i

Table of Contents 

THE PRESIDENT’S TRADE POLICY AGENDA 

I. 2005 Trade Policy Agenda................................................................................................... 1

THE PRESIDENT'S 2004 ANNUAL REPORT ON THE TRADE AGREEMENTS PROGRAM 

II. The World Trade Organization ............................................................................................ 1 

III. Bilateral and Regional Negotiations................................................................................. 145 

A. Free Trade Agreements .............................................................................................. 145 

1. Australia................................................................................................................ 145 

2. Morocco ................................................................................................................ 147 

3. Chile...................................................................................................................... 147 

4. Singapore .............................................................................................................. 149 

5. Jordan .................................................................................................................... 150 

6. Israel...................................................................................................................... 150 

7. Central America and the Dominican Republic ..................................................... 151 

8. Bahrain.................................................................................................................. 153 

9. Panama.................................................................................................................. 153

10. Andean Countries.................................................................................................. 153 

11. United Arab Emirates............................................................................................ 154 

12. Southern Africa ..................................................................................................... 154 

13. Oman..................................................................................................................... 154 

14. Thailand ................................................................................................................ 154

B. Regional Initiatives.................................................................................................... 155 

1. Free Trade Area of the Americas (FTAA)............................................................ 155 

2. Enterprise for ASEAN Initiative........................................................................... 156 

3. North American Free Trade Agreement................................................................ 157 

4. Middle East Free Trade Area (MEFTA)............................................................... 160 

5. Asia Pacific Economic Cooperation ..................................................................... 160 

C. The Americas.............................................................................................................. 164 

1. Canada................................................................................................................... 164 

2. Mexico .................................................................................................................. 166

3. Brazil and the Southern Cone ............................................................................... 167 

4. The Andean Community....................................................................................... 170 

5. Central America and the Caribbean ...................................................................... 171 

D. Europe .......................................................................................................................... 173 

1. European Union .................................................................................................... 174 

2. EFTA..................................................................................................................... 180 

3. Turkey ................................................................................................................... 180 

4. Southeast Europe................................................................................................... 180 
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E. Russia and the Newly Independent States .................................................................. 181 

1. Normal Trade Relations Status ............................................................................. 182 

3. Generalized System of Preferences (GSP)............................................................ 184 

4. WTO Accession .................................................................................................... 184 

5. Bilateral Trade Agreements and Bilateral Investment Treaties (BITs)................. 185 

6. Country Specific Issues......................................................................................... 185 

F. Mediterranean/Middle East .............................................................................................. 185 

1. Egypt ..................................................................................................................... 186 

2. Israel...................................................................................................................... 186 

3. WTO Accession .................................................................................................... 187 

4. Qualifying Industrial Zones .................................................................................. 187 

G. Southeast Asia and the Pacific ................................................................................... 188 

1. Australia................................................................................................................ 189 

2. New Zealand ......................................................................................................... 189

3. The Association of Southeast Asian Nations (ASEAN) ....................................... 190 

4. Republic of Korea ................................................................................................. 196 

5. India....................................................................................................................... 203 

6. Pakistan ................................................................................................................. 204 

7. Afghanistan ........................................................................................................... 204 

8. People’s Republic of China................................................................................... 205 

9. Japan...................................................................................................................... 209 

10. Taiwan................................................................................................................... 223 

11. Hong Kong (Special Administrative Region) ...................................................... 224 

12. Sri Lanka............................................................................................................... 225

13. Iraq ........................................................................................................................ 225 

H. Africa............................................................................................................................ 226 

1. AGOA ................................................................................................................... 226 

2. South Africa .......................................................................................................... 227 

3. Nigeria................................................................................................................... 228 

4. Ghana .................................................................................................................... 229 

5. COMESA.............................................................................................................. 229 

6. UEMOA................................................................................................................ 229 

7. Africa and the WTO.............................................................................................. 230 

IV. Other Multilateral Activities.................................................................................................. 231 

A. Trade and the Environment................................................................................... 231 

B. Trade and Labor .................................................................................................... 234 

C. Organization for Economic Cooperation and Development ................................. 239 

D. Semiconductor Agreement.................................................................................... 248 

E. Steel Trade Policy ................................................................................................. 249 
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V. Trade Enforcement Activities .............................................................................................. 253 

A. Enforcing U.S. Trade Agreements ............................................................................. 253 

1. Overview............................................................................................................... 253 

2. WTO Dispute Settlement ...................................................................................... 254 

3. Other Monitoring and Enforcement Activities...................................................... 255 

B. U.S. Trade Laws ......................................................................................................... 256 

1. Section 301............................................................................................................ 256 

2. Special 301 ............................................................................................................ 259 

3. Section 1377 Review of Telecommunications Agreements.................................. 264 

4. Antidumping Actions ............................................................................................ 265 

5. Countervailing Duty Actions ................................................................................ 266 

6. Other Import Practices .......................................................................................... 267 

7. Trade Adjustment Assistance................................................................................ 271 

8. Generalized System of Preferences....................................................................... 273 

VI. Trade Policy Development .................................................................................................... 277 

A. Trade Capacity Building (TCB) ................................................................................. 277 

1. Hemispheric Cooperation Program....................................................................... 281 

2. Central America .................................................................................................... 281 

3. Panama .................................................................................................................. 281

3. Andean Countries.................................................................................................. 281 

4. Africa..................................................................................................................... 282 

B. Congressional Affairs................................................................................................. 283 

C. Private Sector Advisory System and Intergovernmental Affairs................................ 284 

1. The Advisory Committee System ......................................................................... 284 

2. State and Local Government Relations................................................................. 286 

3. Public and Private Sector Outreach....................................................................... 287 

D. Policy Coordination.......................................................................................................... 288 

Annex I. US Trade in 2004 

Annex II. WTO Background 

Annex III List of Trade Agreements 
LIST OF FREQUENTLY USED ACRONYMS

AD........................................................................... Antidumping 

AGOA..................................................................... African Growth and Opportunity Act 

APEC ...................................................................... Asia Pacific Economic Cooperation 

ASEAN ................................................................... Association of Southeast Asian Nations 

ATC......................................................................... Agreement on Textiles and Clothing 

ATPA ...................................................................... Andean Trade Preferences Act 

ATPDEA................................................................. Andean Trade Promotion & Drug 

Eradication Act 

BIA.......................................................................... Built-In Agenda 

BIT .......................................................................... Bilateral Investment Treaty 

BOP......................................................................... Balance of Payments 

CACM..................................................................... Central American Common Market 

CAFTA ................................................................... Central American Free Trade Area 

CARICOM.............................................................. Caribbean Common Market 

CBERA ................................................................... Caribbean Basin Economic Recovery Act 

CBI.......................................................................... Caribbean Basin Initiative 

CFTA ...................................................................... Canada Free Trade Agreement 

CITEL ..................................................................... Telecommunications division of the OAS 

COMESA................................................................ Common Market for Eastern & Southern 

 Africa 

CTE......................................................................... Committee on Trade and the Environment 

CTG......................................................................... Council for Trade in Goods 

CVD ........................................................................ Countervailing Duty 

DDA........................................................................ Doha Development Agenda 

DSB......................................................................... Dispute Settlement Body 

EAI.......................................................................... Enterprise for ASEAN Initiative 

DSU......................................................................... Dispute Settlement Understanding 

EU ........................................................................... European Union 

EFTA....................................................................... European Free Trade Association 

FTAA ...................................................................... Free Trade Area of the Americas 

FOIA ...................................................................... Freedom of Information Act 

GATT...................................................................... General Agreement on Tariffs and Trade 

GATS ..................................................................... General Agreements on Trade in Services 

GDP......................................................................... Gross Domestic Product 

GEC......................................................................... Global Electronic Commerce 

GSP ......................................................................... Generalized System of Preferences 

GPA......................................................................... Government Procurement Agreement 

IFI............................................................................ International Financial Institution 

IPR .......................................................................... Intellectual Property Rights 

ITA.......................................................................... Information Technology Agreement 

LDBDC................................................................... Least Developed Beneficiary Developing 

Country 

MAI......................................................................... Multilateral Agreement on Investment 
MEFTA.................................................... Middle East Free Trade Area 

MERCOSUL/MERCOSUR.................................... Southern Common Market 

MFA........................................................................ Multifiber Arrangement 

MFN........................................................................ Most Favored Nation 

MOSS...................................................................... Market-Oriented, Sector-Selective 

MOU ....................................................................... Memorandum of Understanding 

MRA ....................................................................... Mutual Recognition Agreement 

NAFTA ................................................................... North American Free Trade Agreement 

NEC......................................................................... National Economic Council 

NIS .......................................................................... Newly Independent States 

NSC......................................................................... National Security Council 

NTR......................................................................... Normal Trade Relations 

OAS ........................................................................ Organization of American States 

OECD...................................................................... Organization for Economic Cooperation and 

Development 

OPIC ....................................................................... Overseas Private Investment Corporation 

PNTR ...................................................................... Permanent Normal Trade Relations 

ROU ........................................................................ Record of Understanding 

SACU...................................................................... Southern African Customs Union 

SADC...................................................................... Southern African Development Community 

SPS.......................................................................... Sanitary and Phytosanitary Measures 

SRM ....................................................................... Specified Risk Material 

TAA ........................................................................ Trade Adjustment Assistance 

TABD...................................................................... Trans-Atlantic Business Dialogue 

TACD ..................................................................... Trans-Atlantic Consumer Dialogue 

TAEVD.................................................... Trans-Atlantic Environment Dialogue 

TALD...................................................................... Trans-Atlantic Labor Dialogue 

TBT......................................................................... Technical Barriers to Trade 

TEP ......................................................................... Transatlantic Economic Partnership 

TIFA ....................................................................... Trade & Investment Framework Agreement 

TPRG ..................................................................... Trade Policy Review Group 

TPSC....................................................................... Trade Policy Staff Committee 

TRIMS .................................................................... Trade Related Investment Measures 

TRIPS...................................................................... Trade Related Intellectual Property Rights 

UAE ........................................................................ United Arab Emirates 

UNCTAD................................................................ United Nations Conference on Trade & 

 Development 

URAA ..................................................................... Uruguay Round Agreements Act 

USDA...................................................................... U.S. Department of Agriculture 

USITC..................................................................... U.S. International Trade Commission 

USTR ...................................................................... United States Trade Representative 

VRA ....................................................................... Voluntary Restraint Agreement 

WAEMU ................................................................ West African Economic & Monetary Union 

WTO ....................................................................... World Trade Organization 
1 

 

I. 2005 Trade Policy Agenda 

Overview 

Introduction

Four years ago, the Bush Administration 

initiated a new trade strategy: to pursue 

reinforcing trade initiatives globally, regionally, 

and bilaterally. In the President’s first term, the 

Administration has operationalized that strategy 

by launching and concluding major trade 

agreements that opened markets throughout the 

world to level the playing field for American 

farmers, ranchers, workers, and businesses and 

expanded choices for American consumers and 

industry. By pursuing multiple free trade 

initiatives, the United States has created a 

“competition for liberalization,” launching new 

global trade negotiations, providing leverage to 

spur new negotiations and solve problems, and 

establishing models of success in areas such as 

intellectual property, e-commerce, environment 

and labor, and anti-corruption. 

As the offensive gains ground, each new 

bilateral and multilateral agreement provides 

new rights and leverage for the United States to 

assure its workers, farmers, and businesses an 

equal chance to compete. During this 

Administration, legal resources devoted to 

enforcement have increased significantly. 

Enforcement is a critical part of every aspect of 

USTR’s operations. From aggressive 

monitoring to summit-level meetings, the Bush 

Administration is focusing on ensuring that 

agreements made are agreements kept. 

This year’s annual report highlights the results 

of the Administration’s ongoing efforts to open 

new overseas markets, level the playing field for 

American exporters, and vigorously enforce the 

trade commitments other countries make to the 

United States. In addition, on the tenth 

anniversary of the World Trade Organization 

(WTO), the report takes a special look at the 

benefits of U.S. membership in the multilateral 

trading system. When Congress approved the 

Agreement establishing the World Trade 

Organization in 1994, the Congress required a 

review of U.S. participation in the WTO at fiveyear intervals. The second five-year review 

occurs this year. 

The record of U.S. participation in the WTO 

clearly demonstrates that continued engagement 

in the global trading system is vital for America. 

Through the WTO, the United States has 

lowered trade barriers in 147 economies around 

the world -- delivering expanded access to the 

95 percent of global consumers who live outside 

our borders and helping to drive a 63 percent 

increase in U.S. exports of goods and services 

between 1994 and 2004. U.S. efforts in the 

WTO have extended a system of trade rules 

globally that protect innovation, provide for 

certainty and predictability, and form the vital 

legal infrastructure for enforcement. Without 

the WTO, other countries could impose higher 

duties on American exports. And without the 

WTO, the United States would not have the 

leverage it needs to address trade barriers that 

disadvantage American farmers, ranchers, 

workers, and businesses, including 

discriminatory tax policies and customs 

procedures, subsidies, unjustified antidumping 

actions and weak intellectual property 

protections. With unwavering U.S. leadership, 

ongoing negotiations through the WTO Doha 

Agenda can provide even greater economic 

benefits. The Administration will work with 

Congress and all stakeholders to achieve that 

goal. 

The Administration’s overall record of 

accomplishment through its global, regional, and 

bilateral trade agenda has produced significant 

tangible gains: 
I. Overview and the 2005 Agenda| 2 

• More than 99 percent of U.S. exports of 

manufactured goods to Australia became 

duty-free immediately on January 1, 2005, 

when the United States – Australia Free 

Trade Agreement (FTA) went into effect. 

Manufactured goods currently account for 

90 percent of total U.S. goods exports to 

Australia. This provision of the FTA is the 

most significant immediate reduction of 

industrial tariffs ever achieved in a U.S. 

FTA and will provide immediate benefits for 

America’s manufacturing workers and 

companies. U.S. manufacturers estimate 

that the elimination of tariffs could result in 

$2 billion per year in increased U.S. exports 

of manufactured goods. 

• Since implementation of the United StatesChile FTA on January 1, 2004, U.S. exports 

to Chile have increased 32 percent as 

compared to the same period the previous 

year -- over double the rate of growth in 

U.S. exports to other countries in Latin 

America. Among the benefits of tariff 

reductions negotiated in the FTA, U.S. 

exports of certain construction machinery 

have grown by 415 percent; tractors by 371 

percent; shelled almonds by 329 percent; 

and motor vehicles used to transport goods 

by 60 percent. 

• The United States-Singapore FTA went into 

effect on January 1, 2004. As a result, U.S. 

exports of furniture products to Singapore 

are up nearly 100 percent, U.S. workers 

producing information technology 

equipment have increased their sales by 62 

percent, and overall U.S. exports have 

grown by more than 19 percent. Other 

significant export growth sectors include 

plastics, cosmetics, and pharmaceuticals; 

fish; construction equipment; building 

products, paper products; and scientific and 

medical equipment. Encouraged by new 

opportunities offered through the FTA, U.S. 

small and medium-sized enterprises also see 

Singapore as an excellent gateway to access 

the greater Association of Southeast Asian 

Nations (ASEAN) region and will benefit 

from the recently signed cooperative 

agreement between U.S. and Singaporean 

manufacturing associations. 

• In the five nations of Central America and 

the Dominican Republic that are part of the 

United States - Central America - 

Dominican Republic Free Trade Agreement 

(CAFTA-DR), innovative provisions in the 

FTA and an institutional framework for 

technical cooperation provide assurance to 

workers that their rights will be protected 

more effectively. 

• Under the President’s leadership, the United 

States played a leading role in launching the 

Doha Development Agenda (DDA) of the 

World Trade Organization in November 

2001, and in advancing ambitious U.S. 

proposals in agriculture, goods, and services. 

After the breakdown of the negotiations in 

September 2003 at the Cancun Meeting of 

Ministers, U.S. Trade Representative Robert 

B. Zoellick worked to get the talks back on 

track in 2004. The United States worked 

with 147 other economies to narrow 

differences, establish frameworks for 

detailed negotiations on key topics, and 

solve problems so as to open the way for 

greater economic growth, development and 

opportunity. We sharpened the focus of the 

Doha negotiations, concentrating on the key 

market access areas of agriculture, industrial 

goods, and services. We also narrowed the 

focus on the "Singapore" issues to trade 

facilitation, which complements market 

access by easing the movement of goods 

across borders. On July 31, 2004, in Geneva, 

the DDA negotiations reached a significant 

milestone with a framework that provides 

direction for moving forward to the Hong 

Kong WTO Ministerial in late 2005. 
I. Overview and the 2005 Agenda | 3 

• Strong enforcement at all levels is critical to 

ensure that American exporters reap the full 

benefits of global, regional, and bilateral 

agreements, and the Administration is using 

all available tools to promote compliance. 

Through bilateral engagement, the United 

States has resolved trade disputes with 

China, Japan, Mexico, Russia, Korea and 

many other countries. In October, the 

Administration announced the most 

comprehensive initiative ever advanced to 

protect American ideas and innovations by 

combating the multi-billion dollar global 

trade in pirated and counterfeit goods around 

the world. The Strategy Targeting 

Organized Piracy (STOP!) is a governmentwide effort to empower American 

businesses to secure and enforce their 

intellectual property rights in overseas 

markets, stop fakes at our borders, expose 

international pirates and counterfeiters, keep 

global supply chains free of infringing 

goods, dismantle criminal enterprises that 

steal America’s intellectual property, and 

reach out to like-minded trading partners to 

build an international coalition to stop piracy 

and counterfeiting worldwide. 

• When necessary to enforce our rights, the 

Administration has initiated dispute 

settlement proceedings in the WTO. Last 

year, for example, the United States filed the 

first WTO dispute settlement case against 

China to address discriminatory tax policies 

that disadvantaged U.S. semiconductor 

exports worth more than $2 billion annually. 

We successfully resolved that case in less 

than four months to the benefit of American 

manufacturers and workers. Through recent 

WTO proceedings, the United States is also 

addressing unfair customs procedures and 

protecting American intellectual property 

rights abroad. We are also securing 

enhanced market access for dairy and apple 

farmers, telecommunications service 

providers, and manufacturers of apparel, 

automobiles, and biotechnology products. 

• As a result of continuing enforcement 

efforts, persistent negotiating, and timely 

action by the United States in the WTO, 

China is now the fifth largest market for 

U.S. exports and our fastest-growing major 

export market (with exports up 86 percent 

since China’s accession to the WTO). On 

the docks in Shanghai and other port cities 

in China, U.S. exports are arriving at record 

levels. These include high-value 

manufactured goods, such as integrated 

circuits and heavy machinery, and 

agricultural commodities, including 

soybeans and cotton. Business is also brisk 

for banks, insurance companies, and other 

U.S. service providers. 

• USTR has also led the Administration’s 

effort to combine trade with effective aid by 

building the capacity of developing 

countries to negotiate and implement trade 

agreements. Trade Capacity Building 

(TCB) work has included establishment of 

TCB Working Groups in the Andean and 

Thailand FTA negotiations that operate in 

parallel to the negotiating groups. The 

interagency TCB process has also sensitized 

agencies to the importance of conducting 

more TCB activities, according to a U.S. 

government survey. Thanks to 

Congressional support in 2004, the United 

States conducted $903 million in TCB 

assistance, an increase of 19 percent 

increase over 2003. 

Building Momentum for Trade

The Administration’s competitive liberalization 

strategy is producing tangible results. Only five 

years ago, efforts to launch new global trade 

talks collapsed in Seattle because countries 

could not agree on the way forward. 

The United States played a key role in defining 

and launching a new round of global trade talks 

at the WTO at Doha in late 2001. At the same 

time we brought China and Taiwan into the 

WTO, establishing a legal framework for 

expanding U.S. exports and integrating China 

into a system of global rules. Also in 2001, the 

Administration worked with Congress to 

approve an FTA with Jordan and a trade and 

investment accord with Vietnam. 
I. Overview and the 2005 Agenda| 4 

Previously, the United States had been stymied 

in its trade liberalization initiatives because 

authority for their negotiation and 

implementation had lapsed in 1994, and 

Congress was unable to agree on renewal. In 

this challenging environment, the President 

secured Congressional approval of the Trade Act 

of 2002 with bipartisan support, giving the 

Administration the tools it needed to move 

America forward in the global marketplace. 

A critical component of the Trade Act of 2002 

was the renewal of the President’s negotiating 

authority through the Trade Promotion Act. In 

2003, the Administration promptly put that 

authority to good use, promoting global 

negotiations in the World Trade Organization 

(WTO), working toward a Free Trade Area of 

the Americas (FTAA), completing and winning 

Congressional approval of state-of-the-art free 

trade agreements with Chile and Singapore, 

launching bilateral negotiations on FTAs with 

twelve more nations, announcing the intention to 

begin negotiations with eight additional 

countries, and putting forward regional trade 

strategies to deepen U.S. trade and economic 

relationships in Southeast Asia and the Middle 

East. 

The Trade Act of 2002 also renewed and 

improved trade preferences covering an 

estimated $20 billion of business with 

developing countries in Africa, Latin America, 

and Asia through the renewal and improvement 

of the Andean Trade Preference and Drug 

Eradication Act (ATPDA), the African Growth 

and Opportunity Act (AGOA), and the renewal 

of benefits under the U.S. Generalized System of 

Preferences. In addition, the Trade Act of 2002 

tripled the level of trade adjustment assistance 

(TAA) available to U.S. workers to over five 

billion dollars over a five-year period, which 

will help train American workers to compete for 

the jobs of the future. TAA is part of the overall 

total of federal resources that will support job 

training and employment services in 2005, 

which is estimated at over $20 billion. 

In 2004, the United States continued building 

the free-trade foundation for a generation of 

prosperity and opportunity. After momentum in 

the Doha Development Round (DDA) at the 

WTO foundered at the Cancun Ministerial in 

September 2003, Ambassador Zoellick wrote to 

all WTO Ministers urging that 2004 not be a lost 

year for Doha negotiations. The letter also 

outlined ways to put the negotiations back on 

track; several of these ideas were subsequently 

taken up by other participants. In February 

2004, Ambassador Zoellick traveled 32,000 

miles and met with over 40 counterparts to hear 

their views and discuss how best to get the 

negotiations back on track. In May, Ambassador 

Zoellick hosted a small gathering of colleagues 

in London to facilitate a discussion on specific 

negotiating frameworks. He joined Ministers 

from the EU, India, and Australia at a gathering 

hosted by Brazil in Sao Paulo in early June to 

advance this work and traveled to Mauritius in 

July to meet Ministers from developing nations 

in the G-90, a group of ACP (African, Caribbean 

and Pacific), African Union, and Least 

Developed Countries. These discussions 

focused on the need to concentrate work on an 

agenda covering agriculture, goods, services, 

and trade facilitation. 

Drawing on this extensive preparatory work, 

Ministers from diverse countries met in Geneva 

in late July to negotiate a WTO framework 

advancing the DDA, including an international 

commitment to eliminate agricultural export 

subsidies. 

Also in 2004, the Bush Administration 

concluded and Congress approved FTAs with 

Australia and Morocco. The United States 

completed negotiations on FTAs with Bahrain 

and five countries of Central America (Costa 

Rica, El Salvador, Guatemala, Honduras, and 

Nicaragua) and the Dominican Republic; the 

Administration looks forward to Congressional 

approval of these FTAs so they can be 

implemented promptly. The United States 

continued FTA negotiations with the five 

nations of the Southern African Customs Union 

(Botswana, Lesotho, Namibia, South Africa, and 

Swaziland) and launched new FTA negotiations 

with Thailand, Panama, and three Andean 

nations. The President also announced to 

Congress his intention to begin FTA 
I. Overview and the 2005 Agenda | 5 

negotiations with the United Arab Emirates and 

Oman. 

Congress acted decisively to bolster sub-Saharan 

African economies by expanding and extending 

the African Growth and Opportunity Act. The 

United States, along with its partners in the Asia 

Pacific Economic Cooperation (APEC) forum, is 

also paving the way to advance free and open 

trade and to realize lower transaction costs and 

reduce barriers in the Asia Pacific region. 

The Administration values its close relationship 

with the U.S. Congress and appreciates the 

assistance and support that Members and staff 

provided on trade matters in 2004. USTR 

worked with the 108th Congress to initiate and 

pass legislation on free trade agreements and 

WTO compliance measures, move forward on 

regional and multilateral trade negotiations, and 

maintain an ongoing dialogue on the overall 

U.S. trade agenda. The Administration looks 

forward to working with the Congress in 2005 

on future trade initiatives. 

Leading Multilateral Efforts to Expand 

Trade: The WTO

 

This year marks the tenth anniversary of the 

creation of the WTO, the agreed international 

framework that governs trade relations among 

nations. While much has changed since the 

WTO was created in 1994 at the conclusion of 

the Uruguay Round of Multilateral Trade 

Negotiations, U.S. leadership in strengthening 

an open, rules-based trading system has 

remained constant. Over the past ten years, 

membership in the WTO has grown from 128 to 

148 economies, with another 29 negotiating 

terms of accession. Most notable over the past 

ten years has been the addition of China, 

Taiwan, and a number of transition economies to 

the WTO system. The United States has taken 

the lead in working multilaterally with trading 

partners to further expand the system. 

 

Since establishment of the GATT in 1947, the 

expansion of trade has been historic: while the 

world’s total GDP expanded seven-fold between 

1950 and 2003, during the same time period the 

world’s exports increased 25-fold. Since 1994 

and the creation of the WTO, the world’s 

exports have increased by 61 percent. For the 

United States alone, in 2004 the value of trade in 

goods and services (imports and exports), 

including earnings and payments on investment, 

was 31.5 percent of the value of U.S GDP, an 

increase from 13 percent in 1970 and 27 percent 

in 1994. In the 1990s, one-quarter of U.S. 

economic growth was spurred by exports. Jobs 

supported by goods exports pay about one-sixth 

more than the national average. Today, one in 

three acres planted in the United States produce 

crops intended for export. 

The WTO, and the GATT before it, has made 

possible an expanded role for trade in fostering 

U.S. economic growth. But growing exports are 

just part of the story. Through the global trading 

system, the United States has negotiated 

predictable, transparent and binding rules that 

eliminate trade barriers and help ensure that U.S. 

goods and services are treated fairly in overseas 

markets. These enforceable rules commit the 

United States and its trading partners in the 

WTO to a level playing field and a single set of 

rules – whether it is the treatment of goods and 

services, the enforcement of intellectual property 

rights, or ensuring that decisions are taken on the 

basis of sound science and that non-tariff 

barriers in areas like standards and customs 

procedures do not impede market access 

opportunities. 

Without the WTO, U.S. goods and services 

could face barriers and discrimination around 

the world in the form of unpredictable tariffs and 

non-tariff barriers. The WTO obligates its 

Members to provide a transparent, predictable 

trade regime based on the rule of law – including 

high levels of intellectual property protection, 

and disciplines to counter unfair trade practices 

like dumping and subsidies. Without the WTO, 

these obligations that work to America’s 

advantage would not exist. 

 

In his first term, President Bush made 

multilateral trade negotiations a priority in 

expanding the global economy, particularly in 

opening new markets for America’s 

manufactured goods, farm products, and service 

providers. At the same time, strengthening the 

rules remains essential, including safeguarding 
I. Overview and the 2005 Agenda| 6 

the environment, for example, by disciplining 

subsidies to avoid over fishing. In the 

President’s second term, concluding the Doha 

agenda of multilateral trade negotiations will be 

a top priority for the Administration. 

The benefits of a successful negotiation have the 

potential to give new momentum to the global 

economy and further the development prospects 

of the poorer countries around the globe. A 

University of Michigan study estimates that a 

one-third cut in global barriers to goods and 

services would mean $2,500 a year in increased 

purchasing power for the average American 

family of four. The Center for Global 

Development found that a successful conclusion 

to the DDA negotiations could lift more than 

500 million out of poverty and add $200 billion 

annually to developing country economies. The 

sharpened focus of the agenda is on the core 

areas for growth and development: 

agricultural reform and liberalization, along 

with the potential to expand market access for 

trade in manufactures and services and new rules 

on trade facilitation. These "market access" 

issues form the basis of a negotiation that can 

achieve significant gains for American interests 

and the global economy. 

Looking ahead, WTO Ministers are scheduled to 

meet in Hong Kong, China, in December 2005, 

to chart the final stage of negotiations in order to 

bring them to a successful conclusion before the 

end of 2006. Advancing the WTO’s DDA 

agenda will be a top priority for 2005, along 

with renewal of Trade Promotion Authority, so 

that the United States will be able to achieve our 

objectives for a comprehensive multilateral 

outcome that will promote prosperity and 

competitiveness for U.S. business, workers, 

ranchers, farmers, and their families. 

 

Chapter II provides further details about the 

WTO in its first ten years and the central role it 

plays in U.S. trade policy. WTO rules provide a 

foundation on which the Bush Administration 

has built new Free Trade Area agreements. One 

need only look to areas like trade facilitation to 

see synergies that have been created between the 

customs chapters of our bilateral FTAs and the 

new negotiations in the DDA. 

Beyond the DDA negotiations and the on-going 

work of the WTO in enforcing trade agreements, 

work will continue to expand the WTO’s 

Membership through the accession of trading 

partners who presently remain outside the 

system. Twenty-nine governments are in the 

midst of negotiating the terms of their accession 

to the WTO and making the needed changes to 

their trade regime. The United States remains 

committed to advancing negotiations, 

particularly with partners such as Russia, 

Ukraine, Vietnam, and Saudi Arabia, which are 

making great strides to conform to WTO rules. 

Advancing Bilateral and Regional 

Agreements 

The United States’ bilateral trade agenda is a 

vibrant and integral part of its trade strategy of 

competitive liberalization. Tariff reduction 

commitments in completed FTAs or those in 

negotiation could save approximately $4.13 

billion in import duties for American firms 

whose products are sold abroad. These 

comprehensive, state-of the-art agreements also 

set modern rules for 21st century commerce. 

They break new ground in areas such as 

services, e-commerce, intellectual property 

protection, transparency, and in the effective 

enforcement of environmental and labor laws. 

Further, FTAs strengthen opportunities for 

progress in regional and WTO negotiations -- an 

important goal for 2005.

The Middle East 

To create hope and opportunity in a region beset 

by violence and despair, the President 

announced his vision to establish a Middle East 

Free Trade Area (MEFTA) by 2013 to build on 

the foundation established by our FTAs with 

Jordan and Israel. The purpose of the initiative 

also is to deepen U.S. trade relationships with all 

countries of the region, through steps tailored to 

individual countries’ level of development. The 

Administration worked hard to advance this 

important goal in 2004, linking Middle Eastern 

countries committed to economic reform from 

the Mahgreb to the Persian Gulf -- such as 

Morocco, Bahrain, the United Arab Emirates 

(UAE), and Oman -- and reinvigorating the 
I. Overview and the 2005 Agenda | 7 

region’s rich history as an important area for 

trade. FTAs with these countries expand 

opportunities for American financial services, 

machinery, aircraft, vehicles, and a range of 

agricultural goods. For example, the UAE is 

America’s third largest export market in the 

Middle East, with an estimated $3.7 billion in 

exports in 2004 and approximately 500 U.S. 

firms with operations in the country. The UAE's 

Jebel Ali port is world's fifth busiest harbor and 

the country is a regional shipping and business 

hub. The country is also a strong security 

partner, supporting U.S. efforts in Afghanistan, 

Iraq, and in the War on Terror, and working with 

the Administration on container security. 

In 2004, the United States signed trade and 

investment framework agreements (TIFAs) with 

several Middle Eastern countries to encourage 

economic reform and explore ways to deepen 

our bilateral trade relationships. We are 

employing customized arrangements to resolve 

trade and investment issues, improve 

performance in areas such as intellectual 

property rights and customs enforcement, and 

lay the groundwork for possible FTAs. The 

United States now has TIFAs with Algeria, 

Egypt, Kuwait, Oman, Qatar, Saudi Arabia, 

Tunisia, United Arab Emirates, and Yemen. 

Recent signs of economic reform in Egypt 

encourage a potential deepening of its economic 

relationship with the United States. 

In addition, the United States made progress 

with the WTO accessions of Saudi Arabia, 

Algeria, Lebanon, and Yemen. The United 

States recently extended GSP benefits to Algeria 

and Iraq as well. In December, the United States 

advanced economic relations between Israel and 

Egypt through an historic agreement that allows 

certain goods with Israeli inputs to be shipped 

duty-free from designated areas in Egypt’s 

Qualified Industrial Zones (QIZs) to the United 

States. This is the most significant economic 

agreement between Egypt and Israel in the last 

20 years, and supports the MEFTA by 

promoting regional economic cooperation, 

reform, and development that will lead to 

stronger overall ties between countries and help 

to achieve a stable, prosperous Middle East. 

The President’s vision of a Middle East that 

trades in freedom and, ultimately, in peace has 

received special attention. The 9/11 

Commission unanimously recommended that the 

United States expand trade with the Middle East 

as a way to “encourage development, more open 

societies, and opportunities for people to 

improve the lives of their families.” When the 

terrorism panel made this recommendation, the 

United States was already aggressively building 

the foundation for President Bush’s vision of a 

MEFTA. Free trade agreements with Jordan and 

Israel had already been put in place. Congress 

was days away from voting to approve -- by a 

large bipartisan margin -- an FTA with 

Morocco, and U.S. negotiators were preparing 

for a final round of meetings that completed an 

FTA with Bahrain. In 2005, the Administration 

will continue to work to advance these historic 

goals. 

Europe 

The United States and the EU are actively 

exploring ways to enhance our vast transatlantic 

economic relationship. At the June 2004 U.S.-

EU Summit in Ireland, President Bush, 

Commission President Prodi, and Irish Prime 

Minister Ahern agreed to the Joint Declaration 

on Strengthening Our Economic Partnership, 

which is aimed at promoting a fresh look at 

transatlantic trade and investment ties. The 

United States and EU have initiated a 

government discourse with business, labor, 

consumer and other elements of civil society on 

concrete ways for governments to improve U.S.-

EU economic interaction. The results of these 

consultations with stakeholders on both sides of 

the Atlantic will be factored into renewed 

government-to-government discussions in the 

lead up to the 2005 U.S.-EU Summit. 

USTR continued efforts in 2004 to enhance 

U.S.-EU regulatory cooperation and reduce 

unnecessary technical barriers to transatlantic 

trade. At the June 2004 US-EU Summit, 

President Bush and his EU counterparts 

welcomed the Roadmap for U.S.-EU Regulatory 

Cooperation. The Regulatory Cooperation 

Roadmap provides a framework for U.S. and EU 

officials to cooperate on a broad range of 
I. Overview and the 2005 Agenda| 8 

important product sectors and topics. In 

February 2004, the United States and the EU 

signed a new, precedent-setting mutual 

recognition agreement (MRA) on marine 

equipment. 

During 2004, USTR continued its constructive 

engagement with the European Free Trade 

Association (EFTA) States. In November 2004, 

the United States concluded negotiation of an 

MRA with the EEA EFTA states (i.e., Norway, 

Iceland, and Liechtenstein) that covers 

telecommunications equipment, electromagnetic compatibility (EMC), and recreational 

craft. 

South and Southwest Asia 

USTR continued to work closely with the 

countries of South and Southwest Asia to open 

their markets and to encourage cooperative work 

with the WTO. Ambassador Zoellick traveled to 

India and Pakistan in 2004 to consult on how to 

revive the Doha round of multilateral trade 

negotiations. The U.S. Trade Representative 

and Indian Commerce Minister worked closely 

together in the summer 2004 to find an 

acceptable formula for agricultural negotiations 

in the Doha Round. Officials from USTR met 

frequently with Indian officials to encourage 

greater access for American products and to 

bring India’s intellectual property regime into 

compliance with the TRIPS agreement. 

The United States held a successful TIFA 

Council meeting with Pakistan in 2004. In the 

summer, the United States and Pakistan also 

announced their intention to negotiate a Bilateral 

Investment Treaty. That negotiation will 

commence early in 2005. The United States 

continues to work closely with Pakistan on ways 

to improve its protection of intellectual property. 

The two countries also consulted continuously 

on matters relating to market access. 

The United States and Sri Lanka held a 

successful TIFA Council meeting in the fall of 

2004. That meeting focused on expanding trade 

through greater market access and improving 

transparency in procurement. 

In 2004, the United States worked very closely 

with Iraq and Afghanistan on establishing their 

trade regimes. Trade issues were discussed 

formally twice with Iraq at Joint Economic 

Council meetings in Washington and Baghdad. 

The United States offered extensive training to 

officials from Iraq on customs, SPS, tariff and 

other trade issues. The United States and 

Afghanistan signed a TIFA in the fall of 2004 

and will hold their first TIFA Council meeting in 

early 2005. The United States was pleased to 

assist both Iraq and Afghanistan in pursuing 

approval of their applications to accede to the 

WTO. Those applications were approved in 

December 2004 by the WTO’s General Council. 

As their negotiations with the WTO proceed, the 

United States will offer appropriate training and 

assistance to speed their formal accession. 

Southeast Asia and the Pacific Region 

President Bush announced the Enterprise for 

ASEAN Initiative (EAI) in October 2002. 

Similar to the MEFTA, this regional initiative 

seeks to offer countries in Southeast Asia a stepby-step pathway to deeper trade and economic 

relationships. In 2004, the United States worked 

to fulfill the EAI by implementing the United 

States-Singapore FTA, launching FTA 

negotiations with Thailand, and signing a TIFA 

with Malaysia. An FTA with Thailand will offer 

additional opportunities for American businesses 

and farmers beyond an estimated $24 billion in 

total trade in 2004. A United States-Thailand 

FTA would be particularly beneficial to 

American farmers, who are one of the largest 

suppliers of agricultural products to the Thai 

market. In 2005, the Administration will 

continue its progress on this important FTA. 

In addition to the TIFA with Malaysia, the 

United States will continue to use existing 

TIFAs with the Philippines, Indonesia, and 

Brunei, to solve practical trade problems and 

build closer bilateral trade ties. To help assist in 

post-tsunami reconstruction efforts, we will 

continue to make progress in our FTA 

negotiations with Thailand and intensify our 

discussions on ways to deepen trade ties with 

Indonesia, Sri Lanka, and other countries 

affected by this disaster. 
I. Overview and the 2005 Agenda | 9 

In 2004, the Administration worked to bring 

Cambodia into the WTO, and it became a WTO 

Member in October. We also began negotiating 

a TIFA with Cambodia, which is expected to be 

concluded shortly. We continue to work with 

Vietnam on its accession to the WTO, which 

would bring the country’s economy into the 

global system of rules-based trade.

The United States-Australia FTA, now in effect, 

will increase American manufacturing exports 

by an estimated $2 billion a year. The FTA 

eliminated tariffs on 99 percent of manufactured 

goods immediately when the FTA went into 

effect on January 1, 2005. 

In East Asia, the United States is deepening its 

economic and trade ties with Japan and South 

Korea. We continue to update our bilateral 

engagement with Japan on key issues such as the 

privatization of government entities and to 

increase our joint cooperation on regional issues, 

including protection of intellectual property 

rights. In our work with South Korea, we are 

expanding our focus on the cross-cutting issues 

of regulatory reform and transparency and are 

exploring other means to strengthen our bilateral 

economic relationship. 

. 

Sub-Saharan Africa 

In sub-Saharan Africa, the African Growth and 

Opportunity Act (AGOA) -- enacted in 2000 and 

expanded in 2002 and 2004 -- has created 

tangible incentives for commercial development 

and economic reform by providing enhanced 

access to the U.S. market for products from 37 

eligible sub-Saharan African nations. 

Enhancements made to the AGOA in 2004 

substantially improved access for imports from 

beneficiary sub-Saharan countries and address 

trade capacity-building needs. To build on 

AGOA’s success and, as called for in the 

legislation, the United States is working with the 

five countries of the Southern African Customs 

Union (SACU) -- Botswana, Lesotho, Namibia, 

South Africa, and Swaziland -- toward 

establishment of a regional free trade agreement. 

Such an agreement would enhance U.S. ties with 

the region as it also would help to strengthen 

regional integration among the SACU nations. 

The Americas 

The Administration has made significant 

progress in its bilateral and subregional work 

with Latin America. U.S.-Latin America trade 

started off strongly in 2004 when the Chile FTA 

took effect on January 1. In August, the United 

States signed an FTA with a group of countries 

that constitute our second largest export market 

in Latin America -- Central America and the 

Dominican Republic -- and this year intends to 

send that agreement to Congress for approval. 

Also in 2004, the United States launched new 

FTA negotiations with Panama and three 

Andean countries (Colombia, Peru, and 

Ecuador). Moreover, the United States signed a 

Bilateral Investment Treaty (BIT) with Uruguay 

on October 25, 2004. When ratified by both 

countries, the BIT will strengthen their 

investment ties. 

In the Caribbean, we continue to promote trade 

and economic opportunities, under the 

Caribbean Basin Initiative (CBI). During 2004, 

the Administration consulted with the private 

sector and Congress to ensure that the CBI 

benefits available to the beneficiaries in the 

Caribbean would not be diminished by 

implementation of the FTA with Central 

America and the Dominican Republic. We 

intend to work closely with the Congress in 

considering proposals so that the CBI program 

continues to provide significant economic 

benefits to the Caribbean Basin. 

2004 also marked the ten year anniversary of the 

North American Free Trade Agreement 

(NAFTA). Since January 1, 1994, when the 

NAFTA entered into force, three-way trade 

among the United States, Mexico and Canada 

has reached over $623 billion, more than double 

the pre-NAFTA level. From 1994 to 2003, 

cumulative foreign direct investment in the three 

countries increased by over $1.7 trillion. These 

increased investment flows have brought more 

and better-paying jobs to all three countries, as 

well as lower costs and more choices for 

consumers and producers. During the 2004 

NAFTA Ministerial, NAFTA partners reached 

agreement to liberalize the rules of origin for a 
I. Overview and the 2005 Agenda| 10 

broad range of foods, consumer and industrial 

products. Together, these changes will affect 

over $20 billion in trilateral trade. This work 

will continue in 2005, as the three countries seek 

to improve the region’s trade competitiveness 

and attractiveness to investors, both domestic 

and foreign. 

Free Trade Area of the Americas (FTAA) 

The United States continues its efforts to move 

the hemispheric trade liberalization process, the 

Free Trade Area of the Americas, toward a 

successful conclusion. In Miami, in November 

2003, the 34 trade ministers agreed on a revised 

framework for the FTAA negotiations involving 

two tracks: a “common and balanced set of 

rights and obligations applicable to all 

countries” and a mechanism for countries that so 

choose to pursue negotiations within the 

framework of the FTAA on additional rights, 

benefits, and obligations beyond those core 

commitments. 

The United States supports this new framework 

because it promises to be a constructive way to 

accommodate different points of view and move 

the FTAA toward realization. We will continue 

our efforts to reach consensus among the 34 

countries on this new framework during 

2005. Progress in the FTAA talks will advance 

the goals of job creation and economic growth 

that will form the core of the agenda for 

the November 2005 Summit of the Americas 

meeting in Argentina among the 34 Presidents 

and Prime Ministers in the hemisphere. Trade 

liberalization through the FTAA can be a key 

tool for promoting investment, generating 

employment, promoting economic reform, 

speeding economic growth, and enhancing 

hemispheric integration -- all of which will 

help our countries to build futures for our 

peoples and to compete successfully in the 

global economy of the 21st century. 

USTR’s bilateral and subregional FTA work 

complements the FTAA. As the United States 

works to press forward on the FTAA that will 

economically integrate a region of 800 million 

people with a combined GDP of $13 trillion, we 

are also advancing a second track to promote 

free trade in the Americas: high-quality bilateral 

and subregional FTAs. As a result of this 

second track alone, the United States stands to 

gain the benefits of free trade with more than 

two-thirds of the non-U.S. GDP of the Western 

Hemisphere. Not only is this economic value 

significant but competitive liberalization, as 

embodied by these agreements, has also served 

to motivate our partners to resolve several longstanding labor, investment, and market access 

disputes. 

Encouraging Economic Reform and the Rule 

of Law

USTR’s process of negotiating bilateral and 

regional free trade agreements, followed by 

continuous monitoring and enforcement, 

provides the means to trigger and then lock-in 

broad economic reforms that address a spectrum 

of issues. America’s efforts require new levels 

of environmental and labor law enforcement, 

government transparency, anti-corruption 

efforts, market-based reforms, and the rule of 

law. 

At its core, the transformational power of trade 

comes from expanding and strengthening the 

core constituencies for these reforms, 

particularly by expanding the middle class and 

increasing the importance of independent 

business relative to the government. 

The Chile, Singapore, Australia, Bahrain, and 

Morocco FTAs use innovative new mechanisms 

to meet environmental and labor objectives set 

out by Congress in the Trade Act of 2002. All 

the agreements envision cooperative projects to 

support environmental protection at the same 

time they require that parties effectively enforce 

their own domestic environmental laws -- an 

obligation enforceable through dispute 

settlement procedures. The CAFTA-DR FTA 

goes further with an innovative plan for 

involving civil society in the implementation of 

the environment chapter’s obligations. 

Subsequent FTAs will continue to include this 

core idea while each will be tailored to the 

particular circumstances of each new FTA 

partner. 
I. Overview and the 2005 Agenda | 11 

We have used our FTA negotiations to promote 

respect for international core labor standards 

among our trading partners. For example, 

reform of the labor code languished in the 

Moroccan Parliament for 20 years before United 

States-Morocco FTA negotiations helped 

provide the momentum for Morocco to update 

its labor code. In the CAFTA-DR countries, the 

United States also worked diligently during the 

negotiations to improve the application and 

enforcement of labor laws and to provide an 

institutional framework for technical 

cooperation on labor issues in the future. 

Another feature of U.S. FTAs is the requirement 

that any monetary assessments for labor and 

environment violations be spent on programs to 

fix the problems that gave rise to the 

assessments, putting the emphasis on correcting 

shortcomings. 

The dispute settlement procedures of the new 

FTAs also set high standards for openness and 

transparency, such as holding open public 

hearings, public release of legal submissions by 

parties, and the opportunity for interested third 

parties to submit views. In all cases, the 

emphasis is on promoting compliance through 

consultation, joint action plans, and tradeenhancing remedies.

Trade Capacity Building 

TCB is a critical part of the U.S. Government’s 

strategy to enable developing countries to 

negotiate and implement market-opening and 

reform-oriented FTAs. In FY04, the U.S. 

conducted $903 million in TCB activities, up 

nearly 20 percent ($761 million) from FY03. 

The United States also recognizes that 

coordination of technical assistance activities 

among the Inter-American Bank, the WTO, the 

World Bank, the International Monetary Fund, 

and other donors is very important. The U.S. 

Government’s efforts include contributions to 

the WTO’s Annual Trade-related Technical 

Assistance program and the Integrated 

Framework, assistance to countries acceding to 

the WTO, targeted support for developing 

countries participating in U.S. preference 

programs including African Growth and 

Opportunity Act and the Andean Trade 

Promotion and Drug Eradication Act, and the 

TCB working groups that are integral elements 

of the FTAA Hemispheric Cooperation Program 

and the Andean and Thailand FTA negotiations. 

TCB assistance is helping countries work with 

the private sector and non-governmental 

organizations to transition to a more open 

economy, prepare for FTA and WTO 

negotiations, and implementing their trade 

obligations. 

The U.S. Trade Representative is a member of 

the Millennium Challenge Corporation’s (MCC) 

Board of Directors. The purpose of the MCC is 

to ensure that the President’s vision of a new 

Aglobal development compact@ is implemented 

in a manner in which Agreater contributions from 

developed countries [are] linked to greater 

responsibility from developing nations.@ In 

2004 and continuing in 2005, USTR is working 

to improve integration of trade into the 

development plans of eligible and threshold 

countries so that each country’s MCC agreement 

taps into the potential for trade to spur economic 

growth and reduce poverty. 

Enforcing U.S. Rights

The Administration’s high-quality FTAs 

establish a critical legal infrastructure for 

enforcement. The bulk of the work done day-in 

and day-out is to use every opportunity and 

every point of leverage in these and other 

agreements to ensure that countries live up to 

their current commitments and to solve 

problems for American businesses, farmers, and 

workers. 

The scope of enforcement extends well beyond 

the number of cases brought before WTO or 

NAFTA tribunals. On any given day, many 

U.S. companies meet with USTR, Commerce, 

and other agencies to decide how best to press 

foreign governments to live up to their 

commitments to open up their markets to U.S. 

goods and services and to protect U.S. 

investment and intellectual property rights. 
I. Overview and the 2005 Agenda| 12 

The vast majority of enforcement efforts are 

brought to successful resolution without the 

need to resort to formal litigation. Most U.S. 

companies urge us to do everything that we can 

to resolve a problem quickly without bringing a 

WTO or FTA case. 

Many problems are resolved in the context of 

FTA talks. Before our trading partners can hope 

to begin negotiations for an upgraded trading 

arrangement like an FTA, they must fix existing 

problems. Before completed trade agreements 

can be taken to Congress, our trading partners 

must show additional progress and prevent new 

problems from occurring. Strict enforcement 

mechanisms are at the core of all agreements 

and are in effect from the first day when an FTA 

enters into force. The United States uses every 

tool and every opportunity to press our trading 

partners to address our concerns. 

Informal means of resolving trade issues have 

created these results: 

• U.S. biotech farm exports and key financial 

services have expanded their access to 

China’s market; 

 

• Japan has strengthened intellectual property 

protections and lowered certain customs 

processing fees by 50 percent; 

• Mexico has implemented rules for 

pharmaceuticals that respect U.S. patents 

and has also worked with the United States 

to resolve outstanding apple, hog, poultry, 

dry bean, and beef market access issues; 

• Russia has made commitments for market 

access opportunities for U.S. poultry, pork, 

and beef exports based on historical trade 

levels that provide room for growth; 

• Taiwan has addressed rice and motorcycle 

export problems and is working to improve 

IPR protection; 

• Korea reopened its market to California 

oranges; and 

• Hong Kong has forced the closure of 

companies that were illegally producing 

optical discs. 

Sometimes, however, enforcement can only be 

achieved through litigation, and we stand 

prepared to bring cases under the 

WTO, NAFTA, and other FTAs to secure 

compliance. USTR is currently pursuing 10 

cases with 6 countries in the WTO, and we are 

defending in another 23 actions. 

USTR is working to resolve a number of highprofile WTO disputes with the European Union 

and exploring opportunities to enhance the 

already enormous transatlantic trade and 

investment relationship. 

We continue to focus more of our enforcement 

resources on China. Although China has 

undertaken significant efforts to move away 

from its centrally-planned economy and to bring 

its laws and regulations into line with WTO 

rules, China must do more to meet its 

obligations: 

• USTR is monitoring and aggressively 

enforcing China’s trade commitments 

undertaken by China as part of its WTO 

accession, which includes completion of the 

annual report on China’s compliance with its 

WTO commitments.

• Since April 2004, USTR, in conjunction 

with the Department of Commerce, 

convened meetings of the Working 

Groups created at the April 2004 meeting of 

the U.S.-China Joint Commission on 

Commerce and Trade (JCCT), and planned 

additional meetings in the spring of 2005. 

These Working Group meetings have 

addressed and will continue to be utilized to 

address U.S. trade policy goals in 

intellectual property rights, agriculture 

market access, China's economic structure, 

textiles, statistics, and trade remedies; 

evaluate previous JCCT accomplishments; 

and develop an ongoing and focused 

problem-solving agenda for cabinet-level 

meetings of the JCCT. 
I. Overview and the 2005 Agenda | 13 

• With counterfeiting and piracy of American 

ideas and innovations at epidemic levels in 

China, improving China’s IPR protection is 

a top priority for the United States. The 

Administration has pressed the Chinese at 

every opportunity on this issue. During the 

2004 JCCT meeting, co-chaired on the U.S. 

side by Secretary Evans and Ambassador 

Zoellick, Chinese Vice Premier Wu Yi 

presented an action plan to address U.S. 

concerns with piracy and counterfeiting. 

The Administration is monitoring 

implementation of this action plan closely 

and is conducting an out-of-cycle review to 

assess China’s implementation of its 

commitments to substantially reduce IPR 

infringement levels. The Administration has 

also called on U.S. companies to submit the 

necessary information to enhance our 

monitoring of China’s IPR enforcement 

efforts. The United States will continue to 

place the highest priority on this issue 

throughout 2005. 

• We are seeking changes in Chinese 

industrial policies that limit market access 

for non-Chinese-origin goods or seek to 

extract technology and intellectual property 

from foreign rights-holders.

• USTR is also working to ensure that China 

adheres fully to its commitments to open 

service sectors and does not maintain or 

erect new entry barriers. 

• We are striving to minimize adverse impact 

to U.S. industry caused by the transition to 

quota-free textiles and apparel trade. 

Protecting Intellectual Property

The Administration announced in October 2004 

a major new government-wide initiative, the 

Strategy Targeting Organized Piracy (STOP!), 

to fight billions of dollars in global trade in 

pirated and counterfeit goods that cheat 

American innovators and manufacturers, hurt 

the U.S. economy and endanger consumers 

worldwide. Key elements of the STOP! 

initiative include: 

• Helping and empowering American 

businesses, inventors and innovators, 

particularly small businesses, to secure and 

enforce their rights in overseas markets; 

• Ensuring consumer safety by securing 

America’s borders and marketplace from 

fakes; 

• Raising the stakes and making life more 

onerous for intellectual property thieves 

through new customs methods that increase 

costs to violators far beyond seizing 

shipments and by naming and shaming 

global pirates and counterfeiters who are 

producing and trafficking in fakes; 

• Developing a "No Trade in Fakes" program 

in cooperation with the private sector to 

ensure that global supply chains are free of 

infringing goods; 

• Working to dismantle criminal enterprises 

that steal intellectual property, using all 

appropriate criminal laws, and overhauling, 

updating and modernizing U.S. intellectual 

property statutes; and 

• Joining forces with like-minded trading 

partners concerned about the growing global 

IPR piracy problem, such as the European 

Commission, Japan, the United Kingdom, 

and France, which have all recently 

launched initiatives. 

Complementing STOP! is USTR’s Special 301 

report on the adequacy and effectiveness of IPR 

protection in trading partners around the world, 

published annually at the end of April. The 

2004 report found that although several 

countries have taken positive steps to improve 

their IPR regimes, the lack of IPR protection and 

enforcement continues to be a global problem. 

It called for special out-of-cycle reviews for 

Israel, Malaysia, Poland, Taiwan, and China to 

evaluate steps those countries have taken to 

improve IPR laws and enforcement. The 

reviews for Poland, Malaysia, and Taiwan were 

completed in January 2005. As a result of the 

findings, Taiwan was moved from the Priority 
I. Overview and the 2005 Agenda| 14 

Watch List to the Watch List due to the progress 

it achieved in strengthening enforcement and 

copyright protection. No change was made to 

the Watch List status for Poland and Malaysia. 

The 2005 Special 301 report will be published 

on April 29, 2005. 

The Administration is utilizing various tools to 

strengthen IPR protection in other countries with 

significant infringement problems. For example, 

in response to an industry petition, we extended 

a review of Brazil’s trade preferences under the 

Generalized System of Preferences Program to 

improve Brazil’s IPR enforcement. Brazil has 

taken some positive steps, but needs to take 

further measures to adequately address serious 

piracy concerns. The United States will 

continue to press Brazil on its IPR issues in 

2005. 

Copyright piracy continues to run rampant in 

Russia as well, and Russia’s current IPR regime 

remains deficient. As with Brazil, the United 

States is implementing the IPR provisions of our 

GSP statute (including possible removal of oneway trade preferences) to bring about an 

improvement in Russian IPR protection. In 

2004, the Administration engaged with the 

Russian government at all levels to solicit 

change, and in June of last year, the Russians 

released an action plan to address deficiencies. 

Russia has passed several important pieces of 

IPR-related legislation and has raided plants that 

produce pirated goods. More actions need to be 

taken, however, and the United States will 

continue to work with the Russians to better 

protect IPR in 2005. 

Pharmaceutical Trade Policy:

The Administration has worked to support 

continued gains in health and longevity globally 

by fostering continued pharmaceutical research 

and development and promoting fair sharing of 

the costs of development of innovative drugs. 

The Australia FTA is the first FTA negotiated 

by the United States to include non-market 

access provisions on pharmaceuticals such as 

specific commitments on transparency, 

accountability, and due process. The FTA also 

establishes a Medicines Working Group to 

provide for a continued dialogue between the 

United States and Australia on emerging health 

care policy issues. In addition, the 

Administration has initiated discussions with 

other developed country trading partners on their 

pharmaceutical regulatory systems and the need 

to encourage continued innovation in health 

care. 

 

The United States has also vigorously pursued 

policies to protect intellectual property rights in 

a way that is consistent with promoting public 

access to medicines. Strong intellectual property 

protection is a powerful force supporting public 

health objectives. It provides incentives for the 

development and launch of the latest cuttingedge products as rapidly as possible. 

At the same time, the United States has sought 

to ensure that intellectual property rules provide 

sufficient flexibility for countries to deal 

appropriately with public health emergencies. 

The United States was instrumental in reaching 

an agreement [the Trade-Related Aspects of 

Intellectual Property Rights Agreement 

(TRIPS)/health solution] in the WTO in August 

2003 to allow countries to use compulsory 

licensing to produce and export drugs to 

developing countries that cannot produce the 

drugs for themselves. The United States is fully 

committed to working with other WTO 

Members to transform the TRIPS/health solution 

into an amendment to the TRIPS Agreement. 

In 2004, the Administration worked closely with 

Canada to suspend certain provisions of NAFTA 

to ensure that Canada could implement this 

arrangement without running afoul of NAFTA 

obligations. The United States has 

also negotiated special side letters to its FTAs 

with Morocco, Central America, and Bahrain 

that state that the FTAs’ intellectual property 

rules would not limit a country’s ability to take 

measures necessary to protect public health and 

would allow effective utilization of the 

TRIPS/health solution. 
I. Overview and the 2005 Agenda | 15 

Looking Back; Looking Forward 

At the beginning of the Bush Administration, the 

United States had FTAs with three countries, 

one of which dated back to 1985. Thanks to 

Congressional approval of Trade Promotion 

Authority in 2002, the United States now has 

completed negotiations with 12 countries, and is 

currently negotiating with 12 more. Taken 

together, these 24 current and future trading 

partners constitute America’s third largest export 

market, with $78 billion in U.S. exports in 2004, 

and the world’s sixth largest economy. 

These FTAs have advanced America’s interests 

by opening new markets for U.S. products and 

services, increasing protection of intellectual 

property, streamlining customs procedures, and 

strengthening labor and environmental laws and 

their enforcement. Bilateral negotiations also 

serve as a vehicle to resolve important disputes 

that might otherwise never have been resolved 

without such leverage. All of these 

achievements translate into free and fair trade, 

leveling the playing field for American workers 

and farmers who export their goods abroad, and 

lowering costs for goods American consumers 

buy everyday. 

In 2005, the United States is seeking to expand 

on this record of accomplishment, with an active 

and comprehensive trade liberalizing agenda. 

While working to further open markets, the 

Administration will continue to focus on 

monitoring and enforcing existing U.S. trade 

agreements and trade laws, building the capacity 

of developing countries to participate in the 

global economy, and making the case for free 

trade to the American public. 

In 2005, the Bush Administration will also 

continue moving quickly to bolster reformoriented countries across the Middle East by 

negotiating free trade agreements with Oman 

and the UAE while helping other nations reform 

their economic and legal systems as a way to 

build the path to FTAs with the United States. 

The United States is encouraged by recent signs 

of economic reform in Egypt, and the QIZ 

agreement is one tangible result. 

As USTR intensifies efforts in the Middle East, 

the United States will not lose focus on other 

important trade and foreign policy interests. In 

the 1990s, the end of bitter civil wars and 

communist-funded insurgencies allowed hope 

and democracy to blossom anew in Latin 

America. The United States is moving to protect 

these fragile democracies as they move along the 

path to reform. Congress can act quickly to pass 

the CAFTA-DR while the Bush Administration 

works aggressively to finish on-going 

negotiations with Colombia, Ecuador, Peru, and 

Panama. Once these FTAs are in place, the 

United States will have united countries 

representing two-thirds of the Americas’ nonU.S. GDP in free trade with the United States. 

To further integrate the region and to reinforce 

effective economic strategies and democratic 

development, the United States will continue its 

engagement toward conclusion of the Free Trade 

Area of the Americas.

In the Asia-Pacific, the United States will work 

to expand opportunity in the region through 

further integration of these economies, playing a 

strong leadership role in economic issues, and 

ensuring that growing trade powers, such as 

China, uphold their commitments to key WTO 

principles of market access, non-discrimination, 

national treatment, and transparency. 

USTR is seeking new ways to work together 

with the European Union to further the Doha 

negotiations. We are also working to resolve 

ongoing trade disputes and to explore further 

opportunities to enhance our important 

transatlantic trade and investment relationship. 

Before April 1, 2005, the President must notify 

Congress of his intent to extend trade promotion 

authority until July 1, 2007. Such authority 

would be extended if neither House of Congress 

adopts a resolution disapproving the President's 

request. The United States has an active trade 

agenda, including ongoing multilateral trade 

negotiations at the WTO, FTA negotiations 

under way with twelve countries, and regional 

free trade initiatives in Latin America, Southeast 

Asia, and the Middle East. The Bush 

administration has actively employed trade 

promotion authority for the benefit of the 
I. Overview and the 2005 Agenda| 16 

American people and plans to continue its active 

efforts to open markets globally, regionally and 

bilaterally. 

Robert B. Zoellick 

United States Trade Representative 

February 18, 2005 
1 

II. The World Trade Organization 

A. Introduction1

 

Ten years ago, the World Trade Organization 

(WTO) was created, as part of the results of the 

Uruguay Round of multilateral negotiations. 

Completed in 1994, the Uruguay Round was the 

eighth multilateral round of trade negotiations 

that had taken place during the 50 years after 

World War II, when the United States undertook 

to lead the world away from the economic 

isolationism and protectionist policies that had 

worsened the Great Depression in the 1930s. 

The establishment of the WTO represented a 

culmination of a decades-long bipartisan U.S. 

commitment to the imperative of an open, rulesbased global trading system. The 119 Members 

that made up the WTO in 1995 included the 

United States and more than 20 other founders 

of the General Agreement on Tariffs and Trade 

(GATT). 

Under an accession process that carries far more 

stringent requirements than what was used in the 

GATT, WTO membership now stands at 148 

economies and has become almost universal. 

Key entries during the past decade include 

China, a number of former Soviet Republics, 

and an array of other countries that each carry 

their own strategic importance, such as Jordan, 

Georgia and Cambodia. Negotiations toward 

entry into the WTO are ongoing at various 

stages for more than 25 countries, ranging from 

Russia and Vietnam to Iraq and Afghanistan 

with the latter two countries’ requests to begin 

the accession process approved in December 

2004. Each effort underscores the importance 

attached to membership in the WTO and its 

member-driven, rules-based approach to the 

global trading system. 

 

1

 This Chapter and Annex II to this report are 

provided pursuant to the reporting requirements 

contained in sections 122, 124, and 125 of the 

Uruguay Round Agreements Act. 

The GATT was created in 1947, drawn up in an 

unsteady post-war world that collectively was 

determined to strengthen global security and 

peace through economic opportunity and growth 

in living standards. The past 10 years have also 

brought events outside the economic realm 

which have served to underscore the important 

U.S. strategic interest in an open, global-trading 

system governed by the rule of law. Such an 

interest is no less vital today than it was in those 

first decades after a catastrophic world war. The 

participation and leadership of the United States 

in the global trading system remains a critical 

element for ensuring America's continued 

prosperity, and for meeting the new challenges 

in working for a more stable and secure world. 

The WTO and the global rules based trading 

system that underpins it is very important for the 

U.S. economy. To ensure equal opportunities 

for U.S. businesses, farmers, ranchers, and other 

exporters, the Administration has pursued 

enforcement actions in the WTO when 

negotiations and other avenues have not 

produced acceptable results. In fact, the United 

States has brought more WTO cases than any 

other Member, including the European Union. 

The United States represents 16 percent of world 

trade, yet has brought nearly 22 percent of the 

WTO disputes between January 1, 1995, and 

December 31, 2004. 

The Administration’s record of WTO cases 

involving the United States is 14 wins and 13 

losses in 4 years, a 52 percent success rate. 

