketing 
loan from the CCC equal to the loan rate multiplie d by the quantity produced.  The loan may be 
redeemed by:  repaying the capital plus interest (generally set at 1 percentage point above the 
U.S. Treasury borrowing rate);  or, when market pr ices are below the loan rate, transferring ownership 
of the crop to the CCC or repaying at a loan repaymen t rate based on local (county) market prices.  As 
an alternative to taking out a marketing assistance loan, a producer may receive a loan deficiency 
payment based on the difference between the loan rate  and market prices.  The loan rates in the 2008 
Farm Act were the same as in the previous Act with increases and decreases for some products set for 
2009-12.  For seed and high-moisture-content maize, lo ans cannot be repaid by transferring ownership 
of the crop.  For upland cotton, the repayment rate is based on world market prices rather than local 
prices (Table AIV.3). 
Counter-cyclical payments program 
10. Counter-Cyclical Payments are based on historical production and the difference between a 
target price and the "effective" price (based on cu rrent market prices).  The target price for each 
eligible commodity is set out in the Farm Act (T able AIV.4) and are the same as those set by the 
previous Act for 2004-07, except for upland cotton w hose target price was set slightly lower.  For 
2010-12, most rates were set at the same level excep t for wheat and oats, whic h were increased.  The 
2008 Farm Act extended the crops covered by Count er-Cyclical Payments Program to include dry 
peas, lentils, and chickpeas.  Although these paymen ts are based on prices, current production of the 
covered crop, or any other crop, is not required for payment and the size of the payment is not 
affected by current production of any crop. 
11. The payment rate for counter-cyclical payments is the target price minus the direct payment 
rate minus the higher of the loan rate or the market  price.  The payment rate is then multiplied by the 
historical yield and historical acreage to give the total payment due to the producer.5 
Sugar 
12. Sugar qualifies for non-recourse loans, i.e. processo rs may borrow at the loan rate set out in 
the Farm Act and redeem the loan by repayment or  by forfeiting the crop to the CCC.  The processors 
are required by law to pay producers at a rate proporti onal to the value of the loan.  In addition, sugar 
is subject to annually determined marketing allotm ents, which potentially restrict marketing and are 
meant to prevent sugar being transferred to the CCC in  forfeit.  The Secretary of Agriculture may also 
purchase sugar intended for food use and sell it to bioe nergy producers although, in practice, this has 
not happened. 
                                                      
4 The covered commodities are wheat, maize, grain sorghum, barley, oats, upland cotton, extra-long 
staple cotton, rice, peanuts, soybeans, other oilseeds, dry peas, lentils, chickpeas, wool, mohair, honey, sugar 
beet, and sugar cane.  To be eligible for marketing a ssistance loans and loan deficiency payments, a producer 
must comply with conservation and wetland protection requirements, report how they use their cropland, have 
beneficial interest in the commodity, and ensure the commodities meet minimum grade and quality standards 
(see:  http://www.fsa.usda.gov/FSA/newsReleases?area=newsroom&subject=landing&topic=pfs&newstype= prfactsheet&type=detail&item=pf_20070601_farln_en_nonrecmkt.html [July 2010]). 
5 For example, for wheat, assuming the loan rate is hi gher than the market pri ce, the counter-cyclical 
payment rate for 2008-09 would be:  US$144.04 - US$19.11 - US$101.05 = US$23.88/tonne of eligible historical production. United States WT /TPR/S/235/Rev.1 
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13. Under the Refined Sugar Re-Export Program a company may obtain a licence to import sugar 
duty-free for refining and export, or to import raw sugar to replace domestically produced refined 
sugar that has been exported.  Under the S ugar Containing Products Re-Export Program, a 
manufacturer of products that contain sugar can im port sugar duty free for use in products to be 
exported.  The Polyhydric Alcohol Program allows  manufacturers of polyhydric alcohol to buy duty-
free sugar from licensed refiners for use in th e production of polyhydric alcohol for non-human 
consumption.  See Table IV.3 for total exports  of refined sugar and sugar-containing products. 
Table IV.3 
Exports of sugar and sugar-containing products, 2005-09 
(Tonnes) 
 Sugar-containing products Refined sugar 
2005 145,337 162,450 
2006 157,571 197,735 
2007 162,259 322,065 
2008 144,932 200,698 
2009 154,264 137,553 
 
Source: Data provided by the U.S. authorities. 
Average crop revenue election (ACRE) program 
14. The 2008 Farm Act introduced the Average Crop Revenue Election (ACRE) Program as an 
option to counter-cyclical payments.  ACRE Program payments are also counter-cyclical but based on 
revenue (State yields and market prices compared to  historic yields and prices).  Opting for the ACRE 
Program means Direct Payments ar e reduced by 20% and loan rates by 30%.  A total of 128,620 
farms (7.7% of total enrolled farms) have signe d up 32,528,628 acres (12.8% of total base acres). 
Economic assistance to cotton users 
15. The Economic Adjustment Assi stance Program provides a paym ent to domestic users of 
upland cotton from any source for specified uses, including modernizing plants or equipment.  
Domestic users and exporters of extra-long staple cotton also receive payments when world market 
prices fall for four consecutive weeks below U.S.  prices and below 134% of the loan rate for 
extra-long staple cotton. 
Dairy 
16. The dairy sector is supported by several programmes that differ markedly from other support 
programmes under Title I of the Farm Act of 2008.  Price support is provided through purchase prices 
set out in the Act;  the CCC "will buy butter, cheddar cheese, and non-fat dry milk offered to it" at the 
prices set out in the 2008 Farm Act.6  These purchases may be resold and, in 2009 a nd 2010, the CCC 
sold about 455 tonnes of non-fat dairy milk, for c onversion into edible dry casein or caseinate, at a 
price of about US$1.58 per kg. 
17. In addition to the purchase prices set by the Farm Act, Federal Milk Marketing Orders 
(FMMOs) set minimum prices for fluid Grade A milk7 that "first handlers" (processors or 
manufacturers) must pay for milk.  According to th e authorities, minimum prices are set to encourage 
                                                      
6 USDA, ERS online information, "Briefing Rooms, Dairy:  Policy",  March 2009.  Viewed at:  
http://www.ers.usda.gov/ Briefing /Dairy/Policy.htm [May 2010]. 
7 Grade A milk is milk that complies with the Pasteurized Milk Ordinance (PMO) by the Food and 
Drug Administration concerning sanitary standards;  99% of milk produced in the United States is Grade A. WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 84 
 
 
the production and movement of fluid milk from areas of surplus production to areas where 
production is low and demand is hi gh.  FMMO prices can vary from month to month depending on 
expected supply and demand, and are not guaranteed:  average milk prices have fluctuated sharply in 
recent years.  Currently, there are ten federal mark eting orders covering about 62% of milk produced 
in the United States.  California operates a similar system which covers about 22% of milk produced, 
and the states of Maine, Montana, Nevada, and Virginia regulate nearly all the remainder.  Under the federal system, the minimum prices depend on the end-u se of the milk:  Class I for milk used in milk 
beverages;  Class II for milk used in soft and frozen  products (fluid cream, yoghurts, ice cream, etc.);  
Class III for milk used for cheese;  a nd Class IV for milk used for butter or milk powder.  Each month 
minimum prices are set for each Class:  the prices for Classes II to IV are based on the wholesale 
prices of these products;  and the price for Class I is  set as a margin over the minimum price for milk 
used for manufactured dairy products. 
18. The 2008 Farm Act continued, with some cha nges, the Milk Income Loss Contract (MILC) 
Program, under which a direct payment is made to dairy producers in each month that the price of 
fluid milk is less than an annually determined  fixed price.  The payments provide partial 
compensation when prices are below the refe rence price, subject to a quantity limit.
8 
(b) Title II (Conservation) 
19. The agriculture conservation programmes are part of a much larger set of measures to protect 
the natural environment.  These programmes involve  the Bureau of Land Management, the Fish and 
Wildlife Service, the Forest Servi ce (part of USDA), and other federa l agencies.  In 2007, spending on 
USDA conservation programmes accounted for a bout 16% of the US$33.8 billion spent on 
programmes to protect natural resources.9  Producer participation in most programmes is voluntary 
with the exception of certain commodity programmes where producers on highly erodible and protected wetlands risk not receiving benefits if they fail to meet the programmes' conservation 
requirements.  The 2008 Farm Act provided an a dditional US$8 billion for conservation programmes 
and changed the amount of land that may be brough t into reserve programmes.  The area allowed in 
the Conservation Reserve Program was reduced fro m 39.2 million acres to 32 million acres, while in 
some smaller programmes (Wetland Reserve and Grassland Reserve) the area was increased. 
(c) Title III (Trade) 
20. The Farm Act 2008 retained some of the agri culture export programmes from the previous 
Act.  The Foreign Agricultural Service (FAS) of th e USDA administers most of the programmes with 
the exception of some food aid programmes, which are the responsibility of the United States' Agency 
for International Development (USAID).  The Ac t terminated the Export Enhancement Program, the 
Supplier Guarantee Credit Program, and GSM-103. 
Export subsidies 
21. The Dairy Export Incentive Program (DEIP) provi des subsidies (bonuses) through the CCC to 
exporters of dairy products.  In May 2009, DEIP was made available for the year beginning 1 July 
                                                     
 
8 The reference price is the Class I milk price in  the Boston market under the applicable FMMO 
(currently US$16.94 per cwt or US$373 per tonne).  Compensation is paid at 45% of the difference for the 
period 1 October 2008 – 31 August 2012 and subject to a limit of 2.985 million lbs (1,354 tonnes) per operation.  From 1 September 2012, the rate is 3%, and the allowa ble quantity per dairy operation is 2.4 million pounds 
(1,087 tonnes). 
9 USDA ERS online information, "Briefing Rooms, Conservation Policy:  Background"  January 2009.  
Viewed at:  http://www.ers.usda.go v/Briefing/ConservationPolicy/b ackground.htm [February 2010]. United States WT /TPR/S/235/Rev.1 
 Page 85 
 
 
2008 through publication of invitations for offers to  apply for bonuses for exports of non-fat dry milk, 
cheese, or butterfat quantities.  On 6 July 2009, another announcement activated the program for the 
year beginning 1 July 2009.  The global limits  for exports under the DEIP were 19,235 tonnes of 
butterfat, 68,201 tonnes of non-fat dry milk, and 3,0 30 tonnes of cheese.  The export subsidy per unit 
exported varies with each offer.  Once an offer is received, the USDA/CC C makes a decision based 
on the data provided by the exporter as it relates to  the export sales contract.  The determination by 
USDA/CCC is based on an evaluation of both the e xport and domestic markets for that commodity.  
According to the authorities, the DEIP bonus is in tended only to offset the differential between the 
export market and the domestic market. 
22. For the programme year beginning 1 July 20 08, bonuses were awarded for 20,025 tonnes of 
non-fat dry milk;  1,862 tonnes of  butter/butteroil;  and 152 tonnes of cheese.  For the fiscal year 
beginning 1 October 2008, budgetary outlays were:  US$7.2 million for non-fat dry milk;  
US$11.3 million for butter/butteroil;  and US$0.3 million for cheese. 
23. Most agricultural products are eligible for th e Export Credit Guarantee Program (GSM-102).  
Under GSM-102, the USDA provides guarantees for cred its extended by private banks in the United 
States to approved foreign banks for purchases of ag ricultural products by foreign buyers.  Fees are 
based on the risk of the obligor country, the tenor of the loan, and other factors.10  As of 30 September 
2009, exporters had registered US$5.3 billion (alt hough by May 2010 this had fallen, due to the 
cancellation of some guarantees).  The default percen tage (defined as the lifetime default claims as a 
percentage of disbursements) was 5.33%.  Th e estimated budget cost for FY2010 of GSM-102 is 
-1.21%, meaning that its fees plus recoveries on default claim payments are expected to exceed 
default claim payments on a net present value basis. 
Export promotion 
24. The FAS is also responsible for the Mark et Access Program (MAP), which provides 
cost-share financial assistance to approved orga nizations for overseas marketing and promotional 
activities, including trade shows, market research, consumer promotions for retail products, technical 
capacity building, and seminars to educate overseas customers.  Assistance for brand promotion is 
restricted to small-sized entities11, cooperatives, and producer associa tions.  Authorized funding for 
the MAP remained at US$200 million from 2007 thr ough 2009.  Under the Technical Assistance for 
Speciality Crops (TASC) Program, funds are made available for projects that address SPS and TBT measures in export markets, including:  seminars and workshops;  study tours;  field surveys;  pest 
and disease research;  and pre-clearance programmes.   Authorized funding for the TASC Program 
increased from US$2 million in 2007 to US$4 million in 2008 and US$7 million in 2009. 
Food aid 
25. For many years, the United States has been the world's biggest donor of food aid, usually 
delivering about half of total ai d (3.2 million tonnes grain equivale nt or 49% of the total in 2008).
12  
                                                      
