prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The World Trade Organization (WTO) is an international organization that administers the trade rules and agreements negotiated by its 164 members to eliminate trade barriers and create nondiscriminatory rules to govern trade  It also serves as an important forum for resolving trade disputes  The United States was a major force behind the establishment of the WTO in 1995 and the rules and agreements that resulted from the Uruguay Round of multilateral trade negotiations (1986-1994)  The WTO encompassed and expanded on the commitments and institutional functions of the General Agreement on Tariffs and Trade (GATT), which was established in 1947 by the United States and 22 other nations  Through the GATT and WTO, the United States and other countries sought to establish a more open, rules-based trading system in the postwar era, with the goal of fostering international economic cooperation, stability, and prosperity worldwide  Today, the vast majority of world trade, approximately 98%, takes place among WTO members  The evolution of U S  leadership in the WTO and the institution's future agenda have been of interest to Congress  The terms set by the WTO agreements govern the majority of U S  trading relationships  Some 65% of U S  global trade is with countries that do not have free trade agreements (FTAs) with the United States, including China, the European Union (EU), India, and Japan, and thus rely on the terms of WTO agreements  Congress has recognized the WTO as the "foundation of the global trading system" within U S  trade legislation and plays a direct legislative and oversight role over WTO agreements  U S  FTAs also build on core WTO agreements  While the U S  Trade Representative (USTR) represents the United States at the WTO, Congress holds constitutional authority over foreign commerce and establishes U S  trade negotiating objectives and principles and implements U S  trade agreements through legislation  U S  priorities and objectives for the GATT/WTO are reflected in trade promotion authority (TPA) legislation since 1974  Congress also has oversight of the USTR and other executive branch agencies that participate in WTO meetings and enforce WTO commitments  The WTO's effectiveness as a negotiating body for broad-based trade liberalization has come under intensified scrutiny, as has its role in resolving trade disputes  The WTO has often struggled to reach consensus over issues that can place developed against developing country members (such as agricultural subsidies, industrial goods tariffs, and intellectual property rights protection)  It has also struggled to address newer trade barriers, such as digital trade restrictions and the role of state-owned enterprises (SOEs) in international commerce, which have become more prominent in the years since the WTO was established  Global supply chains and advances in technology have transformed global commerce, but trade rules have failed to keep up with the pace of change; since 1995 WTO members have been unable to reach consensus for a new comprehensive multilateral agreement  As a result, many countries have turned to negotiating FTAs with one another outside the WTO to build on core WTO agreements and advance trade liberalization and new rules  Plurilateral negotiations, involving subsets of WTO members rather than all members, are also becoming a more popular forum for tackling newer issues on the global trade agenda  The most recent round of WTO negotiations, the Doha Round, began in November 2001, but concluded with no clear path forward, leaving multiple unresolved issues after the 10 th Ministerial conference in 2015  Efforts to build on current WTO agreements outside of the Doha agenda continue  While WTO members have made some progress toward determining future work plans, no major deliverables or negotiated outcomes were announced at the 11 th Ministerial conference in December 2017 and no consensus Ministerial Declaration was released  Many have concerns that the growing use of protectionist trade policies by developed and developing countries, recent U S  tariff actions and counterretaliation, and escalating trade disputes between major economies may further strain the multilateral trading system  The WTO is faced with resolving several significant pending disputes, which involve the United States, and resolving debates about the role and procedures of its Appellate Body, which reviews appeals of dispute cases  In a break from past Administrations' approaches, U S  officials have recently expressed doubt over the value of the WTO institution to the U S  economy and questioned whether leadership in the organization is a benefit or cost to the United States  While USTR Robert Lighthizer acknowledged at the most recent Ministerial that the WTO is an "important institution" that does an "enormous amount of good," the Trump Administration has expressed deep skepticism toward multilateral trade deals, including those negotiated within the WTO  In remarks to the Asia-Pacific Economic Cooperation (APEC) forum in November 2017, President Trump stated the following: "Simply put, we have not been treated fairly by the World Trade Organization     What we will no longer do is enter into large agreements that tie our hands, surrender our sovereignty, and make meaningful enforcement practically impossible " President Trump has also at times threatened to withdraw the United States from the WTO  In addition, amid concerns about "judicial overreach" in WTO dispute findings, the Administration is currently withholding approval for judge appointments to the WTO Appellate Body—a practice that began under the Obama Administration  While many of the U S  concerns are not new and are shared by other trading partners, questions remain about U S  priorities for improving the system  With growing debate over the role and future direction of the WTO, a number of issues may be of interest to Congress, including the value of U S  membership and leadership in the WTO, whether new U S  negotiating objectives or oversight hearings are needed to address prospects for new WTO reforms and rulemaking, and the relevant authorities and the impact of potential WTO withdrawal on U S  economic and foreign policy interests  This report provides background history of the WTO, its organization, and current status of negotiations  The report also explores concerns some have regarding the WTO's future direction and key policy issues for Congress  Following World War II, nations throughout the world, led by the United States and several other developed countries, sought to establish a more open and nondiscriminatory trading system with the goal of raising the economic well-being of all countries  Aware of the role of tit-for-tat trade barriers resulting from the U S  Smoot-Hawley tariffs in exacerbating the economic depression in the 1930s, including severe drops in world trade, global production, and employment, the countries that met to discuss the new trading system considered open trade as essential for peace and economic stability  The intent of these negotiators was to establish an International Trade Organization (ITO) to address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements  Unable to secure approval for such a comprehensive agreement, however, they reached a provisional agreement on tariffs and trade rules, known as the GATT, which went into effect in 1948  This provisional agreement became the principal set of rules governing international trade for the next 47 years, until the establishment of the WTO  The GATT was neither a formal treaty nor an international organization, but an agreement between governments, to which they were contracting parties  The GATT parties established a secretariat based in Geneva, but it remained relatively small, especially compared to the staffs of international economic institutions created by the postwar Bretton Woods conference—the International Monetary Fund and World Bank  Based on a mission to promote trade liberalization, the GATT became the principal set of rules and disciplines governing international trade  The core principles and articles of the GATT (which were carried over to the WTO) committed the original 23 members, including the United States, to lower tariffs on a range of industrial goods and to apply tariffs in a nondiscriminatory manner—the so-called most-favored nation or MFN principle (see text box )  By having to extend the same benefits and concessions to members, the economic gains from trade liberalization were magnified  Exceptions to the MFN principle are allowed, however, including for preferential trade agreements outside the GATT/WTO covering "substantially" all trade among members and for nonreciprocal preferences for developing countries  GATT members also agreed to provide "national treatment" for imports from other members  For example, countries could not establish one set of health and safety regulations on domestic products while imposing more stringent regulations on imports  Although the GATT mechanism for the enforcement of these rules or principles was generally viewed as largely ineffective, the agreement nonetheless brought about a substantial reduction of tariffs and other trade barriers  The eight "negotiating rounds" of the GATT succeeded in reducing average tariffs on industrial products from between 20%-30% to just below 4%, facilitating a 14-fold increase in world trade over its 47-year history (see Table 1 )  When the first round concluded in 1947, 23 nations had participated, which accounted for a majority of global trade at the time  When the Uruguay Round establishing the WTO concluded in 1994, 123 countries had participated and the amount of trade affected was nearly $3 7 trillion  As of the end of 2018, there are 164 WTO members, and trade flows totaled $22 6 trillion in 2017  During the first trade round held in Geneva in 1947, members negotiated a 20% reciprocal tariff reduction on industrial products, and made further cuts in subsequent rounds  The Tokyo Round represented the first attempt to reform the trade rules that had existed unchanged since 1947 by including issues and policies that could distort international trade  As a result, Tokyo Round negotiators established several plurilateral codes dealing with nontariff issues such as antidumping, subsidies, technical barriers to trade, import licensing, customs valuation, and government procurement  Countries could choose which, if any, of these codes they wished to adopt  While the United States agreed to all of the codes, the majority of GATT signatories, including most developing countries, chose not to sign the codes  The Uruguay Round, which took eight years to negotiate (1986-1994), proved to be the most comprehensive GATT trade round  This round further lowered tariffs in industrial goods and liberalized trade in areas that had eluded previous negotiators, notably agriculture and textiles and apparel  It also extended rules to new areas such as services, trade-related investment measures, and intellectual property rights  It created a trade policy review mechanism, which periodically examines each member's trade policies and practices  Significantly, the Uruguay Round created the WTO as a legal international organization charged with administering a revised and stronger dispute settlement mechanism—a principal U S  negotiating objective (see text box )—as well as many new trade agreements adopted during the long negotiation  For the most part, the Uruguay Round agreements were accepted as a single package or single undertaking , meaning that all participants and future WTO members were required to subscribe to all of the agreements  The WTO succeeded the GATT in 1995  In contrast to the GATT, the WTO was created as a permanent organization  But as with the GATT, the WTO secretariat and support staff is small by international standards and lacks independent power  The power to write rules and negotiate future trade liberalization resides specifically with the member countries, and not the WTO director-general (DG) or staff  Thus, the WTO is referred to as a member-driven organization  Decisions within the WTO are made by consensus, although majority voting can be used in limited circumstances  The highest-level body in the WTO is the Ministerial Conference, which is the body of political representatives (trade ministers) from each member country ( Figure 1 )  The body that oversees the day-to-day operations of the WTO is the General Council, which consists of a representative from each member country  Many other councils and committees deal with particular issues, and members of these bodies are also national representatives  In general, the WTO has three broad functions: administering the rules of the trading system; establishing new rules through negotiations; and resolving disputes between member states  The WTO administers the global rules and principles negotiated and signed by its members  The main purpose of the rules is "to ensure that trade flows as smoothly, predictably, and freely as possible " WTO rules and agreements are essentially contracts that bind governments to keep their trade policies within agreed limits  A number of fundamental principles guide WTO rules  In general, as with the GATT, these key principles are nondiscrimination and the notion that freer trade through the gradual reduction of trade barriers strengthens the world economy and increases prosperity  The WTO agreements apply the GATT principles of nondiscrimination as discussed above: MFN treatment and national treatment  The trade barriers concerned include tariffs, quotas, and a growing range of nontariff measures, such as product standards, food safety measures, subsidies, and discriminatory domestic regulations  The fundamental principle of reciprocity is also behind members' aim of "entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations " Transparency is another key principle of the WTO, which aims to reduce information asymmetry in markets, ensure trust, and, therefore, foster greater stability in the global trading system  Transparency commitments are incorporated into individual WTO agreements  Active participation in various WTO committees also aims to ensure that agreements are monitored and that members are held accountable for their actions  For example, members are required to publish their trade practices and policies and notify new or amended regulations to WTO committees  Regular trade policy reviews of each member's trade policies and practices provide a deeper dive into an economy's implementation of its commitments—see " Trade Policy Review Mechanism (Annex 3)  " In addition, the WTO's annual trade monitoring report takes stock of trade-restrictive and trade-facilitating measures of the collective body of WTO members  While opening markets can encourage competition, innovation, and growth, it can also entail adjustments for workers and firms  Trade liberalization can also be more difficult for the least-developed countries (LDCs) and countries transitioning to market economies  WTO agreements thus allow countries to lower trade barriers gradually  Developing countries and sensitive sectors in particular are usually given longer transition periods to fulfill their obligations; developing countries make up about two-thirds of the WTO membership—WTO members self-designate developing country status  The WTO also supplements this so-called "special and differential" treatment (SDT) for developing countries with trade capacity-building measures to provide technical assistance and help implement WTO obligations, and with permissions for countries to extend nonreciprocal, trade preference programs  In WTO parlance, when countries agree to open their markets further to foreign goods and services, they "bind" their commitments or agree not to raise them  For goods, these bindings amount to ceilings on tariff rates  A country can change its bindings, but only after negotiating with its trading partners, which could entail compensating them for loss of trade  As shown in Figure 2 , one of the achievements of the Uruguay Round was to increase the amount of trade under binding commitments  Bound tariff rates are not necessarily the rates WTO members apply in practice to imports from trading partners; so-called applied MFN rates can be lower than bound rates, as reflected in tariff reductions under the GATT  Figure 3 shows average applied MFN tariffs worldwide  In 2017, the United States simple average MFN tariff was 3 4%  A key issue in the Doha Round for the United States was lowering major developing countries' relatively high bound tariffs to below their applied rates in practice to achieve commercially meaningful new market access  Promising not to raise a trade barrier can have a significant economic effect because the promise provides traders and investors certainty and predictability in the commercial environment  A growing body of economic literature suggests certainty in the stability of tariff rates may be just as important for increasing global trade as reduction in trade barriers  This proved particularly important during the 2009 global economic downturn  Unlike in the 1930s, when countries reacted to slumping world demand by raising tariffs and other trade barriers, the WTO reported that its 153 members (at the time), accounting for 90% of world trade, by and large did not resort to protectionist measures in response to the crisis  The promotion of fair and undistorted competition is another important principle of the WTO  While the WTO is often described as a "free trade" organization, numerous rules are concerned with ensuring transparent and nondistorted competition  In addition to nondiscrimination, MFN treatment and national treatment concepts aim to promote "fair" conditions of trade  WTO rules on subsidies and antidumping in particular aim to promote fair competition in trade through recourse to trade remedies, or temporary restriction of imports, in response to alleged unfair trade practices—see " Trade Remedies  " For example, when a foreign company receives a prohibited subsidy for exporting as defined in WTO agreements, WTO rules allow governments to impose duties to offset any unfair advantage found to cause injury to their domestic industries  The scope of the WTO is broader than the GATT because, in addition to goods, it administers multilateral agreements on agriculture, services, intellectual property, and certain trade-related investment measures  These newer rules in particular are forcing the WTO and its dispute settlement system to deal with complex issues that go beyond tariff border measures  As the GATT did for 47 years, the WTO provides a negotiating forum where members reduce barriers and try to sort out their trade problems  Negotiations can involve a few countries, many countries, or all members  As part of the post-Uruguay Round agenda, negotiations covering basic telecommunications and financial services were completed under the auspices of the WTO in 1997  Selected WTO members also negotiated deals to eliminate tariffs on certain information technology products and improve rules and procedures for government procurement  A recent significant accomplishment was the WTO Trade Facilitation Agreement in 2017, addressing customs and logistics barriers  The latest round of multilateral negotiations, the Doha Development Agenda (DDA), or Doha Round, launched in 2001, has achieved limited progress to date, as the agenda proved difficult and contentious  Despite a lack of consensus on its future, many view the round as effectively over  The negotiations stalled over issues such as reducing domestic subsidies and opening markets further in agriculture, industrial tariffs, nontariff barriers, services, intellectual property rights, and SDT for developing countries  The negotiations exposed fissures between developed countries, led by the United States and the EU, on the one hand, and developing countries, led by China, Brazil, and India, on the other hand, who have come to play a more prominent role in global trade  The inability of countries to achieve the objectives of the Doha Round prompted many to question the utility of the WTO as a negotiating forum, as well as the practicality of conducting a large-scale negotiation involving 164 participants with consensus and the single undertaking as guiding principles  At the same time, many proposals have been advanced for moving forward from Doha and making the WTO a stronger forum for negotiations in the future  (See " Policy Issues and Future Direction  ") The WTO arguably has been more successful in the negotiation of discrete items to which not all parties must agree or be bound (see " Plurilateral Agreements (Annex 4) ")  Some view these plurilaterals as a more promising negotiating approach for the WTO moving forward given their flexibility, as they can involve subsets of more "like-minded" partners and advance parts of the global trade agenda  Some experts have raised concerns, however, that this approach could lead to "free riders"—those who benefit from the agreement but do not make commitments—for agreements on an MFN basis, or otherwise, could isolate some countries who do not participate and may face new trade restrictions or disadvantages as a result  Others argue that only though the single undertaking approach to negotiations can there be trade-offs that are sufficient to bring all members on board  The third function of the WTO is to provide a mechanism to enforce its rules and settle trade disputes  A central goal of the United States during the Uruguay Round negotiations was to strengthen the dispute settlement mechanism that existed under the GATT  While the GATT's process for settling disputes between member countries was informal, ad hoc, and voluntary, the WTO dispute settlement process is more formalized and enforceable  Under the GATT, panel proceedings could take years to complete; any defending party could block an unfavorable ruling; failure to implement a ruling carried no consequence; and the process did not cover all the agreements  Under the WTO, there are strict timetables—though not always followed—for panel proceedings; the defending party cannot block rulings; there is one comprehensive dispute settlement process covering all the agreements; and the rulings are enforceable  WTO adjudicative bodies can authorize retaliation if a member fails to implement a ruling or provide compensation  Yet, under both systems, considerable emphasis is placed on having the member countries attempt to resolve disputes through consultations and negotiations, rather than relying on formal panel rulings  See " Dispute Settlement Understanding (DSU) " for more detail on WTO procedures and dispute trends  The statutory basis for U S  membership in the WTO is the Uruguay Round Agreements Act (URAA, P L  103-465 ), which approved the trade agreements resulting from the Uruguay Round  The legislation contained general provisions on approval and entry into force of the Uruguay Round Agreements, and the relationship of the agreements to U S  laws (Section 101 of the act); authorities to implement the results of current and future tariff negotiations (Section 111 of the act); oversight of activities of the WTO (Sections 121-130 of the act); procedures regarding implementation of dispute settlement proceedings affecting the United States (Section 123 of the act); objectives regarding extended Uruguay Round negotiations; statutory modifications to implement specific agreements, including the following: Antidumping Agreement; Agreement on Subsidies and Countervailing Measures (ASCM); Safeguards Agreement; Agreement on Government Procurement (GPA); Technical Barriers to Trade (TBT) (product standards); Agreement on Agriculture; and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)  U S  priorities and objectives for the GATT/WTO have been reflected in various trade promotion authority (TPA) legislation since 1974  For example, the Omnibus Trade and Competitiveness Act of 1988 specifically contained provisions directing U S  negotiators to negotiate disciplines on agriculture, dispute settlement, intellectual property, trade in services, and safeguards, among others, that resulted in WTO agreements in the Uruguay Round (see text box above)  The Trade Act of 2002 provided U S  objectives for the Doha Round, including seeking to expand commitments on e-commerce and clarifications to the WTO dispute settlement system  The 2015 TPA, perhaps reflecting the impasse of the Doha Round, was more muted, seeking full implementation of existing agreements, enhanced compliance by members with their WTO obligations, and new negotiations to extend commitments to new areas  Section 125(b) of the URAA sets procedures for congressional disapproval of WTO participation  It specifies that Congress's approval of the WTO agreement shall cease to be effective "if and only if" Congress enacts a joint resolution calling for withdrawal  Congress may vote every five years on withdrawal; resolutions were introduced in 