From 1995 to 2000, the U.S. record was 18 wins 

and 15 losses, a 54% success rate. Examples 

include cases focusing on: dairy, apples and 

other agricultural products; biotechnology; 

telecommunications; automobiles; apparel; 

changing unfair customs procedures; and 

protecting intellectual property rights and other 

proprietary information. In addition to these 

actions, the United States continues to 

aggressively pursue its interests in the individual 

WTO committees established to monitor 

implementation of the various agreements. 
II. The World Trade Organization| 2 

The WTO is also important for ensuring 

sustainable global economic development. In 

promoting expanded economic freedom, the 

WTO helps the developing world gain access to 

markets, contributes to a stable and peaceful 

world, and helps alleviate poverty. 

The Uruguay Round, which created the WTO, 

was a broad achievement – bringing predictable, 

transparent and binding rules in new areas such 

as services, intellectual property rights (IPR), 

and agriculture fully into the global trading 

system. These rules commit the United States 

and its trading partners in the WTO to a level 

playing field and form the vital legal 

infrastructure for enforcement. Implementation 

of the Uruguay Round results was the main 

feature of the work of WTO Members over the 

last 10 years, and 2005 marks the full 

implementation of many key agreements, such 

as completion of the 10-year phasedimplementation of global tariff cuts on industrial 

and agricultural goods and reductions in tradedistorting agricultural domestic support and 

export subsidies, elimination of quotas and full 

integration of textile trade into the multilateral 

trading system, and improvements in patent 

protection in key markets such as India. The 

Uruguay Round was also highlighted by the 

negotiating results being adopted in a “single 

undertaking” by all Members, who together 

rejected any notion of a two or three-tier trading 

system. 

In its first 10 years, the WTO showed itself to be 

a dynamic organization, one where U.S. interests 

were advanced toward achievements with 

concrete, positive effect. Organizationally, the 

WTO stands out within the world of 

international organizations by continuing to 

maintain a ‘lean’ approach to secretariat staffing, 

avoiding the growth of any bloated bureaucracy. 

With the United States leading the way at 

various points in the last ten years, the WTO has 

taken steps to increase the transparency of its 

operation across the board, from document 

availability to public outreach. Work continues 

on new and creative ways to bring further 

improvements in openness. WTO Members 

continue to set the course for the organization, 

and the Members themselves remain responsible 

for compliance with rules. 

 

Since its creation, the WTO’s substantive 

agenda has remained dynamic, providing the 

path for significant market-opening results over 

the past decade, such as concluding the 

Information Technology Agreement (ITA) to 

eliminate tariffs worldwide on IT products, and 

bringing the Basic Telecommunications 

Agreement into effect, which opened up 95 

percent of the world’s telecommunications 

markets. Both are achievements that continue to 

contribute to the ability of citizens around the 

globe to take advantage of the Information Age. 

The 1997 Agreement on Trade in Financial 

Services has achieved fair, open, and transparent 

practices across the global financial services 

industry, fostering a climate of greater global 

economic security. This agreement ensures that 

U.S. banking, securities, insurance and other 

financial services firms can compete and invest 

in overseas markets on clear and fair terms. 

On a smaller yet no less important scale, the 

WTO provides opportunities on a day-to-day 

basis for U.S. interests to be advanced through 

the more than 20 standing Committees (not 

including numerous additional Working Groups, 

Working Parties, and Negotiating Bodies). They 

meet regularly to provide robust fora for 

Members to exchange views, work to resolve 

questions of Members’ compliance with 

commitments, and develop initiatives aimed at 

systemic improvements. 

Two months after the events of September 11th, 

2001, U.S. leadership played a critical role in the 

launch of a new round of multilateral trade 

negotiations, the first to be conducted under the 

WTO. The negotiations under the Doha 

Development Agenda (DDA) reflect the 

dynamic complexities of today=s economic 

world, and present new opportunities to make 

historic advancements by further opening 

markets and enhancing respect for the rule of 

law. Further in this chapter there is a full 

description of the ongoing progress in advancing 

the DDA toward ambitious results that would 

meet U.S. objectives. 
II. The World Trade Organization| 3 

The United States was the world’s largest 

exporter in 2003. From 1994 to 20042

 U.S. 

exports of goods and services rose 63 percent, 

from $703 billion to $1.1 trillion. The WTO 

exists as the most important vehicle to advance 

U.S. trade interests, critical to America’s 

workers, businesses, farmers, and ranchers. 

Many are dependent and all are affected by a 

global trading system that must operate with 

certainty and transparency, without 

discrimination against American products, and 

an opportunity under the rules to address unfair 

trade practices. In a world where 95 percent of 

consumers live beyond our borders, the WTO is 

essential for U.S. interests. 

The first 10 years of the WTO have 

demonstrated why the United States needs to 

continue its active participation and leadership 

role. A turn away from the work of the past six 

decades to bring about a rules-based, liberalized, 

global trading system would bring certain 

closure of markets to those American workers 

and farmers dependent on continued trade 

liberalization and would ignite unfettered trade 

practices that would distort the global economy 

beyond anything imaginable today. A world 

where the United States steps away from a rulesbased, global trading system would be a world 

where trade no longer would be a positive 

contribution toward solving broader 

international tensions; instead, trade issues 

would add another dimension exacerbating 

larger strategic conflicts. 

The work of U.S. trade policy remains 

perpetually a work in progress, reflecting the 

dynamic changes in today’s fast-moving world 

economy. During the past 10 years, there has 

been increasing participation of small- and 

medium-sized businesses in international trade. 

In the 10 years between 1992 and 2002, U.S. 

exports from small- and medium-sized 

enterprises rose 54 percent, from $102.8 billion 

to $158.5 billion - a faster pace than the rate of 

growth for total U.S. exports during the same 

time. 

 

2

 Annualized from 1st eleven months. 

An examination of the first decade after creation 

of the WTO shows not only exponential growth 

in global trade, but also an unprecedented global 

economic integration that is hallmarked, if not 

led, by continuing advances in technology, 

communication, manufacturing, and logistics. 

From ubiquitous cell phones that capture and 

transmit photos to the routine at-home use of the 

Internet to order overnight delivery of a product 

from thousands of miles away, the citizens of the 

United States and the rest of the world are being 

presented with new products, new services and, 

most important, new economic opportunities 

that did not exist in 1995. At the same time, 

globalization also undoubtedly presents new 

issues, new competitive challenges and new 

economic pressures. Through American 

leadership within the WTO, the core U.S. trade 

agenda of promoting open markets and the rule 

of law remains the core agenda of the global 

trading system. 

B. Economic Assessment 

1994-2004: Performance of the U.S. Economy 

During the First 10 Years of the WTO 

Trade is not a zero sum game. The simple 

metric of a country’s trade balance is not an 

appropriate scale against which to measure the 

benefits of trade liberalization or an enhanced 

rules-based trading system. The complexities 

and dynamism of today’s global economy 

cannot be overstated, yet the process of opening 

markets and freeing trade is widely recognized 

as contributing significantly to enhanced 

economic performance. This can be seen when 

analyzing the economic performance of the 

United States in the 10 years since the 

completion of the Uruguay Round and inception 

of the WTO. From 1994 to 2004, real gross 

domestic product (GDP) of the United States 

rose a strong 38 percent, and the average per 

capita income increased by a quarter. Even the 

downturn in U.S. overall production in 2001 was 

notably shallow and the recession mild by postWorld War II standards. Taken as a whole, the 

performance of the economy in the last 10 yearsand the benefits that American families drew 

from it- has been strong. 
II. The World Trade Organization| 4 

Notably, there has been a sharp improvement 

since 1994 in U.S. industrial production -- the 

bulk of which is manufacturing (78 percent). 

Industrial production in the United States rose 

by 35 percent between 1994 and 2004, 

considerably faster than the 27 percent increase 

in output between 1984 and 1994. In addition, 

U.S. industrial production rose faster than in 

most of our high-income major trade partners. 

Compared to the 35 percent U.S. increase, 

industrial production rose by roughly 18 percent 

in France, 17 percent in Germany, 9 percent in 

Japan and 5 percent in the United Kingdom over 

the last decade. The United States achieved this 

result despite a period of extended decline in 

U.S. industrial production (second half of 2000 

to first half of 2003) associated with domestic 

and foreign recessions. 

Productive investment is central to healthy 

growth and rising living standards. Total gross 

private domestic investment grew impressively, 

by over 67 percent in real terms, between 1994 

and 2004, rising from 15.5 percent of U.S. 

nominal GDP in the earlier year to 16.4 percent 

in the latter. Even excluding housing, U.S. nonresidential fixed, or business, investment has 

risen by 78 percent since 1994, compared to a 34 

percent rise between 1984 and 1994. Such 

business investment accounted for nearly twothirds of all fixed investment in the United 

States last year. 

With regard to employment, the United States 

added 17.2 million net new jobs between full 

year 1994 and 2004. This resulted in an average 

unemployment rate of 5.1 percent in the ten 

years ending in 2004, compared to an average 

unemployment rate of 6.4 percent during the 

prior decade (1984-1994). Along with lower 

rates of unemployment, a higher percentage of 

Americans participated in labor markets in the 

ten years to 2004 (66.7 percent of U.S. civilian 

non-institutional population, 16 years and older) 

than did in the ten years up to 1994 (66.0 

percent). 

Despite the overall positive tone of the U.S. 

employment picture, there have been significant 

concerns about the reduction in U.S. 

manufacturing jobs. In 2004, fewer than 1-in-9 

U.S. workers held a manufacturing job, 

compared to more than 1-in-7 in 1994 and 

nearly 1-in-5 in 1984. 

The U.S. manufacturing job loss, in the face of 

expanded output, is hardly unique among 

countries. A 2003 study by Alliance Capital 

Management looked at manufacturing payrolls 

in the world’s 20 largest economies for the 

period 1995 to 2002. According to this study, 

22 million manufacturing jobs were lost over 

this period, of which 2 million, or less than 10 

percent, were lost in the United States. The 

study further finds that while manufacturing 

employment fell by 11 percent in the 20 

countries, industrial production increased by 

more than 30 percent, implying large 

productivity gains in global manufacturing. 

The shift in the job composition of U.S. 

employment away from manufacturing has 

occurred, even as U.S. manufacturing output has 

experienced long-term growth. Real output of 

U.S. manufacturing industries grew by over 50 

percent between 1987 (earliest year available) 

and 2004 – a period encompassing two U.S. 

recessions. 

Trends in productivity – output per hour worked 

– are among the most important factors 

influencing how rapidly real incomes grow and 

living standards rise. WTO rules and the 

certainty and predictability they provide along 

with liberalization of tariffs played their part in 

this positive development. One of the benefits 

of trade liberalization is a shift in economic 

resources toward more productive uses, thereby 

helping raise productivity growth rates in the 

medium term and enhance living standards. The 

growth of output-per-hour worked in the United 

States has in fact improved strongly: from an 

annual average of 1.8 percent in 1984-1994 to 

2.9 percent in 1994-2004 for all business. 

During the 1994-2004 period, productivity 

growth strengthened, averaging 2.1 percent a 

year for the first 5 years and 3.6 percent a year 

in the most recent 5 years. These statistics are 

important from the standpoint of a constantly 

improving standard of living in the United 

States. 
II. The World Trade Organization| 5 

The productivity record for manufacturing 

workers is even stronger than for the average of 

all private sector workers. The growth in 

output-per-hour worked by U.S. manufacturing 

workers rose from 2.6 percent a year in 1987-

1994 (1987 is the earliest year available) to 4.4 

percent in 1994-2004. As with the whole 

business sector, productivity growth in 

manufacturing improved during the course of 

1994-2004: rising 3.8 percent annually in the 

first 5 years and 4.9 percent annually in the most 

recent 5 years. These U.S. productivity trends 

have significantly helped improve U.S. 

economic growth potential since 1994. The 

combination of increased domestic and 

international competition, business sector 

investment, technological advance and other 

factors have all resulted in enhanced U.S. 

productivity growth. This has enabled U.S. 

manufacturers to rapidly increase manufacturing 

output without increases in manufacturing 

employment. 

The evidence that enhanced productivity growth 

benefited workers and families is found in real 

compensation trends for U.S. workers. Workers 

in the U. S. business sector saw the growth rate 

of real hourly compensation double: from an 

average of 0.9 percent in 1984-1994 to 1.8 

percent in 1994-2004. The improvement is even 

more striking for U.S. manufacturing. Real 

compensation of manufacturing workers rose at 

an average annual rate of 2.2 percent during the 

period 1994-2004, up from just 0.5 percent a 

year in 1987-1994 (1987 is earliest year 

available). 

Multilateral trade liberalization works to 

increase global efficiency and income, making it 

possible for all countries to benefit. The United 

States, with its competitive domestic economy, 

is particularly well placed to benefit from more 

open markets abroad and at home. 

More open global markets are part of a set of 

factors that accelerated U.S. growth rates 

relative to many other countries over the last 

decade. Available World Bank data suggest the 

relative economic success of the United States 

since the inception of the WTO, showing that 

the U.S. share of global income rose from 20.8 

percent to 21.5 percent between 1996 and 2002. 

This increase is especially noteworthy in a world 

in which it is widely believed that national per 

capita incomes tend to converge over time and 

that the highest income countries must usually 

grow at less than the average rate for all 

countries. Moreover, the U.S. income advantage 

over other high-income countries – collectively 

accounting for just 16 percent of global 

population – also rose over the same period 

according to World Bank data. In 1996, U.S. 

per capita real income exceeded the average for 

other high income countries by 39.3 percent. 

This advantage had risen to 43.1 percent by 

2002. 

Falling trade barriers, many of which reflect the 

10 year implementation of the results of the 

Uruguay Round, have helped rapidly increase 

the value of trade relative to the U.S. economy. 

U.S. goods and service trade (exports plus 

imports) reached the levels of 18 percent of the 

value of U.S. GDP in 1984, 22 percent in 1994 

and 25 percent in 2004. One reflection, 

however, of faster growth in the United States in 

the last 10 years and its economic success has 

been a growing trade deficit. As the United 

States has grown faster, imports have increased 

more rapidly than exports. As foreign investors 

have wished to participate in the economic 

success of the United States, inflows of foreign 

capital have provided the foreign exchange 

necessary for Americans to increase the 

purchase of imports more rapidly than the 

growth of U.S. exports. As foreign capital 

inflows soared, America’s own saving rate has 

declined. 

The significance of the U.S. trade imbalance is 

widely debated. Yet its existence has far less to 

do with trade policy than with broader 

macroeconomic factors. One has to take into 

account relative economic growth rates’ levels 

of national saving and investment and, in 

particular, the need for economic structural 

reform and faster economic growth among U.S. 

trade partners. 

Market opening trade policy in general, and the 

Uruguay Round and WTO in particular, should 

be judged in areas where they do have effect: in 
II. The World Trade Organization| 6 

expanding opportunities for trade, contributing 

to higher productivity and earnings, lowering 

prices and increasing choice of household 

consumers and business purchasers alike, 

encouraging beneficial investment, helping to 

enhance domestic living standards and rates of 

economic growth. Against these measures, U.S. 

economic performance in 1994-2004 is 

consistent with that of a country poised to 

maximize the advantages of more open markets, 

freer trade, and a more predictable international 

trading system. 

1994 to 2004: Changes in Trade Flows 

In undertaking any analysis, it is worth noting 

that there are few backward-projecting “what if” 

statistics on trade flows. This is notable because 

the past decade was marked by a severe 

financial crisis in Asia, along with some key 

markets experiencing recessions and other 

significant economic problems. Despite their 

economic hardship, our trading partners honored 

their Uruguay Round tariff reduction 

commitments, and goods exports from the 

United States rose by approximately 60 percent 

in nominal value from 1994 through 2004. U.S. 

goods exports grew in 7 of the past 10 years, 

with double digit growth in 4 of these years. 

The 3 years of negative growth were due to 

complications from the Asian financial crisis, 

and weak economic growth in many of the U.S. 

trading partners. The contractual nature of 

obligations created in the WTO helped cushion 

what would have been a very difficult situation. 

As a result, the United States was able to be the 

engine for global growth during this period. 

One of the achievements of the Uruguay Round 

was to increase the number of tariff lines that are 

“bound” by Members, guaranteeing market 

access opportunities (according to the UNCTAD 

report Post-Uruguay Round Market Access 

Barriers for Industrial Products (2001)). The 

share of industrial tariff lines with bound rates 

for developing countries grew from 21 percent 

to 73 percent, while for developed countries it 

grew from 78 percent to 99 percent. At the same 

time, developed countries' average bound tariff 

rates on industrial goods declined 40 percent, 

while bound tariff rates for developing countries 

were cut 25 percent on imports from developed 

countries and 21 percent from developing 

countries. 

Both U.S. manufacturing exports and U.S. 

agricultural exports grew strongly between 1994 

and 2004, up 64 percent and 39 percent, 

respectively (see Annex 1, Table 1). 

Manufacturing exports accounted for 87 percent 

of the $817 billion in U.S. goods exports in 2004 

(under Census definitions), while agricultural 

exports accounted for 8 percent and mineral 

fuels and mining products accounted for 5 

percent. U.S. exports of high technology 

products grew by 67 percent during the past 10 

years and accounted for one-quarter of total 

goods exports. Non-automotive capital goods, 

the largest U.S. end-use export category 

accounting for 40 percent of total goods exports 

in 2004, grew by 61 percent between 1994 and 

2004. Industrial supplies, the 2nd largest U.S. 

end-use export category accounting for 25 

percent of U.S. goods exports in 2004, grew by 

66 percent during the past 10 years. 

 

Regionally, U.S. exports to middle- and lowincome countries grew by 76 percent between 

1994 and 2004, significantly higher than the 48 

percent growth to high income countries. 

Despite this rapid growth in exports to middleand low-income countries, the majority of U.S. 

exports (55 percent) are still to high-income 

countries. Among major countries and regions, 

exports to China exhibited the fastest growth, 

nearly quadrupling over the past 10 years to a 

record high of an estimated $36 billion. China’s 

entry into the WTO in December 2001 locked in 

improved market access opportunities. China 

committed to reduce its tariffs on industrial 

products, which averaged 24.6 percent, to a level 

that averages 9.4 percent. During this period, 

U.S. exports to Mexico more than doubled, 

while exports to Canada and the EU grew by 64 

percent and 56 percent, respectively. However, 

weak economic conditions in Japan were a 

factor toward limiting the growth in U.S. exports 

to that country to a mere 2 percent between 1994 

and 2004. 

The United States continued to be the catalyst 

for global growth, reflecting the strong growth 
II. The World Trade Organization| 7 

of the U.S. economy over the past decade, goods 

imports more than doubled (see Annex I, Table 

3). Both manufacturing and agriculture imports 

grew by approximately 110 percent, while high 

technology imports increased by roughly 145 

percent. U.S. imports increased substantially in 

all of the major end-use categories, with the 

strongest growth exhibited in consumer goods 

(up 154 percent) and industrial supplies (up 153 

percent). Each of these two sectors account for 

roughly one quarter of the total level of U.S. 

imports. Within U.S. industrial supplies, 

petroleum imports rose 252 percent, from 7.7 

percent of total goods imports in 1994 to 12.3 

percent in 2004. 

Regionally, U.S. import growth in 1994-2004 

was more than twice as strong from middle- and 

low-income countries, as from high-income 

countries (176 percent to 83 percent) (see Annex 

1, Table 4). Due to this growth, the total level of 

U.S. imports from middle- and low-income 

countries surpassed that from high-income 

countries in 2004, reversing the situation in 

1994. As with exports, the strongest import 

growth was from China, up over 400 percent, 

and from Mexico, up 215 percent. U.S. imports 

from Japan were, however, comparatively 

stagnant, up less than 10 percent between 1994 

and 2004. 

The growth in services exports between 1994 

and 2004 (70 percent) slightly exceeded that of 

goods (60 percent), while growth of services 

imports (119 percent), were approximately the 

same as the growth of goods imports. In 2004, 

services exports, at $344 billion, were just over 

40 percent of the value of goods exports, while 

services imports, at $219 billion, were 20 

percent of the value of goods imports (see 

Annex I, Tables 5 and 6). 

Nearly all of the major services export 

categories have grown between 1994 and 2004. 

Export growth has been led by the statistical 

“private services” category consisting of: 

education services; financial services; insurance; 

telecommunications; business, professional and 

technical services; and other unaffiliated 

services: up 134 percent, and the royalties and 

licensing fees category, up 91 percent. Of the 

$139 billion increase in U.S. services exports 

between 1994 and 2004, the other private 

services category accounted for 59 percent of the 

increase and the royalties and licensing fees 

category accounted for 18 percent. 

The growth in services imports, up $159 billion 

between 1994 and 2004, was driven by the other 

private services category (accounting for 40 

percent of the increase) and the “other 

transportation category” consisting of 

transactions arising from the transportation of 

goods by ocean, air, land (truck and rail), 

pipeline, and inland waterway carriers to and 

from the United States and between two foreign 

points, accounting for 17 percent of the increase. 

The Impact of China’s WTO Accession on U.S. 

Exports 

Prior to its accession to the WTO in 2001, China’s 

average applied tariff on industrial products was 24.6 

percent. Upon full implementation of its tariff 

commitments in 2010, China’s average tariff rate on 

non-agricultural products will be 8.9 percent. 

In addition, China committed to join the Information 

Technology Agreement (ITA) and to participate in the 

sectoral “zero for zero agreements” which eliminated 

duties on toys and furniture. Exporters benefited from 

major tariff reductions in construction and petroleum 

equipment, food processing equipment, agricultural 

equipment, scientific and measuring instruments, civil 

aircraft and parts, pumps and compressors, metalworking machinery, power generation equipment, 

engines and household appliances. 

U.S. exports to China in 2004 were 86 percent greater 

than the total for 2001 (the year China joined the WTO, 

at approximately $35.6 billion for 2004 annualized). 

U.S. exports of ITA goods increased 45 percent from 

January to September 2004, and were projected to 

exceed $6 billion by the end of 2004. The United States 

enjoyed a $2 billion surplus in services trade with China, 

and a $3.7 billion surplus in agricultural trade in 2003 

(the latest full year data available). 

In connection with its accession, China took steps to 

repeal, revise, or enact more than 1,000 laws, regulations 

and other measures to bring China into conformity with 

WTO commitments. China agreed to eliminate 

government-mandated technology transfer and local 

content, and eliminated its requirement that goods be 

traded only through state-owned enterprises, thereby for 

the first time allowing U.S. businesses to export their 

goods directly to China without using government 

middlemen. 
II. The World Trade Organization| 8 

All of the major service categories grew since 

1994. U.S. imports of royalties and licensing 

fees have nearly quadrupled, while imports of 

other private services and direct defense 

expenditures have increased 201 percent and 

179 percent, respectively. 

Agriculture: Reliance on Foreign Markets 

The Uruguay Round brought agriculture fully 

into the world trade rules. This is significant 

because U.S. agriculture looks overseas to 

expand sales and boost incomes. The United 

States is the largest exporter of agricultural 

products in the world and is a highly competitive 

producer of many products. 

The promises of greater reform in the new Doha 

negotiations, which have agriculture at the core, 

only enhance our opportunities: 

• Exports of U.S. agricultural products also 

generate additional economic activity that 

ripples through the domestic economy. 

According to USDA’s Economic Research 

Service, every farm export dollar earned 

stimulated another $1.54 in business activity in 

calendar year 2003. The $59.6 billion of 

agricultural exports in 2003 produced an 

additional $92.0 billion in economic activity. 

Farmers’ purchases of fuel, fertilizer, and other 

inputs to produce commodities for export 

spurred economic activity in the manufacturing, 

trade, and transportation sectors. 

• Exports also mean jobs: jobs that pay higher 

than average wages and are distributed across 

many communities and professions, both on the 

farm and off, in urban and rural communities. 

Agricultural exports generated 912,000 full-time 

civilian jobs, which include 461,000 jobs in the 

nonfarm sector. 

• Dollar for dollar, the United States exports 

more corn than cosmetics, more wheat than coal, 

more bakery products than motorboats, and 

more fruits and vegetables than household 

appliances. 

• Twenty-five percent of all cash receipts for 

agriculture come from export markets. Nearly 

half of our wheat and rice crops are exported; 

about one-third of soybean and meat production 

is shipped overseas; and 20 percent of the corn 

crop is exported. 

• Since the mid-1980s, suppliers of highvalue products have seen export sales outpace 

domestic sales by a wide margin. Today, for 

example, nearly 60 percent of U.S. cattle hides 

are exported, with a total export sales value of 

$1.6 billion. 

• The export dependency of the almond 

industry is even higher, with about 65 percent of 

the crop shipped overseas. One-third or more of 

fresh table grapes, dried plums, raisins, canned 

sweet corn, walnuts and animal fats is exported. 

Industrial Goods: The Importance of 

Implementation of WTO Sectoral Initiatives 

Since Completion of the Uruguay Round

Sectoral Liberalization and Global Trade: On 

average, total global exports in the industrial 

sectors subject to tariff elimination or 

harmonization in the Uruguay Round have 

increased at a faster rate than overall global 

exports. These products account for many of 

our leading export sectors. Specifically, average 

cumulative global exports in the industrial 

sectoral initiatives (agricultural equipment, 

chemicals, construction equipment, furniture, 

medical equipment, paper, pharmaceuticals, 

steel, textiles and apparel, and toys) have 

increased more than 100 percent between 1994, 

when the Uruguay Round was completed, and 

2003 (as compared to a cumulative increase of 

75 percent in all global exports). On an 

annualized basis, average global exports in all of 

the sectors listed below have increased more 

than 8 percent each year. 

 
II. The World Trade Organization| 9 

Uruguay Round Sector Growth in Global Exports 

1994-2003 

Average U.S. Tariff Rate 

Pre-Uruguay Round 

Average U.S. Tariff Rate 

Post-Uruguay Round 

Agricultural Equipment 68.0% 0.2 0.0 

Chemical Harmonization 94.8% 5.4 3.7 

Construction Equipment 83.0% 2.2 0.0 

Furniture 140.4% 3.6 0.0 

Medical Equipment 164.5% 5.1 0.0 

Paper and Paper Products 60.3% 2.1 0.0 

Pharmaceuticals 307.7% 4.1 0.0 

Steel 65.9% 5.3 0.0 

Textiles and Apparel 47.7% 17.5 15.5 

Toys 81.5% 5.3 0.0 

Sectoral Liberalization and U.S. Exports: The 

same pattern emerges when examining U.S. total 

exports in these sectors. Total U.S. exports to 

the world grew 35.2 percent between 1994 and 

2003, while average total U.S. exports to the 

world in the industrial sectors subject to sectoral 

liberalization grew more than 55 percent during 

the same period. Certain key sectors 

experienced even faster growth. U.S. 

participation in the chemical harmonization 

sectoral agreement facilitated export growth of 

77 percent between 1994 and 2003 and U.S. 

global exports of medical equipment and 

pharmaceuticals grew 89 percent and 183 

percent respectively. 

Uruguay Round 

Sector 

Growth in U.S. Exports 

1994-2003 

Pharmaceuticals 183.2% 

Medical Equipment 89.2% 

Chemical 

Harmonization 77.0% 

Information Technology Agreement: Although 

WTO Members were not able to complete a 

sectoral initiative on electronic products during 

the Uruguay Round, major exporters of 

information technology products agreed at the 

first post-Uruguay Round Singapore Ministerial 

in 1996 to eliminate tariffs on a set list of 

products. The result was the Information 

Technology Agreement (ITA), which entered 

into force in 1997 with 29 signatories, covering 

90 percent of global trade in these products. 

Today, 63 Members participate in the ITA, 

which covers 95 percent of global trade in 

information technology products. The 

Agreement reflects the increasingly global 

supply chain that has emerged in this sector and 

has sparked tremendous growth in both U.S. and 

global exports of these products. 

Sector Growth in 

Global 

Exports 

1994-2003 

Cumulative 

Growth in 

U.S. Exports 

1994-2003 

Information 

Technology 

Agreement 

102.8% 22.6% 

An Example of the ITA’s Effect with 3 Products 

and 3 Key Markets: Before India joined the 

ITA, U.S. exporters faced tariffs as high as 110 

percent on integrated circuit parts. Now U.S. 

exporters enjoy duty free access. U.S. exports of 

this product to India were $9.7 million in 2003, 

up nearly 35 percent since 1996 (HTS 854290). 

Before the Republic of Korea joined the ITA, 

U.S. exporters faced tariffs as high as 23.6 

percent on electronic dictionaries. Now U.S. 

exporters enjoy duty free access. U.S. exports of 

this product to the Republic of Korea were $294 

million in 2003, up over 225 percent since 1996. 

(HTS 854389) Before Malaysia joined the ITA, 

U.S. exporters faced tariffs as high as 30 percent 

on fixed electrical capacitors. Now U.S. 

exporters enjoy duty free access. U.S. exports 

of this product to Malaysia were $1.775 million 

in 2003, up over 120 percent since 1996. (HTS 

853210) 
II. The World Trade Organization| 10 

The Role of Services in the U.S. Economy and 

its Importance to the Global Trading System 

Services, such as accounting, financial, 

insurance, education, medicine, engineering, 

travel, tourism, construction, express delivery, 

advertising, retailing, telecommunications, 

computer services, environmental services - 

account for approximately 64 percent of total 

economic output in the United States. 

Services are essential inputs to production of 

goods and to enabling access to low cost, 

reliable financial, telecommunications, 

distribution, and transportation infrastructure – 

all of which also enhance a country’s ability to 

engage in international trade. Consumers (i.e., 

clients, patients, students) also benefit from 

services liberalization. 

• For poor countries, services trade offers 

innovative opportunities to jump-start growth 

and development, and to tackle endemic 

poverty. Services promise poorer countries a 

chance to leap over the industrial revolution and 

to directly enter the information revolution. 

• The World Bank has reported that services 

typically account for around 54 percent of GDP 

in developing countries, and that services are the 

fastest growing sector in many of the leastdeveloped economies. 

Throughout the latter half of the twentieth 

century, the service sector has been both the 

largest and the fastest growing component of the 

U.S. economy. Fifty years ago, the service 

sector accounted for about sixty percent of U.S. 

output.3

 By 2000, the service industry share of 

U.S. private-sector gross domestic product 

(GDP) had grown to 79.2 percent.4

Services firms provide more jobs, and more new 

jobs, than all other sectors of the U.S. economy 

 

3

 USDOC, ITA, The Role of Services in the Modern 

Economy, Jan. 1999. 4 USITC, Recent Trends in U.S. Services Trade, May 

2002, p. 1-3; and BEA Survey of Current Business, 

Oct. 2002, p. D-31.

combined.5 In 2001, service industries 

accounted for 81.1 percent of total private-sector 

employment in the United States.6

 Service 

sector payrolls have risen 65 percent over the 

past twenty years, with almost 40 million more 

employees today than there were in 1978. These 

new service sector jobs accounted for the entire 

net gain in non-farm employment since the 

1970s, a trend that is forecast to continue into 

the next decade.7

Developing Countries:

In many developing regions, services industries 

account for a large and increasing share of total 

economic output. During 1980-1995, the share 

of GDP accounted for by services industries 

increased from 48 percent to 56 percent in Latin 

America, and from 43 percent to 48 percent in 

East Asia. Services typically account for a 

larger share of total output in small, open 

markets, such as the Caribbean island countries.8

According to data published by the World Bank, 

service sector GDP is the fastest-growing 

component of total GDP in both low- and 

middle-income countries. Moreover, service 

sector GDP in such countries is growing faster 

than the world average. During 1990-2000, 

service sector GDP in low-income countries 

increased at an average annual rate of 5.1 

percent, faster than the average annual growth 

rates experienced by world service sector GDP 

(2.9 percent) and total GDP in low-income 

countries (3.2 percent). Likewise, in middleincome countries, average annual growth in 

service sector GDP (3.9 percent) exceeded that 

of total world service sector GDP (2.9 percent) 

 

5

 USDOC, ITA, The Role of Services in the Modern 

Economy, Jan. 1999. 6 USITC, Recent Trends in U.S. Services Trade, May 

2002, p. 1-3; and BEA Survey of Current Business, 

Aug. 2002, p. 80. 

7

 USDOC, ITA, The Role of Services in the Modern 

Economy, Jan. 1999. 8 Sherry M. Stephenson, “Approaches to Services 

Liberalization by Developing Countries,” 

Organization of American States, Trade Unit, Feb. 

1999. 
II. The World Trade Organization| 11 

and total GDP in middle-income countries (3.6 

percent).9

Access to intermediate services, such as 

financial services and transport, and producer 

services contributes to economic development 

by improving competitiveness in the goods 

sector and enabling firms to track consumer 

demand. Domestic social services in developing 

countries also benefit from the availability of 

foreign-provided information technology 

services.10

Service sector output makes an important 

contribution to other market sectors. For 

example, a recent World Bank study indicates 

that in Bangladesh, every unit increase in 

infrastructure services output (including output 

in the energy, health, public administration, and 

transport industries) led to a 30- to 43-percent 

increase in demand in other sectors. Unit 

increases in banking and insurance, construction, 

and housing sector output creates 15- to 20-

percent increases in the demand for output 

produced by other sectors.11 

Researchers at the University of Michigan 

estimate that the elimination of barriers to trade 

in services would yield a $1.4 trillion income 

gain for the world, $450 billion of which would 

accrue to the United States. Removing barriers 

to services trade around the world will 

strengthen the prospects of economic growth in 

the developing world, creating jobs and 

developing human capital in knowledge-based 

industries. In the WTO’s Council for Trade in 

Services (the GATS Council) and the DDA 

negotiations a growing number of developing 

countries have begun to acknowledge this and 

have highlighted that trade in services has the 

potential to ultimately bring more gain for them 

than goods trade. 

 

9

 World Bank, World Development Indicators 2002, 

May 2002, table 4.1, pp. 204-206. 

10 Sherry M. Stephenson, “Approaches to Services 

Liberalization by Developing Countries,” 

Organization of American States, Trade Unit, Feb. 

1999. 

11 OECD, GATS: The Case for Open Services 

Markets, 2002, p. 37. 

• Cross-border trade in services, as defined 

by the U.S. Department of Commerce12, 

increased 57.5 percent between 1994 (preGATS) and 2003. 

• In 1994, U.S. cross-border services exports 

totaled $186.7 billion and in 2003 the figure 

reached 294.1 billion. 

• In 2003, the U.S. cross-border trade surplus 

in services was $65.9 billion (i.e., the U.S. 

exported $294.1b in services and imported 

$228.2b). 

• U.S. sales by foreign affiliates of U.S. 

companies (exports – mode 3) also increased 

during this period. Between 1994 and 2002 (last 

year for which data is available), U.S. exports 

increased 152 percent from $159.1 billion to 

$401.1 billion.13 Between 1994 and 1998, U.S. 

exports increased 50 percent from $190.1 billion 

to $286.1 billion. Between 1999 and 2002 (last 

year for which data is available), U.S. exports 

increased 13.6 percent from $353.2 billion to 

$401.1 billion. 

• The United States continued to maintain a 

services surplus in 2002, as exports outpaced 

imports $401.1 billion to $386.7 billion. 

However, it should be noted that in 2002 sales of 

services by foreign affiliates of U.S. companies 

decreased 5 percent, the first decrease since 

these sales were first estimated in 1986. The 

 

12 The Bureau of Economic Analysis incorporates 

travel and passenger fares into its definition of crossborder supply for statistical gathering purposes. This 

should not be confused with the General Agreement 

on Trade in Services (GATS) definition of crossborder supply, which is only defined as the supply of 

a service from the territory of one Member into the 

territory of another Member (such as delivery via 

electronic means). 

13 Beginning in 1999, sales by foreign affiliates were 

classified as goods or services based on industry 

codes derived from the North American Industry 

Classification System; the estimates for prior years 

were based on codes derived from the 1987 Standard 

Industrial Classification System. The change resulted 

in a redefinition of sales of services by affiliates, 

which resulted in a net shift of sales from goods to 

services and a significant spike in the 1999 figures. 
II. The World Trade Organization| 12 

decrease reflects the large drop of sales of 

services by foreign affiliates in utilities; this 

industry was hard hit by the collapse of overseas 

energy trading operations and by the business 

failures of some U.S. parent companies. 

Quantification of Benefits 

Measuring the Effects of Uruguay Round 

Both before and at the time of the WTO’s creation, a 

number of studies estimated its expected future effects on 

the U.S. and world economy. A common approach 

widely used in estimating the impact of trade agreements 

like the Uruguay Round (UR) is comparative static 

analysis, which holds constant all factors other than UR 

changes. These studies considered how trade and the 

economy would have been different in a recent historical 

year, if the Uruguay Round had been in place, fully 

implemented, with all long term economic adjustments 

made instantaneously. The effect of the UR is measured 

as the difference between the year as it was, in fact, and 

as it is estimated it would have been with a fully 

implemented UR. When scale economies and other 

dynamic factors are taken into account such as induced 

larger capital stock, technology transfer, and learning 

effects from the trade liberalization, the estimated 

economic gains can become several times larger. 

In general, these studies capture only some of the effects 

of certain quantifiable features of the UR (for example 

reducing tariffs, subsidies or quotas). They do not 

capture gains such as from provisions of services 

liberalization, dispute settlement, intellectual property 

rights protection or other rules changes. They do not 

capture the enhanced commercial predictability of 

binding previously unbound tariffs in the agricultural and 

industrial sectors – an extremely important gain from the 

UR with respect to the trade policy regimes of low and 

middle-income countries. These studies capture only 

some of the possible dynamic or growth effects of the 

Uruguay Round trade liberalization. Finally, because the 

studies generally deal with the highly aggregated product 

categories and cannot measure economic gains from the 

reduction of barriers among products within categories, a 

so-called “product aggregation bias” is likely to result in 

yet another source of benefit under estimation in such 

modeling efforts. 

Quantification of Economic Effects 

The Council of Economic Advisors (CEA) reported on 

these academic studies – some incorporating dynamic 

effects, others not -- that evaluate gains from the UR 

(CEA 1999). Those studies estimate that annual global 

income could rise between 0.2 percent to 0.9 percent of 

GDP or $40 billion and $214 billion (1992 dollars) upon 

full implementation. For the United States alone, the 

increase could amount to $27 billion to $37 billion (1992 

dollars) each year with good prospects for even further 

gains. Post-Uruguay Round negotiations yielded 

additional market access commitments in financial 

services, basic telecommunication services and 

information technology, areas of undoubted and 

substantial benefit. 
II. The World Trade Organization| 13 

International Trade Benefits the American 

Consumer 

The American approach to an open economy 

brings the benefits of competition and consumer 

choice. Increased trade and competition have 

resulted in large gains for American citizens. 

International trade enriches the marketplace and 

results in a wider variety of consumer goods and 

services than would be available in the absence 

of trade. Trade and competition help keep a lid 

on prices, and over the past decade, U.S. prices 

have fallen for a wide range of supermarket 

products and other consumer goods that are 

prevalent in U.S. trade, such as automobiles, 

household appliances, televisions, camcorders, 

and cellular phones. These tables depict 

consumer benefits in the way of savings on 

products that are prevalent in U.S. trade today. 

A 12-item basket of supermarket goods that cost 

$29.14 in 1994 can be purchased for $23.14 

today. The number of hours an American must 

work in order to purchase a new car, home 

appliance, or bag of groceries has significantly 

decreased from a decade ago. The work time 

required to buy a new car is 16 percent less than 

just seven years ago, and nearly 50 percent less 

for a color TV. Consumers are able to enjoy 

more goods and services per hour worked, and 

international trade has played a considerable role 

in attaining these benefits for the American 

consumer. 

Table 1: U.S. Basket of Supermarket Goods in 1994 & 

2003 

Product 

U.S. 

Average 

Price in 

1994 

(in 2003 

dollars) 

U.S. 

Average 

Price in 

2003 

 (in 2003 

dollars) 

Real 

WorkHour 

Prices 

in 

1994* 

Real 

WorkHour 

Prices 

in 

2003* 

Red Delicious 

Apples $0.99 $0.98 0.07 0.06 

Bananas $0.57 $0.51 0.04 0.03 

Orange Juice $2.00 $1.85 0.13 0.12 

Coffee $4.22 $2.92 0.28 0.19 

White Rice $0.68 $0.45 0.05 0.03 

Potato Chips $3.69 $3.50 0.25 0.22 

Peanut Butter $3.28 $1.92 0.15 0.12 

Chocolate Chip 

Cookies $3.15 $2.81 0.21 0.18 

Boneless Ham $3.24 $2.89 0.22 0.19 

Bologna $3.56 $2.39 0.24 0.15 

Turkey $1.24 $1.08 0.08 0.07 

Tuna $2.52 $1.84 0.17 0.12 

Total $29.14 $23.14 1.89 1.48 

Source: U.S. Bureau of Labor Statistics and Dallas Federal 

Reserve Bank 

*Real work hour prices represent the number of hours an

individual must work in order to purchase the good. 

Unit prices are listed. 

Table 2: U.S. Basket of Consumer Goods in 1997 and 2004 

Product 

U.S. Price 

in 1997 

(in 2004 

dollars) 

U.S. Price 

in 2004 

(in 2004 

dollars) 

Real 

WorkHour 

Prices 

in 

1997* 

Real 

WorkHour 

Prices in 

2004* 

New Car (Ford 4-door 

midsize sedan) $21,430 $18,480 1,368 1,144 

Electric Range $343 $277 22 17 

Refrigerator $1,070 $807 68 50 

Clothes Washer $402 $277 26 17 

Clothes Dryer $405 $247 26 15 

Dish Washer $440 $290 28 18 

Microwave $237 $40 15 2 

Color TV $356 $178 23 11 

VCR $237 $59 15 4 

DVD Player $584 $89 37 5 

Camcorder $653 $247 42 15 

Soft Contact Lenses $60 $15 4 1 

Cellular Phone $143 $70 9 4 

Total $26,359 $21,076 1,682 1,305 

Source: Dallas Federal Reserve Bank 

*Real work hour prices represent the number of hours an individual 

must work in order to purchase the good. 
II. The World Trade Organization| 14 

Global Development 

The WTO Promotes U.S and Global 

Economic Growth and Development 

The United States has been an engine of 

economic growth for much of the world 

economy. Strong growth of the U.S. economy 

and openness to trade assisted the recovering 

countries involved in the Asian financial crisis 

of the late 1990s and further helped pull the 

global economy back from the brink of severe 

recession in the early part of the current decade. 

U.S. trade policies, with the completion of the 

Uruguay Round and creation of the WTO 

figuring prominently, have helped the nation to 

sustain not only its own domestic economic 

strength but also its leadership role within the 

global economy. 

The United States continues to be second to 

none in actively working with developing 

countries to encourage trade liberalization that 

will boost economic growth and development. 

Trading partners with strong economies make 

good allies and provide important outlets for US 

goods and services. Over 95 percent of the 

world’s consumers live beyond U.S. borders. 

The WTO provides numerous important avenues 

for the United States to work with developing 

countries, ranging from a broad-based U.S. 

leadership role in the enhancement of the WTO 

approach to technical assistance, to U.S. efforts 

within individual negotiations to establish 

individual alliances with developing countries 

on particular issues of mutual interest. 

Studies by the World Bank (2002, 2004, 2005), 

IMF (2003) and OECD (2001) show that the 

WTO’s rules-based system promotes openness 

and predictability leading to increased trade and 

improved prospects for economic growth in 

member countries. By promoting the rule of 

law, the WTO fosters a better business climate 

in developing country members, which helps 

them attract more foreign direct investment. 

Studies show that the developing countries that 

have increased their share of world trade the 

most also attract the most investment. Thus the 

WTO is helping the United States reach its longterm goals of assisting developing countries 

raise their living standards, increasing economic 

growth around the globe, and lifting the least 

developed countries out of poverty. 

Trade promotes growth and economic 

opportunity in a number of ways. It increases 

productivity through specialization, leading to 

increased investment and job creation. It also 

helps to spread the best production methods and 

technologies around the world, again boosting 

productivity and creating jobs. Studies show 

that countries that have more open economies 

engage in increased international trade and have 

higher growth rates than more closed 

economies.14 Recent studies also find that trade 

and integration into the world economy lead to 

faster growth and poverty reduction in poor 

countries.15 The developing countries that were 

most open to trade over the past two decades 

also had the fastest growing wages.16 

 

14 See: World Bank, 2001, Trade, Growth and 

Poverty; Jeffrey Frankel and David Romer, 1999, 

“Does Trade Cause Growth?”; and Francisco Alcala 

and Antonio Ciccone, 2001, Trade and Productivity. 15 See: William R. Cline, 2004, Trade Policy and 

Global Poverty; and World Bank, 2004, Global 

Economic Prospects 2004.

16 World Bank, World Development Report, 1995, p. 

55. 
II. The World Trade Organization| 15 

The WTO Has Helped Developing Countries 

Become More Active in Trade

Over the past decade, developing countries have 

opened their economies to more trade and the 

WTO has played an important role in 

encouraging this positive trend. Through 

sustained trade liberalization for manufactured 

products brought about by successive 

multilateral trade rounds, developing countries 

have increased their competitiveness and share 

of global trade. Developing countries nearly 

doubled their exports of goods and services 

between 1990 and 2000, from $860 billion to 

$1.7 trillion.17 Over the past two decades, 

developing countries’ share of world trade has 

increased from about one-quarter to one-third.18 

Even least-developed countries (LDCs) have 

benefited from WTO membership to increase 

their trade activities and improve their growth 

prospects. LDC exports grew 8 percent in 2002 

and 13 percent in 2003, which includes LDC 

trade with other developing countries. 17 LDCs 

from different regions of the world export more 

than half of their products to developing 

countries. The top ten markets for LDCs include 

Thailand, India and Chinese Taipei. 

Additionally, China is the third most important 

market for LDC exports. 

Many developing countries also have 

successfully diversified their exports to cover a 

broad range of manufactured goods, thus 

improving their chances for faster economic 

growth and for creating jobs that pay higher 

wages. The share of manufactured goods 

exports in total developing countries’ exports 

increased from 20 percent in 1980 to over 70 

percent in 2001.19 

 

17 See: World Bank, 1998, World Development 

Indicators; and William R. Cline, 2004, Trade Policy 

and Global Poverty, p. 20. 18 World Bank, 2002, Global Economic Prospects 

2002.

19 World Bank, 2004, Global Economic Prospects 

2004.

Developing Countries Represent a Growing 

Market for U.S. Firms

U.S. trade with developing countries is at an alltime high. Developing countries are growing 

faster now than they were on average during the 

1980s and 1990s, and 2004 was a record year for 

economic growth, currently estimated at 6.1 

percent. Developing countries account for an 

increasing share of global demand and represent 

growing export markets for U.S. firms. In 2003, 

exports to developing countries increased to 45 

percent of total U.S. exports, compared with 43 

percent in 1994. While rapidly rising trade 

volumes played an important role in developing 

countries’ economic growth, U.S. firms also 

benefited substantially by gaining freer access to 

these rapidly growing markets, but for many, 

further opening of these markets remains a key 

objective for achieving future growth. 

Further Trade Liberalization Key to Alleviating 

Poverty 

The Uruguay Round made important progress in 

reducing global trade protection, in particular 

because several key developing countries 

“bound” the highest level that could be applied 

in the case of all or nearly all of their tariffs. 

Such a binding provides more predictable 

market access for exports from the United States 

and, equally important, from other developing 

countries. 

However, from both the perspective of U.S. 

economic aims and the perspective of 

development gains, there is little doubt that more 

remains to be done. Further trade liberalization 

could have a substantial impact on reducing 

global poverty, by as much as 25 percent 

according to some estimates. Reflecting the 

need to turn away from closed markets and 

diminished respect for rule of law, trade 

liberalization has been estimated as having the 

potential to help lift 500 million people out of 

poverty, and inject $200 billion annually into the 

economies of developing countries.20 The 

 

20 William R. Cline, 2004, Trade Policy and Global 

Poverty.
II. The World Trade Organization| 16 

World Bank estimates that complete trade 

liberalization could increase unskilled wages in 

developing countries by 7 percent.21 

Further liberalization of trade between 

developing countries, so-called South-South 

trade, will bring particular development 

dividends to developing countries. Data show 

that developing countries pay about 70 percent 

of their import duties to other developing 

countries. The average level of applied 

industrial tariffs in developing countries is three 

times the level of those in developed countries, 

and for bound tariffs the level is more than six 

times higher. Additionally, the incidence of 

tariff peaks (well in excess of average rates) on 

products of export interest to LDCs is much 

higher in developing countries than in developed 

countries. For example, on non-agricultural 

products, LDCs face 163 peaks in the United 

States, but, for example, face 1,924 in Thailand, 

and 1,323 in Malaysia.22

Thus tariffs are a larger cost of doing business 

for developing countries than they are for 

developed countries. The reduction or 

elimination of tariffs by developing countries 

would stimulate increased South-South trade, 

which has tremendous growth potential. This 

increased trade would create significant welfare 

gains by promoting healthy competition, more 

efficient methods of production and best 

practices. All of these conditions lower costs of 

production for developing countries, allowing 

manufacturers to procure inputs at world prices, 

and lower prices for developing country 

consumers. 

Some of the WTO’s least developed members 

lack the necessary institutions and infrastructure 

to enable them to reap the full benefits of trade. 

In those cases, capacity building and technical 

assistance, coupled with market opening, could 

improve their chances for making the most of 

the opportunities presented by trade 

 

21 World Bank, 2002, Global Economic Prospects 

2002.

22 WTO Secretariat, “Market Access Issues Relating 

to Products of Export Interest Originating from 

Leads-Developed Countries,” Geneva, 2004. 

liberalization. The United States will continue 

to play a prominent role in the WTO to ensure 

that the maximum gains from trade liberalization 

are enjoyed by developing countries and other 

WTO members. 

References

Alcala, Francisco and Antonio Ciccone, 2001. 

Trade and Productivity. Center for Economic 

Policy Research Discussion Paper 3095. 

London: Center for Economic Policy Research. 

Cline, William R., Trade Policy and Global 

Poverty, Center for Global Development and 

Institute for International Economics, 

Washington, DC, June 2004. 

Frankel, Jeffrey and David Romer, 1999. “Does 

Trade Cause Growth?”, American Economic 

Review 89, no. 3: 379-99. 

World Bank, 1995. World Development Report, 

1995, World Bank, Washington, DC. 

World Bank, 1998. World Development 

Indicators, World Bank, Washington, DC. 

World Bank, 2001. Trade, Growth and Poverty, 

World Bank Policy Research Working Paper 

No. 2615. 

World Bank, 2002. Global Economic Prospects 

2002: Making Trade Work for the World’s Poor, 

Washington, DC. 

World Bank, 2004. Global Economic Prospects 

2004: Realizing the Development Promise of the 

Doha Agenda, World Bank, Washington, DC. 

World Bank, 2005. Global Economic Prospects 

2005: Trade Regionalism and Development, 

World Bank, Washington, DC. 

World Trade Organization, 2004. International 

Trade Statistics 2004, Geneva. 
II. The World Trade Organization| 17 

The WTO Promotes Sustainable 

Development 

The broad economic achievements of the 

Uruguay Round have been accompanied by 

unprecedented social progress throughout the 

world, from increases in life expectancy, 

decreases in infant mortality, reductions in 

famine, and the spread of democracy, to greater 

respect for labor standards and environmental 

protection. In the case of environmental 

protection, as incomes rise, part of the additional 

income is often used by governments to address 

environmental problems and achieve a cleaner 

environment. Better-off societies typically have 

both the desire and means to pay for necessary 

abatement and prevention costs. 

From the beginning, the WTO has recognized 

the importance of sustainable development. The 

Preamble of the Agreement establishing the 

WTO calls “for the optimal use of the world’s 

resources in accordance with the objective of 

sustainable development, seeking both to protect 

and preserve the environment and to enhance the 

means for doing so in a manner consistent with 

[Members’] respective needs and concerns at 

different levels of economic development.” 

Contrary to criticisms that have been made, 

WTO rules accommodate Members’ pursuit of 

environmental protection at levels they deem 

appropriate. Panel findings in WTO disputes 

have borne this out over the years. For example, 

in the Shrimp-Turtle dispute (1998), the WTO 

Appellate Body recognized that the U.S. 

Shrimp-Turtle law itself was consistent with the 

GATT’s rules for conservation measures, 

finding fault only with certain aspects of U.S. 

implementation of this law. Similarly, the 

Reformulated Gasoline dispute (1996) 

concerning EPA regulations implementing the 

Clean Air Act, did not put U.S. environmental 

objectives in question. Rather, the WTO 

Appellate Body found that one aspect of EPA’s 

regulations arbitrarily discriminated against 

foreign refiners. In that case, the United States 

adjusted our practices to comply with our WTO 

Trade Facilitation: Cutting Red Tape 

As part of an overall Decision that set the course for 

the final phase of the negotiations under the DDA, 

WTO Members agreed on August 1, 2004 to launch 

negotiations on Trade Facilitation, aimed at clarifying 

GATT Articles V, VIII and X, “with a view to further 

expediting the movement, release and clearance of 

goods, including goods in transit.” The launch was 

an achievement and results of the negotiations will 

yet again prove that the WTO is a dynamic forum 

responsive to rapid changes in the 21st century 

economy. 

In 1947, when the GATT was created and the relevant 

GATT Articles originally were written, customs 

procedures for many countries had changed very little 

since the 19th century. Problems associated with how 

goods cross the border were generally perceived as 

“technical irritants,” and were largely addressed on a 

case-by-case basis rather than as systemic trade 

matters that today are seen as closely linked to 

achieving market access. Uncertainty about import 

procedural requirements, hidden fees, and slow 

border release times are some of the non-tariff 

barriers most frequently cited by U.S. exporters; 

according to various studies such practices can be the 

equivalent of an extra 5 to 15 percent tariff. Small 

enterprises are particularly harmed by opaque border 

processes or, for example, an unwarranted delay in 

obtaining release from customs authorities of a 

critical spare part. 

One of the most frequently-cited impediments to the 

growth of South-South trade is the absence of a rulesbased approach to goods crossing the border. Where 

customs-related corruption exists, it is no longer 

readily dismissed as something petty, but is now 

recognized as a drain on economic development that 

has its genesis in nontransparent discretionary 

practices allowing goods to be held by customs 

officials for unduly long periods of time. The gains 

from negotiations, embodied in new and strengthened 

WTO commitments pertaining to how goods cross 

borders, will yield an immediate “on the ground” 

positive effect and offer a true “win-win” opportunity 

for all Members. Enhancing the trade facilitation 

environment through a WTO rules-based approach 

will also greatly improve the ability of the United 

States and other Members to achieve important 

objectives related to ensuring compliance with 

customs-related requirements concerning health, 

safety, the environment, and security. The United 

States will work to ensure these WTO negotiations 

move forward in a manner where every Member—as 

both an importer and an exporter—will have a real 

stake in robust results and in their implementation. 
II. The World Trade Organization| 18 

obligations without undercutting the efficacy of 

our environmental laws. 

Ministers decided at their meeting in Marrakech 

in April 1994, to establish a WTO Committee on 

Trade and Environment (CTE). The CTE has 

played a critical role in bringing trade and 

environment experts together, and as a result has 

improved communication and cooperation on 

trade and environment issues both domestically 

and internationally. In addition to the CTE’s 

regular meetings, the WTO secretariat has 

hosted briefings, discussions, high-level 

workshops, and other outreach and education 

activities in Geneva and in developing countries 

for government officials and NGOs, many of 

which focus on the environmental aspects of 

trade liberalization. The CTE has become the 

preeminent global forum for identifying and 

analyzing trade and environmental issues and 

has served as an incubator for key issues that 

have been taken up by other WTO bodies, 

including the Technical Barriers to Trade (TBT) 

Committee, and most notably by Ministers for 

negotiation in the Doha mandate (e.g., fisheries 

subsidies and market access for environmental 

goods and services). 

The Doha Agenda is ground-breaking in its 

inclusion of specific negotiating mandates aimed 

at enhancing the mutual supportiveness of trade 

and environmental policies. These specific trade 

initiatives – such as those aimed at eliminating 

market-distorting subsidies that also cause 

damage to the environment, e.g., fishing and 

agricultural export subsidies – can contribute to 

environmental protection efforts and 

simultaneously eliminate trade distortions. The 

mandate to eliminate or reduce tariff and nontariff barriers to trade in environmental goods 

and services will facilitate access to and 

encourage the use of cleaner technologies, which 

can reduce and prevent environmental pollution. 

The WTO Addresses Harmful Fisheries Subsidies—a 

“Win-Win-Win” for Trade, the Environment and 

Sustainable Development 

Early on, WTO Members identified work on fisheries 

subsidies as a key area in which trade liberalization could 

contribute to environmental conservation and sustainable 

development. Excessive subsidies to the world’s fishing 

fleets lead to over fishing and threaten the economic and 

environmental health and sustainability of the world’s 

fisheries, including in some cases the collapse of important 

fisheries stocks. These effects can be particularly harmful 

to developing countries, many of whose people depend on 

fishing for their livelihood. Following extensive 

discussion in the Committee on Trade and the 

Environment, WTO Members agreed on a specific 

negotiating mandate at Doha to strengthen global trading 

rules regarding fisheries subsidies. Negotiations are now 

underway in the Negotiating Group on Rules. The United 

States is a leader in pressing for stronger disciplines on 

fisheries subsidies, including the prohibition of the most 

harmful subsidies. The fisheries negotiations offer the 

United States and other WTO Members an historic 

opportunity not only to improve the state of the world’s 

fisheries but also to demonstrate in concrete, real world 

terms that trade liberalization, environmental protection 

and sustainable development can and should be 

complementary goals. 
II. The World Trade Organization| 19 

C. The Doha Development Agenda 

(DDA) 

The DDA was launched in Doha, Qatar in 

November 2001. The DDA agenda provides a 

mandate for negotiations on a range of subjects 

and work in on-going WTO Committees. The 

main focus of the negotiations is in the 

following areas: agriculture; industrial market 

access; services; trade facilitation; WTO rules 

(i.e., trade remedies, regional agreements and 

fish subsidies); and development. In addition, 

the mandate gives further direction on the 

WTO’s existing work program and 

implementation of the WTO Agreements. The 

goal of the DDA is to reduce trade barriers so as 

to expand global economic growth, development 

and opportunity. 

Progress in the DDA negotiations in 2004 

surpassed expectations. As the new year 

opened, some pundits were suggesting that the 

U.S. Presidential elections, the change in 

leadership in the EU Commission and lack of 

progress for the EU in reform of its Common 

Agricultural Policy would ensure that the 

negotiations would go into a holding pattern 

until 2005. In fact, fears about the breakdown of 

the multilateral system, as evidenced at the 

Cancun Ministerial Meeting in September 2003, 

jarred trading partners into a new reality that the 

world could not afford to let the WTO languish, 

because the world needs a strong and open 

multilateral trading system to oversee trade 

relations between partners. 

The initiative taken in early January 2004 by 

U.S. Trade Representative Zoellick set the tone 

for the year ahead in putting the Doha 

negotiations back on track. In an open letter to 

his WTO counterparts, Ambassador Zoellick 

argued against allowing 2004 to be a lost year 

for the DDA, and shared ideas about a practical 

way to move the negotiations forward, focusing 

on the core “market access” areas of agriculture, 

goods and services, with work to develop 

frameworks that could be approved by the 

WTO’s membership before the end of 2004. 

Agriculture, the key to the breakdown in 

Cancun, was one of the issues mentioned in the 

letter. Importantly, it suggested that WTO 

Members agree to eliminate agricultural export 

subsidies by a date certain. The letter reassured 

partners of U.S. commitment to the DDA 

Agenda in its entirety and the need to move 

expeditiously to eliminate obstacles to progress. 

Reactions were favorable. 

The USTR’s letter was complemented by globespanning diplomacy – with visits to key capitals 

and meetings with Members at various levels of 

development. The commitment to move 

forward with the negotiations was evident as 

Members shared their concerns about the 

agenda, from agriculture to the Singapore issues 

(where lack of consensus on whether to begin 

negotiations on competition, investment, 

transparency in government procurement and 

trade facilitation had led to a stalemate at 

DDA Negotiations 

• Special Session of the Committee on 

Agriculture 

• Negotiations for Non-Agricultural Market 

Access (NAMA) 

• Special Session of the Council on the 

General Agreement on Trade in Services 

(GATS) 

• Negotiating Group on Trade Facilitation 

• Negotiating Group on WTO Rules 

• Special Session of the Dispute Settlement 

Body 

• Special Session of the Council on Trade in 

Intellectual Property Rights (TRIPS) 

• Special Session of the Committee on Trade 

and Environment 

• Special Session of the Committee on Trade 

and Development 
II. The World Trade Organization | 20 

Cancun). By the spring, it was evident that with 

hard work, consensus could be achieved to 

commence negotiations on trade facilitation, but 

the other Singapore issues appeared intractable. 

In May 2004, EU Commissioners Lamy and 

Fischler responded with their own letter to WTO 

Members, and agreed that export subsidies 

would be eliminated by a date certain and 

renewed the European Union’s commitment to 

pursuing the WTO’s agenda. Most heartening, 

however, was the commitment displayed by 

other trading partners – starting with APEC in 

Thailand at the end of 2003, and the African 

Union in Kigali in June 2004 – realizing that 

without the WTO they would not be able to 

effectively participate in world trade. President 

Bush, as host of the G-8 in Sea Island, Georgia 

noted that the world faced a moment of strategic 

economic opportunity to combine the recent 

upturn in economic growth with a global 

reduction to barriers to trade to ensure wider 

participation in a more durable economic 

expansion. 

Through the course of the spring and summer, 

negotiators worked to refine and narrow 

differences in order to devise frameworks that 

would take the DDA to the next phase, setting 

up negotiations on the details of the tariff and 

subsidy cutting formulae in agriculture and 

industrial goods. All the work and consultation, 

including substantial work at the ministeriallevel, concluded in agreement in the early hours 

of August 1 to detailed plans to open markets 

and expand trade. The United States was a 

central player in the work to forge a consensus 

and will continue to give its leadership to 

completing the DDA. The next phase is all 

about negotiating the speed limits for how far 

and how fast we will lower trade barriers. 

Since the launch of the Doha Development 

Round in 2001, the United States has tabled 95 

submissions to dramatically reduce barriers to 

trade in services, agricultural products and 

industrial goods, and to strengthen the rules and 

disciplines of the WTO system. The market 

access related negotiations of the DDA offer the 

greatest potential to create jobs, advance 

economic reform and development, and reduce 

poverty worldwide. The United States 

recognizes that there are many important issues 

in the national economic strategies of our 

developing country WTO partners, yet believes 

the focus of the WTO must remain concentrated 

on its mandate of reducing trade barriers and 

providing a stable, predictable, rules-based 

environment for world trade. 

Given the emphasis on development in the 

DDA, the United States had led the effort to 

provide unprecedented contributions to 

strengthen technical assistance and capacity 

building to ensure the participation of all 

Members in the negotiations. U.S. technical 

assistance contributions on trade-related issues 

to developing countries - both bilaterally and 

multilaterally - were valued at $903 million in 

2004. As the DDA negotiations proceed, the 

United States intends to work with others to 

maximize the opportunities for collaboration 

with other institutions, such as the World Bank 

and IMF, to ensure that the broader technical 

assistance, adjustment and infrastructure, and 

supply-side issues – areas outside of the WTO’s 

mandate – are addressed. 

After detailing the DDA’s progress to date, this 

chapter follows with a review of the 

implementation of existing Agreements, 

including the critical negotiations to expand the 

WTO’s membership to include new members 

seeking to reform their economies and join the 

rules-based system of the WTO. 

D. The General Council and the 

Trade Negotiations Committee Pursue the 

Doha Development Agenda: July 

Framework Revive Negotiations 

The Trade Negotiations Committee (TNC), 

established at the WTO’s Fourth Ministerial 

Conference in Doha, Qatar, oversees the agenda 

and negotiations in cooperation with the WTO 

General Council. The TNC intensified its work 

in the second half of 2004 to supervise 

negotiations and to work with the General 

Council. Annex II identifies the various 

negotiating groups and special bodies 

responsible for the negotiations, some of which 

are the responsibility of the WTO General 
II. The World Trade Organization| 21 

Council. The WTO Director-General serves as 

Chair of the TNC, and worked closely with the 

Chairman of the General Council, Ambassador 

Shotaro Oshima of Japan. The Chairman of the 

General Council, along with Director-General 

Supachai, played a central role in helping forge 

the consensus needed to put the round back on 

track. 