10 USDA (2010), GSM-102 Guarantee Fee Rate Schedule , April.  Viewed at:  http://www.fas.usda. 
gov/excredits/gsm102fees.html [July 2010]. 
11 The definition of a small business entity follows the Small Business Size Standards of the Small 
Business Size Regulations (13 CFR 121).  For farming, the general rule is an enterprise with a turnover of less 
then US$750,000, for the food industry it is an ente rprise with less than between 500 and 1,000 employees 
depending on the type of activity undertaken. 
12 World Food Programme (2010). WT/TPR/S/235/Rev.1 Trade Policy Review 
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Most aid is given under the Food for Peace Act of 200813, which replaced the Agricultural Trade 
Development and Assistance Act of 1954 (P.L. 480).  The objectives of the Food for Peace Act are to:  combat world hunger and malnutrition and their causes;  promote broad-based, equitable, and 
sustainable development, including agricultural deve lopment;  expand international trade;  foster and 
encourage the development of private enterprise and democratic participation in developing countries;  
and prevent conflicts.  Nearly all aid is given in  fully grant form through the World Food Programme 
or private voluntary organizations. 
26. Most food aid donated by the United States is provided as direct transfers (i.e. as in-kind 
commodities) rather than as cash for local or regi onal purchases.  Direct transfers have been criticized 
as being less efficient than cash for local or regional purchases.
14  A declining amount of food aid is 
monetized by private voluntary organizations to ge nerate proceeds for development activities or to 
cover their administrative and distribution expenses.  The GAO has stated that food aid donations by 
the United States could be made more efficient if some legal requirements were relaxed, such as the 
obligation to carry 75% of food aid in U.S.-flagged ships.15 
27. In order to give USDA more flexibility in administering food aid programmes, the 2008 Farm 
Act provided authority under a pilot programme (t he Local and Regional Procurement Project) to 
purchase food aid in local and regional markets.  The funding provided was:  US$5 million for 
FY2009;  US$25 million for fiscal years 2010 and 2011;  and US$5 million for FY2012.16  I n  
addition, in FY2010, the Administration received US$300 million in the International Disaster Assistance (IDA) account for emergency food assistan ce such as local and regional procurement, cash 
voucher and cash transfers, which allow for great er flexibility and timeliness in delivering food 
assistance.  The Administration is reques ting this IDA funding again in FY2011. 
28. Under the Food for Progress Act of 1985, 18 project s were approved or active in 2009 with an 
estimated value of US$212 million.
17  In total the Food for Progress Program provided over 
US$238 million in food assistance in FY2009, supporting the purchase and shipment of 288,530 tonnes of commodities.  The McGovern-Dol e International Food for Education and Child 
Nutrition Program also provided US$175.5 million in aid in FY2009
18, with more than 
126,523 tonnes of commodities to support child nutrition and school feeding programmes in 
18 countries.  In addition, the Bill Emerson Human itarian Trust (BEHT) is a reserve of commodities 
and cash used to meet unanticipated food aid needs.  The BEHT curre ntly holds only cash. 
(d) Title IV (Nutrition) 
29. In addition to the Supplemental Nutrition A ssistance Program, formerly known as the Food 
Stamp Program, the Farm Act authorizes other nut rition programmes including:  the National School 
Lunch Program;  the School Breakfast Program;  the Child and Adult Care Food Program;  the 
                                                      
13 For the full text of the Food for Peace Act of  2008, see:  http://www.fas .usda.gov/excredits/ 
FoodAid/pl480/Food_for_Peace_Act.pdf [February 2010]. 
14 OECD (2006). 
15 GAO (2007). 
16 USDA FAS (2009). 
17 USDA FAS Press Release, "USDA Announces US$212 million in International Assistance under the 
Food for Progress Program" .  17 December 2008.  Viewed at:  http:// www.fas.usda.gov/scriptsw/PressRelease/ 
pressrel_dout.asp?Entry=valid&PrNum=0179-08. 
18 USDA FAS Press Release, "Agric ulture Secretary Vilsack Announces Additional US$80 million in 
Food Assistance Under McGovern-Dole Program:  USDA Releases Final Rule on Food Assistance Program 
Regulations", 7 April 2009.  Viewed  at:  http://www.fas.usda.gov/script sw/PressRelease/pressrel_dout.asp?  
Entry=valid&PrNum=0057-09. United States WT /TPR/S/235/Rev.1 
 Page 87 
 
 
Summer Food Service Program; and the USDA Fr uit and Vegetable Program.  The Food and 
Nutrition Service of the USDA is also responsib le for the Women, Infants, and Children (WIC) 
Program which provides food, education and health care to women on low incomes before and after 
childbirth and for children up to five years of ag e.  The total spending on nutrition programmes under 
the USDA was about US$93.85 billion in FY2010 out of a total budget of US $135.52 billion (not all 
of which was funded through the Farm Act).19 
30. The Agricultural Marketing Service of th e USDA also operates commodity purchase 
programmes to acquire food products for the National School Lunch Pr ogram (NSLP) and other 
Federal nutrition programmes that may also be us ed to "help to stabili ze prices in agriculture 
commodity markets by balancing supply and demand".20  These programmes purchase a wide variety 
of products, including livestock products, fruit, vege tables, nuts, speciality items, and corn syrup.  
Under the NSLP, participating schools are entitled to receive food valued at US$0.195 per lunch 
served.  The entitlement varies from one year to anot her based on changes in food prices.  In addition, 
schools and other feeding programmes can get "bonus" commodities as they become available 
through agricultural surpluses.  During th e 2009 school year, the USDA purchased over 
US$973 million worth of commodities for schools/child nutrition programmes.21 
(e) Title V (Credit) 
31. The 2008 Farm Act made some relatively minor amendments to the existing legislation on 
lending to agricultural producers through the USDA Fa rm Service Agency (FSA).  Direct loans of up 
to US$300,000 are available from government funds  for:  purchasing farmland;  investment in 
buildings and other fixtures (Direct Ownership Loan s);  or for operating expenses (Direct Operating 
Loans).  Under the Direct Ownership Loans, an app licant may opt for a joint-financing plan with the 
FSA providing half the loan and the rest thr ough commercial banks.  Emergency Farm Loans are 
available to help farmers recover from natural disast ers or quarantine conditions imposed as a result of 
an SPS measure (Tables IV.4 and IV.5).  Such lo ans are available only to citizens or permanent 
residents of the United States.  Individuals starting out in farming or ranching may obtain direct loans 
from the FSA of up to US$300,000 or loan guar antees for borrowings of up to US$1,094,000.  In 
addition, each year the FSA targets a portion of it s loans to socially disadvantaged farmers and 
ranchers, as well as to beginning  farmers and ranchers.   
Table IV.4 
Farm Service Agency direct loans, 2008-09 
(US$ million) 
 New loan volume Outstanding volume Delinquent loans 
 2008 2009 2008 2009 2008 2009 
Operating loans 629.1 1,225.5 2,354.4 2,803.4 177.4 192.1 
Ownership loans 381.8 560.0 3,049.4 3,307.2 71.5 73.9 
Emergency loans 45.0 30.4 821.2 758.4 140.2 150.1 
 
Note: Loan volumes at end of fiscal year.  
Source:  USDA FSA (2010), Farm Loan Programmes.  
                                                      
19 USDA (2010) . 
20 USDA AMS (2008). 
21 USDA FNS (2009). WT/TPR/S/235/Rev.1 Trade Policy Review 
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Table IV.5 
Farm loan programmes interest ra tes (effective 1 February 2010) 
Programme Interest rate Programme Interest rate 
Direct Farm Operating Loans 2.625% Direct Fa rm Ownership Loans – Joint financing 5.000% 
Direct Farm Ownership Loans 4.875% Farm Ownership – down payments 1.500% 
  Emergency Loan 3.750% 
 
Source: USDA FSA (2010), Farm Loan Programmes, Interest Rates.  Viewed at:  http://www.fs a.usda.gov/FSA/webapp? 
 area=home&subjec t=fmlp&topic=dfl-ir [February 2010]. 
(f) Title VII (Research and Related Matters) 
32. The USDA has a wide-ranging research programme implemented primarily through the 
Agricultural Research Service, other State agenci es, and universities.  In addition to providing 
funding, the changes in the 2008 Farm Act are in tended to improve efficiency through better 
coordination of research activities.  The provisions in clude:  the creation of the National Institute of 
Food and Agriculture (NIFA) to replace the Coope rative State Research, Education, and Extension 
Service;  and the creation of the Research Extension and Education Office to assist with coordination.  
The 2008 Farm Act also increased the emphasis on awarding funding competitively, and research on 
organic and speciality agriculture. 
(g) Title IX (Energy) 
33. The 2008 Farm Act continues and expands fundi ng for federal agency procurement of bio-
based products, construction and development of adva nced biofuel refineries, biomass research and 
development, and biodiesel education.  New programmes encourage renewable energy use by bio-refineries, renewable energy systems and en ergy efficiency improvements, rural energy 
self-sufficiency, development of next generation feed stocks, and use of forest and woody biomass for 
energy production.  The Biorefinery Assistance pr ogramme seeks to encourage production of biofuels 
from renewable biomass sources other than maize-kernel starch.  It covers grants for the construction 
of biofuel refineries of demonstration size, and loans for the construction of new refineries of 
commercial size.  In addition, the Bioenergy Prog ram for Advanced Biofuels provides payments to 
producers who produce, under contracts with the USDA , biofuels from renewable biomass other than 
corn-kernel starch.  The new pr ogrammes in the 2008 Farm Act incl ude the Biomass Crop Assistance 
Program to assist producers of biomass crops and conversion plants, and the Agricultural Bioenergy 
Feedstock and Energy Efficiency Research and Extension Initiative, which provides grants for 
research and extension services.  Total mandato ry funding through the 2008 Farm Act is about 
US$620 million. 
(h) Title X (Horticulture and Organic Agriculture) 
34. Under the Agricultural Marketing Agreement Ac t of 1937, growers and handlers of certain 
agricultural products may, with the approval of th e Secretary of Agriculture, establish a marketing 
order under which measures can be taken to promote or derly markets.  Orders vary considerably in 
their terms and conditions.  In some cases they  may include supply control through marketing 
restrictions and/or reserve pools.  Marketing orde rs for tart cherries, cranberries, hazelnuts, dried 
prunes, raisins, and spearmint oil include volume control measures.
22 
                                                      
22 USDA (2008). United States WT /TPR/S/235/Rev.1 
 Page 89 
 
 
35. Federal crop insurance is addressed under Title X although it covers a wide range of crops 
and risks.  Although the insurance is provided by the private sector, "the Government subsidizes a 
significant portion of the cost."23 
36. The 2008 Farm Act extended the Speciality Crop Block Grant Program through to FY2012.  
Under the Programme, individual States may apply to  the USDA's Agricultural Marketing Service for 
grants to improve the competitiveness of fruits, vege tables, tree nuts, dried fruits, horticulture, and 
nursery crops (including floriculture). 
(i) Title XI (Livestock) 
37. Although the 2008 Farm Act has a Title dedicated  to livestock, the provisions under Title XI 
are not all exclusively for livestock, such as the provisions relating to country-of-origin-labelling 
(COOL).  In most cases, the United States' policies re lating to livestock are confined to insurance and 
disaster relief programmes, animal health progra mmes, and assistance in meeting sanitary measures 
within the United States and in export markets.  According to the OECD, transfers arising from 
government programmes in FY2006-2008 to pig meat, poultry, beef, and veal producers were zero.24 
38. The main exception to the general livestock po licy is wool and mohair production.  The 2002 
Farm Act reintroduced support for wool and mohair, which was continued in Title I of the 2008 Farm 
Act (see Table AIV.3). 
39. The 2008 Farm Act added chicken, goat meat, gi nseng, pecans and macadamia nuts to the list 
of commodities covered by the country-of-origin labelling provisions.25  It also introduced different 
categories of labels depending on whether the anim al was born, raised and/or slaughtered in the 
United States.  On 19 November 2009, the DSB estab lished a panel to hear complaints from Canada 
and Mexico on the country-of-origin labelling provisions.26 
(j) Title XII (Crop Insurance and Disaster Assistance Programs) 
40. The 2008 Farm Act retained, with minor amen dments, the crop insurance programme set up 
under earlier legislation.  As stated, under Title X, cr op insurance is provided by the private sector at 
subsidized rates under terms set by the Federal Crop  Insurance Corporation and administered by the 
USDA Risk Management Agency. 
41. Supplemental Agricultural Disaster Assistance (S ADA) provides disaster assistance payments 
to producers of eligible commodities (crops, fa rm-raised fish, honey, and livestock) in counties 
declared by the Secretary of Agriculture to be "disaster counties", including counties contiguous to 
disaster counties and any farms with losses in normal production of more than 50% in a calendar year.  
SADA is effective only for losses incurred as result of a disaster, adverse weather, or other 
environmental condition that occurs  on or before 30 September 2011. 
                                                      