2000 and 2005, however neither passed  The WTO member-led body negotiates, administers, and settles disputes for agreements that cover goods, agriculture, services, certain trade-related investment measures, and intellectual property rights, among other issues  The WTO core principles are enshrined in a series of trade agreements that include rules and commitments specific to each agreement, subject to various exceptions  The GATT/WTO system of agreements has expanded rulemaking to several areas of international trade, but does not extensively cover some key areas, including multilateral investment rules, trade-related labor or environment issues, and emerging issues like digital trade or the commercial role of state-owned enterprises  The Marrakesh Agreement is the umbrella agreement under which the various agreements, annexes, commitment schedules, and understandings reside  The Marrakesh Agreement itself created the WTO as a legal international organization and sets forth its functions, structure, secretariat, budget procedures, decisionmaking, accession, entry-into-force, withdrawal, and other provisions  The Agreement contains four annexes  The three major substantive areas of commitments undertaken by the members are contained in Annex 1  The Multilateral Agreement on Trade in Goods establishes the rules for trade in goods through a series of sectoral or issue-specific agreements (see Table 2 )  Its core is the GATT 1994, which includes GATT 1947, the amendments, understanding, protocols, and decisions of the GATT from 1947 to 1994, cumulatively known as the GATT- acquis , as well as six Understandings on Articles of the GATT 1947 negotiated in the Uruguay Round  In addition to clarifying the core WTO principles, each agreement contains sector- or issue-specific rules and principles  The schedule of commitments identifies each member's specific binding commitments on tariffs for goods in general, and combinations of tariffs and quotas for some agricultural goods  Through a series of negotiating rounds, members agreed to the current level of trade liberalization (see Figure 2 above)  In the last four rounds of negotiations, WTO members aimed to expand international trade rules beyond tariff reductions to tackle barriers in other areas  For example, agreements on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures aim to protect a country's rights to implement domestic regulations and standards, while ensuring they do not discriminate against trading partners or unnecessarily restrict trade  The Agreement on Agriculture (AoA) includes rules and commitments on market access and disciplines on certain domestic agricultural support programs and export subsidies  Its objective was to provide a framework for WTO members to reform certain aspects of agricultural trade and domestic farm policies to facilitate more market-oriented and open trade  Regarding market access, members agreed not to restrict agricultural imports by quotas or other nontariff measures, converting them to tariff-equivalent levels of protection, such as tariff-rate quotas—a process called "tariffication " Developed countries committed to cut tariffs (or out-of-quota tariffs, those tariffs applied to any imports above the agreed quota threshold) by an average of 36% in equal increments over six years; developed countries committed to 24% tariff cuts over 10 years  Special safeguards to temporarily restrict imports were permitted in certain events, such as falling prices or surges of imports  The AoA also categorizes and restricts agricultural domestic support programs according to their potential to distort trade  Members agreed to limit and reduce the most distortive forms of domestic subsidies over 6 to 10 years, referred to as "amber box" subsidies and measured by the Aggregate Measure of Support (AMS) index  Subsidies considered to cause minimal distortion on production and trade were not subject to spending limits and exempted from obligations as "green box" and "blue box" subsidies or under de minimis (below a certain threshold) or SDT provisions  In addition, export subsidies were to be capped and subject to incremental reductions, both by value and quantity of exports covered  A so-called "peace" clause protected members using subsidies that comply with the agreement from being challenged under other WTO agreements, such as through use of countervailing duties; the clause expired after nine years in 2003  Members are required to regularly submit notifications on the implementation of AoA commitments—though some countries, including the United States, have raised concerns that these requirements are not abided by in a consistent fashion  Further agricultural trade reform was a major priority under the Doha Round, but negotiations have seen limited progress to date (see " Ongoing WTO Negotiations ")  However, in 2015, members reached an agreement to fully eliminate export subsidies for agriculture  The framework of the GATT did not address the growing linkages between trade and investment  During the Uruguay Round, the Agreement on Trade-Related Investment Measures (TRIMS) was drafted to address certain investment measures that may restrict and distort trade  The agreement did not address the regulation or protection of foreign investment, but focused on investment measures that may violate basic GATT disciplines on trade in goods, such as nondiscrimination  Specifically, members committed not to apply any TRIM that is inconsistent with provisions on national treatment or a prohibition of quantitative restrictions on imports or exports  TRIMS includes an annex with an illustrative list of prohibited measures, such as local content requirements—requirements to purchase or use products of domestic origin  The agreement also includes a safeguard measure for balance of payment difficulties, which permits developing countries to temporarily suspend TRIMS obligations  While TRIMS and other WTO agreements, such as the GATS (see below), include some provisions pertaining to investment, the lack of comprehensive multilateral rules on investment led to several efforts under the Doha Round to consider proposals, which to date have been unfruitful (see " Future Negotiations ")  In December 2017, 70 WTO members announced plans to begin new discussions on developing a multilateral framework on investment facilitation, in part to complement the successful negotiation of rules on trade facilitation  The GATT agreements focused solely on trade in goods, excluding services  Services were eventually covered in the GATS as a result of the Uruguay Round agreements  The GATS provides the first and only multilateral framework of principles and rules for government policies and regulations affecting trade in services  It has served as the foundation on which rules in other trade agreements on services are based  The services trade agenda is complex due to the characteristics of the sector  "Services" refers to a growing range of economic activities, such as audiovisual, construction, computer and related services, express delivery, e-commerce, financial, professional (e g , accounting and legal services), retail and wholesaling, transportation, tourism, and telecommunications  Advances in information technology and the growth of global supply chains have reduced barriers to trade in services, expanding the services tradable across national borders  But liberalizing trade in services can be more complex than for goods, since the impediments faced by service providers occur largely within the importing country, as so-called "behind the border" barriers, some in the form of government regulations  While the right of governments to regulate service industries is widely recognized as prudent and necessary to protect consumers from harmful or unqualified providers, a main focus of WTO members is whether these regulations are applied to foreign service providers in a discriminatory and unnecessarily trade restrictive manner that limits market access  The GATS contains multiple parts, including definition of scope (excluding government-provided services); principles and obligations, including MFN treatment and transparency; market access and national treatment obligations; annexes listing exceptions that members take to MFN treatment; as well as various technical elements  Members negotiated GATS on a positive list basis, which means that the commitments only apply to those services and modes of delivery listed in each member's schedule of commitments  WTO members adopted a system of classifying four modes of delivery for services to measure trade in services and classify government measures that affect trade in services, including cross-border supply, consumption abroad, commercial presence, and temporary presence of natural persons ( Figure 4 )  Under GATS, unless a member country has specifically committed to open its market to suppliers in a particular service, the national treatment and market access obligations do not apply  In addition to the GATS, some members made specific sectoral commitments in financial services and telecommunications  Negotiations to expand these commitments were later folded into the broader services negotiations  WTO members aimed to update GATS provisions and market access commitments as part of the Doha Round  Several WTO members have since submitted revised offers of services liberalization, but in the view of the United States and others the talks have not yielded adequate offers of improved market access (see " Future Negotiations ")  Given the lack of progress, in 2013, 23 WTO members, including the United States, representing approximately 70% of global services trade, launched negotiations of a services-specific plurilateral agreement  Although outside of the WTO structure, participants designed the Trade in Services Agreement (TiSA) negotiations in a way that would not preclude a concluded agreement from someday being brought into the WTO  TiSA talks were initially led by Australia and the United States, but have since stalled; the Trump Administration has not stated a formal position on TiSA  The TRIPS Agreement marked the first time multilateral trade rules incorporated intellectual property rights (IPR)—legal, private, enforceable rights that governments grant to inventors and artists to encourage innovation and creative output  Like the GATS, TRIPS was negotiated as part of the Uruguay Round and was a major U S  objective for the round  The TRIPS Agreement sets minimum standards of protection and enforcement for IPR  Much of the agreement sets out the extent of coverage of the various types of intellectual property, including patents, copyrights, trademarks, trade secrets, and geographical indications  TRIPS includes provisions on nondiscrimination and on enforcement measures, such as civil and administrative procedures and remedies  IPR disputes under the agreement are also subject to the WTO dispute settlement mechanism  The TRIPS Agreement's newly placed requirements on many developing countries elevated the debate over the relationship between IPR and development  At issue is the balance of rights and obligations between protecting private right holders and securing broader public benefits, such as access to medicines and the free flow of data, especially in developing countries  TRIPS includes flexibilities for developing countries allowing longer phase-in periods for implementing obligations and, separately, for pharmaceutical patent obligations—these were subsequently extended for LDCs until January 2033 or until they no longer qualify as LDCs, whichever is earlier  The 2001 WTO "Doha Declaration" committed members to interpret and implement TRIPS obligations in a way that supports public health and access to medicines  In 2005, members agreed to amend TRIPS to allow developing and LDC members that lack production capacity to import generic medicines from third country producers under "compulsory licensing" arrangements  The amendment entered into force in January 2017  While WTO agreements uphold MFN principles, they also allow exceptions to binding tariffs in certain circumstances  The WTO Agreement on Subsidies and Countervailing Measures (ASCM), Agreement on Safeguards, and articles in the GATT, commonly known as the Antidumping Agreement, allow for trade remedies in the form of temporary measures (e g , primarily duties or quotas) to mitigate the adverse impact of various trade practices on domestic industries and workers  These include actions taken against dumping (selling at an unfairly low price) or to counter certain government subsidies, and emergency measures to limit "fairly"-traded imports temporarily, designed to "safeguard" domestic industries  Supporters of trade remedies view them as necessary to shield domestic industries and workers from unfair competition and to level the playing field  Other domestic constituents, including some importers and downstream consuming industries, voice concern that antidumping (AD) and countervailing duty (CVD) actions can serve as disguised protectionism and create inefficiencies in the world trading system by raising prices on imported goods  How trade remedies are applied to imports has become a major source of disputes under the WTO (see below)  The United States has enacted trade remedy laws that conform to the WTO rules: U S  antidumping laws (19 U S C  §1673 et seq ) provide relief to domestic industries that have been, or are threatened with, the adverse impact of imports sold in the U S  market at prices that are shown to be less than fair market value  The relief provided is an additional import duty placed on the dumped imports  U S  countervailing duty laws (19 U S C  §1671 et seq ) give similar relief to domestic industries that have been, or are threatened with, the adverse impact of imported goods that have been subsidized by a foreign government or public entity, and can therefore be sold at lower prices than U S -produced goods  The relief provided is a duty placed on the subsidized imports  U S  safeguard laws give domestic industries relief from import surges of goods; no allegation of "unfair" practices is needed to launch a safeguard investigation  Although used less frequently than AD/CVD laws, Section 201 of the Trade Act of 1974 (19 U S C  §2251 et seq ), is designed to give domestic industry the opportunity to adjust to import competition and remain competitive  The relief provided is generally a temporary import duty and/or quota  Unlike AD/CVD, safeguard laws require presidential action for relief to be put into effect  The dispute settlement system, often called the "crown jewel" of the WTO, has been considered by some observers to be one of the most important successes of the multilateral trading system  WTO agreements contain provisions that are either binding or nonbinding  The WTO Understanding on Rules and Procedures Governing the Settlement of Disputes—Dispute Settlement Understanding or DSU—provides an enforceable means for WTO members to resolve disputes arising under the binding provisions  The DSU commits members not to determine violations of WTO obligations or impose penalties unilaterally, but to settle complaints about alleged violations under DSU rules and procedures  The Dispute Settlement Body (DSB) is a plenary committee of the WTO, which oversees the panels and adopts the recommendation of a dispute settlement panel or Appellate Body (AB) panel  Panels are composed of three (or five in complex cases) panelists—not citizens of the members involved—chosen through a roster of "well qualified governmental and/or non-governmental individuals" maintained by the Secretariat  WTO members must first attempt to settle a dispute through consultations, but if these fail, a member seeking to initiate a dispute may request that a panel examine and report on its complaint  A respondent party is able to block the establishment of a panel at the DSB once, but if the complainant requests its establishment again at a subsequent meeting of the DSB, a panel is established  At its conclusion, the panel recommends a decision to the DSB that it will adopt unless all parties agree to block the recommendation  The DSU sets out a timeline of one year for the initial resolution of disputes (see Figure 5 ); however, cases are rarely resolved in this timeframe  The DSU also provides for AB review of panel reports in the event a panel decision is appealed  The AB is composed of seven rotating panelists serving four-year terms, with the possibility of a one-term reappointment  According to the DSU, appeals are to be limited to questions of law or legal interpretation developed by the panel in the case (Article 17 6)  The AB is to make a recommendation and the DSB is to ratify that recommendation within 120 days of the ratification of the initial panel report, but again, such timely resolution rarely occurs  The United States has raised several issues regarding the practices of the AB and has blocked the appointments of several judges—for more on the current debate, see " Proposed Institutional Reforms  " Following the adoption of a panel or appellate report, the DSB oversees the implementation of the findings  The losing party is then to propose how it is to bring itself into compliance "within a reasonable period of time" with the DSB-adopted findings  A reasonable period of time is determined by mutual agreement with the DSB, among the parties, or through arbitration  If a dispute arises over the manner of implementation, the DSB may form a panel to judge compliance  If a party declines to comply, the parties negotiate over compensation pending full implementation  If there is still no agreement, the DSB may authorize retaliation in the amount of the determined cost of the offending party's measure to the aggrieved party's economy  There have been some calls for reform of the dispute settlement system to deal with the procedural delays and new strains on the system, including the growing volume and complexity of cases  Filing a dispute settlement case provides a way for countries to resolve disputes through a legal process and to do so publicly, signaling to domestic and international constituents the need to address outstanding issues  Dispute settlement procedures can serve as a deterrent for countries considering not abiding by WTO agreements, and rulings can help build a body of case law to inform countries when they implement new regulatory regimes or interpret WTO agreements  That said, WTO agreements and decisions of panels are not self-executing and cannot directly modify U S  law  If a case is brought against the United States and the panel renders an adverse decision, the United States would be expected to remove the offending measure within a reasonable period of time or face the possibility of either paying compensation to the complaining member or becoming subject to sanctions, often in the form of higher tariffs on imports of certain U S  products  As of the beginning of 2019, the WTO has initiated nearly 580 disputes on behalf of its members and issued more than 350 rulings, with 2018 marking its most active year to date  Nearly two-thirds of WTO members have participated in the dispute settlement system  Not all complaints result in formal panel proceedings; about half were resolved during consultations  The complainants usually win their cases, in large part because they initiate disputes that they have a high chance of winning  In the words of WTO Director-General (DG) Roberto Azevêdo, the widespread use of the DS system is evidence it "enjoys tremendous confidence among the membership, who value it as a fair, effective, efficient mechanism to solve trade problems " The United States is an active user of the DS system  Among WTO members, the United States has been a complainant in the most dispute cases since the system was established in 1995, initiating 123 disputes, followed by the EU with 100 disputes  The two largest targets of complaints initiated by the United States are China and the EU, which, combined, account for more than one-third ( Figure 6 )  The latest summary by USTR reports that among WTO disputes through 2015 the United States largely prevailed on "core issues" in 46 of its complaints and lost in 4  Since the report was released, additional cases have been ruled in favor of the United States, including disputes over India's solar energy policies and Indonesia's import licensing requirements  The majority of disputes initiated by the United States between 2016 and early 2019 remain in the consultation or panel stages and have not been decided  As a respondent in 153 dispute cases since 1995, the United States has also had the most disputes filed against it by other WTO members, followed by the EU (85 disputes) and China (43 disputes)  The EU is the largest source of disputes filed against the United States, followed by Canada, China, South Korea, Brazil, and India  A large number of complaints concern U S  trade remedies, in particular the methodologies used for calculating and imposing antidumping duties on U S  imports  The latest summary by USTR reports that as a respondent, the United States won on "core issues" in 17 cases and lost in 57 cases through 2015  Since then, the WTO has ruled against the United States on certain aspects of complaints related to U S  trade remedies, including in cases initiated by South Korea, China, Canada, and Turkey  The United States has prevailed in other cases, for example in December 2017, a panel ruled in U S  favor in a case brought by Indonesia over U S  duties on coated paper imports  The DSB has authorized retaliation against the United States for maintaining a measure in violation of WTO rules in just a handful of cases  Most recently, in February 2019, a panel authorized South Korea to retaliate in a complaint over U S  methodology for calculating antidumping duties on South Korean imports of large residential washers  Several pending WTO disputes are of significance to the United States  One involves China's complaints over U S  and EU failure to grant China market economy status (see " China's Accession and Membership " )   Other cases involve challenges to the tariff measures imposed by the Trump Administration under U S  trade laws, including Section 201 (safeguards), Section 232 (national security), and Section 301 ("unfair" trading practices) ( Table 3 )  Nine WTO members, including China, the EU, Canada, and Mexico, initiated separate complaints at the WTO, based on allegations that U S  Section 232 tariffs on steel and aluminum imports are inconsistent with WTO rules  Consultations were unsuccessful in resolving the disputes, and panels have been established in all nine cases  Most countries notified their consultation requests pursuant to the Agreement on Safeguards, though some countries also allege that U S  tariff measures and related exemptions are contrary to U S  obligations under several provisions of the GATT  Several other WTO members have requested to join the disputes as third parties  On July 16, 2018, the United States filed its own WTO complaints over retaliatory tariffs imposed by five countries (Canada, China, EU, Mexico, and Turkey) in response to U S  actions, and in late August, it filed a similar case against Russia  The United States has invoked the so-called national security exception (GATT Article XXI) in defense of the tariffs (see " Key Exceptions under GATT/WTO "), and states that the tariffs are not safeguards as claimed by other countries  By the end of January 2019, all of the disputes had entered the panel phase  Annex 3 sets out the procedures for the regular trade policy reviews that are conducted by the Secretariat to report on the trade policies of the membership  These reviews are carried out by the Trade Policy Review Body (TPRB) and are conducted periodically with the largest economies (United States, EU, Japan, and China) evaluated every three years, the next 16 largest economies every five years, and remaining economies every seven years  These reviews are meant to increase transparency of a country's trade policy and enable a multilateral assessment of the effect of policies on the trading system  These reviews also allow each member country to question specific practices of other members, and may serve as a forum to flag, and possibly avoid, future disputes  The most recent trade policy review of China occurred in July 2018  During the review members noted and commended some recent initiatives of China to open market access and liberalize its foreign investment regime  Several concerns were also raised, including "the preponderant role of the State in general, and of state-owned enterprises in particular," and "China's support and subsidy policies and local content requirements, including those that may be part of the 2025 [Made in China] plan " Most WTO agreements in force have been negotiated on a multilateral basis, meaning the entire body of WTO members subscribes to them  By contrast, plurilateral agreements are negotiated by a subset of WTO members and often focus on a specific sector  A handful of such agreements supplement