Progress in 2004 

The impasse at Cancun in September 2003, led 

most to believe that the negotiations would not 

make much progress in 2004, given leadership 

changes in the EU and the U.S. elections. The 

United States led the effort to ensure that 

negotiations moved ahead. At the same time, 

trading partners, particularly developing 

countries in Africa and those with agricultural 

interests, saw that the failure of Cancun did not 

work to their advantage. A series of meetings 

were held at ministerial level - in Costa Rica, 

Kenya, Mauritius, and Chile - to put the 

negotiations back on track. In addition, 

President Bush made certain that the WTO 

negotiations were an important part of the 

discussion at the Sea Island G-8 Economic 

Summit. 

In July, the Roadmap for Historic Reforms 

culminated in a detailed plan to open markets 

and expand trade, setting the course to achieve: 

• Historic reform of global agricultural trade; 

• Elimination of all agricultural export 

subsidies; 

• Substantial improvement in market access 

for farm goods through tariff cuts and quota 

expansion; 

• Substantial reductions in trade-distorting 

agricultural support programs; 

• Ambitious opening of global services 

markets; 

• Significant new market access for 

manufactured goods through broad tariff cuts, 

tariff elimination or harmonization in key 

industry sectors, and work to reduce non-tariff 

barriers; and 

• Less red tape and more efficiency in the 

movement of goods across borders. 

Agriculture 

• In a key accomplishment for U.S. farmers 

and ranchers, the framework calls for an 

ambitious and balanced result through reform of 

trade-distorting agricultural subsidies, 

elimination of agricultural export subsidies, and 

a substantial improvement in market access for 

all farm products; 

• In cutting farm tariffs, all countries other 

than the least-developed will make a 

contribution, and there will be deeper cuts in 

higher tariffs; 

• Tariffs will be cut using a tiered (“banded”) 

formula that will lead to greater harmonization 

in tariff levels across countries. In addition, a 

tariff cap will be evaluated as part of the 

negotiations; 

• Substantial improvement in market access 

will apply to all agricultural products, even 

“sensitive” products. Countries may designate a 

specific number of sensitive products that will 

be handled through a combination of tariff quota 

expansion and tariff reductions to expand market 

access; 

• Developing countries, while part of the 

reform process, will be subject to lesser tariff 

reduction commitments in each band of the 

tiered approach. The vulnerability of poor 

subsistence farmers is recognized in the text for 

further discussion; 

• In a historic achievement that has been a 

goal of the U.S. and others for decades, the 

framework calls for the elimination of 

agricultural export subsidies. These are the most 

trade-distorting type of agricultural subsidies; 
II. The World Trade Organization | 22 

• The framework also disciplines export 

credits and export guarantee programs, 

eliminating over time their trade-distorting 

elements; 

• Another key U.S. objective reflected in the 

framework is the elimination of trade-distorting 

practices in the sales of State Trading 

Enterprises (STEs). The framework calls, for 

the first time, for specific disciplines and greater 

transparency on STEs, and offers the possibility 

to negotiate the elimination of the monopoly 

powers of such entities; 

• Those countries with higher allowed levels 

of domestic support will be subject to deeper 

cuts. This harmonization of domestic support 

levels has long been a key U.S. objective; 

• Trade-distorting forms of domestic support 

for agriculture will be cut substantially, with 

caps on support levels for specific commodities 

and cuts in the overall level of trade-distorting 

support; 

• In the first year of implementation, each 

Member’s total trade-distorting support will be 

cut by 20 percent from currently allowed levels, 

an amount equal to the cut of these subsidies 

during the entire Uruguay Round; 

• The framework text also maintains the 

viability of food aid programs for humanitarian 

and development needs; and 

• Cotton: countries have agreed that cotton 

is a vital issue that will be addressed within the 

agriculture negotiations. As the G-8 Leaders 

recently affirmed, cotton is a matter of primary 

concern to African countries. Work on cotton 

will include all trade-distorting policies in the 

sector, including market access, domestic 

support, and export competition. 

Manufactured Products – Broad Cuts in 

Tariffs and Other Barriers 

• The text lays the groundwork for 

significant reductions or elimination of tariffs on 

industrial goods, which account for over $6 

trillion in global trade or nearly 60 percent of 

overall global trade in goods and services. U.S. 

exports of industrial goods are more than $670 

billion per year. 

• Members agreed to negotiate a tariffcutting formula for industrial products under 

which higher tariffs will be cut more than low 

tariffs. This will help U.S. manufacturers, 

because foreign tariffs on industrial goods 

currently average 40 percent, while U.S. tariffs 

average 4 percent. The formula cuts will be 

complemented by sectoral initiatives to fully 

eliminate or harmonize tariffs in particular 

industry areas. This may include “zero-forzero” (elimination of tariffs) as well as 

“harmonization” (tariffs equalized at lower 

levels) sectoral initiatives.

• In cutting tariffs, developing countries will 

have longer implementation periods and 

flexibility on a certain percentage of their tariff 

lines. 

• Least developed countries are expected to 

increase the certainty and predictability of their 

tariff regimes by binding (capping) more of their 

industrial tariffs. 

 

• Non-tariff barriers will be reduced through 

negotiations that are equally important as tariffcutting work. Countries will identify and work 

to reduce non-tariff barriers in the next phase of 

negotiations. 

Current WTO-Allowed Industrial 

Tariffs

4

40

0

10

20

30

40

50

U.S. World

%
II. The World Trade Organization| 23 

Services – Intensified Negotiations to Open 

Markets 

• Members reaffirmed that Services is one of 

three core elements of an ambitious market 

access result. 

• Members agreed to intensify negotiations 

to open global services markets, which are the 

increasingly critical infrastructure of economic 

growth and competitiveness in both developed 

and developing countries. 

• In the United States, services account for 

65 percent of GDP and 80 percent of domestic 

employment. The U.S. services market is one of 

the most open in the world; the U.S. objective in 

the Doha negotiations is to open foreign service 

markets to world-class services of U.S. 

providers. Developing countries, too, will 

benefit from services liberalization. On average, 

services account for more than half the GDP of 

most developing countries. 

• Countries agreed that more – and better – 

market-opening offers need to be put on the 

table as soon as possible, and that they should 

aim for progressively higher levels of 

liberalization. 

Trade Facilitation – Cutting Red Tape, 

Helping Small Business 

• Countries have agreed to launch 

negotiations to clarify and improve the WTO 

rules governing customs procedures. This will 

cut red tape, improve the transparency and 

efficiency of how goods cross borders, and 

advance reforms that will contribute to anticorruption efforts in many countries. 

• These negotiations will update and 

modernize current WTO rules on border 

procedures, which date back to 1947. 

• Red tape and unnecessary formalities at the 

border can wipe away market access gains 

achieved through lower tariffs. Some studies 

have suggested that an antiquated approach to 

customs procedures in some countries can be the 

equivalent of an extra 5 to 15 percent tariff. 

• Uncertainty about import requirements, 

hidden fees, and slow border release times are 

among the non-tariff barriers most frequently 

cited by U.S. exporters. 

• Small and medium-sized exporters are 

particularly affected by opaque customs 

procedures and unexpected problems in getting 

clearance of critical shipments into important 

markets. 

Key Opportunities 

For U.S. Exporters and Small Businesses 

• Cut red tape and reduce the cost of selling into some 

countries by 5% to 15%. 

• Expedited customs treatment for express deliveries. 

• Facilitate “just-in-time” manufacturing programs. 

• Use the Internet to improve information about 

foreign customs requirements and fees. 

• Improve opaque foreign customs procedures that cause 

shipment delays and frustration for small U.S.

exporters. 

Key Opportunities 

For U.S. Workers and Manufacturers 

• Expanded market access for U.S. 

manufactured goods, from cars to computers 

to consumer goods. 

• Broad cuts in tariffs through a “tariffequalizing” formula that would cut high 

foreign tariffs faster. 

• Elimination of tariffs in key U.S. export 

sectors through “zero-for-zero” initiatives. 

• Work to address foreign non-tariff barriers. 
II. The World Trade Organization | 24 

Development – Ensuring That the Poorest 

Are Not Left Behind 

• The framework encourages expanded trade 

between developed and developing countries, as 

well as expanded “South-South” trade. Open 

markets and domestic reform go hand in hand, 

offering the best means for further integrating 

developing countries into the global economy. 

• This reflects the recent commitment of G-8 

Leaders to ensure that the poorest are not left 

behind, but that they too develop the capacity to 

participate in the global trading system. The 

framework recognizes that different countries 

will need to move at different speeds toward 

open trade. 

• The Doha Development Agenda is part of 

President Bush’s strategy to open markets, 

reduce poverty and expand freedom through 

increased trade among all countries in the global 

trading system, developed and developing. The 

strategy is being implemented through global, 

regional and bilateral trade initiatives, as well as 

preference programs like the African Growth 

and Opportunity Act. 

Prospects for 2005 

The WTO will convene for its 6th Ministerial 

Meeting in Hong Kong, China, December 13-18, 

2005. Accordingly, work over the next year will 

concentrate on advancing the negotiations and 

ideally enable the final negotiations to begin 

post-Hong Kong, with the aim of concluding the 

DDA in 2006. The detailed plans agreed before 

the 2004 summer break in Geneva have enabled 

governments to return to the key technical issues 

needed to advance negotiations. Key issues in 

2005 on the Doha Development Agenda will 

include: 

 

• Agriculture: Building on the framework 

agreed, the United States will continue to focus 

on establishing the parameters for reform and 

liberalization in each of the three pillars of the 

negotiations: market access, export subsidies 

and domestic support. Progress in all three 

areas, reducing and harmonizing the level of 

trade domestic support, agreeing on the details 

of the commitment to eliminate export subsidies 

and creating new market access opportunities in 

the markets of developed and developing 

countries, will be the focus of attention. With 

these parameters set, negotiations will then turn 

to the development of specific schedules which 

must be submitted by each WTO Member and 

will start the final phase of the round. 

• Non-Agricultural Market Access: The 

United States, along with key trading partners 

will continue to press for an ambitious outcome 

in this critical area of the negotiation. Work on 

developing a non-linear formula that reduces 

individual tariffs, agreements to sectoral 

liberalization, addressing non-tariff measures, 

and defining appropriate flexibility will all be 

critical to the work done in 2005. Like 

agriculture, agreement on the parameters of 

liberalization should be completed before the 

next ministerial meeting, so that governments 

can begin to table their schedules and enter the 

final phase of bargaining early in 2006. 

• Services: A successful conclusion to the 

DDA requires far-reaching liberalization and 

commitments in the area of services. United 

States interests are broad in negotiations – from 

audiovisual services to telecommunications, 

financial services, express delivery and energyrelated services. The United States has an 

aggressive agenda for market opening in 

The framework 

encourages expanded 

trade between 

developed and 

developing countries, 

as well as expanded 

“South-South” trade. 
II. The World Trade Organization| 25 

services. Since the United States is the world’s 

leader in services for the 21st century economy, 

and services account for 80 percent of U.S. 

employment, our efforts in this area continue to 

be significant. Market opening in services is 

essential to the long-term growth of the U.S. 

economy. For developing countries, services are 

a great economic multiplier and essential to their 

respective development strategies. 

• Dispute Settlement: The United States has 

led efforts to strengthen the rules governing the 

settlement of disputes. The system of WTO 

rules is only as strong as our ability to enforce 

our rights under these Agreements. For this 

reason, the United States has led the efforts to 

promote transparency in the operation of dispute 

settlement. This will continue to be an issue as 

Members pursue the review of the Dispute 

Settlement Understanding (DSU), which was 

extended in 2004. 

• WTO Rules: The United States remains 

focused on ensuring that the negotiations 

strengthen the system of trade rules and address 

the underlying causes of unfair trade practices. 

American workers need strong and effective 

trade rules to combat unfair trade practices, 

particularly as tariffs decline. While admittedly 

a difficult topic, constructive engagement in the 

negotiations in this area have focused on the 

substantive issues of concern. This 

identification process will continue into 2005, 

with the aim of building consensus for any 

changes that may be required. The process 

envisioned in the WTO should result in 

strengthened trade rules in antidumping and 

subsidies, as well as new disciplines on harmful 

fisheries subsidies that contribute to overfishing. 

• Trade Facilitation (Customs Procedures): 

At long last, negotiations are underway in this 

critical area. These negotiations will update and 

modernize current WTO rules on border 

procedures. Cutting the red tape may reduce the 

cost of selling into some countries by 5 percent 

to 15 percent. Work in 2005 will focus on the 

practical issues that need to be addressed in 

forging an agreement. 

• Environment: The United States will 

continue to pursue a practical approach to the 

negotiations, working to enhance the process of 

communication and cooperation between the 

Secretariats of Multilateral Environmental 

Agreements (MEAs) and the WTO. The U.S. 

agenda is aimed at promoting growth, trade and 

the environment. 

• Trade and Development: The July 

frameworks establish further work on 

development – a critical issue that can best be 

addressed in the negotiating areas. The United 

States intends to work with others in promoting 

better cooperation in the field of technical 

assistance and capacity building to integrate 

developing countries into the trading system. 

With respect to the negotiations, proper, debates 

will continue regarding the need to ensure that 

the poorest, less advanced countries are helped 

to participate, while the more advanced, tradeoriented, developing countries make a greater 

contribution to the system. 

• Implementation: The majority of so-called 

implementation issues have been resolved 

through consultations. Nonetheless, outstanding 

issues remain, including the treatment of rules 

issues, particularly trade-related investment 

measures and whether to expand the 

negotiations in the TRIPS agreement regarding 

geographical indications beyond wines and 

spirits. These are difficult issues, which the 

Director-General and his team will take up with 

Members as part of the preparations for the 

Hong Kong, China ministerial. 

1. Committee on Agriculture, Special 

Session 

Status 

The WTO provides multilateral disciplines and 

rules on agricultural trade policies and serves as 

a forum for further negotiations on agricultural 

trade reform. The WTO is uniquely situated to 

advance the interests of U.S. farmers and 

ranchers, because only the WTO can establish 

disciplines on the entire broad range of 

agricultural producing and consuming Members. 

For example, absent a WTO Agreement on 
II. The World Trade Organization | 26 

Agriculture, there would be no limits on the 

EU’s subsidization practices or firm 

commitments for access to the Japanese market. 

Negotiations in the WTO provide the best means 

to open global markets for U.S. farm products 

and reduce subsidized competition. 

Agriculture negotiations are conducted under the 

ambitious mandate agreed at the Fourth WTO 

Ministerial Conference in Doha, Qatar which 

calls for "substantial improvements in market 

access; reductions of, with a view to phasing 

out, all forms of export subsidies; and 

substantial reductions in trade-distorting 

domestic support." This mandate was 

augmented with specific provisions for 

agriculture in the framework agreed by the 

General Council on August 1, 2004. 

Major Issues in 2004 

Following disagreement at the Cancun 

Ministerial meeting in September 2003 over the 

scope and speed of agriculture reform, the 

United States initiated a series of informal 

consultations with WTO members to assess their 

commitment to multilateral agricultural reform 

consistent with the Doha mandate. The United 

States has long advocated fundamental reform of 

all trade-distorting measures by all WTO 

members and in 2002 made specific proposals to 

phase-out all tariffs, trade-distorting domestic 

support, and export subsidies in the Doha 

negotiations. Subsidizing, uncompetitive 

countries hesitant to introduce their producers to 

market forces resisted these proposals. In 

addition, a number of developing countries 

proposed substantial reforms in developed 

country agricultural policies before committing 

to their own reforms. The fundamental 

challenge after Cancun was to determine if other 

countries were prepared to undertake reform 

and, if so, how to negotiate specific 

commitments to reduce protection and tradedistorting support. Building on this U.S. 

initiative, WTO members engaged in intensive 

discussions in the first half of 2004. The 

discussions focused on the core issues in the 

three pillars of market access, export 

competition, and domestic support with a view 

toward identifying agreed approaches to achieve 

reform. 

U.S. negotiators met bilaterally with interested 

participants, with small groups of like-minded 

countries, in informal groups of countries with 

varied interests in the negotiations, and in large 

informal and formal meetings organized by the 

Chairman of the WTO agriculture negotiations, 

Ambassador Tim Groser of New Zealand. 

Through this process, and in particular, the work 

of a group of five interested parties (the United 

States, the European Union, Australia, Brasil, 

and India) common ground was developed on 

some of the fundamental issues in the 

negotiations. These ideas were provided to 

Chairman Groser who presented a draft 

agricultural framework to WTO Members on 

July 16, 2004. 

After further revisions, developed through 

intensive round-the-clock negotiations at the 

ministerial-level at the end of July, WTO 

Members agreed to an agriculture framework to 

guide further progress in the negotiations. In the 

fall, technical discussions continued in Geneva 

to prepare the way for specific negotiations over 

the depth of tariff and subsidy cuts, time frames 

for implementing reforms, and other issues. 

Key elements of the framework in each of the 

three pillars are described below. 

Export Subsidies: On export subsidies, the 

framework specifies, for the first time, that all 

export subsidies will be eliminated by a date 

certain. Export credit and credit guarantee 

programs with repayment terms over 180 days 

will also be eliminated in a parallel manner with 

direct export subsidies. Disciplines will be 

developed on export credit and credit guarantee 

with repayment terms under 180 days. The 

framework prohibits all trade-distorting 

elements of export state trading enterprises. 

Disciplines will also be established on food aid 

programs to ensure that food aid does not 

displace commercial sales. Further discussions 

will be held on export restrictions, including 

export taxes. 
II. The World Trade Organization| 27 

Market Access: The framework on market 

access specifies the use of a tiered formula that 

ensures higher tariffs receive deeper cuts. For a 

certain number of sensitive products, less than 

formula reductions will be permitted with access 

to be provided through tariff-rate quotas. In 

addition, WTO members will negotiate whether 

to establish a tariff cap, new rules for 

administering tariff-rate quotas, and disposition 

of the special agricultural safeguard. Provisions 

are also established for special and differential 

treatment for developing countries, including the 

development of a new safeguard mechanism and 

recognition of special treatment for special 

products related to development and food 

security needs of these countries. 

Domestic Support: On domestic support, the 

framework specifies the use of a tiered-formula 

that ensures countries with higher levels of 

allowed trade-distorting domestic support (the 

Aggregate Measurement of Support) make 

larger reductions to deliver greater 

harmonization in subsidy levels across countries. 

Payments partially decoupled from production 

decisions or linked to production-limiting 

programs will be capped for the first time, and 

rules for disciplining these programs will be 

subject to further discussions. Allowances for 

de minimis support will be subject to reductions 

as well. The total level of all these forms of 

trade-distorting support will be subject to a 

maximum level and reductions, with higher 

levels of allowed support subject to greater cuts. 

Members agreed to a 20 percent cut in the 

overall level of trade distorting domestic support 

in the first year of implementation of the 

agreement. Product-specific caps, but not 

reductions, for the Aggregate Measurement of 

Support will be established. Criteria for “green 

box” programs that have minimal or no tradedistorting effects will be reviewed. Special and 

differential treatment will be established to 

address the particular needs of developing 

countries. 

Intensive discussions were conducted on 

proposals for a sectoral initiative on cotton. 

WTO members established a sub-committee 

within the agriculture negotiations to monitor 

work on all elements related to trade in cotton, 

and reaffirmed the importance of an ambitious 

outcome in the agriculture negotiations and for 

the cotton sector. 

Prospects for 2005 

In 2005, negotiations will focus on establishing 

specific modalities in each of the three pillars. 

In addition to negotiating the specific parameters 

of the reduction formulas for tariffs and the 

elements of trade-distorting domestic support, a 

time period for phasing-in the reductions as well 

as the elimination of export subsidies will need 

to be agreed. In parallel, negotiations will focus 

on the rules and criteria for allowed subsidy 

measures, administration of tariff-rate quotas 

and safeguard measures. In addition, bilateral 

discussions and sectoral negotiations for 

reductions beyond those called for in the basic 

modalities will occur when progress is achieved 

on the core modalities. As talks move forward, 

the United States will work to achieve the high 

level of ambition that all countries bring to all 

three pillars. U.S. objectives for agriculture 

reform will continue to focus on the principles 

of greater harmonization across countries, 

substantial overall reforms, and specific 

commitments of interest in key developed and 

developing country markets. 

2. Council for Trade in Services, Special 

Session 

Status 

In 2000, pursuant to the mandate provided in the 

Uruguay Round, Members embarked upon new, 

multi-sectoral services negotiations under 

Article XIX of the General Agreement on Trade 

in Services (GATS). The Doha Declaration 

recognized the work already undertaken in the 

services negotiations and reaffirmed the 

Guidelines and Procedures for the Negotiations 

adopted by the Council for Trade in Services 

(CTS) in March 2001. The Doha mandate 

directed Members to conduct negotiations with a 

view to promoting the economic growth of all 

trading partners. The Doha mandate also set 

deadlines for initial services requests and offers. 

As of December 31, 2004, 51 WTO Members 

had submitted initial offers as part of this 
II. The World Trade Organization | 28 

process. While offers are submitted to the 

Council for Trade in Services in Special Session 

(CTS-SS) for all Members to review, the 

negotiations occur primarily through bilateral 

negotiations. The Special Session met four 

times during 2004 in March, June, September 

and December. 

Cumulative Assessment Since the WTO Was 

Established 

The Special Session of the Council for Trade in 

Services (CTS-SS) was formed in 2000, 

pursuant to the Uruguay Round mandate to 

undertake new multi-sectoral services 

negotiations. Specific issues pertaining to the 

trade negotiations, including the overall 

framework for the services negotiations, 

classification and scheduling issues raised by 

Members, developing country participation in 

the negotiations, market access and assessment 

of the value of services liberalization are 

discussed in this body. Since 2000, the United 

States has made 16 submissions pertaining to the 

negotiations and U.S. market access priorities. 

The U.S. submitted 12 sector-specific proposals 

including accounting services, advertising 

services, audio-visual services, distribution 

services, education services (higher and tertiary 

education), energy services, environmental 

services, express delivery services, financial 

services, legal services, telecommunication and 

complementary services, and tourism and hotel 

services. In addition, the U.S. submitted 

proposals on small- and medium-sized 

enterprises, movement of persons, transparency 

in domestic regulation and an assessment of 

services trade and liberalization in the United 

States and developing economies. 

Major Issues in 2004 

In 2004, the United States worked to secure 

Members’ commitment to progress in the 

negotiations in line with the Doha mandate. 

While negotiations proceeded slowly following 

the Cancun Ministerial there was agreement in 

July 2004 to intensify negotiations and further 

establish benchmarks for progress (Annex C of 

the August 1, 2004 General Council Decision). 

The United States and India also led a number of 

delegations in efforts to improve the treatment of 

services market access negotiations as part of the 

July agreement. It instructed Members that have 

not yet submitted their initial offers to do so as 

soon as possible and established May 2005 as an 

indicative date for revised offers. In November 

2004, the United States, Switzerland, Singapore 

and Japan led a group of 15 other WTO 

Members in a joint statement that highlighted 

the importance of services market access 

negotiations and set the stage for more intensive 

work on offers in 2005. 

Eleven WTO Members submitted initial offers 

in 2004, bringing the total number of 

submissions to 50. As of December 2004, in 

addition to the United States, the following 49 

WTO members had submitted initial offers: 

Argentina; Australia; Bahrain; Bolivia; Brazil; 

Bulgaria; Canada; Chile; China; Chinese Taipei; 

Colombia; Costa Rica; Czech Republic; 

Dominican Republic; EC; Egypt; El Salvador; 

Fiji; Gabon; Guatemala; Hong Kong, China; 

Iceland; India; Israel; Japan; Jordan; Kenya; 

Korea; Liechtenstein; Macao, China; Mauritius; 

Mexico; New Zealand; Norway; Panama; 

Paraguay; Peru; Poland; Senegal; Singapore; 

Slovak Republic; Slovenia; Sri Lanka; St. 

Christopher & Nevis; Suriname; Switzerland; 

Thailand; Turkey; and Uruguay. 

In an effort to promote U.S. objectives in all 

possible forums, in addition to the Special 

Session and bilateral negotiations, the United 

States has been working with like-minded 

countries in the context of “Friends Groups.” 

These groups, which share common market 

access priorities in sectors such as financial 

services, telecommunication services, computer 

and related services, logistics services, express 

delivery services, energy services, audiovisual 

services, legal services, and environmental 

services, work together to develop common 

priorities and understandings in the negotiations. 

As part of the mandate of the CTS-SS, WTO 

members continued discussions on the 

assessment of trade in services and considered 

the benefits of greater liberalization. In 2004, a 

number of WTO Members and observers, 
II. The World Trade Organization| 29 

including the OECD and UNCTAD, made 

written and oral presentations on the topic. 

Several other issues were discussed at Special 

Session meetings during 2004, including Mode 

4 (temporary entry of persons), based primarily 

on submissions from developing countries and 

new submissions from Switzerland and 

Australia, a submission highlighting the 

importance of mode 3 commitments 

(commercial presence) by Canada, and a 

proposal for a symposium on the cross-border 

supply of services by India. In September, 

Brazil, Colombia, the Dominican Republic, El 

Salvador, India, Indonesia, Nicaragua, the 

Philippines and Thailand submitted a 

communication on Tourism Services. The 

United States is pleased that Members are 

actively participating in the discussions and 

submitting proposals of interest to them. The 

United States has submitted or joined proposals 

over the course of the negotiations, including 

one in December 2004 with 15 other countries to 

put emphasis on moving market access 

negotiations in light of the May 2005 

requirement for tabling of offers. 

Pertaining to developing and least-developed 

countries, the United States, along with Canada 

and the European Union supported a pilot 

project by the International Trade Centre in 

Geneva to help developing and least developed 

country Members to increase their participation 

in the request-offer process. 

Prospects for 2005 

Sessions in Geneva, known as “clusters,” will 

continue to follow the pattern of a general 

meeting of the Special Session, followed by 

bilateral meetings. This allows Members the 

opportunity to present and discuss their initial 

and revised negotiating offers, requests, and 

other topics of concern. Discussions in the 

general meeting of the Special Session and in 

the bilateral negotiating sessions are expected to 

continue on the topics noted above. 

Specifically, we expect that a number of 

“Friends Groups” will introduce statements 

identifying areas of priority and consensus 

within the groups. The United States will 

prepare its revised offer. During the February 

2005 cluster, Members will participate in a 

symposium coordinated with industry on 

financial services and the WTO will also hold a 

symposium on Mode 1 (cross-border supply) 

bringing a number of capital based experts to 

Geneva, which provide further opportunities for 

bilateral negotiations in computer and related 

and telecommunication services in particular. A 

few other sectoral friends groups are organizing 

special one week clusters to foster additional 

negotiations and exchanges in preparation for 

May, 2005. 

3. Negotiating Group on NonAgricultural Market Access 

Status 

After three years of negotiations, WTO 

Members have agreed to the broad outlines of an 

approach to liberalizing non-agricultural goods 

in a manner consistent with the Doha mandate, 

but the precise details of each element still need 

significant clarification. These elements include 

a formula, the extent to which there should be 

sectoral liberalization as in the Uruguay Round, 

the work on non-tariff barriers and developing 

country participation. The mandate, established 

at the fourth WTO Ministerial Conference held 

in Doha in 2001, launched non-agricultural 

market access (NAMA) negotiations with a goal 

to reduce or eliminate non-tariff barriers and 

tariffs, including tariff peaks, high tariffs, and 

tariff escalation, in particular on products of 

export interest to developing countries. 

Ministers also agreed that developing countries 

should be permitted to provide “less-than-fullreciprocity”, but that negotiations should be 

comprehensive and include all industrial 

products without a priori exclusions. Finalizing 

the details of (1) the tariff-cutting formula; (2) a 

robust sectoral component; (3) the treatment of 

non-tariff barriers (NTBs); and (4) provisions 

related to flexibility for developing countries 

will be the central focus of negotiations in 2005. 

The outcome of these negotiations is crucial for 

trade in manufactured goods, which accounts for 

over 75 percent of total global trade in goods 

and more than 90 percent of total U.S. goods 

exports. U.S. manufactured goods exports 
II. The World Trade Organization | 30 

increased nearly 13.5 percent in the first 10 

months of 2004 and are set to reach an annual 

level of $711 billion. The Doha Round provides 

an opportunity to lower tariffs in key markets of 

the WTO’s 148 Members, including India and 

Egypt, which still retain ceiling rates as high as 

150 percent. Likewise, gains from tariff rate 

reductions made as a result of the Round will 

accrue to developing countries, which currently 

pay 74 percent of duties collected to other 

developing countries. 

Tariff reduction or elimination through sectoral 

initiatives also provides an important 

opportunity for U.S. exporters of industrial 

products. On average, total global exports in the 

industrial sectors subject to tariff elimination or 

harmonization in the Uruguay Round have 

increased at a faster rate than overall global 

exports. Specifically, cumulative global exports 

in the industrial sectoral initiatives from the 

Uruguay Round (agricultural equipment, 

chemicals, construction equipment, furniture, 

medical equipment, paper, pharmaceuticals, 

steel, textiles and apparel, and toys) have 

increased, on average, more than 100 percent 

between 1994, when the Uruguay Round was 

completed, and 2003 (as compared to a 

cumulative increase of 75 percent in all global 

exports). Please refer to the Tables in Section B, 

“Sectoral Liberalization and Global Trade” and 

“Sectoral Liberalization and U.S. Exports”. 

Major Issues in 2004 

In the first half of the year, many Members 

refused to advance substantive work on NAMA 

until the outlines of the agriculture negotiations 

became more clear. In July, Members decided 

that the NAMA text presented by the Chairman 

at the 2003 Cancun Ministerial at Cancun 

contained all the elements necessary to move 

forward. These elements include: (1) a nonlinear formula applied line-by-line; (2) a sectoral 

component; (3) the possibility for employing 

additional approaches, such as request-offer 

negotiations; (4) broad outlines of an approach 

to addressing non-tariff barriers; and (5) a 

variety of flexibilities to be provided for leastdeveloped countries, poor and revenue-strapped 

countries just above the LDC level, and other 

developing countries. Members agreed that 

further work would be necessary to determine 

the specific details of these and other elements. 

At this stage, we are working under a mandate 

that calls for: (1) the use of a formula as a core 

element of tariff-cutting modalities; and (2) a 

non-linear formula applied line-by-line, which 

would reduce higher tariffs more than lower 

tariffs. A number of developing countries 

continue to support use of a non-linear formula 

that would require developed countries to reduce 

tariffs substantially, while permitting developing 

countries to retain relatively high levels of 

protection. Other developing countries have 

begun to realize that tariff cuts in developing 

country markets are critical for their own growth 

and export interests and thus have been more 

supportive of formulae that provide flexibility to 

developing countries, but also ensure significant 

new market access in these markets. 

In addition, several countries have joined the 

United States in supporting an ambitious 

sectoral component that would eliminate and or 

harmonize tariffs on highly-traded sectors. At 

Cancun, there was a debate as to whether 

participation should be mandatory. Similar to 

the approach adopted in the Uruguay Round, 

these sectoral initiatives are critical element of 

the U.S. non-agricultural market access strategy. 

Accordingly, over the past year, the United 

States has discussed with Members the benefits 

of approaching sectoral liberalization using the 

“critical mass” concept. This means that there 

is some flexibility in participation, with the 

exact level to be negotiated to reflect key and 

potential export/import interests of Members. 

Flexibility for developing countries, or “lessthan-full-reciprocity,” continues to be an 

important area of discussion, with a number of 

approaches under consideration. Decisions on 

this element will be closely linked to the 

outcome of negotiations on the formula and 

sectors. Several developing country Members 

continue to note their concerns with the potential 

erosion of preferences or loss of government 

revenue due to tariff cuts. Similarly, on nontariff barriers, 32 Members have submitted 

indicative lists of non-tariff barriers they are 
II. The World Trade Organization| 31 

interested in pursuing through the Doha 

negotiations, and several proposals have been 

tabled on how best to address them. 

Prospects for 2005 

In 2005, work will focus on negotiating the final 

details of the non-linear formula, identifying 

specific sectors and country participation in the 

various sectoral initiatives, determining the final 

balance of flexibilities for developing countries, 

and advancing negotiations on identified NTBs. 

The United States continues to seek an 

ambitious approach that will deliver real market 

access in key developed and developing country 

markets, while supporting elements of additional 

flexibility for the least-developed and most 

financially-constrained Members and those 

developing country Members that have already 

contributed significantly to liberalization 

through the maintenance of low tariff levels and 

high levels of tariff bindings. 

Several developing country Members will likely 

continue to press for further discussion on the 

perceived implications of tariff reduction or 

elimination on preference programs. Recent 

studies by the IMF show that reduction or 

elimination of tariffs in developed country 

markets will have a limited effect on a very 

small number of countries that receive 

preferences. The United States, along with the 

World Bank and IMF, is working with these 

countries to isolate the specific products where 

they have concerns and will work with them to 

develop solutions in these areas. The United 

States continues to emphasize that the original 

intent of preferences is to integrate developing 

countries into the global trading system and 

should not impede global liberalization. 

Likewise, for developing countries with 

concerns about the implications for government 

revenue caused by tariff reduction or 

elimination, there are a number of World Bank 

and IMF programs that can help these Members 

reform their revenue collection structures and 

reduce dependence on import tariffs. 

Work on the formula, sectors, NTBs, and 

flexibilities will all need to move roughly in 

parallel, as all of these elements are inter-related. 

Work on NTBs, which also constrain market 

access on individual products and sectors, will 

be critical. Flexibilities for developing countries 

will need to be discussed as they relate to the 

formula, sectors, and non-tariff barrier 

components. 

4. Negotiating Group on Rules 

Status 

In paragraph 28 of the Doha Declaration, 

Ministers agreed to negotiations aimed at 

clarifying and improving disciplines under the 

Agreements on Implementation of Article VI of 

the GATT 1994 (the Antidumping Agreement) 

and on Subsidies and Countervailing Measures 

(the Subsidies Agreement), while preserving the 

basic concepts, principles and effectiveness of 

these Agreements and their instruments and 

objectives. Ministers also directed that the 

negotiations take into account the needs of 

developing and least developed participants. 

The Doha mandate specifically calls for the 

development of disciplines on trade-distorting 

practices, which are often the underlying causes 

of unfair trade, and also calls for clarified and 

improved WTO disciplines on fisheries 

subsidies. In addition, paragraph 29 of the Doha 

Declaration provides for negotiations aimed at 

clarifying and improving disciplines and 

procedures under the existing WTO provisions 

applying to regional trade agreements. 

Paragraph 28 provides for a two-phase process 

for the negotiations, in which participants would 

identify in the initial phase of negotiations the 

provisions in the Agreements that they would 

seek to clarify and improve in the subsequent 

phase. WTO Members have submitted almost 

170 formal papers to the Rules Group thus far, 

the majority of them identifying issues for 

discussion rather than making specific 

proposals. In order to deepen the understanding 

of the Group of the very technical issues raised 

by these papers, in 2004, the Group began a 

process of in-depth discussion of elaborated 

proposals in informal session. There were 28 
II. The World Trade Organization | 32 

elaborated proposals on antidumping and/or 

subsidies issues submitted by Members and 

discussed in the Group in 2004. 

Major Issues in 2004 

The Rules Group held seven meetings in 2004, 

at first under the Chairmanship of Ambassador 

Eduardo Perez Motta from Mexico, and 

subsequently under the Chairmanship of 

Ambassador Guillermo Valles Galmes of 

Uruguay. The Group based its work primarily 

on the written submissions from Members, 

organizing its work in the following categories: 

(1) antidumping (often including similar issues 

relating to countervailing duty remedies); (2) 

subsidies, including fisheries subsidies; and (3) 

regional trade agreements. 

Given the Doha mandate that the basic concepts 

and principles underlying the Antidumping and 

Subsidies Agreements must be preserved, the 

United States outlined in a 2002 submission the 

basic concepts and principles of the trade 

remedy rules, and identified four core principles 

to guide U.S. proposals for the Rules 

Negotiating Group. The United States’ work in 

the Rules Group in 2004 continued to be guided 

by these principles: 

First, negotiations must maintain the strength 

and effectiveness of the trade remedy laws and 

complement a fully effective dispute settlement 

system which enjoys the confidence of all 

Members; 

Second, trade remedy laws must operate in an 

open and transparent manner. This principle is 

fundamental to the rules-based system as a 

whole, and the transparency and due process 

obligations should be further enhanced as part of 

these negotiations; 

Third, disciplines must be enhanced to address 

more effectively underlying trade-distorting 

practices; and 

Fourth, it is essential that dispute settlement 

panels and the Appellate Body, in interpreting 

obligations related to trade remedy laws, follow 

the appropriate standard of review and not 

impose on Members obligations that are not 

contained in the Agreements. 

In accordance with these principles, the United 

States has continued to be very active in the 

discussions in the Rules Group, identifying 

specific issues for consideration, following up 

with elaborated proposals, and raising detailed 

questions with respect to the issues raised by 

other Members. 

Pursuant to the first principle, the United States 

has continued to emphasize that the Doha 

mandate to preserve the effectiveness of the 

trade remedy rules must be strictly adhered to in 

evaluating proposals for changes to the 

Antidumping or Subsidies Agreements, and has 

raised a number of questions to evaluate whether 

issues raised by other Members are consistent 

with that mandate. The United States has also 

raised particular issues relevant to ensuring that 

these trade remedies remain effective, such as 

addressing the problem of circumvention of 

antidumping and countervailing duty orders, as 

well as the related problem of abuse of 

provisions for “new shipper” reviews. The 

United States has also highlighted the need for 

the unique characteristics of perishable and 

seasonal agricultural products to be reflected in 

the trade remedy rules. 

Pursuant to the second principle, the United 

States has identified a number of respects in 

which investigatory procedures in antidumping 

and countervailing duty investigations could be 

improved, highlighting areas in which interested 

parties and the public could benefit from greater 

openness and transparency, as well as some 

areas where improved procedures could reduce 

costs. Since U.S. exporters are frequently 

subject to foreign trade remedy proceedings, it is 

essential to improve transparency and due 

process so that U.S. exporters are treated fairly. 

Pursuant to the third principle, the United States 

has stressed the need to address trade-distorting 

practices that are often the root causes of unfair 

trade, and has made a number of submissions to 

the Rules Group with respect to the 

strengthening of subsidies disciplines. 
II. The World Trade Organization| 33 

Pursuant to the fourth principle, the United 

States has emphasized in its submissions the 

importance of ensuring that the WTO panels and 

the Appellate Body adhere to the special 

standard of review in the Antidumping 

Agreement, and the need to address several 

issues raised by certain past findings of the 

WTO Appellate Body in trade remedy cases. 

Antidumping and Countervailing Duty 

Remedies: The United States has in its 

submissions to the Rules Group identified over 

30 issues for discussion related to antidumping 

and countervailing duty remedies, in accordance 

with the principles listed above, and followed up 

with elaborated proposals on nine issues in 

2004. A group calling itself the “Friends of 

Antidumping Negotiations” has also presented a 

series of papers identifying over 30 antidumping 

issues for discussion by the Rules Group, 

following up with elaborated proposals on 

twelve of these issues in 2004. The “Friends” 

group consists of Brazil, Chile, Colombia, Costa 

Rica, Hong Kong, China, Israel, Japan, Korea, 

Mexico, Norway, Singapore, Switzerland, 

Chinese Taipei, Thailand, and Turkey, although 

not all of its members have joined in each paper 

by the Friends. In addition to the proposals 

submitted by the United States and the Friends 

group, in 2004 Canada submitted six elaborated 

proposals and Australia submitted one such 

proposal. 

The United States has been a leading contributor 

to the recent technical discussions aimed at 

deepening the understanding of all Members of 

the issues raised in the Rules Group, drawing 

upon extensive U.S. experience and expertise as 

both a user of trade remedies and as a country 

whose exporters are often subject to other 

Members’ use of trade remedies. In addition to 

presenting its own submissions, the United 

States has been actively engaged in addressing 

the submissions from other Members, carefully 

scrutinizing and vigorously questioning the 

technical merits of the issues they have raised, as 

well as seeking to ensure that the Doha mandate 

for the Rules Group is fulfilled. 

Subsidies: In 2004, the United States, Canada 

and Australia submitted elaborated proposals in 

the subsidies area. Following up on its general 

subsidy paper submitted in March 2003, the 

United States submitted three papers that 

proposed more detailed rules with respect to the 

calculation of subsidy benefits. These papers 

were generally well received in that they address 

issues recognized by most, if not all, WTO 

Members that have conducted countervailing 

duty investigations. In its most notable paper, 

Canada proposed bringing back the “dark 

amber” category of subsidies. As originally 

reflected in the now-lapsed provisions of Article 

6.1 of the Subsidies Agreement, Members that 

provided dark amber subsidies (e.g., subsidies to 

cover operating losses) had the burden of 

demonstrating that the subsidies provided did 

not result in adverse effects. Australia’s paper, 

inter alia, proposed the clarification of the 

definition of a de facto export subsidy. 

Fisheries Subsidies: The United States 

continued to play a major role in advancing the 

discussion of fisheries subsidies reform in the 

Rules Group in 2004, working closely with a 

broad coalition of developed and developing 

countries, including Argentina, Australia, Chile, 

Ecuador, Iceland, New Zealand, Peru and the 

Philippines. The United States views improving 

WTO disciplines on harmful fisheries subsidies 

as an important objective that will provide a 

concrete, real world demonstration that trade 

liberalization benefits the environment and 

contributes to sustainable development. 

In 2002 and much of 2003, Japan and Korea 

questioned whether the Doha mandate allowed 

for stronger WTO disciplines over fisheries 

subsidies. In 2004, the discussion generally 

moved beyond a debate over interpretation of 

the mandate toward consideration of possible 

frameworks for improved disciplines. The 

United States and other proponents of stronger 

disciplines advocated a framework that would 

center on a prohibition, combined with 

appropriate exceptions. In December 2004, the 

United States submitted a paper building on a 

previous submission by six Members 

(Argentina, Chile, Ecuador, New Zealand, Peru 

and the Philippines) and offering additional 

ideas on how such an approach could work. 

Specifically, the United States advocated a 
II. The World Trade Organization | 34 

prohibition focused on subsidies that contributed 

to overcapacity and overfishing, and 

consideration of carefully targeted exceptions to 

allow appropriate flexibility. The United States 

also stressed that to increase transparency the 

negotiation of exceptions should be grounded in 

the consideration of Members’ particular current 

programs. In contrast, Japan and Korea, joined 

by Chinese Taipei, advocated a framework 

premised on a potentially large number of 

permitted subsidies and a small number of 

prohibited subsidies. Japan and Korea both 

presented papers explaining this approach. A 

number of other countries, including Brazil, 

China, Malaysia, India, Pakistan and Sri Lanka, 

became more active in the discussions. While 

these countries generally did not take a position 

on the appropriate framework, they stressed the 

need for special and differential treatment of 

developing country Members. 

 

Regional Trade Agreements: The discussion in 

the Rules Group on regional trade agreements 

(RTAs) has focused on ways in which WTO 

rules governing customs unions and free trade 

agreements, and economic integration 

agreements for services, might be clarified and 

improved. During 2004, discussions continued 

on both transparency and systemic issues related 

to RTAs. The Group’s work on transparency 

focuses on the need to improve the effectiveness 

of the current WTO system for reviewing and 

analyzing trade agreements. On substantive or 

systemic issues, work has included discussion of 

such issues as the requirements of GATT Article 

XXIV that RTAs eliminate tariffs and "other 

restrictive regulations of commerce" on 

"substantially all the trade" between parties (and 

the analogous provisions for the GATS), the 

effects of particular rules of origin applied in 

RTAs, and the relationship between RTA rules 

and the application of trade remedies. 

In 2004, papers on RTA issues submitted to the 

Rules Group by Chile, Japan and Botswana (on 

behalf of the African, Caribbean and Pacific 

States) have also contributed to the discussions. 

The United States has been an active participant 

in the RTA discussions in the Group. 

Prospects for 2005 

It is expected that the process of technical 

discussion of elaborated proposals on 

antidumping, countervailing duty, and subsidies 

issues will continue in the Rules Group in 2005, 

as well as identification of additional issues for 

discussion. The United States will continue to 

pursue an aggressive affirmative agenda, based 

on the core principles summarized above, and 

building upon the U.S. papers submitted thus far 

with respect to, inter alia, strengthening the 

existing subsidies rules and improving WTO 

disciplines on harmful fisheries subsidies. 

Concerning fisheries subsidies, the United States 

will seek to move the discussions forward 

through more detailed consideration of the types 

of subsidies that should be prohibited and the 

scope of possible exceptions. On RTAs, a more 

focused discussion of possible procedural 

improvements within the WTO to enhance 

transparency is likely in 2005. 

5. Negotiating Group on Trade Facilitation 

Status 

An important U.S. objective was met when 

WTO negotiations on Trade Facilitation were 

launched as one of the results included in the 

General Council Decision of 1 August 2004. 

This achievement was the result of U.S. 

leadership and perseverance through seven years 

of exploratory work under the auspices of the 

Council for Trade in Goods. Commencing 

negotiations on Trade Facilitation greatly 

enhances the market access aspect of the Doha 

negotiating agenda. U.S. exporters facing 

opaque procedures and unwarranted delays at 

the border in key export markets can face what 

has been shown to be the equivalent of an extra 

five to fifteen percent tariff. The agreed-upon 

negotiating mandate includes the specific 

objective of “further expediting the movement, 

release and clearance of goods, including goods 

in transit,” while also providing a path toward 

ambitious results in the form of modernized and 

strengthened WTO commitments governing how 

border transactions are conducted. 
II. The World Trade Organization| 35 

On October 12, 2004, the Trade Negotiations 

Committee formally established the Negotiating 

Group on Trade Facilitation. Ambassador 

Muhamad Noor Yacob of Malaysia was elected 

chair of the Negotiating Group. In November 

2004 the negotiating group held an initial brief 

meeting to establish its work program, and also 

conducted a session devoted to ‘stock-taking’ 

and providing developing country Members an 

educational overview on issues that would likely 

be addressed as the negotiations proceeded. 

Major Issues in 2004 

Despite the overall impasse at the 2003 Cancun 

Ministerial Conference, Members entered 2004 

with new enthusiasm and broad-based support 

for commencing negotiations on Trade 

Facilitation, in particular by an increasing 

number of developing countries. As the year 

progressed toward the July General Council 

meeting, resistance from the remaining 

developing countries gradually shifted away 

from outright objection to a more constructive 

focus on specific concerns to be articulated in 

the context of establishing modalities for 

conducting negotiations. 

Continuing a trend from previous years, the 

issue of Trade Facilitation was not a matter of a 

simplistic ‘north-south’ split, but something that 

was increasingly seen as offering a “win-win” 

opportunity. Leadership toward advancing the 

Trade Facilitation agenda continued to be 

provided by the cooperative efforts of Members 

from varying developing levels known as the 

“Colorado Group”: the United States, Australia, 

Canada, Chile, Colombia, Costa Rica, European 

Union, Hong Kong, China, Hungary, Japan, 

Korea, Morocco, New Zealand, Norway, 

Paraguay, Singapore, and Switzerland. 

An added boost to the momentum to a decision 

to launch WTO negotiations was provided by 

the U.S. work in the free trade agreements that 

had recently been negotiated. With partners as 

diverse as Chile, Singapore, Australia and 

Morocco, each FTA negotiated by the United 

States has included a separate, stand-alone 

chapter on Customs Administration. Within the 

context of the 2004 Geneva work on Trade 

Facilitation, these achievements not only 

showed the commitment of the United States 

and its FTA partners to a rules-based approach 

to this area, the texts themselves provided some 

shape to Members that were uncertain about the 

types of commitments likely to be sought by the 

United States and others. It also served as a 

real-life demonstration of how creative 

approaches through transition periods and 

targeted technical assistance could be used to 

address the challenges of implementing the 

results of the negotiations. 

Under the modalities agreed to as part of the 

August 2004 decision: 

Negotiations shall aim to clarify and 

improve relevant aspects of Articles V, VIII 

and X of the GATT 1994 with a view to 

further expediting the movement, release 

and clearance of goods, including goods in 

transit. Negotiations shall also aim at 

enhancing technical assistance and support 

for capacity building in this area. The 

negotiations shall further aim at provisions 

for effective cooperation between customs 

or any other appropriate authorities on trade 

facilitation and customs compliance issues. 

The modalities also include references that serve 

to underscore the importance assigned to the 

negotiations addressing implementation issues 

such as costs, potential implications with regard 

to infrastructure, capacity building, the status of 

least developed country Members, and the work 

of other international organizations. 

Work Program: The work plan agreed by 

Members in November 2004 provides for work 

“to proceed on the basis of Members’ 

contributions and other input that the 

Negotiating Group may request,” with approval 

of the following work agenda: 

• Clarification and improvement of relevant 

aspects of Articles V, VIII and X of the 

GATT 1994; enhancement of technical 

assistance and support for capacity building; 

effective cooperation between customs or 
II. The World Trade Organization | 36 

any other appropriate authorities on trade 

facilitation and customs compliance issues; 

• Special and differential treatment for 

developing and least-developed countries; 

• Least-developed country members; 

• Identification of trade facilitation needs and 

priorities; concerns related to cost 

implications of proposed measures; 

• Technical assistance and support for 

capacity building; 

• Working with and work of relevant 

international organizations 

Prospects for 2005 

With the first two substantive meetings of the 

Negotiating Group scheduled for February and 

March, it is likely that work will quickly 

intensify. Examples of areas where the United 

States and other Members have already signaled 

their interest in achieving strengthened WTO 

commitments include Internet publication of 

importation procedures, expedited procedures 

for express shipments, issuance of binding 

rulings to traders, increased certainty for rapid 

release of shipments, and enhanced measures 

providing procedural fairness. Historically, the 

non-tariff barriers most frequently cited by U.S. 

exporters have been related to uncertainty about 

import procedural requirements, hidden fees, 

and slow border release times. 

 

There is a great potential for new and 

strengthened WTO commitments that could 

provide short-term if not immediate “on the 

ground” positive effects and offer a true “winwin” opportunity for all Members. One of the 

most frequently-cited impediments to the growth 

of South-South trade is the absence of a rulesbased approach to goods crossing the border. 

While negotiations toward new and strengthened 

disciplines move forward, it will be important 

that negotiations also proceed in a workman-like 

manner on the issue of how all Members can 

meet the challenge of implementing the results 

of the negotiations. In particular, the 

negotiations represent an opportunity to address 

longstanding issues in this area about 

redundancy in assistance efforts, lack of 

coordination, and frequent failure to specifically 

target technical assistance toward concrete 

results. The aim of the United States in 2005 

will be to ensure a negotiating dynamic that 

makes clear that every Member, as both an 

importer and an exporter, has a real stake in 

robust results and in their implementation. 

6. Committee on Trade and 

Environment, Special Session 

Status 

 

Following the Fourth Ministerial Conference at 

Doha, the Trade Negotiations Committee (TNC) 

established a Special Session of the Committee 

on Trade and Environment (CTE) to implement 

the mandate in paragraph 31 of the Doha 

Declaration. The CTE in Regular Session has 

taken up other environment-related issues 

without a specific Doha negotiating mandate. 

Major Issues in 2004 

The CTE in Special Session (CTESS) met three 

times in 2004. At each of these meetings, the 

CTESS addressed each of the negotiating 

mandates set forth in the three sub-paragraphs 

under paragraph 31 of the Doha Declaration: 

(i) the relationship between existing 

WTO rules and specific trade 

obligations (STOs) set out in 

Multilateral Environmental 

Agreements (MEAs) (with specific 

reference to the applicability of 

existing WTO rules among parties 

to such MEAs and without prejudice 

to the WTO rights of Members that 

are not parties to the MEAs in 

question); 

(ii) procedures for regular information 

exchange between MEA secretariats 

and relevant WTO committees, and 

the criteria for granting observer 

status; and 
II. The World Trade Organization| 37 

(iii) the reduction or, as appropriate, 

elimination of tariff and non-tariff 

barriers to trade in environmental 

goods and services. 

In addition to the three CTESS meetings, the 

CTE also met in Regular Session (CTERS) three 

times during 2004, debating important trade 

liberalization issues including, market access 

under Doha Sub-paragraph 32(i), TRIPS and 

environment under Doha Sub-paragraph 32(ii), 

labeling for environmental purposes under Doha 

sub-paragraph 32(iii), capacity building and 

environmental reviews under Doha paragraph 33 

and the environmental effects of negotiations 

under Doha paragraph 51 (See Section on Other 

General Council Bodies/Activities, Committee 

on Trade and the Environment). 

MEA Specific Trade Obligations and WTO 

Rules: During 2004, discussions under this 

mandate have progressed beyond the initial 

focus on the specific parameters of the mandate 

and analysis of provisions in MEAs that are 

covered by it. Members began to provide 

information on their experiences with respect to 

negotiation and implementation of specific trade 

obligations set out in MEAs. The United States 

submitted a paper highlighting its experiences 

related to particular STOs set out in three 

MEAs: the Convention on International Trade 

in Endangered Species of Wild Fauna and Flora 

(CITES); the Stockholm Convention on 

Persistent Organic Pollutants (POPs); and the 

Rotterdam Convention on the Prior Informed 

Consent Procedure for Certain Hazardous 

Chemicals and Pesticides in International Trade 

(PIC). Drawing on U.S. experience, the paper 

also identified features of these STOs that have 

contributed to the effective achievement of each 

MEA’s objectives and furthered the mutually 

supportive relationship between these MEAs and 

the WTO Agreement. A large majority of 

delegations have noted their interest in 

continuing experience-based discussions and 

have resisted any premature consideration of 

potential results in the negotiations. 

Procedures for Information Exchange and 

Criteria for Observer Status: Members generally 

appear to be supportive of identifying additional 

means to enhance information exchange 

between MEA secretariats and WTO bodies. In 

this regard, delegations suggested a number of 

options, including formalizing a structure of 

regular information exchange sessions with 

MEAs; organizing parallel WTO events at 

meetings of the conferences of the parties of 

MEAs; organizing joint WTO, United Nations 

Environment Program (UNEP) and MEA 

technical assistance and capacity building 

projects; promoting regular exchange of 

documents between secretariats; and creating 

additional avenues for communication and 

coordination between trade and environment 

officials. On the issue of observer status for 

MEA secretariats in WTO bodies, little progress 

was made, although Members were able to agree 

on a separate decision to allow certain MEA 

secretariats to be invited on an ad hoc basis to 

attend CTESS meetings. With respect to a more 

permanent status, a number of delegations 

expressed the view that the issue of criteria for 

observership is dependent on an outcome in 

more general ongoing General Council and TNC 

deliberations. 

Environmental Goods and Services: 

Members continue to engage in detailed 

discussions in the CTESS on the scope of 

products that could be included in a definition of 

environmental goods. While much of the focus 

continued to be on existing lists developed by 

the OECD and APEC, additional ideas were 

tabled. For example, a proposal from Chinese 

Taipei identifies 78 products in the category of 

pollution control. There was also continued 

interest in a paper tabled by the United States in 

July 2003, which suggested that there could be a 

flexible approach to the definition involving a 

core list of goods for which all Members would 

make tariff and non-tariff concessions and a 

complementary list that would not require full 

participation. Delegations continued to 

acknowledge that market access negotiations on 

environmental goods and services should take 

place in the Non-Agriculture Market Access 

Negotiating Group and the Council on Trade in 

Services in Special Session. In addition to its 

formal discussions on environmental goods, the 

WTO Secretariat hosted an informal workshop 

on environmental goods, which provided useful 
II. The World Trade Organization | 38 

information particularly with regard to 

developing country interests and concerns in this 

sector. 

Prospects for 2005 

The CTESS is expected to increase the intensity 

of its discussions leading up to the Ministerial 

meeting scheduled for December 2005 in Hong 

Kong, China, particularly in the area of 

environmental goods. WTO members have been 

encouraged to come forward with lists of 

environmental goods for consideration by the 

CTESS. In addition to discussion of lists of 

goods and criteria for defining environmental 

goods, the CTESS is likely to engage in further 

discussions of ideas put forward by the United 

States regarding flexible yet ambitious 

modalities for environmental goods. 

Under sub-paragraph 31(i), discussions are 

expected to continue to focus on an exchange of 

national experiences in negotiation and 

implementation of STOs set out in MEAs. The 

United States continues to view this experiencebased exchange as the best way to explore the 

relationship between WTO rules and STOs 

contained in MEAs. It is quite possible that 

negotiations under sub-paragraph 31(ii) could 

gain momentum, particularly if it becomes clear 

that the outcome under sub-paragraph 31(i) is 

likely to be limited in scope. Finally, the 

CTESS will remain the forum for discussing the 

importance of liberalization in both 

environmental goods and services in order to 

secure concrete benefits associated with access 

to state-of-the-art environmental technologies 

that promote sustainable development. 

7. Dispute Settlement Body, Special 

Session 

Status 

Following the Fourth Ministerial Conference in 

November, 2001, the TNC established the 

Special Session of the Dispute Settlement Body 

(“DSB”) to fulfill the Ministerial mandate found 

in paragraph 30 of the Doha Declaration which 

provides: “We agree to negotiations on 

improvements and clarifications of the Dispute 

Settlement Understanding. The negotiations 

should be based on the work done thus far as 

well as any additional proposals by Members, 

and aim to agree on improvements and 

clarifications not later than May 2003, at which 

time we will take steps to ensure that the results 

enter into force as soon as possible thereafter.” 

In July 2003, the General Council decided (i) 

that the timeframe for conclusion of the 

negotiations on clarifications and improvements 

of the DSU be extended by one year, i.e., to aim 

to conclude the work by May 2004 at the latest; 

(ii) that this continued work build on the work 

done to date, and take into account proposals put 

forward by Members as well as the text put 

forward by the Chairman of the Special Session 

of the DSB; and (iii) that the first meeting of the 

Special Session of the DSB when it resumed its 

work be devoted to a discussion of conceptual 

ideas. In August 2004, the General Council 

decided that Members should continue work 

towards clarification and improvement of the 

DSU, without establishing a deadline. Due to 

complexities in negotiations, deadlines were not 

met. 

Major Issues in 2004 

The Special Session of the DSB met several 

times during 2004 in an effort to implement the 

Doha mandate. In previous phases of the review 

of the Understanding on Rules and Procedures 

Governing the Settlement of Disputes (“DSU”), 

Members had engaged in a general discussion of 

the issues. Following that general discussion, 

Members tabled proposals to clarify or improve 

the DSU. Members then reviewed each 

proposal submitted and requested explanations 

and posed questions of the Member(s) making 

the proposal. Members also had an opportunity 

to discuss each issue raised by the various 

proposals. Notwithstanding these efforts, 

Members were unable to conclude discussions. 

The United States has advocated two proposals. 

One would expand transparency and public 

access to dispute settlement proceedings. The 

proposal would open WTO dispute settlement 

proceedings to the public for the first time and 

give greater public access to submissions and 

panel reports. In addition to open hearings, 
II. The World Trade Organization| 39 

public submissions, and early public release of 

panel reports, the U.S. proposal calls on WTO 

Members to consider rules for "amicus curiae" 

submissions -- submissions by non-parties to a 

dispute. WTO rules currently allow such 

submissions, but do not provide guidelines on 

how they are to be considered. Guidelines 

would provide a clearer roadmap for handling 

such submissions. 

In addition, the United States, joined by Chile, 

submitted a proposal to help improve the 

effectiveness of the WTO dispute settlement 

system in resolving trade disputes among WTO 

Members. The joint proposal contains 

specifications aimed at giving parties to a 

dispute more control over the process and 

greater flexibility to settle disputes. Under the 

present dispute settlement system, parties are 

encouraged to resolve their disputes, but do not 

always have all the tools with which to do so. 

Prospects for 2005 

In 2005, Members will continue to work to 

complete the review of the DSU. Members will 

be meeting several times over the course of 2005 

in an effort to complete their work. 

8. Council for Trade-Related Aspects of 

Intellectual Property Rights (TRIPS), Special 

Session 

 

Status 

With a view to completing the work started in 

the TRIPS Council on the implementation of 

Article 23.4, Ministers agreed at Doha to 

negotiate the establishment of a multilateral 

system of notification and registration of 

geographical indications for wines and spirits by 

the Fifth Session of the Ministerial Conference. 

Further, in the August 1, 2004 decision on the 

Doha Work Programme, the WTO General 

Council reaffirmed Members’ commitment to 

progress in this area of negotiation in line with 

the Doha Mandate. This is the only issue before 

the Special Session of the Council. 

Major Issues in 2004 

During 2004, the TRIPS Council continued its 

negotiations under Article 23.4, which is 

intended to facilitate protection of geographic 

indications. Argentina, Australia, Canada, 

Chile, Colombia, Costa Rica, the Dominican 

Republic, Ecuador, El Salvador, Guatemala, 

Honduras, Japan, Namibia, New Zealand, the 

Philippines, Chinese Taipei, and the United 

States continued to support the “Joint Proposal” 

under which Members would notify their 

geographical indications for wines and spirits for 

incorporation into a register on the WTO 

website and several Joint Proposal co-sponsors 

submitted a “Question and Answer” document 

to the Special Session to further explain the 

advantages of the proposal. Members choosing 

to use the system would agree to consult the 

website when making any decisions under their 

domestic laws related to geographical 

indications or, in some cases, trademarks. 

Implementation of this proposal would not 

impose any additional obligations with regard to 

geographical indications on Members that chose 

not to participate nor would it place undue 

burdens on the WTO Secretariat. The European 

Communities together with a number of other 

countries continued to support their alternative 

proposal for a system under which Members 

would notify the WTO of their geographical 

indications for wines and spirits. Other 

Members would then have eighteen months in 

which to object to the registration of particular 

notified geographical indications that they 

believed were not entitled to protection within 

their own territory. If no objection were made, 

each notified geographical indication would be 

registered and all WTO Members would be 

required to provide protection as required under 

Article 23. If an objection were made, the 

notifying Member and the Member objecting 

would negotiate a solution, but the geographical 

indication would have to be protected by all 

Members that had not objected. 

At the April 2003 meeting, Hong Kong, China, 

introduced a proposal under which a registration 

should be accepted by participating Members' 

domestic courts, tribunals or administrative 

bodies as prima facie evidence of: (a) 
II. The World Trade Organization | 40 

ownership; (b) that the indication is within the 

definition of "geographical indications" under 

Article 22.1 of the TRIPS Agreement; and (c) 

that it is protected in the country of origin. The 

intention is that the issues will be deemed to 

have been proved unless evidence to the 

contrary is produced by the other party to the 

proceedings before domestic courts, tribunals or 

administrative bodies when dealing with matters 

related to geographical indications. In effect, a 

rebuttable presumption is created in favour of 

owners of geographical indications in relation to 

the three relevant issues. Although this proposal 

was discussed, it has not been endorsed by either 

supporters of the Joint Proposal or the EC 

proposal. 

There was no shift in currently-held positions 

among the members, nor any movement towards 

bridging the sharp differences between the Joint 

Proposal and the EC proposal. 

Prospects for 2005 

In his report to the TNC, the Chair of the Special 

Session of the Council for Trade-Related 

Aspects of Intellectual Property Rights noted 

that it was agreed that the Secretariat will update 

a background note on the WTO Central Registry 

of Notifications (CRN) and that a Secretariat 

CRN administrator would be invited to attend 

the next session to respond to questions, in order 

to facilitate understanding of other notification 

systems in the WTO. He also noted that a range 

of issues require further work, including, but not 

limited to, resolving the key issues of legal 

effects of registrations and participation in the 

system. 

The United States will aggressively pursue 

additional support for the Joint Proposal in the 

coming year, so that the negotiations can be 

completed. 

9. Committee on Trade and Development, 

Special Session 

Status 

The Special Session of the Committee on Trade 

and Development (CTD) was established in 

February 2002 to fulfill the Doha mandate to 

review all special and differential treatment 

(S&D) provisions “with a view to strengthening 

them and making them more precise, effective 

and operational.” Under existing S&D 

provisions, the WTO provides developing 

country Members with technical assistance and 

transitional arrangements toward 

implementation of WTO agreements, and, 

ultimately, full integration into the multilateral 

trading system. WTO S&D provisions also 

enable Members to provide better-than-MFN 

access to markets for developing country 

Members. 

As part of the S&D review, the CTD Special 

Session provided recommendations to the 

General Council on a number of proposals for 

consideration at the Cancun Ministerial, but no 

decisions were taken. Discussions on other 

proposals have continued in the CTD/SS and, in 

some cases, in negotiating groups or Committees 

that address the respective subject matter of the 

proposals. In recent months, informal 

discussions have focused on better ways to 

address the mandate, reflecting a desire to find a 

more productive approach than that associated 

with the specific proposals tabled by individual 

Members or groups. Developed countries have 

emphasized willingness to provide greater S&D 

treatment to the least-developed countries than 

to those Members that are now more advanced. 