23 USDA, Briefing Rooms:  Fruit and Tree Nuts:  Policy,  Viewed at http://www.ers.usda.gov/ 
Briefing/FruitandTreeNuts/Policy. htm#cropins [February 2010]. 
24 OECD (2009b), p. 239. 
25 Other commodities include:  muscle cuts of beef, lamb, and pork;  ground beef, ground lamb, and 
ground pork;  farm-raised fish and she llfish;  wild fish and shellfish;  pe rishable agricultural commodities (fresh 
fruits and vegetables as defined by the Perishable Agricultural Commodities Act);  and peanuts. 
26 WTO document series WT/DS/384/- and WT/DS/386;  and WT/DSB/M/276, 29 January 2010. WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 90 
 
 
(iii) Agriculture tariffs and tariff quotas 
42. Tariffs and tariff-rate quotas for agricultural pro ducts are not covered in the Farm Act 2008.  
Based on the WTO definition of agricultural pr oducts, the Harmonized Tariff Schedule of the 
United States (HTSUS) has 1,791 tariff lines at the 8-di git national level.  Some of these lines refer to 
in-quota tariff rates with other tariff lines for the same product giving the out-of-quota rate.  There are 
1,595 tariff lines for out-of-quota tariff rates for agricultural products.27 
43. For these 1,595, the average applied MFN tariff is 8.9%, which is relatively low compared 
with some other WTO Members.  However, rates vary a lot from one product group to another, from 
350% for some tobacco tariff lines to zero for 368 ta riff lines.  Of these 1,595 tariff lines, 696 have 
non-ad valorem  duties.  Ethyl alcohol used as fuel is also  subject to "other duties or charges" and 
bound in HTSUS at US$0.1427 per litre. 
44. The highest tariffs are on tobacco, sugar, p eanuts, and dairy products, followed by beef, 
cotton, and certain horticultural products (such as mushrooms). 
45. The United States notifies the Committee on Agriculture for 44 tariff quotas covering 
171 tariff lines, mostly for dairy products, sugar products, products contai ning sugar and/or dairy 
ingredients and cotton.  The most recent notification is for 2007 and 2008.28  Fill rates varied 
significantly from one quota to anot her and have been particularly low for cotton, possibly reflecting 
the decline of the textiles and clothing industry.  They were also quite low for some dairy and other products.  On the other hand, in-quota imports were close to or greater than the quota quantity in several cases. 
46. The United States has reserved the right to use the Special Agricultural Safeguard on 
189 tariff lines, mostly dairy products, sugar prod ucts, products containing  sugar and/or dairy 
ingredients, and cotton.  The quantity-based SSG wa s last used in 2003.  However, the price-based 
safeguard has been applied much more frequently.  It was used 61 times in 2007,  and 53 times in 
2008.  In nearly all cases, the SSG was applied to ve ry small quantities, for example:  4kg of cream 
over 45% fat;  and 3kg of cocoa powder over 65% sugar, but it was also used on commercially 
significant imports, such as 327 tonnes of milk-based  drinks and 2,598 tonnes of frozen, boneless 
bovine meat.
29 
(iv) Support levels 
47. Notifications by the United States to th e WTO Committee on Agriculture cover domestic 
support up to crop year 2007 and do not include changes resulting from the 2008 Farm Act.  
However, although changes were made in the Ac t to payment rates and coverage in existing 
programmes, and some new programmes were esta blished, the 2008 Farm Act does not represent a 
radical departure from the 2002 Farm Act. 
48. The notification for support for crop year 2007 stated that total support to agriculture was 
US$84.65 billion.  Of this, US$76.2 billion wa s notified under the Green Box, of which: 
US$54.4 billion was for domestic food aid;  US$5. 2 billion was notified as Direct Payments under 
decoupled income support;  US$4.3 billion was a nnual outlays by states for services;  and 
US$1.9 billion was for the Conservation Reserve Program. 
                                                      
27 For more information see HTSUS at:  http://www. usitc.gov/publications/docs/tata/hts/bychapter/ 
1000gntoc.htm [May 2010]. 
28 WTO document G/AG/N/USA/72, 1 March 2010. 
29 WTO document G/AG/N/USA/67, 2 March 2009. United States WT /TPR/S/235/Rev.1 
 Page 91 
 
 
49. The Current Total Aggregate Measurement of Support (Current Total AMS) in the 
United States was US$6.3 billion in 2007.  In addition, there was US$2.0 billion in non-product-specific support and US$0.2 billion in other product-specific support, which were below the de minimis limits. 
50. Thus, Amber Box support in the United States is  a small portion of total support notified to 
the WTO.  Most of this support is related to pric es, to production or to both.  Marketing assistance 
loan programmes for cereals, oilseeds and cotton effectively give nearly all producers of these 
products guaranteed minimum prices by providing compensation for falls in market prices
30 below the 
loan rates set out in the Farm Act.  Counter-c yclical payments also provide some compensation 
should prices fall below the target prices in the Ac t, although in this case, payments are decoupled 
from production.  Apart from upland cotton, there ha ve been essentially no marketing loan payments 
since 2005 because market prices have been greater th an the Farm Bill loan rates.  Other commodities 
also qualify for price-related support programmes such as non-recourse commodity loans for sugar and minimum purchase prices for dairy products. 
51. As a result of the close link between support and prices for some commodities, the Current 
Total AMS and product-specific AMS values vary with changes in market prices.  Thus, under the 
2002 Farm Act, Current Total AMS was US$12.9 billi on for 2005 before falling to US$6.3 billion in 
2007.  It should be noted that, due to the met hodologies used to calculate the product-specific AMS 
values, the value of support for dairy and sugar app ears to be relatively constant from one year to 
another while support for other commodities varies considerably.
31  Chart IV.1 shows the AMS 
support for some commodities which, in years of high levels of support, is almost entirely made up of 
payments under the marketing assistance loan progr amme.  The chart shows the degree to which 
support, as measured by the Current Total AMS,  varies with prices.  It does not include 
counter-cyclical payments which, though price-based, are decoupled from production. 
52. Notifications to the Committee on Agriculture of the Current Total and product-specific AMS 
were not meant to be indicators of the value of tran sfers to producers.  The Current Total AMS is the 
basis for the Committee on Agriculture to review implementation of commitments in the WTO.  
However, for the United States, for products other than dairy and sugar, the product-specific AMS can 
be a useful indicator of support as it reflects budgetary outlay. 
 
 
                                                      
30 For most commodities local prices are used for th e loan repayment rates, except for cotton and rice 
where adjusted world prices are used.  
31 In its notifications on domestic support, the United States calculates most support for dairy and sugar 
as market price support using the "price-gap" methodolog y.  That is, the current total Market Price Support 
component of the AMS is calculated by multiplying the difference between the "fixed external reference price" 
and the "applied administered price" by the "volume of eligible production".  Where:  the fixed external 
reference price is based on the averag e international price in 1986-88;  the "applied administered price" is the 
marketing loan rate for sugar beet and sugar cane, and the support price for manufacturing grade milk;  and the 
"volume of eligible production" is the total production of each commodity .  Support for other commodities is 
mostly calculated based on the budgetary outlay for the relevant programmes. 
As a result, the AMS figures for sugar and dairy have not varied much from one year to another.  In 
part, this is because the AMS figure s for these two products are based on fixed  external prices.  However, the 
AMS figures for other commodities vary a lot from one year to the next b ecause the budgetary outlay is based 
on current market prices and production which vary considerably.  For more information see WTO documents 
G/AG/N/USA/66 of 19 January 2009 and G/AG/AGST/USA (in document G/AG/AGST/Vol.3, 22 March 1995).  WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 92 
 
 
020040060080010001200
1995
1996
19971998
1999
2000
2001
20022003
2004
20052006
2007US$ million
050100150200250300
US$ per tonneChart IV.1
Product-specific AMS support and market pr ices for selected commodities, 1995-2007
Wheat
0500100015002000250030003500400045005000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007US$ million
050100150200250
US$ per tonneMaize
01002003004005006007008009001000
1995
1996
19971998
1999
2000
2001
20022003
2004
20052006
2007US$ million
0100200300400500
US$ per tonne
05001000150020002500300035004000
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
20062007US$ million
050100150200250300350400
US$ per tonneRice SoybeansNote: Year starting 1 June.
Wheat price for U.S. No. 1 HRW, f.o.b. Gulf of Mexico.Note: Year starting 1 September.
Maize price for U.S. No. 2 yellow, f.o.b. Gulf of Mexico.
Note: Year starting 1 August.
Price for 5% broken, nominal price quote, f.o.b. Bangkok.Note: Year starting 1 September.
Price for soybeans; U.S., c.i.f. Rotterdam.Wheat product-specific AMS Maize product-specific AMS
Rice product-specific AMS Soybeans product-
specific AMSIMF price IMF price
IMF priceIMF price
Note: Product-specific AMS includes de minimis  support but does not include counter-cyclical payments.
Source: WTO notifications: G/AG/N/USA/10, 17, 27, 36, 43, 51/Rev.1, 60/Rev.1 and 66.
             Annual average prices are based on IMF Commodity Prices for the relevant crop years.
 United States WT /TPR/S/235/Rev.1 
 Page 93 
 
 
53. Another estimate of transfers to agricultural producers arising from policy measures is the 
Producer Support Estimate (PSE) and associated indicators of the OECD.  The methodology for calculating PSEs and associated indicators is differe nt from that used to calculate the AMS and the 
two sets of data are not compatible or comparable .  Furthermore, the methodology used by the OECD 
is evolving and was revised for the 2007 Monitoring and Evaluation report resulting in several 
changes, including the estimates of support of specific commodities.
32 
54. According to the OECD, the PSE for agriculture in the United States was 7% of gross farm 
receipts, which is the third lowest among OECD countries where the average PSE was 21%.33  It is 
also lower than in some non-OECD countries for which PSE figures have been calculated.34  
However, because the United States has a large agricu lture sector this percenta ge translates into an 
absolute level of support of US$23.3 billion, which is the third highest in the OECD. 
55. The PSE is an indicator of support to all agricultural producers.  The OECD indicator for 
commodity-specific support is the Single Commodity Transfer (SCT) which, for the United States 
(and other countries), varies from one product to anot her reflecting the different programmes affecting 
different products.  The SCT for each product also varies from one year to another which reflects the 
close link between commodity-specific programmes and production and prices (see Table IV.6) for 
some products.  The high levels of support shown for sugar and milk in some years reflects the 
relatively high tariffs in these two sectors as well as the budgetary programmes covering them. 
Table IV.6 
Total producer support estimate and single commodit y transfer values for selected commodities, 2004-08 
(US$ million and % of gross farm receipts) 
 2004 2005 2006 2007 2008 
Total PSE      
US$ million 43,104 41, 929 31,199 33,953 23,359 
% of gross farm receipts 16 16 11 10 7 
Wheat   
US$ million 353 124 544 493 502 
% of gross farm receipts 4.6 1.7 6.6 3.6 2.9 
Maize   
US$ million 2.952 4,443 138 -246 727.0 
% of gross farm receipts 10.8 16.7 0.4 -0.5 1.5 
Rice    
US$ million 135 110 18 8 12.0 
% of gross farm receipts 7.4 6.1 0.9 0.3 0.4 
Soya beans   
US$ million 517 -87 -77 152 1,241.0 
% of gross farm receipts 2.8 -0.5 -0.4 0.6 4.3 
Sugar   
US$ million 1,053 896 519 775 574 
% of gross farm receipts 54.2 44.4 21.4 34.8 27.0 
Milk   
US$ million 7,623 4,833 3,700 8,433 5 
% of gross farm receipts 27.6 18.0 15.6 23.6 0.0 
 
Source: OECD (2007, 2008, and 2009), Agricultural Policies in OECD Co untries.  Monitoring and Evaluation, Paris . 
56. According to the OECD, marketing loan benef its (used for cereals, oilseeds, cotton, pulses, 
and wool) and market price supports (used for suga r and dairy), are among the less efficient and more 
                                                      