the main WTO agreements discussed previously  Within the WTO, members have two ways to negotiate on a plurilateral basis, also known as "variable geometry " A group of countries can negotiate with one another provided that the group extends the benefits to all other WTO members on an MFN basis—the foundational nondiscrimination principle of the GATT/WTO  Because the benefits of the agreement are to be shared among all WTO members and not just the participants, the negotiating group likely would include those members forming a critical mass of world trade in the product or sector covered by the negotiation in order to avoid the problem of free riders—those countries that receive trade benefits without committing to liberalization  An example of this type of plurilateral agreement granting unconditional MFN is the Information Technology Agreement (ITA), in which tariffs on selected information technology goods were lowered to zero, as negotiated by WTO members comprising more than 90% of world trade in these goods (see below)  A second type of WTO plurilateral is the non-MFN agreement, often referred to as "conditional-MFN " In this type, participants undertake additional obligations among themselves, but do not extend the benefits to other WTO members, unless they directly participate in the agreement  Also known as the "club" approach, non-MFN plurilaterals allow for willing members to address policy issues not covered by WTO disciplines  However, these types of agreements require a waiver from the entire WTO membership to commence negotiations  Some countries are reluctant even to allow other countries to negotiate for fear of being left out, even while not being ready to commit themselves to new disciplines  Yet, according to one commentator, these members are "simply outsmarting themselves" by encouraging more ambitious members to take negotiations out of the WTO altogether, such as the proposed expansion of the GATS through the plurilateral (and outside the WTO) TiSA  The Government Procurement Agreement (GPA) is an early example of a plurilateral agreement with limited WTO membership—first developed as a code in the 1979 Tokyo Round  As of the end of 2018, 47 WTO members (including the 28 EU member countries and United States) participate in the GPA; non-GPA signatories do not enjoy rights under the GPA  The GPA provides market access for various nondefense government projects to contractors of its signatories  Each member specifies government entities and goods and services (with thresholds and limitations) that are open to procurement bids by foreign firms of the other GPA members  For example, the U S  GPA market access schedules of commitments cover 85 federal-level entities and voluntary commitments by 37 states  Negotiations to expand the GPA were concluded in March 2012, and a revised GPA entered into force on April 6, 2014  Several countries, including China—which committed to pursuing GPA participation in its 2001 WTO accession process—are in long-pending negotiations to accede to the GPA  South Korea, Moldova, and Ukraine were the latest WTO members to join the GPA in 2016  According to estimates by the U S  Government Accountability Office (GAO), from 2008 to 2012, 8% of total global government expenditures, and approximately one-third of U S  federal government procurement, was covered by the GPA or similar commitments in U S  FTAs  Unlike the GPA, the Information Technology Agreement (ITA) is a plurilateral agreement that is applied on an unconditional MFN basis  In other words, all WTO members benefit from the tariff reductions enacted by parties to the ITA regardless of their own participation  Originally concluded in 1996 by a subset of WTO members, the ITA provides tariff-free treatment for covered IT products; however, the agreement does not cover services or digital products like software  In December 2015, a group of 51 WTO members, including the United States, negotiated an expanded agreement to cover an additional 201 products and technologies, valued at over $1 trillion in annual global exports  Members committed to reduce the majority of tariffs by 2019  In June 2016, the United States initiated the ITA tariff cuts  China began its cuts in mid-September 2016 with plans to reduce tariffs over five to seven years  ITA members are expected to review the agreement's scope in 2018 to determine if additional product coverage is needed  The Trade Facilitation Agreement (TFA) is the newest WTO multilateral trade agreement, entering into force on February 22, 2017, and perhaps the lasting legacy of the Doha Round, since it is the only major concluded component of the negotiations  The TFA aims to address multiple trade barriers confronted by exporters and importers and reduce trade costs by streamlining, modernizing, and speeding up the customs processes for cross-border trade, as well as making it more transparent  Some analysts view the TFA as evidence that achieving new multilateral agreements is possible and that the design, including special and differential treatment provisions, could serve as a template for future agreements  The TFA has three sections  The first is the heart of the agreement, containing the main provisions, of which many, but not all, are binding and enforceable  Mandatory articles include requiring members to publish information, including publishing certain items online; issue advance rulings in a reasonable amount of time; and provide for appeals or reviews, if requested  The second section provides for SDT for developing country and LDC members, allowing them more time and assistance to implement the agreement  The TFA is the first WTO agreement in which members determine their own implementation schedules and in which progress in implementation is explicitly linked to technical and financial capacity  The TFA requires that "donor members," including the United States, provide the needed capacity building and support  Finally, the third section sets institutional arrangements for administering the TFA  Under WTO agreements, members generally cannot discriminate among trading partners, though specific market access commitments can vary significantly by agreement and by member  WTO rules permit some broad exceptions, which allow members to adopt trade policies and practices that may be inconsistent with WTO disciplines and principles such as MFN treatment, granting special preferences to certain countries, and restricting trade in certain sectors, provided certain conditions are met  Some of the key exceptions follow  General e xceptions   GATT Article XX grants WTO members the right to take certain measures necessary to protect human, animal, or plant life or health, or to conserve exhaustible natural resources, among other aims  The measures, however, must not entail "arbitrary" or "unjustifiable" discrimination between countries where the same conditions prevail, or serve as "disguised restriction on international trade " GATS Article XIV provides for similar exceptions for trade in services  National security exception  GATT Article XXI protects the right of members to take any action they consider "necessary for the protection of essential national security interests" as related to (i) fissionable materials; (ii) traffic in arms, ammunition, and implements of war, and such traffic in other goods and materials carried out to supply a military establishment; and (iii) taken in time of war or other emergency in international relations  Similar exceptions relate to trade in services (GATS Article XIV bis) and intellectual property rights (TRIPS Article 73)  More f avorable t reatment to d eveloping c ountries   The so-called "enabling clause" of the GATT—called the "Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries" of 1979—enables developed country members to grant differential and more favorable treatment to developing countries that is not extended to other members  For example, this permits granting unilateral and nonreciprocal trade preferences to developing countries under special programs, such as the U S  Generalized System of Preferences (GSP), and also relates to regional trade agreements outside the WTO (see below)  Exceptions for r egi onal tr ade agreements (RTAs )   WTO countries are permitted to depart from the MFN principle and grant each other more favorable treatment in trade agreements outside the WTO, provided certain conditions are met  Three sets of rules generally apply  GATT Article XXIV applies to goods trade, and allows the formation of free trade areas and customs unions (areas with common external tariffs)  These provisions require that RTAs be notified to the other WTO members, cover "substantially all trade," and do not effectively raise barriers on imports from third parties  GATS Article V allows for economic integration agreements related to services trade, provided they entail "substantial sectoral coverage," eliminate "substantially all discrimination," and do not "raise the overall level of barriers to trade in services" on members outside the agreement  Paragraph 2(c) of the "enabling clause," which deals with special and differential treatment, allows for RTAs among developing countries in goods trade, based on the "mutual reduction or elimination of tariffs " RTA provisions in the GATS also allow greater flexibility in sectoral coverage within services agreements that include developing countries  There are currently 164 members of the WTO  Another 22 countries are seeking to become members  Joining the WTO means taking on the commitments and obligations of all the multilateral agreements  Governments are motivated to join not just to expand access to foreign markets but also to spur domestic economic reforms, help transition to market economies, and promote the rule of law  While any state or customs territory fully in control of its trade policy may become a WTO member, a lengthy process of accession involves a series of documentation of a country's trade regime and market access negotiation requirements (see Figure 7 )  For example, Kazakhstan joined the WTO on November 30, 2015, after a 20-year process  Afghanistan became the 164th WTO member on July 29, 2016, after nearly 12 years of negotiating its accession terms  Other countries have initiated the process but face delays  Iran first applied for membership in 1996 and, while it submitted its Memorandum on the Foreign Trade Regime in 2009 (a prerequisite for negotiating an accession package), Iran has not begun the bilateral negotiation process, and the United States is unlikely to support its accession  As the WTO generally operates by member consensus, any single member could block the accession of a prospective new member  As part of the process, a prospective member must satisfy specific market access conditions of other WTO members by negotiating on a bilateral basis  The United States has been a central arbiter of the accession process for countries like China (joined in 2001, see below), Vietnam (2007), and Russia (2012), with which permanent normal trade relations had to be established concurrently under U S  law for the United States to receive the full benefits of their membership  China formally joined the WTO in December 2001  China has emerged as a major player in the global economy, as the fastest-growing economy, largest merchandise exporter, and second-largest merchandise importer worldwide  China's accession into the WTO on commercially meaningful terms was a major U S  trade objective during the late 1990s  Entry into the WTO was viewed as an important catalyst for spurring additional economic and trade reforms and the opening of China's economy in a market, rules-based direction  These reforms have made China an increasingly significant market for U S  exporters , a central factor in global supply chains, and a major source of low -cost goods for U S  consumers  At the same time, China has yet to fully transit ion to a market economy and the government continue s to intervene in many parts of the econom y, which has created a growing debate over the role of the WTO in both respects   Negotiations for China's accession to the GATT and then the WTO began in 1986 and took more than 15 years to complete  During WTO negotiations, China sought to enter the WTO as a developing country, while U S  trade officials insisted that China's entry into the WTO had to be based on "commercially meaningful terms" that would require China to significantly reduce trade and investment barriers within a relatively short time  In the end, a compromise was reached that required China to make immediate and extensive reductions in various trade and investment barriers, while allowing it to maintain some level of protection (or a transitional period of protection) for certain sensitive sectors (see text box )  According to USTR, after joining the WTO, China began to implement economic reforms that facilitated its transition toward a market economy and increased its openness to trade and foreign direct investment (FDI)  China also generally implemented its tariff cuts on schedule  However, by 2006, U S  officials and companies noted evidence of some trends toward a more restrictive trade regime and more state intervention in the economy  In particular, observers voiced concern about various Chinese industrial policies, such as those that foster indigenous innovation based on forced technology transfer, domestic subsidies, and IP theft  Some stakeholders have expressed concerns over China's mixed record of implementing certain WTO obligations and asserted that, in some cases, China appeared to be abiding by the letter but not the "spirit" of the WTO  The United States and other WTO members have used dispute settlement procedures on a number of occasions to address China's alleged noncompliance with certain WTO commitments  As a respondent, China accounts for about 12% of total WTO disputes since 2001  The United States has brought 23 dispute cases against China at the WTO on issues, including IPR protection, subsidies, and discriminatory industrial policies, and has largely prevailed in most cases  Though some issues remain contested, China has largely complied with most WTO rulings  China has also increasingly used dispute settlement to confront what it views as discriminatory measures; to date, it has brought 15 cases against the United States (as of February 2019)  More broadly, the Trump Administration has questioned whether WTO rules are sufficient to address the challenges that China's economy presents  USTR Robert Lighthizer expressed this view in remarks in September 2017: "The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented  Unfortunately, the World Trade Organization is not equipped to deal with this problem " USTR views efforts to resolve concerns over Chinese trade practices to date as limited in effectiveness, including through WTO dispute settlement, as well as recent proposals by WTO members to craft new rules and WTO reforms  In its latest report to Congress on China's WTO compliance, USTR stated the following: [The WTO dispute settlement] mechanism is not designed to address a trade regime that broadly conflicts with the fundamental underpinnings of the WTO system  No amount of WTO dispute settlement by other WTO members would be sufficient to remedy this systemic problem  Indeed, many of the most harmful policies and practices being pursued by China are not even directly disciplined by WTO rules  Another related concern some have is whether China claims it is a "developing country" under the WTO  Through developing country status, which countries self-designate, countries are entitled to certain rights under special and differential treatment (SDT), among other provisions in WTO agreements (see " Treatment of Developing Countries " and text box )  USTR has claimed that "China persists in claiming to be a 'developing Member'" in future negotiations at the WTO  While it is unclear what SDT provisions China has sought in ongoing negotiations, China is a part of the coalition group of Asian developing members at the WTO and has claimed to be a developing country in various fora  Chinese officials have asserted that despite being the world's second-largest economy, China remains a developing country, due to its relatively low GDP per capita and other economic challenges  Concerns over China's trade actions have led the Trump Administration to increase the use of unilateral mechanisms outside the WTO that in its view more effectively address Chinese "unfair trade practices;" the recent Section 301 investigation of Chinese IPR and technology transfer practices and resulting imposition of tariffs is evidence of this strategy  Prior to the establishment of the WTO, the United States resorted to Section 301 relatively frequently, in particular due to concerns that the GATT lacked an effective dispute settlement system  When the United States joined the WTO in 1995, it agreed to use the dispute settlement mechanism rather than act unilaterally; many analysts contend that the United States has violated its WTO obligations by imposing tariffs against China under Section 301  The United States also initiated a WTO dispute settlement case against China's "discriminatory technology licensing" in March 2018  Subsequently, China filed its own complaints at the WTO over U S  tariff actions  The United States has pursued cooperation to some extent with other countries with similar concerns over certain Chinese trade practices and the need to clarify and improve WTO rules on industrial subsidies and SOEs in particular  At the WTO Ministerial meeting in December 2017, USTR Lighthizer, the European Commissioner for Trade Cecelia Malmström, and Japan's Minister of the Economy, Trade and Industry Hiroshige Seko announced new trilateral efforts to cooperate on issues related to government-supported excess capacity, unfair competition caused by market-distorting subsidies and SOEs, forced technology transfer, and local content requirements  Observers believe that China, while not specifically named, is the intended target of the coordinated action  The three officials continued talks in 2018 and 2019, issuing a scoping paper on stronger rules on industrial subsidies, as well as joint statements on technology transfer and "market-oriented conditions " They indicated plans to propose a draft text on subsidies rules by spring 2019  Some experts have questioned whether recent U S  tariff actions might undermine efforts to coordinate further action to address these challenges (see " Selected Challenges and Issues for Congress ")  Another pending dispute involving China could have significant implications for the treatment of China's economy under WTO rules, in particular debate over the terms of China's "nonmarket economy" (NME) status under its WTO accession protocol  Under its accession, China agreed to allow other WTO members to continue to use alternative methodologies, such as surrogate countries, for assessing prices and costs on products subject to antidumping measures  This concession was a result of WTO members' concerns that distortions in the Chinese economy caused by government intervention result in Chinese prices that do not reflect market forces, making them poorly suited to determining dumping margins  China contends that language in its WTO accession protocol requires all WTO members to terminate their use of the alternative methodology by December 11, 2016, including the United States, which has classified China as a NME for trade remedy cases since 1981  The NME distinction is important to China because it has often resulted in higher antidumping margins on Chinese exports; moreover, a significant share of Chinese exports is subject to trade remedies, namely AD duties  The United States and the EU have argued that the WTO language is vague and did not automatically obligate them to extend market economy status (MES) to China because it is still not a market economy  On December 12, 2016, China requested consultations under WTO dispute settlement with the United States and EU over the failure to grant China MES, and the cases are now pending  In April 2017, a panel was established in the EU case, and in November 2017, the United States formally submitted arguments as a third party in support of the EU  The panel said it expected to issue its final report during the second quarter of 2019  The 11 th WTO Ministerial Conference took place December 10-13, 2017, in Buenos Aires, Argentina  The Ministerial generally convenes every two years to make decisions and announce progress on multilateral trade agreements  After countries were unable to complete the Doha Round (see text box ), many questioned what could effectively be achieved in 2017  Members have made some progress in recent years, reaching the Trade Facilitation Agreement in 2013, followed by a small package of deals in 2015 concerning agriculture and rules for LDCs  Still, they remain sharply divided over how to prioritize both unresolved and new issues on the agenda, and, more fundamentally, how to conduct negotiations to better facilitate successful outcomes  WTO Director-General Azevêdo had tempered expectations for major negotiated outcomes or announcements at the 11 th Ministerial, acknowledging that "members' positions continue to diverge significantly on the substantial issues " These differences were perhaps most apparent by the inability of WTO members to reach consensus over a draft Ministerial Declaration, largely due to staunch disagreements over including references to the mandate of the Doha Round (see text box )  Instead the Ministerial became primarily an opportunity for members to take stock of ongoing talks and further define priority work areas  WTO members had worked intensively to build consensus over proposals in several areas, including reducing fisheries subsidies, a permanent solution to public stockholding for food security, domestic services regulations, and e-commerce  Some members pushed for new initiatives in areas such as investment facilitation; others like India advocated for a greater focus on trade facilitation in services  The U S  proposal to improve overall transparency at the WTO, with penalties for countries that fail to comply with notification requirements, did not garner enough support to be discussed extensively at the Ministerial  The 11 th Ministerial did not result in major breakthroughs  WTO members committed to intensify fisheries subsidies negotiations, "with a view to adopting" an agreement by the next Ministerial; the United States has supported these efforts  A joint statement was issued by 60 members in support of advancing multilateral negotiations on domestic regulations in services  Subsets of WTO members also issued statements committing to new work programs or open-ended talks for interested parties to potentially conclude plurilateral agreements in areas, including the following: E-commerce : among 71 WTO members (covering 77% of global trade); Investment facilitation : among 70 WTO members (covering 73% of global trade and 66% of inward FDI); and Micro, small and medium-sized enterprises (MSMEs) : among 87 WTO members (covering 78% of global trade)  Of these, the United States signed on to the declaration in support of e-commerce  The lack of concrete multilateral outcomes at the 11 th Ministerial was a reminder of the continued resistance of some countries to a new agenda outside of the original 2001 Doha mandate  In the view of EU Trade Commissioner Malmström, the Ministerial "laid bare the deficiencies of the negotiating function at the WTO" and that "members are systematically being blocked from addressing the pressing realities of global trade " Malmström blamed the lack of progress on "procedural excuses and vetoes" and "cynical hostage taking " Some developing country members, including India, attempted to block progress in a range of areas—including the renewal of the decades-old moratorium on e-commerce customs duties—absent more progress on Doha issues such as agricultural stockholding for food security  Such "hostage-taking" tactics, widely acknowledged to have hindered progress in the Doha Round, further highlight the difficulty of achieving future consensus among all 164 members  While the United States provided input and signaled support for select proposals, the overall perception of many was a lack of U S  leadership in the Ministerial discussions  Consistent with the Trump Administration's "America First" trade policy, the U S  stated objective for the Ministerial was broadly to "advocate for U S  economic and trade interests, including WTO institutional reform and market-based, fair trade policies " Several observers were relieved when USTR Lighthizer acknowledged in Ministerial remarks that the WTO plays an important role, even as he outlined key criticisms  The United States viewed the Ministerial outcome positively—that it signaled "the impasse at the WTO was broken," paving the way for like-minded countries to pursue new work in other areas  USTR expressed U S  support in particular for forthcoming work on e-commerce, scientific