However, while there is some recognition that 

any additional S&D provisions will likely focus 

on the needs of the least-developed and more 

vulnerable Members, developing countries want 

to ensure there is no diminution of their existing 

rights. 

Major Issues in 2004 

Work on the CTD Special Session’s mandate 

proceeded slowly in 2004, following the failure 

at the Cancun Ministerial to adopt 28 proposals 

that had been negotiated prior to Cancun. A 

number of African and LDC Members resisted 

adoption on the grounds that the proposals were 

not sufficient to address the entire mandate and 

that the 28 proposals were not, in their view, 

sufficiently commercially meaningful. Efforts 

thus focused on finding a more productive 
II. The World Trade Organization| 41 

approach to the S&D issue. Proponents 

acknowledged that many of the proposals they 

had initially submitted needed further 

clarification. It was also acknowledged by many 

developed and developing Members that efforts 

by some proponents to be exempted from many 

WTO provisions would have negative effects on 

other developing countries and that the rules 

remained important for both developing and 

developed countries. 

In July 2004, the General Council decision 

emphasized the need to expeditiously review all 

outstanding proposals and to report to the 

General Council with clear recommendations by 

July 2005. It further instructed the CTD Special 

Session to resume its work on cross cutting 

issues, the monitoring mechanism and the 

incorporation of S&D into the architecture of 

WTO rules and report, as appropriate, to the 

General Council. 

Discussions at the end of 2004 focused on a way 

to address the individual proposals by reviewing 

the underlying problems they represent. 

Consideration was also given to finding ways to 

make the core related provisions more precise, 

effective and operational. In some cases this 

may require redrafting, combining or 

withdrawing current proposals. In other cases, 

problems may be addressed through examination 

of the broad underlying concerns in a more 

holistic manner, for example through addressing 

crosscutting issues, a monitoring mechanism or 

S&D architecture. 

Prospects for 2005 

With a July 2005 deadline ahead, work is likely 

to intensify early in 2005. It is expected that a 

number of revised proposals will be submitted to 

the Special Session early in the new year. It also 

is anticipated that work on how proposals may 

be combined or addressed through a broader 

approach. Discussions are expected on a 

mechanism to monitor implementation of S&D 

provisions, including how to monitor the 

effectiveness of various approaches, as well as 

monitoring the commitments of Members, 

primarily developed countries. Recent 

references to the possible need for a new 

framework or “architecture” for S&D suggest 

there may also be discussion of this issue in the 

coming months. Both the July 2005 deadline 

contained in the General Council decision of 1 

August 2004 and the Hong Kong Ministerial are 

target dates for work on special and differential 

treatment, with the former deadline focused on 

management of the individual proposals in some 

manner and the latter focused more on the 

longer term aspects of S&D. Nevertheless, all 

work will proceed throughout the year in 

parallel. 

E. Work Programs Established in the 

Doha Development Agenda 

1. Working Group on Trade, Debt and 

Finance 

Status 

Ministers at the Fourth Ministerial Conference 

held in Doha established the mandate for the 

Working Group on Trade, Debt and Finance 

(TDF). Ministers instructed the Working Group 

to examine the relationship between trade, debt 

and finance, and to examine recommendations 

on possible steps, within the mandate and 

competence of the WTO, to enhance the 

capacity of the multilateral trading system to 

contribute to a durable solution to the problem 

of external indebtedness of developing and least 

developed countries. The Group was also 

instructed to consider possible steps to 

strengthen the coherence of international trade 

and financial policies, with a view to 

safeguarding the multilateral trading system 

from the effects of financial and monetary 

instability. 

Major Issues in 2004 

The Working Group held three formal meetings 

in 2004. The first meeting addressed the topic 

of trade finance. The IMF, World Bank, and the 

WTO Secretariat gave presentations followed by 

an exchange of views amongst Members. At the 

second meeting, the Working Group addressed 

the topic of trade and financial markets. The 

Secretary-General of the Financial Stability 

Forum and the IMF gave presentations followed 
II. The World Trade Organization | 42 

by a question and answer period and exchange 

of Member views. The third meeting addressed 

the theme of better coherence in the design and 

implementation of trade-related reform and 

monitoring. At this meeting, UNCTAD and the 

World Bank made presentations. At these 

meetings, the United States and other 

delegations continued to stress the importance 

that the Working Group avoid venturing into 

discussion and work already covered by the 

mandates of the IMF and World Bank as well as 

other relevant bodies of the WTO. 

Prospects for 2005 

In 2005, the Working Group will continue to 

discuss the remaining themes identified by 

Members in 2003. The list of agreed upon 

themes included trade liberalization as a source 

of growth; WTO rules and financial stability; the 

importance of market access and the reduction 

of other trade barriers in the Doha Development 

Agenda negotiations; trade and financial 

markets; trade-financing; better coherence in the 

design and implementation of trade-related 

reforms and monitoring; the inter-linkages 

between external liberalization and internal 

reform; and external financing, commodity 

markets and export diversifications. 

2. Working Group on Trade and Transfer 

of Technology 

Status 

During the Fourth Ministerial Conference in 

Doha, WTO ministers agreed to an 

“examination...of the relationship between trade 

and transfer of technology, and of any possible 

recommendations on steps that might be taken 

within the mandate of the WTO to increase 

flows of technology to developing countries.” 

In fulfillment of that mandate, the Trade 

Negotiations Committee established the 

Working Group on Trade and Transfer of 

Technology (WGTTT), under the auspices of the 

General Council, asking it to report on its 

progress to the Fifth Session of the Ministerial 

Conference (Cancun). The WGTTT met three 

times in 2004, continuing its Doha Ministerial 

mandate to examine the relationship between 

trade and the transfer of technology. Members 

have not reached consensus on any 

recommendations. 

Major Issues in 2004 

In the period since the Doha Ministerial, the 

WGTTT considered submissions from the 

Secretariat, WTO members, other WTO bodies, 

and other inter-governmental organizations. 

Members discussed two documents prepared by 

the Secretariat, a general background paper and 

“A Taxonomy of Country Experiences on 

International Technology Transfers.” The latter 

paper suggested a framework for classifying the 

policies that governments have adopted to 

promote technology transfer and included a 

series of country case studies. The WGTTT also 

considered several papers circulated for 

discussion by members. One submission by the 

EU argued for the development of a common 

understanding of the definition of technology 

transfer and identified various channels for the 

transfer of technology. Another EU submission 

highlighted the importance to technology 

transfer of commercial trade and investment, 

effective intellectual property rights protection, 

and the absorptive capacities of host countries. 

Several developing countries submitted a paper 

that identified provisions relating to the transfer 

of technology in WTO agreements. 

In 2003, a group of developing countries, led by 

India and Pakistan, circulated a paper entitled, 

“Possible Recommendations on Steps that Might 

be Taken within the Mandate of the WTO to 

Increase Flows of Technology to Developing 

Countries.” The United States and several other 

Members objected to much of the analysis in 

this paper, which suggested that some WTO 

agreements were hindering the transfer of 

technology. In particular, the United States and 

other Members expressed the strong view that 

effective intellectual property rights protections 

under the TRIPS Agreement promote the 

transfer of technology by private firms, rather 

than hindering such transfer, as the paper 

suggested. 

During discussions on this and other inputs into 

the working group’s deliberations, the United 
II. The World Trade Organization| 43 

States and other countries argued that marketbased trade and investment are the most efficient 

means of promoting technology transfer and that 

governments should generally not require the 

transfer of technology. The United States also 

argued that the contribution of commerce to 

technology transfer reinforces the case for 

continued trade and investment liberalization. 

The United States and other countries suggested 

that developing countries take steps to enhance 

their ability to absorb foreign technologies, and 

described how technical assistance could 

promote technology transfer and absorption. 

Discussions on the India/Pakistan paper were the 

focus of two of the three WGTTT meetings held 

in 2004, which ended without any consensus on 

possible recommendations for ministers. 

Prospects for 2005 

As of this writing, no WGTTT meetings have 

been scheduled in 2005. The chairman is 

expected to recommend that the group continue 

its examination of issues raised in the 

India/Pakistan paper. 

3. Work Program on Electronic 

Commerce 

Status 

According to the Decision adopted by the 

General Council on August 1, 2004, the General 

Council reaffirmed the high priority that 

Ministers at Doha gave to elements of the Work 

Programme on Electronic Commerce that do not 

involve negotiations. The moratorium on 

imposing customs duties on electronic 

transmission has been extended up to the 6th

Ministerial Conference. 

Since 2001, the Work Program on Electronic 

Commerce held several dedicated discussions 

under the auspices of the General Council. 

These informal discussion examined issues 

identified by the various sub-bodies as crosscutting ones, i.e., those that impacted two or 

more of the various WTO legal instruments. 

The most controversial cross-cutting issue is 

whether to classify electronically delivered 

products as a good or a service. The fiscal 

implications of classification was also part of 

those discussions, as were development related 

aspects of electronic commerce. No agreement 

has been reached on how to classify these 

products and the work program made no 

recommendations or reports to the Members. 

The Work Program remains a standing item in 

the Doha Development Agenda, yet has been 

inactive over the past year. Members have, 

however, continued to abide by the existing 

practice of not imposing customs duties on 

electronic transmissions. 

Major Issues in 2004 

While the Work Program on Electronic 

Commerce is still an item in the Doha mandate, 

not much activity occurred in 2004. The 

dedicated discussions that occurred in 2003 

failed to yield any meaningful results with 

respect to the most prevalent outstanding issue, 

classification of electronically transmitted 

products. There was some discussion and 

debate in services. As a result, no new dedicated 

discussions were held in 2004. 

Prospects for 2005 

As in the past, the United States is committed to 

advancing meaningful trade policies that 

promote the growth of electronic commerce. 

Indeed, the focus of work in all negotiating 

groups has been to advance market openings in 

key information technology product and services 

sectors. Market access for these products and 

services will help continue to spur the expansion 

of electronic commerce. Similarly, the United 

States continues to support extending the current 

practice of not imposing customs duties on 

electronic transmissions, and is in the process of 

examining ways to achieve the objective of 

making it permanent and binding in the future. 

4. Working Group on Trade and 

Competition Policy 

Status 

In August 2004, the WTO General Council 

decided that no work towards negotiations on 
II. The World Trade Organization | 44 

Trade and Competition will take place during 

the Doha Round. There were no meetings of the 

WTO Working Group on the Interaction 

between Trade and Competition Policy (the 

“Working Group”) in 2004, and absent a further 

agreement by Members as to future work for the 

Working Group, there will be no such meetings 

in 2005. 

The Working Group was established by WTO 

Trade Ministers at their first Ministerial 

Conference in Singapore in December 1996. Its 

mandate was to “study issues raised by Members 

relating to the interaction between trade and 

competition policy, including anti-competitive 

practices, in order to identify any areas that may 

merit further consideration in the WTO 

framework.” In December 1998, the General 

Council authorized the Working Group to 

continue its work on the basis of a more focused 

framework of issues, which served as the basis 

of the Working Group’s work until the Doha 

Ministerial Conference in 2001. 

The Doha Ministerial Declaration provided that 

a decision was to be taken at the Fifth Session of 

the Ministerial Conference, by explicit 

consensus, as to the modalities of negotiations 

on trade and competition policy. In accordance 

with the Doha Declaration, the Working Group 

focused its work up through the 2003 Cancun 

Ministerial Conference on the clarification of: 

core principles, including transparency, nondiscrimination and procedural fairness; 

provisions on hardcore cartels; modalities for 

voluntary cooperation; and support for 

progressive reinforcement of competition 

institutions in developing countries through 

capacity building. The Working Group also 

addressed the nature and scope of compliance 

mechanisms that might be included under a 

multilateral framework on competition policy, 

and possible elements of progressivity and 

flexibility that might be included in such a 

multilateral framework. 

Informal consultations in 2004 revealed 

significant differences among Members as to 

how to proceed on this issue. For example, the 

European Communities advocated a multilateral 

WTO agreement on trade and competition 

policy with substantive disciplines subject to 

WTO dispute settlement. Several other 

Members, including Japan and Korea, likewise 

advocated a multilateral framework. However, a 

number of developing country Members 

responded that they were not ready to proceed to 

negotiation of a multilateral agreement, stating 

that they did not want to be required to have a 

competition law and authority until they were 

ready. Given these differences, the decision was 

reached, as part of the overall General Council 

Decision of 1 August 2004, that no work toward 

negotiations would take place during the Doha 

Round. 

 

Major Issues in 2004 

At the start of 2004 there was still a debate as to 

whether any of the so-called Singapore issues 

should be the subject of negotiation. As it was 

clear that no further work on competition would 

be acceptable to Members, there was no activity 

on this topic in 2004. 

The General Council made a decision in August 

2004 that trade and competition policy will not 

form part of the negotiations set out in the Doha 

Ministerial Declaration. 

Prospects for 2005 

Given the General Council decision in mid-2004 

there is little expectation that work will proceed 

in this area in 2005. 

5. Working Group on Transparency in 

Government Procurement 

Status 

The WTO General Council Decision of August 

1, 2004, included a mandate that there would be 

no work towards negotiations on transparency in 

government procurement during the Doha 

Round. The Working Group on Transparency in 

Government Procurement (Working Group) has 

not met since the Cancun Ministerial in 

September 2003. At the close of 2004, it 

remained unclear as to whether, and if so how, 

work will continue in the WTO on this 

important topic beyond the work on the 
II. The World Trade Organization| 45 

plurilateral Agreement on Government 

Procurement (GPA) and in the General 

Agreement on Trade in Services (GATS). 

The Working Group was established by WTO 

Trade Ministers at their first Ministerial 

Conference in Singapore in December 1996. 

The Working Group’s extensive examination of 

the benefits of transparency in government 

procurement raised the profile and underscored 

the benefits of transparency in government 

procurement. The Working Group’s discussions 

also confirmed that many WTO Members 

consider the elements of a transparent 

government procurement system to be 

fundamental to ensuring efficient and 

accountable procurement systems and have 

already incorporated these elements in their 

existing procurement laws, regulations, and 

practices. 

Major Issues in 2004 

In July 2004, it was clear that there was no 

consensus among WTO Members to initiate 

negotiations of an agreement on transparency in 

government procurement. Despite the 

reaffirmation in the draft ministerial text 

presented to Ministers at the Cancun Ministerial 

that negotiations of a multilateral agreement on 

transparency in government procurement would 

be limited to the transparency aspects of 

procurement and would not restrict the ability of 

Members to give preferences to domestic 

supplies and suppliers, a number of WTO 

Members remained concerned that a 

transparency agreement could lead to market 

access commitments. In addition, some 

Members were also concerned that under a 

transparency agreement, individual contract 

awards could be subject to the WTO dispute 

settlement system, even though the United States 

and other WTO Members provided assurances 

to the contrary in submissions to the Working 

Group. As part of his efforts to consult on the 

DDA, in February 2004, Ambassador Zoellick 

consulted with trading partners on the 

disposition of the issue. Developing countries, 

particularly African partners, expressed great 

concern with the prospect of negotiations. 

Prospects for 2005 

Even though a mandate for the negotiation of an 

agreement on transparency in government 

procurement was not included in the DDA Work 

Programme, ensuring transparency in 

government procurement remains a priority for 

the United States in its pursuit of broader 

initiatives aimed at promoting the international 

rule of law, combating international bribery and 

corruption, and supporting the good governance 

practices that many countries have adopted as 

part of their overall structural reform programs. 

The United States will continue to incorporate 

transparency in government procurement 

provisions in its negotiations of free trade 

agreements and to advance government 

procurement principles within APEC. In 

addition, the United States will continue to work 

to enhance the transparency provisions of the 

plurilateral GPA and to encourage other 

Members to join the GPA. 

6. Working Group on Trade and 

Investment 

Status 

WTO ministers established the Working Group 

on Trade and Investment (WGTI) during the 

Singapore Ministerial in 1996. At the 

conclusion of the Fourth Ministerial in Doha, 

ministers extended the WGTI’s mandate and 

agreed that investment negotiations “will take 

place after the next Session of the Ministerial 

Conference on the basis of a decision to be 

taken, by explicit consensus, at that Session on 

the modalities of negotiations.” During the 

period between the Doha and Cancun 

Ministerials, the United States sought in the 

WGTI to promote understanding of the benefits 

of open investment policies and of the 

contribution of investment to economic 

development. WTO Members did not agree in 

Cancun on a negotiating mandate for 

investment. The WGTI did not meet during 

2004. 

For several years following the Singapore 

Ministerial, the WGTI served as the WTO’s 

principal venue for discussions on the 
II. The World Trade Organization | 46 

relationship between trade and investment flows 

and on the influence of trade and investment 

policies on investment, but Members did not 

reach consensus on whether to launch 

multilateral investment negotiations. During the 

Doha Ministerial, ministers decided to give the 

WGTI a narrower work program, focused on 

seven substantive issues bearing on the scope 

and content of possible WTO investment 

negotiations: the scope and definition of 

investment; transparency; non-discrimination; 

approaches to the treatment of investment prior 

to establishment, based on a GATS-type, 

positive list; development provisions; exceptions 

and balance-of-payments safeguards; and 

consultation and the settlement of disputes 

between Members. 

During 2002 and 2003, in preparation for the 

Fifth Ministerial Conference in Cancun, WTO 

Members addressed the Doha Declaration issues 

in six formal meetings and several informal 

sessions. The Working Group also discussed 

investment-related WTO technical assistance 

initiatives. The EU and Japan, the leading 

advocates for WTO investment negotiations, 

argued that multilateral investment disciplines 

would stimulate increased flows of investment 

as well as trade, which increasingly follows 

investment. Most developing country WTO 

Members consistently opposed all but the most 

limited proposals for WTO investment 

negotiations tabled either formally or informally 

after the Singapore Ministerial. Developing 

countries argued that multilateral disciplines 

would restrict their ability to regulate foreign 

investment in ways designed to promote 

economic development and that investment rules 

were beyond the mandate and the competence of 

the WTO. As a result of this disagreement, no 

consensus was reached during the Cancun 

Ministerial on the proposed investment 

negotiations. 

During the months following the Cancun 

Ministerial, in the context of a broader set of 

consultations on the fate of the four Singapore 

issues, developing countries continued to oppose 

various proposals for the launch of WTO 

investment negotiations. In early 2004, the EU, 

Japan, and other advocates dropped their 

proposals to launch investment negotiations. 

Members took no action on the WGTI or its 

mandate during these consultations, and the 

group did not meet in 2004. 

WTO discussions on the relationship between 

trade and investment have nonetheless been 

valuable. Members have clarified many 

important points of difference on the Doha 

Ministerial issues, and they have improved their 

understanding of each other’s positions and 

concerns. The WGTI has also given the United 

States a sustained opportunity to highlight the 

economic benefits of strong investment 

disciplines and to make the case that high 

standards of investor protection can be 

effectively balanced with the regulatory 

prerogatives of national governments. 

Major Issues in 2004 

The WGTI did not meet during 2004. 

Prospects for 2005 

As of this writing, no WGTI meetings have been 

scheduled in 2005. 

F. General Council Activities 

Status 

The WTO General Council is the highest-level 

decision-making body in the WTO that meets on 

a regular basis during the year. It exercises all 

of the authority of the Ministerial Conference, 

which is required to meet no less than once 

every two years. The General Council and 

Ministerial Conference consist of representatives 

of all WTO Members. Only the Ministerial 

Conference and the General Council have the 

authority to adopt authoritative interpretations of 

the WTO Agreements, submit amendments to 
II. The World Trade Organization| 47 

the Agreements for consideration by Members, 

and grant waivers of obligations. All accessions 

to the WTO must be approved by the General 

Council or the Ministerial Conference. 

Technically, meetings of both the Dispute 

Settlement Body (DSB) and the Trade Policy 

Review Body (TPRB) are meetings of the 

General Council convened for the purpose of 

discharging the responsibilities of the DSB and 

TPRB respectively. 

Four major bodies report directly to the General 

Council: the Council for Trade in Goods, the 

Council for Trade in Services, the Council for 

Trade-Related Aspects of Intellectual Property 

Rights, and the Trade Negotiations Committee. 

In addition, the Committee on Trade and 

Environment, the Committee on Trade and 

Development, the Committee on Balance of 

Payments Restrictions, the Committee on 

Budget, Finance and Administration, and the 

Committee on Regional Trading Arrangements 

report directly to the General Council. The 

Working Groups established at the First 

Ministerial Conference in Singapore in 1996 to 

examine investment, trade and competition 

policy, and transparency in government 

procurement also report directly to the General 

Council, although these groups have been 

inactive since the Cancun Ministerial 

Conference. A number of subsidiary bodies 

report to the General Council through the 

Council for Trade in Goods or the Council for 

Trade in Services. The Doha Ministerial 

Declaration approved a number of new work 

programs and working groups which have been 

given mandates to report to the General Council 

such as the Working Group on Trade, Debt, and 

Finance and the Working Group on Trade and 

Transfer of Technology. The mandates are part 

of DDA and their work is reviewed elsewhere in 

this chapter. 

The General Council uses both formal and 

informal processes to conduct the business of the 

WTO. Informal groupings, which generally 

include the United States, play an important role 

in consensus-building. Through the first half of 

2004, the Chairman of the General Council 

conducted extensive informal consultations, with 

both the Heads of Delegation of the entire WTO 

Membership and a wide variety of smaller 

groupings. These consultations were convened 

with a view to finding consensus on both the 

substance and process of that culminated in the 1 

August 2004 General Council decision 

containing frameworks on the core issues in the 

Doha Work Program discussed earlier in this 

chapter. 

Cumulative Assessment Since the WTO Was 

Established 

Over the past ten years, the General Council has 

operated successfully in the role envisioned at 

the creation of the WTO in 1995 as a forum both 

for management of the WTO Agreement and for 

decision-making and negotiations. Indeed, the 

General Council has proven its effectiveness in 

simultaneously supervising the substantive work 

of the WTO, monitoring compliance with WTO 

obligations and managing the WTO as an 

institution. In addition, the work of the General 

Council has accurately reflected the interests and 

concerns of its Members, enabling the WTO to 

remain squarely a Member-driven organization. 

As a decision-making and deliberative body, it 

has shown itself responsive and flexible when 

called to do extra-ordinary work, such as 

approving the text of the “July package” just 

after midnight on 1 August 2004. Lastly, the 

General Council has continuously worked on 

improving the openness and responsiveness of 

the WTO to the public. 

Since its creation, the General Council’s record 

on substantive work has been considerable. The 

General Council supervised the launch of the 

most historically ambitious agenda for trade 

liberalization in Doha in 2001. This launch was 

made possible by years of work in developing 

and building the negotiating agenda. The 

General Council has managed the progress 

since, including the agreement on frameworks in 

its 1 August 2004 decision that gave the 

negotiations a new boost. Despite the expected 

ups and downs in the process – including some 

considerable setbacks along the way – the 

General Council continues to chart the path 

forward in the negotiations, using both large 

formal and small informal meetings to move 

ahead. 
II. The World Trade Organization | 48 

In addition to launching and managing a new 

Round of trade liberalization, the General 

Council has presided over an active calendar of 

expansion in WTO membership. Since 1996, 

twenty countries have acceded to the WTO, and 

twenty-eight additional applicants have 

negotiations in various stages of development. 

On these, the General Council provides a forum 

for review and for monitoring progress in the 

accessions. Working through the General 

Council, the WTO responded to the historic 

changes that occurred in the early 1990’s with 

the breakup of the Soviet Union and Yugoslavia. 

Accession to the WTO has played a significant 

role in integrating a number of the new countries 

created into the rules-based multilateral trading 

system. The accessions of China in December 

2001 and Chinese Taipei in January 2002 also 

represented important developments; while the 

General Council’s special yearly reviews of 

China’s implementation of its WTO 

commitments have fostered improved 

transparency. In 2001, the General Council also 

approved streamlined and simplified procedures 

for accessions of least-developed countries 

(LDCs). The first LDC members to complete an 

accession process were Nepal and Cambodia at 

the Cancun Ministerial in 2003. Continuing to 

adapt to a quickly changing world, in December 

2004, the General Council approved requests to 

begin the accession process for Iraq and 

Afghanistan. 

In ten years, the General Council transformed 

the ad-hoc structure of the Interim Committee 

for the International Trade Organization into the 

high-functioning and efficient international 

agency that is the current WTO Secretariat. It 

has done so at a relatively small cost to the 

United States – in the 2004 WTO budget, for 

example, the U.S. contribution was roughly $22 

million. In the move to a permanent structure, 

however, the General Council has actively 

worked to keep the WTO Secretariat responsive 

to the interests and concerns of Members. On 

issues as diverse as the decision on TRIPS and 

Health to the waiver on trade restrictions on 

conflict diamonds, the General Council has 

acted on the concerns of its Members. Through 

actions such as increasing timely public access 

to WTO documents, the General Council has 

also made the workings of the WTO more 

transparent to the public over the years. 

In the increasingly integrated global economy, 

the General Council has continuously worked to 

collaborate closely with other international 

institutions. Its special sessions on “coherence” 

in global economic policy with the heads of the 

World Bank and International Monetary Fund 

have resulted in innovative programs to spur 

global economic growth for all of its Members. 

In addition, the General Council monitors 

closely the donor collaboration on trade-related 

technical and capacity building assistance for 

developing countries provided through the 

Integrated Framework. 

 

Major Issues in 2004 

Ambassador Shotaro Oshima of Japan served as 

Chairman of the General Council in 2004. The 

major task for Chairman Oshima and the 

General Council was the effort to overcome the 

obstacles that prevented progress at the WTO 

Ministerial in Cancun and produce an agreement 

on frameworks for the core negotiating issues of 

the Doha Development Agenda. This agreement 

– the 1 August 2004 General Council decision – 

is described at length earlier in this Chapter. In 

addition to work on the DDA, activities of the 

General Council in 2004 included: 

Coherence in Global Economic PolicyMaking: Article III(5) of the Marrakesh 

Agreement Establishing the WTO provides for 

coherence in global economic-policy making 

through WTO cooperation with the International 

Monetary Fund (IMF) and the World Bank. At 

the May 2004 session of the General Council, 

First Deputy Managing Director of the IMF, 

Anne Krueger, presented the IMF’s new lending 

facility, the Trade Integration Mechanism 

(TIM), developed in support of the WTO’s trade 

liberalization agenda. The IMF designed the 

TIM to respond to developing country concerns 

that trade liberalization undertaken by WTO 

Members on the DDA could adversely affect 

their balance-of-payments position. 

In a meeting of the General Council in October, 

both the IMF Managing Director Rodrigo de 
II. The World Trade Organization| 49 

Rato and World Bank President James 

Wolfensohn participated in an exchange of 

views with WTO Members. The discussion 

centered on the importance of market access, 

agricultural reforms and improved trade 

facilitation outcomes in achieving the 

development goals of the DDA, with compelling 

arguments advanced in favor of an ambitious 

outcome, including the importance of 

developing country commitments. Continued 

strengthening of the cooperative work among 

the organizations, particularly technical and 

financial support for the Doha Work Program 

and its implementation, was considered essential 

to make an ambitious outcome possible. 

Capacity Building through Technical 

Cooperation: The General Council continued 

its supervision of technical assistance for the 

purpose of capacity building in developing 

countries (i.e., modernizing their government 

operations to facilitate effective participation in 

the negotiation and implementation of WTO 

Agreements). For its part, the United States 

directly supports the WTO's trade-related 

technical assistance (TRTA) activities. In May 

2004, USTR Robert B. Zoellick announced the 

United States would contribute approximately 

$1 million dollars for trade-related technical 

assistance (TRTA) to the World Trade 

Organization. This contribution brought total 

U.S. TRTA for the DDA to almost $4 million 

since the launch of negotiations in November 

2001. 

Waivers of Obligations: As part of the annual 

review required by Article IX of the WTO 

Agreement, the General Council considered 

reports on the operation of a number of 

previously agreed waivers, including those 

applicable to the United States for the Caribbean 

Basin Economic Recovery Act, and preferences 

for the Former Trust Territories of the Pacific 

Islands. 

The General Council also approved the request 

from the European Communities to extend the 

deadline for withdrawal of concessions for 

Members seeking compensation for adverse 

trade impact of the May 2004 enlargement of the 

European Union. In the review of waivers for 

preferential arrangements, several bananaproducing Latin American countries registered 

complaints regarding impact of enlargement and 

tariffication of quotas under the EU banana 

regime. Annex II contains a detailed list of 

Article IX waivers currently in force. 

Development Aspects of Cotton: At the 

December 2004 session, WTO Director-General 

Supachai reported on the response of the 

international community to the concerns raised 

at the Cancun Ministerial by several cottonproducing African countries. Director-General 

Supachai said he was encouraged by rapid 

actions taken by donors, including the United 

States, the EU, and Japan, but he also 

underscored the importance of mutually 

supportive actions by proponents. Benin, 

Senegal, Burkina Faso, and Mali spoke 

positively about recent initiatives. 

Accessions: In 2004, the General Council 

approved requests from Libya, Iraq and 

Afghanistan to initiate accession negotiations 

and directed that working parties be established 

with standard terms of reference to develop their 

protocols for accession. 

China Transitional Review Mechanism: The 

General Council conducted its transitional 

review of China’s implementation of WTO 

commitments in December. In an exchange of 

views with other WTO Members, the United 

States both credited China for the steps it has 

taken to meet its WTO commitments and 

emphasized areas where more needed to be 

done. 

Prospects for 2005 

The General Council is expected to be extremely 

active in 2005. In addition to its management of 

the WTO and its oversight of implementation of 

the WTO Agreements, the General Council will 

select a new Director-General in 2005, direct the 

DDA negotiations in the critical phase of 

developing modalities, and prepare for the WTO 

Sixth Ministerial Conference scheduled for 

December 13-18, 2005 in Hong Kong, China. In 

addition, the Council will consider the 

recommendations contained in the report 
II. The World Trade Organization | 50 

released in January 2005, “The Future of the 

WTO: Addressing Institutional Challenges in 

the New Millennium”, a report produced by a 

board of distinguished experts led by former 

Director-General Peter Sutherland. 

The current WTO Director-General is Dr. 

Supachai Panitchpakdi, whose term of office 

expires at the end of August 2005. The 

following candidates have been nominated by 

their respective governments to succeed Dr. 

Supachai: Carlos Pérez del Castillo of Uruguay, 

Luiz Felipe de Seixas Corrêa of Brazil, Jaya 

Krishna Cuttaree of Mauritius, and Pascal Lamy 

of France. In 2002, the General Council adopted 

new procedures that will govern this selection 

process. 

In June 2003, Director-General Supachai 

requested the help of eight eminent persons (the 

“Consultative Board”) to participate in a process 

of reflection on the institutional challenges 

facing the WTO. The findings of the 

Consultative Board contained in this report will 

be the basis for discussions on improving the 

effectiveness and operation of the WTO, 

including efforts towards greater transparency, 

outreach, and ministerial involvement. The 

report also raises important issues for discussion 

regarding the functioning of the multilateral 

trading system, including the importance of 

continued liberalization and the proliferation of 

preferential arrangements. The findings and 

conclusions of the report will need careful 

consideration by WTO Members. Our 

expectation is that the work will be pursued 

separately from the DDA, but may give added 

impetus to important issues, such as 

transparency in the day-to-day operations of the 

WTO, particularly in the dispute settlement area. 

In 2003, the General Council selected Hong 

Kong, China, as the venue for the Sixth 

Ministerial Conference and preparations are now 

underway. The requirement for ministerial 

meetings was established in the Uruguay Round 

to assure regular, political level review by 

ministers of the operation of the WTO, similar to 

the practice of other international organizations. 

Previous Ministerial Conferences were 

convened in Singapore (1996), Geneva (1998), 

Seattle (1999), Doha (2001) and Cancun (2003). 

G. Council for Trade in Goods 

Status 

The WTO Council for Trade in Goods (CTG) 

oversees the activities of 12 committees 

(Agriculture, Antidumping Practices, Customs 

Valuation, Import Licensing Procedures, 

Information Technology, Market Access, Rules 

of Origin, Safeguards, Sanitary and 

Phytosanitary Measures, Subsidies and 

Countervailing Measures, Technical Barriers to 

Trade and Trade-related Investment Measures 

(TRIMS)) in addition to the Textiles Monitoring 

Body (TMB), and the Working Party on State 

Trading. 

Cumulative Assessment Since the WTO was 

Established 

At the conclusion of the Uruguay Round, the 

Council for Trade in Goods was established. It 

has proven to be a useful forum for discussing 

issues and making decisions which may 

ultimately require the attention of the General 

Council for resolution or a higher-level 

discussion, and putting the issue in the broader 

context of the rules and disciplines that apply to 

trade in goods. The CTG serves as a place to lay 

the groundwork and to resolve issues on many 

matters that will ultimately require General 

Council approval. The use of the Article 9 

waiver provisions, for example, is initiated in the 

Goods Council. European Union and United 

States grants of trade preferences to African, 

Caribbean and Pacific (ACP) and Caribbean 

Basin Initiative (CBI) countries respectively 

required waivers initiated in the CTG. 

Under a mandate from the 1996 Singapore 

Ministerial conference, the Council for Trade in 

Goods was the forum for exploratory and 

analytical work which ultimately led to the 2004 

launch of WTO negotiations on Trade 

Facilitation. The work on Trade Facilitation by 

the Council was conducted through informal 

sessions, until 2002 and 2003, when Members 

agreed to conduct the continuing work on Trade 
II. The World Trade Organization| 51 

Facilitation through formal sessions. During the 

seven year preparatory phase leading up to the 

launch of negotiations, the Council also held 

several symposium or workshop type events. 

Major Issues in 2004 

In 2004, the CTG held seven formal meetings. 

As the central oversight body in the WTO for all 

agreements related to trade in goods, the CTG 

primarily devoted its attention to providing 

formal approval of decisions and 

recommendations proposed by its subsidiary 

bodies. The CTG also served as a forum for 

airing initial complaints regarding actions taken 

by individual Members with respect to the 

operation of agreements. Many of these 

complaints were resolved through consultation. 

In addition, four major issues were extensively 

debated in the CTG in 2004: 

Waivers: The CTG approved several requests 

for waivers, including those related to the 

implementation of the Harmonized Tariff 

System and renegotiation of tariff schedules. A 

list of waivers currently in force can be found in 

Annex II. 

TRIMS Article 9 Review: The Council met 

several times, formally and informally, to 

consider proposals by India and Brazil to lower 

the level of obligations for developing countries 

under the TRIMS Agreement. Developed 

countries expressed their opposition to rewriting 

the Agreement. Consultations continue 

concerning a proposal by developing countries 

to have the Secretariat do a study of developing 

countries experiences with various TRIMS. 

China Transitional Review: On November 25, 

the CTG conducted China’s Transitional Review 

(TRM) as mandated by the Protocol on the 

Accession of the People’s Republic of China to 

the WTO. China supplied the CTG with 

information, answered questions posed by 

Members and reviewed the TRM reports of CTG 

subsidiary bodies. (See Chapter IV Section F on 

China for more detailed discussion of its 

implementation of WTO commitments). 

Textiles: The CTG conducted the 3rd stage 

review of the operation of the Agreement on 

Textiles and Clothing (ATC) as mandated by the 

ATC. Developing Members criticized the major 

importing Members for not instituting greater 

liberalization in the 3rd stage. In particular, they 

complained that importing Members had failed 

to eliminate quotas on more than a token number 

of products. This back loading meant that all 

liberalization was put off until the end of ATC 

and thus did not allow adjustment to occur in a 

more orderly fashion. Importing Members 

responded that they had implemented all their 

obligations under the ATC. They stated that 

liberalization was intended to occur through the 

accelerated growth of quotas over the life of the 

ATC. In the case of the U.S., imports had 

grown by 150 percent over the life of the ATC. 

This had allowed U.S. producers to adjust to 

increased competition in an orderly manner. As 

a result, the process of adjustment had been 

substantially completed by the end of the ATC. 

The CTG also met several times formally and 

informally to review a proposal by small 

exporting Members to find ways to assist them 

with post-ATC adjustment problems. These 

countries argued that the elimination of quotas 

will result in a disastrous loss of market share 

from small suppliers to the large exporters such 

as China and India. They asked that the CTG 

study this adjustment issue with a view to 

adopting proposals to ease the transition. These 

proposals were blocked by the large exporting 

Members such as China and India. They argued 

that 40 years of textile restraints were long 

enough. It was necessary for this sector to 

return to normal trade rules. Any attempt to 

ease the transition to a quota-free environment 

would perpetuate the distortions suffered by this 

sector for so long. 

EC Enlargement: At its meeting on October 1, 

the CTG agreed on a six month extension of the 

deadline for compensation negotiations and 

referred the matter to the General Council for 

adoption. Enlargement involves expansion of 

the European Union from 15 countries to 25, and 

necessary adjustments to the EC’s trade regime. 
II. The World Trade Organization | 52 

Prospects for 2005 

The CTG will continue to be the focal point for 

discussing agreements in the WTO dealing with 

trade in goods. Post-ATC adjustment, TRIMS 

Article 9 review and EU enlargement will be 

prominent issues on the agenda. The United 

States will be seeking the CTG to approve 

waivers for trade preferences provided to the 

African Growth and Opportunity Act (AGOA), 

CBI and the Andean Pact countries, in 2005. 

1. Committee on Agriculture 

Status 

In 1995, the WTO formed the Committee on 

Agriculture to oversee the implementation of the 

Agreement on Agriculture and to provide a 

forum for Members to consult on matters related 

to provisions of the Agreement. In many cases, 

the Committee resolves problems on 

implementation, thus permitting Members to 

avoid invoking lengthy dispute settlement 

procedures. The Committee also has 

responsibility for monitoring the possible 

negative effects of agricultural reform on leastdeveloped and net food-importing developing 

countries. 

Cumulative Assessment Since the WTO Was 

Established 

The Agreement on Agriculture represents a 

major step forward in bringing agriculture more 

fully under WTO disciplines. The Uruguay 

Round’s creation of new trade rules and specific 

market-opening commitments has transformed 

the world trading environment in agriculture 

from one where trade was heavily distorted and 

basically outside effective GATT disciplines to a 

rules-based system that quantifies, caps and 

reduces trade-distorting protection and support. 

Prior to the establishment of the Agreement, 

Members were able to block imports of 

agricultural products, provide essentially 

unlimited production subsidies to farmers, and 

dump surplus production on world markets with 

the aid of export subsidies. As a consequence, 

U.S. farmers and ranchers were denied access to 

other countries’ markets and were undercut by 

subsidized competition in world markets. 

The WTO Agreement on Agriculture established 

disciplines in three critical areas affecting trade 

in agriculture. 

• First, the Agreement places limits on the 

use of export subsidies. Products that had not 

benefited from export subsidies in the past are 

banned from receiving them in the future. 

Where Members had provided export subsidies 

in the past, the future use of export subsidies 

was capped and reduced. 

• Second, the Agreement set agricultural 

trade on a more predictable basis by requiring 

the conversion of non-tariff barriers, such as 

quotas and import bans, into simple tariffs. 

Currently, trade in agricultural products can only 

be restricted by tariffs. Quotas, discriminatory 

licensing, and other non-tariff measures are now 

prohibited. Also, all agricultural tariffs were 

“bound” in the WTO and made subject to 

reduction commitments. Creating a “tariff-only” 

system for agricultural products has been an 

important advance, yet too many high tariffs and 

administrative difficulties with tariff-rate quota 

systems that replaced the non-tariff barriers 

continue to impede international trade of food 

and fiber products. 

• Third, the Agreement calls for reduction 

commitments on trade-distorting domestic 

supports, while preserving criteria-based “green 

box” policies that can provide support to 

agriculture in a manner that minimizes 

distortions to trade. Governments have the right 

to support farmers if they so choose. However, 

it is important that this support be provided in a 

manner that causes minimal distortions to 

production and trade. 

As a result, farmers all over the world benefit 

from access to new markets and improved 

access to existing markets, face less subsidized 

competition, and now have a solid framework 

for addressing agricultural trade disputes. Yet it 

is clear that full agricultural reform is a longterm endeavor. Hence, the Agreement reached 

in the Uruguay Round also called for new 

negotiations on agriculture beginning in 1999, as 
II. The World Trade Organization| 53 

part of the “built-in” agenda of the WTO. 

Agriculture is an important element of the DDA. 

The Committee on Agriculture has proven since 

its inception to be a vital instrument for the 

United States in monitoring and enforcing 

agricultural trade commitments that were 

undertaken by other countries in the Uruguay 

Round. Members agreed to provide annual 

notifications of progress in meeting their 

commitments in agriculture, and the Committee 

has met frequently to review the notifications 

and monitor activities of Members to ensure that 

trading partners honor their commitments. 

Under the watchful eye of the Committee, 

Members have, for the most part, complied with 

the agricultural commitments that they 

undertook in the WTO. However, there have 

been important exceptions where the U.S. 

agricultural trade interests have been adversely 

affected. In these situations, the Committee on 

Agriculture has frequently served as an 

indispensable tool for resolving conflicts before 

they become formal WTO disputes. The 

following are some examples: 

• Resolution of issues related to the use of 

export subsidies in Hungary, benefiting U.S. 

exports of grains, fruits and vegetables by nearly 

$10 million. 

• Elimination of restrictions on beef imports 

by Switzerland that affected approximately $15 

million in U.S. exports. 

• Resolution of issues related to access for 

pork and poultry in the Philippines. In the case 

of pork, resolution of this issue meant additional 

U.S. exports of up to $70 million, and in the case 

of poultry, of up to $20 million. 

• Resolving issues associated with Turkey’s 

imposition of a tax on imported cotton, 

important to U.S. exports of more than $150 

million. 

• Resolution of issues related to the 

implementation of a tariff-rate quota on poultry 

in Costa Rica helped to triple U.S. exports to 

that country in 1998. 

• Questioning Canada concerning a milk 

pricing scheme that appeared to be in violation 

of Canada’s export subsidy commitments. 

Building on a process that began with the 

Committee’s discussion, the United States 

eventually won a WTO dispute settlement case 

on this issue, benefiting U.S. exporters by 

reining in unfairly subsidized dairy exports from 

Canada. 

• Elimination of Mexico's ban on dried beans 

from the United States, leading to continued 

U.S. sales of $42 million per year into the 

Mexican market. 

• Improved mechanisms by which China 

manages its tariff rate quota system for bulk 

agricultural commodities, with results including 

record U.S. cotton exports to China of $475 

million. 

• Discouraging the EU from increasing 

tariffs on U.S. wheat exports, preserving a $220 

million-market (EU-15). 

• Ensuring the issuance of required import 

permits to enable rice exports to Costa Rica ($10 

million). 

• Partially mitigating the effect of a 

Venezuela import ban affecting what had been a 

$100 million corn market for the United States. 

• Discouraging India from effectively raising 

tariffs on imports of soybean oil ($44 million). 
II. The World Trade Organization | 54 

Major Issues in 2004 

The Committee held four formal meetings in 

March, June, September, and November 2004, 

to review progress on the implementation of 

commitments negotiated in the Uruguay Round. 

This review was undertaken on the basis of 

notifications by Members in the areas of market 

access, domestic support, export subsidies, 

export prohibitions and restrictions, and general 

matters relevant to the implementation of 

commitments. 

In total, 170 notifications were subject to review 

during 2004. The United States actively 

participated in the notification process and 

raised specific issues concerning the operation 

of Members’ agricultural policies. The 

Committee proved to be an effective forum for 

raising issues relevant to the implementation of 

Members’ commitments. For example, the 

United States used the review mechanism to 

enhance the transparency of China’s tariff-rate 

quota (TRQ) system and to help address low 

quota-fill of the European Union’s pork TRQ. 

The United States was successful in removing a 

significant trade barrier to U.S. poultry exports 

to Moldova and made progress in addressing 

problems with Panama’s import licensing 

regime for french fries. 

The United States also raised questions 

concerning elements of domestic support 

programs used by the European Union, Chile, 

Tunisia, and Japan; identified restrictive import 

licensing and tariff-rate quota administration 

practices by the European Union, China, Japan, 

Panama, Thailand, Turkey, Iceland, Poland, 

Venezuela, and Moldova; questioned Japan’s 

use of the special agricultural safeguard; and 

raised concerns with the Slovak Republic’s use 

of export subsidies. The United States also 

inquired about the European Union’s food aid 

programs. 

During 2004, the Committee addressed a 

number of other agricultural implementationrelated issues: (1) development of 

internationally agreed disciplines to govern the 

provision of export credits, export credit 

guarantees, or insurance programs pursuant to 

Article 10.2 of the Agreement on Agriculture, 

taking into account the effect of such disciplines 

on net food-importing countries; (2) 

examination of possible ways to improve the 

effectiveness of the implementation of the Net 

Food-Importing Developing Countries (NFIDC) 

Decision; and (3) the review process of 

Members’ notifications on TRQs in accordance 

with the General Council’s decision regarding 

the administration of TRQ regimes in a 

transparent, equitable, and non-discriminatory 

manner. 

At each of its meetings, the Committee 

considered a pending proposal by the WTO 

Africa Group regarding the NFIDC Decision 

that was referred to the Committee by the 

Chairman of the General Council in the context 

of the review of all Special and Differential 

treatment provisions by the Committee on Trade 

and Development in Special Session. In 

accordance with the General Council Decision 

of August 1, 2004, the Committee pursued this 

matter on the basis of its recommendation to the 

General Council from July 2003: 

“... that, building on the work 

already undertaken, including the 

WTO roundtable of 19 May 2003, 

the Committee will continue to 

explore, as a matter of priority and 

on the basis of proposals submitted 

by Members, options and solutions 

within the framework of the 

Marrakesh NFIDC Decision to 

address short-term difficulties of 

LDCs and WTO NFIDCs in 

financing commercial imports of 

basic foodstuffs.” 

At its March meeting, the Committee accepted 

the application by Gabon to be included in the 

WTO list of net food-importing developing 

countries. This list comprises the following 

developing country Members of the WTO: 

Barbados, Botswana, Côte d'Ivoire, Cuba, 

Dominica, Dominican Republic, Egypt, Gabon, 

Honduras, Jamaica, Jordan, Kenya, Mauritius, 

Morocco, Namibia, Pakistan, Peru, Saint Kitts 

and Nevis, Saint Lucia, Saint Vincent and the 

Grenadines, Senegal, Sri Lanka, Trinidad and 

Tobago, Tunisia, and Venezuela. 
II. The World Trade Organization| 55 

At the meeting in September, the Committee 

held its annual Transitional Review under 

paragraph 18 of the Protocol of Accession of the 

People's Republic of China. The United States, 

with support from other Members, raised 

questions and concerns regarding China's 

implementation of its WTO commitments in the 

areas of tariff-rate quota administration and 

import licensing. 

The annual monitoring exercise on the follow-up 

to the NFIDC Decision was undertaken at the 

November meeting of the Committee, on the 

basis inter alia, of Table NF:1 notifications by 

donor Members as well as contributions by 

observer organizations. 

Prospects for 2005 

The United States will continue to make full use 

of the Committee to ensure transparency through 

timely notification by Members and to enhance 

enforcement of Uruguay Round commitments as 

they relate to export subsidies, market access, 

domestic support or any other trade-distorting 

practices by WTO Members. In addition, the 

Committee will continue to monitor and analyze 

the impact of the possible negative effects of the 

reform process on least-developed and net foodimporting developing countries in accordance 

with the Agreement on Agriculture. 

2. Committee on Market Access 

Status 

In January 1995, WTO Members established the 

Committee on Market Access, consolidating the 

work under the GATT system of the Committee 

on Tariff Concessions and the Technical Group 

on Quantitative Restrictions and other NonTariff Measures. The Committee on Market 

Access supervises the implementation of 

concessions on tariffs and non-tariff measures 

where not explicitly covered by another WTO 

body (e.g., the Textiles Monitoring Body). The 

Committee also is responsible for verification of 

new concessions on market access in the goods 

area. The Committee reports to the Council on 

Trade in Goods. 

Cumulative Assessment Since the WTO Was 

Established 

Since 1995, WTO Members have negotiated and 

implemented new tariff initiatives on 

pharmaceuticals (1997 and 1999), distilled 

spirits (1997), and information technology 

products (1997) under the Committee’s 

auspices.23 In addition, in 1998 and 1999, the 

Committee was the venue for introducing the 

Asia-Pacific Economic Cooperation (APEC) 

Accelerated Tariff Liberalization initiatives on 

environmental goods and services, medical 

equipment and instruments, fish and fish 

products, toys, gems and jewelry, chemicals, 

energy sector goods and services, and forest 

products. 

The Committee also has focused on developing 

the tools needed to monitor goods market access 

commitments and establish the technical 

foundation for any new market access 

negotiations, including the Doha Development 

Agenda. Specific achievements include: 

• Revitalizing the Integrated Data Base 

(IDB) by restructuring the framework from a 

mainframe environment to a personal computerbased system and developing technical 

assistance projects to facilitate participation by 

developing countries. With the new system in 

place, on the Committee’s recommendation, the 

WTO required all Members to supply tariff and 

trade information on an annual basis. As of 

December 2004, 105 Members and three 

acceding countries had provided IDB 

submissions; in contrast, only three Members 

(including the United States) supplied IDB 

information in 1994 under the old mainframe 

system. 

 

23 A new WTO Committee of Participants on the 

Expansion of Trade in Information Technology 

Products was established to monitor implementation 

of the Information Technology Agreement. 
II. The World Trade Organization | 56 

• Ensuring implementation of the 1996 and 

2002 updates to the Harmonized Tariff System 

nomenclature (HTS) did not adversely affect 

existing tariff bindings of WTO Members. Most 

WTO Members were unable to carry out the 

procedural requirements related to the 

introduction of HTS96 changes in WTO 

schedules prior to implementation of those 

changes. To deal with this, the Committee put 

in place a system of granting waivers until 

countries finalized their procedures. The 

Committee also examined issues related to the 

transposition and renegotiation of the schedules 

of certain Members who had adopted the HTS in 

the years following its introduction on January 

1, 1988. 

• Establishing the Consolidated Tariff 

System database to ensure the development of 

an up-to-date schedule in standardized format 

for each WTO Member that reflects Uruguay 

Round tariff concessions, HTS96 updates to 

tariff nomenclature and bindings, and any other 

modifications to the WTO schedule. The 

Secretariat began work in 2002 to link the IDB 

and the Consolidated Tariff System to facilitate 

trade policy analysis and enable Members to 

evaluate the impact of future reductions of 

bound duties on MFN applied and preferential 

duties. Given Members’ technical difficulties 

and the delay in completing the HTS96 process, 

in 2004 the Committee adopted the Chairman’s 

proposal that the Secretariat prepare HTS2002 

schedules for all Members. Completion of this 

exercise will be a significant technical 

contribution to the Doha Round market access 

negotiations. 

Major Issues in 2004 

During 2004, WTO Members continued 

implementing the tariff reductions agreed to in 

the Uruguay Round; the Committee is 

responsible for verifying that implementation 

proceeds on schedule. The Committee held four 

formal meetings and one informal meeting in 

2004 to discuss the following topics: (1) the 

ongoing review of WTO tariff schedules to 

accommodate updates to the Harmonized Tariff 

System (HTS) tariff nomenclature; (2) the WTO 

Integrated Data Base; (3) finalizing consolidated 

schedules of WTO tariff concessions in current 

HTS nomenclature; (4) reviewing the status of 

notifications on quantitative restrictions and 

reverse notifications of non-tariff measures; and 

(5) implementation issues related to “substantial 

interest.” The Committee also conducted its 

third annual transitional review of China’s 

implementation of its WTO accession 

commitments. 

Updates to the HTS nomenclature: In 1993, the 

Customs Cooperation Council -- now known as 

the World Customs Organization (WCO) -- 

agreed to approximately 400 sets of amendments 

to the HTS, which entered into effect January 1, 

1996. Further modifications entered into effect 

January 1, 2002. These amendments resulted in 

changes to the WTO schedules of tariff 

bindings. The Committee also examined issues 

related to the transposition and renegotiation of 

the schedules of certain Members that adopted 

the HTS in the years following its introduction 

on January 1, 1988. 

Using agreed examination procedures, Members 

have the right to object to any proposed 

nomenclature change affecting bound tariff 

items on grounds that the new nomenclature (as 

well as any increase in tariff levels for an item 

above existing bindings) represents a 

modification of the tariff concession. Members 

may pursue unresolved objections under GATT 

1994 Article XXVIII. The majority of WTO 

Members have completed the process of 

implementing HTS 1996 changes, but five 

Members continue to require waivers. 

Using the same procedures, the Committee also 

began to review Members’ WTO amendments 

that took effect on January 1, 2002 (HTS2002). 

The review process includes converting all 

WTO Members’ schedules into the HTS2002 

nomenclature and reviewing and approving the 

373 amendments incorporated under HTS2002. 

Conversion to HTS2002 is essential to laying 

the technical groundwork for analyzing tariff 

implications of the Doha Round. As a result, at 

the July 2004 meeting, the Committee reviewed 

the Chairman’s proposal that the Secretariat take 

on a majority of the work in preparing 

Members’ HTS2002 schedules, which would 
II. The World Trade Organization| 57 

then be subject to verification. At that same 

meeting the Committee further agreed that the 

Secretariat should begin laying the groundwork 

for the technical aspects of the transposition. 

Funding for this project will be provided from 

the global trust fund and work will be carried out 

in 2005. The United States submitted its 

proposed HTS2002 changes to the Secretariat in 

December 2001. 

Integrated Data Base (IDB): The Committee 

addressed issues concerning the IDB, which is 

updated annually with information on the tariffs, 

trade data, and non-tariff measures maintained 

by WTO Members. Members are required to 

provide this information as a result of a General 

Council Decision adopted in July 1997. In 

recent years, the United States has taken an 

active role in pressing for a more relevant 

database structure with the aim of improving the 

trade and tariff data supplied by WTO Members. 

As a result, participation has continued to 

improve. As of December 2004, 105 Members 

and three acceding countries had provided IDB 

submissions. In September 2004, the Secretariat 

agreed to organize a hands-on workshop on the 

IDB internet analysis facility. 

 

Consolidated Schedule of Tariff Concessions 

(CTS): The Committee continued work on 

implementing an electronic structure for tariff 

and trade data. The CTS includes: tariff 

bindings for each WTO Member that reflect 

Uruguay Round tariff concessions; HTS96 and 

2002 updates to tariff nomenclature and 

bindings; and any other modifications to the 

WTO schedule (e.g., participation in the 

Information Technology Agreement). The 

database also includes agricultural support 

tables. The CTS will be linked to the IAB and 

will serve as the vehicle for conducting Doha 

negotiations in agriculture and non-agricultural 

market access. 

China Transitional Review: In September 

2004, the Committee conducted the third annual 

review of China’s implementation of its WTO 

commitments on market access. The review 

touched upon issues such as implementation of 

China’s schedule of tariff commitments, tariffrate quota administration, management of 

industrial quotas, and China’s application of 

value added and consumption taxes. 

 

Prospects for 2005 

The ongoing work program of the Committee, 

while highly technical, will ensure that all WTO 

Members’ schedules are up-to-date and available 

in electronic spreadsheet format. The 

Committee will likely explore technical 

assistance needs related to data submissions. 

The Committee will continue to review 

Members’ amended schedules based on the 

HTS2002 revision, including following through 

on the Chairman’s proposal to have the 

Secretariat generate HTS2002 schedules for all 

Members. The successful completion of 

conversion to HTS2002 will be a tremendous 

step forward in technical preparation for the 

Round. 

3. Committee on the Application of 

Sanitary and Phytosanitary Measures 

Status 

The WTO Agreement on the Application of 

Sanitary and Phytosanitary (SPS) Measures 

establishes rules and procedures that ensure that 

Members’ SPS measures address legitimate 

human, animal and plant health concerns, do not 

arbitrarily or unjustifiably discriminate between 

Members’ agricultural and food products and are 

not disguised restrictions on trade. SPS 

measures protect against risks associated with 

plant or animal borne pests and diseases; 

additives, contaminants, toxins and diseasecausing organisms in foods, beverages and 

feedstuffs. Fundamentally, the Agreement 

requires that such measures be based on science, 

developed using systematic risk assessment 

procedures and are notified to the WTO SPS 

Secretariat for distribution to other Members in 

sufficient time for Members to comment before 

final decisions are made. At the same time, the 

Agreement recognizes each Member’s right to 

choose the level of protection it considers 

appropriate with respect to SPS risks. 
II. The World Trade Organization | 58 

The Committee is a forum for consultation on 

Members’ existing and proposed SPS measures 

that affect international trade, the 

implementation and administration of the 

Agreement, technical assistance and the 

activities of the international standard setting 

bodies recognized in the Agreement. There are: 

for food, the Codex Alimentarius Commission; 

for animal health, the World Organization for 

Animal Health (OIE); for plant health, the 

International Plant Protection Convention 

(IPPC). The Committee also discusses specific 

provisions of the Agreement including 

transparency in Members’ development and 

application of SPS measures (Article 7), 

equivalence (Article 4), regionalization (Article 

6), technical assistance (Article 9) and special 

and differential treatment (Article 10). 

Participation in the Committee is open to all 

WTO Members. Certain non-WTO Members 

also participate as observers, in accordance with 

guidance agreed to by the General Council. In 

addition, representatives from a number of 

international intergovernmental organizations 

are invited to attend Committee meetings as 

observers on an ad hoc basis. These include: the 

Food and Agriculture Organization (FAO), the 

World Health Organization (WHO), the 

FAO/WHO Codex Alimentarius Commission, 

the FAO IPPC, the OIE, the International Trade 

Center, the World Bank, and others. 

Cumulative Assessment Since the WTO Was 

Established 

Based on discussions in the SPS Committee and 

bilateral discussions, there is a virtual consensus 

that SPS issues and concerns are the result of not 

fully implementing the existing obligations in 

the SPS Agreement and that the current text of 

the SPS Agreement does not need to be changed. 

With this principle in mind, the Committee has 

undertaken focused discussions on various 

articles of the Agreement. These discussions 

provide the opportunity for Members to share 

experiences on their SPS implementation 

activities and to elaborate procedures to assist 

Members in meeting specific SPS obligations. 

For example, the Committee has elaborated 

procedures or guidelines regarding: 

notifications, the “consistency” provisions under 

Article 5.5, equivalence and transparency 

regarding the provision of special and 

differential treatment. 

The Fourth Session of the Ministerial 

Conference held in Doha in November 2001 

directed that the Committee review the operation 

and implementation of the Agreement at least 

once every four years. During 2005, the 

Committee will complete a review to meet this 

mandate. The United States considers the 

review to be an important opportunity to assess 

implementation and to develop a work plan for 

the Committee in response to issues identified 

by Members. Thus far, Members have focused 

the discussions for the review on 

implementation issues. 

Since 1995, over 5,000 SPS notifications have 

been submitted to the Secretariat by Members. 

As of January 6, 2005, the United States had 

submitted 1,026 notifications of proposed SPS 

measures. The effort we have taken to notify 

these proposals is a clear statement of the 

importance the United States attaches to the 

transparency provisions of the Agreement. The 

SPS Secretariat reported to the Committee in 

November 2004 that many Members, mainly 

developing country Members, had not submitted 

any notifications. Members increasingly 

recognize the value and importance of notifying 

proposed SPS measures but that additional 

efforts will be needed to fully implement this 

obligation. 

The Committee has a standing agenda item, 

“Specific Trade Concerns”, which provides an 

U.S. Inquiry Point 

Office of Food Safety and Technical Services 

Foreign Agricultural Service 

U.S. Department of Agriculture 

AG Box 1027 

Room 5545 South Agriculture Building 

14th and Independence Ave., SW 

Washington DC 20250-1027 

 

Telephone: (202) 720-2239 

Fax: (202) 690-0677 

email: ofsts@fas.usda.gov 
II. The World Trade Organization| 59 

opportunity for Members to express concerns 

about proposed or existing SPS measures of 

other Members. Two primary indicators 

demonstrate the increasing sophistication of 

Members’ understanding and use of the rights 

and obligations in the Agreement. 

First, over the ten year period, the number and 

diversity of Members raising concerns have 

increased. Initially, most of the issues were 

raised by developed country Members regarding 

both developed and developing country 

Members’ SPS measures. Since 2003 in 

particular, more developing country Members 

are raising issues under this agenda item in 

Committee meetings. The nature of the 

concerns being raised is becoming more 

sophisticated. Concerns expressed include more 

than the straightforward failure to notify. 

Increasingly the concerns inquire about the 

scientific basis for the proposed measure and 

why the relevant international standard was not 

used. The numbers of Members participating in 

these discussions and increasing complexity of 

both the issues raised and the responses 

demonstrate that Members are using the 

Committee meetings to address and resolve 

concerns with trading partners. Members’ use 

of the Committee to raise SPS-related trade 

issues increases the visibility of SPS obligations 

in capitals and in Geneva missions. These 

discussions are no longer limited to developed 

country Members; they are, in many cases, 

discussions among developing country 

Members. 

The second indicator is the broad-based 

participation among Members in Committee 

discussions on various provisions of the 

Agreement. Since 2001, there has been a 

marked increase in the number of Members’ oral 

comments and written submissions on the 

equivalence, transparency, regionalization, and 

technical assistance provisions of the 

Agreement. The discussions reveal increased 

understanding of these provisions and improved 

efforts to meet SPS obligations. From these 

discussions several Members have recognized 

their need to improve SPS implementation 

activities and also that any modifications to the 

Agreement should not be considered until more 

Members more fully implement the obligations 

in the existing text. 

Major Issues in 2004 

In 2004, the Committee met three times. The 

Committee meetings are used increasingly by 

Members to raise concerns regarding the new 

and existing SPS measures of other Members. 

In addition, Members are using the Committee 

meetings to exchange views and experiences in 

implementing various provisions of the 

Agreement such as transparency, regionalization 

and equivalence. Members are also providing 

information to the Committee on efforts to 

achieve freedom from specified pests and 

diseases. The United States views this as a 

positive development as it demonstrates growing 

familiarity with the provisions of the Agreement 

and increasing recognition of the value of the 

Committee as a venue to discuss SPS-related 

trade issues among Members. 

With assistance from the United States and other 

donors, most of the 34 countries participating in 

the Free Trade Area of the Americas 

negotiations attended each Committee meeting 

in 2003 and 2004. This has significantly 

expanded capital-based and Geneva-based 

participation in Committee meetings. 

Immediately prior to each Committee meeting, 

representatives from the FTAA countries have 

met to exchange views on issues on the agenda. 
II. The World Trade Organization | 60 

• BSE - TSE24: The Committee devoted 

considerable time discussing Members’ 

measures restricting trade in beef and bovine 

products resulting from concerns with BSE. 

U.S. beef and other bovine-related exports were 

severely restricted by many Members after the 

diagnosis of a single imported cow in 

Washington state with the disease. Several other 

Members also had concerns that many 

Members’ restrictions were not based on the 

international standard established by the OIE 

and no scientific justification was provided for 

denying imports of U.S. beef and beef products. 

The United States reported the single case and 

the steps taken to control the disease, and 

encouraged Members to conform to the OIE 

standard. Several other Members supported the 

U.S. views. Other Members expressed concerns 

with the interim final regulations of the United 

States to address BSE. The United States 

expects that BSE will continue to be an issue in 

the Committee. 

• Avian Influenza: During the 2004 

meetings, several Members reported on their 

activities to control and eradicate avian 

influenza (AI) and the resulting restriction on 

trade in poultry. Other Members, including the 

United States, expressed concerns with the 

restrictions some Members implemented on 

trade in poultry that were inconsistent with the 

international standards of the OIE or that did not 

employ the regionalization provisions of the 

Agreement to reduce trade restrictions. The 

United States encouraged Members to base all 

AI restrictions on science and, for those 

Members with country-wide prohibitions, to 

make use of the regionalization provisions of the 

Agreement with regard to U.S. poultry exports. 

• Notifications: The SPS notification 

process is taking on increasing importance for 

trade and also a means to report on 

determinations of equivalence and special and 

differential treatment. In 2004, the United States 

and other Members expressed concern about the 

failure of some Members to notify SPS measures 

 

24 Bovine Spongiform Encephalopathy and 

Transmissible Spongiform Encephalopathy. 

which could have significant trade impacts. In 

2003, the Committee agreed to a modification of 

the notification format to include information of 

equivalence agreements. In 2004, another 

modification was agreed to so that Members 

could use the notification form to provide 

information on special and differential 

treatment. In 2004, the WTO SPS Secretariat 

reported receiving over 5,000 notifications since 

1995 of which over 1,000 were from the United 

States. 