32 OECD (2007). 
33 OECD (2009b). 
34 OECD (2009a). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 94 
 
 
trade-distorting forms of support to agricultural prod ucers.  The OECD has st ated that such policies 
are less efficient than alternatives,  such as decoupled or area-based pa yments, because a large part of 
the benefits are lost to higher input and resource co sts, and that these policies can also distort trade to 
a greater extent than their more efficient alternatives.35 
(2) FINANCIAL SERVICES  
(i) General legal framework 
57. The Gramm-Leach-Bliley Act (Financial Services  Modernization) of 1999 (GLBA) is the 
main law regulating the consolidated financial sector.36  The Financial Services Regulatory Relief Act 
of 2006 introduced changes to U.S. financial ser vice legislation affecting banking, securities, and 
insurance.  Under the McCarran-Ferguson Act of 194 5 (U.S. Code Title 15, Chapter 20), regulation of 
insurance services is primarily at the state level.  The Federal Reserve is the umbrella regulator for 
financial conglomerates that include a bank.  The activities of subsidiaries of financial holding 
companies (FHCs) are regulated by several different regulators.37  Banking sector supervision is the 
responsibility of both federal and state regulators.38 
58. There have been no major changes affecti ng the basic conditions of market access and 
national treatment for foreign financial institutions in the United States since 2008.  Initial entry into 
the U.S. market is permitted in all states thr ough the establishment or acquisition of a nationally 
chartered bank subsidiary by a foreign person.  U. S. bank subsidiaries of foreign banks are granted 
national treatment.  A foreign bank must establish an  insured banking subsidiary to accept or maintain 
domestic retail deposits of less than US$100,000.  Branches and agencies of foreign banks have 
similar powers to banks but agencies may not accept de posits from U.S. citizens or residents.  At the 
state level, there are limitations on the acquisition or establishment of a state-chartered bank, and on 
the establishment of branches or agencies. 
59. Insurance companies, agents, and brokers must  be licensed under the law of the State in 
which the risk they intend to insure is located, but states have taken steps to facilitate multi-state 
operations.  Foreigners may acquire an insuranc e company licensed in all states, incorporate 
subsidiaries in 47 states, or operate as branches in 36 states and the District of Columbia.  A federal 
tax on insurance policies covering U.S. risks is impo sed at a rate of 1% of gross premiums on all 
reinsurance but at 4% of gross premiums with resp ect to non-life insurance when the insurer is not 
subject to U.S. net income tax on the premiums. 
(ii) Recent developments 
60. During the period under review, the U.S. financia l sector was impacted by the severe crisis, 
which was triggered by a protracted downturn in the housing market and a sharp increase in delinquencies of sub-prime mortgages leading to a sudden drop in the price of the securities backed 
by those mortgages.  The sub-prime mortgage crisis  was the result of abundant liquidity, loose lending 
standards, and lack of macro-pr udential supervision in the financial system prior to the crisis. 
                                                     
 
35 OECD (2002). 
36 WTO (2008). 
37 The Office of the Comptroller of the Currency (OCC)  in the case of national banks;  a state banking 
agency and the Federal Reserve or Federal Deposit Insura nce Corporation (FDIC) in the case of state-chartered 
banks;  the Securities and Exchange Commission (SEC) in the case of securities firms;  and a State insurance 
commission in the case of insurance companies. 
38 The Federal Reserve Board shares responsibility with the OCC, the FDIC, the Office of Thrift 
Supervision (OTS), as well as with State regulators. United States WT /TPR/S/235/Rev.1 
 Page 95 
 
 
61. Output and employment in the financial servi ces sector declined sharply during the review 
period.  Real GDP in financial services and insura nce declined for five c onsecutive quarters between 
Q4 2007 and Q4 2008 inclusive, before resuming pos itive growth rates in the first three quarters of 
2009, and declining again in the fourth quarter of 2009.39  Employment in the U.S. financial services 
sector (finance and insurance) has also been str ongly affected.  Between early 2008 and March 2010, 
total employment in the sector contracted 7% to 5.7 million.40 
62. Having recorded impressive growth rates in  2007 and 2008, U.S. exports and imports of 
financial services contracted severely during th e last two quarters of 2008 and throughout 2009, 
before resuming growth in the first quarter of 2010 (Table IV.7).41  Exports of insurance services 
showed positive growth rates in 2008 and 2009, proba bly due to the major stability of insurance 
premiums compared with financial services assets, whose contraction may be reflected in the fall of fees and commissions included in financial services data.  Imports of insurance services declines 
slightly in 2009. 
Table IV.7 
Exports and imports of financia l and insurance services, 2008-10 
(Year-on-year percentage change) 
 2008:I 2008:II 2008:III 2008:IV 2009: I 2009:II 2009:III 2009:IV 2010:I 
Exports          
Financial services 13.5 4.2 -8.6 -8.6 -16.0 -13.7 -3.3 -1.2 8.3 
Insurance services 21.9 31.1 25.0 21.7 19.1 8.0 2.6 4.5 1.3 
Imports          
Financial services 20.3 5.5 -2.9 -12.7 -30.4 -17.8 -15.7 -7.6 12.8 
Insurance services 15.7 18.4 14.5 23.8 9.6 -1.8 -5.6 -7.2 -4.8 
 
Source: U.S. Bureau of Economic Analysis online in formation.  Viewed at:  http://www.bea.gov. 
(iii) Policy actions in response to the crisis 
63. During the period under review, developments in financial services policy and regulation 
were driven to a large extent by the unprecedented financial crisis that virtually paralysed credit 
markets.  Through a series of actions by the Fede ral Reserve, the FDIC, and the Treasury Department, 
the immediate effects of the crisis were mitigat ed and some degree of stability returned to the 
financial system, allowing policymakers to turn thei r attention to overall financial regulatory reform. 
64. The immediate measures taken fall into the following categories:  (1) guarantees of bank 
liabilities;  (2) retail deposit guarantees;  (3 ) central bank assistance measures;  (4) bank 
recapitalization through equity investments by privat e investors and Government;  (5) open-market or 
negotiated acquisitions of illiquid or otherw ise undesirable assets from weakened financial 
institutions;  and (6) assistance to individual financ ial institutions. 
65. On 3 October 2008, the U.S. President signed in to law the Emergency Economic Stabilization 
Act of 2008 (EESA), which provided budgetary auth orization of up to US$700 billion to respond to 
the crisis.  This authorization was utilized th rough the Troubled Assets Relief Program (TARP), 
                                                      
39 USBEA (2010). 
40 Department of Labor online information.  Vi ewed at:  http://data.bls.gov/PDQ/servlet/Survey 
utputServlet. 
41 Figures for financial services supplied through aff iliates are only available up to 2007.  Nonetheless 
the U.S. Bureau of Economic Analysis has recently revi sed the statistics for services  supplied through affiliates 
and has for the first time incorporated services provided by  bank affiliates, and for U.S. multinationals, services 
provided by non-bank affiliates of bank parents. WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 96 
 
 
which enabled the Secretary of the Treasury to purchase, and to make and fund commitments to 
purchase troubled assets from any financial institutions .  The purpose of the TARP was to restore the 
liquidity and stability of the financial system.  The Act defines "financial institution" as including 
"any institution, including, but not  limited to, any bank, savings association, credit union, security 
broker or dealer, or insurance company, established and regulated under the laws of the United States 
or any State, territory, or possession of the United States ... but excluding any central bank of, or institution owned by, a foreign government".  Fore ign institutions established and regulated in the 
United States were therefore, in principle, eligible  for relief.  In May 2010, the Department of the 
Treasury notified Congress that the projected lifet ime cost of TARP would total US$105.4 billion.
42 
66. To meet the goals of the EESA, the Treasury established several programmes under the 
TARP, and defined eligibility guidelines for each  programme.  According to the application 
guidelines for the Capital Purchase Program, the largest single program under TARP, and the TARP 
Capital Assistance Program, "applicants must be established and operating in the United States and 
may not be controlled by a foreign bank or company".43  Similarly, according to the "summary of 
terms" for the TARP Legacy Loans Program, banks or savings associations owned or controlled by a 
foreign bank or company are not eligible  to participate in this programme.44  According to the U.S. 
authorities, this approach was based on the rationale  that:  U.S. subsidiaries of foreign banks that 
needed additional capital should initially look to their parent banks;  and the fi nancial regulator of the 
country where the parent bank is subject to co mprehensive consolidated supervision are best 
positioned to determine the overall strength of the fi nancial conglomerate.  The U.S. authorities also 
note that this principle is well established in inte rnational banking supervision and regulation, as set 
out, for example, in the Basel Committee’s Concordat.45 
67. In addition to the TARP programmes, tem porary liquidity guarantee programmes were 
implemented by the FDIC.  These are the Transaction Account Guarantee Program (TAGP), which fully guarantees non-interest-bearing transaction deposit accounts above US$250,000, and the Debt 
Guarantee Program (DGP), which guarantees elig ible senior unsecured debt issued by eligible 
institutions.  All insured depository institutions, including insured U.S. branches of foreign banks, 
were eligible to participate in the TAGP, while all U.S. established entities that are, or own, an 
insured bank were eligible to participate in  the Debt Guarantee Program.  The standard 
insurance amount of US$250,000 per depositor (inc reased from US$100,000) is in effect until 
31 December, 2013. 
68. Substantial liquidity support – well over US$1 trillion – was provided by the Federal Reserve, 
both directly to the markets and via programmes such  as the Asset-Backed Secu rities Loan Facility, or 
the Term Asset-Backed Securities Loan Facility (TA LF);  the Primary Dealer Credit Facility;  and 
liquidity swaps with foreign central banks.
46 
                                                      
42 U.S. Department of the Treasury (2010), Troubled Assets Relief Program:  Monthly 105(a) Report 
May 2010, 10 June.  Viewed at:  http://www.finan cialstability.gov/docs/May%2 02010%20105(a)%20Report_ 
final.pdf . 
43 Application Guidelines for TARP Capital Purchase Program.  Viewed at:  http://www. 
financialstability.gov/docs/CPP/application-guidelines.pdf ;  and Application Guidelines for Capital Assistance 
Program.  Viewed at:  http://www.financial stability.gov/docs/CAP_App-Guidelines.pdf.  
44 Legacy Loans Program Summary of Terms.  Vi ewed at:  http://www.treas.gov/press/releases/ 
eports/legacy_loans_terms.pdf. 
45 Principles for the Supervision of  Bank’s Foreign Establishments. 
46 The TALF is a joint endeavour of Treasury (which contributed a US$20 billion subordinated loan) 
and the Federal Reserve, whose objective was to fund bu yers of asset-backed securities.  On 31 March 2010 
TALF ceased for issued asset-back ed securities and legacy commercial mortgage-backed securities. United States WT /TPR/S/235/Rev.1 
 Page 97 
 
 
(iv) Financial regulatory reform 
69. On 17 June 2009, the U.S. Administration released  the details of its comprehensive financial 
regulatory reform proposal, aimed at addressing the regulatory gaps that resulted in the financial 
crisis.47  This white paper was soon followed by  proposed implementing legislation. 
70. The proposal is structured around five key objectives:  (1) promote robust supervision and 
regulation of financial firms;  (2 ) establish comprehensive supervis ion of financial markets;  (3) 
protect consumers and investors from financial abus es;  (4) provide the Government with the tools 
needed to manage financial crises;  and (5) ra ise international regulator y standards and improve 
international cooperation.  The legislation has not been approved by Congress (June 2010). 
(3) TRANSPORT  
(i) Air transport services 
(a) Main features 
71. By many measures the United States continues to have the largest airlines, busiest airports, 
and most comprehensive air transport network in the world: 
− In terms of passengers carried, five of the to p ten airlines are based in the United States 
(Southwest Airlines, American Airlines, Delta Air Lines, United Airlines, and US Airways); 
− In terms of passenger-kilometres flown five of the top ten airlines are based in the 
United States (American Airlines, United Airlines,  Delta Air Lines, Continental Airlines, and 
Southwest Airlines); 
− The world's two largest air cargo carriers, in te rms of tonne-kilometres are based in the United 
States (Federal Express and UPS Airlines)48;  and 
− Five of the ten busiest airports in the wo rld are in the United States (Hartsfield-Jackson 
Atlanta International, O'Hare International, Los Angeles International, Dallas-Fort Worth 
International, and Denver International).49 
72. Air freight is mostly used for perishable a nd/or high value goods a nd, in 2007, represented 
only 40 billion ton-miles out of a total of 3, 491 billion ton-miles for all modes of transport.50  
Nevertheless, in value terms, air frei ght accounted for 23% of imports in 200651 (and presumably a 
similar portion in more recent years).  However, in 2009, the quantity delivered by air freight was 
down 23% from its 2007 peak.  The Implementing Recommendations of the 9/11 Commission Act of 
2007, require that, as of 1 August 201 0, each piece of cargo transported on passenger aircraft in the 
United States to be screened before being trans ported.  In 2009 50% of such cargo was screened.  
                                                      
47 See Financial Regulatory Reform – A New Foundation:  Rebuilding Financial Supervision and 
Regulation. 
48 IATA (2010), and taking into account the merg er of Delta Air Lines and Northwest Airlines 
announced in April 2010. 
49 EU Infrastructure , "The Busiest Airports in the World", Sam Conrad 8 October 2009.  Viewed at:  
http://www.euinfrastructure.com/news/Busy-month-for-He athrow/ [March 2010] and taking into account the 
merger of Delta Air Lines and Northwes t Airlines announced in April 2010. 
50 Department of Transportation (2008). 
51 Interagency Working Group on Food Safety (2007). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 98 
 