standards for agriculture, and disciplines on fisheries subsidies  While WTO members did not announce any negotiated outcomes at the 11 th Ministerial meeting, several countries committed to make progress on ongoing talks, including fisheries subsidies and e-commerce  In other areas, such as agriculture and environmental goods, talks remain stalled with no clear path forward  For some issues multilateral solutions arguably remain ideal, for example, disciplines on agricultural subsidies, which are widely used by developed and advanced developing countries alike  One concern is that such important, unresolved issues may founder for want of a negotiating venue  While the Doha Round largely did not achieve its comprehensive negotiating mandate to lower agricultural tariffs and subsidies, negotiations more limited in scope have continued  The 2015 Nairobi Ministerial agreed to eliminate export subsidies for agriculture, but the issue of public stockholding remains seemingly intractable  Public stockholding, also known as food security programs, is used by governments, especially in developing countries, to purchase and stockpile food to release to the public during periods of market volatility or shortage  These programs become problematic when governments purchase food at a price and quantity that effectively become trade-distorting domestic support  While no agreement was reached at Buenos Aires, some developing countries, such as India, have demanded that the issue be resolved before new issues are considered in the WTO work program  The United States has also flagged the broader issue of notification and transparency  Under WTO agreements, members are required to notify subsidies and trade-distorting support to ensure transparency and consistency with a member's obligation  Compliance with notifications has been notoriously lax, with some countries years behind on their reporting  According to U S  Department of Agriculture trade counsel Jason Hafemeister, these practices have consequences: In the absence of transparency, how are we to determine whether Members are complying with existing obligations? Moreover, only with comprehensive and current information can negotiators understand, discuss, and address the problems that face farmers today: high tariffs, trade distorting support, and non-tariff barriers  The United States with other countries recently issued new proposals to address these concerns—see " Transparency/Notification  " As noted above, WTO members committed to negotiate disciplines related to fisheries subsidies at the 11 th Ministerial with a view toward reaching an agreement by 2020  The proposals aim to meet the goals outlined in United Nations Sustainable Development Goal 14 targeting illegal, unregulated, and unreported (IUU) fishing  Though multiple areas of disagreement remain, members have been negotiating on the scope of exemptions, such as for fuel subsidies  The United States reportedly seeks to minimize the level and scope of such exclusions  Members are expected to move from discussions of proposals into negotiations on a consolidated draft text by early 2019  The Trump Administration has voiced support for the talks, stating that it continues "to support stronger disciplines and greater transparency in the WTO with respect to fisheries subsidies " Digital trade has emerged as a major force in world trade since the Uruguay Round, creating end products (e g , email or social media), enabling trade in services (e g , consulting), and facilitating goods trade through services, such as logistics and supply chain management that depend on digital data flows  While the GATS contains explicit commitments for telecommunications and financial services that underlie e-commerce, trade barriers related to digital trade, information flows, and other related issues are not specifically included  The WTO Work Program on Electronic Commerce was established in 1998 to examine trade-related issues for e-commerce under existing agreements  Under the work program, members agreed to continue a temporary moratorium on e-commerce customs duties, and have renewed the moratorium at each ministerial meeting  Some developing countries, however, have begun to question the moratorium, seeing it as blocking a potential government revenue stream  Progress under the work program has largely stalled as multiple members have put forward competing views on possible paths forward  In advance of the 2017 Ministerial, various members had submitted proposals for specific work agendas in e-commerce  The U S  submission, dated July 4, 2016, reflected many of the ideas included in the proposed Trans-Pacific Partnership (TPP), an FTA with 11 other countries in the Asia-Pacific from which the United States withdrew in January 2017  The proposal may gain the support of other TPP members as several have already ratified a slightly modified agreement—the Comprehensive and Progressive Agreement for TPP (CPTPP or TPP-11)—which maintained the digital trade provisions as negotiated by the United States  The Chinese WTO submission, on the other hand, more narrowly focuses on facilitating e-commerce  India has said it would not agree to any new obligations in the WTO related to e-commerce or digital trade, preferring to focus on issues identified under the original Doha mandate, including agriculture  As a result, the 2017 Ministerial ended with an agreement to "endeavor to reinvigorate our work " The plurilateral effort announced at the ministerial agreeing to "initiate exploratory work on negotiations on electronic commerce issues in the WTO" may provide the best avenue to pursue an agreement within the WTO framework  A U S  discussion paper on the initiative outlined potential provisions, including protecting cross-border data flows, source code, and encryption technology; prohibiting discrimination, customs duties, technology transfer or localization requirements; and promoting cybersecurity and open government data  The United States also included the WTO Telecommunications Reference Paper, seeking all WTO members to adopt its principles on telecommunications competition  Notably, the U S  submission did not list privacy or consumer protection among its provisions  The group of 49 WTO members formally launched the e-commerce initiative in January 2019, on the sidelines of the World Economic Forum annual meetings  Their joint statement lists not only the United States and EU as participants, but also several developing countries, including China and Brazil  In the statement, the group agreed to seek a "high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible," but did not specify which trade barriers and issues are to be addressed  USTR's statement after the meeting emphasized the need for an enforceable agreement with the "same obligations for all participants " The negotiation process is expected to begin in March 2019  It is unclear how, or if, the plurilateral effort will overlap or be incorporated into the existing multilateral work program  Some countries viewed the 11 th Ministerial meeting as a missed opportunity to reinvigorate the stalled EGA plurilateral negotiations  The EGA negotiations, initiated in mid-2014 by 14 WTO members including the United States and China, seek to liberalize trade in environmental goods through tariff liberalization  Current EGA members represent 86% of global trade in covered environmental goods  Like the ITA, the EGA would be an open plurilateral agreement so that the benefits achieved through negotiations would be extended on an MFN basis to all WTO members  Despite 18 rounds of negotiations, members were unable to conclude the agreement at the December 2016 General Council   meeting, and talks have since stalled  Most parties blamed China for the lack of progress, as it rejected the list of products to be included and requested several lengthy tariff phaseout periods which other countries refused to accept  The EGA's future now remains uncertain—while several countries have expressed support for resuming the talks, the Trump Administration has not put forward a public position on the agreement  The inability of WTO members to conclude a comprehensive agreement during the Doha Round raised new questions about the WTO's future direction  Many intractable issues from Doha remain unresolved, and members have yet to reach consensus on a way forward  Persistent differences about the extent and balance of trade liberalization continue to stymie progress, as evidenced by the outcomes of recent ministerial meetings  Further, members remain divided over adopting new issues on the agenda, amid concerns that the WTO could lose relevance if its rules are not updated to reflect the modern global economy  Some WTO members seek to incorporate new issues that pose challenges to the trading system, such as digital trade, competition with SOEs, global supply chains, and the relationship between trade and environment issues  These divisions have called into question the viability of the "single undertaking," or one-package approach in future multilateral negotiations and suggest broader need for institutional reform if the WTO is to remain a relevant negotiating body  Moreover, the consistent practice of some countries like India to block discussion of new issues serves as a reminder of the power of a single member to halt progress in the WTO's consensus-based system  As a result of slow progress at the WTO, countries have increasingly turned to other venues to advance trade liberalization and rules, namely plurilateral agreements and preferential FTAs outside the WTO  Plurilaterals have been seen as having the potential to resurrect the WTO's relevance as a negotiating body, but have also been seen as possibly undermining multilateralism if the agreements are not extended to all WTO members on an MFN basis  Regional trade agreements have also been seen as potential laboratories for new rules  How these negotiations and agreements will ultimately affect the WTO's status as the preeminent global trade institution is widely debated  In addition, an open question is whether U S  leadership within these initiatives will continue under the Trump Administration  More recently, concerns for some have been mounting about further strains on the multilateral system, due to the growing use of trade protectionist policies by both developed and developing countries, the recent U S  tariff actions and counterretaliation by other countries, and the escalating trade disputes between major economies  Many countries are questioning whether the WTO is equipped to effectively handle the challenges of emerging markets, as well as the deepening trade tensions  Some experts view the system as facing a potential crisis, while o thers remain optimistic that the current state of affairs could spur renewed focus on reforms of the system  Certain WTO members, like the EU and Canada, have begun to explore some areas for reform (see below)  In contrast to the consensus-based agreements of the WTO, some members, including the United States, point to the progress made in sectoral or plurilateral settings as the way forward for the institution  By assembling coalitions of interested parties, negotiators may more easily and quickly achieve trade liberalizing objectives, as shown by the ITA  Sectoral agreements are viewed as one way to pursue new agreements and extend WTO disciplines and commitments in new areas, including, for example, U S  trade priorities in digital trade and SOEs  The commitments by some WTO members to pursue talks in e-commerce, investment facilitation, and SMEs could plant the seeds for future plurilaterals  Plurilateral negotiations, however, still involve resolving divisions among developed and advanced developing countries  Members were able ultimately to overcome their differences in the ITA negotiation, but thus far have been unable to reach consensus in the EGA  At the same time, the participation of developing and emerging market economies, such as China and India, is critical to achieving agreements that cover a meaningful share of global trade  There is also a concern that plurilateral agreements not applied on an MFN basis could lead nonparticipating countries to become marginalized from the trading system and face new trade restrictions  To attract a critical mass of participants and lower barriers for developing countries and LDCs who may be hesitant to agree to ambitious commitments, agreements could allow flexibility in implementation timeframes and provide additional assistance, as in the TFA  Some experts question whether potential waning U S  leadership in plurilateral and multilateral trade negotiations might slow momentum toward concluding new agreements (see " Value of the Multilateral System and U S  Leadership and Membership ")  The Trump Administration has yet to clarify its position on plurilaterals pursued under the Obama Administration, such as EGA and TiSA, which have stalled, but is supporting new efforts on e-commerce/digital trade  Given that the WTO allows its members to establish preferential FTAs outside the WTO that are consistent with WTO rules, many countries have formed bilateral or regional FTAs and customs areas; since 1990, the number of RTAs in force has increased seven-fold, with 290 trade agreements notified to the WTO and in force, as of the end of 2018  FTAs have often provided more negotiating flexibility for countries to advance new trade liberalization and rulemaking that builds on WTO agreements; however, the agreements vary widely in terms of scope and depth  Like plurilaterals, many view comprehensive FTAs as having potential for advancing the global trade agenda  Also like plurilaterals, however FTAs can also have downsides compared to multilateral deals  The United States currently has 14 FTAs in force with 20 countries  The Trump Administration has stated a preference for negotiating bilateral FTAs, rather than multiparty agreements  In September 2018, the United States, Mexico, and Canada completed negotiations of the proposed USMCA, which revamps the North American Free Trade Agreement (NAFTA)  The United States and South Korea also agreed to some modifications of their bilateral FTA  In addition, USTR notified Congress of its intent to begin trade negotiations with the EU, Japan, and the UK  In general, U S  FTAs are considered to be "WTO-plus" in that they reaffirm the WTO agreements, but also eliminate most tariff and nontariff barriers and contain rules and obligations in areas not covered by the WTO  For example, most U S  FTAs include access to services markets beyond what is contained in the GATS or, more recently, digital trade obligations  While U S  FTAs cover some major trading partners, the majority of U S  trade, including with significant trade partners such as China, the EU, and Japan, continues to rely solely on the terms of market access and rulemaking in WTO agreements  In 2017, the United States traded $3 4 trillion with non-FTA partners, compared to $1 8 trillion with its FTA partners ( Figure 8 )  More recently, groups of countries have also been pursuing so-called "mega-regional" trade agreements that cover significant shares of global trade  These include the CPTPP signed in March 2018 between 11 countries in the Asia-Pacific to replace the TPP, ongoing negotiations over the Regional Comprehensive Economic Partnership (RCEP) between the Association of Southeast Asian Nations (ASEAN) and six of its FTA partners including China, and the Pacific Alliance signed in June 2012 among Chile, Colombia, Mexico, and Peru  Negotiations on the proposed Transatlantic Trade and Investment Partnership (T-TIP) between the United States and EU stalled, and though new U S -EU trade talks are to resume, their scope remains unclear  Such agreements could potentially consolidate trade rules across regions and to a varying extent address new issues not covered by the WTO  There has been wide debate regarding the relationship of preferential FTAs to the WTO and multilateral trading system  Some argue that crafting new rules through mega-regionals could undermine the trading system, create competing regional trade blocs, lead to trade diversion, and marginalize countries not participating in the initiatives  On the other hand, some view such agreements as potentially spurring new momentum at the global level  WTO DG Azevêdo has supported the latter sentiment, expressing that "RTAs [regional trade agreements] are blocks which can help build the edifice of global rules and liberalization " Many analysts have viewed the CPTPP specifically through this lens  Some experts view plurilateral agreements in particular as potential vehicles for bringing new rulemaking from RTAs into the multilateral trading system  While RTAs may propagate precisely what the multilateral system—with MFN and national treatment at its underpinnings—was designed to prevent, namely trade diversion and fragmented trading blocs, some observers believe it may be the only way trade may be liberalized in the future as additional interested parties could join the agreements over time  Since the founding of the WTO, the landscape of global trade has changed dramatically  The commercial internet, the growth of supply chains, and increasing trade in services have all contributed to the tremendous expansion of trade  However, WTO disciplines have not been modernized or expanded since 1995, aside from the TFA and the renegotiation of the ITA and the GPA  In addition to ongoing WTO efforts to negotiate new trade liberalization and rules in areas like e-commerce and digital trade, the following are selected areas of trade policy that could be subjects for future negotiations multilaterally within the WTO, or as plurilaterals  Meaningful progress in areas such as services, competition with SOEs, investment, and labor and environment issues could help increase the relevance of the WTO as a negotiating body  Since the GATS, the scope of global trade in services has increased tremendously, spurred by advances in IT and the growth of global supply chains  Yet, these advances are largely not reflected in the GATS  WTO members committed to further services negotiations (GATS Article XIX), which began in 2000 and were incorporated into the Doha Round  Further talks were spurred by the recognition among many observers that the GATS, while it extended the principles of nondiscrimination and transparency to services trade, was not thought to provide much actual liberalization, as many countries simply bound existing practices  However, services negotiations during Doha also succumbed to the resistance of developing countries to open their markets in response to developed country demands, as well as dissatisfaction with other aspects of the single undertaking  Whether the stalled plurilateral TiSA talks will ultimately lead to services reform in the WTO is an open question  Aside from increased market access, several issues are ripe for future negotiations at the WTO, such as transition from the current positive list schedule of commitments to a negative list  Instead of a member declaring which services are open for competition, it would need to declare which sectors are exempted  This exercise in itself could force members to reexamine their approximately 25-year-old commitments and decide whether current market access barriers will be maintained  New services sectors, such as online education and telemedicine, that were not envisioned at the founding of GATS could also be the subject of future negotiations, at least on a plurilateral basis  The issue of "servicification" of traditional goods industries—for example, services that are sold with a good, such as insurance or maintenance services, or enabling services, such as distribution, transportation, marketing, or retail—has also attracted attention as the subject of possible WTO negotiations  Other issues of interest to members include services facilitation (transparency, streamlining administrative procedures, simplifying domestic regulations), and emergency safeguards, envisioned in the GATS (Article X) as an issue for future negotiation  The United States and other members of the WTO see an increased need to discipline state-owned or state-dominated enterprises engaged in international commerce, and designated monopolies, whether through the WTO or through regional or bilateral FTAs  However, WTO rules on competition with state-owned or state-dominated enterprises are limited to state trading enterprises (STE)—enterprises, such as agricultural marketing boards, that influence the import or export of a good  GATT Article XVII requires them to act consistently with GATT commitments on nondiscrimination, to operate in accordance with commercial considerations, and to abide by other GATT disciplines, such as disciplines on import and export restrictions  The transparency obligations consist of reporting requirements describing the reason and purpose of the STE, the products covered by STE, a description of its functions, and pertinent statistical information  Meanwhile, countries desiring disciplines on SOEs have turned to FTAs  The TPP and the proposed USMCA have dedicated chapters on SOEs  The USMCA includes commitments that SOEs of a party act in accordance with commercial considerations; requires parties to provide nondiscriminatory treatment to like goods or services to those provided by SOEs; and prohibits most noncommercial assistance to its SOE, among other issues  The SOE chapter in USMCA likely is aimed at countries other than the three USMCA parties, such as China, to signal their negotiating intentions going forward  While there could be a desire to multilateralize these disciplines, they likely would face objections from those members engaged in such practices  State support provided to SOEs, including subsidies, is a closely related issue, as it can play a major role in market-distorting behavior under current rules  The WTO ASCM covers the provision of specified subsidies granted to SOEs, including by the government or any "public body " Some members, including the United States and EU, have contested past interpretations by the WTO Appellate Body of what qualifies as a public body as too narrow, and remain concerned that a large share of Chinese and other SOEs in effect have avoided being subject to disciplines  As discussed, the United States, EU, and Japan are engaged in ongoing discussions on strengthening rules on industrial subsidies and SOEs, including "how to develop effective rules to address market-distorting behavior of state enterprises and confront particularly harmful subsidy practices "  They commit to both "maintain effectiveness of existing WTO disciplines" and also initiate negotiations on "more effective subsidy rules" in the near future  At the latest meetings in January 2019, the three partners indicated plans to finalize a proposed text on industrial subsidies by spring 2019  With limited provisions under TRIMS and GATS, rules and disciplines covering international investment are not part of WTO  More extensive protection for investors was one of the "Singapore issues" proposed at the 1996 WTO Ministerial as a topic for future negotiations, but then dropped under opposition from developing countries at the 2003 Cancun Ministerial  The OECD also attempted to liberalize investment practices and provide investor protections through a Multilateral Agreement on Investment, however, that effort was abandoned in 1998 in the face of widespread campaigns by nongovernment organizations in developed countries  While multilateral attempts to negotiate investment disciplines have not borne fruit, countries have agreed to investment protections within bilateral investment treaties (BITs) and chapters in bilateral and regional FTAs  The U S  "model BIT" serves as the basis for most recent U S  FTAs  These provisions are often negotiated between developed countries and developing countries—often viewed as having less robust legal systems—that want to provide assurance that incoming FDI will be protected in the country  Developed countries themselves have begun to diverge on the use and inclusion of provisions on investor-state dispute settlement (ISDS)  Incorporating investment issues more fully in the WTO would recognize that trade and investment issues are increasingly interlinked  Moreover, bringing coherence to the nearly 3,000 BITs or trade agreements with investment provisions could be a role for the WTO  In addition, agreement on investment disciplines could help to resolve the thorny issue of investment adjudication between the competing models of ISDS and an investment court, as proposed by the EU in its recent FTAs, given that disputes likely would remit to WTO dispute settlement  While it remains unclear whether developing countries would be more amenable to negotiating investment disciplines multilaterally than they were in 2003, this area could be ripe for plurilateral activity  In the meantime, since the Ministerial some WTO members are pursuing the development of a multilateral framework on investment facilitation  The group is comprised of a