• Regionalization: The Committee held 

informal meetings on regionalization in advance 

of each formal Committee meeting in 2004. 

Regionalization can be an effective means to 

reduce restrictions on trade due to animal and/or 

plant health concerns. In many cases, countrywide import prohibitions can be reduced to stateor county-wide prohibitions depending on the 

characteristics of the pest or disease and other 

factors. The IPPC and OIE have significant 

contributions to offer and participated in both 

the informal and formal Committee meetings on 

regionalization. Some Members expressed 

concerns with the time Members require to make 

regionalization decisions and to publish the 

appropriate regulations and are seeking to 

establish timeframes for decision-making. Due 

to the unique circumstances of the pest or 

disease in question, environmental factors, the 

SPS infrastructure and other significant issues, 

the United States does not believe that the 

Committee should develop timeframes for 

Members’ action. Rather, the OIE and IPPC 

should consider the need for and utility of 

timelines given the unique characteristics of 

individual disease or pest. The Committee will 

continue to discuss this issue. 

• Review of the Agreement: Paragraph 3.4 

of the Decision on Implementation-Related 

Issues and Concerns adopted at the Fourth 

Session of the Ministerial Conference directs the 

Committee to review the operation and 

implementation of the Agreement at least once 

every four years. The first review under this 

mandate is to be completed during 2005. In 

2004, the Members agreed to a timeline for the 

review and to submit documents for the 

Committee’s consideration. The Committee 
II. The World Trade Organization| 61 

held informal meetings on the review in advance 

of the formal Committee meetings in June and 

November. The United States and several other 

Members submitted proposals which were 

discussed at the November 2004 meeting. The 

Committee has agreed that the review should be 

completed in June so that it can be submitted to 

Ministers at the Sixth Ministerial in late 2005. 

• China’s Transitional Review 

Mechanism: The United States participated in 

the Committee’s third review of China’s 

implementation of its WTO obligations as 

provided for in paragraph 18 of the Protocol on 

the Accession of the People’s Republic of 

China. The United States submitted questions 

(G/SPS/W/153) regarding China’s notification 

and transparency procedures, the scientific basis 

for some SPS measures, risk assessment 

procedures, and control, inspection and approval 

procedures. Other Members also provided 

written comments and questions and others 

offered comments during the review. China 

responded orally during the review and restated 

its commitment to implement fully the 

provisions of the Agreement. 

Prospects for 2005 

The Committee will hold three meetings in 

2005; informal sessions are anticipated in 

advance of each formal meeting. The 

Committee has a standing agenda for meetings 

that can be altered to accommodate new or 

special issues. The United States anticipates that 

the Committee will continue to monitor 

Members’ implementation activities. Discussion 

of specific trade concerns will continue to be an 

important part of the Committee’s activities. 

The Committee also will continue to serve as an 

important venue to exchange information among 

Members’ on SPS related issues including BSE, 

AI, food safety measures and technical 

assistance. The activities of the Codex, OIE and 

IPPC will be of increasing importance to 

Members as BSE, AI and other SPS issues affect 

trade. 

In preparation for the Sixth Ministerial, the 

Committee will complete the review of the 

operation and implementation of the Agreement. 

The United States anticipates that as part of the 

review the Committee will develop a multi-year 

work plan to promote the full implementation of 

the Agreement which may apply to the 

Committee and to Members. 

The United States anticipates that the Committee 

will continue discussions on transparency and 

notifications, technical assistance, special and 

differential treatment, and regionalization. The 

Committee will also monitor the use and 

development of international standards, 

guidelines and recommendations by Codex, OIE 

and IPPC. Representatives from the 

organizations will provide technical expertise to 

the Committee on a range of issues within their 

competence. The Committee will also prepare 

for and conduct the fourth review of China’s 

implementation of the Agreement. 

4. Committee on Trade-Related 

Investment Measures 

Status 

The Agreement on Trade-Related Investment 

Measures (TRIMS), which entered into force 

with the establishment of the WTO in 1995, 

prohibits investment measures that are 

inconsistent with national treatment obligations 

under Article III:4 of the GATT 1994 and the 

prohibitions on quantitative restrictions set out 

in Article XI:1 of GATT 1994. The TRIMS 

Agreement thus requires the elimination of 

certain measures imposing requirements on, or 

linking advantages to, certain actions of foreign 

investors, such as measures that require, or 

provide benefits for, the incorporation of local 

inputs in manufacturing processes (“local 

content requirements”) or measures that restrict 

a firm’s imports to an amount related to the 

quantity of its exports or of its foreign exchange 

earnings (“trade balancing requirements”). The 

Agreement includes an illustrative list of 

measures that are inconsistent with Articles III:4 

and XI:1 of GATT 1994. 
II. The World Trade Organization | 62 

Cumulative Assessment Since the WTO Was 

Established 

Developments relating to the TRIMS Agreement 

are monitored and discussed both in the Council 

on Trade in Goods (“CTG”) and in the TRIMS 

Committee. Since its establishment in 1995, the 

TRIMS Committee has been a forum for the 

United States and other Members to address 

concerns, gather information, and raise questions 

about the maintenance, introduction, or 

modification of TRIMS by WTO Members. 

Much of the discussion has related to TRIMS in 

the context of the automotive sector. 

Twenty-six WTO Members submitted 

notifications of inconsistent measures to the 

TRIMS Committee, as required by the terms of 

the Agreement, in order to benefit from grace 

periods for eliminating notified TRIMS. 

Developed countries were required to eliminate 

notified TRIMS by the beginning of 1997, 

developing countries by the beginning of 2000, 

and least-developed countries by the beginning 

of 2002. In 2001, eight developing countries 

were granted up to four additional years 

(retroactive to the beginning of 2000) to 

eliminate notified TRIMS. These extensions 

expired at the end of 2003, and only Pakistan 

has requested an additional extension, as 

discussed below. 

Major Issues in 2004 

The TRIMS Committee held three formal 

meetings during 2004. TRIMS issues were also 

discussed during several meetings of the CTG. 

During meetings in late 2003 and in 2004, the 

TRIMS Committee and the CTG considered 

Pakistan’s request that its deadline for 

eliminating certain measures in the automotive 

sector be extended again, from the end of 2003 

to the end of 2006. The United States posed a 

series of questions about the TRIMS and 

Pakistan’s rationale for delaying their 

elimination. Pakistan replied in April 2004, 

arguing that certain enterprises depended upon 

the TRIMS and that elimination of the TRIMS 

would cause jobs to be lost in the automotive 

sector. No decision was reached on Pakistan’s 

request for an extension. 

As part of the review of special and differential 

treatment provisions, the TRIMS Committee 

considered in October 2004, several TRIMSrelated proposals submitted in 2003 by a group 

of African countries. One proposal argued that 

WTO Members should interpret and apply the 

TRIMS Agreement in a manner that supports 

WTO-consistent measures taken by developing 

and least-developed countries to safeguard their 

balance of payments. A second proposal argued 

that least-developed or other low-income WTO 

Members experiencing balance-of-payments 

difficulties should be permitted to maintain 

measures inconsistent with the TRIMS 

Agreement for periods of not less than six years. 

The final African proposal would require the 

CTG to grant new requests from least-developed 

countries and certain other developing countries 

for the extension of transition periods or for 

fresh transition periods for the notification and 

elimination of TRIMS. 

In response to these proposals, the United States 

argued that any TRIMS imposed for balance-ofpayments purposes must follow existing WTO 

rules on balance-of-payments safeguards. The 

United States also argued that it would not be 

appropriate to adopt fixed time periods for 

maintaining TRIMS in response to balance-ofpayments crises given the varying nature of such 

crises and that, given the lack of requests for 

TRIMS extensions from least-developed 

countries to date, it was not clear that a policy of 

automatically granting requests for longer 

TRIMS transition periods was warranted. The 

TRIMS Committee is expected to continue to 

discuss this issue in 2005. 

In July 2004, Brazil and India submitted a 

proposal to the CTG for a study of the impact on 

trade and development of TRIMS and of the 

elimination of TRIMS under the TRIMS 

Agreement since 1995. The proposal suggests 

focusing on the agri-processing and automotive 

industries. The Chairman of the TRIMS 

Committee undertook consultations with 

Members on the study proposal. 
II. The World Trade Organization| 63 

Pursuant to paragraph 18 of the Protocol on the 

Accession of the People’s Republic of China to 

the WTO, the TRIMS Committee conducted its 

third annual review in 2004 of China’s 

implementation of the TRIMS Agreement and 

related provisions of the Protocol. The United 

States’ main objectives were to obtain 

information and clarification regarding China’s 

WTO compliance efforts and to convey to 

China, in a multilateral setting, the concerns that 

it has regarding Chinese practices and/or 

regulatory measures that may not be in 

accordance with China’s WTO commitments. 

During the October meeting of the TRIMS 

Committee, U.S. questions focused in particular 

on China’s regulation of the auto sector. U.S. 

agencies are analyzing China’s policies and its 

responses to U.S. questions in an effort to decide 

whether and how to pursue these issues during 

future meetings of the CTG or the TRIMS 

Committee. 

Prospects for 2005 

 

In early 2005, the United States will work to 

address Pakistan’s request for an extension 

through the end of 2006 of the deadline for 

eliminating its remaining TRIMS. The United 

States will also engage other WTO Members in 

efforts to promote compliance with the TRIMS 

Agreement. 

5. Committee on Subsidies and 

Countervailing Measures25

Status 

The Agreement on Subsidies and Countervailing 

Measures (Subsidies Agreement) provides rules 

and disciplines for the use of government 

subsidies and the application of remedies – 

through either WTO dispute settlement or 

countervailing duty (CVD) action – to address 

subsidized trade that causes harmful commercial 

effects. The Agreement nominally divides 

subsidy practices among three classes: 

 

25 For further information, see also the Joint Report of 

the United States Trade Representative and the U.S. 

Department of Commerce, Subsidies Enforcement 

Annual Report to the Congress, February 2005. 

prohibited (red light) subsidies; permitted yet 

actionable (yellow light) subsidies; and 

permitted, non-actionable (green light) 

subsidies.26 Export subsidies and import 

substitution subsidies are prohibited. All other 

subsidies are permitted, but are actionable 

(through CVD or dispute settlement action) if 

they are (i) “specific”, i.e., limited to a firm, 

industry or group thereof within the territory of a 

WTO Member and (ii) found to cause adverse 

trade effects, such as material injury to a 

domestic industry or serious prejudice to the 

trade interests of another WTO Member. With 

the expiration of the Agreement’s provisions on 

green light subsidies, at present, the only nonactionable subsidies are those which are not 

specific, as defined above. 

Cumulative Assessment Since the WTO Was 

Established 

Rules and disciplines covering industrial 

subsidies have strengthened over time in the 

multilateral trading system to ensure that the 

artificial competitive advantages that they can 

confer do not disrupt the market signals that 

guarantee the most efficient allocation of 

resources and generally lead to the generation of 

wealth for producers, consumers, and workers. 

The WTO’s disciplines on subsidies prevent the 

erosion of comparative advantage and the 

 

26 Prior to 2000, Article 8 of the Agreement provided 

that certain limited kinds of government assistance 

granted for industrial research and development 

(R&D), regional development, or environmental 

compliance purposes would be treated as nonactionable subsidies. In addition, Article 6.1 of the 

Agreement provided that certain other subsidies (e.g.,

subsidies to cover a firm’s operating losses), referred 

to as dark amber subsidies, could be presumed to 

cause serious prejudice. If such subsidies were 

challenged on the basis of these dark amber 

provisions in a WTO dispute settlement proceeding, 

the subsidizing government would have the burden of 

showing that serious prejudice had not resulted from 

the subsidy. However, as explained in our 1999 

report, these provisions expired on January 1, 2000 

because a consensus could not be reached among 

WTO Members on whether to extend or the terms by 

which these provisions might be extended beyond 

their five-year period of provisional application. 
II. The World Trade Organization | 64 

undermining of market access expectations 

conferred through reciprocal concessions to 

reduce tariffs and other barriers at the border. In 

short, subsidy rules help to level the playing 

field, so private actors need not worry about 

having to compete with government treasuries. 

At the same time, however, WTO subsidy rules 

recognize that all governments intervene in their 

economies in some fashion to pursue legitimate 

objectives for the society at large. The WTO 

rules prohibit or discourage the most distortive 

kinds of subsidies while concurrently allowing 

governments to use less distortive subsidies to 

achieve broader social or economic objectives. 

 

This historical balance has generally served U.S. 

interests well. The orientation of multilateral 

subsidy rules has tended to reflect the balances 

struck within the United States on the same 

issues: a low toleration for the more distortive 

types of government intervention, along with a 

flexibility which permits a variety of approaches 

to address the different social, economic and 

developmental needs of a Member. It is also a 

balance that has served the multilateral system 

well, providing a model which discourages the 

kind of targeted industrial policies and noncommercial government support that exacerbate 

fundamental economic problems but permits 

broadly-available industry and worker 

assistance. Finally, it is a framework which 

holds promise for creating greater 

complementarities between the goals of trade 

policy and environmental policy, as the United 

States identifies sectors in which the reduction 

or elimination of subsidy practices can alleviate 

both adverse trade and environmental effects. 

In the development context, the provisions of the 

Agreement have been commended as a rational 

approach to the issue of special and differential 

treatment for developing and least-developed 

countries in the rules-based trading system of the 

WTO. In particular, the criteria for inclusion in 

Annex VII of the Subsidies Agreement, 

specifically the per-capita income threshold, 

have been referenced as a sensible and objective 

basis for identification of those poorer 

developing countries in need of particular 

assistance and as an appropriate mechanism to 

provide a temporary respite from fulfilling the 

normal rules. Particularly noteworthy in this 

regard is that the Agreement further recognizes 

that once a developing or least-developed 

country becomes export competitive in a product 

area, it may no longer need certain special and 

differential treatment. 

 

Importantly, the Agreement established the 

Committee on Subsidies and Countervailing 

Measures (the Committee), which is charged 

with implementing specific provisions of the 

Agreement and which operates as a forum for 

the discussion of subsidy-related issues. The 

Agreement and the work of the Committee 

increase the transparency of the application of 

countervailing duties and the operation of 

subsidy programs maintained by Members. 

Under the Agreement, Members must notify to 

the Committee their countervailing duty laws 

and actions as well as their subsidies programs. 

Although additional work is needed to 

strengthen these transparency obligations and 

augment the productivity of the review process, 

the Agreement’s transparency provisions are 

valuable tools in assessing other Members’ 

adherence to the Agreement, as well as their 

approach to subsidy policy in their own 

domestic economies. 

The Committee has also proven to be a vital 

forum for the discussion of subsidy issues more 

generally. For example, in the lead-up to the 

Doha Ministerial Conference, developing 

countries raised numerous “implementation” 

issues regarding the Agreement. All of these 

issues were extensively discussed in the 

Committee in both formal and informal 

meetings. For several of these issues the 

Committee’s work established the bases for 

decisions made at the Fourth Ministerial 

Conference that significantly contributed to the 

consensus to launch the Doha Development 

Agenda. The Committee’s work in this regard is 

also illustrative of how specific practical 

problems faced by WTO developing country 

Members can be pragmatically addressed 

without undermining the integrity and strength 

of the underlying rules of the relevant WTO 

agreement. 
II. The World Trade Organization| 65 

The Uruguay Round Subsidies Agreement 

brought important new disciplines to address the 

more egregious subsidy practices, and for the 

first time extended the coverage of disciplines 

from a small number of signatories of the Tokyo 

Round Subsidies Code to all 148 Members of 

the WTO. The Agreement’s methodological 

concepts reflect, in most instances, the very 

concepts and standards which the United States 

developed over the course of decades in 

administering its own unfair trade statutes. The 

Committee established by the Agreement fosters 

greater transparency and facilitates cooperative 

problem-solving. In sum, the Agreement 

continues to offer a strong yet balanced tool to 

address issues of subsidies in international trade. 

Major Issues in 2004 

The Committee held two meetings in 2004. In 

addition to its routine activities concerned with 

reviewing and clarifying the consistency of 

WTO Members’ domestic laws, regulations and 

actions with Agreement requirements, the 

Committee, and the United States, continued to 

accord special attention to the general matter of 

subsidy notifications and the process by which 

such notifications are made to and considered by 

the Subsidies Committee. During the fall 

meeting, the Committee undertook its third 

transitional review with respect to China’s 

implementation of the Agreement. Other issues 

addressed in the course of the year included: the 

examination of the export subsidy program 

extension requests of certain developing 

countries, the updating of the methodology for 

Annex VII(b) of the Agreement and an 

appointment to the Permanent Group of Experts. 

Further information on these various activities is 

provided below. 

• Review and Discussion of 

Notifications: Throughout the year, Members 

submitted notifications of: (i) new or amended 

CVD legislation and regulations; (ii) CVD 

investigations initiated and decisions taken; and 

(iii) measures which meet the definition of a 

subsidy and which are specific to certain 

recipients within the territory of the notifying 

Member. Notifications of CVD legislation and 

actions, as well as subsidy notifications, were 

reviewed and discussed by the Committee at 

both of its meetings. In reviewing notified CVD 

legislation and subsidies, Committee procedures 

provide for the exchange in advance of written 

questions and answers in order to clarify the 

operation of the notified measures and their 

relationship to the obligations of the Agreement. 

To date, 97 Members of the WTO (counting the 

European Union as one) have notified that they 

currently have CVD legislation in place, while 

37 Members have not, as yet, made a 

notification. Among the notifications of CVD 

laws and regulations reviewed in 2004 were 

those of: Argentina, Canada, China, the 

European Communities, Japan, Jordan, Mexico, 

Peru and South Africa.27

As for CVD measures, eleven WTO Members 

notified CVD actions taken during the latter half 

of 2003, and eight Members notified actions 

taken in the first half of 2004. Specifically, the 

Committee reviewed actions taken by Argentina, 

Australia, Brazil, Canada, Costa Rica, the 

European Union, Latvia, Mexico, New Zealand, 

the United States and Venezuela. In 2004, 54 

subsidy notifications for 2003 were reviewed. 

The Committee also continued its examination 

of new and full notifications and updating 

notifications for earlier time periods. 

Unfortunately, many Members have never made 

a subsidy notification to the WTO, although 

many are least developed countries. 

The lack of a subsidy notification by China has 

been of particular concern to the United States, 

as well as numerous other WTO Members (see 

China Transitional Review below). Although 

China became a WTO Member in 2001, it has 

yet to provide a subsidy notification as required 

under Article 25.1 of the Agreement and China’s 

Protocol of Accession. While recognizing the 

problems inherent in compiling the first subsidy 

notification for a large country, the United States 

took the lead in the Committee in urging China 

to file its subsidy notification as soon as 

possible. In addition, to obtain specific 

 

27 In keeping with WTO practice, the review of 

legislative provisions which pertain or apply to both 

antidumping and CVD actions by a Member 

generally took place in the Antidumping Committee. 
II. The World Trade Organization | 66 

information regarding known assistance 

programs that potentially should be notified the 

United States exercised its rights under Article 

25.8 of the Agreement and submitted detailed 

written questions to China requesting 

information on the nature and extent of the 

programs in question. Under Article 25.9 of the 

Agreement, China is obligated to provide a 

written, comprehensive response. 

• China Transitional Review: At the fall 

meeting, the Committee undertook, pursuant to 

the Protocol on the Accession of the People’s 

Republic of China, the third annual transitional 

review with respect to China’s implementation 

of its WTO obligations in the areas of subsidies, 

countervailing measures and pricing policies. 

Taking a leading role, the United States, along 

with other Members, presented written and oral 

questions and concerns to China in these areas. 

China provided substantial information with 

respect to its countervailing duty laws and 

regulations, as well as some information 

regarding its pricing policies. China orally 

described a limited number of its subsidy 

programs in response to Members’ inquiries 

during the meeting. As noted above, however, it 

has not submitted a subsidies notification since 

becoming a WTO Member, citing numerous 

practical difficulties in assembling and 

submitting the appropriate information. 

Reciting detailed, publicly-available information 

for several of China’s programs, the United 

States questioned the comprehensiveness of 

China’s answers and urged it to provide a 

subsidy notification as required by Article 25.1 

of the Agreement and its Protocol of Accession. 

Later in the year, at the Council for Trade in 

Goods meeting, China did commit to provide a 

subsidies notification within the year. 

• Extension of the transition period for the 

phase out of export subsidies: Under the 

Agreement, most developing countries were 

obligated to eliminate their export subsidies by 

December 31, 2002. Article 27.4 of the 

Agreement allows for an extension of this 

deadline provided consultations were entered 

into with the Committee by the end of 2001. If 

the Committee grants an extension, annual 

consultations with the Committee must be held 

to determine the necessity of maintaining the 

subsidies.28 If the Committee does not 

affirmatively sanction a continuation, the export 

subsidies must be phased out within two years. 

To try and address the concerns of certain small 

developing countries, a special procedure within 

the context of Article 27.4 of the Agreement was 

adopted at the Fourth Ministerial Conference 

under which countries whose share of world 

exports was not more than 0.10 percent and 

whose Gross National Income was not greater 

than $20 billion could be granted a limited 

extension for particular types of export subsidy 

programs subject to rigorous transparency and 

standstill provisions. Members meeting all the 

qualifications for the agreed upon special 

procedures were eligible for a five-year 

extension of the transition period, in addition to 

the two years referred to under Article 27.4.29

At the end of 2001, Antigua and Barbuda, 

Barbados, Belize, Bolivia, Costa Rica, 

Dominica, Dominican Republic, El Salvador, 

Fiji, Grenada, Guatemala, Honduras, Jamaica, 

Jordan, Kenya, Mauritius, Panama, Papua New 

Guinea, St. Kitts and Nevis, St. Lucia, St. 

Vincent and Grenadines, Sri Lanka, and 

Suriname made requests under the special 

procedures adopted at the Fourth Ministerial 

Conference for small exporter developing 

countries.30 Uruguay requested an extension for 

 

28 Any extension granted by the Committee would 

only preclude a WTO dispute settlement case from 

being brought against the export subsidies at issue. A 

Member’s ability to bring a countervailing duty 

action under its national laws would not be affected. 

29 In addition to agreement on the specific length of 

the extension, it was also agreed at the Fourth 

Ministerial Conference, in essence, that the 

Committee should look favorably upon the extension 

requests of Members which do not meet all the 

specific eligibility criteria for the special small 

exporter procedures but which are similarly situated 

to those that do meet all the criteria. This provision 

was added at the request of Colombia. 

30 Bolivia, Honduras, Kenya and Sri Lanka are all 

listed in Annex VII of the Subsidies Agreement and 

thus, may continue to provide export subsidies until 

their “graduation”. Therefore, these countries have 

only reserved their rights under the special 

procedures in the event they graduate during the five-
II. The World Trade Organization| 67 

one program under both the normal and special 

procedures. Additionally, Colombia sought an 

extension for two of its export subsidies 

programs under a procedure agreed to at the 

Fourth Ministerial Conference analogous to that 

provided for small exporter developing 

countries. These requests were approved by the 

Committee in 2002 and again in 2003. 

In 2004, requests were made by all the countries 

which had received extensions under the special 

procedures adopted at the Fourth Ministerial 

Conference for small exporter developing 

countries.31 All these requests required, inter 

alia, a detailed examination of whether the 

applicable standstill and transparency 

requirements had been met. In total, the 

Committee conducted a detailed review of more 

than 40 export subsidy programs. At the end of 

the process, all of the requests under the special 

procedures were granted. Throughout the 

review and approval process, the United States 

took a leadership role in ensuring close 

adherence to all of the preconditions necessary 

for continuation of the extensions. 

• The Methodology for Annex VII(b) of 

the Agreement: Annex VII of the Agreement 

identifies certain least developed countries that 

are eligible for particular special and differential 

treatment. Specifically, the export subsidies of 

these countries are not prohibited and, therefore, 

are not actionable as prohibited subsidies under 

the dispute settlement process. The countries 

identified in Annex VII include those WTO 

 

year extension period contemplated by the special 

procedures. Because these countries are only 

reserving their rights at this time, the Committee did 

not need to make any decisions as to whether their 

particular programs qualify under the special 

procedures. 

31 Colombia did not request an extension for two of 

its export subsidies programs for which extensions 

were granted under the procedure agreed to at the 

Fourth Ministerial Conference. Consequently, the 

two export subsidy programs of Colombia which had 

been granted extensions under a procedure agreed to 

at the Fourth Ministerial Conference analogous to 

that provided for small exporter developing countries, 

must be phased out within two years (i.e., the end of 

2006). 

Members designated by the United Nations as 

“least developed countries” (Annex VII(a)) as 

well as countries that had, at the time of the 

negotiation of the Agreement, a per capita GNP 

under $1,000 per annum and are specifically 

listed in Annex VII(b).32 A country 

automatically “graduates” from Annex VII(b) 

status when its per capita GNP rises above the 

$1,000 threshold. When a Member crosses this 

threshold it becomes subject to the subsidy 

disciplines of other developing country 

Members. 

Since the adoption of the Agreement in 1995, 

the de facto interpretation by the Committee of 

the $1,000 threshold was that it reflected current 

(i.e., nominal or inflated) dollars. The concern 

with this interpretation, however, was that a 

Member could graduate from Annex VII on the 

basis of inflation alone, rather than on the basis 

of real economic growth. 

In 2001, the Chairman of the Committee, in 

conjunction with the WTO Secretariat, 

developed an alternative approach to calculate 

the $1,000 threshold in constant 1990 dollars. 

At the Fourth Ministerial Conference, decisions 

were made which led to the adoption of this 

methodology. The WTO Secretariat updated 

these calculations in 2004.33

 

• Permanent Group of Experts: Article 24 

of the Agreement directs the Committee to 

establish a Permanent Group of Experts (PGE), 

“composed of five independent persons, highly 

qualified in the fields of subsidies and trade 

relations.” The Agreement articulates three 

possible roles for the PGE: (i) to provide, at the 

request of a dispute settlement panel, a binding 

ruling on whether a particular practice brought 

before that panel constitutes a prohibited 

 

32 Members identified in Annex VII(b) are Bolivia, 

Cameroon, Congo, Cote d’Ivoire, Dominican 

Republic, Egypt, Ghana, Guatemala, Guyana, India, 

Indonesia, Kenya, Morocco, Nicaragua, Nigeria, 

Pakistan, Philippines, Senegal, Sri Lanka, and 

Zimbabwe. In recognition of the technical error 

made in the final compilation of this list and pursuant 

to a General Council decision, Honduras was 

formally added to Annex VII(b) on January 20, 2001. 

33 See: G/SCM/110/Add. 1. 
II. The World Trade Organization | 68 

subsidy, within the meaning of Article 3 of the 

Agreement; (ii) to provide, at the request of the 

Committee, an advisory opinion on the existence 

and nature of any subsidy; and (iii) to provide, at 

the request of a WTO Member, a “confidential” 

advisory opinion on the nature of any subsidy 

proposed to be introduced or currently 

maintained by that Member. To date, the PGE 

has not yet been called upon to perform any of 

the aforementioned duties. Article 24 further 

provides for the Committee to elect the experts 

to the PGE, with one of the five experts being 

replaced every year. As of the beginning of 

2004, the members of the Permanent Group of 

Experts were: Professor Okan Aktan (Turkey); 

Dr. Marco Bronckers (Netherlands); Mr. Yuji 

Iwasawa (Japan); Mr. Hyung-Jin Kim (Korea); 

and Mr. Terence P. Stewart (United States). Dr. 

Bronckers’ term expired in the spring of 2004. 

Mr. Asger Petersen (Denmark) was elected to 

replace Dr. Bronckers, assuming the term until 

the spring of 2009. 

Prospects for 2005 

In 2005, the United States will continue to work 

with others to encourage Members’ to meet their 

subsidy notification obligations, and to provide 

technical assistance with their notifications when 

available and where appropriate. (The United 

States is scheduled to provide its new and full 

subsidy notification in 2005.) Second, the 

United States will particularly focus on China’s 

Transitional Review Mechanism, continuing the 

effort to ensure that China meets its obligations 

under its Protocol of Accession and the 

Agreement. Thirdly, the United States will 

continue to ensure the close adherence to the 

provisions of the agreed upon export subsidy 

extension procedures for small exporter 

developing countries. Finally, the United States 

is prepared to take a leadership role in 

addressing any technical questions or developing 

country issues that the Subsidies Committee 

may be asked to consider in the context of issues 

that may arise within the Rules Negotiating 

Group. 

6. Committee on Customs Valuation 

Status 

The purpose of the WTO Agreement on the 

Implementation of GATT Article VII (known as 

the WTO Agreement on Customs Valuation) is 

to ensure that determinations of the customs 

value for the application of duty rates to 

imported goods are conducted in a neutral and 

uniform manner, precluding the use of arbitrary 

or fictitious customs values. Adherence to the 

Agreement is important for U.S. exporters, 

particularly to ensure that market access 

opportunities provided through market access 

gains achieved through tariff reductions are not 

negated by unwarranted and unreasonable 

“uplifts” in the customs value of goods to which 

tariffs are applied. 

Cumulative Assessment Since the WTO Was 

Established 

Achieving universal adherence to the Agreement 

on Customs Valuation in the Uruguay Round 

was an important objective of the United States 

dating back more than twenty years. The 

Agreement was initially negotiated in the Tokyo 

Round, but its acceptance was voluntary until 

mandated as part of membership in the WTO. A 

proper valuation methodology under the WTO 

Agreement on Customs Valuation, avoiding 

arbitrary determinations or officially-established 

minimum import prices, can be the foundation to 

the realization of market access commitments. 

Just as important, the implementation of the 

Customs Valuation Agreement also often 

represents the first concrete and meaningful 

steps taken by developing countries toward 

reforming their customs administrations and 

diminishing corruption, and ultimately moving 

to a rules-based trade facilitation environment. 

Because the Agreement precludes the use of 

arbitrary customs valuation methodologies, an 

additional positive result is to diminish one of 

the incentives for corruption by customs 

officials. For all of these reasons, as part of an 

overall strategic approach to advancing trade 

facilitation within the WTO, the United States 

has taken an aggressive role on matters related 

to customs valuation during the past decade. 
II. The World Trade Organization| 69 

U.S. exporters to many developing countries 

have had market access gains undermined 

through the application of arbitrarily-established 

minimum import prices, often used as a crude, 

broad-brush type of trade remedy - one that 

provides no measure of administrative 

transparency or procedural fairness. A notable 

development of the past 10 years has been a 

broad number of developing country Members 

moving toward implementing rules-based trade 

remedy procedures as a direct result of their 

implementation of the Valuation Agreement and 

moving away from the use of minimum import 

prices. 

Under the Uruguay Round Agreement, special 

transitional measures were provided for 

developing country Members, allowing for 

delayed implementation of the Agreement on 

Customs Valuation and resulting in individual 

implementation deadlines for such Members 

beginning in 2000. An achievement of the past 

10 years has been the positive experience within 

the Customs Valuation Committee in 

successfully addressing individual 

implementation needs of developing country 

Members. Starting in 1998 and continuing 

through 2004 the Committee operated through 

U.S.-led informal consultations leading to more 

than 30 decisions granting further flexible 

transitional measures specifically tailored to 

address particular situations, ultimately leading 

to full implementation through benchmarked 

work programs. The Committee has also been 

very active in exploring ways to ensure targeted 

and effective technical assistance is available to 

developing countries. 

Major Issues in 2004 

The Agreement is administered by the WTO 

Committee on Customs Valuation, which held 

two formal meetings in 2004. The Agreement 

established a Technical Committee on Customs 

Valuation under the auspices of the World 

Customs Organization (WCO). In accordance 

with a 1999 recommendation of the WTO 

Working Party on Preshipment Inspection that 

was adopted by the General Council, the 

Committee on Customs Valuation continued to 

provide a forum for reviewing the operation of 

various Members’ preshipment inspection 

regimes and the implementation of the WTO 

Agreement on Preshipment Inspection. 

The use of minimum import prices, a practice 

inconsistent with the operation of the Agreement 

on Customs Valuation, continues to diminish as 

more developing countries undertake full 

implementation of the Agreement. The United 

States has used the WTO Committee as an 

important forum for addressing concerns on 

behalf of U.S. exporters across all sectors - 

including agriculture, automotive, textile, steel, 

and information technology products - that have 

experienced difficulties related to the conduct of 

customs valuation regimes outside of the 

disciplines set forth under the WTO Agreement 

on Customs Valuation. The use of arbitrary and 

inappropriate “uplifts” in the valuation of goods 

by importing countries when applying tariffs can 

result in an unwarranted doubling or tripling of 

duties. 

While many developing country Members 

undertook timely implementation of the 

Agreement, the Committee continued 

throughout 2004 to address various individual 

Member requests for either a transitional 

reservation for implementation methodology, or 

for a further extension of time for overall 

implementation. Each decision has included an 

individualized benchmarked work program 

toward full implementation, along with 

requirements to report on progress and specific 

commitments on other implementation issues 

important to U.S. export interests. The United 

Arab Emirates maintains an extension of the 

delay period in accordance with the provisions 

of paragraph 1, Annex III. El Salvador, 

Guatemala, Senegal, and Sri Lanka maintain 

reservations that have been granted under 

paragraph 2, Annex III for minimum values, or 

under the Article IX waiver provisions. 

In 2004, in accord with the Doha Ministerial 

mandate on “Implementation-Related Issues and 

Concerns,” the Committee continued to examine 

five proposals from India pertaining to the 

operation of several provisions of the 

Agreement. Support for these proposals from 

other WTO Members has been limited, and 
II. The World Trade Organization | 70 

Members did not come to consensus on these 

issues in 2004. The Committee also actively 

worked to meet another Doha implementationrelated mandate to “identify and assess practical 

means” for addressing concerns by several 

Members on the accuracy of declared values of 

imported goods. The Technical Committee was 

requested to provide this input, and in May 2003 

it submitted its report along with a draft “Guide 

to the Exchange of Customs Valuation 

Information.” In 2004, the Committee 

continued to evaluate the Technical Committee’s 

report. 

An important part of the Committee’s work is 

the examination of implementing legislation. As 

of November 2004, 68 Members had notified 

their national legislation on customs valuation. 

During 2003, the Committee concluded the 

examinations of the legislations of Chile, 

Paraguay, the Philippines and Tanzania. The 

Committee also agreed to revert to the 

examination of the customs legislations of 

Armenia, Burkina Faso, China, India, Mexico, 

Peru and Thailand. Working with information 

provided by U.S. exporters, the United States 

played a leadership role in these examinations, 

submitting in some cases a series of 

comprehensive questions as well as suggestions 

toward improved implementation, particularly 

with regard to China, India, and Mexico. These 

examinations will continue into 2005. In 

October 2004, the Committee also conducted a 

Transitional Review in accordance with 

Paragraph 18 of the Protocol of China’s 

accession to the WTO, with the United States 

submitting comprehensive questions which drew 

a verbal response from China. Most of the 

questions remain an element of the ongoing 

review of China’s legislation. 

The Committee’s work throughout 2004 

continued to reflect a cooperative focus among 

all Members toward practical methods to 

address the specific problems of individual 

Members. As part of its problem-solving 

approach, the Committee continued to take an 

active role in exploring how best to ensure 

effective technical assistance, including with 

regard to meeting post-implementation needs of 

developing country Members. 

Prospects for 2005 

The Committee’s work in 2005 will include 

reviewing the relevant implementing legislation 

and regulations notified by Members, along with 

addressing any further requests by other 

Members concerning implementation deadlines. 

The Committee will monitor progress by 

Members with regard to their respective work 

programs that were included in the decisions 

granting transitional reservations or extensions 

of time for implementation. In this regard, the 

Committee will continue to provide a forum for 

sustained focus on issues arising from practices 

of all Members that have implemented the 

Agreement, to ensure that such Members’ 

customs valuation regimes do not utilize 

arbitrary or fictitious values such as through the 

use of minimum import prices. Finally, the 

Committee will continue to address technical 

assistance issues as a matter of high priority. 

7. Committee on Rules of Origin 

Status 

The objective of the WTO Agreement on Rules 

of Origin is to increase transparency, 

predictability, and consistency in both the 

preparation and application of rules of origin. 

The Agreement on Rules of Origin provides 

important disciplines for conducting preferential 

and non-preferential origin regimes, such as the 

obligation to provide binding origin rulings upon 

request to traders within 150 days of request. In 

addition to setting forth disciplines related to the 

administration of rules of origin, the Agreement 

provides for a work program leading to the 

multilateral harmonization of rules of origin 

used for non-preferential trade. The 

Harmonization Work Programme (HWP) is 

more complex than initially envisioned under 

the Agreement, which originally set for the work 

to be completed within three years after its 

commencement in July 1995. This work 

program continued throughout 2004 and will 

continue into 2005. 

The Agreement is administered by the WTO 

Committee on Rules of Origin, which met 

formally and informally throughout 2004. The 
II. The World Trade Organization| 71 

Committee also serves as a forum to exchange 

views on notifications by Members concerning 

their national rules of origin, along with those 

relevant judicial decisions and administrative 

rulings of general application. The Agreement 

also established a Technical Committee on 

Rules of Origin in the World Customs 

Organization to assist in the HWP. 

As of the end of 2004, 77 WTO Members 

notified the WTO concerning non-preferential 

rules of origin, of which 37 Members notified 

that they had non-preferential rules of origin and 

40 Members notified that they did not have a 

non-preferential rules of origin regime. 83 

Members notified the WTO concerning 

preferential rules of origin, of which 79 notified 

about their preferential rules of origin and four 

notified that they did not have preferential rules 

of origin. 

Cumulative Assessment Since the WTO Was 

Established 

Virtually all issues and problems cited by U.S. 

exporters as arising under the origin regimes of 

U.S. trading partners arise from administrative 

practices that result in non-transparency, 

discrimination, and a lack of predictability. 

Substantial attention has been given to the 

implementation of the Agreement’s important 

disciplines related to transparency, which 

constitute internationally recognized “best 

customs practices.” Many of the Agreement’s 

commitments, such as issuing binding rulings 

upon request of traders in advance of trade, have 

frequently been cited as a model for more broadbased commitments that could emerge from 

future WTO work on Trade Facilitation. 

For the past ten years, the Agreement has 

provided a means for addressing and resolving 

many problems facing U.S. exporters pertaining 

to origin regimes, and the Committee has been 

active in its review of the Agreement’s 

implementation. The ongoing HWP leading to 

the multilateral harmonization of nonpreferential product-specific rules of origin has 

attracted a great deal of attention and resources. 

Significant progress has been made toward 

completion of this effort, despite the large 

volume and magnitude of complex issues which 

must be addressed for hundreds of specific 

products. 

While the Committee has made significant 

progress towards fulfilling the mandate of the 

Agreement to establish harmonized nonpreferential rules of origin, the Committee is still 

grappling with a number of fundamental issues, 

including the scope of the prospective obligation 

to equally apply for all purposes the harmonized 

non-preferential rules of origin. This issue and 

the remaining “core policy issues” are among 

the most difficult and sensitive matters for the 

Members and continued commitment and 

flexibility from all Members will be required to 

conclude the work program and implement the 

non-preferential rules of origin. 

Major Issues in 2004 

The WTO Committee on Rules of Origin 

continued to focus on the work program on the 

multilateral harmonization of non-preferential 

rules of origin. U.S. proposals for the WTO 

origin HWP have been developed under the 

auspices of a Section 332 study being conducted 

by the U.S. International Trade Commission 

pursuant to a request by the U.S. Trade 

Representative. The proposals reflect input 

received from the private sector and ongoing 

consultations with the private sector as the 

negotiations have progressed from the technical 

stage to deliberations at the WTO Committee on 

Rules of Origin. Representatives from several 

U.S. Government agencies continue to be 

actively involved in the WTO origin HWP, 

including the Bureau of Customs and Border 

Protection (formally the U.S. Customs Service), 

the U.S. Department of Commerce, and the U.S. 

Department of Agriculture. 

In addition to the October 2004 formal meeting, 

the Committee conducted numerous informal 

consultations and working party sessions related 

to the HWP negotiations. The Committee 

proceeded in accordance with a December 2001 

mandate from the General Council, which 

extended the HWP while specifically requesting 

that the Committee on Rules of Origin focus 

during the first half of 2004 on identifying core 
II. The World Trade Organization | 72 

policy issues arising under the HWP that would 

require attention of the General Council. 

The Committee continued to make progress in 

reducing the number of issues that remained 

outstanding under the HWP, and proceeding on 

a track toward achieving consensus on productspecific rules of origin for more than 5000 tariff 

lines. In 2004, the Committee focused on 94 

unresolved issues identified as “core policy 

issues.” Many of these issues are particularly 

significant due to their broad application across 

important product sectors, including fish, beef 

products, dairy products, sugar, industrial and 

automotive goods, semiconductors and 

electronics, and steel. Specific origin questions 

among these “core policy issues” include, for 

example, how to determine the origin of fish 

caught in an Exclusive Economic Zone, or 

whether the refinement, fractionation, and 

hydrogenation substantially transform oil and fat 

products to a degree appropriate to confer 

country of origin. A cross-cutting unresolved 

“core policy issue” continues to arise from the 

absence of common understanding among 

Members concerning the scope of the 

Agreement’s prospective obligation, upon 

completion of the harmonization and 

implementation of the results, for Members to 

“apply rules of origin equally for all purposes.” 

As a result, positions have sometimes been 

divided between a strictly neutral analysis under 

the criterion of ‘substantial transformation’ and 

an advocacy of restrictiveness for certain 

product-specific rules that would be unwarranted 

for application to the normal course of trade but 

is perceived as necessary for the operation of 

certain regimes or measures covered by other 

Agreements. 

Prospects for 2005 

Further progress in the HWP will remain 

contingent on achieving appropriate resolution 

of the “core policy issues” and to reaching a 

consensus on the scope of the prospective 

obligation to equally apply for all purposes the 

harmonized non-preferential rules of origin for 

all purposes. In accordance with a decision 

taken by the General Council in July 2004, work 

will continue on addressing these issues. The 

General Council, at its meeting in July 2004, 

extended the deadline for completion of the 94 

core policy issues to July 2005. The General 

Council also agreed that following resolution of 

these core policy issues, the CRO would 

complete its remaining technical work by 

December 31, 2005. 

8. Committee on Technical Barriers to 

Trade 

The Agreement on Technical Barriers to Trade 

(the TBT Agreement) establishes rules and 

procedures regarding the development, adoption, 

and application of voluntary product standards, 

mandatory technical regulations, and the 

procedures (such as testing or certification) used 

to determine whether a particular product meets 

such standards or regulations. The Agreement’s 

aim is to prevent the use of technical 

requirements as unnecessary barriers to trade. 

Although the TBT Agreement applies to a broad 

range of industrial and agricultural products, 

sanitary and phytosanitary (SPS) measures and 

specifications for government procurement are 

covered under separate agreements. TBT 

Agreement rules help to distinguish legitimate 

standards and technical regulations from 

protectionist measures. Standards, technical 

regulations and conformity assessment 

procedures are to be developed and applied on a 

U.S. Inquiry Point 

National Center for Standards and Certification 

Information 

National Institute of Standards and Technology (NIST) 

100 Bureau Drive 

Gaithersburg, MD 20899-2160 

Telephone: (301) 975-4040 

Fax: (301) 926-1559 

email: ncsci@nist.gov

website: http://ts.nist.gov/ncsci 

NIST offers a free web-based service, Export Alert!, that 

provides U.S. customers with the opportunity to review 

and comment on proposed foreign technical regulations 

that can affect them. By registering for the Export Alert! 

Service, U.S. customers receive, via e-mail, notifications 

of drafts or changes to foreign regulations for a specific 

industry sector and/or country. To register on-line 

contact: http://ts.nist.gov/ncsci. 
II. The World Trade Organization| 73 

nondiscriminatory basis, developed and applied 

transparently, and should be based on relevant 

international standards and guidelines, when 

appropriate. 

 

The TBT Committee34 serves as a forum for 

consultation on issues associated with the 

implementation and administration of the 

Agreement. This includes discussions and/or 

presentations concerning specific standards, 

technical regulations and conformity assessment 

procedures proposed or maintained by a 

Member that are creating adverse trade 

consequences and/or are perceived to be 

violations of the Agreement. It also includes an 

exchange of information on Member 

government practices related to implementation 

of the Agreement and relevant international 

developments. 

Transparency and Availability of WTO/TBT 

Documents: A key benefit to the public 

resulting from the TBT Agreement is the ability 

 

34 Participation in the Committee is open to all WTO 

Members. Certain non-WTO Member governments 

also participate, in accordance with guidance agreed 

on by the General Council. Representatives of a 

number of international intergovernmental 

organizations were invited to attend meetings of the 

Committee as observers: the International Monetary 

Fund (IMF), the United Nations Conference on Trade 

and Development (UNCTAD); the International 

Trade Center (ITC); the International Organization 

for Standardization (ISO); the International 

Electrotechnical Commission (IEC); the Food and 

Agriculture Organization (FAO); the World Health 

Organization (WHO); the FAO/WHO Codex 

Alimentarius Commission; the International Office of 

Epizootics (OIE); the Organization for Economic 

Cooperation and Development (OECD); the UN 

Economic Commission for Europe (UN/ECE); and 

the World Bank. The International Organization of 

Legal Metrology (OIML), the United Nations 

Industrial Development Organization (UNIDO), the 

Latin American Integration Association (ALADI), 

the European Free Trade Association (EFTA) and the 

African, Caribbean and Pacific Group of States 

(ACP) have been granted observer status on an ad 

hoc basis, pending final agreement by the General 

Council on the application of the guidelines for 

observer status for international intergovernmental 

organizations in the WTO. 

to obtain information on proposed standards, 

technical regulations and conformity assessment 

procedures, and to provide written comments for 

consideration on those proposals before they are 

finalized. Members are also required to 

establish a central contact point, known as an 

inquiry point, that is responsible for responding 

to requests for information on technical 

requirements or making the appropriate referral. 

The National Institute of Standards and 

Technology (NIST) serves as the U.S. inquiry 

point. NIST maintains a reference collection of 

standards, specifications, test methods, codes 

and recommended practices. This reference 

material includes U.S. Government agencies’ 

regulations and standards, and standards of U.S. 

and foreign non-governmental standardizing 

bodies. The inquiry point responds to requests 

for information concerning federal, state and 

non-governmental standards, regulations, and 

conformity assessment procedures. Upon 

request, NIST will provide copies of 

notifications of proposed regulations from 

foreign governments received under the TBT 

Agreement. NIST also will provide information 

on central contact points for information 

maintained by other WTO Members. NIST 

refers requests for information concerning 

standards and technical regulations for 

agricultural products, including SPS measures, 

to the U.S. Department of Agriculture, which 

maintains the U.S. inquiry point pursuant to the 

Sanitary and Phytosanitary Agreement. 

A number of documents relating to the work of 

the TBT Committee are available to the public 

directly from the WTO website: www.wto.org. 

TBT Committee documents are indicated by the 

symbols, “G/TBT/....” Notifications by 

Members of proposed technical regulations and 

conformity assessment procedures which are 

available for comment are issued as: G/TBT/N 

(the “N” stands for “notification”)/USA (which 

in this case stands for the United States of 

America; three letter symbols will be used to 

designate the WTO Member originating the 

notification)/X (where “x” will indicate the 

numerical sequence for that country or 
II. The World Trade Organization | 74 

Member).35 Parties in the United States 

interested in submitting comments to foreign 

governments on their proposals should send 

them through the U.S. inquiry point at the 

address above. Minutes of the Committee 

meetings are issued as “G/TBT/M/...” (followed 

by a number). Submissions by Members (e.g., 

statements, informational documents, proposals, 

etc.) and other working documents of the 

Committee are issued as “G/TBT/W/...” 

(followed by a number). As a general rule, 

written information provided by the United 

States to the Committee is provided on an 

“unrestricted” basis and is available to the public 

on the WTO website. 

Cumulative Assessment Since the WTO Was 

Established 

With the implementation of the Agreement 

Establishing the World Trade Organization, all 

Members assumed responsibility for compliance 

with the TBT Agreement. Although a form of 

the Agreement had existed as a result of the 

Tokyo Round, the expansion of its applicability 

to all Members was significant and resulted in 

new obligations for many Members. The 

Agreement has secured the right for interested 

parties in the United States to have information 

on proposed standards, technical regulations and 

conformity assessment procedures being 

developed by other Members. It provides an 

opportunity for interested parties to influence the 

development of such measures by taking 

advantage of the opportunity to provide written 

comments on drafts. Among other things, this 

helps to prevent the establishment of technical 

barriers to trade. The Agreement has functioned 

well in this regard, though discussions on how to 

improve the operation of the provisions on 

transparency are ongoing. Other disciplines and 

obligations, such as the prohibition of 

discrimination and the call for measures not to 

be more trade restrictive than necessary to fulfill 

legitimate regulatory objectives, have been 

 

35 Before 2000, the numbering of notifications of 

proposed technical regulations and conformity 

assessment procedures read: “G/TBT/Notif./...” 

(followed by a number). 

useful in evaluating potential trade barriers and 

in seeking ways to address them. 

Committee monitoring and oversight has served 

an important role. The Committee has served as 

a constructive forum for discussing and 

resolving issues, and this has perhaps alleviated 

the need for more dispute settlement 

undertakings. Over the past ten years, an 

increasing number of Members have used the 

Committee to highlight trade problems, 

including a number of developing country 

members. To date, there has been only one 

WTO dispute concerning the rights and 

obligations under the TBT Agreement (Peru’s 

challenge of the European Communities’ trade 

description of sardines). 

The Agreement obliges the Committee to review 

every three years the operation and 

implementation of the Agreement. Three such 

reviews have now been completed (G/TBT/5, 

G/TBT/9, and G/TBT/13). From the U.S. 

perspective, a key benefit of these reviews is that 

it prompts WTO Members to review and discuss 

all of the provisions of the Agreement, which 

facilitates a common understanding of 

Members’ rights and obligations. The review 

also identifies some practical problems 

associated with implementation and ways to 

address them. For example, in response to 

questions about how to define “international 

standard” for purposes of implementing the 

Agreement, the Committee adopted a decision 

containing a set of principles it considered 

important for international standards 

development (i.e., openness, transparency, 

impartiality; consensus; relevance and 

effectiveness; and coherence and development). 

Members were encouraged to promote 

adherence to these principles by their 

standardizing bodies and participants in the 

international bodies and thereby advance the 

objectives of the Agreement. (Decisions and 

recommendations adopted by the Committee are 

contained in G/TBT/1/Rev.8.) The reviews have 

also stimulated the Committee to host 

workshops on various topics of interest, 

including technical assistance, conformity 

assessment, labeling and good regulatory 

practice. 
II. The World Trade Organization| 75 

Major Issues in 2004 

 

The TBT Committee met three times in 2004. 

and addressed implementation of the 

Agreement, including an exchange of 

information on actions taken by Members 

domestically to ensure implementation and 

ongoing compliance. A number of Members 

used the Committee meetings to raise concerns 

about specific technical regulations that affected, 

or had the potential to affect, trade adversely and 

were perceived to create unnecessary barriers to 

trade. U.S. interventions were primarily targeted 

at a variety of proposals from the EU that could 

seriously disrupt trade (e.g., the EU’s proposed 

regulation on the Registration, Evaluation and 

Authorization of Chemicals (“REACH”), wine 

labeling regulations, and regulations on the 

traceability and labeling of biotech food and 

feed products). The minutes of the meetings are 

contained in G/TBT/M/32, 33 and 34. 

On November 2-3, 2004, the Committee held its 

Fourth Special Meeting on Procedures for 

Information Exchange to discuss in-depth 

practical issues associated with making 

notifications, handling comments received on 

them, disseminating information on proposals at 

the national level, and promoting awareness of 

Members’ rights under the Agreement as well as 

other elements associated with transparency. 

The Committee also carried out its third annual 

transitional review of China’s progress in 

implementing its WTO commitments which is 

mandated by China’s protocol of accession. The 

United States (G/TBT/W/245), the EU 

(G/TBT/W/242), and Japan (G/TBT/W/243) 

submitted written questions to China which 

raised concerns relating to notifications, 

standards setting, scrap recycling regulations, 

chemical regulations and conformity assessment 

procedures, among other matters. China 

provided written information in G/TBT/W/246 

and responded to Member’s questions orally at 

the committee’s November 4, 2004 meeting. 

The Committee also conducted its Ninth Annual 

Review of the Agreement based on information 

contained in G/TBT/14, and its Ninth Annual 

Review of the Code of Good Practice for the 

Preparation, Adoption and Application of 

Standards (Annex 3 of the Agreement) based on 

information contained in G/TBT/CS/1/Add.8 

and G/TBT/CS/2/Rev.10. 

Follow-up to the Third Triennial Review of the 

Agreement: In November 2003, the Committee 

concluded its Third Triennial Review 

(G/TBT/13). In follow-up to that review, the 

committee gave priority attention to an exchange 

of information on good regulatory practice, 

conformity assessment procedures, transparency 

and technical assistance, and the implementation 

needs of developing countries. The Committee 

discussed preparations for one workshop (March 

2005) on implementation of supplier’s 

declaration of conformity and another workshop 

on other approaches to facilitate the acceptance 

of conformity assessment results (March 2006). 

It has also explored ways to facilitate 

coordination, both within the WTO and with 

other bodies, of technical assistance in response 

to identified needs. The Triennial Review 

document includes a listing of all the 

submissions made by Members in the context of 

the review and that are available at 

www.wto.org. It also includes information, by 

Member, on whether individual Members have 

established an enquiry point and provided a 

statement regarding domestic steps that have 

been taken to implement the Agreement. 

Prospects for 2005 

The Committee will continue to monitor 

implementation of the Agreement by WTO 

Members. The number of specific trade 

concerns raised in the Committee appears to be 

increasing. The Committee has been a useful 

forum for Members to raise concerns and 

facilitate bilateral resolution of such concerns. 

In March 2005, the Committee will host a 

workshop on supplier’s declaration of 

conformity. Follow-up on issues raised in past 

reviews, or discussion of new issues in 

preparation for the Fourth Review, are driven by 

Member statements and submissions. The U.S. 

priorities are likely to continue to focus on good 

regulatory practice, transparency and technical 

assistance. At its last meeting in 2004, the 

Committee agreed upon a work program for the 
II. The World Trade Organization | 76 

Fourth Triennial Review which it expects to 

conclude at its third meeting in 2006. An initial 

list of topics and organization of the discussion 

will be discussed at the Committee’s March 

2005 meeting. 

9. Committee on Antidumping Practices 

Status 

The Agreement on Implementation of Article VI 

of the General Agreement on Tariffs and Trade 

1994 (the Antidumping Agreement) sets forth 

detailed rules and disciplines prescribing the 

manner and basis on which Members may take 

action to offset the injurious dumping of 

products imported from another Member. 

Implementation of the Agreement is overseen by 

the Committee on Antidumping Practices (the 

Antidumping Committee), which operates in 

conjunction with two subsidiary bodies, the 

Working Group on Implementation (formerly 

the Ad Hoc Group on Implementation) and the 

Informal Group on Anticircumvention. 

The Working Group on Implementation is an 

active body which focuses on practical issues 

and concerns relating to implementation. Based 

on papers submitted by Members on agreed 

topics for discussion, the activities of the 

Working Group permit Members to develop a 

better understanding of each others’ 

antidumping policies and practices. 

At Marrakesh in 1994, Ministers adopted a 

Decision on Anticircumvention directing the 

Antidumping Committee to develop rules to 

address the problem of circumvention of 

antidumping measures. In 1997, the 

Antidumping Committee agreed upon a 

framework for discussing this important topic 

and established the Informal Group on 

Anticircumvention. Under this framework, the 

Informal Group held meetings in April and 

October 2004 to discuss the topics of: (1) what 

constitutes circumvention; (2) what is being 

done by Members confronted with what they 

consider to be circumvention; and (3) to what 

extent circumvention can be dealt with under 

existing WTO rules and what other options may 

be deemed necessary. 

Cumulative Assessment Since the WTO Was 

Established 

Antidumping rules provide a remedial 

mechanism that WTO Members have agreed is 

necessary to the maintenance of the multilateral 

trading system. Without this and other trade 

remedies, there could have been no agreement 

on broader GATT and later WTO packages of 

market-opening agreements, especially given the 

imperfections that remain in the multilateral 

trading system. WTO rules ensure that 

antidumping actions are governed by objective 

and transparent standards and procedures, and 

are founded on the principles set forth in Article 

VI of the GATT 1994 for addressing injurious 

dumping. The Antidumping Agreement, 

therefore, sets out rules and procedures that 

ensure that legitimate actions taken against 

injurious dumping are grounded in the rule of 

law and due process, building upon the 

standards that have been ingrained in U.S. 

antidumping law for decades. 

Antidumping rules are necessarily complex. Yet 

they have come to be used by a growing circle 

of Members, especially in the developing world. 

Accordingly, the work of the Antidumping 

Committee and its subsidiary bodies has been 

important for reviewing Members’ compliance 

with the detailed provisions in the Antidumping 

Agreement, improving mutual understanding of 

those provisions, and providing opportunities to 

exchange views and experience with respect to 

Members’ application of antidumping remedies. 

The Committee’s work has helped ensure that 

Members understand their commitments under 

the Agreement and develop the tools to 

implement them properly. By providing 

opportunities to discuss Members’ legislation, 

policies and practices, the Committee’s work 

assists Members in conducting antidumping 

investigations and adopting antidumping 

measures in conformity with the detailed 

provisions of the Agreement, as well as in 

providing advice to exporters when they are 

subject to other Members’ antidumping 

investigations. 
II. The World Trade Organization| 77 

This ongoing review process in the Committee 

helps ensure that antidumping laws around the 

world are properly drafted and implemented, 

thereby contributing to a well-functioning, open 

and rules-based trading system. U.S. exporters 

have access to information submitted to the 

Committee about the antidumping laws of other 

Members that should assist exporters in better 

understanding the operation of such laws and in 

taking them into account in commercial 

planning. 

The Antidumping Agreement requires Members 

to submit reports on all preliminary or final 

antidumping actions taken, and, on a semiannual basis, reports of antidumping actions 

taken within the preceding six months. The 

semi-annual reports provide valuable reference 

tools summarizing Members’ antidumping use, 

and are increasingly important given the 

increase in the number of Members using 

antidumping measures. The United States 

carefully scrutinizes those reports, often raises 

questions about them at Committee meetings, 

and refers to them when specific questions arise 

as to antidumping actions by other Members. 

The semi-annual reports are accessible to the 

general public, in keeping with the objectives of 

the Uruguay Round Agreements Act. 

(Information on accessing WTO notifications is 

included in Annex II). This promotes improved 

public knowledge and appreciation of the trends 

in and focus of all WTO Members’ antidumping 

actions. 

The Working Group on Implementation 

continues to serve as an active venue for work 

regarding the practical implementation of WTO 

antidumping provisions. It offers important 

opportunities for Members to examine issues 

and candidly exchange views and information 

across a broad range of topics. It has drawn a 

high level of participation by Members and, in 

particular, by experts from capitals and officials 

of antidumping administering authorities, many 

of whom are eager to obtain insight and 

information from their peers. Since the 

inception of the Working Group, the United 

States has submitted papers on most topics, and 

has been an active participant at all meetings. 

The Working Group addresses implementation 

concerns and questions stemming both from 

one's own administrative experience and from 

observing the practices of others. While not a 

negotiating forum in either a technical or formal 

sense, the Working Group serves an important 

role in promoting improved understanding of the 

Agreement’s provisions and exploring options 

for improving practices among antidumping 

administrators. 

Where possible, the Working Group endeavors 

to develop draft recommendations on the topics 

it discusses, which it forwards to the 

Antidumping Committee for formal 

consideration. To date, the Committee has 

adopted Working Group recommendations on: 

(1) pre-initiation notifications under Article 5.5 

of the Agreement; (2) the periods used for data 

collection in investigations of dumped imports 

and of injury caused or threatened to be caused 

by such imports; (3) extensions of time to supply 

information; (4) the timeframe to be used in 

calculating the volume of dumped imports for 

making the determination under Article 5.8 of 

the Agreement as to whether the volume of such 

imports is negligible; and (5) guidelines for the 

improvement of annual reviews under Article 

18.6 of the Agreement. 

The last two recommendations listed above, both 

agreed upon in November 2002, addressed 

issues referred to the Committee by the 2001 

Doha Ministerial Decision on ImplementationRelated Issues and Concerns. With respect to 

the implementation of these two 

recommendations, many Members, including the 

United States, have filed notifications with 

respect to their practices as to the timeframe 

under Article 5.8 of the Agreement, in 

accordance with the Committee’s 

recommendation. In addition, pursuant to the 

Committee’s recommendation under Article 

18.6 designed to improve transparency in the 

Committee’s annual reviews, a number of 

Members, including the United States, have 

provided additional information in their semiannual reports to the Committee, and the 

Committee’s annual reports have reflected this 

additional information. 
II. The World Trade Organization | 78 

Discussions in the Working Group on 

Implementation will continue to play an 

important role as more and more Members enact 

antidumping laws and begin to apply them. 

There has been a sharp and widespread interest 

in clarifying understanding of the many complex 

provisions of the Antidumping Agreement. 

Tackling these issues will require the 

involvement of the Working Group, which is the 

forum best suited to provide the necessary 

technical and administrative expertise. The 

United States will continue to rely upon the 

Working Group to learn in greater detail about 

other Members’ administration of their 

antidumping laws, especially as that forum 

provides opportunities to discuss not only the 

laws, as written, but also the operational 

practices which Members employ to implement 

them. 

The Antidumping Committee’s establishment of 

the Informal Group on Anticircumvention in 

1997 marked an important step towards 

fulfilling the Decision of Ministers at Marrakesh 

to refer this matter to the Committee. Many 

Members, including the United States, recognize 

the importance of using the Informal Group to 

pursue the 1994 decision of Ministers at 

Marrakesh, who expressed the desirability of 

achieving uniform rules in this area as soon as 

possible. Members have submitted papers and 

made presentations outlining scenarios based on 

factual situations faced by their investigating 

authorities, and exchanged views on how their 

respective authorities might respond to such 

situations. Moreover, those Members, such as 

the United States, that have legislation intended 

to address circumvention, have responded to 

inquiries from other Members as to how such 

legislation operates and the manner in which 

certain issues may be treated. However, other 

Members have taken the position that any action 

to counter circumvention is prohibited by the 

Agreement, other than a new investigation of 

dumping and material injury by the allegedly 

circumventing imports. This basic conceptual 

disagreement has arisen repeatedly in the 

discussions of the Informal Group. 

Major Issues in 2004 

In 2004, the Antidumping Committee held two 

meetings, in April and October. At its meetings, 

the Committee focused on implementation of the 

Antidumping Agreement, in particular, by 

continuing its review of Members’ antidumping 

legislation. The Committee also reviewed 

reports required of Members that provide 

information as to preliminary and final 

antidumping measures and actions taken in each 

case over the preceding six months. 

Among the more significant activities 

undertaken in 2004 by the Antidumping 

Committee, the Working Group on 

Implementation and the Informal Group on 

Anticircumvention are the following: 

• Notification and Review of Antidumping 

Legislation: To date, 76 Members of the WTO 

have notified that they currently have 

antidumping legislation in place, while 29 

Members have notified that they maintain no 

such legislation. In 2004, the Antidumping 

Committee reviewed notifications of new or 

amended antidumping legislation submitted by 

Argentina, Australia, Canada, China, the 

European Communities, Japan, Jordan, Mexico, 

Peru and South Africa. Members, including the 

United States, were active in formulating written 

questions and in making follow-up inquiries at 

Committee meetings. 

• Notification and Review of Antidumping 

Actions: In 2004, 26 WTO Members notified 

that they had taken antidumping actions during 

the latter half of 2003, whereas 27 Members did 

so with respect to the first half of 2004. (By 

comparison, 39 Members notified that they had 

not taken any antidumping actions during the 

latter half of 2003, and 33 Members notified that 

they had taken no actions in the first half of 

2004). These actions, in addition to outstanding 

antidumping measures currently maintained by 

WTO Members, were identified in semi-annual 

reports submitted for the Antidumping 

Committee’s review and discussion. 