 
According to the FAA, the additional cost of screen ing and the burden of the additional time needed 
will fall on the air cargo industry.52 
73. Commercial aviation in the United States (and el sewhere) faced various difficulties in 2008 
and 2009.  In FY2008 and 2009,  commercial carriers in the United States had net losses of 
US$18.6 billion and US$8.1 billion.  Costs and p assenger revenues both declined in 2009 as a result 
of lower fuel prices and reduced fares.53  The airlines' financial problems in 2008 and 2009 probably 
reinforced the trends towards:  consolidation am ong airlines, such as the merger between Delta and 
Northwest Airlines;  concentration of activity in a smaller number of airports, as some hub-and-spoke 
carriers have focussed services at fewer hubs;  and convergence of unit costs between low-cost and 
network airlines.54 
74. The performance of the largest U.S.  air carriers (i.e. certificated air carriers that account for at 
least 1% of domestic scheduled passenger revenues)  in terms of on-time arrivals improved from 73% 
in 2007 to 80% in 2009.  The primary causes of dela ys in 2009 were the national aviation system, the 
late arrival of the incoming aircraft, and air-carrier caused delays.55  All were related to congestion, 
and the improvement in on-time arrivals during 2007-09 could be because fewer passengers and 
planes were in the air (i.e., less congestion) as airlines cut capacity due to the general economic 
downturn.  According to the authorities, the Depart ment of Transportation is  committed to protecting 
consumers and ensuring that the quality of air servi ce continues to improve.  The U.S. Department of 
Transportation plans to pursue enforcement ac tion aggressively, including assessment of civil 
penalties, against U.S. airlines that violate a new rule  that went into effect in April 2010 that prohibits 
them from operating chronically delayed flights or  subjecting passengers to lengthy tarmac delays. 
75. All public airports with commercial services are publicly owned, although some are partly or 
wholly operated through outsour cing and management contracts.56  This practice is particularly 
common in airport services, such as terminal a nd parking area operations, ground transport, building 
maintenance, baggage handling, a nd construction and engineering.  With the exception of security 
services, foreign services suppliers may provide servi ces to airports on the same terms and conditions 
as domestic suppliers.  Security standards for a ll public airports, and security screening at such 
airports are administered, regulated, and enforced by the Transportation Security Administration of the Department of Homeland Security. 
76. Through the Airport Improvement Program (AIP) the FAA provides grants for the 
development of public airports, including airports with no scheduled passenger flights, which may be 
privately owned.
57  The proportion of costs covered by grants from the AIP vary with the type of work 
and the size of the airport and can be as high as 95% of eligible costs for small primary, and general aviation airports.  The Program is funded through taxes on passenger ticket sales and aviation fuel.  
Grants for airport improvement require airlines to be  able to self-handle and use of airport facilities to 
be non-discriminatory.
58  US$3.9 billion was authorized for the AIP in FY2009.59 
                                                      
52 FAA (2010b). 
53 FAA (2010b). 
54 Tsoukalas et. al (2008);  and Button (2008). 
55 Research and Innovative Technology Administration (2010). 
56 WTO (2008). 
57 Kirk (2009). 
58 WTO (2008). 
59 Federal Aviation Administration Extension Act of 200 9, Sec. 4. Viewed at:  http://frwebgate.access. 
gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_b ills&docid=f:h1512rds.tx t.pdf [April 2010]. United States WT /TPR/S/235/Rev.1 
 Page 99 
 
 
77. Funds provided under the ARRA, specifically to the Federal Aviation Administration for 
airports, require that the steel and manufactured goods  used in the project must be produced in the 
United States (see Chapter III(3)(iii)).60  A waiver may be sought when procuring a facility or 
equipment if the cost of components and subcomponents produced in the United States is more than 
60% of the cost of all components, and final assembly is in the United States. 
78. There are no legal or regulatory barriers to pr ivate ownership of airports with commercial 
service, but the general legal complexity at federal, st ate and local level, plus restrictions on the use of 
revenues have meant that there has been little interest from the private sector.  The Airport 
Privatization Pilot Program, which began in 1997 , was intended to assess whether privatization is a 
feasible way to tap private capital for airport improve ment and development.  However, the scope of 
the programme is limited as it provides for only one large hub airport, and an application (which 
remains active) was made in September 2006 by a pub lic body, the City of Chicago, for the Chicago 
Midway International Airport.  Of the other sev en airports considered for the programme:   
− one is no longer in the programme (Stewa rt International Airport, Newburgh, NY); 
− three have withdrawn their applications (San  Diego Brown Field, CA;  Rafael Hernandez 
Airport, Puerto Rico;  and New Orleans Lakefront, LA); 
− one has had its application terminated (Niaga ra Falls International Airport, NY);  and 
− two have had preliminary appli cations approved (Luìs Muñoz Ma rín International Airport in 
Puerto Rico, and Louis Armstrong New Orleans International Airport in New Orleans).61 
79. Stewart International Airport (SWF) in Newbur gh, NY, is the only airport to receive final 
agency approval.  National Express Group, a private company from the United Kingdom, operated SWF Airport from March 2000, until October 2007, wh en the Port Authority of New York and New 
Jersey purchased the National Express Group's Airport Lease. 
80. The authorities note that an airport's participati on in the Pilot Program is voluntary;  and the 
decision to submit an application rests with the airport owner.  They also point out that there is usually 
heightened interest in the Program during periods of economic distress, as local municipalities look to 
the Pilot Program in an effort to  increase municipal funds without raising taxes.  However, overall, 
there has not been significant interest in airport privatization in general in the United States for a 
number of reasons:  (1) local government's reluctance to  cede control of the airport to a private entity;  
(2) the availability of, and access to tax exempt fi nancing and other low cost  financing options, and 
(3) airlines' opposition to airport privatization a nd their perception that the loss of governmental 
control may produce higher costs.  The authorities also note that the Chicago Midway application 
marks the first time airlines have agreed to support ai rport privatization at an air carrier airport, and 
they state that such support (65% of air carriers servi ng an airport) is necessary for a public sponsor to 
recover funds from the sale or lease of the airport.  
(b) Regulatory framework 
81. There has been no significant change in the re gulatory framework for air transport during the 
review period.  Within the Department of Trans portation, the Office of the Assistant Secretary for 
Aviation and International Affair s is responsible for economic po licy and regulation, while the 
Federal Aviation Administration is  responsible for safety issues, regulation of commercial space 
                                                     
 
60 49 U.S.C. section 50101. 
61 FAA (2010a). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 100 
 
 
aviation, and monitoring air carriers operating in the territory of the United States.  The 
Transportation Security Administration of the Depart ment of Homeland Security is responsible for the 
security of air transport in the United States, in cluding regulating and monitoring the implementation 
of security standards at U.S. airports, and of U.S.  aircraft operators and fo reign air carriers operating 
to, from, and within the United States. 
82. Anyone wishing to provide air transport service s as an air carrier mu st obtain two separate 
authorizations from the DOT:  "economic" aut hority from the Office of the Secretary of 
Transportation, and "safety" authority from the FAA.  The FAA's Air Traffic Organization (ATO) established in February 2004 to oversee the U.S. air traffic system.  It provides all air traffic services 
in the United States.  In addition, any authority to operate in U.S. air commerce granted by the 
Secretary of Transportation is conditional on the op erator also satisfying the security requirements 
established by the Transportation Security Administ ration of the Department of Homeland Security. 
83. U.S. air carriers are still required to be under the actual control of U.S. citizens.
62  Non-U.S. 
citizens may not own more than 25% of the voting inte rest in a U.S. air carrier.  The Department of 
Transportation may, on a case-by-case basis, allow total foreign equity investments (voting and 
non-voting) above 25%, as long as actual control remains in the hands of U.S. citizens.  In all cases,  
the president and two thirds of the board of direct ors and other managing officers must also be U.S. 
citizens.  The restrictions on foreign ownership of airlines based in the United States were first 
included in the Air Commerce Act of 1926 and set at 75% domestic ownership in the Civil Aeronautics Act of 1938.
63 
84. The FAA's War Risk Aviation Insurance Program  provides war risk hull loss and passenger 
and third-party liability insurance to the domestic  airline industry, as required by the Homeland 
Security Act of 2002 as amended by the FAA Extens ion Act of 2010.  The authorities note that the 
Program charges premiums and has accumulated reserv es to pay claims.  They state that the general 
procedure used to develop the premium structur e for each of the three insurance categories is: 
− To adopt a plausible accident scenario basis for the severity and frequency of future hostile 
acts against aviation (the premiums for all thr ee insurance categories assumed an accident rate 
of one catastrophic incident every two years, or equivalently, one-half accident per year); 
− To estimate the reasonable liability implicati ons for each insurance category under that 
accident scenario; 
− To calculate the aggregate premium level that would be needed (per year and over the term of 
the policy) to cover the expected liab ility under each insurance category;  and 
− To allocate those premiums among the airlines on the basis of fair and relevant factors. 
85. The United States has GATS commitments with resp ect to aircraft repairs and maintenance, 
and has scheduled MFN exemptions with regard to  the sale and marketing of air transport services 
and the operation and regulation of CRS services. 
86. Since end 2007 the United States has complete d negotiations on "open-skies" agreements 
with Australia, Barbados Croatia, Kenya, Laos, Ar menia, Zambia, Israel, and Trinidad and Tobago, 
                                                      
62 WTO document WT/TPR/S/200/Rev.1. 
63 Dempsey (2008). United States WT /TPR/S/235/Rev.1 
 Page 101 
 
 
and with the European Commission on further liberalization of air transport.64  It also initialled an 
MOU with Japan in December 2009, which woul d, upon signature, implement an open-skies 
agreement.  The United States also forms part of  the Multilateral Agreement on the Liberalization of 
Air Transport (MALIAT) concluded between vari ous members of APEC (Brunei, Chile, Cook 
Islands, United States, New Zealand, Samoa, Si ngapore, Tonga, and Mongolia).  Altogether, the 
United States has negotiated Open Skies agreem ents with 99 partners, (counting the EU as 27). 
87. The second-stage U.S.-EU Air Transport Agre ement was signed on 24 June 2010.  With 
respect to ownership of U.S. and EU airlines, th e agreement provides for the possible expansion of 
opportunities in the future, contingent on confirmation that reciprocal investment is allowed.  The 
U.S.-EU Joint Committee, which meets at least once a year, is mandated to review developments and 
to improve cooperation, including appropriate recomme ndations in this regard.  Cabotage restrictions 
in the United States remain and domestic transport may only be provided by U.S. carriers except in 
limited circumstances.  Furthermore, the crews engaged in domestic air passenger and freight service must be U.S. nationals or resident aliens, and other restrictions apply.
65 
(ii) Maritime transport 
(a) Main features 
88. In 2008, waterborne commerce in the United St ates was about 2.3 billion tonnes, down 0.5% 
from its peak in 2006, while the share of foreign trade remained fairly constant at about 60%.66  U.S. 
foreign trade accounted for 17% of global waterborne trade in 2008.  Foreign container trade grew by 
35% to 235 million tonnes from 2003 to 2008 but then  contracted in 2009 to 214 million tonnes.  
Container trade remains concentrated in a few ports;  the top four container ports (Los Angeles, Long 
Beach, New York/New Jersey, and Savannah) account ed for 60% of container imports in 2009 and 
47% of container exports.  Container cargo represen ts only 17% of U.S. international ocean-borne 
trade in terms of tonnage but 56% in terms of cargo value.67 
89. Domestic trade accounts for 40% of waterborne trade in the United States.  The Great Lakes 
represented over 9% of the domestic wate rborne trade in 2008 (Chart IV.2). 
90. The trade deficit in freight and port services declined from US$20.7 billion in 2005 to nearly 
US$9.8 billion in 2009 as exports of these services increased faster than imports between 2006 and 
2008 and then, in 2009, they fell by less than imports.68 
91. In 2008, there were 675 U.S.-owned ocean and Great Lakes vessels of which 238 were under 
the United States' flag and 145 had unrestricted coas twise trading privileges (Jones Act vessels – see 
below).  The number of ocean-going vessels sailing unde r the flag of the United States has declined 
by 5% since 2003. 
                                                      
64 An "open-skies" agreement, while normally a signifi cant step towards deregulation, is defined as not 
having limits on the number of flights or operating po ints, but this may not be extended to all freedoms. 
65 WTO (2008). 
66 Department of Transportation (2009) Maritime Administration. 
67 Department of Commerce online information, USA Trade Online, U.S. Bureau of Census.  
Viewed at:  http://www.usatradeo nline.gov/, 27 April, 2010. 
68 BEA (2010b). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 102 
 
 
Chart IV.2
Waterborne trade in th e United States, 2008
(Million tonnes)
Source:Imports
(892)Great Lakes
(85)
Inland
(567)
Exports
(484)Coastwise
(182)Others
(87)
Petroleum
(606)
LNG
(10.1)Grain
(118.9)Container
(235.1)Other
(284.9)Coal
(102.8) Iron ore
(18.7)
U.S. Department of Transportation, Maritime Administration (2009), U.S. Water Transportation Statistical 
Snapshot .  Viewed at:  http://www.marad.dot.gov/documents/US_Water_Transportati on_Statistical_
snapshot.pdf.
 