mix of developed and developing economies, including the EU, Canada, China, Japan, Mexico, Singapore, and Russia, but not the United States  Labor and environmental provisions were not included in the Uruguay Round agreements, largely at the insistence of developing countries  Some observers maintain that this has created major gaps in global trade rules and call for the WTO to address these issues  Related provisions have developed and evolved within U S  FTAs outside the WTO  Recent U S  FTAs require partner countries to adhere to internationally recognized labor principles of the International Labor Organization (ILO) and applicable multilateral environmental agreements, and to enforce their labor or environmental laws and not to derogate from these laws to attract trade and investment  The CPTPP and proposed USMCA also contain provisions, though not identical, prohibiting the most harmful fisheries subsidies, and relating to illegal trafficking, marine species, air quality, marine litter, and sustainable forestry  More broadly, while inclusion of labor and environmental provisions within FTAs has expanded in the past decade, in general the commitments can vary widely in their scope and depth, with only some subject to dispute settlement mechanisms  While general provisions on labor and environment may be a heavy lift at this time given these differences, the WTO has undertaken an effort to discipline fisheries subsidies, which could have a beneficial environmental effect (see above)  However, fisheries subsidies may be a special case, as it directly pertains to an existing trade-related agreement, the ASCM  Many observers believe the WTO needs to adopt reforms to continue its role as the foundation of the world trading system  In particular, its negotiating function has atrophied following the collapse of the Doha Round  Its dispute settlement mechanism, while functioning, is viewed by some as cumbersome and time consuming  And some observers, including U S  officials, contend it has exceeded its mandate when deciding cases  Potential changes described below address institutional and negotiation reform, as well as reforms to the dispute settlement system  Reforms concern the administration of the organization, including its procedures and practices, and attempts to address the inability of WTO members to conclude new agreements  Dispute settlement reforms attempt to improve the working of the dispute settlement system, particularly the Appellate Body (AB)  Addressing concerns related to the dispute settlement system may take priority in the near term, as the WTO faces a pending crisis should the AB fall below its three-member quorum in late 2019  Certain WTO members have begun to explore some aspects of reform  In July 2018, the European Commission produced a discussion paper on WTO reform proposals, and in September published a revised paper on its comprehensive approach "to modernise the WTO and to make international trade rules fit for the challenges of the global economy " As noted, the United States, EU, and Japan have issued scoping papers and joint statements on strengthening WTO disciplines on industrial subsidies and SOEs and cooperating on forced technology transfer  In addition, Canada organized a ministerial among a small group of "like-minded" countries interested in WTO reform, including Australia, Brazil, Chile, the EU, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea, and Switzerland, held in Ottawa on October 24-25, based on a discussion draft of its proposals  Canadian trade officials have said that "starting small has allowed us to address problems head-on and quickly develop proposals," while acknowledging that a larger effort must include the United States and China  In a joint communiqué, the group of 13 countries emphasized that "the current situation at the WTO is no longer sustainable," and identified three areas requiring "urgent consideration": safeguarding and strengthening the dispute settlement system; reinvigorating the WTO's negotiating function; including how the development dimension can be best pursued in rulemaking; and strengthening the monitoring and transparency of WTO members' trade policies  The group met again in January 2019 on the sidelines of the annual World Economic Forum meetings, committing to make "significant progress" toward WTO reform before the G20 meetings convene in June 2019  Some Members of Congress have expressed support for these new efforts to address long-standing concerns of the United States  While consensus in decisionmaking is a long-standing core practice at the GATT/WTO, voting on a nonconsensus basis is authorized for certain activities on a one member-one vote basis  For example, interpretations of the WTO agreements and country waivers from certain provisions require a three-fourths affirmative vote for some matters, while a two-thirds affirmative vote is required for an amendment to an agreement  However, even when voting is possible, the practice of consensus decisionmaking remains the norm  As an organization of sovereign entities, some observers believe the practice of consensus decisionmaking gives legitimacy to WTO actions  Consensus assures that actions taken are in the self-interest of all its members  Consensus also reassures small countries that their concerns must be addressed  However, the practice of consensus has often led to deadlock, especially in the Doha Round negotiations  The ability to block consensus also has perpetuated so-called "hostage taking," in which a country can block consensus over an unrelated matter  In order to attempt to expedite institutional decisionmaking, some expert observers have proposed alternatives to the current system, such as the following: Use the voting procedures currently prescribed in the WTO agreements  Adopt a weighted voting system based on a formula that includes criteria relating to a member's gross domestic product, trade flows, population, or a combination thereof  Establish an executive committee composed of a combination of permanent and rotating members, or composed based on a formula as above or representatives of differing groups of countries  Maintain current consensus voting but require a member stating an objection to explain why it is doing so, or why it is a matter of vital national interest  The "single undertaking" method by which WTO members negotiate agreements means that during a negotiating round, all issues are up for negotiation until everything is agreed  On one hand, this method, in which nothing is agreed until everything is agreed, is suited for large, complex rounds in which rules and disciplines in many areas of trade (goods, services, agriculture, IPR, etc ) are discussed  It permits negotiation on a cross-sectoral basis, so countries can make a concession in one area of negotiation and receive a concession elsewhere  The method is intended to prevent smaller countries from being "steamrolled" by the demands of larger economies, and helps ensure that each country sees a net benefit in the resulting agreement  On the other hand, arguably, the single undertaking has contributed to the breakdown of the negotiating function under the WTO, exemplified by the never-completed Doha Round, as issues of importance to one country or another served to block consensus at numerous points during the round  Some members, including the EU, have called for "flexible multilateralism," based on continued support for full multilateral negotiations where possible, but pursuit of plurilateral agreements on an MFN basis where multilateral consensus is not possible  An important task of the WTO is to monitor each member's compliance with various agreements  A WTO member is required to notify the Secretariat of certain relevant domestic laws or practices so that other members can assess the consistency of WTO members' domestic laws, regulations, and actions with WTO agreements  Required notifications include measures concerning subsidies, agricultural support, quantitative restrictions, technical barriers to trade, and sanitary and phytosanitary standards  Compliance with the WTO agreement's notification requirements, especially regarding government subsidy programs, has become a serious concern among certain members, including the United States  Many WTO members are late in submitting their required notifications or do not submit them at all  This effectively prevents other members from fully examining the policies of their trading partners  In response, some members—notably the United States and the EU—have proposed incentives for compliance or sanctions for noncompliance with notification reporting requirements  These include the following: A U S  proposal to impose a series of sanctions including steps to "name and shame" an offending member, limiting the member from using certain WTO resources, and designating a member "inactive " An EU proposal to create a rebuttable presumption that a non-notified subsidy measure is an actionable subsidy or a subsidy causing serious prejudice, thereby allowing a member to challenge the subsidy under WTO dispute settlement  An EU proposal to encourage counternotifications—a challenge to the accuracy or existence of another member's notification—against members that do not voluntarily notify on their own  In May and November 2018, for example, the United States launched counternotifications of India's farm subsidy notifications regarding wheat, rice, and cotton  In November 2018, the United States, EU, Japan, Argentina, and Costa Rica put forward a joint proposal that reflects several of these elements, including penalties for noncompliance  It also specifies exemptions for developing countries that lack capacity and have requested assistance to help fulfill notification obligations  A country's development status can affect the pace at which a country undertakes its WTO obligations  Given that WTO members self-designate their status, some members hold on to developing-country status even after their economies begin more to resemble their developed-country peers  In addition, some of the world's largest economies, including China, India, and Brazil, may justify developing country status because their per capita incomes more closely resemble those of a developing country than those of developed countries  Developing country status enables a country to claim special and differential treatment (SDT) both in the context of existing obligations and in negotiations for new disciplines (see text box )  The WTO specifies, however, that while the designated status is on the basis of self-selection, it is "not necessarily automatically accepted in all WTO bodies " Developed countries, including the EU and United States, have expressed frustration at this state of affairs  In January 2019, the United States circulated a paper warning that the WTO is at risk of becoming irrelevant due to the practice of allowing members to self-designate their development status to obtain special and differential treatment  The paper noted that some of the world's richest nations, including Singapore, South Korea, and the United Arab Emirates, as well as some of the world's major trading economies, such as China and India, consider themselves developing countries at the WTO  The paper maintained that self-designation has damaged the negotiating function of the WTO, and contributed to the failure of the Doha Round and possibly ongoing negotiations, if countries can avoid making meaningful offers by claiming exemptions from the rules  Several suggestions have been made to address the situation, including encouraging countries to graduate from developing country status; setting quantifiable criteria for development status; targeting SDT in future agreements on a needs-driven, differential basis; and requiring full eventual implementation of all new agreements  Some of these steps were implemented in the WTO Trade Facilitation Agreement  Supporters of the multilateral trading system consider the dispute settlement mechanism (DSM) not only a success of the system, but essential to maintain the relevance of the institution, especially while the WTO has struggled as a negotiating body  However, the DSM is facing increased pressure for reform, in part due to long-standing U S  objections over certain rules and procedures  USTR Lighthizer contends that the WTO has become a "litigation-centered organization," which has lost its focus on negotiations  While WTO members have actively used the DSM since its creation, some have also voiced concerns about various aspects, including procedural delays and compliance, and believe the current system could be reformed to be fairer and more efficient  The Doha Round included negotiations to reform the dispute settlement system through "improvements and clarifications" to DSU rules  A framework of 50 proposals was circulated in 2003 but countries were unable to reach consensus  Discussions have continued beyond Doha with a primary focus on 12 issues, including third-party rights, panel composition, and remand authority of the Appellate Body  Under prior Administrations, the United States proposed greater control for WTO members over the process, guidelines for the adjudicative bodies, and greater transparency, such as public access to proceedings  However, these negotiations have yet to achieve results  Some experts suggest that enhancing the capabilities and legitimacy of the dispute settlement system will likely require several changes, including improving mechanisms for oversight, narrowing the scope of and diverting sensitive issues from adjudication, improving institutional support, and providing WTO members more input over certain procedures  The immediate flashpoint to the system is the refusal of the United States to consent to the appointment of new AB jurists  The United States has long-standing objections to decisions involving the AB's interpretation of certain U S  trade remedy laws in particular—the subject of the majority of complaints brought by other WTO members against the United States  The AB consists of seven jurists appointed to four-year terms on a rolling basis, with the possibility of a one-term reappointment  Each dispute case is heard by three jurists  Like the previous Administration, the Trump Administration blocked the process to appoint new jurists in 2017 and 2018, leaving only three AB jurists remaining to hear all cases  Concerns are rising that the AB, already facing a backlog of cases, could come to a halt in 2019 if additional appointments are not made  Deputy DG of the WTO Alan Wolff summarized the stakes in recent remarks, noting that if the Appellate Body were to cease to function, member countries would be unable to appeal an adverse panel decision against one of their policies, and without that option, "there is a risk of every trade dispute devolving into small and not so small trade wars, consisting of retaliation and counter-retaliation " The United States expounded on some of the perceived shortcomings of the dispute settlement system in its most recent trade policy agenda  Arguably the main U S  complaint is that the system, particularly the AB, is "adding to or diminishing U S  rights by not applying the WTO agreements as written" in the areas of subsidies, antidumping and countervailing duties, standards, and safeguards  At its crux, the current controversy is over the autonomy of the AB, its deference to the DSB, and its obligations to implement the provisions of the DSU  The United States has been the most vocal in its criticisms, yet other WTO members have expressed similar concerns  While the United States has not tabled specific reforms for these complaints to the WTO membership, other members have  Two groups (G-12, G-3) submitted specific proposals for the December 2018 General Council meeting to attempt to break the impasse  The G-12 submission reflects proposals of all 12 members; the G-3 submission contains supplementary proposals put forward by a subset of the 12  The United States criticized the proposals as seeking to change WTO DS rules to fit the practices objectionable to the United States, rather than adhering to the rules as originally negotiated  Instead of seeking to accommodate current practices, U S  Ambassador to the WTO Dennis Shea proposed that WTO members "engage in a deeper discussion of the concerns raised, to consider why the Appellate Body has felt free to depart from what WTO Members agreed to, and to discuss how best to ensure that the system adheres to WTO rules as written " Ambassador Shea also criticized the G-3 proposals as lessening the accountability of the Appellate Body, rather than increasing it  Under each of the following issues, these proposals are raised along with other reform proposals that members or observers have put forward to address current concerns  Disregard for the 90-day, DSU-mandated deadline for AB appeals  USTR claims that the AB does not have the authority to fail to meet the deadline without consulting the DSB, maintaining that the deadline "helps ensure that the AB focuses its report on the issue on appeal " The G-12 submission proposes to amend the DSU to allow parties, based on a proposal by the AB, to extend the length of time to conclude an appeal  If the parties do not agree on an extension, the AB would propose work procedures or arrangements to allow it to conclude the appeal within 90 days  In addition, the G-3 submission proposes to amend the DSU to increase the number of AB jurists from seven to nine to allow for greater efficiency and geographical diversity  Extension of service by former AB jurists on cases continuing after their four-year terms have expired  The United States maintains that the AB does not have the authority unilaterally to extend the terms of jurists, rather that authority lies with the DSB and that it is a matter of adherence to the DSU  In actual practice, however, it may be the case that having former jurists stay on to finish an appeal may be more efficient than having a new jurist join the case  The G-12 submission proposes to amend the DSU to allow outgoing AB jurists to complete the disposition of a pending appeal, provided that the hearing stage has taken place  In addition, the G-3 submission proposes that outgoing AB members continue to serve until replaced, but not more than two years following expiration of their term  Alternatively, some trade experts have suggested that the AB could refrain from assigning cases to jurists less than 90 days before their exits  During the Obama Administration, the United States blocked the reappointment of a South Korean jurist to the AB in May 2016  The United States cited what it considered "abstract discussions" in prior decisions by the jurist that went beyond the legal scope of the WTO  This action has led to the concern that the prospect of non-reappointment could affect the independence of the AB system  However, one former AB jurist opines that, "reappointment is an option, not a right," and calls for the WTO members to determine if a more formal process similar to initial appointment of AB jurists is needed for reappointment  The G-3 submission proposes to amend the DSU to permit AB members to serve one term of longer length (6-8 years) and not allow for reappointment  Other criticisms of the AB involve the extent to which it can interpret WTO agreements  The United States, in arguing for a more restrictive view of the power of the DSB, points to Article 3 2 that "recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements" (see text box above)  However, those supporting a more expansive view of the DSU's role can point to the same article, which highlights the role "to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law " The scope and reach of the AB's activities is an enduring controversy for the organization, not limited to the Trump Administration  USTR has flagged several specific practices relating to these issues, such as the following: Issuing advisory opinions on issues not relevant to the issue on appeal  This point is related to the U S  concern that the AB is engaged in "judicial overreach" by going beyond deciding the case at hand  USTR contends that the ability to issue advisory opinions or interpretations of text rests with the Ministerial Conference or General Council  The G-12 proposes to amend the DSU to stipulate that the AB address each issue raised in a dispute "to the extent necessary for the resolution of the dispute " Rather than issue advisory opinions, some observers have suggested that the AB also could "remand" issues of uncertainty to the standing committees of the WTO for further negotiation  In addition, members could also use a provision of the WTO Agreement (Article IX 2) to seek an "authoritative interpretation" of a WTO text at the General Council or Ministerial Conference, which could be adopted by a three-fourths vote  De novo review of facts or domestic law in cases on appeal  The United States alleges that the AB is not giving the initial panel due deference on matters of fact, including regarding the panel's interpretation of domestic law  This point derives from USTR's view that a country's domestic law should be considered as fact, and that the panel's interpretation of the domestic law is thus not reviewable by the AB  The G-12 submission proposes to amend the DSU to clarify that the meaning of a party's domestic laws is a matter of fact, and not reviewable by the AB  Treatment of AB decisions as precedent  Like the previous two concerns, this complaint speaks to the alleged overreach of the AB  USTR asserts that while AB reports can provide "valuable clarification" of covered agreements, they cannot be considered or substituted for the WTO agreements and obligations negotiated by members  However, according to a former DG of the WTO, "the precedent concept used in the WTO jurisprudence is     centrally important to the effectiveness of the WTO dispute settlement procedure goals of security and predictability " A related concern some WTO members have is "gap-filling" by the DS system, where the legal precedent is unclear or ambiguous or there are no or incomplete WTO rules regarding a contested issue  Here there are diametrically opposite beliefs: a U S  trade practitioner asks, "Is filling gaps and construing silences really not the creation of rights and obligations through disputes vs  leaving such function to negotiations by the members?" The former DG, however, contends that "every juridical institution has at least some measure of gap-filling responsibility as part of its efforts to resolve ambiguity " The issue of the legitimacy of precedence or gap-filling may be one of the thorniest issues of all with few solutions proposed that would potentially satisfy differences among members  The G-12 submission proposes to amend the DSU to establish a yearly meeting between the AB and the DSB  This session would allow for WTO members to comment on rulings made during the year  According to the submission, it could be a venue "where concerns with regard to some Appellate Body approaches, systemic issues or trends in the jurisprudence could be voiced " It is likely that many of the issues that could arise from proposed reforms to the WTO system would require clarification of or amendment to the language of the Marrakesh Agreement or the DSU  Clarification could take the form of interpretation of the agreements  As noted above, interpretation can be undertaken by the Ministerial Conference (held every two years), General Council, or Dispute Settlement Body, with a three-fourths vote of the WTO membership  Amending the decisionmaking provisions of the Marrakesh Agreement (Article IX) or the DSU would require consensus of the membership at the Ministerial Conference (Marrakesh Agreement, Article X 8)  Amendments to the Marrakesh Agreement would require a two-thirds vote of the membership  As noted above, negotiations related to reforms of the DSM occurred during the Doha Round, and despite the criticism of the DSM by the United States and others, the General Council or the DSB has not undertaken serious consideration of these reforms  The United States has served as a leader in the WTO and the GATT since their creation  The United States played a major role in shaping GATT/WTO negotiations and rulemaking, many of which reflect U S  laws and norms  It was a leading advocate in the Uruguay Round for expanding negotiations to include services and IPR, key sources of U S  competitiveness, as well as binding dispute settlement to ensure new rules were enforceable  Today, many stakeholders across the United States rely on WTO rules to open markets for importing and exporting goods and services, and to defend and advance U S  economic interests  The Trump Administration has expressed doubt over the value of the WTO and multilateral trade negotiations to the U S  economy  As a candidate, President Trump asserted that WTO trade deals are a "disaster" and that the United States should "renegotiate" or "pull out "  In late June 2018, media reports suggested that President Trump was considering withdrawing the United States