• China Transitional Review: At the October 

2004 meeting, the Committee undertook, 
II. The World Trade Organization| 79 

pursuant to the Protocol on the Accession of the 

People's Republic of China, its third annual 

transitional review with respect to China's 

implementation of the Agreement. Several 

Members, including the United States, presented 

written and oral questions to China with respect 

to China's antidumping laws and practices, 

particularly emphasizing concerns about a lack 

of transparency in some of China’s practices, 

with China orally providing information in 

response to these questions at the October 2004 

meeting. 

• European Union Expansion: At its April 

2004 meeting, the Committee discussed issues 

pertaining to the status of outstanding 

antidumping measures of the European Union in 

light of the expansion of the EU as of May 1, 

2004 from 15 members to 25 members. 

Following up on issues discussed in the 

Committee in 2003, several Members, including 

the United States, raised questions about the 

consistency with the Antidumping Agreement of 

the EU’s announced intention to extend 

automatically, upon expansion, its antidumping 

measures previously covering imports into the 

territory of the 15 member-states of the EU 

before expansion to cover imports into the 

territory of its 25 member-states after expansion, 

in the absence of an additional determination of 

injury covering the territory of the 25 memberstates. 

• Working Group on Implementation: The 

Working Group held two meetings, in April and 

October 2004. The Working Group’s principal 

focus in 2004 was the discussion of four topics 

the Committee had referred to the Working 

Group in 2003: (1) export prices to third 

countries vs. constructed value under Article 2.2 

of the Antidumping Agreement; (2) foreign 

exchange fluctuations under Article 2.4.1; (3) 

conduct of verifications under Article 6.7; and 

(4) judicial, arbitral or administrative reviews 

under Article 13. The United States submitted 

papers on the topics of foreign exchange 

fluctuations, conduct of verifications, and 

judicial, arbitral or administrative review in 

2003, and submitted a paper on the topic of 

Article 2.2 in late 2004. Other Members that 

have submitted papers on one or more of these 

topics include Argentina, Australia, Canada, the 

European Union, New Zealand, South Africa, 

Turkey and Venezuela. 

• Informal Group on Anticircumvention: At 

its two meetings in 2004, the Informal Group on 

Anticircumvention continued its useful 

discussions on the first three items of the agreed 

framework of (1) what constitutes 

circumvention; (2) what is being done by 

Members confronted with what they consider to 

be circumvention; and (3) to what extent can 

circumvention be dealt with under the relevant 

WTO rules; to what extent can it not; and what 

other options may be deemed necessary. At the 

April 2004 meeting, the Group continued its 

discussion of a paper submitted by the United 

States in 2003 summarizing its experience in 

two recent circumvention investigations. At the 

October 2004 meeting, the Group discussed a 

new paper by New Zealand, which discussed a 

specific circumvention-related problem that it 

had faced, and proposed a possible approach to 

deal with the situation where unassembled and 

disassembled goods are imported in order to 

circumvent an antidumping duty. The Group 

also discussed an issue raised with respect to 

notification of exporters and their governments 

by Members that initiate anti-circumvention 

inquiries. 

Prospects for 2005 

Work will proceed in 2005 on the areas that the 

Antidumping Committee, the Working Group on 

Implementation and the Informal Group on 

Anticircumvention addressed this past year. The 

Antidumping Committee will pursue its review 

of Members’ notifications of antidumping 

legislation, and Members will continue to have 

the opportunity to submit additional questions 

concerning previously reviewed notifications. 

Members’ preparation and Committee review of 

semi-annual reports and reports of preliminary 

and final antidumping actions will also continue 

in 2005. 

In 2005, the Working Group will also consider 

whether additional topics should be added for 

discussion, as well as how to advance the 

discussions of the existing topics. To facilitate 
II. The World Trade Organization | 80 

this consideration, Members will be reviewing 

an updated list to be prepared by the WTO 

Secretariat listing all topics that the Working 

Group has considered since its inception, as well 

as the papers that have been submitted by 

Members for each topic. 

The work of the Informal Group on 

Anticircumvention will also continue in 2005 

according to the framework for discussion on 

which Members agreed. 

10. Committee on Import Licensing 

Status 

The Committee on Import Licensing was 

established to administer the Agreement on 

Import Licensing Procedures (“Import Licensing 

Agreement”) and to monitor compliance with 

the mutually agreed rules for the application of 

these widely used measures set out in the 

Agreement. The Committee meets at least twice 

a year to review information on import licensing 

requirements submitted by WTO Members in 

accordance with the obligations of the 

Agreement. The Committee also receives 

questions from Members on the licensing 

regimes notified by other Members, and 

addresses specific observations and complaints 

concerning Members’ licensing systems. These 

reviews are not intended to substitute for dispute 

settlement procedures. Rather, they offer 

Members an opportunity to receive information 

on specific issues and to clarify problems and 

possibly to resolve them before they become 

disputes. Every other year, the Committee 

conducts an overall review of its activities. 

Since the accession of China to the WTO in 

December 2001, the Committee has also 

conducted an annual review of China’s 

compliance with accession commitments in the 

area of import licensing as part of the 

Transitional Review Mechanism (TRM) 

provided for in China’s Protocol of Accession. 

The Import Licensing Agreement establishes 

rules for all WTO Members that use import 

licensing systems to regulate their trade, and sets 

guidelines for what constitutes a fair and nondiscriminatory application of such procedures. 

Its provisions establish disciplines to protect 

Members from unreasonable requirements or 

delays associated with a licensing regime. 

These obligations are intended to ensure that the 

use of such procedures does not create additional 

barriers to trade beyond the policy measures 

implemented through licensing (the 

Agreement’s provisions discipline licensing 

procedures, and do not directly address the 

WTO consistency of the underlying measures). 

The notification requirements and the system of 

regular Committee reviews seek to increase the 

transparency and predictability of Members’ 

licensing regimes. The Agreement covers both 

“automatic” licensing systems, which are 

intended only to monitor imports, not regulate 

them, and “non-automatic” licensing systems, 

under which certain conditions must be met 

before a license is issued. Governments often 

use non-automatic licensing to administer import 

restrictions such as quotas and tariff-rate quotas 

(TRQs), or to administer safety or other 

requirements (e.g., for hazardous goods, 

armaments, antiquities, etc.). Requirements for 

permission to import that act like import 

licenses, such as certification of standards and 

sanitary and technical regulations, are also 

subject to the rules of the Agreement. 

Cumulative Assessment Since the WTO Was 

Established 

Implementation of the Agreement, which had 

been voluntary for the Contracting Parties to the 

GATT 1947, became mandatory for all WTO 

Members in 1995, and has resulted in a much 

broader acceptance of the principles of 

transparency, certainty, and predictability in the 

operation of licensing regimes in the 

international trading system. As tariffs have 

declined in relative importance as a means of 

trade regulation, licensing to monitor trade and 

to apply safety, quality, and other requirements 

to imports has increased. As a result, the 

Agreement=s provisions have taken on added 

significance, and will continue to do so as the 

volume of world trade and number of Members 

in the WTO grows. The impact of licensing 

requirements on agricultural trade has also 

increased as Members implement the minimum 

market access requirements established during 
II. The World Trade Organization| 81 

the Uruguay Round using TRQs. The users of 

import licensing systems include Members that 

account for the bulk of international trade. In 

addition, many new Members are either 

transforming economies with broad mandatory 

licensing requirements or developing economies 

that have long relied on discretionary licensing 

to regulate trade flows. Members have 

scrutinized these countries= regimes during the 

accession process and in subsequent reviews in 

the Committee and other WTO bodies. 

Committee reviews of these countries’ 

notifications have allowed Members to identify 

specific procedures and measures that have the 

potential of blocking trade, and to focus 

multilateral attention on problems at an early 

stage. 

Major Issues in 2004 

At its meetings in May and September 2004, the 

Committee reviewed 49 submissions from 48 

Members,36 including initial or revised 

notifications, completed questionnaires on 

procedures, and questions and replies to 

questions. This represented a decline in the 

number of notifications submitted, but included 

submissions from countries that had not before 

provided notifications to the Committee, e.g. 

Armenia, Dominican Republic, El Salvador, 

Ghana, and Suriname. The Chairman reported 

that at the end of 2004, only 2537 of 123 

Committee Members had never submitted a 

notification to the Committee, bringing the 

percentage of Members with at least an initial 

notification to over three-quarters of the total. 

Concern remained, however, that Members are 

not submitting notifications with the frequency 

required by the Agreement. The Chairman of 

the Committee reminded Members that 

 

36 The EU and its member states are considered a 

single Member for the purposes of submissions to the 

Committee. 

37 Angola, Belize, Botswana, Central African 

Republic, Cambodia, Congo, Democratic Republic of 

the Congo, Djibouti, Egypt, Guinea, Guinea Bissau, 

Israel, Kuwait, Lesotho, Macedonia, Mauritania, 

Mozambique, Myanmar, Nepal, Rwanda, St. Vincent 

& Grenadines, Sierra Leone, Solomon Islands, 

Tanzania, and Thailand. 

notifications were required even if only to report 

that no import licensing system existed and that 

the WTO Secretariat further was prepared to 

assist Members in developing their submissions. 

 

The United States was very active in using the 

Committee to discuss import licensing measures 

applied to its trade by other Members. For 

example, in additional written questions to 

Brazil on its quotas on and non-automatic 

licensing system for imports of certain lithium 

compounds, i.e., lithium carbonate and lithium 

hydroxide, the United States pointed out that 

these measures appear to be part of a system of 

restrictions that had not been notified to the 

Committee, and requested further information 

on the operation of this licensing system, as well 

as on: (i) the basis for granting licences; (ii) 

the administration of the restrictions; (iii) the 

import licences granted over a recent period; 

(iv) the distribution of such licences among 

supplying countries; (v) where practicable, 

import statistics (i.e., value and/or volume) with 

respect to the products subject to import 

licensing; and (vi) the time period allowed for 

processing applications. 

The United States also flagged licensing and 

quantitative restrictions applied by the European 

Union as areas of concern. The United States 

noted that the EU has maintained strict 

quantitative restrictions on imports of natural 

and enriched uranium to protect its domestic 

producers since 1992, and that only about 25 per 

cent of the European market is open to imports 

of enriched uranium. The United States 

observed that the EU has not notified these 

restrictions, and should provide more 

information on them and on any future EU 

agreements negotiated to the Committee. The 

United States stressed that any such 

agreements should comply with WTO rules on 

import quotas and transparency. Another area of 

concern was the EU’s administration of the 

TRQs on pigmeat imports. The EU limited to 

10 percent the portion of the TRQ quota that 

could be allocated to any one exporter. As there 

were few exporters eligible, much of the quota 

was not filled. 
II. The World Trade Organization | 82 

The United States also submitted further written 

questions on Indonesia’s non-automatic 

licensing system for selected textile products, 

first notified during 2002, drawing particular 

attention to Indonesia’s practice of granting 

import licences only to textile producers with a 

local production capacity and barring the 

transfer of imported textiles to other private 

parties. The United States is concerned that 

these measures restrict and distort trade in a 

manner contrary to the Agreement. The United 

States submitted other questions to Argentina, 

India and Jamaica, and written replies to these 

and previous questions were received from 

Argentina, Brazil, India, Indonesia, and Turkey. 

Bahrain and the United Arab Emirates 

responded bilaterally to U.S. questions from 

2003, but did not submit these for circulation to 

other delegations. 

At its October meeting, the Committee carried 

out its third review of China's implementation of 

its WTO accession commitments in the area of 

import licensing procedures as part of the TRM 

included in the terms of China's accession. The 

United States and other WTO Members returned 

to concerns with China's implementation of its 

commitments expressed at the last two TRMs 

and previous Committee meetings: in particular 

the use of import licensing to administer import 

quotas on automobiles; tariff-rate quota 

administration for agricultural commodities and 

fertilizer; and inspection-related requirements 

for agricultural imports and trading rights. 

Prospects for 2005 

Both in the context of the Doha Development 

Agenda and in the day-to-day administration of 

current obligations, consideration of import 

licensing procedures is likely to intensify, 

principally with regard to the administration of 

agricultural TRQs, safeguard measures, and 

technical and sanitary requirements applied to 

imports. The Committee also will continue to be 

the point of first contact in the WTO for 

Members with complaints or questions on the 

licensing regimes of other Members. As use of 

import licensing increases (e.g., to enforce 

national security, environmental, and technical 

requirements, to administer TRQs, or to manage 

safeguard measures) so too will utilization of the 

Committee as a forum for discussion and 

review. As demonstrated by the recent increase 

in requests for formal consultations, this could 

have the effect of increasing the number of 

dispute settlement cases on import licensing 

requirements as well. 

The Committee will continue discussions to 

encourage enhanced compliance with the 

notification and other transparency requirements 

of the Agreement, with renewed focus on 

securing timely revisions of notifications and 

questionnaires, and timely responses to written 

questions, as required by the Agreement. The 

Committee will also continue to conduct annual 

reviews of China’s import licensing operations 

in support of the TRM. 

11. Committee on Safeguards 

Status 

The Committee on Safeguards was established 

to administer the WTO Agreement on 

Safeguards. The Agreement establishes rules for 

the application of safeguard measures as 

provided in Article XIX of GATT 1994. 

Cumulative Assessment Since the WTO Was 

Established 

Effective safeguards rules are important to the 

viability and integrity of the multilateral trading 

system. The availability of a safeguards 

mechanism gives WTO Members the assurance 

that they can act quickly to help industries adjust 

to import surges, thus providing them with 

flexibility they would not otherwise have to 

open their markets to international competition. 

At the same time, WTO safeguards rules ensure 

that such actions are of limited duration and are 

gradually less restrictive over time. 

The Agreement on Safeguards incorporates into 

WTO rules many of the concepts embodied in 

U.S. safeguards law (section 201 of the Trade 

Act of 1974, as amended). The Agreement 

requires all WTO Members to use transparent 

and objective procedures when taking safeguard 
II. The World Trade Organization| 83 

actions to prevent or remedy serious injury to a 

domestic industry caused by increased imports. 

Among its key provisions, the Agreement: 

• requires a transparent, public process for 

making injury determinations; 

• sets out clearer definitions than GATT 

Article XIX of the criteria for injury 

determinations; 

• requires safeguard measures to be 

steadily liberalized over their duration; 

• establishes an eight-year maximum 

duration for safeguard actions, and 

requires a review no later than the midterm of any measure with a duration 

exceeding three years; allows safeguard 

actions to be taken for three years, 

without the requirement of 

compensation or the possibility of 

retaliation; and 

• prohibits so-called “grey area” 

measures, such as voluntary restraint 

agreements and orderly marketing 

agreements, which had been utilized by 

countries to avoid GATT disciplines and 

which adversely affected third-country 

markets. 

The Agreement on Safeguards requires 

Members to notify to the Committee their laws, 

regulations and administrative procedures 

relating to safeguard measures. It also requires 

Members to notify to the Committee various 

safeguards actions, such as (1) initiation of an 

investigatory process; (2) a finding by a 

Member’s investigating authority of serious 

injury or threat thereof caused by increased 

imports; (3) the taking of a decision to apply or 

extend a safeguard measure; and (4) the 

proposed application of a provisional safeguard 

measure. The work of the Committee has been 

important for reviewing Members’ compliance 

with the provisions in the Safeguard Agreement, 

improving mutual understanding of those 

provisions, and providing opportunities to 

exchange views and experience with respect to 

Members’ application of safeguards remedies. 

The Committee’s work has helped ensure that 

Members understand their commitments under 

the Agreement and develop the tools to 

implement them properly. By providing 

opportunities to discuss Members’ legislation, 

policies and practices, the Committee’s work 

assists Members in conducting safeguard 

investigations and adopting safeguard measures 

in conformity with the provisions of the 

Agreement, as well as in providing advice to 

exporters when they are subject to other 

Members’ safeguard investigations. The United 

States carefully scrutinizes both the notifications 

of legislation, and the notifications of actions, 

often raising questions or concerns about them at 

Committee meetings. U.S. exporters have 

access to information submitted to the 

Committee about the safeguard laws of other 

Members, as well as the notifications of 

safeguards actions by other Members. This 

assists exporters in better understanding the 

operation of such laws and in taking them into 

account in commercial planning, as well as in 

defending their interests when other Members 

initiate safeguards investigations. 

Major Issues in 2004 

During its two meetings in April and October 

2004, the Committee continued its review of 

Members’ laws, regulations, and administrative 

procedures, based on notifications required by 

Article 12.6 of the Agreement. The Committee 

reviewed new or amended legislative texts from 

Armenia, China, Jamaica, Jordan, Mexico, 

Pakistan, Peru, Chinese Taipei, and Turkey. 

The Committee reviewed Article 12.1(a) 

notifications, regarding the initiation of a 

safeguard investigatory process relating to 

serious injury or threat thereof and the reasons 

for it, from the following Members: Argentina 

on color television sets; Colombia on electric 

smoothing irons; Ecuador on paper and 

paperboard, and on pneumatic tyres of rubber; 

the European Communities on salmon; India on 

starch; Jamaica on cement; Moldova on 

cosmetic and perfumery products; Peru on 
II. The World Trade Organization | 84 

certain textiles; and Turkey on thermometers. on 

active earth and clays, on certain glassware, on 

unframed glass mirrors, and on certain 

voltmeters and ammeters. 

The Committee reviewed Article 12.1(b) 

notifications, regarding a finding of serious 

injury or threat thereof caused by increased 

imports, from the following Members: Ecuador 

on smooth ceramics; the European Communities 

on mandarins; Hungary on white sugar; India on 

bisphenol; Jamaica on cement; Poland on 

matches. 

The Committee reviewed Article 12.1(c) 

notifications, regarding a decision to apply a 

safeguard measure, from the following 

Members: Ecuador on smooth ceramics; the 

European Communities on mandarins; Hungary 

on white sugar; Jamaica on cement; the 

Philippines on cement, on glass mirrors, on 

figured glass, on float glass; and Poland on 

matches. 

The Committee received notifications from the 

following Members of the termination of a 

safeguard investigation with no safeguard 

measure imposed: Bulgaria on certain steel 

products; Canada on certain steel products; and 

Ecuador on paper and paperboard, and on 

pneumatic tyres of rubber. 

The Committee reviewed Article 12.4 

notifications, regarding the application of a 

provisional safeguard measure, from the 

following Members: the European Communities 

on mandarins, and on salmon; and Jamaica on 

cement. 

The Committee reviewed notifications from 

Brazil regarding a review of, and a proposed 

extension of, its safeguard measures on toys. 

 

China Transitional Review: At the October 

2004 meeting, the Committee undertook, 

pursuant to the Protocol on the Accession of the 

People’s Republic of China, its third transitional 

review with respect to China’s implementation 

of the Agreement. Several Members, including 

the United States, addressed questions and 

comments to China, with a particular emphasis 

on transparency concerns, relating to China’s 

notification of its safeguard regulations and 

rules, and to China’s 2002-2003 safeguard 

measure with respect to certain steel products. 

China’s representatives provided oral responses 

at the October meeting. 

Implementation: At both the April and October 

2004 meetings, the Committee discussed various 

issues pertaining to Article 9.1 of the 

Agreement, concerning the exclusion of 

developing country Members from the 

application of safeguard measures when certain 

criteria are met. 

Prospects for 2005 

The Committee’s work in 2005 will continue to 

focus on the review of safeguard actions that 

have been notified to the Committee and on the 

review of notifications of any new or amended 

safeguards laws. Among the new notifications 

of actions under the Agreement on Safeguards 

that the Committee will be reviewing in 2005 

are notifications by Chile with respect to its 

investigation on wheat flour, and by the 

European Communities with respect to its 

investigation on salmon. 

12. Textiles Monitoring Body 

Status 

The Textiles Monitoring Body (TMB), 

established in the Agreement on Textiles and 

Clothing (ATC), supervised the implementation 

of all aspects of the Agreement. Pursuant to the 

provisions of the ATC, the 10-year period for 

phasing out textile restraints ended on December 

31, 2004. After that date, all remaining textile 

restraints maintained under the provisions of the 

ATC were eliminated and the TMB ceased to 

exist. In 2004, TMB membership was 

composed of appointees and alternates from the 

United States, the European Union, Japan, 

Canada, Turkey, Peru, Indonesia, China, India, 

and Korea. Each TMB member served in a 

personal capacity. 

The ATC succeeded the Multifiber Arrangement 

(MFA) as an interim arrangement establishing 
II. The World Trade Organization| 85 

special rules for trade in textile and apparel 

products on January 1, 1995. All Members of 

the WTO were subject to the disciplines of the 

ATC, whether or not they were signatories to the 

MFA, and only Members of the WTO were 

entitled to the benefits of the ATC. The ATC 

was a ten-year arrangement which provided for 

the gradual integration of the textile and clothing 

sector into the WTO and provided for improved 

market access and the gradual and orderly 

phase-out of the special quantitative 

arrangements that have regulated trade in the 

sector among the major exporting and importing 

nations. 

Cumulative Assessment Since the WTO Was 

Established 

The United States has implemented the ATC in 

a manner which ensured that the affected U.S. 

industries and workers as well as U.S. importers 

and retailers had a gradual, stable and 

predictable regime under which to operate 

during the quota phase-out period. At the same 

time, the United States aggressively sought to 

ensure full compliance with market-opening 

commitments by U.S. trading partners, so that 

U.S. exporters enjoyed growing opportunities in 

foreign markets. 

Major Issues in 2004

A considerable portion of the TMB’s time in 

2004 was spent drafting its contribution to the 

CTG’s review of the operation of the ATC in its 

third stage. This report was forwarded to the 

CTG in July. As expected, in the last year of the 

operation of the ATC, there were no disputes 

among Members involving the application of the 

safeguard mechanism or other actions by 

restraining Members. TMB documents are 

available on the WTO’s web site: 

http://www.wto.org. Documents are filed in the 

Document Distribution Facility under the 

document symbol “G/TMB.” 

Prospects for 2005 

The ATC expired on 1 January 2005 and the 

TMB ceased to function on the same date. 

13. Working Party on State Trading 

Status 

Article XVII of the GATT 1994 requires 

Members to ensure that state trading enterprises 

and private enterprises to which Members 

accord special or exclusive privileges act in a 

manner consistent with the general principle of 

non-discriminatory treatment, make purchases or 

sales solely in accordance with commercial 

considerations, and abide by other GATT 

disciplines. The Understanding on the 

Interpretation of Article XVII of the GATT 1994 

( “Article XVII Understanding”) defines a state 

trading enterprise and instructs Members to 

notify the Working Party of all enterprises in 

their territory that fall within the agreed 

definition, whether or not such enterprises have 

imported or exported goods. 

A WTO Working Party on State Trading was 

established in 1995 to review, inter alia, Member 

notifications of state trading enterprises and the 

coverage of state trading enterprises that are 

notified, and to develop an illustrative list of 

relationships between Members and their state 

trading enterprises and the kinds of activities 

engaged in by these enterprises. All Members 

are required under Article XVII of the GATT 

1994 and paragraph 1 of the Article XVII 

Understanding to submit annual notifications of 

their state trading activities. 

Cumulative Assessment Since the WTO Was 

Established 

The working definition of state trading entities 

agreed to in the Uruguay Round along with the 

establishment of a Working Party on State 

Trading significantly increased the scrutiny of 

these entities in the WTO. While notification 

requirements for state trading entities have 

existed since 1960, no body was established 

specifically to review the notifications until the 

Uruguay Round. Before 1995, little, if any, 
II. The World Trade Organization | 86 

attention was given in the GATT General 

Council to compliance with the notification 

requirement or the content of the notifications, 

and differences existed among countries as to 

what type of entities actually fell under Article 

XVII’s obligations. 

New and full notifications were first required in 

1995 and subsequently must be provided every 

third year thereafter. Members are required to 

update notifications in the intervening years 

indicating any changes since the full 

notification. This practice changed in November 

2003, when the Working Party adopted a 

recommendation that modified the periodicity of 

state trading notifications so that new and full 

notifications on state trading are due every two 

years instead of every three years and the 

requirement of updating notifications in the 

intervening years is eliminated. The Council for 

Trade in Goods approved this change on 

November 26, 2003. 

Under the WTO, Members have provided new 

and full notifications of state trading enterprises 

as follows: 58 Members for 1995, 52 Members 

for 1998, and 52 Members for 2001. Members 

submitted updating notifications as follows: 33 

Members for 1996, 35 Members for 1997, 49 

Members for 1999, 42 Members for 2000, 37 

Members for 2002 and 26 Members for 2003. 

The European Communities and its then 15 

Member States were counted as one Member for 

both the new and full notifications and the 

updating notifications of state trading 

enterprises. The United States has submitted 

new and full notifications of its state trading 

enterprises for 1998 and 2001 and updated its 

notification in 1999, 2000, 2002 and 2003. 

The Working Party has met between one and 

four times a year to review these notifications, 

including the formal submission of questions 

and answers on the operation of specific entities 

reported in the notifications. This improved 

scrutiny and transparency set the stage for indepth examination of certain activities of 

agricultural state trading entities in the DDA 

negotiations. 

The Working Party also completed two other 

tasks mandated in the Article XVII 

Understanding: review of the 1960 notification 

questionnaire and development of the illustrative 

list. 

In July 1998, the Council for Trade in Goods 

adopted the revised notification format which is 

now the basis for all new and full notifications. 

In 1999, the Working Party completed its work 

on an illustrative list of relationships between 

governments and state trading enterprises and 

the kinds of activities in which these enterprises 

are engaged. The illustrative list assists 

Members in preparing notifications. As a result 

of the improved notification system, agriculture 

negotiators have benefited from the improved 

information on activities of and measures used 

by agricultural state trading entities. 

Major Issues in 2004

The Working Party held one formal meeting in 

November 2004, where it reviewed Member 

notifications. New and full notifications for 

2004 have been received from 17 members. In 

October 2003 and again in November 2004, the 

United States submitted a request for 

information from Egypt regarding the operations 

of the Alexandria Cotton Exporters’ Association 

(ALCOTEXCA) and its members, pursuant to 

Article XVII:4(c) of the GATT 1994. The 

United States believes that its interests are being 

adversely affected by the operations of the 

ALCOTEXCA and its members. Article 

XVII:4(c) provides that a Member that has 

reason to believe its interests are being adversely 

affected by the operations of a state trading 

enterprise may request that the Member 

establishing, maintaining or authorizing such 

enterprise supply information about its 

operations related to carrying out the provisions 

of the GATT 1994. 
II. The World Trade Organization| 87 

Prospects for 2005 

As part of the agricultural negotiations in the 

WTO, the United States proposed specific 

disciplines on export agricultural state trading 

enterprises that would increase transparency, 

improve competition and tighten disciplines for 

these entities. 

In 2005, the Working Party will contribute to the 

ongoing discussion of these and other state 

trading issues through its review of new 

notifications and its examination of what further 

information could be submitted as part of the 

notification process to enhance transparency of 

state trading enterprises. 

H. Council on Trade Related Aspects of 

Intellectual Property Rights 

Status 

The Agreement on Trade-Related Aspects of 

Intellectual Property Rights (the TRIPS 

Agreement) is a multilateral agreement that sets 

minimum standards of protection for copyrights 

and neighboring rights, trademarks, 

geographical indications, industrial designs, 

patents, integrated circuit layout designs, and 

undisclosed information. The TRIPS 

Agreement also establishes minimum standards 

for the enforcement of intellectual property 

rights through civil actions for infringement and, 

at least in regard to copyright piracy and 

trademark counterfeiting, in criminal actions and 

actions at the border. The TRIPS Agreement 

requires as well that, with very limited 

exceptions, WTO Members provide national and 

most-favored-nation treatment to the nationals of 

other WTO Members with regards to the 

protection and enforcement of intellectual 

property rights. Disputes between WTO 

Members regarding implementation of the 

TRIPS Agreement can be settled using the 

procedures of the WTO’s Dispute Settlement 

Understanding. 

The TRIPS Agreement entered into force on 

January 1, 1995, and its obligations to provide 

“most favored nation” and national treatment 

became effective on January 1, 1996 for all 

Members. Most substantive obligations are 

phased in based on a Member’s level of 

development. Developed country Members 

were required to implement the obligations of 

the Agreement fully by January 1, 1996; 

developing country Members generally had to 

implement fully by January 1, 2000; and leastdeveloped country Members must implement by 

January 1, 2006. Based on a proposal made by 

the United States at the Doha WTO Ministerial 

Conference, however, the transition period for 

least developed countries to implement or apply 

Sections 5 and 7 of Part II of the TRIPS 

Agreement with respect to pharmaceutical 

products, or to enforce rights with respect to 

such products, was extended by the TRIPS 

Council until January 1, 2016. The WTO 

General Council, on the recommendation of the 

TRIPS Council, similarly waived until 2016 the 

obligation for least developed country Members 

to provide exclusive marketing rights for certain 

pharmaceutical products if those Members did 

not provide product patent protection for 

pharmaceutical inventions. 

The WTO TRIPS Council monitors 

implementation of the TRIPS Agreement, 

provides a forum in which WTO Members can 

consult on intellectual property matters, and 

carries out the specific responsibilities assigned 

to the Council in the TRIPS Agreement. The 

TRIPS Agreement is important to U.S. interests 

and has yielded significant benefits for U.S. 

industries and individuals, from those engaged 

in the pharmaceutical, agricultural, chemical, 

and biotechnology industries to those producing 

motion pictures, sound recordings, software, 

books, magazines, and consumer goods. 

Cumulative Assessment Since the WTO Was 

Established

The TRIPS Agreement has yielded enormous 

benefits for a broad range of U.S. industries, 

including producers of motion pictures, sound 

recordings, software, books, magazines, 

pharmaceuticals, agricultural chemicals, and 

consumer goods; and individuals, including 

authors, artists, composers, performers, and 

inventors and other innovators. The Agreement 

establishes minimum standards for protection 
II. The World Trade Organization | 88 

and enforcement of intellectual property rights 

of all kinds and provides for dispute settlement 

in the event that a WTO Member fails to fulfill 

its obligations fully and in a timely fashion. 

Much of the credit for ensuring that the benefits 

of the TRIPS Agreement are realized by U.S. 

industries should be given to the operation of the 

TRIPS Council. 

 

During 1997 - 1999, the TRIPS Council 

conducted reviews of the implementation of 

obligations by developed country Members and 

other Members acceding at that time. Since 

January 1, 2000, reviews have focused on 

developing country Members, other than leastdeveloped countries, whose TRIPS obligations 

entered into force on that date. The reviews in 

the TRIPS Council provide an opportunity for 

WTO Members to ask detailed questions about 

the way in which other WTO Members have 

implemented their obligations. All questions are 

asked and answered in writing, creating a useful 

record that can be used to educate domestic 

industries about acquiring and exercising rights 

in other countries and that also can alert 

Members in instances in which obligations have 

not been adequately implemented. Perhaps most 

important, the reviews have helped to establish 

certain expectations about the interpretation of 

the TRIPS Agreement by demonstrating that 

there is considerable similarity in 

implementation by those WTO Members that 

have met their obligations. The examples of 

implementation regimes and the rationales given 

for such implementation provide useful guidance 

for Members, in particular least developed 

country Members as they work to implement 

their obligations by January 1, 2006. 

Of particular importance more recently has been 

the review mechanism for China, especially the 

transitional review mechanism under Section 18 

of the Protocol on the Accession of the People’s 

Republic of China. The first of these reviews 

occurred in 2002. This process has been 

instrumental in helping to understand the levels 

of protection of intellectual property rights in 

China, and provides a forum for addressing the 

concerns of U.S. interests in this process. The 

United States has been active in seeking answers 

to questions on a wide breadth of intellectual 

property matters and in raising concerns about 

protection of intellectual property in China, 

especially regarding enforcement of intellectual 

property rights. 

Now that the vast majority of reviews has been 

completed for developed and developing country 

Members, it should be recognized that the 

TRIPS Agreement continues to be instrumental, 

in conjunction with the WTO accession process, 

in ensuring that newly acceding Members of the 

WTO are fully compliant with TRIPS 

obligations upon their date of accession. In this 

manner, the TRIPS review process and the WTO 

accession processes are complementary in 

ensuring that the TRIPS Agreement can 

continue to provide its expected benefits. 

 

The TRIPS Council also undertook a review of 

the enforcement obligations of the Agreement. 

During this review, the United States drew 

special attention to obligations such as that 

contained in Article 41.1 which requires 

Members to ensure that enforcement procedures 

sufficient to permit effective action against acts 

of infringement were available. Such 

procedures must include expeditious remedies 

which constitute a deterrent to further 

infringement. The United States stressed it was 

impossible to get a complete picture of the 

situation in a Member country without 

understanding how its enforcement remedies 

were applied in practice. If the procedures 

provided in legislative texts were not available 

in practice, they could not be effective or have 

the deterrent effect required by the Agreement. 

Since January 1, 2000, the focus has been on 

responses from developing countries and newly 

acceding countries. While much of this review 

has taken place, newly acceding countries 

continue to supply responses to the checklist of 

questions on enforcement issues that facilitate 

review of these issues. 

The review of the provisions of Article 27.3(b) 

(permiting Members to exclude from 

patentability plants, animals, and essential 

biological processes for producing plants and 

animals) of the TRIPS Agreement, begun in 

1999, provided an opportunity for the developed 

country Members and, after January 1, 2000, 
II. The World Trade Organization| 89 

developing country Members, to compile 

information on the ways in which they have 

implemented any exceptions to patentability 

authorized by that section. The synoptic table 

compiled by the WTO Secretariat from the 

information provided by Members demonstrated 

that there is considerable uniformity in the 

protection afforded plants and animals among 

those Members that have implemented their 

obligations, even though the manner in which 

that protection is provided varies. The 

description of various regimes for protecting 

plants and animals also could assist other 

Members that were considering the best method 

to implement their obligations. In addition, the 

review provided an opportunity for the United 

States, along with other WTO Members, to 

submit papers that form the basis of discussion 

during Council meetings, helping to clarify 

issues related to the protection of plants and 

animals. However, the 2001 Doha Ministerial 

Conference Declaration provided that this 

review would also include an examination, inter 

alia, of the relationship between the TRIPS 

Agreement and the Convention on Biological 

Diversity (CBD), the protection of traditional 

knowledge and folklore, and other relevant new 

developments raised by Members. While this 

has raised many controversial issues, this 

process has provided the United States with an 

opportunity to clarify its views on the mutually 

supportive nature of the TRIPS Agreement and 

the CBD as well as to de-mystify the 

relationship between the patent system, in 

particular, and certain CBD objectives. The 

United States has introduced five separate 

papers discussing various aspects of the subjects 

under discussion, including an in-depth paper on 

the provisions of the CBD that might have any 

relationship to the TRIPS Agreement and 

describing how the CBD’s provisions regarding 

access to genetic resources and benefit sharing 

can be implemented through an access regime 

based on contracts that would spell out the 

conditions of access, including benefit sharing 

and reporting. Other papers describe the 

practices of the National Cancer Institute and the 

access regime of the U.S. National Park Service 

as examples of how a contractual access regime 

would function. 

During 1998 and 1999, the TRIPS Council 

considered the articles of the Agreement, in 

particular those related to copyright and 

neighboring rights, for which emerging 

electronic commerce would likely have the 

greatest implications. The Council submitted a 

report to the General Council, identifying those 

articles and noting that the subject might be 

pursued further. The United States submitted a 

paper, as part of the review, giving its views on 

the implications of electronic commerce for the 

TRIPS Agreement. 

At the Doha Ministerial Conference in 2001, 

Ministers acknowledged the serious public 

health problems afflicting Africa and other 

developing and least-developed countries, 

especially those resulting from HIV/AIDS, 

malaria, tuberculosis, and other epidemics. In 

doing so, WTO Ministers adopted the 

Declaration on the TRIPS Agreement and Public 

Health, clarifying the flexibilities available in 

the TRIPS Agreement that may be used by 

WTO Members to address public health crises. 

The declaration sends a strong message of 

support for the TRIPS Agreement, confirming 

that it is an essential part of the wider national 

and international response to the public health 

crises that afflict many developing and least 

developed Members of the WTO, in particular 

those resulting from HIV/AIDS, tuberculosis 

and malaria and other epidemics. Ministers 

worked in a cooperative and constructive 

fashion to produce a political statement that 

answers the questions identified by certain 

Members regarding the flexibility inherent in the 

TRIPS Agreement. This strong political 

statement demonstrates that TRIPS is part of the 

solution to these crises. The statement does so, 

without altering the rights and obligations of 

WTO Members under the TRIPS Agreement, by 

reaffirming that Members are maintaining their 

commitments under the Agreement while at the 

same time highlighting the flexibilities in the 

Agreement. 

The Declaration reflects and confirms the 

profound conviction of the United States that the 

exclusive rights provided by Members as 

required under the TRIPS Agreement are a 

powerful force supporting public health 
II. The World Trade Organization | 90 

objectives. As a consequence of Ministers’ 

efforts, we believe those Members suffering 

under the effects of the pandemics of 

HIV/AIDS, tuberculosis and malaria, 

particularly those in sub-Saharan Africa, should 

have greater confidence in meeting their 

responsibilities to address these crises. The 

United States will continue working with the 

international community to ensure that 

additional funding and resources are made 

available through President Bush’s Emergency 

Plan for AIDS Relief (PEPFAR) to the least 

developed and developing country Members to 

assist them in addressing these public health care 

problems. 

One major part of the Doha Declaration was the 

agreement that least-developed country 

Members will not be obliged, with respect to 

pharmaceutical products, to implement or apply 

sections 5 and 7 of Part II of the TRIPS 

Agreement (patents and protection of 

undisclosed information, respectively) or to 

enforce rights provided for under these Sections 

until January 1, 2016, which was first proposed 

by the United States. The agreement was 

implemented by decision of the TRIPS Council 

in July 2002, and was made without prejudice to 

the right of least-developed country Members to 

seek other extensions of the period provided for 

in paragraph 1 of Article 66 of the TRIPS 

Agreement. 

Pursuant to paragraph 6 of the Declaration, 

Ministers recognized the complex issues 

associated with the ability of certain Members 

lacking domestic manufacturing capacity to 

make use of the flexibilities in the TRIPS 

Agreement. Ministers directed the TRIPS 

Council to find an expeditious solution to the 

difficulties certain Members might face in using 

compulsory licensing if they lacked sufficient 

manufacturing capacity in the pharmaceutical 

sector and to report to the WTO General Council 

by the end of 2002. Intensive discussions were 

undertaken on a solution that, with appropriate 

provisions on scope, safeguards and 

transparency, would waive the obligation in 

paragraph 31(f) that requires that compulsory 

licenses, when granted, be predominantly for the 

supply of the domestic market, since it is this 

limitation that could make it difficult for a 

Member lacking manufacturing capacity of its 

own to obtain a needed pharmaceutical if that 

product were patented in the Member from 

which supply was being sought. 

Intensive consultations continued into 2003. As 

a result of these consultations the TRIPS 

Council, at its meeting of 28 August 2003, 

approved the draft Decision on “Implementation 

of Paragraph 6 of the Doha Declaration on the 

TRIPS Agreement and Public Health”, along 

with the text of a statement to be read by the 

General Council Chairman at its adoption by the 

WTO General Council. On 30 August 2003, the 

General Council adopted the Decision in the 

light of the statement read out by its Chairman 

(the “August 30 solution”). The statement 

describes Members’ “shared understanding” on 

how the decision is to be interpreted and 

implemented. It says the decision should be 

used in good faith to protect public health and 

not for industrial or commercial policy 

objectives and that all reasonable measures 

should be taken to prevent medicines from being 

diverted away from those countries for which 

they are intended to be provided. The solution 

establishes procedures for utilizing a waiver of 

Article 31(f), which allows countries producing 

generic copies of patented products under 

compulsory licences to export the products to 

eligible importing countries where certain 

procedures are followed. The August 30 

solution was widely viewed as a major 

achievement and should give affected countries 

further confidence in meeting such crises as they 

arise. 

In the TRIPS Council, the United States has also 

continued to urge Members to respond to the 

checklist of questions pursuant to the review of 

the provisions related to protection of 

Geographical Indications. This has helped in 

understanding the various systems, including 

certification marks, used by Members in 

implementing their obligations for this important 

protection. 

Over the last ten years, the TRIPS Agreement 

has yielded enormous benefits for a broad range 

of U.S. interests and the TRIPS Council has 
II. The World Trade Organization| 91 

served as a valuable forum for discussion of 

issues related to intellectual property as well as 

ensuring adequate levels of intellectual property 

protection throughout all WTO Members. The 

United States has used the opportunities 

provided by the built-in agenda and other agenda 

items, including the Doha Development Agenda, 

to explain its interpretation of the Agreement’s 

provisions and to support its interpretation with 

appropriate examples of the benefits that flow 

from strong protection of intellectual property 

rights. It has worked to provide support for 

these views and will continue to do so in the 

future. 

Major Issues in 2004

In 2004, the TRIPS Council held four formal 

meetings, including “special negotiation 

sessions” on the establishment of a multilateral 

system for notification and registration of 

geographical indications for wines and spirits 

called for in Article 23.4 of the Agreement (See 

separate discussion of this topic under section D, 

“Council for Trade-Related Intellectual Property 

Rights, Special Session”, and below). In 

addition to continuing its work reviewing the 

implementation of the Agreement by developing 

countries and newly-acceding Members, the 

Council’s work in 2004 focused on TRIPS 

issues addressed in the Doha Ministerial 

Declaration and the Declaration on the TRIPS 

Agreement and Public Health. 

• Review of Developing Country 

Members’ TRIPS Implementation: As a 

result of the Agreement’s staggered 

implementation provisions, the TRIPS Council 

during 2004 continued to devote considerable 

time to reviewing the Agreement’s 

implementation by developing country Members 

and newly acceding Members as well as to 

providing assistance to developing country 

Members so they can fully implement the 

Agreement. In particular, the TRIPS Council 

continued to urge developing country Members 

to respond to the questionnaires already 

answered by developed country Members 

regarding their protection of geographical 

indications and implementation of the 

Agreement’s enforcement provisions, and to 

provide detailed information on their 

implementation of Article 27.3(b) of the 

Agreement. During the TRIPS Council 

meetings, the United States continued to press 

for full implementation of the TRIPS Agreement 

by developing country Members and 

participated actively during the reviews of 

legislation by highlighting specific concerns 

regarding individual Members’ implementation, 

particularly with regard to China, of its 

obligations. 

During 2004, the TRIPS Council took up the 

review of legislation of Armenia and the Former 

Yugoslav Republic of Macedonia, completed 

reviews of the implementing legislation of China 

(as part of China’s transitional review 

mechanism), Moldova, Nigeria, and Pakistan, 

and noted both the new responses received from 

and the outstanding material required to 

complete the reviews of 14 other Members. 

• Intellectual Property and Access to 

Medicines: The August 30 solution (the 

General Council Decision on “Implementation 

of Paragraph 6 of the Doha Declaration on the 

TRIPS Agreement and Public Health”, in light 

of the statement read out by the General Council 

Chairman), will apply to each Member until an 

amendment to the TRIPS Agreement replacing 

its provisions takes effect for each Member. At 

its meeting in June 2004, the TRIPS Council 

agreed to extend the original deadline for 

transforming the August 30 solution into an 

amendment until the end of March 2005. A 

series of discussions took place in March, June 

and September of 2004 evidencing differing 

viewpoints, on the form and content of such an 

amendment. The first proposal for an 

amendment was submitted by the African Group 

during the December 2004 meeting of the 

TRIPS Council. This proposal is under review 

by the United States and other members but 

upon initial review, it appears to be flawed 

because it does not refer to the shared 

understandings of the Chairman’s Statement and 

includes only selective elements of the General 

Council Decision. The United States remains 

fully committed to the March 31, 2005 deadline 

and to transforming the August 30 solution into 

an amendment of the TRIPS Agreement. 
II. The World Trade Organization | 92 

However, the United States maintains the 

position that any amendment must accurately 

capture all elements of the General Council 

Chairman’s statement and the General Council 

Decision, and will continue to work in the 

TRIPS Council in 2005 to ensure that any 

amendment incorporates both parts of the 

August 30 solution. 

• TRIPS-related WTO Dispute Settlement 

Cases: In a report issued on December 21, 

2004, a WTO panel agreed with the United 

States that the EC’s regulation on food-related 

geographical indications (GIs) is inconsistent 

with the EC’s obligations under the TRIPS 

Agreement and the GATT 1994. This report 

results from the United States’ long-standing 

complaint that the EC GI system discriminates 

against foreign products and persons – notably 

by requiring that EC trading partners adopt an 

“EC-style” system of GI protection -- and 

provides insufficient protections to trademark 

owners. In its report, the panel agreed that the 

EC’s GI regulation impermissibly discriminates 

against non-EC products and persons and agreed 

with the United States that the regulation could 

not create broad exceptions to trademark rights 

guaranteed by the TRIPS Agreement. The panel 

recommended that the EC amend its GI 

regulation to come into compliance with its 

WTO obligations. The United States requested 

WTO dispute consultations on this regulation in 

June 1999. On August 18, 2003, the United 

States requested the establishment of a panel, 

and panelists were appointed on February 23, 

2004. The United States anticipates that the 

panel’s report will be circulated to WTO 

Members and the public in mid-March 2005. 

There are a number of other WTO Members that 

appear not to be in full compliance with their 

TRIPS obligations. The United States, for this 

reason, is still considering initiating dispute 

settlement procedures against several Members. 

We will continue to consult informally with 

these countries in an effort to encourage them to 

resolve outstanding TRIPS compliance concerns 

as soon as possible. We will also gather data on 

these and other countries’ enforcement of their 

TRIPS obligations and assess the best cases for 

further action if consultations prove 

unsuccessful. 

• Geographical Indications: The Doha 

Declaration directed the TRIPS Council to 

discuss “issues related to extension” of Article 

23-level protection to geographical indications 

for products other than wines and spirits and to 

report to the Trade Negotiations Committee by 

the end of 2002 for appropriate action. Because 

no consensus could be reached in the TRIPS 

Council on how the Chair should report to the 

TNC on the issues related to extension of Article 

23-level protection to geographical indications 

for products other than wines and spirits, and, in 

light of the strong divergence of positions on the 

way forward on geographical indications and 

other implementation issues, the TNC Chair 

closed the discussion by saying he would 

consult further with Members. In a decision on 

August 1, 2004 to move the Doha Development 

Agenda forward, the Ministers mandated the 

Director-General to continue his consultative 

process on all outstanding implementation 

issues, including on extension of the protection 

of geographical indications. Consistent with this 

mandate, the Director-General appointed the 

Deputy Director-General to hold such 

consultations with Members on the issue of 

extension. The first consultation took place in 

December 2004 and discussed proceduralrelated issues on how future consultations 

should be structured. The next consultations are 

scheduled for February 2005 and then likely 

again in conjunction with regularly scheduled 

TRIPS Council meetings in March, June and 

September 2005. 

Throughout 2004, the United States and many 

like-minded Members maintained the position 

that demandeurs had not established that the 

protection provided geographical indications for 

products other than wines and spirits was 

inadequate and thus proposals for expanding GI 

protection were unwarranted. The United States 

and other Members noted that the administrative 

costs and burdens of proposals to expand 

protection would be considerable for those 

Members that did not have a longstanding 

statutory regime for the protection of 

geographical indications, and that the benefits 

accruing to those few Members that had 
II. The World Trade Organization| 93 

longstanding statutory regimes for the protection 

of geographical indications would represent a 

windfall, while other Members with few or no 

geographical indications would receive no 

counterbalancing benefits. While willing to 

continue the dialog in the TRIPS Council, the 

United States believes that discussion of the 

issues has been exhaustive and that no consensus 

has emerged with regard to extension of Article 

23-level protection to products other than wines 

and spirits. 

The United States and other Members have also 

steadfastly resisted efforts by some Members to 

obtain new GI protections in the WTO 

agriculture negotiations. The United States 

views such initiatives as efforts to take back the 

names of many famous products, such as feta 

and parmesan, from U.S. producers who have 

invested considerable time and resources to 

make these names famous and who are currently 

using such terms in a manner fully consistent 

with international intellectual property 

agreements. 

No further progress has been made on the 

Article 24.2 review of the application by 

Members of TRIPS provisions on geographical 

indications in spite of the review continuing to 

be on the TRIPS Council’s agenda. In 2004 

TRIPS Council meetings, the United States 

continued to urge developing country Members 

that have not yet provided information on their 

regimes for the protection of geographical 

indications, and most of them have not, to do so. 

The United States also maintained its support for 

the proposal by New Zealand in 2000, and by 

Australia in 2001, that the Council conduct the 

review by addressing each article of the TRIPS 

Agreement covering geographical indications in 

light of the experience of Members as reflected 

in the responses to the “checklist.” The TRIPS 

Council Chairman intends to consult with 

Members on how to proceed with the review in 

2005. The TRIPS Council, in 2004, also took 

note of responses to the checklist of questions 

relating to the review under TRIPS Article 24.2 

from Moldova and Chinese Taipei. 

• Review of Current Exceptions to 

Patentability for Plants and Animals: As 

called for in the Agreement, the TRIPS Council 

initiated a review of TRIPS Article 27.3(b) 

(permitting Members to except from 

patentability plants and animals and biological 

processes for the production of plants and 

animals) and, because of the interest expressed 

by some Members, the discussion continued 

through 2000 and 2001. In 2001, the United 

States again called for developing country 

Members to provide this same information so 

that the Council would have a more complete 

picture on which to base its discussion. 

Regrettably, most developing country Members 

have chosen not to provide such information and 

have raised topics that fall outside the scope of 

Article 27.3(b). However, in 2004, the Council 

did note information provided by Moldova on 

how these matters are addressed in their national 

law. 

 

The Doha Declaration directs the Council for 

TRIPS, in pursuing its work program under the 

review of Article 27.3(b) to examine, inter alia, 

the relationship between the TRIPS Agreement 

and the CBD, and the protection of traditional 

knowledge and folklore. In 2004, several 

developing countries, led by India and Brazil 

have submitted a series of papers based on an 

unsuccessful proposal for a “checklist” approach 

to structuring the discussions on the relationship 

between TRIPS and CBD, the protection of 

genetic resources and traditional knowledge. 

This “checklist” approach was not acceptable to 

the United States and certain other Members as 

it presupposes the position of the demandeurs 

that the patent provisions of the TRIPS 

Agreement should be amended to require 

disclosure of the source of the genetic resource 

or traditional knowledge, as well as evidence of 

prior informed consent to obtain the genetic 

resource and adequate benefit sharing with the 

custodian community or country of the genetic 

resource in order to obtain a patent. In response 

to this proposal the United States submitted a 

new paper in November 2004 which provides 

counter-arguments to mandatory disclosure 

requirements for patent applications as well as a 

number of alternative proposals for better 

achieving certain objectives. In addition, the 
II. The World Trade Organization | 94 

U.S. paper proposes a structure for future 

discussions that will not prejudice the position 

of any Members by focusing on shared 

objectives related to the protection of genetic 

resources and traditional knowledge, and sharing 

national experiences that may provide effective 

alternative models outside intellectual property 

right regimes to achieve the shared objectives. 

The United States has suggested that any 

Member that has a question about whether a 

particular CBD implementation proposal would 

run afoul of TRIPS obligations raise the issue 

with the Council so that it might obtain the 

views of other Members. 

• Non-violation: The Doha Declaration on 

Implementation directs the TRIPS Council to 

continue its examination of the scope and 

modalities for non-violation nullification and 

impairment complaints related to the TRIPS 

Agreement, to make recommendations to the 

Fifth Ministerial Conference, and, during the 

intervening period, not to make use of such 

complaints. No consensus on a recommendation 

to establish scope and modalities or to extend 

the moratorium emerged by the time of the 5th

Ministerial meeting. However, the General 

Council agreed, in its decision of August 1, 

2004, on the Doha Work Program, to extend the 

moratorium until the Sixth Ministerial 

Conference, currently scheduled to take place in 

Hong Kong, China, in December 2005. 

Responsive to the General Council decision, the 

TRIPS Council took up the issue of nonviolation nullification and impairment 

complaints in the context of the TRIPS 

Agreement in September and December 2004. 

As in past years, the United States continued to 

support the automatic expiration of the 

moratorium at the 6th Ministerial meeting, 

arguing that TRIPS is no different than other 

agreements where non-violation nullification 

and impairment claims are permitted, and that 

Article 26 of the Dispute Settlement 

Understanding and GATT decisions on nonviolation provide sufficient guidance to enable a 

panel or the Appellate Body to make appropriate 

determinations in such cases. 

Further Reviews of the TRIPS Agreement: 

Article 71.1 calls for a review of the Agreement 

in light of experience gained in implementation, 

beginning in 2002. The Council continues to 

consider how the review should best be 

conducted in light of the Council’s other work. 

The Doha Ministerial Declaration directs that, in 

its work under this Article, the Council is also to 

consider the relationship between intellectual 

property and the CBD, traditional knowledge, 

folklore, and other relevant new developments 

raised by Members pursuant to Article 71.1. 

• Technical Cooperation and Capacity 

Building: As in each past year, the United 

States and other Members provided reports on 

their activities in connection with technical 

cooperation and capacity building. 

• Implementation of Article 66.2: Article 

66.2 requires developed countries to provide 

incentives for enterprises and institutions in their 

territories to promote and encourage technology 

transfer to least developed Members in order to 

enable them to create a sound and viable 

technological base. This provision was 

reaffirmed in the Doha Decision on 

Implementation-related Issues and Concerns and 

the TRIPS Council was directed to put in place a 

mechanism for ensuring monitoring and full 

implementation of the obligation. During 2003, 

the TRIPS Council adopted a Decision calling 

on developed countries to provide detailed 

reports every third year, with annual updates, on 

these incentives. The reports are to be reviewed 

in the TRIPS Council at its last meeting each 

year. The United States had provided detailed 

reports on specific U.S. Government institutions 

(e.g. the African Development Foundation and 

Agency for International Development) and 

incentives as required. 

Prospects for 2005 

In 2005, the TRIPS Council will continue to 

focus on transforming the August 30 solution for 

access to medicines into an amendment of the 

TRIPS Agreement, its built-in agenda and the 

additional mandates established in Doha, 

including issues related to the extension of 

Article 23-level protection for geographical 

indications for products other than wines and 
II. The World Trade Organization| 95 

spirits, on the relationship between the TRIPS 

Agreement and the CBD, and on traditional 

knowledge and folklore, as well as other 

relevant new developments. 

U.S. objectives for 2005 continue to be: 

• to transform the Chairman’s Statement and 

the General Council Decision on access to 

medicines into an amendment of the TRIPS 

Agreement; 

• to resolve differences through dispute 

settlement consultations and panels, where 

appropriate; 

• to continue its efforts to ensure full TRIPS 

implementation by developing country 

Members; and 

• to ensure that provisions of the TRIPS 

Agreement are not weakened. 

I. Council for Trade in Services 

Status 

The General Agreement for Trade in Services 

(GATS) is the first multilateral, legally 

enforceable agreement covering trade in services 

and investment in the services sector. It is 

designed to reduce or eliminate governmental 

measures that prevent services from being freely 

provided across national borders or that 

discriminate against locally-established services 

firms with foreign ownership. The Agreement 

provides a legal framework for addressing 

barriers to trade and investment in services. It 

includes specific commitments by WTO 

Members to restrict their use of those barriers 

and provides a forum for further negotiations to 

open services markets around the world. These 

commitments are contained in national 

schedules, similar to the national schedules for 

tariffs. 

The Council for Trade in Services in Regular 

Session (CTS) oversees implementation of the 

GATS and reports to the General Council. In 

addition, the CTS is responsible for a technical 

review of GATS Article XX.2 provisions; 

waivers from specific commitments pursuant to 

paragraphs 3 and 4 of Article IX of the 

Marrakesh Agreement establishing the WTO; 

the transitional review under Section 18 of the 

Protocol on the Accession of the People’s 

Republic of China; implementation of GATS 

Article VII; the MFN review; and notifications 

made to the Council Pursuant to GATS Article 

III.3, V.5, V.7, and VII.4. 

The ongoing market access negotiations take 

place in the CTS meeting in Special Session, 

described earlier in this chapter. Other bodies 

that report to the CTS include the Committee on 

Specific Commitments (CSC), the Committee 

on Trade in Financial Services (CTFS), the 

Working Party on Domestic Regulations 

(WPDR), and the Working Party on GATS 

Rules (WPGR). The following section discusses 

work in the CTS regular session. 

Cumulative Assessment Since the WTO Was 

Established

The Council for Trade in Services was 

established following the conclusion of the 

Uruguay Round. As part of its mandate, 

following the Uruguay Round, the CTS 

concluded negotiations on telecommunication 

services and financial services and undertook 

new market access negotiations in 2000 as part 

of the Uruguay Round’s built-in agenda. The 

CTS is the companion to the WTO’s Council in 

Trade in Goods. These negotiations are 

ongoing. Information on the assessment of the 

CTS’ other bodies (CSC, CTFS, WPDR, and 

WPGR) can be found under the appropriate 

heading. 

Major Issues in 2004

The discussion of the relationship between 

market access and national treatment 

commitments, particularly the interpretation of a 

Member’s schedule in the context of GATS 

Article XX.2 where one column reads “none” 

and the other reads “unbound”, continued in 

2004. In 2003 the issue was referred to the 

Committee on Specific Commitments and the 

Chairman issued his report to the CTS in March 
II. The World Trade Organization | 96 

2004. The CTS agreed at its June meeting to 

revert to this item upon specific request. 

Pursuant to paragraphs 3 and 4 of Article IX of 

the Marrakesh Agreements, the CTS examined 

and approved a request by Albania to postpone 

the implementation of its GATS commitments in 

international public voice services. The draft 

decision was forwarded to the General Council 

for approval and was adopted on May 17, 2004. 

The United States, with support of other WTO 

Members, raised questions and concerns 

regarding China’s implementation of its services 

commitments in the distribution, express 

delivery, transport, telecommunications and 

construction services sectors during the annual 

transitional review of China’s implementation of 

its WTO commitments before the CTS in 

November 2004. 

 

Members continued to discuss a 2003 paper 

tabled by India concerning implementation of 

GATS Article VII, regarding mutual 

recognition. The CTS agreed to continue these 

discussions in 2005. 

In accordance with the decision adopted by the 

CTS at the conclusion of the previous review of 

MFN exemptions, Members began a second 

review in 2004. The Council reviewed 

horizontal exemptions and sector specific 

exemptions in business services, communication 

services, construction services, and distribution 

services. The remaining sectors will be 

reviewed in 2005. 

There were a number of notifications pursuant to 

GATS Article III.3 (transparency), GATS 

Article V (economic integration) and GATS 

Article VII.4 (recognition). The notification of 

greatest concern to the United States was 

submitted by the European Union under GATS 

Article V, regarding its intent to withdraw 

commitments as a result of the accession of 

Cyprus, the Czech Republic, Estonia, Hungary, 

Latvia, Lithuania, Malta, Poland, the Slovak 

Republic, and Slovenia into the European 

Union. 

Eighteen countries filed claims of interest during 

the CTS regular session in connection with the 

GATS Article V notification by the European 

Union (EU) pursuant to the procedures outlined 

in GATS Article XXI. In 2003, the EU had 

belatedly notified the 1995 enlargement of the 

EU to include Austria, Finland and Sweden. In 

2004, the EU withdrew that notification and 

submitted a new one to cover the 1995 

enlargement as well as the ten newest Member 

States who joined the EU on May 1, 2004. To 

allow more time for consultations and 

examination, the EU and those WTO Members 

who are claiming an interest pursuant to Article 

XXI mutually agreed to extend the period of 

negotiations until April 26, 2005. Under Article 

XXI, which is being applied for the first time by 

WTO Members in the context of EU 

enlargement, Members who believe their access 

to EU services markets will be adversely 

affected by the EU’s changes to its schedule of 

commitments are entitled to seek compensation 

through negotiations from the EU to make up for 

lost market access. 

Prospects for 2005 

The CTS will continue discussions on these 

issues. In addition, the CTS will formally 

commence a second review of the Air Transport 

Annex in 2005, without prejudice to Members’ 

views on the interpretation of the Annex. 

1. Committee on Trade in Financial 

Services 

Status 

The Committee on Trade in Financial Services 

(CTFS) provides a forum for WTO members to 

explore any financial services market access or 

regulatory issue deemed appropriate, including 

implementation of existing trade commitments. 

Cumulative Assessment Since the WTO Was 

Established

The Committee on Financial Services has been 

useful in advancing many U.S. interests related 

to financial services. For example, the 

Committee was instrumental in overseeing postUruguay Round negotiations on financial 

services that culminated in the 1997 Agreement 

on Financial Services and has monitored WTO 
II. The World Trade Organization| 97 

Members’ ratification of those commitments, 

their binding under the GATS (acceptance of the 

GATS “Fifth Protocol”) and implementation. In 

addition, the Committee enabled Members to 

share information on market access and 

regulatory changes that have taken place, 

providing useful context for the Doha services 

negotiations underway. Finally, as part of 

China’s transitional review mechanism, since 

2002, the Committee has conducted an annual 

review of China’s implementation of its WTO 

accession commitments on financial services. 

Members have been active in using the 

Committee to get answers from China on key 

issues affecting the insurance, banking and 

securities sectors. 

Major Issues in 2004

The CTFS met four times in 2004. Brazil, 

Jamaica and the Philippines are the only 

remaining participants from the 1997 Financial 

Services Agreement that have not yet ratified 

their commitments from those negotiations and 

accepted the Fifth Protocol. WTO Members 

urged these Members to accept the Fifth 

Protocol as quickly as possible. At the request 

of Members, the three countries provided some 

information on the status of their domestic 

ratification efforts. 

Several WTO Members, including Norway, 

Mexico, Malaysia, Turkey and Chinese Taipei 

reported on developments under their financial 

services regimes, including issues such as 

financial services regulatory modernization and 

the cross-border supply of insurance. Members 

also provided reactions to an OECD background 

document on the request-offer negotiating 

approach for insurance. 

In November, 2004, as part of China’s 

transitional review mechanism, the CTFS 

carried out its third annual review of China’s 

implementation of its WTO financial services 

commitments. The United States and other 

WTO members took that opportunity to express 

concerns with China’s implementation of certain 

commitments in the insurance, banking and 

securities sectors. 

Prospects for 2005 

The Members of the Committee will continue to 

use the broad and flexible mandate of the CTFS 

to explore various issues, including topics such 

as market access and regulatory transparency, in 

particular as they relate to the Doha services 

negotiations. 

2. Working Party on Domestic 

Regulation Status 

GATS Article VI:4, on Domestic Regulation, 

directs the CTS to develop any necessary 

disciplines relating to qualification requirements 

and procedures, technical standards, and 

licensing requirements and procedures. A 1994 

Ministerial Decision assigned priority to the 

professional services sector, for which the 

Working Party on Professional Services (WPPS) 

was established following the conclusion of the 

Uruguay Round. The WPPS developed 

Guidelines for the Negotiation of Mutual 

Recognition Agreements in the Accountancy 

Sector that Members adopted in May 1997. The 

WPPS completed Disciplines on Domestic 

Regulation in the Accountancy Sector in 

December 1998 (The texts are available at 

www.wto.org). 

After the completion of the Accountancy 

Disciplines, in May 1999, the CTS established a 

new Working Party on Domestic Regulation 

(WPDR), which also took on the work of the 

predecessor WPPS and its existing mandate. 

The WPDR is now charged with determining 

whether the disciplines adopted in connection 

with accountancy or similar disciplines may be 

more generally applicable to other sectors. The 

Working Party shall report its recommendations 

to the CTS no later than the conclusion of the 

services negotiations. 

Cumulative Assessment since its 

Establishment in 1999 

The WPDR has made some progress in defining 

the scope of its work in developing any 

necessary disciplines on domestic regulation. In 

the past year alone, the WPDR has received four 

formal papers and several informal papers. The 
II. The World Trade Organization | 98 

WPDR has also organized a widely attended 

seminar, which many delegations found 

extremely helpful in clarifying the benefits of 

transparency to regulators, negotiators, and 

industry. However, there is some disagreement 

among Members as how best to proceed. While 

some Members prefer an approach that focuses 

on specific sectors, the United States and others 

believe that a dual approach that combines 

horizontal principles and sector specific 

disciplines is preferable. 

Major Issues in 2004

With respect to the development of generally 

applicable regulatory disciplines, Members 

discussed several submissions tabled in response 

to a number of Members who believed that some 

elements for regulatory disciplines on licensing 

procedures and requirements, technical 

standards, qualification procedures and 

requirements and transparency require further 

attention. Such disciplines would be aimed at 

ensuring that regulations are not in themselves a 

restriction on the supply of services. 