(b) Regulatory framework 
92. The regulatory framework for maritime transpor t in the United States has not changed during 
the review period.  The United States Coast Guard of the Department of Homeland Security is the 
primary federal agency responsible for regulating maritime transport, including regulating vessel 
safety and security, environmental protection and res ponse, and the licensing of mariners.  In addition, 
the Maritime Administration (MARAD) of the Departme nt of Transportation is responsible for certain 
maritime regulations, programmes that promote the use of waterborne transportation and its 
integration with other segments of the transportatio n system, and the viability of the U.S. merchant 
marine.  MARAD is also responsible for a variet y of programmes involving ships and shipbuilding, 
port operations, environment, and safety.  It also ma intains a reserve fleet of cargo ships for national 
emergencies, and operates a training academy for merchant seamen and provides training vessels for 
six state maritime academies. 
93. The independent Federal Maritime Commission (FMC) is responsible for the regulation of 
ocean transportation intermediaries, ocean common carriers, cruise operators, and marine terminal 
operators.  The FMC also operates a Consumer  Affairs and Alternative Dispute Resolution 
programme.  The FMC is responsible for the implem entation of an alternative competition regime for 
ocean common carriers and marine terminal operators, whose collaboration may qualify for 
exemption from the generally applicable antitrust laws under the Shipping Act.  Under the mandates 
of the Controlled Carrier Act, Section 19 of the Me rchant Marine Act, 1920, and the Foreign Shipping United States WT /TPR/S/235/Rev.1 
 Page 103 
 
 
Practices Act, the FMC also monitors the laws a nd practices of foreign governments and carriers for 
unreasonable practices affecting U.S. ocean-borne foreign commerce.69 
94. The United States did not table an offer in the WTO Negotiations on Maritime Transport 
Services, suspended in June 1996.  It has not tabled an offer with respect to maritime transport 
services in its offer on services in the Doha Development Agenda.70 
(c) Water-borne trade 
95. As reported in previous Trade Policy Reviews, cabotage of goods and passengers is restricted 
by Section 27 of the Merchant Marine Act of 1920 (Jones Act) and the Passenger Vessel Services Act 
of 1886.  Under the Jones Act, cabot age is reserved for ships registered, built, and maintained in the 
United States, owned by a domestic individual, includ ing corporations, and three quarters of the crew 
must be citizens of the United States.  Accordi ng to MARAD, the Jones Act fleets totals 38,000 
vessels (including the 145 ocean and Great Lakes vessels referred to above) which represented an 
investment of US$48 billion and moves over 1 billion tonnes of cargo annually.71 
96. Requests for waivers of the provisions of the J ones Act and the Passenger Vessel Services Act 
are made to the Commissioner, U.S. Customs and Border Protection (CBP).  CBP is required to 
consult with MARAD and, as a matter of practice, also  consults with other interested agencies before 
a waiver is granted or denied.  Waivers of the Jones Act are only granted by the Secretary of the 
Department of Homeland Security only "in the inte rest of national defence",  and consequently, only 
in "extremely rare" cases.72  MARAD is responsible for canvassi ng domestically flagged shipping to 
locate suitable vessels.  Additionally, MARAD has sole res ponsibility for the programme for small 
passenger vessels to apply for waivers.  Since 2006,  one anchor-handling vessel was granted a waiver 
in April 2010 to operate in waters off Alaska, and waivers have also been gr anted in response to the 
oil spill cleanup arising from the Deepwater Ho rizon incident in the Gulf of Mexico. 
97. The United States has bilateral maritime agreemen ts in effect with Brazil (signed September 
2005), China (December 2003), Russia (June 2001) and Viet Nam (March 2007).  It also has an 
exchange of letters with Japan  (November 1997) on port services, which has the effect of an 
agreement.73 
98. The United States administers a number of maritime transport programmes related to national 
defence: 
− The Maritime Security Program (MSP) provides a fixed payment to operators of domestically 
flagged vessels under the Maritime Security Act of 2003.  Annual spending of up to 
US$156 million was authorized for FY2006-08, US$174 for 2009-11;  and US$186 for 
FY2012-1574;  In FY2009, 59 vessels received MSP pa yments totalling US$166.5 million, or 
an average of US$2.8 million per vessel; 
                                                      
69 FMC online information.  Viewed at:  http://www.fmc.gov. 
70 WTO document TN/S/O/USA, 9 April 2003. 
71 MARAD (2008). 
72 MARAD online information.   Viewed at:  http://www.marad.dot.gov/ships_shipping_landing_page/ 
domestic_shipping/Domestic_Shipping.htm. 
73 MARAD online information.   Viewed at:  http://www.marad.dot.gov/about_us_landing_page/ 
international_activities/international_agreements /International_Agreements.htm [March 2010]. 
74 MARAD online information.  Viewed at:  http ://www.marad.dot.gov/ships_shipping_landing_page/ 
domestic_shipping/Domestic_Shipping.htm [March 2010]. WT/TPR/S/235/Rev.1 Trade Policy Review 
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− The Voluntary Intermodal Sealift Agreement (V ISA) programme provides the Department of 
Defense with assured access to commercial intermodal capacity during time of war or national emergency.  VISA participants receive priority for award of DOD peacetime ocean freight contracts;  and
75 
− The Cargo Preference Act of 1904 requires a ll items procured for or owned by defence 
agencies to be carried exclusively on U.S.-flagged vessels. 
99. Under the American Recovery and Re investment Act of 2009 MARAD received 
US$100 million for the Small Shipyards Grant Program, up from US$10 million in 2008.  In August 2009, the Department of Transportation announced 70 gran ts worth US$98 million under the 
Program which provides grants of up to 75% of the cost of a wide variety of infrastructure and training projects.
76  Port infrastructure projects are also e ligible for projects under the Transportation 
Investment Generating Economic Recovery.77 
100. In addition, existing legislation applies pref erences to using domest ically flagged vessels 
transporting goods under government programmes: 
− The Cargo Preference Act of 1954 requires that at least 50% of the gross tonnage of all 
government-generated cargo be transported on  privately owned, domestically flagged 
commercial vessels, to the extent such vessels are available at fair and reasonable rates.  The 
Act also requires that shipments from or to th e Strategic Petroleum Reserve use domestically 
flagged tankers for at least 50% of oil transport; 
− The Food Security Act of 1985, requires that 75% of agricultural cargoes under certain USDA 
and USAID foreign assistance be carried on domestically flagged vessels:  It also established the ocean freight differential (OFD) programme, which reimburses USDA and USAID for the additional cost of using these vessels;  and 
− Public Resolution No. 17 of 1934 requires that exports of goods that benefit from export loans 
or credit guarantees from the Export Import Bank, must be carried in U.S. vessels, although 
the vessels of a recipient country may be gran ted access to 50% of those cargoes, where there 
is no discriminatory treatment against U.S.-flag ca rriers.  Waivers may be granted, subject to 
reciprocal treatment for U.S.-flag vessels by the recipient country.
78 
101. The carriage of goods for international trade by liner services has traditionally been exempt 
from antitrust rules, and subject to regulation.  Under the Ocean Shipping Reform Act (OSRA) of 
1998, agreements among liner operators  and marine terminal operators to discuss, fix, or regulate 
transportation rates, and other conditions of service, or cooperate on operationa l matters must be filed 
with, and examined by the Federal Maritime Commi ssion.  The Act also requires ocean carriers to 
publish tariff rates and charges for carriage for trad e with foreign countries.  The FMC also reviews 
the rates of government-controlled ocean carriers to  ensure that the commercial carriers with whom 
they compete are not unfairly disadvantaged. 
                                                      
75 MARAD online information.  Viewed at:  http ://www.marad.dot.gov/ships_shipping_landing_page/ 
national_security/vol_intermodal_sealift_agreement/vol_intermodal_sealift_agreement.htm [March 2010]. 
76 MARAD online information .  Viewed at:  http://www.marad.dot.gov/about_us_landing_page/ 
marad_recovery_ act/recove ry.htm. [March 2010]. 
77 Department of Transportation (2009). 
78 MARAD online information.  Viewed at:  http ://www.marad.dot.gov/ships_shipping_landing_page/ 
cargo_preference/Ca rgo_Preference_Landing_P age.htm [March 2010]. United States WT /TPR/S/235/Rev.1 
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102. Under the Foreign Shipping Practices Act of 1988 the FMC is required to monitor and 
investigate conditions arising from foreign governme nt or business practices in the U.S. foreign 
shipping trades.  The Commission is authorized to take action to addr ess "unfavourable shipping 
conditions in U.S. foreign commerce and may im pose penalties".  No action was taken in FY2009.79  
While the FMC continues to monitor potentially rest rictive foreign shipping laws and practices, the 
only current active item is Docket 96-20, Port Restric tions and Requirements in the U.S./Japan Trade. 
103. Although the European Union no longer appli es exemptions to competition law for liner 
shipping, the United States has not indicated that  it intends to move in a similar direction. 
(4) TELECOMMUNICATIONS  
(i) Market structure80 
104. The telecommunications market in the United States  is the largest in the world by revenue;  at 
US$393 billion in 2007, it grew by 3% per year between 2004 and 2007.  Annual investment also 
increased steadily since in the same period, r eaching US$74.5 billion in 2007.  Although this 
represented more than 40% of all investment in telecommunications in OECD countries, it is lower 
than the peak of US$113 billion in 2000.  As in  other countries, revenue from mobile services and 
data continued to grow while fixed-line voice revenues declined. 
105. In 2007, there were 1,248 fixed-line operato rs, 177 mobile operators, 33,736 cable TV 
systems, and 74.7 million broadband subscribers.  Despite the low fixed-line charges in the 
United States, analogue and ISDN lines continue d to decline, falling by 10% in 2005-07 to 
151 million, as broadband and mobile carrying both data and voice replaced them.  Mobile phone 
subscriptions continue to increase and reached just over 91 per 100 inhabitants in 2009.  Mobile 
broadband penetration (3G and 4G) has been incr easing rapidly with over 98% of the population 
served by one or more m obile broadband providers81 and over 28% of subscrib ers reported to have 3G 
devices in September 2008.82 
106. Broadband connections continue to increase.  The authorities note that 64% of households 
had broadband access in February 2010, up from 51% in 2007.83  According to the OECD, in 2008, 
the primary access technologies for broadband were by cable and DSL although fibre is gaining 
market share.  As in other countries, radio, television, internet and voice telephone services are 
merging, although for many consumers and supplie rs they remain separate products.  Voice over 
internet protocol (VoIP), video streaming, br oadband by cable, wireless internet, and other 
developments mean that "broadcasters, telecomm unication operators (fixed and mobile), Internet 
service providers, content aggregators, advertisers a nd users are all active parts of a new, converged 
market"84, which is also drawing in other data and entertainment providers. 
107. Due to the digitization of all terrestrial broa dcasting in the United States, additional spectrum 
has been made available for wireless telecommunicati ons services.  The first U.S. auction of spectrum 
for commercial mobile wireless services, as a result of the digital television transition, took place in 
2000.  There have been subsequent auctions of li cences in additional spectrum blocks subject to the 
digital transition.  Since June  2009, all full-power over-the-air  television broadcasts in the 
                                                      
79 FMC (2010). 
80 Unless otherwise indicated the data in this section are from OECD (2009c). 
81 FCC (2010a). 
82 Sullivan, E (2008). 
83 Department of Commerce (2010). 
84 OECD (2009c), p. 16. WT/TPR/S/235/Rev.1 Trade Policy Review 
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United States have been digita l-only using the ATSC standard.85  There is no television licence fee for 
households to own a television in the United States. 
108. In 2007, cable was the main type of distri bution for television, accounting for 57.5% of 
households with a television.  Cable is also u sed to deliver broadband communications, highlighting 
the convergence of different telecoms services.  Ho wever, direct broadcast satellite (DBS) continued 
to make inroads, and accounted for 27% of hou seholds.  Terrestrial made up the remainder. 
(ii) GATS commitments 
109. The United States' commitments on basic telecommun ications attached to the Fourth Protocol 
of the GATS cover most services.86  Excluded from the commitments are one-way satellite 
transmissions direct-to-home (DTH), direct broad cast satellite (DBS) services, and digital audio radio 
services (DARS). 
110. The United States has taken an exemption under GATS Article II (MFN) to allow for 
"differential treatment of countries due to applicati on of reciprocity measures or through international 
agreements guaranteeing market access or nationa l treatment" for DTH and DBS television services 
and digital audio services (DARS).87  The United States also reserved the right to "allow the deduction 
for expenses of an advertisement carried by a fore ign broadcast undertaking and directed primarily to 
a U.S. market only where the broadcast undertaking is located in a foreign country that allows a similar deduction for an advertisement pl aced with a U.S. broadcast undertaking".
88  The purpose of 
this MFN exemption is to "encourage the allowa nce of advertising expe nses internationally". 
(iii) Regulatory and policy authority 
111. The Federal Communications Commission (FCC) is responsible for "regulating interstate and 
international communications by radio, television,  wire, satellite, and cable.  The FCC's jurisdiction 
covers the 50 states, the District of Colombia, and U.S. possessions."89 The FCC was established by 
the Communications Act of 1934, as amended, as an independent government agency.  Intra-state 
basic telecoms services continue to be  regulated by the state authorities. 
112. The National Telecommunications and Informati on Administration (NTIA) of the Department 
of Commerce is the principal advisor to the Presi dent on telecommunications and information policy 
issues.90  The International Communication and Informa tion Policy (CIP) Office in the Department of 
State, along with the FCC and NTIA, represent the Un ited States in bilateral and multilateral affairs 
concerning telecommunications, the Internet, and information technology.91 
113. The United States Trade Representative is respons ible for developing a nd coordinating trade 
policy, including the negotiation and enforcement of specific provisions relating to 
telecommunications in the trade agreements  to which the United States is a party. 
                                                      