from the WTO  While U S  officials have downplayed talks of withdrawal as "premature" and an "exaggeration," the President has since reportedly repeated these threats in July and August 2018  The Administration has continued to express skepticism toward the value of multilateral agreements, preferring bilateral negotiations to address "unfair trading practices " In addition, "reform of the multilateral trading system" is a stated Administration trade policy objective  While some U S  frustrations with the WTO are not new and are shared by other trading partners, the Administration's overall approach has spurred new questions regarding the future of U S  leadership of and participation in the WTO  Most observers would maintain that the possibility of U S  withdrawal from the WTO remains unlikely for procedural and substantive reasons  Procedurally, a withdrawal resolution would have to pass the House and Senate; it has also been debated what legal effect the resolution would have if adopted  Moreover, if the United States were to consider such a step, withdrawal would have a number of practical consequences  The United States could face economic costs, since absent WTO membership, remaining members would no longer be obligated to grant the United States MFN status under WTO agreements  WTO rules also restrict members' ability to use quotas, regulations, trade-related investment measures, or subsidies in ways that discriminate or disadvantage U S  goods and services  They also require members to respect U S  IPR  Consequently, U S  businesses could face significant disadvantages in other markets, as members without FTAs with the United States could raise tariffs or other trade barriers at will  Nondiscrimination, a key bedrock principle of the multilateral trading system, could be eroded, particularly given the added impetus U S  withdrawal could give to the proliferation of FTAs  Withdrawal could also lead to a U S  loss of influence over how important international trade matters are decided and who writes global trade rules  In the process, economic inefficiencies and political tensions could increase  Exiting the WTO and the international trading relationships it creates and governs could have broader policy implications, including for cooperation between the United States and allies on foreign policy issues  Another question is whether the WTO would flounder without U S  leadership, or whether other WTO members like the EU and China would increase their roles  As some in the United States question the value of WTO participation and leadership, other countries have begun to assert themselves as leaders and advocates for the global trading system  As noted, cooperation on WTO reform has become elevated as a major topic of discussion at recent high-level meetings, including the latest EU-China Summit held in July 2018 and at the October summit held in Canada among trade ministers from 13 WTO members  Congressional oversight could examine the value, both economic and political, of U S  membership and leadership in the WTO  As part of its oversight, Congress could consider, or could ask the U S  International Trade Commission to investigate, the value of the WTO or potential impact of withdrawal from the WTO on U S  businesses, consumers, federal agencies, laws and regulations, and foreign policy  Congress could vote on a resolution expressing support of the WTO, instructing USTR to prioritize WTO engagement, or, conversely, a resolution for disapproval of U S  membership under the URAA in 2020  The founding of the GATT and creation of the WTO were premised on the notion that an open and rules-based multilateral trading system was necessary to avoid a return to the nationalistic interwar trade policies of the 1930s  There are real costs and benefits to the United States and other countries to uphold the rules and enforce their commitments and those of other WTO members  A liberalized, rules-based global trading system increases international competition for companies domestically, but also helps to ensure that companies and their workers have access and opportunity to compete in foreign markets with the certainty of a stable, rules-based system  A framework for resolving disputes that inevitably arise from repeated commercial interactions may also help ensure such trade frictions do not spill over into broader international relations  However, certain actions by the Trump Administration and other countries have raised questions about respect for the rules-based trading system, and could weaken the credibility of the WTO  In particular, recent U S  actions to raise tariffs against major trading partners under Section 232 and Section 301, and to potentially obstruct the functioning of the dispute settlement system by withholding approval for appointments to the AB, have prompted concerns that the United States and other countries who have retaliated to the U S  actions may undermine the effectiveness and credibility of the institution that it helped to create  Moreover, the outcomes of controversial ongoing dispute cases at the WTO, initiated by several countries over U S  tariffs, could set precedents and have serious implications for the future credibility of the global trading system  In particular, several U S  trading partners view U S  action as blatant protection of domestic industry and not a legitimate use of the national security exception  Some are concerned that U S  actions may embolden other countries to protect their own industries under claims of protecting their own national security interests  Furthermore, U S  tariff actions outside of the multilateral system's dispute settlement process may open the United States to criticism and could impede U S  efforts to use the WTO for its own enforcement purposes  Respect for the rules is also weakened when any country imposes new trade restrictions and takes actions that are not in line with WTO agreements  In particular, China's industrial state policies, including IPR violations and forced technology transfer practices, arguably damage the credibility of the multilateral trading system that is based on respect for the consensus-based rules  In part, the WTO's perceived inability to address certain Chinese policies led to the United States resorting to Section 301 actions  Other countries' pursuit of industrial policy or imposition of discriminatory measures broadly in the name of national or economic security further call into question the viability of the WTO rules-based system  Under the Trump Administration, USTR has put new emphasis on "preserving national sovereignty" within the U S  trade policy agenda, emphasizing that any multinational system to resolve trade disputes "must not force Americans to live under new obligations to which the United States and its elected officials never agreed " The question of sovereignty is not a new one  The withdrawal procedures in the URAA responded to concerns that the WTO would infringe on U S  sovereignty  During the congressional debate over the Uruguay Round agreements, there were some proposals to create extra review mechanisms of WTO dispute settlement, and many Members stressed that only Congress can change U S  laws as a result of dispute findings  While U S  concerns regarding alleged "judicial overreach" in WTO dispute findings are long-standing, the Trump Administration has also emphasized unilateral action outside the WTO as a means of defending U S  interests, including national security  Some observers fear that disagreements at the WTO on issues related to national security (e g , Section 232 tariffs) may be difficult to resolve through the existing dispute settlement procedures, given current disagreements related to the WTO AB and concerns over national sovereignty that would likely be raised if a dispute settlement panel issued a ruling relating to national security  As noted previously, Article XXI of the GATT allows WTO members to take measures to protect "essential security interests " WTO members and parties to the GATT have invoked Article XXI in other trade disputes  These parties, including the United States, have often argued that each country is the sole judge of questions relating to its own security interests  However, neither the WTO members nor a WTO panel have formally interpreted the Article XXI exception to define its scope  Accordingly, there is little guidance as to (1) whether a WTO panel would decide, as a threshold matter, that it had the authority to evaluate whether U S  invocation of the exception was proper; and (2) how a panel might apply the national security exception, if invoked, in any dispute before the WTO involving the steel and aluminum tariffs  The broadened membership of the WTO over the past two decades has promoted greater integration of emerging markets such as Brazil, Russia, India, and China in the global economy, and helped ensure that developing country interests are represented on the global trade agenda  At the same time, many observers have attributed the inability of WTO members to collectively reach compromise over new rules and trade liberalization to differing priorities for reforms and market opening among developed countries and emerging markets  One question is to what extent emerging countries like China, with significant economic clout, will take on greater leadership; will such countries play a constructive role, advance the global trade agenda, and facilitate compromise among competing interests? China has voiced support for globalization and the multilateral trading system under which it has thrived  The Chinese government's recent white paper on the WTO stated the following: "The multilateral trading system, with the WTO at its core, is the cornerstone of international trade and underpins the sound and orderly development of global trade  China firmly observes and upholds the WTO rules, and supports the multilateral trading system that is open, transparent, inclusive and nondiscriminatory " At the same time, China has blocked further progress in certain initiatives, including the WTO plurilateral Environmental Goods Agreement, and has not put forward a sufficiently robust offer on government procurement to join that WTO agreement, a long-standing promise  With its industrial policies that advantage domestic industries, some analysts contend that China often abides by the letter but not the "spirit" of WTO rules, raising questions about the country's willingness in practice to take on more leadership responsibility in the WTO context  Another related concern voiced by the United States and other WTO members is the role of large emerging markets and the use of developing country status by those and other countries to ensure flexibility in implementing future liberalization commitments  The United States could work with other WTO members to set specific criteria to clarify the "developing" country qualification, such as using a combination of metrics including GDP, per capita income, and trade volume  Members could be given incentives to graduate from developing status; different WTO agreements could offer different incentives  The Administration included "reform of the multilateral trading system" in its 2018 trade policy objectives  Congress may also hold oversight hearings to ask the USTR about specific plans or objectives regarding WTO reforms for the institution, dispute settlement, or in regards to updating or amending existing agreements to address trade barriers and market-distorting behaviors not sufficiently covered by current rules  Congress could also consider directing the executive branch to increase U S  engagement in reform negotiations, by, for example, endorsing the current trilateral negotiations announced by USTR, the EU, and Japan to address nonmarket practices, mostly aimed at China  Congress may also want to review the recent report by economists from the WTO, the IMF, and the World Bank that identifies potential areas for greater trade integration, and determine which are in the U S  national economic interest  Congress could further consider establishing specific or enhanced new negotiating objectives for multilateral trade agreement negotiations, possibly through amendment to TPA  Congress may request that USTR provide an update of ongoing plurilateral negotiations to address new issues, including digital trade—specified by Congress as a principal trade negotiating objective of TPA  Some experts argue however, that recent U S  unilateral tariff actions may limit other countries' interest in engaging in future WTO or other negotiations to reduce international trade barriers and craft new rules  Such concerns are amplified given the proliferation of preferential FTAs outside the context of the WTO, which have the potential for discriminatory effects on countries not participating, including the United States  Congress may consider the long-term implications of the U S  actions on current and future trade negotiations  The future outlook of the multilateral trading system is the subject of growing debate, as it faces serious challenges, some long-standing and some emerging more recently  Some experts view the system as long stagnant and facing a potential crisis; others remain optimistic that the current state of affairs could spur new momentum toward reforms and alternative negotiating approaches moving forward  Despite differing views, there is a growing consensus that the status quo is no longer sustainable, and that there is urgent need to improve the system and find ground for new compromises if the WTO is to remain the cornerstone of the trading system  Debate about the path forward continues  Recent proposals for WTO reforms and for new rules have provided the seeds for new ideas, though concrete solutions and next steps have yet to be agreed among countries involved in discussions  In the near term, several events on the horizon could provide added impetus for resolving differences and assessing progress  The dispute settlement system could cease to function by late 2019 if the terms of the three remaining AB members continue to expire without the approval of new appointments  WTO members will also face their biennial Ministerial Conference in June 2020, which could provide an opportunity for countries to announce completion of ongoing negotiations, such as on fisheries subsidies, and concrete progress in other areas of long-standing priority, including the plurilateral efforts launched during the 2017 Ministerial  Meanwhile, other ambitious trade initiatives outside the WTO are proceeding, including the CPTPP, which entered into force in December 2018 for several members and which many analysts view as providing a possible template for future trade liberalization and rulemaking in several areas  
Report 2:  In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate  As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate  FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties  However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed  Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology  First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties  Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss  Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988  Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases  Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used  Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented  In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas  Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch  In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent  This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates  However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low  Agency officials told us that they had not addressed this weakness because of other priorities  Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information  In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities  As a result, our recommendation remains open  FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest  FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount  Agency officials said that they plan to do such consultations through COMSTAC  However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed  As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain  This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected  Because of this potential exposure, we maintain that addressing this weakness is a priority  As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties  FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios  The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle  According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive  The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool  According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations  In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations  Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates  For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties  We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage  For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex  Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large  In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties  While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches  The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations  As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety  Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives  For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system  Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources  Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources  We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade  FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012  FAA’s MPL methodology is critical in balancing the encouragement of the U S  commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents  However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness  In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs  Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA  FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions  However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority  FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete  For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988  While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open  Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed  These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government  We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds  (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government  (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government  (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch  (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment  In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations  The Department of Transportation also provided technical comments, which we incorporated as appropriate  We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation  In addition, this report will be available at no charge on GAO’s website at http://www gao gov  If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Individuals making key contributions to this report are listed in appendix II  In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report 

ground_truth: The federal government pays benefits to coal miners affected by coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) and other lung diseases linked to coal mining in cases where responsible mine operators are not able to pay. In 2019, the monthly benefit for a miner with no dependents is $660.10. Benefits can be as much as $1,320.10 per month for miners with three or more dependents. Medical benefits are provided separately from disability benefits. Benefit payments and related administrative expenses in cases in which the responsible operators do not pay are paid out of the Black Lung Disability Trust Fund. The primary source of revenue for the trust fund is an excise tax on coal produced and sold domestically. If excise tax revenue is not sufficient to finance Black Lung Program benefits, the trust fund may borrow from the general fund of the Treasury. For 2018, the tax rates on coal were $1.10 per ton of underground-mined coal or $0.55 per ton of surface-mined coal, limited to 4.4% of the sales price. These rates were established in 1986. Starting in 2019, under current law, these tax rates are $0.50 per ton of underground-mined coal or $0.25 per ton of surface-mined coal, limited to 2% of the sales price. These are the rates that were set when the trust fund was established in 1977. The decline in the excise tax rates will likely put additional financial strain on a trust fund that already borrows from the general fund to meet obligations. The decline in domestic coal production, recent increases in the rate of CWP, and bankruptcies in the coal sector also contribute to the financial strain on the trust fund. The Black Lung Disability Trust Fund and associated excise tax on coal were established so that the coal industry, as opposed to taxpayers in general, would bear the burden associated with providing black lung benefits. Throughout its history, the Black Lung Disability Trust Fund has not raised revenues sufficient to meet obligations. As a result, at various points in time, Congress and the President have acted to increase the excise tax on coal, forgive or refinance trust fund debt, and modify black lung benefits eligibility. With the rate of the excise tax on coal reduced in 2019, the 116th Congress may again evaluate options for improving the fiscal condition of the Black Lung Disability Trust Fund, or other issues related to providing federal benefits to miners with black lung disease.