The United States announced its intent to table a 

paper in support of negotiating horizontal 

transparency disciplines, signaling at the same 

time, its interest in pursuing a sector specific 

approach, where appropriate. The United States 

considers proposals on transparency to be 

appropriate for horizontal disciplines because 

they involve universal principles that promote 

governmental accountability, rule of law and 

good governance. They benefit not only service 

exporters but domestic producers, consumers, 

and the public at large. The U.S. submission 

was warmly received by both developed and 

developing countries. 

The United States continued to support focusing 

the Working Party=s discussion on examples of 

problems or restrictions for which new 

disciplines would be appropriate, before 

defining the disciplines themselves. In this 

context, the Working Party considered whether 

procedures for obtaining visas or entry permits, 

fall within the purview of GATS Article VI:4. 

Some members, expressed the view that visa 

administrative procedures do not fall under 

Article VI:4 because visas and entry permits 

provide a supplier the right to enter a country 

and/or maintain a legal immigration status, while 

a license provides the right to supply the service. 

Members continued to solicit views on the 

accountancy disciplines from their relevant 

domestic professional bodies, exploring whether 

the accountancy disciplines might serve as a 

model for those professions. The United States 

noted that architecture and engineering are two 

specific sectors which may be able to apply 

disciplines similar to the accountancy 

disciplines. To this end, the United States 

proposed dedicating a part of the September 

2005 meeting to reviewing how the accountancy 

disciplines may apply to architectural services. 

A Workshop on the subject could be held, to 

which association representatives and relevant 

regulators would be invited. 

Members also reviewed a submission from 

Mexico regarding its experience with disciplines 

on technical standards and regulations in 

services which described a uniform procedure 

for drafting and amending technical standards or 

regulations applicable to both services and 

goods. Some Members noted that Mexico=s 

regime incorporates many principles that create 

an environment conducive to economic growth, 

specifically representativeness or participation 

from all interested parties, transparency, and 

non-discrimination; and policies that benefit 

both foreign and domestic service suppliers. 

 

Prospects for 2005 

The Working Party will continue discussion of 

possible regulatory disciplines, both horizontal 

and sector-specific, to promote the GATS 

objective of effective market access. Regarding 

the next stage of negotiations, however, there are 

some differences of view on when the Working 

Party would be ready to proceed. There was, 

however, general agreement that further 

progress would depend on receiving new 

submissions, the discussion of those 

submissions, and the consensus that will need to 

emerge on next steps. 
II. The World Trade Organization| 99 

3. Working Party on GATS Rules 

Status 

The Working Party on GATS Rules (WPGR) 

continues to discuss whether the GATS should 

include new disciplines on emergency safeguard 

measures, government procurement, or 

subsidies. The WPGR held five formal 

meetings in 2004. Of the three issues, only the 

question of emergency safeguard measures was 

subject to a deadline. When this deadline 

expired on March 15, 2004, the Council for 

Trade in Services agreed to a WPGR 

recommendation to an extension with no firm 

deadline and a less direct linkage to the 

conclusion of the Doha Round. During 2005, 

these three issues will continue to be discussed 

in parallel. 

Cumulative Assessment Since the WTO Was 

Established

The WPGR was established in 1995 to carry out 

the negotiating mandates contained in the GATS 

on emergency safeguard measures, government 

procurement in services, and services subsidies. 

Although consensus has yet to be reached on 

whether to pursue negotiations in these areas, 

the WPGR has served a useful function by 

enabling Members to explore issues of 

importance in an organized and constructive 

fashion. 

Major Issues in 2004

Regarding emergency safeguard measures, the 

negotiating mandate is to consider “the question 

of emergency safeguard measures,” which 

entails determining whether such measures are 

an appropriate objective. The major issue in the 

early part of the year was whether to extend the 

deadline. After an extension was agreed, the 

WPGR continued to discuss hypothetical 

scenarios demonstrating the need for safeguard 

mechanisms put forward by a group of 

delegations from ASEAN. The WPGR also 

discussed whether existing mechanisms 

contained within the GATS could mitigate the 

need for safeguard measures, and whether 

developing a credible safeguard mechanism is 

feasible. The United States continues to raise 

concerns with respect to feasibility, pointing out 

that a determination of trade-related injury 

would be difficult given weaknesses in services 

trade data; and implementing remedial measures 

could be problematic, particularly for services 

supplied through locally-established enterprises. 

On government procurement, discussions 

continued on the basis of two communications 

from the European Communities (EC) and 

informal communications from Singapore and 

Hong Kong, China. Many questions and issues 

were raised, including the relationship of 

possible services disciplines to those already 

contained in the Government Procurement 

Agreement, development implications, and 

whether the negotiating mandate under Article 

XIII entails market access issues. At the request 

of Members, the Secretariat prepared a 

background paper that described government 

procurement-related provisions in economic 

integration agreements. 

With respect to subsidies, delegations 

considered examples of subsidies put forward by 

Chile that might distort trade in services, with a 

particular focus on issues relating to export 

subsidies. Members also discussed an informal 

communication from the delegation of Chinese 

Taipei on the definition of subsidies in services, 

as well as an informal communication from the 

delegation of Hong Kong, China, that put 

forward thoughts on how to proceed with an 

information exchange, other sources of 

information about subsidies, the definition of 

subsidy, and trade distortion. Some delegations 

argued for setting a target date for the exchange 

of information on subsidies provided to 

domestic suppliers, but the United States and 

others pointed out that such an exchange would 

be premature and unproductive without having 

an agreed definition of what actually would 

constitute a subsidy. The United States 

continues to work constructively to foster a 

productive exchange of information to develop a 

better understanding of services subsidies and 

their relationship to trade. 
II. The World Trade Organization | 100 

Prospects for 2005 

Discussion on all three issues will continue in 

2005. We expect that some developing 

countries will continue to tie progress on further 

services liberalization commitments to an 

acceptable resolution on emergency safeguard 

measures. Members will continue to gather 

further information on government procurement 

and consider the relationship between possible 

services disciplines and the existing plurilateral 

Government Procurement Agreement (GPA). 

Subsidies discussions likely will focus on how 

to develop an appropriate definition of a services 

subsidy as well as on how to assess the extent to 

which such subsidies could have a distortive 

effect on trade. 

4. Committee on Specific 

Commitments 

Status 

The Committee on Specific Commitments 

examines ways to improve the technical 

accuracy of scheduling commitments, primarily 

in preparation for the GATS negotiations, and 

oversees the application of the procedures for 

the modification of schedules under Article XXI 

of the GATS. The Committee also oversees 

implementation of commitments in Members’ 

schedules in sectors for which there is no 

sectoral body, currently the case for all sectors 

except financial services. The Committee works 

to improve the classification of services, so that 

scheduled commitments reflect the services 

activities, in particular to ensure coverage of 

evolving services. The CSC met four times in 

2004, in March, June, September, and 

December. 

Cumulative Assessment Since the WTO Was 

Established

Prior to the launch of the GATS negotiations in 

2000, the CSC had undertaken and addressed a 

number of technically complicated, resource 

intensive tasks and produced results that 

improve prospects for clear, commerciallyvaluable commitments in the continuing 

negotiations (in the case of work on 

nomenclature and on scheduling guidelines), 

usefully elaborated on GATS provisions in the 

case of Article XXI procedures, and promoted 

accessibility and clarity in GATS schedules in 

the case of the electronic schedule. Since 2000, 

the CSC has examined technical issues such as 

new scheduling guidelines and sector specific 

nomenclature for sectors such as energy services 

and legal services. 

Major Issues in 2004

The CSC addressed three items in 2004: issues 

relating to GATS Article XX.2; classification 

issues; and scheduling issues. 

During the March 2004 meeting, the CSC 

continued discussion of the relationship between 

market access and national treatment 

commitments, particularly the interpretation of a 

Member’s schedule in the context of GATS 

Article XX.2 where one column reads “None” 

and the other reads “Unbound”. Following these 

discussions, the Committee Chairman submitted 

a factual report to the Council for Trade in 

Services. 

The Committee also discussed classification 

issues. In particular, the Committee’s 

discussions focused on energy services and legal 

services. The energy services discussions 

focused on submissions from various Members, 

in particular a recent submission by Indonesia. 

Discussions on legal services included a 

submission by the International Bar Association, 

which was requested by Australia, and a 

submission and presentation by the Organization 

for Economic Cooperation and Development 

(OECD). 

As a scheduling issue, before it had tabled its 

initial offer, Brazil attempted to “multilateralize” 

the bilateral request-offer process by using the 

forum of the CSC to pose questions to specific 

Members about their initial offers that would 

have been more appropriately raised in the 

request-offer negotiations. The United States 

expressed its concern that Brazil’s approach in 

the CSC could undermine the bilateral 

request/offer process and chose to answer all of 
II. The World Trade Organization| 101 

Brazil’s questions regarding the U.S. initial offer 

during bilateral meetings with Brazil. 

Prospects for 2005 

Work will continue on technical issues and other 

issues that Members raise. The CSC will likely 

examine classification issues pertaining to other 

service sectors. 

J. Dispute Settlement Understanding 

Status 

The Understanding on Rules and Procedures 

Governing the Settlement of Disputes (Dispute 

Settlement Understanding or DSU), which is 

annexed to the WTO Agreement, provides a 

mechanism to settle disputes under the Uruguay 

Round Agreements. Thus, it is key to the 

enforcement of U.S. rights under these 

Agreements. 

The DSU is administered by the Dispute 

Settlement Body (DSB), which is empowered to 

establish dispute settlement panels, adopt panel 

and Appellate Body reports, oversee the 

implementation of panel recommendations 

adopted by the DSB and authorize retaliation. 

The DSB makes all its decisions by "consensus." 

Annex II provides more background information 

on the WTO dispute settlement process. 

Cumulative Assessment Since the WTO Was 

Established

In its first ten years of operation, the DSB has 

addressed the ambitious agenda set for it by the 

negotiators in the Uruguay Round, and has put 

in place the rules and institutions required for a 

functioning dispute settlement system. It has 

established rules of conduct designed to keep the 

system free from conflicts of interest. It has 

elected the members of an Appellate Body that 

has been active and productive, and has filled 

vacancies on the Body as openings occurred and 

terms expired. Yet while the DSB has made 

some procedural decisions when required, the 

agenda of dispute settlement in the WTO 

remains Member-driven. Members have, in the 

context of individual disputes, agreed on 

procedures for determining compliance and 

levels of suspension of concessions, as well as 

innovative approaches to taking decisions by 

negative consensus beyond the time frames 

provided for in the DSU. The review of WTO 

dispute settlement rules and procedures 

conducted over the past several years was run as 

a member-driven process in which all proposals 

were generated by Members and must be agreed 

to by consensus. 

The DSB has on several occasions authorized 

measures in response to non-compliance by a 

WTO Member with panel and Appellate Body 

rulings. In January 1999, the United States was 

the first WTO Member to invoke its WTO and 

DSU rights by proposing to suspend concessions 

in an amount equivalent to the trade damage 

caused to the United States by the EU’s illegal 

banana import regime. Resisting repeated 

attempts at blockage by the EU, the DSB 

authorized the United States to proceed. This 

ultimately led to agreement on changes to the 

EU’s regime in April 2001. Other examples of 

DSB-authorized suspensions of concessions 

(retaliation) include the hormones case, 

involving U.S. and Canadian claims against the 

EU, and the foreign sales corporation case, 

involving EU claims against the United States. 

The United States requested authorization to 

suspend concessions in 2001 in the dairy dispute 

against Canada, but further action was rendered 

unnecessary when Canada changed its measures 

in a satisfactory manner. The United States 

currently has a request to suspend concessions 

pending against Japan in a dispute over apples. 

A WTO compliance panel is now considering 

whether Japan has implemented the DSB 

recommendations and rulings in that dispute. 

Major Issues in 2004

The DSB met 19 times in 2004 to oversee 

disputes and to address responsibilities such as 

consulting on proposed amendments to the 

Appellate Body working procedures and 

approving additions to the roster of 

governmental and non-governmental panelists. 

Roster of Governmental and Non-Governmental 

Panelists: Article 8 of the DSU makes it clear 
II. The World Trade Organization | 102 

that panelists may be drawn from either the 

public or private sector and must be “wellqualified,” such as persons who have served on 

or presented a case to a panel, represented a 

government in the WTO or the GATT, served 

with the Secretariat, taught or published in the 

international trade field, or served as a senior 

trade policy official. Since 1985, the Secretariat 

has maintained a roster of non-governmental 

experts for GATT 1947 dispute settlement, 

which has been available for use by parties in 

selecting panelists. In 1995, the DSB agreed on 

procedures for renewing and maintaining the 

roster, and expanding it to include governmental 

experts. In response to a U.S. proposal, the DSB 

also adopted standards increasing and 

systematizing the information submitted by 

roster candidates. These modifications aid in 

evaluating candidates’ qualifications and 

encouraging the appointment of well-qualified 

candidates who have expertise in the subject 

matters of the Uruguay Round Agreements. In 

2004, the DSB approved by consensus a number 

of additional names for the roster. The United 

States scrutinized the credentials of these 

candidates to assure the quality of the roster. 

Pursuant to the requirements of the Uruguay 

Round Agreements Act (URAA), the present 

WTO panel roster appears in the background 

information in Annex II. The list in the roster 

notes the areas of expertise of each roster 

member (goods, services and/or TRIPS). 

Rules of Conduct for the DSU: The DSB 

completed work on a code of ethical conduct for 

WTO dispute settlement and on December 3, 

1996, adopted the Rules of Conduct for the 

Understanding on Rules and Procedures 

Governing the Settlement of Disputes. A copy 

of the Rules of Conduct was printed in the 

Annual Report for 1996 and is available on the 

WTO and USTR websites. There were no 

changes in these Rules in 2004. 

The Rules of Conduct elaborate on the ethical 

standards built into the DSU, and to maintain the 

integrity, impartiality and confidentiality of 

proceedings conducted under the DSU. The 

Rules of Conduct require all individuals called 

upon to participate in dispute settlement 

proceedings to disclose direct or indirect 

conflicts of interest prior to their involvement in 

the proceedings, and to conduct themselves 

during their involvement in the proceedings so 

as to avoid such conflicts. The Rules of 

Conduct also provide parties to a dispute an 

opportunity to address potential material 

violations of these ethical standards. The 

coverage of the Rules of Conduct exceeds the 

goals established by Congress in section 123(c) 

of the Uruguay Round Agreements Act 

(URAA), which directed the USTR to seek 

conflict of interest rules applicable to persons 

serving on panels and members of the Appellate 

Body. The Rules of Conduct cover not only 

panelists and Appellate Body members, but also: 

(1) arbitrators; (2) experts participating in the 

dispute settlement mechanism (e.g., the 

Permanent Group of Experts under the Subsidies 

Agreement); (3) members of the WTO 

Secretariat assisting a panel or assisting in a 

formal arbitration proceeding; (4) the Chairman 

of the Textile Monitoring Body (“TMB”) and 

other members of the TMB Secretariat assisting 

the TMB in formulating recommendations, 

findings or observations under the Agreement on 

Textiles and Clothing; and (5) support staff of 

the Appellate Body. 

As noted above, the Rules of Conduct 

established a disclosure-based system. 

Examples of the types of information that 

covered persons must disclose are set forth in 

Annex II to the Rules, and include: (1) financial 

interests, business interests, and property 

interests relevant to the dispute in question; (2) 

professional interests; (3) other active interests; 

(4) considered statements of personal opinion on 

issues relevant to the dispute in question; and (5) 

employment or family interests. 

Appellate Body: The DSU requires the DSB to 

appoint seven persons to serve on an Appellate 

Body, which is to be a standing body, with 

members serving four-year terms, except for 

three initial appointees determined by lot whose 

terms expired at the end of two years. At its first 

meeting on February 10, 1995, the DSB 

formally established the Appellate Body, and 

agreed to arrangements for selecting its 

members and staff. They also agreed that 
II. The World Trade Organization| 103 

Appellate Body members would serve on a parttime basis, and sit periodically in Geneva. The 

original seven Appellate Body members, who 

took their oath on December 11, 1995, were: Mr. 

James Bacchus of the United States, Mr. 

Christopher Beeby of New Zealand, Professor 

Claus-Dieter Ehlermann of Germany, Dr. Said 

El-Naggar of Egypt, Justice Florentino Feliciano 

of the Philippines, Mr. Julio Lacarte-Muró of 

Uruguay, and Professor Mitsuo Matsushita of 

Japan. On June 25, 1997, it was determined by 

lot that the terms of Messrs. Ehlermann, 

Feliciano and Lacarte-Muró would expire in 

December 1997. The DSB agreed on the same 

date to reappoint them for a final term of four 

years commencing on 11 December 1997. On 

October 27, 1999 and November 3, 1999, the 

DSB agreed to renew the terms of Messrs. 

Bacchus and Beeby for a final term of four 

years, commencing on December 11, 1999, and 

to extend the terms of Dr. El-Naggar and 

Professor Matsushita until the end of March 

2000. On April 7, 2000, the DSB agreed to 

appoint Mr. Georges Michel Abi-Saab of Egypt 

and Mr. A.V. Ganesan of India to a term of four 

years commencing on June 1, 2000. On May 

25, 2000, the DSB agreed to the appointment of 

Professor Yasuhei Taniguchi of Japan to serve 

through December 10, 2003, the remainder of 

the term of Mr. Beeby, who passed away on 

March 19, 2000. On September 25, 2001, the 

DSB agreed to appoint Mr. Luiz Olavo Baptista 

of Brazil, Mr. John S. Lockhart of Australia and 

Mr. Giorgio Sacerdoti of Italy to a term of four 

years commencing on December 19, 2001. On 

November 7, 2003, the DSB agreed to appoint 

Professor Merit Janow of the United States to a 

term of four years commencing on December 

11, 2003, to reappoint Professor Taniguchi for a 

final term of four years commencing on 

December 11, 2003, and to reappoint Mr. AbiSaab and Mr. Ganesan for a final term of four 

years commencing on June 1, 2004. The names 

and biographical data for the Appellate Body 

members are included in Annex II of this report. 

The Appellate Body has also adopted Working 

Procedures for Appellate Review. On February 

28, 1997, the Appellate Body issued a revision 

of the Working Procedures, providing for a twoyear term for the first Chairperson, and one-year 

terms for subsequent Chairpersons. In 2001 the 

Appellate Body amended its working procedures 

to provide for no more than two consecutive 

terms for Chairperson. Mr. Lacarte-Muró, the 

first Chairperson, served until February 7, 1998; 

Mr. Beeby served as Chairperson from February 

7, 1998 to February 6, 1999; Mr. El-Naggar 

served as Chairperson from February 7, 1999 to 

February 6, 2000; Mr. Feliciano served as 

Chairperson from February 7, 2000 to February 

6, 2001; Mr. Ehlermann served as Chairperson 

from February 7, 2001 to December 10, 2001; 

Mr. Bacchus served as Chairperson from 

December 15, 2001 to December 10, 2003; Mr. 

Abi-Saab served as Chairperson from December 

13, 2003 to December 12, 2004; Mr. 

Taniguchi’s term as Chairperson runs from 

December 17, 2004 to December 16, 2005. 

In 2004, the Appellate Body issued five reports, 

of which four involved the United States as a 

party and are discussed in detail below. The 

remaining report concerned India’s challenge to 

certain tariff preferences granted by the 

European Union to developing countries. The 

United States participated in this proceeding as 

an interested third party. 

Dispute Settlement Activity in 2004: During its 

first ten years in operation, WTO Members filed 

324 requests for consultations (22 in 1995, 42 in 

1996, 46 in 1997, 44 in 1998, 31 in 1999, 30 in 

2000, 27 in 2001, 37 in 2002, 26 in 2003, and 19 

in 2004). During that period, the United States 

filed 69 complaints against other Members’ 

measures and received 96 complaints on U.S. 

measures. Several of these complaints involved 

the same issues (4 U.S. complaints against 

others and 22 complaints against the United 

States). A number of disputes commenced in 

earlier years remained active in 2004. What 

follows is a description of those disputes in 

which the United States was either a 

complainant, defendant, or third party during the 

past year follows below. 
II. The World Trade Organization | 104 

Prospects for 2005 

While there were improvements to the DSU as a 

result of the Uruguay Round, there is still room 

for improvement. Accordingly, the United 

States has used the opportunity of the ongoing 

review to seek improvements in its operation, 

including greater transparency. In 2005, we 

expect that the DSB will continue to focus on 

the administration of the dispute settlement 

process in the context of individual disputes. 

Experience gained with the DSU will be 

incorporated into the U.S. litigation and 

negotiation strategy for enforcing U.S. WTO 

rights, as well as the U.S. position on DSU 

reform. DSB Members will continue to consider 

reform proposals in 2005. 

a. Disputes Brought by the United States 

In 2004, the United States continued to be one of 

the most active participants in the WTO dispute 

settlement process. This section includes brief 

summaries of dispute settlement activity in 2004 

where the United States was a complainant. As 

demonstrated by these summaries, the WTO 

dispute settlement process has proven to be an 

effective tool in combating barriers to U.S. 

exports. Indeed, in a number of cases the United 

States has been able to achieve satisfactory 

outcomes invoking the consultation provisions 

of the dispute settlement procedures, without 

recourse to formal panel proceedings. 

Argentina—Patent and test data protection for 

pharmaceuticals and agricultural chemicals 

(DS171/196) 

On May 6, 1999, the United States filed a 

consultation request challenging Argentina’s 

failure to provide a system of exclusive 

marketing rights for pharmaceutical products, 

and to ensure that changes in its laws and 

regulations during its transition period do not 

result in a lesser degree of consistency with the 

provisions of the Agreement on Trade-Related 

Aspects of Intellectual Property Rights (“TRIPS 

Agreement”). Consultations were held on June 

15, 1999, and again on July 27, 1999. On May 

30, 2000, the United States expanded its claims 

in this dispute to include new concerns that 

arose as a result of Argentina’s failure to fully 

implement its remaining TRIPS obligations as 

required on January 1, 2000. These concerns 

include Argentina’s failure to protect 

confidential test data submitted to government 

regulatory authorities for pharmaceuticals and 

agricultural chemicals; its denial of certain 

exclusive rights for patents; its failure to provide 

such provisional measures as preliminary 

injunctions to prevent infringements of patent 

rights; and its exclusion of certain subject matter 

from patentability. Consultations began July 17, 

2000. On May 31, 2002, the United States and 

Argentina notified the DSB that a partial 

settlement of this dispute had been reached. Of 

the ten claims raised by the United States, eight 

were settled. The United States reserved its 

rights with respect to two remaining issues: 

protection of test data against unfair commercial 

use and the application of enhanced TRIPS 

Agreement rights to patent applications pending 

as of the entry into force of the TRIPS 

Agreement for Argentina (January 1, 2000). 

The dispute remains in the consultation phase 

with respect to these issues. 

Brazil—Customs valuation (DS197) 

The United States requested consultations on 

May 31, 2000 with Brazil regarding its customs 

valuation regime. U.S. exporters of textile 

products reported that Brazil uses officiallyestablished minimum reference prices both as a 

requirement to obtain import licenses and/or as a 

base requirement for import. In practice, this 

system works to prohibit the import of products 

with declared values below the established 

minimum prices. This practice appears 

inconsistent with Brazil’s WTO obligations, 

including those under the Agreement on 

Customs Valuation. The United States 

participated as an interested third party in a 

dispute initiated by the European Union 

regarding the same matter, and decided to 

pursue its own case as well. The United States 

held consultations with Brazil on July 18, 2000, 

and continues to monitor the situation. 

Canada – Measures Relating to Exports of 

Wheat and Treatment of Imported Grain 

(DS276) 
II. The World Trade Organization| 105 

On December 17, 2002, the United States 

requested consultations with Canada regarding 

trade in wheat. The United States challenged 

the wheat trading practices of the Canadian 

Wheat Board (CWB) as inconsistent with WTO 

disciplines governing the conduct of statetrading enterprises. The United States also 

challenged as unfair and burdensome Canada’s 

requirements to treat imported grain differently 

than Canadian grain in the Canadian grain 

handling system, along with Canada's 

discriminatory policy that affects U.S. grain 

access to Canada's rail transportation system. 

Consultations were held January 31, 2003. The 

United States requested the establishment of a 

panel on March 6, 2003. The DSB established a 

panel on March 31, 2003. The Director-General 

composed the panel as follows: Ms. Claudia 

Orozco, Chair, and Mr. Alan Matthews and Mr. 

Hanspeter Tschaeni, Members. Following a 

preliminary procedural ruling, the DSB 

established a second panel on July 11, 2003, 

with the same panelists and the same schedule. 

In its report circulated on April 6, 2004, the 

panel found that Canada’s grain handling system 

and rail transportation system discriminate 

against imported grain in violation of national 

treatment principles. However, the panel found 

that the United States failed to establish a claim 

that Canada violates WTO disciplines governing 

the conduct of state trading enterprises. The 

United States appealed the panel’s findings 

related to state trading enterprises. On August 

30, 2004, the Appellate Body upheld the panel’s 

findings on state trading enterprises. Canada did 

not appeal the panel’s findings that Canada’s 

grain handling and transportation systems 

discriminate against U.S. grain. The DSB 

adopted the panel and Appellate Body reports on 

September 27, 2004. Canada and the United 

States subsequently agreed that the reasonable 

period of time for implementation of the DSB’s 

recommendations and rulings will expire on 

August 1, 2005. 

China–Value-added tax on integrated circuits 

(WT/DS309) 

On March 18, 2004, the United States requested 

consultations with China regarding its valueadded tax (“VAT”) on integrated circuits 

(“ICs”). While China provides for a 17 percent 

VAT on ICs, enterprises in China are entitled to 

a partial refund of the VAT on ICs that they 

have produced. Moreover, China allows for a 

partial refund of the VAT for domesticallydesigned ICs that, because of technological 

limitations, are manufactured outside of China. 

As a result of the rebates, China appears to be 

according less favorable treatment to imported 

ICs than it accords to domestic ICs. China also 

appears to be providing for less favorable 

treatment of imports from one WTO Member 

than another and discriminating against services 

and service suppliers of other Members. The 

United States considers these measures to be 

inconsistent with China’s obligations under 

Articles I and III of the GATT 1994, the 

Protocol on the Accession of the People's 

Republic of China, and Article XVII of the 

GATS. Consultations were held on April 27, 

2004 in Geneva, and additional bilateral 

meetings were held in Washington and Beijing. 

On July 14, 2004, the United States and China 

notified the WTO of their agreement to resolve 

the dispute. Effective immediately, China will 

not certify any new IC products or 

manufacturers for eligibility for VAT refunds, 

China will no longer offer VAT refunds that 

favor ICs designed in China, and, by April 1, 

2005, China will stop providing VAT refunds on 

Chinese-produced ICs to current beneficiaries. 

Egypt–Apparel Tariffs (WT/DS305) 

On December 23, 2003, the United States 

requested consultations with Egypt regarding the 

duties that Egypt applies to certain apparel and 

textile imports. During the Uruguay Round, 

Egypt agreed to bind its duties on these imports 

(classified under HTS Chapters 61, 62 and 63) at 

rates of less than 50 percent (ad valorem) in 

2003 and thereafter. The United States believes 

the duties that Egypt actually applied, on a “per 

article” basis, greatly exceeded Egypt’s bound 

rates of duty. In January 2004, Egypt informed 

the United States that it had issued a decree 

applying ad valorem rates to these imports and 

setting the duty rates within Egypt's tariff 

bindings. The United States is reviewing these 

changes. 
II. The World Trade Organization | 106 

European Union—Measures concerning meat 

and meat products (hormones) (WT/DS26, 48) 

The United States and Canada challenged the 

EU ban on imports of meat from animals to 

which any of six hormones for growth 

promotional purposes had been administered. 

On July 2, 1996, the following panelists were 

selected, with the consent of the parties, to 

review the U.S. claims: Mr. Thomas Cottier, 

Chairman; Mr. Jun Yokota and Mr. Peter 

Palecka, Members. The panel found that the EU 

ban is inconsistent with the EU’s obligations 

under the Agreement on the Application of 

Sanitary and Phytosanitary Measures (“SPS 

Agreement”), and that the ban is not based on 

science, a risk assessment, or relevant 

international standards. Upon appeal, the 

Appellate Body affirmed the panel's findings 

that the EU ban fails to satisfy the requirements 

of the SPS Agreement. The Appellate Body also 

found that while a country has broad discretion 

in electing what level of protection it wishes to 

implement, in doing so it must fulfill the 

requirements of the SPS Agreement. In this case 

the ban imposed is not rationally related to the 

conclusions of the risk assessments the EU had 

performed. 

Because the EU did not comply with the 

recommendations and rulings of the DSB by 

May 13, 1999, the final date of its compliance 

period as set by arbitration, the United States 

sought WTO authorization to suspend 

concessions with respect to certain products of 

the EU, the value of which represents an 

estimate of the annual harm to U.S. exports 

resulting from the EU's failure to lift its ban on 

imports of U.S. meat. The EU exercised its right 

to request arbitration concerning the amount of 

the suspension. On July 12, 1999, the arbitrators 

determined the level of suspension to be $116.8 

million. On July 26, 1999, the DSB authorized 

the United States to suspend such concessions 

and the United States proceeded to impose 100 

percent ad valorem duties on a list of EU 

products with an annual trade value of $116.8 

million. On May 26, 2000, USTR announced 

that it was considering changes to that list of EU 

products. While discussions with the EU to 

resolve this matter are continuing, no resolution 

has been achieved yet. On November 3, 2003, 

the EU notified the WTO of its plans to make 

permanent the ban on one hormone, oestradiol. 

As discussed below (DS320), on November 8, 

2004, the European Communities requested 

consultations with respect to “the United States’ 

continued suspension of concessions and other 

obligations under the covered agreements” in the 

EC – Hormones dispute. 

European Union—Protection of trademarks and 

geographical indications for agricultural 

products and foodstuffs (DS174) 

EU Regulation 2081/92, inter alia, discriminates 

against non-EC products and nationals with 

respect to the registration and protection of 

geographical indications for agricultural 

products and foodstuffs; it also protects 

geographical indications to the detriment of 

TRIPS-guaranteed trademark rights. The United 

States therefore considers this measure 

inconsistent with the EU’s obligations under the 

TRIPS Agreement and the GATT 1994. The 

United States requested consultations regarding 

this matter on June 1, 1999, and, on April 4, 

2003, requested consultations on the additional 

issue of the EU’s national treatment obligations 

under the GATT 1994. Australia also requested 

consultations with respect to this measure. 

When consultations failed to resolve the dispute, 

the United States requested the establishment of 

a panel on August 18, 2003. A panel was 

established on October 2, 2003, to consider the 

complaints of the United States and Australia. 

On February 23, 2004, the Director-General 

composed the panel as follows: Mr. Miguel 

Rodriguez Mendoza, Chair, and Mr. Seung Wha 

Chang and Mr. Peter Kam-fai Cheung, 

Members. 

European Union – Provisional Safeguard 

Measure on Imports of Certain Steel Products 

(DS260) 

On May 30, 2002, the United States requested 

consultations with the European Union 

concerning the consistency of the European 

Union’s provisional safeguard measures on 

certain steel products with the General 

Agreement on Tariffs and Trade (1994) and with 
II. The World Trade Organization| 107 

the WTO Agreement on Safeguards. 

Consultations were held on June 27 and July 24, 

2002, but did not resolve the dispute. Therefore, 

on August 19, 2002, the United States requested 

that a WTO panel examine these measures. The 

panel was established on September 16, 2002. 

European Union–Measures affecting the 

approval and marketing of biotech products 

(WT/DS291) 

On May 13, 2003, the United States filed a 

consultation request with respect to the EU's 

moratorium on all new biotech approvals, and 

bans of six member states (Austria, France, 

Germany, Greece, Italy and Luxembourg) on 

imports of certain biotech products previously 

approved by the EU. The moratorium is not 

supported by scientific evidence, and the EU's 

refusal even to consider any biotech applications 

for final approval constitutes "undue delay." 

The national import bans of previously EUapproved products appear not to be based on 

sufficient scientific evidence. Consultations 

were held June 19, 2003. The United States 

requested the establishment of a panel on August 

7, 2003, and the DSB established a panel on 

August 29, 2003. On March 4, 2003, the 

Director-General composed the panel as follows: 

Mr. Christian Häberli, Chairman, and Mr. 

Mohan Kumar and Mr. Akio Shimizu, Members. 

 

Japan - Measures Affecting the Importation of 

Apples (DS245) 

On March 1, 2002, the United States requested 

consultations with Japan regarding Japan’s 

measures restricting the importation of U.S. 

apples in connection with fire blight or the fire 

blight disease-causing organism, Erwinia 

amylovora. These restrictions include: the 

prohibition of imported apples from U.S. states 

other than Washington or Oregon; the 

prohibition of imported apples from orchards in 

which any fire blight is detected; the prohibition 

of imported apples from any orchard (whether or 

not it is free of fire blight) should fire blight be 

detected within a 500 meter buffer zone 

surrounding such orchard; the requirement that 

export orchards be inspected three times yearly 

(at blossom, fruitlet, and harvest stages) for the 

presence of fire blight for purposes of applying 

the above-mentioned prohibitions; a post-harvest 

surface treatment of exported apples with 

chlorine; production requirements, such as 

chlorine treatment of containers for harvesting 

and chlorine treatment of the packing line; and 

the post-harvest separation of apples for export 

to Japan from those apples for other 

destinations. Consultations were held on April 

18, 2002, and a panel was established on June 3, 

2002. The Director-General selected as 

panelists Mr. Michael Cartland, Chair, and Ms. 

Kathy-Ann Brown and Mr. Christian Haeberli, 

Members. 

In its report issued on July 15, 2003, the panel 

agreed with the United States that Japan's fire 

blight measures on U.S. apples are inconsistent 

with Japan's WTO obligations. In particular, the 

panel found that: (1) Japan's measures are 

maintained without sufficient scientific 

evidence, inconsistent with Article 2.2 of the 

SPS Agreement; (2) Japan's measures cannot be 

provisionally maintained under Article 5.7 of the 

SPS Agreement (an exception to the obligation 

under Article 2.2); and (3) Japan's measures are 

not based on a risk assessment and so are 

inconsistent with Article 5.1 of the SPS 

Agreement. Japan appealed the panel's report on 

August 28, 2003. The Appellate Body issued its 

report on November 26, 2003, upholding panel 

findings that Japan's phytosanitary measures on 

U.S. apples, allegedly to protect against 

introduction of the plant disease fire blight, are 

inconsistent with Japan's WTO obligations. In 

particular, the Appellate Body upheld the three 

panel findings, detailed above, that Japan had 

appealed. The DSB adopted the panel and 

Appellate Body reports on December 10, 2003. 

Japan notified its intention to implement the 

recommendations and rulings of the DSB on 

January 9, 2004. Japan and the United States 

agreed that the reasonable period of time for 

implementation will expire on June 30, 2004. 

On expiration of the reasonable period of time, 

Japan proposed revised measures which made 

limited changes to its existing measures, and 

which continued to include an orchard 

inspection and a buffer zone. On July 19, 2004, 

the United States requested the establishment of 
II. The World Trade Organization | 108 

a DSU Article 21.5 compliance panel to evaluate 

Japan’s revised measures. Simultaneously, the 

United States requested authorization to suspend 

concessions or other obligations under DSU 

Article 22.2 in an amount equal to $143.4 

million. Japan objected to this amount on July 

29, 2004, referring the matter to arbitration. The 

parties suspended the arbitration pending 

completion of the compliance proceeding. The 

compliance panel was established on July 30, 

2004. The original three panelists agreed to 

serve on the compliance panel. 

Mexico—Measures affecting 

telecommunications services (DS204) 

On August 17, 2000, the United States requested 

consultations with Mexico regarding its 

commitments and obligations under the General 

Agreement on Trade in Services (``GATS'') with 

respect to basic and value-added 

telecommunications services. The U.S. 

consultation request covered a number of key 

issues, including the Government of Mexico’s 

failure to: (1) maintain effective disciplines over 

the former monopoly, Telmex, which is able to 

use its dominant position in the market to thwart 

competition; (2) ensure timely, cost-oriented 

interconnection that would permit competing 

carriers to connect to Telmex customers to 

provide local, long-distance, and international 

service; and (3) permit alternatives to an 

outmoded system of charging U.S. carriers 

above-cost rates for completing international 

calls into Mexico. Prior to such consultations, 

which were held on October 10, 2000, the 

Government of Mexico issued rules to regulate 

the anti-competitive practices of Telmex 

(Mexico’s major telecommunications supplier) 

and announced significant reductions in longdistance interconnection rates for 2001. 

Nevertheless, given that Mexico still had not 

fully addressed U.S. concerns, particularly with 

respect to international telecommunications 

services, on November 10, 2000, the United 

States filed a request for establishment of a 

panel as well as an additional request for 

consultations on Mexico’s newly issued 

measures. Those consultations were held on 

January 16, 2001. The United States requested 

the establishment of a panel on March 8, 2002. 

The panel was established on April 17, 2002. 

On August 26, 2002, the Director-General 

appointed as chairperson Mr. Ulrich Petersmann 

(Germany), and Mr. Raymond Tam (Hong 

Kong, China) and Mr. Björn Wellenius (Chile) 

as panelists. 

On April 2, 2004, the panel released its final 

report, siding with the United States on most of 

the major claims in this dispute. Specifically, 

the panel found that: (1) Mexico breached its 

commitment to ensure that U.S. carriers can 

connect their international calls to Mexico’s 

major supplier, Telmex, at cost-based rates; (2) 

Mexico breached its obligation to maintain 

appropriate measures to prevent its dominant 

carrier from engaging in anti-competitive 

practices, by granting Telmex the exclusive 

authority to negotiate the rate that all Mexican 

carriers charge U.S. companies to complete calls 

originating in the United States; and (3) Mexico 

breached its obligations to ensure that U.S. 

carriers operating within Mexico can lease lines 

from Mexican carriers (and thereby provide 

services on a resale basis). The panel 

concluded, however, that Mexico may prohibit 

U.S. carriers from using leased lines in Mexico 

to complete calls originating in the United 

States. 

Mexico did not appeal the panel report, which 

the DSB adopted on June 1, 2004. At that DSB 

meeting, Mexico and the United States informed 

the DSB that they had reached agreement on the 

steps required to implement the panel report. 

Mexico and the United States subsequently 

agreed that the reasonable period of time for 

implementation of the DSB’s recommendations 

and rulings will expire on July 1, 2005. 

Mexico—Definitive antidumping measures on 

beef and rice (WT/DS295) 

On June 16, 2003, the United States requested 

consultations on Mexico’s antidumping 

measures on rice and beef, as well as certain 

provisions of Mexico’s Foreign Trade Act and 

its Federal Code of Civil Procedure. The 

specific U.S. concerns include: (1) Mexico’s 

injury investigations in the two antidumping 

determinations; (2) Mexico’s failure to terminate 
II. The World Trade Organization| 109 

the rice investigation after a negative 

preliminary injury determination and its decision 

to include firms that were not dumping in the 

coverage of the antidumping measures; (3) 

Mexico’s improper application of the “facts 

available”; (4) Mexico’s improper calculation of 

the antidumping rate applied to non-investigated 

exporters; (5) Mexico’s improper limitation of 

the antidumping rates it calculated in the beef 

investigation; (6) Mexico’s refusal to conduct 

reviews of exporters’ antidumping rates; and (7) 

Mexico’s insufficient public determinations. 

The United States also challenged five 

provisions of Mexico’s Foreign Trade Act. The 

United States alleges violations of various 

provisions of the Antidumping Agreement, the 

Agreement on Subsidies and Countervailing 

Measures, and the GATT 1994. Consultations 

were held the summer of 2003. The United 

States requested the establishment of a panel on 

the measure on rice and the five measures of the 

Foreign Trade Act on September 19, 2003, and 

the DSB established a panel on November 7, 

2003. The United States is continuing to 

monitor developments surrounding the beef 

antidumping measures. 

Mexico––Tax measures on soft drinks and other 

beverages (WT/DS308) 

On March 16, 2004, the United States requested 

consultations with Mexico regarding its tax 

measures on soft drinks and other beverages that 

use any sweetener other than cane sugar. These 

measures apply a 20 percent tax on soft drinks 

and other beverages that use any sweetener other 

than cane sugar. Soft drinks and other beverages 

sweetened with cane sugar are exempt from the 

tax. Mexico’s tax measures also include a 20 

percent tax on the commissioning, mediation, 

agency, representation, brokerage, consignment, 

and distribution of soft drinks and other 

beverages that use any sweetener other than cane 

sugar. Mexico’s tax measures work inter alia to 

restrict U.S. exports to Mexico of high fructose 

corn syrup, a corn-based sweetener that is 

directly competitive and substitutable with cane 

sugar. The United States considers these 

measures to be inconsistent with Mexico’s 

national treatment obligations under Article III 

of the GATT 1994. Consultations were held on 

May 13, 2004, but they failed to resolve the 

dispute. 

The United States requested the establishment of 

a panel on June 10, 2004, and the DSB 

established a panel on July 6, 2004. On August 

18, 2004, the parties agreed to the composition 

of the panel as follows: Mr. Ronald Saborío 

Soto, Chair, and Mr. Edmond McGovern and 

Mr. David Walker, Members. 

Venezuela – Import Licensing Measures on 

Certain Agricultural Products (DS275) 

On November 7, 2002, the United States 

requested consultations with Venezuela 

concerning its import licensing systems and 

practices that restrict agricultural imports from 

the United States. The United States considers 

that Venezuela’s system creates a discretionary 

import licensing regime that appears to be 

inconsistent with the Agreement on Agriculture, 

the TRIMS Agreement, and the Import 

Licensing Agreement. The United States held 

consultations with Venezuela on November 26, 

2002. 

European Communities–-Selected customs 

matters (WT/DS315) 

On September 21, 2004, the United States 

requested consultations with the EC with respect 

to (1) lack of uniformity in the administration by 

EC member States of EC customs laws and 

regulations and (2) lack of an EC forum for 

prompt review and correction of member State 

customs determinations. On September 29, 

2004, the EC accepted the U.S. request for 

consultations, and consultations were 

subsequently held on November 16, 2004. 

European Communities—Subsidies on large 

civil aircraft (WT/DS316) 

On October 6, 2004, the United States requested 

consultations with the EC, as well as with 

Germany, France, the United Kingdom, and 

Spain, with respect to subsidies provided to 

Airbus, a manufacturer of large civil aircraft. 

The United States alleged that such subsidies 

violated various provisions of the SCM 
II. The World Trade Organization | 110 

Agreement, as well as Article XVI:1 of the 

GATT. Consultations were held on November 

4, 2004. 

b. Disputes Brought Against the United 

States 

Section 124 of the URAA requires, inter alia, 

that the Annual Report on the WTO describe, for 

the preceding fiscal year of the WTO, each 

proceeding before a panel or the Appellate Body 

that was initiated during that fiscal year 

regarding Federal or State law, the status of the 

proceeding, and the matter at issue; and each 

report issued by a panel or the Appellate Body in 

a dispute settlement proceeding regarding 

Federal or State law. This section includes 

summaries of dispute settlement activity in 2004 

when the United States was a defendant. 

United States—Foreign Sales Corporation 

(“FSC”) tax provisions (DS108) 

The European Union challenged the FSC 

provisions of the U.S. tax law, claiming that the 

provisions constitute prohibited export subsidies 

and import substitution subsidies under the 

Subsidies Agreement, and that they violate the 

export subsidy provisions of the Agreement on 

Agriculture. A panel was established on 

September 22, 1998. On November 9, 1998, the 

following panelists were selected, with the 

consent of the parties, to review the EU claims: 

Mr. Crawford Falconer, Chairman; Mr. Didier 

Chambovey and Mr. Seung Wha Chang, 

Members. The panel found that the FSC tax 

exemption constitutes a prohibited export 

subsidy under the Subsidies Agreement, and also 

violates U.S. obligations under the Agreement 

on Agriculture. The panel did not make findings 

regarding the FSC administrative pricing rules 

or the EU's import substitution subsidy claims. 

The panel recommended that the United States 

withdraw the subsidy by October 1, 2000. The 

panel report was circulated on October 8, 1999 

and the United States filed its notice of appeal 

on November 26, 1999. The Appellate Body 

circulated its report on February 24, 2000. The 

Appellate Body upheld the panel's finding that 

the FSC tax exemption constitutes a prohibited 

export subsidy under the Subsidies Agreement, 

but, like the panel, declined to address the FSC 

administrative pricing rules or the EU's import 

substitution subsidy claims. While the Appellate 

Body reversed the panel's findings regarding the 

Agreement on Agriculture, it found that the FSC 

tax exemption violated provisions of that 

Agreement other than the ones cited by the 

panel. The panel and Appellate Body reports 

were adopted on March 20, 2000, and on April 

7, 2000, the United States announced its 

intention to respect its WTO obligations. On 

November 15, 2000, the President signed the 

FSC Repeal and Extraterritorial Income 

Exclusion Act of 2000 (“the ETI Act”), 

legislation that repealed and replaced the FSC 

provisions. However, the European Union 

claimed that the new legislation failed to bring 

the US into compliance with its WTO 

obligations. 

On January 14, 2002, the Appellate Body issued 

its report with respect to the ETI Act. The 

Appellate Body affirmed the findings of the 

panel that: (1) the ETI Act’s tax exclusion 

constituted a prohibited export subsidy under the 

WTO Subsidies Agreement; (2) the tax 

exclusion constituted an export subsidy that 

violated U.S. obligations under the WTO 

Agriculture Agreement; (3) the ETI Act’s 

foreign article/labor limitation provides less 

favorable treatment to “like” imported products 

in violation of Article III:4 of GATT 1994; and 

(4) the ETI Act’s transition rules resulted in a 

failure to withdraw the subsidy as recommended 

by the DSB under Article 4.7 of the Subsidies 

Agreement. The DSB adopted the panel and 

Appellate Body reports on January 29, 2002. 

In November 2000, the European Union had 

sought authority to impose countermeasures in 

the amount of $4.043 billion as a result of the 

alleged U.S. non-compliance, and the United 

States had challenged this amount by requesting 

arbitration. Under a September 2000 procedural 

agreement between the United States and the 

European Union, the arbitration was suspended 

pending the outcome of the EU’s challenge to 

the WTO-consistency of the ETI Act. With the 

adoption of the panel and Appellate Body 

reports, the arbitration automatically resumed. 

On August 30, 2002, the arbitrator circulated its 

decision. The arbitrator found that the 
II. The World Trade Organization| 111 

countermeasures sought by the European Union 

were “appropriate” within the meaning of 

Article 4.10 of the Subsidies Agreement 

because, according to the arbitrator, they were 

not “disproportionate to the initial wrongful act 

to which they are intended to respond.” 

Following the adoption of the panel and 

Appellate Body reports, legislation was 

introduced in the U.S. House of Representatives 

to repeal the ETI Act. After holding hearings, 

both the House Ways and Means Committee and 

the Senate Finance Committee reported out bills. 

On May 7, 2003, the DSB authorized the 

European Communities (“EC”) to impose 

countermeasures up to a level of $4.043 billion 

in the form of an additional 100 percent ad 

valorem duty on various products imported from 

the United States. On December 8, 2003, the 

Council of the European Union adopted Council 

Regulation (EC) No. 2193/2003, which provides 

for the graduated imposition of sanctions. These 

sanctions took effect on March 1, 2004. 

On October 22, 2004, the President signed the 

American Jobs Creation Act of 2004 (AJCA). 

The AJCA repealed the FSC/ETI regime and, 

consistent with standard legislative practice 

regarding major tax legislation, contained a 

transition provision and a “grandfather” 

provision for pre-existing binding contracts. On 

November 5, 2004, the EU requested 

consultations regarding the transition and 

grandfather provisions. 

United States—1916 Revenue Act (DS136/162) 

Title VII of the Revenue Act of 1916 (15 U.S.C. 

§§ 71-74, entitled “Unfair Competition”), often 

referred to as the Antidumping Act of 1916, 

allows for private claims against, and criminal 

prosecutions of, parties that import or assist in 

importing goods into the United States at a price 

substantially less than the actual market value or 

wholesale price. On April 1, 1999, the 

following panelists were selected, with the 

consent of the parties, to review the EU claims: 

Mr. Johann Human, Chairman; Mr. Dimitrij 

Grcar and Mr. Eugeniusz Piontek, Members. 

On January 29, 1999, the panel found that the 

1916 Act is inconsistent with WTO rules 

because the specific intent requirement of the 

Act does not satisfy the material injury test 

required by the Antidumping Agreement. The 

panel also found that civil and criminal penalties 

in the 1916 Act go beyond the provisions of the 

Antidumping Agreement. The panel report was 

circulated on March 31, 2000. Separately, Japan 

sought its own rulings on the same matter from 

the same panelists; that report was circulated on 

May 29, 2000. On the same day, the United 

States filed notices of appeal for both cases, 

which were consolidated into one Appellate 

Body proceeding. The Appellate Body report, 

issued August 28, 2000, affirmed the panel 

reports. This ruling, however, has no effect on 

the U.S. antidumping law, as codified in the 

Tariff Act of 1930, as amended. The panel and 

Appellate Body reports were adopted by the 

DSB on September 26, 2000. On November 17, 

2000, the European Union and Japan requested 

arbitration to determine the period of time to be 

given the United States to implement the panel’s 

recommendation. By mutual agreement of the 

parties, Mr. A.V. Ganesan was appointed to 

serve as arbitrator. On February 28, 2001, he 

determined that the deadline for implementation 

was July 26, 2001. On July 24, the DSB 

approved a U.S. proposal to extend the deadline 

until the earlier of the end of the then-current 

session of the U.S. Congress or December 31, 

2001. Legislation to repeal the Act and 

terminate cases pending under the Act was 

introduced in the House on December 20, 2001 

and in the Senate on April 23, 2002, but 

legislative action was not completed. 

Legislation repealing the Act and terminating 

pending cases was again introduced in the 

Senate on May 19, 2003, and repeal legislation 

that would not terminate pending cases was 

introduced in the House on March 4, 2003 and 

in the Senate on May 23, 2003. 

On January 17, 2002, the United States objected 

to proposals by the EU and Japan to suspend 

concessions, thereby referring the matter to 

arbitration. On February 20, 2002, the following 

individuals were selected by mutual agreement 

of the parties to serve as Arbitrator: Mr. Dimitrij 

Grcar, Chair; Mr. Brendan McGivern and Mr. 

Eugeniusz Piontek, Members. At the request of 
II. The World Trade Organization | 112 

the United States, the Arbitrator suspended its 

work on March 4, 2002, in light of on-going 

efforts to resolve the dispute. On September 19, 

2003, the EU requested that its arbitration 

resume. 

On February 24, 2003, the Arbitrator issued its 

award in the arbitration. The Arbitrator stated 

that the EU has no current right to retaliate 

against the United States. While it refused to 

approve or disapprove of the regulation 

proposed by the EU (which would resemble the 

1916 Act in some respects), it found that the EU 

had to limit any retaliation to the amount of 

quantifiable final judgments or settlements under 

the 1916 Act. There were no such judgments or 

settlements against EU companies. 

On December 3, 2004, the President signed the 

Miscellaneous Trade and Technical Corrections 

Act of 2004, which repealed the 1916 Act. 

United States—Section 110(5) of the Copyright 

Act (DS160) 

As amended in 1998 by the Fairness in Music 

Licensing Act, section 110(5) of the U.S. 

Copyright Act exempts certain retail and 

restaurant establishments that play radio or 

television music from paying royalties to 

songwriters and music publishers. The 

European Union claimed that, as a result of this 

exception, the United States is in violation of its 

TRIPS obligations. Consultations with the 

European Union took place on March 2, 1999. 

A panel on this matter was established on May 

26, 1999. On August 6, 1999, the DirectorGeneral composed the panel as follows: Ms. 

Carmen Luz Guarda, Chair; Mr. 

Arumugamangalam V. Ganesan and Mr. Ian F. 

Sheppard, Members. The panel issued its final 

report on June 15, 2000, and found that one of 

the two exemptions provided by section 110(5) 

is inconsistent with the United States’ WTO 

obligations. The panel report was adopted by 

the DSB on July 27, 2000, and the United States 

has informed the DSB of its intention to respect 

its WTO obligations. On October 23, 2000, the 

European Union requested arbitration to 

determine the period of time to be given the 

United States to implement the panel’s 

recommendation. By mutual agreement of the 

parties, Mr. J. Lacarte-Muró was appointed to 

serve as arbitrator. He determined that the 

deadline for implementation should be July 27, 

2001. On July 24, 2001, the DSB approved a 

U.S. proposal to extend the deadline until the 

earlier of the end of the then-current session of 

the U.S. Congress or December 31, 2001. 

On July 23, 2001, the United States and the 

European Union requested arbitration to 

determine the level of nullification or 

impairment of benefits to the European Union as 

a result of section 110(5)(B). In a decision 

circulated to WTO Members on November 9, 

2001, the arbitrators determined that the value of 

the benefits lost to the European Union in this 

case is $1.1 million per year. On January 7, 

2002, the European Union sought authorization 

from the DSB to suspend obligations vis-à-vis 

the United States. The United States objected to 

the details of the EU request, thereby causing the 

matter to be referred to arbitration. However, 

because the United States and the European 

Union have been engaged in discussions to find 

a mutually acceptable resolution of the dispute, 

the arbitrators suspended the proceeding 

pursuant to a joint request by the parties filed on 

February 26, 2002. 

On June 23, 2003, the United States and the EU 

notified to the WTO a mutually satisfactory 

temporary arrangement regarding the dispute. 

Pursuant to this arrangement, the United States 

made a lump-sum payment of $3.3 million to the 

EU, to a fund established to finance activities of 

general interest to music copyright holders, in 

particular awareness-raising campaigns at the 

national and international level and activities to 

combat piracy in the digital network. The 

arrangement covered a three-year period, which 

ended on December 21, 2004. 

United States—Section 211 Omnibus 

Appropriations Act (DS176) 

Section 211 addresses the ability to register or 

enforce, without the consent of previous owners, 

trademarks or trade names associated with 

businesses confiscated without compensation by 

the Cuban government. The EU questioned the 
II. The World Trade Organization| 113 

consistency of Section 211 with the TRIPS 

Agreement, and it requested consultations on 

July 7, 1999. Consultations were held 

September 13 and December 13, 1999. On June 

30, 2000, the European Union requested a panel. 

A panel was established on September 26, 2000, 

and at the request of the European Union the 

WTO Director-General composed the panel on 

October 26, 2000, as follows: Mr. Wade 

Armstrong, Chairman; Mr. François 

Dessemontet and Mr. Armand de Mestral, 

Members. The panel report was circulated on 

August 6, 2001, rejecting 13 of the EU’s 14 

claims and finding that, in most respects, section 

211 is not inconsistent with the obligations of 

the United States under the TRIPS Agreement. 

The European Union appealed the decision on 

October 4, 2001. The Appellate Body issued its 

report on January 2, 2002. The Appellate Body 

reversed the panel’s one finding against the 

United States, and upheld the panel’s favorable 

findings that WTO Members are entitled to 

determine trademark and trade name ownership 

criteria. The Appellate Body found certain 

instances, however, in which section 211 might 

breach the national treatment and most favored 

nation obligations of the TRIPS Agreement. 

The panel and Appellate Body reports were 

adopted on February 1, 2002. On March 28, 

2002, the United States and the European Union 

notified the DSB that they had agreed that the 

reasonable period of time for the United States 

to implement the DSB’s recommendations and 

rulings would expire on December 31, 2002, or 

on the date on which the current session of the 

U.S. Congress adjourns, whichever is later, and 

in no event later than January 3, 2003. On 

December 19, 2003, the EU and the United 

States agreed to extend the reasonable period of 

time for implementation until December 31, 

2004. The RPT was later extended until June 

30, 2005. 

United States—Antidumping measures on 

certain hot-rolled steel products from Japan 

(DS184) 

Japan alleged that the preliminary and final 

determinations of the Department of Commerce 

and the USITC in their antidumping 

investigations of certain hot-rolled steel products 

from Japan, issued on November 25 and 30, 

1998, February 12, 1999, April 28, 1999, and 

June 23, 1999, were erroneous and based on 

deficient procedures under the U.S. Tariff Act of 

1930 and related regulations. Japan claimed that 

these procedures and regulations violate the 

GATT 1994, as well as the Antidumping 

Agreement and the Agreement Establishing the 

WTO. Consultations were held on January 13, 

2000, and a panel was established on March 20, 

2000. In May 1999, the Director-General 

composed the panel as follows: Mr. Harsha V. 

Singh, Chairman; Mr. Yanyong Phuangrach and 

Ms. Lidia di Vico, Members. On February 28, 

2001, the panel circulated its report, in which it 

rejected most of Japan’s claims, but found that, 

inter alia, particular aspects of the antidumping 

duty calculation, as well as one aspect of the 

U.S. antidumping duty law, were inconsistent 

with the WTO Antidumping Agreement. On 

April 25, 2001, the United States filed a notice 

of appeal on certain issues in the panel report. 

The Appellate Body report was issued on July 

24, 2001, reversing in part and affirming in part. 

The reports were adopted on August 23, 2001. 

Pursuant to a February 19, 2002, arbitral award, 

the United States was given 15 months, or until 

November 23, 2002, to implement the DSB’s 

recommendations and rulings. On November 

22, 2002, the Department of Commerce issued a 

new final determination in the hot-rolled steel 

antidumping duty investigation, which 

implemented the recommendations and rulings 

of the DSB with respect to the calculation of 

antidumping margins in that investigation. In 

view of other DSB recommendations and 

rulings, after consultations with Japan, the 

United States requested that the "reasonable 

period of time" in this dispute be extended until 

December 31, 2003, or until the end of the first 

session of the next Congress, whichever is 

earlier. That request was approved by the DSB 

at its meeting of December 5, 2002. On 

December 10, 2003, the DSB agreed to extend 

the reasonable period of time for implementation 

until July 31, 2004, and on August 31, 2004, this 

period was further extended to July 31, 2005. 

United States—Countervailing duty measures 

concerning certain products from the European 

Communities (DS212) 
II. The World Trade Organization | 114 

On November 13, 2000, the European Union 

requested WTO dispute settlement consultations 

in 14 separate U.S. countervailing duty 

proceedings covering imports of steel and 

certain other products from member states of the 

European Union, all with respect to the 

Department of Commerce’s “change in 

ownership” (or “privatization”) methodology 

that was challenged successfully by the 

European Union in a WTO dispute concerning 

leaded steel products from the UK. 

Consultations were held December 7, 2000. 

Further consultations were requested on 

February 1, 2001, and held on April 3. A panel 

was established at the EU’s request on 

September 10, 2001. In its panel request, the 

European Union challenged 12 separate US 

CVD proceedings, as well as Section 771(5)(F) 

of the Tariff Act of 1930. At the request of the 

European Union, the WTO Director-General 

composed the panel on November 5, 2001, as 

follows: Mr. Gilles Gauthier, Chairman; Ms. 

Marie-Gabrielle Ineichen-Fleisch and Mr. 

Michael Mulgrew, Members. 

On July 31, 2002, the panel circulated its final 

report. In a prior dispute concerning leaded bar 

from the United Kingdom, the European Union 

successfully challenged the application of an 

earlier version of Commerce’s methodology, 

known as “gamma.” In this dispute, the panel 

found that Commerce’s current “same person” 

methodology (as well as the continued 

application of the “gamma” methodology in 

several cases) was inconsistent with the 

Subsidies Agreement. The panel also found that 

section 771(5)(F) of the Tariff Act of 1930 – the 

“change of ownership” provision in the U.S. 

statute – was WTO-inconsistent. The United 

States appealed, and the Appellate Body issued 

its report on December 9, 2002. The Appellate 

Body reversed the panel with respect to section 

771(5)(F), finding that it did not mandate WTOinconsistent behavior. The Appellate Body 

affirmed the panel’s findings that the “gamma” 

and “same person” methodologies are 

inconsistent with the Subsidies Agreement, 

although it modified the panel’s reasoning. 

On January 27, 2003, the United States informed 

the DSB of its intention to implement the DSB’s 

recommendations and rulings in a manner that 

respects U.S. WTO obligations. U.S. 

implementation proceeded in two stages. First, 

Commerce modified its methodology for 

analyzing a privatization in the context of the 

CVD law. Commerce published a notice 

announcing its new, WTO-consistent 

methodology on June 23, 2003. See Notice of 

Final Modification of Agency Practice Under 

Section 123 of the Uruguay Round Agreements 

Act, 68 Fed. Reg. 37,125. Second, Commerce 

applied its new methodology to the twelve 

determinations that had been found to be WTOinconsistent. On October 24, 2003, Commerce 

issued revised determinations under section 129 

of the Uruguay Round Agreements Act. As a 

result of this action, Commerce: (1) revoked 

two CVD orders in whole; (2) revoked one CVD 

order in part; and (3) in the case of five CVD 

orders, revised the cash deposit rates for certain 

companies. See Notice of Implementation 

Under Section 129 of the Uruguay Round 

Agreements Act; Countervailing Measures 

Concerning Certain Steel Products from the 

European Communities, 68 Fed. Reg. 64,858 

(Nov. 17, 2003). 

On November 7, 2003, the United States 

informed the DSB of its implementation of the 

DSB’s recommendations and rulings. 

On March 17, 2004, the EU requested 

consultations regarding the Department of 

Commerce’s new change of ownership 

methodology. The EU contends that the 

Department countervails the entire amount of 

unamortized subsidies even if the price paid for 

the acquired firm was only $1 less than the fair 

market value. With respect to the Department of 

Commerce’s revised determinations, the EU 

complains about the three sunset reviews in 

which the Department declined to address the 

privatization transactions in question on what 

essentially were “judicial economy” grounds. 

With respect to a fourth sunset review, the EU 

challenges the Department’s analysis of the sale 

of shares to employees of the company in 

question. Consultations took place on May 24, 

2004. A panel was established on September 

27, 2004. The original three panelists agreed to 

serve on the compliance panel. 
II. The World Trade Organization| 115 

United States—Countervailing duties on certain 

corrosion-resistant carbon steel flat products 

from Germany (DS213) 

On November 13, 2000, the European Union 

requested dispute settlement consultations with 

respect to the Department of Commerce’s 

countervailing duty order on certain corrosionresistant flat rolled steel products from 

Germany. In a “sunset review”, the Department 

of Commerce declined to revoke the order based 

on a finding that subsidization would continue at 

a rate of 0.54 percent. The European Union 

alleged that this action violates the Subsidies 

Agreement, asserting that countervailing duty 

orders must be revoked where the rate of 

subsidization found is less than the 1 percent de 

minimis standard for initial countervailing duty 

investigations. The United States and the 

European Union held consultations pursuant to 

this request on December 8, 2000. A second 

round of consultations was held on March 21, 

2001, in which the European Union made a new 

allegation that the automatic initiation of sunset 

reviews by the United States is inconsistent with 

the SCM Agreement. A panel was established at 

the EU’s request on September 10, 2001. The 

panel was composed of: Mr. Hugh McPhail, 

Chair, and Mr. Wieslaw Karsz, Member 

(selected by agreement of the parties); and Mr. 

Ronald Erdmann, Member (selected by the 

Director-General). 

In its final report, which was circulated on July 

3, 2002, the panel made the following findings 

in favor of the United States: (1) the EU claims 

regarding “expedited sunset reviews” and 

“ample opportunity” for parties to submit 

evidence were not identified in the panel 

request, and were therefore outside the panel’s 

terms of reference; (2) because Article 21.3 of 

the Subsidies Agreement contains no evidentiary 

standard for the self-initiation of sunset reviews, 

the automatic self-initiation of sunset reviews by 

Commerce was not a violation; and (3) the U.S. 

CVD law “as such” is not inconsistent with 

Article 21.3 with respect to the obligation that 

authorities “determine” the likelihood of 

continuation or recurrence of subsidization in a 

sunset review. Disagreeing with the United 

States, however, a majority of the panel found 

that the Subsidies Agreement’s one percent de 

minimis standard for the investigation phase of a 

CVD proceeding applies to sunset reviews. 

Because U.S. law applies a 0.5 percent de 

minimis standard in reviews, the majority found 

a violation with respect to U.S. law “as such” 

and as applied in the German steel sunset 

review. In a rare step, one panelist dissented 

from this finding. The panel also found that 

Commerce’s determination of likelihood of 

continuation or recurrence of subsidization in 

the German steel sunset review lacked 

“sufficient factual basis,” and therefore was 

inconsistent with the obligation to “determine” 

under Article 21.3. 