85 For more about the Advanced Television Systems Committee see:  http://www.atsc.org/cms/ 
[February 2010]. 
86 WTO (2008);  and WTO documents GATS/SC/90/Suppl.2, 11 April 1997 and S/DCS/W/USA, 
27 February 2003. 
87 WTO document GATS/EL/90/Suppl.2, 11 April 1997. 
88 WTO document GATS/EL/90, 15 April 1994. 
89 For more information on the Federal Communications Commission see:  http://www.fcc.gov/ 
aboutus.html [June 2010]. 
90 For more information on the NTIA see:  h ttp://www.ntia.doc.gov/about. html [February 2010]. 
91 For more information on the International Communication and Information Policy Group 
see:  http://www.state.gov/e/eeb/cip/abt/index.htm [February 2010]. United States WT /TPR/S/235/Rev.1 
 Page 107 
 
 
114. The principle legislation covering telecommuni cations is the Communications Act of 1934 
and its amendments.  The Telecommunications Ac t of 1996 was a major reform that sought to 
improve competition by:  reducing barriers to entr y for telecoms services;  obliging incumbents to 
permit new entrants to connect with their networ ks;  allowing the removal of restrictions on the 
provision of long-distance services by regional Bell operating companies when certain conditions had 
been met;  and adopting rules for intercarrier compensation.92 
115. The issue of intercarrier compensation continues to be a subject of discussion.  In 
November 2008, the FCC released a Further Noti ce of Proposed Rulemaking, seeking comments on 
proposals to comprehensively reform rules go verning payments between service providers 
(intercarrier compensation) for the origination and termination of communications.  The National 
Broadband Plan (NBP), delivered to Congress in  March 2010 and under review by the Executive 
Branch before the NBP's recommendations are fo rmally adopted, also recognizes the need to 
comprehensively reform the intercarrier compensati on system.  In April 2010, the FCC announced its 
agenda for implementing key recommendations in the National Broadband Plan, which includes an 
intercarrier compensation Notice of Proposed Rulema king expected in the fourth quarter of 2010. 
116. Since the last TPR Report on the United States in  2008, there have been no major changes to 
the regulatory authority or legal framework for telecoms.  Section 310 of the Communications Act, restricts the granting of a common carrier wireless licence to foreign governments, as well as to any 
non-U.S. citizens or corporations, or any corporat ion with more than 20% foreign ownership.  
However, the FCC may grant a licence to a U.S. co mpany that is controlled by a holding company in 
which foreign individuals, corporations, or governme nts own or vote up to 100% of the capital stock.  
The FCC gives preference to foreign investments by other WTO Members, who are treated with a refutable presumption that foreign investment from them does not pose competitive concerns in the U.S. market.  In all cases, the FCC is authorized to attach conditions to a licen ce, or to deny a licence, 
if it is in the public interest to do so. 
117. The FCC seeks the advice of other government  agencies on matters concerning national 
security, law enforcement, foreign policy and trade policy concerns when it considers an application 
to provide international telecoms services or to take  control of an existing provider of domestic or 
international telecoms services.
93 
118. The FCC has also proposed creating rules to ensu re net neutrality, that is, all content on the 
Internet is equally accessible and there is  no discrimination among different contents.94 
119. The American Recovery and Reinvestment Act of 2009 (the Recovery Act) requires the FCC 
to develop a plan to deliver broadband to everyone in the United States.95  The purpose of the FCC's 
plan, which was submitted to Congress in March 2010 and under review by the Executive Branch 
before the National Broad Band Plan's recommendati ons are formally adopte d, is to "include a 
detailed strategy for achieving affordab ility and maximizing use of broadband."96  The Recovery Act 
also makes available US$4.7 billion to the NT IA for the Broadband Technology Opportunities 
                                                      
92 The Communications Act of 1934 as amended by the Telecommunications Act of 1996.  
Viewed at:  http://www.fcc.gov/Repo rts/1934new.pdf [F ebruary 2010]. 
93 OECD (2009c). 
94 FCC (2009), Notice of Proposed Rule Making, October.  Viewed at:  http://hraunfoss.fcc.gov/ 
edocs_public/attachmatch/FCC-09-93A1.pdf [July 2010].  
95 American Recovery and Reinvestment Act of 2000, Title VI – Broadband Technology Opportunities 
Program, Section 6000.  Viewed at:  http://en.wiki source.org/wiki/American_Recovery_and_Reinvestment_ 
Act_of_2009 [February 2010]. 
96 FCC (2010b). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 108 
 
 
Program (BTOP) that will support the deployment  of broadband infrastructure, enhance and expand 
public computer centers, and encourage sustainabl e adoption of broadband service.  NTIA will also 
develop and maintain a nationwid e public map of broadband service capability and availability.   
120. In addition, the Recovery Act states that up to US$350 million may be used to implement the 
Broadband Data Improvement Ac t (Public Law No. 110-385) and to develop and maintain a 
broadband inventory map.  It also  permits the NTIA to transfer fu nds to the FCC for the purposes of 
creating a national broadband plan.  The Recovery Act also allocates US$2.5 billion to the Department of Agriculture to ac celerate broadband deployment in rural areas of the country through 
the Broadband Initiative Program (BIP).  Under the BIP, the Department of Agriculture's Rural 
Utilities Service will award grants, loans, and loan/grant combinations to fund broadband 
infrastructure throughout the country. 
121. The authorities stated that, in June 2010, th e President signed a Presidential Memorandum 
committing the United States government to make 500 megahertz of spectrum available for wireless 
technology by the end of the decade.  This would nearly double the total amount of spectrum available for wireless technologies.  This is also  consistent with the FCC’s recommendation in the 
National Broadband Plan that it should make 500 megahertz of spectrum newly available for 
broadband within 10 years.  Amongst other thi ngs, the Presidential Memorandum requires that the 
National Telecommunications and Information Admi nistration (NTIA), in collaboration with the 
FCC, complete a plan and timetable by 1 Octobe r 2010 for identifying and making available this 
additional 500 megahertz of spectrum over the next 10 years.
97 
(iv) International settlements policy 
122. The FCC's International Settlements Policy refe rs to the settlement between carriers of 
charges for international telecommunications traffi c.  The Policy originated in the 1930s and was 
incorporated into the FCC's rules in the 1980s.  It  was designed to create a unified bargaining position 
between domestic and foreign carriers at a time when many countries had monopoly service 
providers.  Under the Policy, agreements between domestic and foreign carriers must not discriminate 
among domestic carriers;  a domestic carrier must re ceive the same proportion of incoming traffic as 
it provides in outbound traffic;  and the accounting ra te is divided equally between the domestic and 
the foreign carrier.  In 1997, the FCC issued an  Order which requires U.S. carriers to negotiate 
settlement rates cannot exceed benchmark rates set out in the Order.  Since the start of 2004, the FCC 
stopped applying the Policy to routes for which U. S. carriers had negotiate d benchmark compliant 
rates.98  The authorities state that, as of May 2010, 16 5 international routes have been exempted from 
the International Settlements Policy and 38 routes re main subject to it.  Separately, the Commission 
maintains a "List of Foreign Carriers that ar e Presumed to Possess Market Power in Foreign 
Telecommunications Markets".  This list of carriers is used for the purposes of implementing the Policy and certain other FCC rules on switched ser vices over private lines and U.S. international 
common carriers and cable landing licensees.
99 
123. A petition from U.S. carriers to remove the Policy from the 38 routes to which the policy 
continues to apply is currently before the Commission.  Commission staff are preparing 
recommendations to the Commission on the petition and possible changes to related Commission 
rules.  In addition, in 2004 the Commission initiate d a Notice of Inquiry on the effect of mobile 
                                                      
97 White House (2010), Presidential Memorandum:  Unleashing the Wireless Broadband Revolution, 
Office of the Press Secretary.  Viewed at:  h ttp://www.whitehouse.gov/the-press-office/presidential-
memorandum-unleashing-wireless-broadband-revolution [July 2010]. 
98 FCC (2008a). 
99 FCC (2007b). United States WT /TPR/S/235/Rev.1 
 Page 109 
 
 
termination rates on U.S. customers.  The procee ding resulted in internal staff analysis with 
continuing Commission review of the issue. 
(v) Satellite services 
124. The Domestic and International Satellite Cons olidation Order (DISCO II) was intended to 
meet the United States' commitments in the WT O Agreement on Basic Telecommunications Services 
as they relate to access to satellites.100  Under the Order, an earth station operator may apply for a 
licence to access a foreign satellite or the satellite operator may file a Petition for Declaratory Ruling 
requesting authority to serve customers in the United States.  Foreign operators may also ask that their 
satellites operating in the conventional C-, Ku-, or  Ka-bands be included in the Permitted Space 
Station List.  Once a foreign satellite is on the Perm itted List, all U.S. earth stations with "routine" 
technical parameters may access the satellite.  There are 29  foreign satellites on the Permitted Space 
Station List;  and 21 other foreign satellites are authorized to provide service in the United States. 
125. All requests under the DISCO II Order are examined  to ensure they are consistent with the 
public interest provisions of the Communicati ons Act, which include competition, spectrum 
availability, eligibility requirements such as legal,  technical, and financia l qualifications, operating 
requirements, and national security, law enforcemen t, foreign policy, and trade policy concerns. 
126. The United States excluded direct-to-home (DTH), direct broadcast services (DBS) and 
digital audio services (DARS) from its commitments under the Agreement on Basic Telecommunications in the WTO.  For these ser vices, the FCC applies an ECO-Sat (effective 
competitive opportunities for satellites) analysis, which requires the applicant to show that satellite 
systems licensed in the United States may provide a si milar service in the applicant's home market.  If 
this is not the case, and unless the Commission determ ines that there is a strong public interest reason 
in favour of the service, the FCC will not permit a foreign satellite system to provide these services to the United States' market.
101  The United States has bilateral agreements covering some of these 
GATS-excluded services with Mexico (DARS and DTH), Argentina (DTH and DBS), and Canada (DARS).
102  In total, the FCC has allowed 11 foreign  satellites to provide DTH, DBS and/or SDARS 
to the U.S. market. 
(vi) Media ownership rules 
127. In its last Quadrennial Regulatory Review of its broadcast ownership rules, the FCC 
maintained certain restrictions on media ownershi p such as the prohibition on mergers between the 
top four television broadcast networks (ABC, CBS, F ox, and NBC) and restrictions on the numbers of 
television and radio stations any entity may own in a single market.103  The Commission changed its 
rules in order to permit the cross-ownership of newspapers and broadcasters in certain cases, depending on the size of the market and the ma rket share of the entities proposing to merge.  
However, the changes to those rules are currently subject to a court challenge. 
128. In August 2009, the U.S. Court of Appeals for th e District of Colombia Circuit struck down 
the FCC rule that set a 30% limit on the number of MVPD subscribers a cable operator may serve 
nationwide.  Because the rule has been vacated by the court, the F CC will need to develop a new rule. 
                                                     
 
100 FCC (1997).  
101 FCC (2007a). 
102 FCC (2009) 
103 WTO document WT/TPR/S/200/Rev.1;  and FCC (2008). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 110 
 