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: T he federal government pays benefits to coal miners affected by coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) and other lung diseases linked to coal mining in cases where the responsible mine operators are not able to pay  Benefit payments and related administrative expenses are paid out of the Black Lung Disability Trust Fund  The primary source of revenue for the trust fund is an excise tax on coal produced and sold domestically  If excise tax revenue is not sufficient to finance Black Lung Program benefits, the trust fund may borrow from the general fund of the Treasury, which contains federal receipts not earmarked for a specific purpose  For 2018, the tax rates on coal were $1 10 per ton of underground-mined coal or $0 55 per ton of surface-mined coal, limited to 4 4% of the sales price  Starting in 2019, under current law, these tax rates are $0 50 per ton of underground-mined coal or $0 25 per ton of surface-mined coal, limited to 2% of the sales price  This decline in the excise tax rates will likely put additional financial strain on a trust fund that already borrows from the general fund to meet obligations  The decline in domestic coal production, recent increases in the rate of CWP, and bankruptcies in the coal sector also contribute to the financial strain on the trust fund  This report provides background information and policy options to help inform the debate surrounding the coal excise tax rate, and other considerations related to the Black Lung Disability Trust Fund  The report begins with an overview of the federal black lung program, providing information on black lung disease and benefits under the program  The report proceeds to examine Black Lung Disability Trust Fund revenues, focusing on the coal excise tax and its history  The report closes with a discussion of policy options, evaluating various revenue- and benefits-related policy options that could improve the fiscal outlook of the Black Lung Disability Trust Fund  The Black Lung Disability Trust Fund is used to finance the payment of federal Black Lung Program benefits under Part C of the Black Lung Benefits Act (BLBA) when a responsible coal operator does not meet its obligations under the law to pay benefits  Coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) is an interstitial lung disease caused by the inhalation of coal dust  Like in other types of pneumoconioses, the inhalation of coal dust results in the scarring of the lung tissue and affects the gas-exchanging ability of the lungs to remove carbon dioxide and take oxygen into the bloodstream  Exposure to coal dust over an extended period of time can lead to CWP and continued exposure can lead to the progression from the early stages of CWP referred to as "simple CWP," to more advanced stages of scarring referred to as "complicated CWP" or progressive massive fibrosis (PMF)  There is no cure for CWP and PMF  CWP can lead to loss of lung function, the need for lung transplantation, and premature death  CWP can be identified by observing light spots, or opacities, in x-ray images of the lungs and can be classified using guidelines established by the International Labour Organization (ILO)  Despite technological advances in mining dust control, mandatory chest x-rays for miners, free CWP surveillance offered to miners by the National Institute for Occupational Safety and Health (NIOSH), the enactment of numerous pieces of mine safety and health legislation, and the promulgation and enforcement of mine safety and health standards by the Mine Safety and Health Administration (MSHA), CWP persists in American coal miners, especially those in the Appalachian region  After reductions in rates of PMF in the 1990s, this advanced form of CWP has recently been found in Central Appalachia at rates not seen since the early 1970s  In 2017 researchers discovered, among coal miners mostly living in Kentucky and Virginia and served by three federally funded Black Lung Clinics in Virginia, what may be the largest cluster of PMF ever recorded  This cluster of miners with PMF includes a relatively high number of miners with less than 20 years of mining experience as well as cases of PMF in current miners  The occurrence of this advanced stage of CWP in short-tenured and current miners is noteworthy since MSHA standards require that any miner with evidence of CWP be given the option, without loss of compensation or other penalty, to work in an area of the mining operation in which the average concentration of coal dust in the air is continuously maintained at or below an established level that is lower than the permissible exposure level for all miners with the goal of preventing the progression of CWP  The federal Black Lung Program was created in 1969 with the enactment of Title IV of the Federal Coal Mine Health and Safety Act of 1969 (Coal Act, P L  91-173, later renamed the Federal Mine Safety and Health Act of 1977 by P L  95-164 )  Section 401 of the Coal Act provides the congressional justification for the federal Black Lung Program and cites the lack of benefits for disability and death caused by CWP provided by existing state workers' compensation systems as justification for the creation of a federal program  This section also states that the program is intended to be a cooperative effort between the federal government and the states  The Coal Act also established mandatory safety and health standards for coal mines, including standards limiting exposure of miners to coal dust and giving miners with CWP the option of being moved, without loss of compensation or penalty, to an area of the mine with lower dust concentrations  The Coal Act was later amended by the Black Lung Benefits Act of 1972 (BLBA, P L  92-303)  The Coal Act established Part B of the federal Black Lung Program to provide cash benefits to miners totally disabled due to CWP and to the survivors of miners who die from CWP  Part B only applies to cases filed on or before December 31, 1973  Part B benefits are paid out of general revenue and were initially administered by the Social Security Administration (SSA)  Today, with the exception of a small number of pending appellate cases, Part B benefits are administered by the Department of Labor (DOL), Office of Workers' Compensation Programs (OWCP)  The Coal Act established Part C of the Federal Black Lung Program for cases filed after December 31, 1973, and was later amended by the BLBA  Under Part C of the BLBA, all claims for benefits for disability or death due to CWP are to be filed with each state's workers' compensation system, but only if such systems have been determined by DOL as providing benefits that are equivalent to or greater than the cash benefits provided by the federal government under Part B of the BLBA and the medical benefits provided to disabled longshore and harbor workers under the federal Longshore and Harbor Workers' Compensation Act (LHWCA)  If a state's workers' compensation system is not determined by DOL to meet these standards, then Part C benefits are to be paid by the each miner's coal employer, or, if no such employer is available to pay benefits, by the federal government  In 1973, Maryland, Kentucky, Virginia, and West Virginia submitted their state workers' compensation laws to DOL for approval, but were denied  To date, no state workers' compensation system has been approved by DOL under Part C of the BLBA  Because no state's workers' compensation system has been determined to be sufficient to pay benefits under Part C, each operator of an underground coal mine is responsible for the payment of benefits to that operator's miners  Operators are required to provide for these benefits either by purchasing insurance for benefits or through self-insurance approved by DOL  A self-insured operator is required to purchase an indemnity bond or provide another form of security (such as a deposit of negotiable securities in a Federal Reserve Bank or the establishment of a trust) in an amount specified by DOL  In order to be approved for self-insurance, federal regulations require that a mine operator have been in business for at least the three previous years and have average assets over the previous three years that exceed current liabilities by the sum of expected benefit payments and annual premiums on the indemnity bond  When a claim for benefits is approved, benefits are to be paid by the "responsible" operator, which is generally the last coal operator to employ the miner  If a company has acquired the assets of a mine operator, then that company is considered a "successor operator" and is responsible for the payment of claims related to the original operator  The federal government pays benefits in cases in which the responsible operator no longer exists and has no successor operator, or is unable to pay benefits  The federal government pays benefits when an operator has not made payment within 30 days of a determination of eligibility or when benefits are otherwise due to be paid  Initially, under Part C of the Coal Act, these federal benefits were paid out of general revenue  However, pursuant to the Black Lung Benefits Revenue Act of 1977 ( P L  95-227 ), these benefits are now paid from the Black Lung Disability Trust Fund established by this law and primarily financed by an excise tax on coal  If a responsible operator can later be identified, the trust fund is authorized by law to seek to recover from this operator the amount of benefits paid by the trust fund and any interest earned on these amounts  The trust fund is also used for the following federal Black Lung Program-related expenses: the payment of benefits for miners whose last coal mine employment was before January 1, 1970; reimbursement to the Treasury for the costs of Part C benefits paid from general revenue before April 1, 1978, for periods of benefit eligibility after January 1, 1974; the repayment and payment of interest on advances made from the general fund to the trust fund; the payment of administrative expenses related to Part C of the BLBA and the coal excise tax incurred after March 1, 1978; and the reimbursement of coal operators who paid Part C benefits before April 1, 1978, for miners whose last coal mine employment ended before January 1, 1970  A miner is eligible for benefits if that miner is totally disabled due to pneumoconiosis arising out of coal mine employment  The survivors of a miner are eligible for benefits if the miner's death was due to pneumoconiosis arising out of coal mine employment  Benefits are only available to miners and their survivors  The BLBA defines a miner as any individual who works or has worked in or around a coal mine or coal preparation facility in the extraction or preparation of coal  Such term also includes an individual who works or has worked in coal mine construction or transportation in or around a coal mine, to the extent such individual was exposed to coal dust as a result of such employment  Thus, other workers who may be exposed to coal dust in their work, such as railroad workers or workers at coal-fired power plants are not eligible for benefits  Persons who live near coal mines or power plants are also not eligible for benefits even if they are exposed to coal dust  In addition, while a miner's family members may receive benefits as survivors and the number of family members can increase the amount of a miner's monthly benefits, family members may not claim benefits on their own due to exposure to coal dust in the home such as from cleaning the miner's soiled clothing  The BLBA defines pneumoconiosis for the purposes of benefit eligibility as "a chronic dust disease of the lung and its sequelae, including respiratory and pulmonary impairments, arising out of coal mine employment " The BLBA directs the Secretary of Labor to develop, through regulations, standards for determining if a miner is totally disabled due to pneumoconiosis or died due to pneumoconiosis  The federal Black Lung Program regulations provide that the definition of pneumoconiosis includes medical or "clinical" pneumoconiosis and statutory or "legal" pneumoconiosis  Clinical pneumoconiosis is defined as follows: "Clinical pneumoconiosis" consists of those diseases recognized by the medical community as pneumoconioses, i e , the conditions characterized by permanent deposition of substantial amounts of particulate matter in the lungs and the fibrotic reaction of the lung tissue to that deposition caused by dust exposure in coal mine employment  This definition includes, but is not limited to, coal workers' pneumoconiosis, anthracosilicosis, anthracosis, anthrosilicosis, massive pulmonary fibrosis, silicosis or silicotuberculosis, arising out of coal mine employment  Legal pneumoconiosis is defined as any chronic lung disease or impairment and its sequelae arising out of coal mine employment  This definition includes, but is not limited to, any chronic restrictive or obstructive pulmonary disease arising out of coal mine employment  Through these definitions, DOL has established that benefits are available not just to miners with CWP, but also to those miners with other respiratory diseases arising out of coal mine employment such as chronic obstructive pulmonary disease (COPD) even though these diseases are not pneumoconioses and may be linked to other factors unrelated to exposure to coal dust such as cigarette smoking  The BLBA contains five presumptions used to determine if a miner is eligible for black lung benefits  Three of these presumptions are "rebuttable," meaning that, in the absence of any contrary evidence, eligibility is presumed  One presumption is "irrebutable" and eligibility for Black Lung program benefits is established if the statutory requirements of the presumption are met  Three of these presumptions apply to current Black Lung Program claims while two apply only to cases filed before the end of 1981  Table 1 provides a summary of the following five presumptions provided by the BLBA  1  A rebuttable presumption that the pneumoconiosis of a miner who was employed in mining for at least 10 years was caused by his or her employment  2  A rebuttable presumption that the death of a miner who worked in mining for at least 10 years and who died of any respirable disease, was due to pneumoconiosis  This presumption does not apply to claims filed on or after January 1, 1982, the effective date of the Black Lung Benefits Amendments of 1981 ( P L  97-119 )  3  An irrebuttable presumption that a miner with any chronic lung disease which meets certain statutory tests or diagnoses is totally disabled due to pneumoconiosis or died due to pneumoconiosis  4  A rebuttable presumption that a miner employed in mining for at least 15 years, and who has a chest x-ray that is interpreted as negative with respect to certain statutory standards but who has other evidence of a totally disabling respiratory or pulmonary impairment, is totally disabled due to pneumoconiosis or died due to pneumoconiosis  This presumption may only be rebutted by the Secretary of Labor establishing that the miner does not or did not have pneumoconiosis or that the miner's respiratory or pulmonary impairment did not arise out of connection to mine employment  5  A presumption that a miner who died on or before March 1, 1978, and who was employed in mining for at least 25 years before June 30, 1971, died due to pneumoconiosis, unless it is established that at the time of the miner's death, he or she was not at least partially disabled due to pneumoconiosis  This presumption does not apply to claims filed on or after June 29, 1982, which is 180 days after the effective date of the Black Lung Benefits Amendments of 1981  This presumption is not listed in the law as either rebuttable or irrebuttable  The Patient Protection and Affordable Care Act (commonly referred to as the Affordable Care Act (ACA), P L  111-148 ) included two provisions that amended the BLBA to reinstate one of the eligibility presumptions and a provision affecting survivors' benefits  The effect of these changes was to increase the opportunity to establish eligibility through the statutory presumptions and make it easier for certain survivors to receive benefits  Pursuant to Section 202(a) of the Black Lung Benefits Amendments of 1981, the fourth presumption did not apply to cases filed on or after January 1, 1982  Section 1556(a) of the ACA removed the prohibition on applying the fourth presumption to cases filed on or after January 1, 1982  It is expected that this ACA provision will increase the number of miners eligible for benefits  The BLBA provides that, for Part C claims, the survivors of a miner who was determined to be eligible to receive benefits at the time of his or her death are not required to file new claims for benefits or revalidate any claim for benefits, thus permitting the payment of survivors' benefits in these cases even if the miner's death was not caused by pneumoconiosis  Pursuant to Section 203(a)(6) of the Black Lung Benefits Amendments of 1981, this provision did not apply to claims filed on or after January 1, 1982  Section 1556(b) of the ACA removed from this provision the exception for claims filed on or after January 1, 1982  It is expected that this ACA provision will increase the number of survivors eligible for benefits  The amendments to the BLBA provided in Section 1556 of the ACA apply to any claims filed under Part B or C of the act after January 1, 2005, that were pending on or after March 23, 2010, the date of enactment of the ACA  Eligible miners receiving benefits under Parts B and C are entitled to medical coverage for their pneumoconiosis and related disability  This medical coverage is provided at no cost to the miner and can generally be obtained from the miner's choice of medical providers  Eligible miners are also entitled to cash disability benefits  The basic benefit rate is set at 37 5% of the basic pay rate at GS-2, Step 1, on the federal pay schedule without any locality adjustment  If the miner has one dependent (a spouse or minor child) the miner is eligible for a benefit of 150% of the basic benefit  A miner with two dependents is eligible for 175% of the basic benefit and a miner with three or more dependents is eligible for 200% of the basic benefit  Benefits may also be paid to the divorced spouse of a miner if the marriage lasted at least 10 years and the divorced spouse was dependent on the miner for at least half of the spouse's support at the time of the miner's disability  A child is considered a dependent until the child marries, or reaches age 18, unless the child is either disabled using the Social Security Disability Insurance (SSDI) definition of disability or is under the age of 23 and a full-time student  The benefit rates are adjusted whenever there are changes to the federal employee pay schedules, but are not separately adjusted to reflect changes in the cost of living  Table 2 provides the benefit rates for 2019  Benefits are offset by state workers' compensation or other benefits paid on account of the miner's disability or death due to pneumoconiosis  Part C benefits, but not Part B benefits, are considered workers' compensation for the purposes of reducing a miner's SSDI benefits  The total amount paid in cash disability benefits has fallen over time, as illustrated in Figure 1   More is paid in cash disability benefits than is paid in medical benefits  Certain survivors of a miner whose death was due to pneumoconiosis are eligible for cash benefits  In the case of a surviving spouse or divorced spouse, the spouse's benefit is equal to what the miner would have received and is based on the number of dependents of the spouse as provided in Table 2   If there is no surviving spouse, then benefits are awarded to the surviving minor children in equal shares  If there are no surviving minor children, then benefits can be paid to the miner's dependent parents or dependent siblings  If there are no eligible survivors, no benefits are paid upon the miner's death and benefits do not go to the miner's estate or to any other person, including a person named by the miner in a will  The number of miners and survivors receiving benefits has declined over time, as illustrated in Figure 2   The primary revenue source for the Black Lung Disability Trust Fund is a per-ton excise tax on coal  Historically, the coal excise tax has not generated enough revenue to meet the trust fund's obligations  Thus, additional funds have been provided from the general fund of the Treasury  The general fund includes governmental receipts not earmarked for a specific purpose, the proceeds of general borrowing, and is used for general governmental expenditures  Internal Revenue Code (IRC) Section 4121 imposes the black lung excise tax (BLET) on sales or use of domestically mined coal  Generally, a producer that sells the coal is liable for the tax  Producers that use their own domestically mined coal, such as integrated utilities or steel companies, are also liable for the tax  The tax rate depends on how coal is mined  Effective January 1, 2019, the tax on underground-mined coal is the lesser of (1) $0 50 per ton, or (2) 2% of the sale price  The tax on surface-mined coal is the lesser of (1) $0 25 per ton, or (2) 2% of the sales price  Before 2019, the tax rates were $1 10 per ton for coal from underground mines or $0 55 per ton for coal from surface mines, with the tax being no more than 4 4% of the sale price  In FY2017, $229 million was collected on coal mined underground (see Figure 3 )  Nearly all of this coal was taxed at the $1 10 per ton rate  In FY2017, $200 million was collected on surface-mined coal  Just over half of this coal was taxed at the $0 55 per ton rate, with the rest subject to the 4 4% of sales price maximum tax  On January 1, 2019, the BLET rates declined to their current levels  The rates that took effect January 1, 2019, would also have taken effect if the Black Lung Disability Trust Fund had repaid, with interest, all amounts borrowed from the General Fund of the Treasury  The tax is imposed on "coal from mines located in the United States" and does not apply to imported coal  The tax is designed to support the Black Lung Disability Trust Fund for domestic miners  Very little domestically consumed coal is imported  The BLET also does not apply to exported coal under the Export Clause of the United States Constitution  A credit or refund can be claimed if coal is taxed before it is exported  Black lung excise tax collections have generally declined in recent years (see Figure 3 )  In FY2009, more than $650 million was collected from the BLET  In FY2017, collections were about $429 million  The decline in BLET collections follows the general decline in U S  coal production  As the price of coal rose in the 2000s, coal mined underground tended to pay the tax at a fixed rate of $1 10 per ton, as opposed to paying 4 4% of the sales price  In the years beyond 2018, coal excise tax receipts are expected to fall sharply, reflecting the decrease in the coal excise tax rate (see Figure 3 )  The excise tax on coal was established to help ensure the coal industry shared in the social costs imposed by black lung disease  Over time, the rate of the tax has been increased, in an effort to provide sufficient revenue to meet this objective  The Black Lung Benefits Revenue Act of 1977 ( P L  95-227 ) first imposed the Section 4121 excise tax on coal  When enacted, the tax was $0 50 per ton for coal from underground mines, and $0 25 per ton for coal from surface mines  The tax was limited to 2% of the sales price  The tax was effective for sales after March 31, 1978  Before P L  95-227 was enacted there was considerable debate surrounding how black lung benefits programs should be financed  Various mechanisms to shift the costs of the black lung benefits program to the coal industry and its customers were considered  These debates ultimately led to the establishment of the Black Lung Disability Trust Fund and the related excise tax on coal  There was also debate about how to structure the proposed tax  Some suggested a graduated tax, with higher rates imposed on coal with a higher British thermal unit (Btu) content, as such coal was believed to be more likely to cause black lung disease  There were concerns, however, that such a tax could be difficult to administer  Other proposals suggested that coal be subject to a uniform rate, with coal mined from underground deposits subject to a higher rate than other coal (including lignite)  A concern with this approach was that coal prices vary substantially per ton for different types of coal (lignite is less expensive than anthracite), meaning that the tax as a percent of the sales price could differ substantially across different types of coal  One answer to this concern is to impose an ad valorem tax, or a tax based on the sales price  Another approach that was considered was to impose a "premium rate" at a level that would fully finance the Black Lung Disability Trust Fund, giving authority to the Department of Labor to adjust the fee as necessary  The tax as enacted was the lesser of the per-unit price or the ad valorem rate of 2%  In the early 1980s, it was observed that coal excise tax revenues were not sufficient to meet the trust fund's obligations  The Black Lung Benefits Revenue Act of 1981 ( P L  97-119 ) doubled the excise tax rates to $1 00 per ton for coal from underground mines, and $0 50 per ton for coal from surface mines, not to exceed 4% of the sales price  The higher rates were effective January 1, 1982  The doubled rates were temporary, and scheduled to revert to the previous rates on January 1, 1996  Further, the rates could be reduced earlier if the trust fund repaid all advances and interest from the general fund of the Treasury  A stated goal of this legislation was to eliminate the Black Lung Disability Trust Fund's debt  The Consolidated Omnibus Budget Reconciliation Act of 1985 ( P L  99-272 ) again increased the BLET rates to $1 10 for underground-mined coal, and $0 55 for surface-mined coal, not to exceed 4 4% of the sales price  The Omnibus Budget Reconciliation Act of 1987 ( P L  100-203 ) extended these rates through 2013  Increased excise tax rates on coal were again extended in 2008  Current-law rates were extended through 2018 as part of the Emergency Economic Stabilization Act of 2008 (EESA; P L  110-343 )  When extending the increased rates, Congress reiterated the original intent of establishing trust fund financing for black lung benefits, observing that it is "to reduce reliance on the Treasury and to recover costs from the mining industry " It was also observed that the program's expenses had continued to exceed revenues over time, and that the debt to the Treasury was not likely to be paid off by 2013  For these reasons, "the Congress believe[d] that it [was] appropriate to continue the tax on coal at the increased rates beyond the expiration date " When receipts of the trust fund are less than expenditures, advances are appropriated from the general fund of the Treasury to the trust fund  These advances are repayable, and interest charged on these advances is also payable to the general fund  The Consolidated Omnibus Budget Reconciliation Act of 1985 ( P L  99-272 ) provided a five-year forgiveness of interest on debt owed to the Treasury's general fund  As a result, the principal amount of trust fund debt outstanding was relatively unchanged throughout the late 1980s  The moratorium on interest payments ended September 30, 1990  Throughout the 1990s and into the 2000s, the cumulative end-of-year debt of the trust fund grew, and the trust fund continued to receive repayable advances from the general fund to cover expenses  The trust fund was subject to financial restructuring when the current excise tax rate was extended until January 1, 2019, in EESA  The Black Lung Disability Trust Fund debt was restructured in FY2009  Essentially, the partial forgiveness and restructuring allowed the trust fund to refinance outstanding repayable advances and unpaid interest on those advances  As a result of the partial forgiveness and refinancing, the cumulative debt was reduced from $10 4 billion at the end of FY2008 to $6 2 billion by the end of FY2009  At the time of the restructuring it was expected that the trust fund's debt would be fully eliminated