 
129. In November 2009, the FCC initiated the 2010 Qu adrennial Review of broadcast ownership 
rules with a series of workshops intended to get pu blic input to its future decision on what, if any, 
changes should be made to its media ownership rules.104 
(5) PROFESSIONAL AND BUSINESS SERVICES  
(i) Introduction 
130. The surplus in international trade in bus iness, professional, and technical services105 continued 
to grow in 2007-08.  The main exports are manage ment and consulting services, followed by research 
and development, equipment services (installation, ma intenance, and repair), and legal services.  The 
main imports are the same as the main expor ts, except for legal services (Chart IV.3). 
131. As noted in the previous Trade Policies Review  of the United States, individual states have 
competence for the regulation, licensing, and over sight of the professions practised within their 
jurisdictions and the federal government does not it self evaluate diplomas or credits or recognize 
qualifications.106  Although there is no federal-level licensure that supersedes state regulation, and the 
different regulatory systems may create different  market access conditions  among the states, some 
professions are subject to national qualifying examinations recognized in most states as part of the 
licensing process.  Furthermore, there is considerable convergence among states for some 
professions.107  In cases, such as accounting, architecture, and engineering services, there are single 
exams by professional bodies that are recognized nationally.  In many cases, the states also use independent institutions, including  professional associations, to set  and enforce regulations and 
standards.
108 
132. The H-1B visa programme allows for the entry of foreign professionals in "speciality 
occupations".  The duration of stay is three years, extendible to six, and the annual cap on H-1B admissions is 65,000 per fiscal year plus an add itional 20,000 foreign nationa ls holding a master's 
degree or higher from a U.S. university.  In ad dition, H-1B workers who are petitioned for or 
employed at an institution of higher education or its affiliated or related non-profit entities or a 
non-profit research organization, or a government resear ch organization are not subject to this limit.  
In recent years demand for H-1B visas has been st rong and the caps were reached shortly after the 
applications process was opened on 1 April each year;  for example, on 8 April 2008, the USCIS announced that the cap for the 2009 fi scal year had already been reached.
109  However, interest waned 
in 2009 and the caps for the 2010 fiscal year  were not reached until December 2009.110 
                                                      
104 FCC (2010c). 
105 There is no internationally recognized definiti on of the term "professional services".  In the 
United States' BEA statistics the term "business, profes sional, and technical services" includes:  computer 
services;  management and consulting services;  research and development and testing services;  operational 
leasing;  accounting, auditing, and b ookkeeping services;  advertising;  architectural, engineering, and other 
technical services;  construction;  industrial engineering;  installation, maintenance, and repair of equipment;  
legal services;  medical services;  mining;  sports and pe rforming arts;  trade-related services;  training services;  
and other. 
106 Department of Education (2007). 
107 WTO (2008). 
108 Williams and Nersessian (2007). 
109 USCIS online information.  "USCIS Reaches FY 2009 H-1B Cap".  Viewed  at:  http://www.uscis. 
gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=c5b6628090e29110VgnVCM1000004718190aRCRD&vgnextchannel=68439c7755cb9010VgnVCM10000045f3d6a1RCRD [March 2010]. 
110 USCIS online information.  "USCIS Reaches FY 2010 H-1B Cap".  Viewed  at:  http://www.uscis. 
gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=153a1638367b5210VgnVCM100000082ca60aRCRD&vgnextchannel=b56db6f2cae63110VgnVCM1000004718190aRCRD [June 2010]. United States WT /TPR/S/235/Rev.1 
 Page 111 
 
 
133. The U.S.-Chile and U.S.-Singapore trade agreements include provisions that allow 
non-immigrant professionals to enter the United States temporarily to engage in business activities.  The numbers are limited to 1,400 for Chile
111, and 5,400 for Singapore.112  The H1B1 admission 
category was introduced in 2004 to implement the temporary entry provisions for these agreements.  
In addition, citizens of Mexico or Canada may enter the United States temporarily to work in a 
professional occupation recognized under the terms of the NAFTA without numerical limitations. 
020,00040,00060,00080,000100,000120,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Chart IV.3
Exports and imports of business, profe ssional, and technical services, 1997-2008
Source: Imports Exports(US$ million)
BEA (2010), International Economic Accounts, February. Viewed at: 
http://www.b ea.gov/international/international_services.htm#detailedstatisticsfor.
 
(ii) Accounting services 
134. Although the United States has an overall surplu s in trade in the business, professional, and 
technical services category, it has a deficit in th e accounting, auditing, and bookkeeping sub-category 
(Chart IV.4).  However, trade is a small part of the total value of the accounting and bookkeeping 
sector, which had a gross output of about US $128 billion in 2008 with  export revenues of 
US$1.4 billion.  There are thousands of accountancy  firms in the United States, many of which are 
                                                      
111 Chile-United States Free Trade Agreement.  Ch apter 14.  Viewed at:  http://www.ustr.gov/ 
trade-agreements/free-trade-agreements /chile-fta/final-text [March 2010]. 
112 United State-Singapore Free Trade Agreement .  Chapter 11.  Viewed at:  http://www.ustr.gov/sites/ 
default/files/uploads/agreements/fta/singapore/ asset_upload_file708_4036 .pdf [March 2010]. WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 112 
 
 
part of one of the Big 4 (PricewaterhouseCoopers , Deloitte Touche Tohmatsu, Ernst & Young, and 
KPMG) each of which has nearly 100 offices around the country. 
05001,0001,5002,0002,500
2006 2007 2008Chart IV.4
Trade in accounting, auditing, and bookkeeping, 2006-08
Source: Imports Exports(US$ million)
BEA (2010), International Economic Accounts, February. Viewed at: 
http://www.b ea.gov/international/international_services.htm#detailedstatisticsfor.
 
 
135. Issuing reports on financial statements and other attestations and financial compilation 
services are reserved for accountants and auditors who must be licensed by, or have a practice privilege from, the regulatory authorities of each state where they wish to practise.  Auditors for all 
companies are regulated by the State Boards of  Accountancy, and auditors with public company 
clients (defined as "issuers" under the Securities Exchange Act of 1934), are also regulated by the 
SEC and the Public Company Accounting Oversight Board (PCAOB).  The PCAOB is a private-
sector entity created under the Sarbanes-Oxley Act of 2002 to oversee auditors of  public companies.  
The Board has five members appointed by the SEC , and is funded mainly by annual fees on public 
companies in proportion to their market capitalization.
113 
136. At the federal level, the Office of the Chief Accountant (OCA) in the Securities and Exchange 
Commission (SEC) is responsible for establishing a nd enforcing accounting and auditing standards.  
The Office works with the private-sector accoun ting bodies, such as the Financial Accounting 
Standards Board and the PCAOB as well as with international accounting, auditing, and regulatory 
                                                      
113 PCAOB online information, About the PCAOB.  Viewed at:  http://pcaobus.org/Pages/default.aspx. United States WT /TPR/S/235/Rev.1 
 Page 113 
 
 
bodies.  In this context, state regulators are res ponsible for private-company standard setting, for 
which they look to the FASB and AICPA for support.  At state level, each state (plus the District of 
Colombia, Puerto Rico, U.S. Virgin Islands, Guam , and the Commonwealth of the Northern Mariana 
Islands) has regulatory authority to adopt standa rds and license individuals and firms to practise 
public accounting.  The state boards have joined to c oordinate their efforts at the national level via the 
National Association of State Boards of Acc ounting (NASBA).  The NASBA seeks to improve 
uniformity of accounting standards as well as qua lification and licensing requirements among the 
states.114 
137. The American Institute of Certified Public Accountants (AICPA) is by far the largest 
professional accountants association in the United Stat es.  It works with state boards and NASBA in 
developing the Uniform Certified Public Account ancy (CPA) Examination.  Passing the Uniform 
CPA Examination is essential for CPA status, and CP A status is needed to practise accounting in all 
states of the United States.  In addition, candidates must have a required number of hours of accountancy and related education (normally 150 hour s) and work experience (minimally one year) 
(the so-called "3 Es" of exam , education, and experience).
115 
138. The AICPA and NASBA, through the Internationa l Qualifications Appraisal Board, have 
negotiated mutual recognition agreements with acc ountancy bodies in several countries, including:  
the Certified Practicing Accountants of Australia;  the Institute of Chartered Acc ountants in Australia;  
the Canadian Institute of Chartered Accountants;  the Instituto Mexicano de Contadores Públicos;  
Chartered Accountants Ireland;  and the New Z ealand Institute of Chartered Accountants.  
Professionals in good standing with these institutions may apply to sit the International Qualification 
Examination (IQEX) in lieu of taking the Uniform CPA Examination.116  Successful candidates may 
apply for licensure as a CPA in those states that have adopted the mutual recognition agreements. 
139. Since the Sarbanes-Oxley Act of 2002, which in creased accountancy requirements, there have 
been no major changes in federal legi slation affecting corporate accounting.117  However, the 
United States standard setters are in the process of converging U.S. Gene rally Accepted Accounting 
Principles (GAAP) with the International Financ ial Reporting Standards (IFRS) developed by the 
International Accounting Standards Board (IASB).  The SEC is engaged in a "work plan" that could 
move public company accounting into convergence with IFRS by 2015.  The move to the principle-based IFRS would represent a significant shift for the accountants and industry, which is 
why the standard setters have been working to harmonize the two systems for some time and the 
AICPA has been working to try to smooth the transition.
118 
(iii) Legal services 
140. The United States continues to run a large, a nd growing, trade surplus in legal services 
(Chart IV.5), although trade is only a small porti on of gross output of legal services, which was 
US$252 billion in 2008 with exports of US$7.3 billi on.  There are about 180,000 law offices in the 
United States and, although some are large firms, th e industry is quite fragmented with the 50 largest 
firms generating less than 15% of  revenue.  In 2008, there were over a million lawyers in the 
                                                      
114 NASBA (2010b). 
115 For information on specific licensing requirements of each St ate, see NASBA Accountancy 
Licensing Library at:  http://all.nasbatools.com/jurisdiction/list_jurisdiction [April 2010]. 
116 NASBA (2010a). 
117 WTO (2008). 
118 American Institute of Certified Public Accountants (2010). WT/TPR/S/235/Rev.1 Trade Policy Review 
Page 114 
 
 
United States;  about three quarters were in private practice.119  The American Bar Association 
(ABA), the American Law Institute, and other organizations represent lawyers as a profession. 
01,0002,0003,0004,0005,0006,0007,0008,000
2006 2007 2008Chart IV.5
Trade in legal services, 2006-08
Source: Imports Exports(US$ million)
BEA (2010), International Economic Accounts, February. Viewed at: 
http://www.b ea.gov/international/international_services.htm#detailedstatisticsfor.
 
141. Under the 10th Amendment to the Constitution, each st ate of the United States has sovereignty 
for its court system.  Therefore, each state has the au thority to set its own standards for qualifications 
to practise law.  In most cases, after finishing law school, the state's bar exam and the Multistate 
Professional Responsibility Examination (MPRE) must be passed.120  Other requirements must also be 
met before a legal service provider may call her/hi mself a lawyer, attorney, or counsellor and be 
admitted to legal practice.  Legal services in the United States must be supplied by natural persons. 
142. Many states also provide limited rights to practise law for certain categories, including 
foreign legal consultants.  There are 31 jurisdictions  with foreign legal consultant (FLC) rules (these 
31 jurisdictions represent 88% of the U.S. ma rket for legal services as measured by GDP).121  The  
                                                      
119 American Bar Association (2009). 
120 National Conference of  Bar Examiners (2010). 
121 National Conference of Bar Examiners (2010).  Comprehensive Guide to Bar Admission 
Requirements 2010 .  Viewed at:  http://www.ncbex.org/fileadmin/mediafiles/downloads/Comp_Guide/Comp 
Guide_2010.pdf [June 2010]. United States WT /TPR/S/235/Rev.1 
 Page 115 
 
 
FLC rules vary considerably from one state to another.122  In some states, FLCs are only entitled to 
provide advice on legal matters rela ting to the country where they hold a legal qualification;  in some 
other states they may also provide advice on international law and/or third-country law, and in other states an FLC can also provide advice on U.S. or stat e law if they rely on a local lawyer.  In some 
cases, the restrictions and requirements may be quite  severe;  for example, New Jersey requires that 
an FLC work in association with a New Jersey a ttorney who assumes full responsibility for the FLC;  
and North Carolina prohibits an FLC from being hi red as a partner, and requires that s/he be 
supervised by a North Carolina attorney.
123 
143. Foreign law firms may establish legal subsidiari es in the United States, with the same rights 
as U.S. firms, including the right to hire domestic lawyers.  These subsidiaries may operate by using 
local domestic lawyers or using foreign lawyers w ho have registered as FLCs or have qualified as 
domestic U.S. lawyers.  In 2008 and 2009, 3,874 fo reign applicants (in 25 jurisdictions) successfully 
passed a U.S. bar exam. 
144. The United States has made GATS commitments on market access and national treatment for 
the provision of foreign legal cons ultancy services in 16 jurisdictions.124 
 
                                                      
122 American Bar Association (2009b). 
123 Silver and DeBruin (2006). 
124 Alaska, California, Connecticut, District of Colomb ia, Florida, Georgia, Hawaii, Illinois, Michigan, 
Minnesota, New Jersey, New York, Ohio, Oregon, Texas, and Washington. United States WT /TPR/S/235/Rev.1 
 Page 117 
 
 
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