by FY2040  The trust fund's cumulative debt has trended downward since the restructuring (see Figure 4 )  However, coal excise tax revenue has been less than anticipated in recent years  As a result, current projections suggest that the trust fund debt will rise over time when considering annual borrowing as well as legacy debt  The trust fund's debt is therefore not on a path to be eliminated  By FY2050, the Government Accountability Office (GAO) projects the trust fund's debt will be $15 4 billion without any changes in current policy  In addition to revenue from the BLET and repayable general fund advances, the trust fund receives revenue from the collection of certain fines, penalties, and interest paid by coal operators and miners and reimbursements from responsible operators  Part C of the BLBA authorizes the following fines and penalties for violations of the act: a civil penalty of up to $1,000 per day for a mine operator's failure to secure benefits through insurance or approved self-insurance; a fine of up to $1,000 upon conviction of the misdemeanor offense of knowingly destroying or transferring property of a mine operator with the intent to avoid the payment of benefits for which the mine operator is responsible; a fine of up to $1,000 upon conviction of the misdemeanor offense of making a false or misleading statement or representation for the purposes of obtaining benefits; and a civil penalty of up to $500 for a mine operator's failure to file a report on miners who are or may be entitled to benefits as required by DOL  The amount of these penalties and fines, as well as interest assessed, is paid into the trust fund  In FY2017, trust fund receipts from fines, penalties, and interest totaled $1 2 million  This is a small source of trust fund revenue relative to the coal excise tax, which generated $428 7 million in trust fund revenues in FY2017  The trust fund is authorized to begin paying benefits within 30 days if no responsible operator has begun payment  If, after paying benefits, DOL is able to identify a responsible operator, the trust fund may seek to collect from that operator the costs of benefits already paid by the trust fund and interest assessed on this amount  The amount of these collections is paid into the trust fund  In FY2017, $19 9 million was collected from responsible mine operators  The amount collected from responsible mine operators has fluctuated over time, but has averaged about 1% of total receipts since 1995  Various factors have contributed to the ongoing situation of trust fund expenditures exceeding trust fund revenues  Throughout the 1980s, black lung benefit payments and administrative expenditures exceeded trust fund revenue  As a result, the trust fund accumulated debt  As discussed above, over time, various efforts have been made to improve the fiscal condition of the trust fund  However, as of the end of FY2017, the trust fund remains in debt  The trust fund's cumulative debt at the end of FY2017 was $3 1 billion  The trust fund also borrowed $1 3 billion from the general fund that same year  Projections suggest that borrowing from the general fund will increase over the next few years, even as cumulative (or legacy) debt is paid down  Under the current excise tax rates, benefit payments and administrative expenses will be approximately equal to trust fund revenues in FY2020 through FY2022 (see Figure 5 )  However, revenues are not projected to be sufficient to repay debt, and expenses are projected to rise over time when debt and interest expenses are included  Specifically, by FY2022, it is projected that the trust fund will borrow $2 6 billion in repayable advances from the general fund  There are various policy options that Congress might consider to improve the fiscal condition of the Black Lung Disability Trust Fund  Broadly, increasing taxes on the coal industry (or maintaining 2018 rates) would pass the costs associated with paying black lung benefits onto the coal industry  Alternatively, forgiving trust fund interest or debt or financing black lung benefits out of general fund revenues would pass the costs of federal black lung benefits onto taxpayers in general  Another option would be to reduce federal black lung benefits  Additional revenue would likely need to be provided to the trust fund if the trust fund is to pay for past black lung benefits and maintain current benefit levels  Additional revenue may be needed even if past debt is forgiven (or assumed by the general fund), as anticipated trust fund revenues are not likely to be sufficient to cover anticipated trust fund expenditures  As discussed above, in the past, Congress and the President have opted to increase the excise tax on coal to address shortfalls in the Black Lung Disability Trust Fund  These increased rates have been temporary, and scheduled to revert back to the reduced rate if the trust fund's debt is eliminated  Congress has chosen to extend the increased rates beyond their scheduled expiration when the trust fund is in debt  One option would be to extend 2018 rates   The GAO projects that if 2018 coal excise tax rates are extended, the trust fund will have a debt of $4 5 billion in 2050 (see "GAO Options for Improving Trust Fund Finances" below)  GAO projections suggest that increasing 2018 tax rates by 25% would eliminate the trust fund's debt, leaving the trust fund with a surplus of $0 6 billion in 2050  An alternative way to raise revenue from the coal industry is to scale back or eliminate various tax expenditures, or tax preferences, from which the coal industry benefits  For example, coal producers benefit from being able to expense exploration and development costs and are able to recover costs using percentage depletion (depletion based on revenue from the sale of the mineral asset) instead of cost depletion (depletion based on the amount of the mineral asset exhausted and the amount invested in the asset)  The Obama Administration regularly proposed repealing these tax incentives as part of the Administration's annual budget  It could be difficult to assign the revenues raised via the repeal of tax benefits to the trust fund  With an excise tax, it is straightforward to identify the revenue generated by the tax and earmark the revenue for a trust fund  It is not as straightforward to determine the amount of revenue that is raised through the repeal of an income tax expenditure, or direct the additional revenue raised because a certain preference is no longer in the code to a trust fund  Repeal of coal-industry tax benefits could, however, be used to offset the cost of a one-time transfer from the general fund to the trust fund  Revenue from various sources, including the general fund, could be used to supplement trust fund revenue generated from current sources  General fund revenues are not earmarked for a specific purpose, and there is generally no direct link between the source of general fund revenue and the government good or service provided  Black lung benefits were paid out of general revenue before the trust fund was established in 1977  Trust funds are generally established when there is a link between the government benefits or services being provided and the revenue source funding those benefits or services  The Black Lung Disability Trust Fund was established because Congress believed that the costs of the part C black lung program should be borne by the coal industry  Financing black lung benefits with general fund revenue would weaken the link between the industry and black lung benefits, while reducing the burden on the industry associated with paying for black lung benefits  In the past the Black Lung Disability Trust Fund's fiscal outlook has been improved through interest and debt forgiveness  As discussed above, in the late 1990s, there was a five-year forgiveness of interest on debt owed to the Treasury's general fund  More recently, debt was forgiven as part of the 2008 restructuring of the trust fund's debt  The GAO projects that if all current debt were forgiven, the trust fund would accumulate $2 3 billion in new debt by 2050  If all interest were forgiven, the trust fund debt is projected to be $5 8 billion by 2050  Forgiving the trust fund's interest or debt obligations would shift the burden of paying for black lung disability benefits from the coal industry to general taxpayers  However, a one-time appropriation to forgive interest or debt is a transparent option for satisfying the trust fund's obligations to the general fund  The primary expenditures of the trust fund are for the payment of Part C benefits to miners in cases in which there is no responsible operator  In order to reduce expenditures and improve the long-term financial health of the trust fund, Congress could consider several options to reduce the generosity and scope of benefits or increase the ability of the federal government to ensure that coal operators, even those who are in the bankruptcy process, pay benefits for their miners  A reduction in the amount of Part C benefits would result in lower Part C expenditures from both responsible coal operators and the trust fund  However, as compared to other workers' compensation benefits, Part C benefits are relatively low  The basic Part C benefit rate for a single miner is equal to 37 5% of the base rate of pay for federal employees at the GS-2, Step 1 level  For 2019 this benefit is just over $660 per month, or under $8,000 per year  In the majority of state workers' compensation programs, the basic benefit rate is set at two-thirds of the worker's pre-disability wage, subject to statutory minimums and maximums  The other workers' compensation programs administered by DOL, the LHWCA, and the Federal Employees' Compensation Act (FECA) use two-thirds of a worker's pre-disability wage as the basis for their benefits  A federal worker with a spouse or dependent in the FECA program is entitled to 75% of his or her pre-disability wage  The minimum benefit for total disability or death in the FECA program, 75% of GS-2, Step 1, is twice the amount of the Part C benefit rate  In addition, unlike the other federal workers' compensation programs and many state programs, there is no automatic adjustment to Part C benefits to reflect increases in the cost of living  Part C benefits instead increase only when federal pay rates are increased  The eligibility of miners and survivors to Part C benefits could be restricted to reduce expenditures from responsible operators and the trust fund  In 1981, Congress enacted several eligibility restrictions to miners and survivors as part of the Black Lung Benefits Revenue Act of 1981, to address concerns about the financial insolvency of the trust fund  Specifically, this law removed the following three eligibility presumptions for new claims going forward: A rebuttable presumption that the death of a miner who worked in mining for at least 10 years and who died of any respirable disease, was due to pneumoconiosis (listed as presumption 2 in Table 1 )  A rebuttable presumption that a miner employed in mining for at least 15 years, and who has a chest x-ray that is interpreted as negative with respect to certain statutory standards but who has other evidence of a totally disabling respiratory or pulmonary impairment, is totally disabled due to pneumoconiosis, or died due to pneumoconiosis  This presumption may only be rebutted by the Secretary of Labor establishing that the miner does not or did not have pneumoconiosis or that the miner's respiratory or pulmonary impairment did not arise out of connection to mine employment (presumption 4 in Table 1 )  A presumption that a miner who died on or before March 1, 1978, and who was employed in mining for at least 25 years before June 30, 1971, died due to pneumoconiosis, unless it is established that at the time of the miner's death, he or she was not at least partially disabled due to pneumoconiosis (presumption 5 in Table 1 )  In addition to removing three of the five existing eligibility presumptions, the 1981 law also removed the right of the survivors of a miner who is determined to be eligible for Part C benefits at the time of his or her death to receive survivors' benefits without filing a new claim, thus permitting the payment of survivors' benefits in the case of a current beneficiary, even if the beneficiary's death is not proven to be linked to pneumoconiosis  Two of the restrictions put in place by the 1981 legislation were later removed by the ACA  The ACA reinstated the fourth eligibility presumption and expanded rights for survivors' benefits, thus expanding eligibility for both miners and certain survivors  Under Part C of the BLBA, the federal government may recover the costs of benefits, and interest accrued on those benefits, paid by the trust fund from identified responsible operators  In addition, Part C allows the federal government to place a lien on the property and rights to property of an operator that refuses to pay the benefits and interest it owes to the trust fund  In the case of a bankruptcy or insolvency proceeding, this lien is to be treated in the same manner as a lien for taxes owed to the federal government  However, in a 2016 letter to the Comptroller General requesting a GAO review of the trust fund, Representatives Bobby Scott, Ranking Member of the House Committee on Education and the Workforce, and Sander Levin, Ranking Member of the House Committee on Ways and Means, claimed that the number of current and potential bankruptcies among coal operators is placing stress on the trust fund  Representatives Scott and Levin cited the example of Patriot Coal which, according to their letter, transferred $62 million in Part C liabilities to the trust fund when it became insolvent  In addition, this letter claims that insolvent coal operators may be able to avoid trust fund liens by continuing to make benefit payments until after the court in their bankruptcy cases has approved the sale of their assets to another company  Because the original company was never in default of its payments, no lien was filed, and these assets were able to be purchased by another company without any lien or future liability to the trust fund  Congress may examine the issue of the impact of coal operator bankruptcies and the interaction of bankruptcy law and the BLBA's lien provisions, to strengthen both the federal government's ability to ensure that responsible operators are paying for benefits and reduce the benefit expenditures of the trust fund 


Report 2:  In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate  As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate  FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties  However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed  Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology  First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties  Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss  Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988  Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases  Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used  Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented  In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas  Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch  In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent  This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates  However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low  Agency officials told us that they had not addressed this weakness because of other priorities  Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information  In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities  As a result, our recommendation remains open  FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest  FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount  Agency officials said that they plan to do such consultations through COMSTAC  However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed  As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain  This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected  Because of this potential exposure, we maintain that addressing this weakness is a priority  As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties  FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios  The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle  According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive  The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool  According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations  In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations  Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates  For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties  We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage  For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex  Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large  In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties  While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches  The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations  As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety  Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives  For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system  Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources  Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources  We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade  FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012  FAA’s MPL methodology is critical in balancing the encouragement of the U S  commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents  However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness  In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs  Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA  FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions  However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority  FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete  For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988  While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open  Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed  These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government  We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds  (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government  (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government  (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch  (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment  In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations  The Department of Transportation also provided technical comments, which we incorporated as appropriate  We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation  In addition, this report will be available at no charge on GAO’s website at http://www gao gov  If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Individuals making key contributions to this report are listed in appendix II  In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report 

ground_truth: Historically, the United States' leadership of the global trading system has ensured the United States a seat at the table to shape the international trade agenda in ways that both advance and defend U.S. interests. The evolution of U.S. leadership and the global trade agenda remain of interest to Congress, which holds constitutional authority over foreign commerce and establishes trade negotiating objectives and principles through legislation. Congress has recognized the World Trade Organization (WTO) as the "foundation of the global trading system" within trade promotion authority (TPA) and plays a direct legislative and oversight role over WTO agreements. The statutory basis for U.S. WTO membership is the Uruguay Round Agreements Act (P.L. 103-465), and U.S. priorities and objectives for the General Agreement on Tariffs and Trade (GATT)/WTO have been reflected in various TPA legislation since 1974. Congress also has oversight of the U.S. Trade Representative and other agencies that participate in WTO meetings and enforce WTO commitments. The WTO is a 164-member international organization that was created to oversee and administer multilateral trade rules, serve as a forum for trade liberalization negotiations, and resolve trade disputes. The United States was a major force behind the establishment of the WTO in 1995, and the rules and agreements resulting from multilateral trade negotiations. The WTO encompassed and succeeded the GATT, established in 1947 among the United States and 22 other countries. Through the GATT and WTO, the United States, with other countries, sought to establish a more open, rules-based trading system in the postwar era, with the goal of fostering international economic cooperation and raising economic prosperity worldwide. Today, 98% of global trade is among WTO members. The WTO is a consensus and member-driven organization. Its core principles include nondiscrimination (most favored nation treatment and national treatment), freer trade, fair competition, transparency, and encouraging development. These are enshrined in a series of WTO trade agreements covering goods, agriculture, services, intellectual property rights, and trade facilitation, among other issues. Some countries, including China, have been motivated to join the WTO not just to expand access to foreign markets but to spur domestic economic reforms, help transition to market economies, and promote the rule of law. The WTO Dispute Settlement Understanding (DSU) provides an enforceable means for members to resolve disputes over WTO commitments and obligations. The WTO has processed more than 500 disputes, and the United States has been an active user of the dispute settlement system. Supporters of the multilateral trading system consider the dispute settlement mechanism an important success of the system. At the same time, some members, including the United States, contend it has procedural shortcomings and has exceeded its mandate in deciding cases. Many observers are concerned that the effectiveness of the WTO has diminished since the collapse of the Doha Round of multilateral trade negotiations, which began in 2001, and believe the WTO needs to adopt reforms to continue its role as the foundation of the global trading system. To date, WTO members have been unable to reach consensus for a new comprehensive multilateral agreement on trade liberalization and rules. While global supply chains and technology have transformed international trade and investment, global trade rules have not kept up with the pace of change. Many countries have turned to negotiating free trade agreements (FTAs) outside the WTO as well as plurilateral agreements involving subsets of WTO members rather than all members. At the latest WTO Ministerial conference in December 2017, no major deliverables were announced. Several members committed to make progress on ongoing talks, such as fisheries subsidies and e-commerce, while other areas remain stalled. While many were disappointed by the limited progress, in the U.S. view, the outcome signaled that "the impasse at the WTO was broken," paving the way for groups of like-minded countries to pursue new work in other key areas. Certain WTO members have begun to explore aspects of reform and future negotiations. Potential reforms concern the administration of the organization, its procedures and practices, and attempts to address the inability of WTO members to conclude new agreements. Proposed DS reforms also attempt to improve the working of the dispute settlement system, particularly the Appellate Body—the seven-member body that reviews appeals by WTO members of a panel's findings in a dispute case. Some U.S. frustrations with the WTO are not new and many are shared by other trading partners, such as the European Union. At the same time, the Administration's overall approach has spurred new questions regarding the future of U.S. leadership and U.S. priorities for improving the multilateral trading system. Concerns have emphasized that the Administration's recent actions to unilaterally raise tariffs under U.S. trade laws and to possibly impede the functioning of the dispute settlement system might undermine the credibility of the WTO system. A growing question of some observers is whether the WTO would flounder for lack of U.S. leadership, or whether other WTO members like the EU and China taking on larger roles would continue to make it a meaningful actor in the global trade environment. The growing debate over the role and future direction of the WTO may be of interest to Congress. Important issues it may address include how current and future WTO agreements affect the U.S. economy, the value of U.S. membership and leadership in the WTO, whether new U.S. negotiating objectives or oversight hearings are needed to address prospects for new WTO reforms and rulemaking, and the relevant authorities and impact of potential U.S. withdrawal from the WTO on U.S. economic and foreign policy interests.