The United States appealed the de minimis 

finding, but not the case-specific finding 

concerning Commerce’s determination of 

likelihood. The European Union cross-appealed 

on the findings it lost. The Appellate Body 

issued its report on November 28, 2002, and 

found in favor of the United States on all counts. 

The DSB adopted the panel and Appellate Body 

reports on December 19, 2002. On January 17, 

2003, the United States informed the DSB of its 

intent to implement the DSB’s recommendations 

and rulings. 

On April 20, 2004, the United States informed 

the DSB that it had revoked the countervailing 

duty order at issue, thereby implementing the 

DSB’s recommendations and rulings. 

United States—Continued Dumping and 

Subsidy Offset Act of 2000 (CDSOA) 

(DS217/234) 

On December 21, 2000, Australia, Brazil, Chile, 

the European Union, India, Indonesia, Japan, 

Korea, and Thailand requested consultations 

with the United States regarding the Continued 

Dumping and Subsidy Offset Act of 2000 (19 

USC 754), which amended Title VII of the 

Tariff Act of 1930 to transfer import duties 

collected under U.S. antidumping and 

countervailing duty orders from the U.S. 

Treasury to the companies that filed the 

antidumping and countervailing duty petitions. 

Consultations were held on February 6, 2001. 

On May 21, 2001, Canada and Mexico also 
II. The World Trade Organization | 116 

requested consultations on the same matter, 

which were held on June 29, 2001. On July 12, 

2001, the original nine complaining parties 

requested the establishment of a panel, which 

was established on August 23. On September 

10, 2001, a panel was established at the request 

of Canada and Mexico, and all complaints were 

consolidated into one panel. The panel was 

composed of: Mr. Luzius Wasescha, Chair 

(selected by mutual agreement of the parties); 

and Mr. Maamoun Abdel-Fattah and Mr. 

William Falconer, Members (selected by the 

Director-General). 

The panel issued its report on September 2, 

2002, finding against the United States on three 

of the five principal claims brought by the 

complaining parties. Specifically, the panel 

found that the CDSOA constitutes a specific 

action against dumping and subsidies and 

therefore is inconsistent with the WTO 

Antidumping and SCM Agreements as well as 

GATT Article VI. The panel also found that the 

CDSOA distorts the standing determination 

conducted by the Commerce Department and 

therefore is inconsistent with the standing 

provisions in the Antidumping and SCM 

Agreements. The United States prevailed 

against the complainants’ claims under the 

Antidumping and SCM Agreements that the 

CDSOA distorts the Commerce Department’s 

consideration of price undertakings (agreements 

to settle AD/CVD investigations). The panel 

also rejected Mexico’s actionable subsidy claim 

brought under the SCM Agreement. Finally, the 

panel rejected the complainants’ claims under 

Article X:3 of the GATT, Article 15 of the Antidumping Agreement, and Articles 4.10 and 7.9 

of the SCM Agreement. The United States 

appealed the panel’s adverse findings on 

October 1, 2002. The Appellate Body issued its 

report on January 16, 2003, upholding the 

panel’s finding that the CDSOA is an 

impermissible action against dumping and 

subsidies, but reversing the panel’s finding on 

standing. The DSB adopted the panel and 

Appellate Body reports on January 27, 2003. At 

the meeting, the United States stated its intention 

to implement the DSB recommendations and 

rulings. On March 14, 2003, the complaining 

parties requested arbitration to determine a 

reasonable period of time for U.S. 

implementation. On June 13, 2003, the 

arbitrator determined that this period would end 

on December 27, 2003. On June 19, 2003, 

legislation to bring the Continued Dumping and 

Subsidy Offset Act into conformity with U.S. 

obligations under the AD Agreement, the SCM 

Agreement and the GATT of 1994 was 

introduced in the U.S. Senate (S. 1299). 

On January 15, 2004, eight complaining parties 

(Brazil, Canada, Chile, EU, India, Japan, Korea, 

and Mexico) requested WTO authorization to 

retaliate. The remaining three complaining 

parties (Australia, Indonesia and Thailand) 

agreed to extend to December 27, 2004, the 

period of time in which the United States has to 

comply with the WTO rulings and 

recommendations in this dispute. On January 

23, 2004, the United States objected to the 

requests from the eight complaining parties to 

retaliate, thereby referring the matter to 

arbitration. On August 31, 2004, the Arbitrators 

issued their awards in each of the eight 

arbitrations. They determined that each 

complaining party could retaliate, on a yearly 

basis, covering the total value of trade not 

exceeding, in U.S. dollars, the amount resulting 

from the following equation: amount of 

disbursements under CDSOA for the most 

recent year for which data are available relating 

to antidumping or countervailing duties paid on 

imports from each party at that time, as 

published by the U.S. authorities, multiplied by 

0.72. 

Based on requests from Brazil, the EU, India, 

Japan, Korea, Canada, and Mexico, on 

November 26, 2004, the DSB granted these 

Members authorization to suspend concessions 

or other obligations, as provided in DSU Article 

22.7 and in the Decisions of the Arbitrators. The 

DSB granted Chile authorization to suspend 

concessions or other obligations on December 

17, 2004. 

United States—Countervailing duties on certain 

carbon steel products from Brazil (DS218) 

On December 21, 2000, Brazil requested 

consultations with the United States regarding 
II. The World Trade Organization| 117 

U.S. countervailing duties on certain carbon 

steel products from Brazil, alleging that the 

Department of Commerce’s “change in 

ownership” (or “privatization”) methodology, 

which was ruled inconsistent with the WTO 

Subsidies Agreement when applied to leaded 

steel products from the UK, violates the 

Subsidies Agreement as it was applied by the 

United States in this countervailing duty case. 

Consultations were held on January 17, 2001. 

The dispute remains in the consultation phase. 

United States—Antidumping duties on seamless 

pipe from Italy (DS225) 

On February 5, 2001, the European Union 

requested consultations with the United States 

regarding antidumping duties imposed by the 

United States on seamless line and pressure pipe 

from Italy, complaining about the final results of 

a “sunset” review of that antidumping order, as 

well as the procedures followed by the 

Department of Commerce generally for 

initiating “sunset” reviews pursuant to Section 

751 of the Tariff Act of 1930 and 19 CFR §351. 

The European Union alleges that these measures 

violate the WTO Antidumping Agreement. 

Consultations were held on March 21, 2001. 

The dispute remains in the consultation phase. 

United States—Calculation of dumping margins 

(DS239) 

On September 18, 2001, the United States 

received from Brazil a request for consultations 

regarding the de minimis standard as applied by 

the U.S. Department of Commerce in 

conducting reviews of antidumping orders, and 

the practice of “zeroing” (or, not offsetting 

“dumped” sales with “non-dumped” sales) in 

conducting investigations and reviews. Brazil 

submitted a revised request on November 1, 

2001, focusing specifically on the antidumping 

duty order on silicon metal from Brazil. 

Consultations were held on December 7, 2001. 

The dispute remains in the consultation phase. 

United States – Sunset review of antidumping 

duties on corrosion-resistant carbon steel flat 

products from Japan (DS244) 

On January 30, 2002, Japan requested 

consultations with the United States regarding 

the final determination of both the United States 

Department of Commerce and the United States 

International Trade Commission on the full 

sunset review of corrosion-resistant carbon steel 

flat products from Japan, issued on August 2, 

2000 and November 21, 2000, respectively. 

Consultations were held on March 14, 2002. A 

panel was established at Japan’s request on May 

22, 2002. The Director-General selected as 

panelists Mr. Dariusz Rosati, Chair, and Mr. 

Martin Garcia and Mr. David Unterhalter, 

Members. 

In its report circulated on August 14, 2003, the 

panel found that the United States acted 

consistently with its international obligations 

under the WTO in conducting this sunset 

review. The panel found that Commerce may 

automatically initiate a sunset review; that U.S. 

law contains proper standards for conducting 

sunset reviews; that the de minimis and 

negligibility provisions in the Antidumping 

Agreement apply only to investigations, not 

sunset reviews; that U.S. administrative practice 

can only be challenged with respect to its 

application in a particular sunset review, not “as 

such”; and that Commerce and the ITC properly 

conducted this particular sunset review. Japan 

appealed the report on September 15, 2003. 

The Appellate Body issued its report on 

December 15, 2003. The Appellate Body agreed 

that the United States may maintain the 

antidumping duty order at issue. The Appellate 

Body, however, concluded that the panel had not 

fully considered relevant arguments in finding 

that the Sunset Policy Bulletin can not be 

challenged “as such,” and reversed the finding 

on that basis. The DSB adopted the panel and 

Appellate Body reports on January 9, 2004. 

United States – Equalizing excise tax imposed 

by Florida on processed orange and grapefruit 

products (DS250) 

On March 20, 2002, Brazil requested 

consultations with the United States regarding 

the "Equalizing Excise Tax" imposed by the 

State of Florida on processed orange and 
II. The World Trade Organization | 118 

grapefruit products produced from citrus fruit 

grown outside the United States – Section 

601.155 Florida Statutes. Consultations were 

held with Brazil on May 2, 2002, and June 27, 

2002, and a panel was established on October 1, 

2002. Following amendment of the Florida tax 

legislation on April 30, 2004, the United States 

and Brazil notified the DSB on May 28, 2004 

that they had reached a mutually satisfactory 

solution. 

United States—Final countervailing duty 

determination with respect to certain softwood 

lumber from Canada (DS257) 

On May 3, 2002, Canada requested 

consultations with the United States regarding 

the U.S. Department of Commerce’s final 

countervailing duty determination concerning 

certain softwood lumber from Canada. Among 

other things, Canada challenged the evidence 

upon which the investigation was initiated, 

claimed that the Commerce Department imposed 

countervailing duties against programs and 

policies that are not subsides and are not 

“specific” within the meaning of the Agreement 

on Subsidies and Countervailing Measures, and 

that the Commerce Department failed to conduct 

its investigation properly. Consultations were 

held on June 18, 2002, and a panel was 

established at Canada’s request on October 1, 

2002. The panel was composed of Mr. Elbio 

Rosselli, Chair, and Mr. Weislaw Karsz and Mr. 

Remo Moretta, Members. In its report, 

circulated on August 29, 2003, the panel found 

that the United States acted consistently with the 

SCM Agreement and GATT 1994 in 

determining that the programs at issue provided 

a financial contribution and that those programs 

were “specific” within the meaning of the SCM 

Agreement. It also found, however, that the 

United States had calculated the benefit 

incorrectly and had improperly failed to conduct 

a “pass-through” analysis to determine whether 

subsidies granted to one producer were passed 

through to other producers. The United States 

appealed these issues to the WTO Appellate 

Body on October 21, 2003, and Canada appealed 

the “financial contribution” issue on November 

5. 

On January 19, 2004, the WTO Appellate Body 

issued a report finding in favor of the United 

States in all key respects. The Appellate Body 

reversed the panel’s unfavorable finding with 

respect to the rejection of Canadian prices as a 

benchmark; upheld the panel’s favorable finding 

that the provincial governments’ provision of 

low-cost timber to lumber producers constituted 

a “financial contribution” under the SCM 

Agreement; and reversed the panel’s 

unfavorable finding that the Commerce 

Department should have conducted a “passthrough” analysis to determine whether 

subsidies granted to one lumber company were 

passed through to other lumber companies 

through the sale of subsidized lumber. The 

Appellate Body’s only finding against the 

United States was that the Commerce 

Department should have conducted such a passthrough analysis with respect to the sale of logs 

from harvester/sawmills to unrelated sawmills. 

The DSB adopted the panel and Appellate Body 

reports on February 17, 2004. The United States 

stated its intention to implement the DSB 

recommendations and rulings on March 5, 2004. 

On December 17, 2004, the United States 

informed the DSB that Commerce had revised 

its CVD order, thereby implementing the DSB’s 

recommendations and rulings. 

United States – Sunset reviews of antidumping 

and countervailing duties on certain steel 

products from France and Germany (DS262) 

On July 25, 2002, the European Union requested 

consultations with the United States with respect 

to anti-dumping and countervailing duties 

imposed by the United States on imports of 

corrosion-resistant carbon steel flat products 

(“corrosion resistant steel”) from France (dealt 

with under US case numbers A-427-808 and C427-810) and Germany (dealt with under US 

case numbers A-428-815 and C-428-817), and 

on imports of cut-to-length carbon steel plate 

(“cut-to-length steel”) from Germany (dealt with 

under US case numbers A-428-816 and C-428-

817). Consultations were held on September 12, 

2002. 
II. The World Trade Organization| 119 

United States—Final dumping determination on 

softwood lumber from Canada (DS264) 

On September 13, 2002, Canada requested WTO 

dispute settlement consultations concerning the 

amended final determination by the U.S. 

Department of Commerce of sales at less than 

fair value with respect to certain softwood 

lumber from Canada, as published in the May 

22, 2002 Federal Register, along with the 

antidumping duty order with respect to imports 

of the subject products. Canada alleged that 

Commerce’s initiation of its investigation 

concerning the subject products, as well as 

aspects of its methodology in reaching its final 

determination, violated the GATT 1994 and the 

Agreement on Implementation of Article VI of 

GATT 1994. Consultations were held on 

October 11, 2002. On December 6, 2002, 

Canada requested establishment of a panel, and 

the DSB established the panel on January 8, 

2003. On February 25, 2003, the parties agreed 

on the panelists, as follows: Mr. Harsha V. 

Singh, Chairman, and Mr. Gerhard Hannes 

Welge and Mr. Adrian Makuc, Members. In its 

report, the panel rejected Canada’s arguments: 

(1) that Commerce’s investigation was 

improperly initiated; (2) that Commerce had 

defined the scope of the investigation (i.e., the 

“product under investigation”) too broadly; and 

(3) that Commerce improperly declined to make 

certain adjustment based on difference in 

dimension of products involved in particular 

transactions compared. The panel also rejected 

Canada’s claims on company-specific 

calculation issues. The one claim that the panel 

upheld was Canada’s argument that Commerce’s 

use of “zeroing” in comparing U.S. price to 

normal value was inconsistent with Article 2.4.2 

of the Antidumping Agreement. 

On May 13, 2004, the United States filed a 

notice of appeal regarding the “zeroing” issue. 

Canada cross-appealed with respect to two 

company-specific issues (one regarding the 

allocation of costs to Abitibi, and the other 

regarding the valuation of an offset to cost of 

production for Tembec). The Appellate Body 

issued its report on August 11, 2004. The report 

upheld the panel’s findings on “zeroing” and the 

Tembec issue. It reversed a panel finding 

regarding the Abitibi issue concerning 

interpretation of the term “consider all available 

evidence” in Article 2.2.1.1 of the AD 

Agreement; however, it declined to complete the 

panel’s legal analysis. The panel and Appellate 

Body reports were adopted at the August 31, 

2004 DSB meeting. The United States and 

Canada agreed that the reasonable period of time 

for implementation in this dispute will expire on 

April 15, 2005. 

United States – Subsidies on upland cotton 

(DS267) 

On September 27, 2002, Brazil requested WTO 

consultations pursuant to Articles 4.1, 7.1 and 30 

of the Agreement on Subsidies and 

Countervailing Measures, Article 19 of the 

Agreement on Agriculture, Article XXII of the 

General Agreement on Tariffs and Trade 1994, 

and Article 4 of the Understanding on Rules and 

Procedures Governing the Settlement of 

Disputes. The Brazilian consultation request on 

U.S. support measures that benefit upland cotton 

claims that these alleged subsidies and measures 

are inconsistent with U.S. commitments and 

obligations under the Agreement on Subsidies 

and Countervailing Measures, the Agreement on 

Agriculture, and the General Agreement on 

Tariffs and Trade 1994. Consultations were 

held on December 3, 4 and 19 of 2002, and 

January 17, 2003. 

On February 6, 2003, Brazil requested the 

establishment of a panel. Brazil’s panel request 

pertains to “prohibited and actionable subsidies 

provided to US producers, users and/or exporters 

of upland cotton, as well as legislation, 

regulations and statutory instruments and 

amendments thereto providing such subsidies 

(including export credit guarantees), grants, and 

any other assistance to the US producers, users 

and exporters of upland cotton” [footnote 

omitted]. The Dispute Settlement Body 

established the panel on March 18, 2003. On 

May 19, 2003, the Director-General appointed 

as panelists Dariusz Rosati of Poland, Chair; 

Daniel Moulis of Australia and Mario Matus of 

Chile, Members. 
II. The World Trade Organization | 120 

On September 8, 2004, the panel circulated its 

report to all WTO Members and the public. The 

panel made some findings in favor of Brazil on 

certain of its claims and other findings in favor 

of the United States: 

• The panel found that the “Peace Clause” in 

the WTO Agreement on Agriculture did not 

apply to a number of U.S. measures, 

including (1) domestic support measures and 

(2) export credit guarantees for 

“unscheduled commodities” and rice (a 

“scheduled commodity”). Therefore, Brazil 

could proceed with certain of its challenges. 

• The panel found that export credit 

guarantees for “unscheduled commodities” 

(such as cotton and soybeans) and for rice 

are prohibited export subsidies. However, 

the panel also found that Brazil had not 

demonstrated that the guarantees for other 

“scheduled commodities” exceeded U.S. 

WTO reduction commitments and therefore 

breached the Peace Clause. Further, Brazil 

had not demonstrated that the programs 

threaten to lead to circumvention of U.S. 

WTO reduction commitments for other 

“scheduled commodities” and for 

“unscheduled commodities” not currently 

receiving guarantees. 

• Some U.S. domestic support programs (i.e., 

marketing loan, counter-cyclical, market 

loss assistance, and Step 2 payments) were 

found to cause significant suppression of 

cotton prices in the world market in 

marketing years 1999-2002 causing serious 

prejudice to Brazil’s interests. However, the 

panel found that other U.S. domestic support 

programs (i.e., production flexibility 

contract payments, direct payments, and 

crop insurance payments) did not cause 

serious prejudice to Brazil’s interests 

because Brazil failed to show that these 

programs caused significant price 

suppression. The panel also found that 

Brazil failed to show that any U.S. program 

caused an increase in U.S. world market 

share for upland cotton constituting serious 

prejudice. 

• The panel did not reach Brazil’s claim that 

U.S. domestic support programs threatened 

to cause serious prejudice to Brazil’s 

interests in marketing years 2003-2007. The 

panel also did not reach Brazil’s claim that 

U.S. domestic support programs per se cause 

serious prejudice in those years. 

• The panel also found that Brazil had failed 

to establish that FSC/ETI tax benefits for 

cotton exporters were prohibited export 

subsidies. 

• Finally, the panel found that Step 2 

payments to exporters of cotton are 

prohibited export subsidies, not protected by 

the Peace Clause, and Step 2 payments to 

domestic users are prohibited import 

substitution subsidies because they were 

only made for U.S. cotton. 

On October 18, 2004, the United States filed a 

notice of appeal. The oral hearing was held on 

December 13-15, 2004. 

United States – Sunset reviews of antidumping 

measures on oil country tubular goods from 

Argentina (DS268) 

On October 7, 2002, Argentina requested 

consultations with the United States regarding 

the final determinations of the United States 

Department of Commerce (USDOC) and the 

United States International Trade Commission in 

the sunset reviews of the antidumping duty order 

on oil country tubular goods (OCTG) from 

Argentina, issued on November 7, 2000, and 

June 2001, respectively, and the USDOC’s 

determination to continue the antidumping duty 

order on OCTG from Argentina, issued on July 

25, 2001. Consultations were held on November 

14, 2002, and December 17, 2002. Argentina 

requested the establishment of a panel on April 

3, 2003. The DSB established a panel on May 

19, 2003. On September 4, 2003, the DirectorGeneral composed the panel as follows: Mr. 

Paul O’Connor, Chairman, and Mr. Bruce 

Cullen and Mr. Faizullah Khilji, Members. In 

its report circulated July 16, 2004, the panel 

agreed with Argentina that the waiver provisions 

prevent the DOC from making a determination 
II. The World Trade Organization| 121 

as required by Article 11.3 and that the DOC’s 

Sunset Policy Bulletin is inconsistent with 

Article 11.3. The panel rejected Argentina’s 

claims that the ITC did not correctly apply the 

“likely” standard and did not conduct an 

objective examination. Further, the panel 

concluded that statutes providing for cumulation 

and the time-frame for continuation or 

recurrence of injury were not inconsistent with 

Article 11.3. On August 31, 2004, the United 

States filed a notice of appeal. The Appellate 

Body issued its report on November 29, 2004. 

The Appellate Body reversed the panel’s finding 

against the Sunset Policy Bulletin and upheld the 

other findings described above. The DSB 

adopted the panel and Appellate Body reports on 

December 17, 2004. 

United States—Investigation of the U.S. 

International Trade Commission in softwood 

lumber from Canada (DS277) 

On December 20, 2002, Canada requested 

consultations concerning the May 16, 2002 

determination of the U.S. International Trade 

Commission (notice of which was published in 

the May 22, 2002 Federal Register) that imports 

of softwood lumber from Canada, which the 

U.S. Department of Commerce found to be 

subsidized and sold at less than fair value, 

threatened an industry in the United States with 

material injury. Canada alleged that flaws in the 

U.S. International Trade Commission’s 

determination caused the United States to violate 

various aspects of the GATT 1994, the 

Agreement on Implementation of Article VI of 

GATT 1994, and the Agreement on Subsidies 

and Countervailing Measures. Consultations 

were held January 22, 2003. Canada requested 

the establishment of a panel on April 3, 2003, 

and the DSB established a panel on May 7, 

2003. On June 19, 2003, the Director-General 

composed the panel as follows: Mr. Hardeep 

Singh Puri, Chairman, and Mr. Paul O’Connor 

and Ms. Luz Elena Reyes De La Torre, 

Members. In its report circulated on March 22, 

2004, the panel agreed with Canada’s principal 

argument was that the ITC’s threat of injury 

determination was not supported by a reasoned 

and adequate explanation, and agreed with 

Canada that the ITC had failed to establish that 

imports threaten to cause injury. However, the 

panel: declined Canada’s request to find 

violations of certain overarching obligations 

under the Antidumping and Subsidies 

Agreements; rejected Canada's argument that a 

requirement that an investigating authority take 

“special care” is a stand-alone obligation; 

rejected Canada's argument that the ITC was 

obligated to identify an abrupt change in 

circumstances; agreed with the United States 

that, where the Antidumping and Subsidies 

Agreements required the ITC to “consider” 

certain factors, the ITC was not required to make 

explicit findings with respect to those factors; 

and rejected Canada's argument that the United 

States violated certain provisions of the 

applicable agreements that pertain to present 

material injury. The DSB adopted the panel 

report on April 26, 2004. 

At the May 19, 2004 meeting of the DSB, the 

United States stated its intention to implement 

the rulings and recommendations of the DSB. 

On November 24, 2004, the ITC issued a new 

threat-of-injury determination, finding that the 

U.S. lumber industry was threatened with 

material injury by reason of dumped and 

subsidized lumber from Canada. On December 

13, Commerce amended the antidumping and 

countervailing duty orders to reflect the issuance 

and implementation of the new ITC 

determination. 

United States—Countervailing duties on steel 

plate from Mexico (WT/DS280) 

On January 21, 2003, Mexico requested 

consultations on an administrative review of a 

countervailing duty order on carbon steel plate 

in sheets from Mexico. Mexico alleges that the 

Department of Commerce used a WTOinconsistent methodology – the “change-inownership” methodology – to determine the 

existence of countervailable benefits bestowed 

on a Mexican steel producer. Mexico alleges 

inconsistency with various articles of the WTO 

Agreement on Subsidies and Countervailing 

Measures. Consultations were held April 2-4, 

2003. Mexico requested the establishment of a 

panel on August 4, 2003, and the DSB 

established a panel on August 29, 2003. 
II. The World Trade Organization | 122 

United States—Anti-dumping measures on 

cement from Mexico (WT/DS281) 

On January 31, 2003, Mexico requested 

consultations regarding a variety of 

administrative determinations made in 

connection with the antidumping duty order on 

gray portland cement and cement clinker from 

Mexico, including seven administrative review 

determinations by Commerce, the sunset 

determinations of Commerce and the ITC, and 

the ITC’s refusal to conduct a changed 

circumstances review. Mexico also referred to 

certain provisions and procedures contained in 

the Tariff Act of 1930, the regulations of 

Commerce and the ITC, and Commerce’s Sunset 

Policy Bulletin, as well as the URAA Statement 

of Administrative Action. Mexico cited a host 

of concerns, including case-specific dumping 

calculation issues; Commerce’s practice of 

zeroing; the analytical standards used by 

Commerce and the ITC in sunset reviews; the 

U.S. retrospective system of duty assessment, 

including the assessment of interest; and the 

assessment of duties in regional industry cases. 

Consultations were held April 2-4, 2003. 

Mexico requested the establishment of a panel 

on July 29, 2003, and the DSB established a 

panel on August 29, 2003. On September 3, 

2004, the Director-General composed the panel 

as follows: Mr. Peter Palecka, Chair, and Mr. 

Martin Garcia and Mr. David Unterhalter, 

Members. 

United States—Anti-dumping measures on oil 

country tubular goods (OCTG) from Mexico 

(WT/DS282) 

On February 18, 2003, Mexico requested 

consultations regarding several administrative 

determinations made in connection with the 

antidumping duty order on oil country tubular 

goods from Mexico, including the sunset review 

determinations of Commerce and the ITC. 

Mexico also challenges certain provisions and 

procedures contained in the Tariff Act of 1930, 

the regulations of Commerce and the ITC, and 

Commerce’s Sunset Policy Bulletin, as well as 

the URAA Statement of Administrative Action. 

The focus of this case appears to be on the 

analytical standards used by Commerce and the 

ITC in sunset reviews, although Mexico also 

challenges certain aspects of Commerce’s 

antidumping methodology. Consultations were 

held April 2-4, 2003. Mexico requested the 

establishment of a panel on July 29, 2003, and 

the DSB established a panel on August 29, 2003. 

On February 11, 2003, the following panelists 

were selected, with the consent of the parties, to 

review Mexico’s claims: Mr. Christer 

Manhusen, Chairman; Mr. Alistair James 

Stewart and Ms. Stephanie Sin Far Man, 

Members. 

United States—Measures Affecting the CrossBorder Supply of Gambling and Betting 

Services (DS285) 

On March 13, 2003, Antigua & Barbuda 

requested consultations regarding its claim that 

U.S. federal, state and territorial laws on 

gambling violate U.S. specific commitments 

under the General Agreement on Trade in 

Services (“GATS”), as well as Articles VI, XI, 

XVI, and XVII of the GATS, to the extent that 

such laws prevent or can prevent operators from 

Antigua & Barbuda from lawfully offering 

gambling and betting services in the United 

States. Consultations were held on April 30, 

2003. Antigua & Barbuda requested the 

establishment of a panel on June 12, 2003. The 

DSB established a panel on July 21, 2003. At 

the request of the Antigua & Barbuda, the WTO 

Director-General composed the panel on August 

25, 2003, as follows: Mr. B. K. Zutshi, 

Chairman, and Mr. Virachai Plasai and Mr. 

Richard Plender, Members. The panel’s final 

report, circulated on November 10, 2004, found 

that the United States breached Article XVI 

(Market Access) of the GATS by maintaining 

three U.S. federal laws (18 U.S.C. §§ 1084, 

1952, and1955) and certain statutes of 

Louisiana, Massachusetts, South Dakota, and 

Utah. It also found that these measures were not 

justified under exceptions in Article XIV of the 

GATS. 

United States—Laws, regulations and 

methodology for calculating dumping margins 

(“zeroing”) (WT/DS294) 
II. The World Trade Organization| 123 

On June 12, 2003, the European Union 

requested consultations regarding the use of 

"zeroing" in the calculation of dumping margins. 

Consultations were held July 17, 2003. The EU 

requested further consultations on September 8, 

2003. Consultations were held October 6, 2003. 

The EC requested the establishment of a panel 

on February 5, 2004, and the DSB established a 

panel on March 19, 2004. On October 27, 2004, 

the panel was composed as follows: Mr. 

Crawford Falconer, Chair, and Mr. HansFriedrich Beseler and Mr. William Davey, 

Members. 

United States—Countervailing duty 

investigation on dynamic random access 

memory semiconductors (DRAMS) from Korea 

(WT/DS296) 

On June 30, 2003, Korea requested consultations 

regarding determinations made by Commerce 

and the ITC in the countervailing duty 

investigation on DRAMS from Korea, and 

related laws and regulations. Consultations were 

held August 20, 2003. Korea requested further 

consultations on August 18, 2003, which were 

held October 1, 2003. Korea requested the 

establishment of a panel on November 19, 2003. 

The panel request covered only the Commerce 

and ITC determinations made in the DRAMS 

investigation. The DSB established a panel on 

January 23, 2004. On March 5, 2004, the 

Director-General composed the panel as follows: 

H. E. Mr. Hardeep Puri, Chair, and Mr. John 

Adank and Mr. Michael Mulgrew, Members. 

United States—Determination of the 

International Trade Commission in hard red 

spring wheat from Canada (WT/DS310) 

On April 8, 2004, Canada requested 

consultations regarding the U.S. International 

Trade Commission’s determination on hard red 

spring wheat. In its request, Canada alleged that 

the United States has violated Article VI:6(a) of 

the GATT 1994 and various articles of the Antidumping Agreement and the SCM Agreement. 

Canada alleged that these violations stemmed 

from certain errors in the ITC’s determination. 

In particular, Canada claims that the ITC: (1) 

failed “to properly examine the effect of the 

dumped and subsidized imports on prices in the 

domestic market for like products;” (2) failed “to 

properly examine the impact of the dumped and 

subsidized imports on domestic producers of 

like products;” (3) failed “to properly 

demonstrate a causal relationship between the 

dumped and subsidized imports and material 

injury to the domestic industry;” (4) failed “to 

properly examine known factors other than 

dumping and subsidizing that were injuring the 

domestic industry;” and (5) attributed to the 

dumped and subsidized imports the injuries 

caused by other factors. Consultations were 

held on May 6, 2004. On June 11, 2004, Canada 

requested the establishment of a panel, the 

United States objected, and Canada made but 

withdrew a second panel request. 

United States—Reviews of countervailing duty 

on softwood lumber from Canada (WT/DS311) 

On April 14, 2004, Canada requested 

consultations concerning what it termed “the 

failure of the United States Department of 

Commerce (Commerce) to complete expedited 

reviews of the countervailing duty order 

concerning certain softwood lumber products 

from Canada” and “the refusal and failure of 

Commerce to conduct company-specific 

administrative reviews of the same 

countervailing duty order.” Canada alleged that 

the United States had acted inconsistently with 

several provisions of the SCM Agreement and 

with Article VI:3 of the GATT 1994. 

Consultations were held on June 8, 2004. The 

dispute remains in the consultation phase. 

United States–-Subsidies on large civil aircraft 

(WT/DS317) 

On October 6, 2004, the European Communities 

requested consultations with respect to 

“prohibited and actionable subsidies provided to 

U.S. producers of large civil aircraft.” The EC 

alleged that such subsidies violated several 

provisions of the SCM Agreement, as well as 

Article III:4 of the GATT. Consultations were 

held on November 5, 2004. 

United States - Section 776 of the Tariff Act of 

1930 (WT/DS319) 
II. The World Trade Organization | 124 

On November 5, 2004, the European 

Communities requested consultations with the 

United States with respect to the “facts 

available” provision of the U.S. dumping statute 

and the Department of Commerce’s dumping 

order on Stainless Steel Bar from the United 

Kingdom. The EC claims that both the statutory 

provision on adverse facts available and 

Commerce’s determination and order are 

inconsistent with various provisions of the 

Antidumping Agreement and the GATT 1994. 

United States - Continued suspension of 

obligations in the EC - Hormones dispute 

(WT/DS320) 

On November 8, 2004, the European 

Communities requested consultations with 

respect to “the United States’ continued 

suspension of concessions and other obligations 

under the covered agreements” in the EC – 

Hormones dispute. Consultations were held on 

December 16, 2004. 

United States – Measures relating to zeroing and 

sunset reviews (WT/DS322) 

On November 24, 2004, Japan requested 

consultations with respect to: (1) the Department 

of Commerce’s alleged practice of “zeroing” in 

antidumping investigations, administrative 

reviews, sunset reviews, and in assessing the 

final antidumping duty liability on entries upon 

liquidation; (2) in sunset reviews of antidumping 

duty orders, Commerce’s alleged irrefutable 

presumption of the likelihood of continuation or 

recurrence of dumping in certain factual 

situations; and (3) in sunset reviews, the waiver 

provisions of U.S. law. Japan claims that these 

alleged measures breach various provisions of 

the AD Agreement and Article VI of the GATT 

1994. Consultations were held on December 20, 

2004. 

United States – Provisional antidumping 

measures on shrimp from Thailand (WT/DS324) 

On December 9, 2004, Thailand requested 

consultations with respect to the Department of 

Commerce’s imposition of provisional 

antidumping duties on certain frozen and canned 

warmwater shrimp from Thailand. Specifically, 

Thailand has alleged that Commerce’s use of a 

“zeroing” methodology is inconsistent with 

Article 2.4 of the AD Agreement. Thailand also 

has alleged that Commerce’s resort to “adverse 

facts available” in calculating normal value for 

one Thai producer violates provisions of Article 

6 and Annex II of the AD Agreement; and that 

Commerce’s alleged failure to make due 

allowances for certain factors in its calculations 

for the Thai exporters violates Article 2.4 of the 

AD Agreement. 

United States – Anti-Dumping Determinations 

Regarding Stainless Steel from Mexico 

(WT/DS325) 

On January 5, 2005, Mexico requested 

consultations with respect to the Department of 

Commerce’s alleged use of “zeroing” in an 

antidumping investigation and three 

administrative reviews involving certain 

stainless steel products from Mexico. Mexico 

claims these alleged measures breach several 

provisions of the AD Agreement, the GATT 

1994 and the WTO Agreement. 

K. Trade Policy Review Body 

Status 

The Trade Policy Review Body (TPRB), a 

subsidiary body of the General Council, was 

created by the Marrakesh Agreement 

Establishing the WTO to administer the Trade 

Policy Review Mechanism (TPRM). The 

TPRM is a valuable resource for improving the 

transparency of Members’ trade and investment 

regimes and in ensuring adherence to WTO 

rules. The TPRM examines national trade 

policies of each Member on a schedule designed 

to cover the full WTO Membership on a 

frequency determined by trade volume. 

The process starts with an independent report by 

the WTO Secretariat on the trade policies and 

practices of the Member under view. This 

Member works closely with the Secretariat to 

provide relevant information for the report. The 

Secretariat report is accompanied by another 

report prepared by the government undergoing 

the review. Together these reports are discussed 
II. The World Trade Organization| 125 

by the WTO Membership in a TPRB session. 

At this session, the Member under review will 

discuss the report and answer questions on its 

trade policies and practices. The express 

purpose of the review process is to strengthen 

Members observance of WTO provisions and 

contribute to the smoother functioning of the 

multilateral trading system. 

A number of Members have remarked that the 

preparations for the review are helpful in 

improving their own trade policy formulation 

and coordination. The current process reflects 

improvements to streamline the TPRM and 

gives it broader coverage and greater flexibility. 

Reports cover the range of WTO agreements 

including goods, services, and intellectual 

property and are available to the public on the 

WTO’s web site at www.wto.org. Documents 

are filed on the site’s Document Distribution 

Facility under the document symbol “WT/TPR.” 

Cumulative Assessment Since the WTO Was 

Established

The TPRM has served as a valuable resource for 

improving transparency in WTO Members’ 

trade and investment regimes and ensuring 

commitment to WTO rules. Since the WTO was 

established, the TPRB has conducted 141 

reviews. Prior to establishment of the WTO, the 

TPRM had conducted 56 reviews under the 

auspices of the GATT. The reports produced for 

each review are made available to the public 

after the review is completed. For many least 

developed countries, the reports represent the 

first comprehensive analysis of their commercial 

policies, laws, and regulations and have 

implications and uses beyond the meeting of the 

TPRB. Some Members have used the 

Secretariat’s Report as a national trade and 

investment promotion document, while others 

have indicated that the report has served as basis 

for internal analysis of inefficiencies and 

overlaps in domestic laws and government 

agencies. For other trading partners and U.S. 

businesses, the reports are a dependable resource 

for assessing the commercial environment of the 

majority of WTO Members. 

The United States has participated in every 

Trade Policy Review and developed for each 

Member under review a detailed list of questions 

and comments designed to urge, where 

necessary, compliance with certain WTO/GATT 

obligations or to obtain better information on 

issues that are of particular concern to interested 

parties in the United States. The biennial 

Reviews of the European Union, Canada, and 

Japan have provided a regular forum for updates 

and analysis of policies and measures 

undertaken by the United States’ largest trading 

partners. During the four reviews of the United 

States since 1995 (the most recent in 2004), the 

U.S. team has emphasized the openness of the 

U.S. market and the important role the U.S. 

economy plays in the global trading system. 

The U.S. Trade Policy Reviews also have 

afforded the opportunity to defend WTO 

consistent trade practices and reduce 

misunderstandings about certain U.S. trade 

policies and laws. Thus, the TPRM has met the 

expectations of the United States to provide 

greater transparency, understanding and 

consistency in the trade policies of WTO 

Members, and to better ensure compliance with 

the rules-based system. 

Major Issues in 2004

During 2004, the TPRB reviewed the trade 

regimes of Belize, Benin, Brazil, Burkina Faso, 

the European Union, Gambia, Korea, Mali, 

Norway, Rwanda, Singapore, Sri Lanka, 

Suriname, the United States, and the Customs 

Territory of Switzerland and Liechtenstein. This 

group included five least-developed (LDC) 

Members and four Members reviewed for the 

first time. As of the end of 2004, the TPRM had 

conducted 197 reviews, covering 114 out of 148 

Members (counting the European Union as 

fifteen) and representing approximately 88 

percent of world merchandise trade. 

Reviews emphasized the macroeconomic and 

structural context for trade policies, including 

the effects of economic and trade reforms, 

transparency with respect to the formulation and 

implementation of trade policy, and the current 

economic performance of Members under 

review. Another important issue has been the 
II. The World Trade Organization | 126 

balance between multilateral, bilateral, regional 

and unilateral trade policy initiatives. Closer 

attention has been given to the link between 

Members’ trade policies and the implementation 

of WTO Agreements, focusing on Members’ 

participation in particular Agreements, the 

fulfillment of notification requirements, the 

implementation of TRIPS, the use of 

antidumping measures, government 

procurement, state-trading, the introduction by 

developing-countries of customs valuation 

methods, the adaptation of national legislation to 

WTO requirements and technical assistance. 

As of the end 2004, 22 of the WTO’s 32 leastdeveloped Members have been reviewed. For 

least-developed countries, the reports represent 

the first comprehensive analysis of their 

commercial policies, laws and regulations and 

have implications and uses beyond the meeting 

of the TPRB. The TPRB’s report to the 

Singapore Ministerial Conference recommended 

greater attention be paid to LDCs in the 

preparation of the TPRB timetable, and a 1999 

appraisal of the operation of the TPRM also 

drew attention to this matter. Trade Policy 

Reviews of LDCs have increasingly performed a 

technical assistance function and have been 

useful in broadening the understanding of 

LDC’s trade policy structure. These reviews 

tend to enhance understanding of WTO 

Agreements, enabling better compliance and 

integration in the multilateral trading system. In 

some cases, the TPR has facilitated better 

interaction between government agencies. The 

TPRM’s comprehensive coverage of trade 

policies also enables Members to identify 

shortcomings in specific areas where further 

technical assistance may be required. 

The seminars and the technical assistance 

involve close cooperation between LDCs and 

the WTO Secretariat. This cooperation 

continues to respond more systematically to 

technical assistance needs of LDCs. The review 

process for an LDC now includes a multi-day 

seminar for its officials on the WTO and, in 

particular, the trade policy review exercise and 

the role of trade in economic policy; such 

seminars were held in 2004 for the review 

process of Gambia and Rwanda. Similar 

exercises have been conducted in Benin, 

Burkina Faso, Mali. Belize and Suriname. The 

Secretariat Report for an LDC review includes a 

section on technical assistance needs and 

priorities with a view to feeding this into the 

Integrated Framework process. 

Prospects for 2005 

The TPRM will continue to be an important tool 

for monitoring Members’ adherence to WTO 

commitments and an effective forum in which to 

encourage Members to meet their obligations 

and to adopt further trade liberalizing measures. 

The 2005 program schedules 18 Members for 

review, including Bolivia, Djibouti, Ecuador, 

Egypt, Guinea, Jamaica, Japan, Malaysia, 

Mongolia, Nigeria, Paraguay, The Philippines, 

Qatar, Romania, Sierra Leone, Togo, Trinidad 

and Tobago, and Tunisia. Djibouti, Ecuador, 

Mongolia, Qatar, Sierra Leone, and Tunisia will 

undergo their first Reviews. Four Members – 

Djibouti, Guinea, Sierra Leone, and Togo – are 

LDCs. 

K. Other General Council 

Bodies/Activities 

1. Committee on Trade and the 

Environment 

Status 

The Committee on Trade and Environment 

(CTE) was created by the WTO General Council 

on January 31, 1995, pursuant to the Marrakesh 

Ministerial Decision on Trade and Environment. 

Following the Doha Ministerial Conference 

concluded in November 2001, the CTE in 

Regular Session continued discussion of many 

important issues with a focus on those identified 

in the Doha Declaration, including market 

access associated with environmental measures, 

TRIPS and environment, and labeling for 

environmental purposes under paragraph 32; 

capacity-building and environmental reviews 

under paragraph 33; and discussion of the 

environmental aspects of Doha negotiations 

under paragraph 51. These issues identified in 

the Doha Declaration are separate from those 

that are subject to specific negotiating mandates 
II. The World Trade Organization| 127 

and that are being taken up by the CTE in 

Special Session. 

Cumulative Assessment Since the WTO Was 

Established

The CTE has played an important role in 

promoting mutually supportive trade and 

environmental policies and has become the 

preeminent global forum for identifying and 

analyzing trade and environmental issues. The 

CTE has brought together trade and environment 

officials from Member governments over the 

last ten years to build a better understanding of 

the complex links between trade and 

environmental policies. Among other things, 

this has helped to address the serious problem of 

lack of coordination between trade and 

environment officials in many governments. 

Together, these experts have studied important 

issues and produced useful recommendations, 

including those contained in the CTE’s report to 

the first WTO Ministerial Conference held in 

Singapore in 1996. The CTE also launched the 

creation of a data base of all environmental 

measures that have been notified by Members 

under WTO transparency rules. In addition, the 

CTE established an ongoing relationship with 

the Secretariats of several relevant Multilateral 

Environmental Agreements (MEAs) and has 

held seven information sessions where trade and 

environment officials had the opportunity to 

exchange information and learn more about 

MEA activities relevant to trade. The CTE’s 

commitment to these types of events continues. 

The CTE’s analytical work has contributed to 

the identification of “win-win” opportunities that 

can contribute to both trade and environmental 

policy objectives, and Ministers agreed to pursue 

several of these in the Doha Declaration (e.g., 

market access for environmental goods and 

services, disciplines on fisheries subsidies that 

contribute to over fishing). The CTE has also 

worked to promote greater transparency related 

to environmental measures and policies, 

including eco-labeling. 

Major Issues in 2004

In 2004, the CTE met in Regular Session 

(CTERS) three times. The United States 

continued its active role in discussions, as 

discussed below. 

• Market Access under Doha SubParagraph 32(i): Discussions under this 

agenda item continued to demonstrate a lower 

level of interest than in past years. However, 

discussions began to pick up in late 2004, 

spurred by a paper from the European 

Commission, which highlighted its recent efforts 

to improve the transparency and accountability 

of its regulatory process and to address 

developing countries’ concerns. In addition, 

discussions returned to a paper from India, first 

tabled in May 2002, which outlines several 

suggestions for moving the discussions forward. 

• TRIPS and Environment under Doha 

Sub-Paragraph 32(ii): Discussions under this 

item continued to focus, as they had prior to the 

Doha Ministerial Conference, on whether there 

may be any inherent conflicts between the 

TRIPS Agreement and the Convention on 

Biological Diversity (CBD) with respect to 

genetic resources and traditional knowledge. 

The CTERS received a report on the seventh 

meeting of the CBD Parties and the first meeting 

of the Parties to the Biosafety Protocol. Several 

suggestions for further structuring discussions 

under this agenda item include studying the 

impacts, if any, of trade and intellectual property 

rights regimes on biodiversity and exploring 

funding for biodiversity protection and 

technology transfer. 
II. The World Trade Organization | 128 

• Labeling for Environmental Purposes 

under Doha Sub-Paragraph 32(iii): 

Discussions under this agenda item 

demonstrated a considerably lower level of 

interest in 2004. However, the European 

Community continued to note its interest in 

future work on environmental labeling. Most 

Members continued to question the rationale for 

singling out environmental labeling for special 

consideration separate from ongoing work in the 

Committee on Technical Barriers to Trade on 

labeling more generally. 

• Capacity Building and Environmental 

Reviews under Doha Paragraph 33: Many 

developing country Members stressed the 

importance of benefitting from technical 

assistance related to negotiations in the WTO on 

trade and environment, particularly given the 

complexity of some of these issues. The 

Secretariat briefed Members on its technical 

assistance activities in 2004, including three 

regional workshops on WTO rules and MEAs 

and three regular trade policy courses. Most 

Members agreed that a key aspect of capacity 

building in this area involves increasing 

communication and coordination between trade 

and environment officials at national levels. 

Additionally, the United States and Canada 

continued to update the CTE in Regular Session 

on their respective environmental reviews of the 

WTO negotiations, while the European Union 

provided additional information on its 

sustainability impact assessments.

• Discussion of Environmental Effects of 

Negotiations under Doha Paragraph 51:

Discussions under this agenda item continued to 

highlight developments in other areas of 

negotiations, including agriculture, nonagricultural market access, services and rules 

(including discussions on disciplining fisheries 

subsidies). The CTERS also agreed to hold an 

informal event in 2005 to discuss the sustainable 

development aspects of the negotiations and 

invite international governmental organizations, 

such as the United Nations Environment 

Program (UNEP), to participate. 

Prospects for 2005 

It is expected that the CTE will devote 

increasing attention to the substance of the 

mandate in paragraph 51 of the Doha 

Declaration. Regarding other environmental 

issues identified in the Doha Declaration that do 

not have a negotiating mandate, discussions are 

less likely to become more focused or increase 

in intensity in the next year. 

2. Committee on Trade and 

Development 

Status 

The Committee on Trade and Development 

(CTD) was established in 1965 to strengthen the 

GATT 1947’s role in the economic development 

of less-developed GATT Contracting Parties. In 

the WTO, the Committee on Trade and 

Development is a subsidiary body of the General 

Council. Since the DDA was launched, two 

additional sub-groups of the CTD have been 

established, a Subcommittee on Least 

Developed Countries and a Dedicated Session 

on Small Economies. 

The Committee addresses trade issues of interest 

to Members with particular emphasis on issues 

related to the operation of the “Enabling Clause” 

(the 1979 Decision on Differential and More 

Favorable Treatment, Reciprocity and Fuller 

Participation of Developing Countries). In this 

context, it focuses on the Generalized System of 

Preferences (GSP) programs, the Global System 

of Trade Preferences among developing 

countries, and regional integration efforts among 

developing countries. In addition, the CTD 

focuses on issues related to the fuller integration 

of all developing countries into the trading 

system, technical cooperation and training, 

commodities, market access in products of 

interest to developing countries and the special 

concerns of the least developed countries, small 

and landlocked economies. 
II. The World Trade Organization| 129 

Cumulative Assessment Since the WTO Was 

Established

Over the past decade, the CTD has been the 

primary forum for discussion of broad issues 

related to the nexus between trade and 

development, rather than implementation or 

operation of a specific agreement. Since Doha 

and the establishment of the DDA, the CTD has 

intensified its work on issues related to trade and 

development. The CTD has focused on issues 

such as expanding trade in products of interest 

to developing countries, reliance on a narrow 

export base, coherence in the work of the World 

Bank, the IMF and the WTO, the WTO’s 

technical assistance and capacity building 

activities, and sustainable development goals. 

Work in the Sub-Committee on LDCs and the 

Dedicated Session on Small Economies has been 

useful in identifying unique challenges faced by 

LDCs in their WTO accession processes and the 

special characteristics of small, vulnerable 

economies, including island and landlocked 

states. 

Since the launch of the DDA, there has been a 

clear recognition of the need for intensified 

technical assistance, training and capacity 

building for developing countries to actively 

participate in the negotiations and to implement 

the results of the negotiations. The CTD has 

played an important role in managing the growth 

and direction of the WTO’s technical assistance 

program. WTO Technical Assistance funding 

through the WTO’s Global Trust Fund has 

grown from approximately $650,000 in the preDoha period to $15 million in 2005. Combined 

with significant growth in funding from other 

donors, the scope and nature of the training has 

expanded, with regional and national training 

programs supplementing the traditional Genevabased trade policy courses. In 2004, the WTO 

introduced a new approach to technical 

assistance designed to ensure a “sustainable 

footprint” of capacity in developing countries, so 

their participation in the negotiations and 

implementation would be more effective. 

Developing country participation has 

progressively increased throughout the DDA 

negotiations, with both individual developing 

countries and groups of developing countries 

playing an increasingly more active role in the 

negotiations. Developing country groupings 

active in the negotiations include: the Latin 

America Group (Groupo Latino or GRULAC); 

the Africa Group; the Africa, Caribbean and 

Pacific Group (ACP); and the LDC Group. 

Despite progress in participation in the 

negotiation, challenges remain. A number of 

developing countries have little depth in their 

trade policy due largely to the high attrition 

among the few expert trade policy officials in 

capitals. 

Special efforts over the last decade have been 

undertaken to increase LDC participation in the 

WTO. The CTD was actively involved in two 

successful high-level meetings – the 1997 High 

Level Meeting on the Least Developed 

Countries and the 1999 Symposium on Trade 

and Development. Both meetings demonstrated 

the CTD’s constructive contribution to the 

WTO’s work by increasing understanding of the 

concerns of the poorest and most vulnerable 

WTO Members. In addition, special efforts 

included the DDA-mandated LDC work 

program. This program, implemented by the 

CTD’s Sub-Committee on LDCs, has included 

identification of market access barriers for entry 

of LDC products into markets of interest to 

them, an annual assessment of improvements in 

market access undertaken by Members, and 

examination of possible additional measures for 

progressive improvements. 

Recent assessments of LDC trade patterns in the 

CTD suggest that over the past few years, LDC 

exports have grown strongly, for example, 

growing 8 percent in 2002 and 13 percent in 

2003. The leading exports of these countries 

vary substantially. In terms of export 

destinations, China has recently become the 

third most important market for LDC products, 

after the United States and European Union, 

with Thailand, India, Korea and Chinese Taipei 

also of growing market importance. This 

growth reflects, in part, substantial changes in 

preferential programs by developed countries, 

but also additional preferences granted to LDCs 

by other developing countries. 
II. The World Trade Organization | 130 

Another special effort to increase LDC 

participation was the General Council adoption 

of guidelines for LDC WTO Accessions, based 

on a recommendation developed by the LDC 

Subcommittee in December 2002. In these 

guidelines, developed countries committed to 

facilitating and accelerating LDC accessions. 

Since adoption of the guidelines, two least 

developed countries, Cambodia and Nepal, have 

joined, and nine LDCs are currently in the 

process of accession (Afghanistan, Bhutan, Cape 

Verde, Ethiopia, Lao PDR, Samoa, Sudan, 

Vanuatu, and Yemen). 

Work on Small Economies has focused on 

defining the unique circumstances faced by 

those economies, including vulnerability to 

frequent weather challenges, additional 

transportation or trading costs caused by 

geographical access to markets, or heightened 

vulnerabilities to natural and trade-related 

shocks. Mindful of the requirement not to create 

a new subcategory of WTO Members, the work 

has focused on practical problems and solutions. 

This work also has direct implications for work 

being undertaken on special and differential 

treatment more broadly. For example, other 

developing countries that are not considered 

small, vulnerable or landlocked have registered 

concerns that these efforts not undermine their 

existing rights to special treatment in the WTO. 

Major Issues in 2004

The CTD’s work in 2004 focused primarily on 

technical assistance, assessing the progress of 

developing and least-developed countries in 

market access and trade, and DDA-consistent 

consideration of commodity issues. The 

Committee also has monitored work related to 

trade and development being undertaken in the 

respective DDA negotiating groups to ensure 

issues of concern to developing countries, 

including, for example, special and differential 

treatment, “less-than-full-reciprocity”, erosion of 

preference and revenue concerns are being 

addressed effectively. Reviews of the work of 

most negotiating groups in 2004 suggest that 

most negotiating groups have actively addressed 

concerns of developing countries in their 

discussions thus far. 

Outlook for 2005 

The Committee is expected to continue to 

monitor developments in the negotiations as 

they relate to issues of concern to developing 

countries, as well as to deepen its work on 

commodities, small economies and landlocked 

states, and assistance to LDCs. Interest in 

market access in the developed countries is 

expected to continue. However, with SouthSouth trade growing at 10 percent a year -- 

double the growth of world trade -- the CTD’s 

work should increasingly focus on expanding 

South-South trade. On commodities, the CTD 

will examine positive experiences of those 

countries that have been able to successfully 

diversify their export bases beyond one or two 

commodities. 

3. Committee on Balance-of-Payments 

Restrictions 

Status 

The Uruguay Round Understanding on Balance 

of Payments (BOP) substantially strengthened 

GATT disciplines on BOP measures. Under the 

WTO, any Member imposing restrictions for 

balance-of-payments purposes must consult 

regularly with the BOP Committee to determine 

whether the use of such restrictions are 

necessary or desirable to address a country’s 

balance of payments difficulties. The BOP 

Committee works closely with the International 

Monetary Fund in conducting consultations. 

Full consultations involve examining a country’s 

trade restrictions and balance of payments 

situation, while simplified consultations provide 

for more general reviews. Full consultations are 

held when restrictive measures are introduced or 

modified, or at the request of a Member in view 

of improvements in the balance of payments. 

 

Cumulative Assessment Since the WTO Was 

Established

The Uruguay Round strengthening of disciplines 

has ensured that the BOP provisions of the 

GATT 1994 are used as originally intended: to 

enable countries undergoing a BOP crisis to 

impose temporary import measures while 
II. The World Trade Organization| 131 

undertaking needed policy adjustments to bring 

their external account back into balance. 

Looking back to 1995, it is clear that the 

Committee’s surveillance of these measures has 

dramatically reduced the incidence of imposition 

of unwarranted import restrictions. In 1995, the 

Committee on BOP held consultations with 

eleven Members on imposition of new import 

restrictions, six in 1996, eight in 1997, three in 

1998, three in 1999, four in 2000, one in 2001, 

one in 2002, zero in 2003 and zero in 2004. 

Discussions in recent years have focused on 

Members’ plans for removing previously 

approved import restrictions. 

Major Issues in 2004

During 2004, no Member imposed new balanceof-payments restrictions. The BOP Committee 

held one meeting during the year, in November, 

to conduct the third review of China’s accession 

commitments as part of the annual transitional 

review mechanism (TRM). To date, China has 

not notified the Committee of any BOP 

restrictions. The Committee also reviewed 

Bangladesh’s plans for removing its existing 

BOP restrictions on a limited number of items 

by 2009. 

As part of the work program agreed at Doha, 

Committee Members continued to consider 

proposals by delegations and certain suggestions 

provided by the Chair to clarify the respective 

roles of the IMF and BOP Committee in balance 

of payment proceedings. The BOP Committee 

did not arrive at a consensus on this issue in 

2004, but the discussions have narrowed 

differences. 

Prospects for 2005 

Should other Members resort to new BOP 

measures, WTO rules require a thorough 

program of consultation with this Committee. 

The United States expects the Committee to 

continue to ensure that BOP provisions are used 

as intended to address legitimate problems 

through the imposition of temporary, pricebased measures. 

4. Committee on Budget, Finance and 

Administration 

Status 

The Budget Committee is responsible for 

establishing and presenting the budget for the 

WTO Secretariat to the General Council for 

approval. The Committee meets throughout the 

year to address the financial requirements of the 

organization. In 2003, the WTO moved to a 

biennial budget process. Under this new 

approach, Members agreed in December 2003 

on the WTO’s first biennial budget, covering 

2004 and 2005. As envisaged in the decision 

establishing biennial budgeting, in 2004 the 

Secretariat presented proposed adjustments to 

the 2005 budget to take into account unforeseen 

and uncontrollable developments. As is the 

practice in the WTO, decisions on budgetary 

issues are taken by consensus of the Members. 

The United States is an active participant in the 

Budget Committee. The total assessments of 

WTO Members are based on the share of WTO 

Members’ trade in goods, services, and 

intellectual property, and the United States, as 

the Member with the largest share of such trade, 

also makes the largest contribution to the WTO 

budget. For the 2004 budget, the U.S. 

contribution is 15.735 percent of the total budget 

assessment, or Swiss Francs (CHF) 25,259,391 

(about $22 million). Details on the WTO’s 

budget required by Section 124 of the Uruguay 

Round Agreements Act are provided in Annex 

II. Reflecting the move to a biennial budget 

process, Annex II contains consolidated budget 

data for both 2004 and 2005. 

 

Cumulative Assessment Since the WTO Was 

Established

Over the past ten years, the Budget Committee 

successfully performed the core activities central 

to the establishment and functioning of the WTO 

Secretariat as an organization. It formulates 

recommendations to the General Council on the 

WTO’s budget, monitors on a regular basis the 

financial and budgetary situation of the WTO 

including the receipt of contributions, and 

examines the yearly budgetary and financial 
II. The World Trade Organization | 132 

reports from the Director-General and the 

external auditors. In addition, the Budget 

Committee formulated recommendations to the 

General Council on many issues including 

Member assessment plans, personnel 

management improvements, the WTO pension 

plan, the selection of external auditors, 

guidelines governing the process of acceptance 

of voluntary contributions, budget arrangements 

for the UNCTAD/WTO International Trade 

Centre, the trust fund for the participation of 

least developed countries at Doha, and WTO 

building facilities, including the headquarters 

agreement signed with the Swiss authorities. Of 

particular note, the Budget Committee 

strengthened the management of the WTO by 

developing performance-based pay and biennial 

budgeting for adoption by the General Council. 

Major Issues in 2004

• Security Enhancement Program: In 

December 2004, the General Council agreed to 

fund the Secretariat’s proposed Security 

Enhancement Program. This multi-year plan is 

designed to meet the new realities of the post9/11 world by, among other things, improving 

controls on the entrance of goods, vehicles and 

people to the WTO as well as by improving the 

technology available to monitor the WTO’s 

facilities and grounds. 

• Policy on the Use of Temporary 

Assistance: In December 2004, the Budget 

Committee endorsed a new policy on the use of 

temporary assistance. The new policy is 

designed to enhance the control of long term 

costs to the WTO by ensuring that temporary 

assistance is used for truly temporary needs and 

does not lead to uncontrolled long term 

obligations. 

• Appellate Body Remuneration: In 

December 2004, the Budget Committee 

proposed and the General Council agreed to 

increase the remuneration of Appellate Body 

Members by 11.1 percent. Their remuneration 

had not been adjusted since the establishment of 

the Appellate Body in 1995. The increase will 

be funded entirely through savings elsewhere in 

the budget. 

• Agreed Budget for 2005: In December 

2004, the Budget Committee proposed and the 

General Council agreed to increase the 2005 

budget from CHF 166,804,200 to CHF 

168,703,400 to take into account unforeseen and 

uncontrollable developments. Almost all of the 

increase was necessitated by the Security 

Enhancement Program. The remainder was 

needed to meet statutory commitments with 

regard to salary, contribution to the pension fund 

and other staff costs. 

Prospects for 2005 

In 2005, the Budget Committee is expected to 

intensify its work on the Security Enhancement 

Program of the WTO. It will also perform its 

ongoing responsibilities of formulating the 

2006-2007 biennial budget and monitoring the 

financial and budgetary situation of the WTO. 

5. Committee on Regional Trade 

Agreements 

Status 

The Committee on Regional Trade Agreements 

(CRTA), a subsidiary body of the General 

Council, was established in early 1996 as a 

central body to oversee all regional agreements 

to which Members are party. The CRTA is 

charged with conducting reviews of individual 

agreements, seeking ways to facilitate and 

improve the review process, implementing the 

biennial reporting requirements established by 

the Uruguay Round Agreements, and 

considering the systemic implications of such 

agreements and regional initiatives on the 

multilateral trading system. Prior to 1996, these 

reviews were typically conducted by a “working 

party” formed to review a specific agreement. 
II. The World Trade Organization| 133 

The WTO addresses regional trade agreements 

in more than one agreement. In the GATT 1947, 

Article XXIV was the principal provision 

governing Free Trade Areas (FTAs), Customs 

Unions (CUs), and interim agreements leading 

to an FTA or CU. Additionally, the 1979 

Decision on Differential and More Favorable 

Treatment, Reciprocity and Fuller Participation 

of Developing Countries, commonly known as 

the “Enabling Clause,” provides a basis for 

certain agreements between or among 

developing countries. The Uruguay Round 

added two more provisions: the Understanding 

on the Interpretation of Article XXIV, which 

clarifies and enhances the requirements of 

GATT Article XXIV; and Article V and Vbis of 

the General Agreement on Trade in Services 

(GATS), which governs services and labor 

markets economic integration agreements. 

FTAs and CUs are authorized departures from 

the principle of MFN treatment, if certain 

requirements are met. First, tariffs and other 

restrictions on trade must be eliminated on 

substantially all trade between the parties. 

Second, duties and other restrictions of 

commerce applied to third countries upon the 

formation of a CU must not, on the whole, be 

higher or more restrictive than was the case 

before the agreement. For an FTA, no duties or 

restrictions may be higher. Finally, while 

interim agreements leading to FTAs or CUs are 

permissible, transition periods to full FTAs or 

CUs can exceed ten years only in exceptional 

cases. With respect to the formation of a CU, 

the parties must notify Members to negotiate 

compensation to other Members for exceeding 

their WTO bindings with market access 

concessions. An analogous compensation 

requirement exists for services. 

Cumulative Assessment Since the WTO Was 

Established

Prior to the establishment of the CRTA in 1996, 

the GATT Contracting Parties created a working 

party to review each separate agreement, and 

each was reviewed in isolation. The CRTA was 

created to centralize “expertise” on RTAs and to 

enable Members to focus on the varying quality 

and consistency of agreements with respect to 

WTO obligations. The Committee provides an 

important oversight and transparency function. 

Although the Committee does not have the 

power to nullify agreements, a key issue debated 

in the late 1990’s was the Committee’s inability 

to conclude its reports on individual RTAs due 

to lack of consensus on the content of each 

report with respect to assessment of WTO 

consistency. 

Major Issues in 2004

During 2004, the Committee held three sessions. 

As of October 31, 2004, 300 RTAs had been 

notified to the GATT/WTO. Of the notified 

agreements, 150 are currently in force. Of these, 

105 agreements were notified under GATT 

Article XXIV; 19 under the Enabling Clause; 

and 26 under GATS Article V. The Committee 

currently has 110 agreements under 

examination, of which 38 are currently 

undergoing factual examination and 32 are yet to 

be examined. For the remaining 40 agreements, 

the factual examination has been concluded, but 

no reports have been completed as Members do 

not agree on the nature of appropriate 

conclusions. 

In November, the CRTA met to respond to a 

request from the Rules Negotiating Group (NG) 

on RTAs that the Secretariat prepare reports on 

“volunteered” RTAs for review in the CRTA. 

The Rules NG on RTAs has been working on 

developing new reporting and review procedures 

to improve the transparency of RTAs and to 

make the CRTA process more efficient. The 

Rules NG on RTAs was of the view that it 

would be useful to “test-drive” some proposed 

procedures in 2005 to see how they would work 

in practice. The CRTA considered and 

approved a revision in its terms of reference 

(TOR) to allow the Secretariat, on its own 

responsibility, to prepare a factual presentation 

of an RTA for use by the Committee in its 

review of that agreement. 

The CRTA also met informally in 2004 to 

discuss several issues that were contributing to a 

backlog in work. First, the Committee’s work in 

some cases was being hampered by a lack of 

information. Second, the Committee was also 
II. The World Trade Organization | 134 

unable to make progress on certain services 

agreements, because they lacked specific 

commitments. Lastly, the CRTA considered 

how to deal with agreements where one of the 

Parties is not a WTO Member. The CRTA 

agreed to adjustments to deal with the lack of 

information and commitments, but did not reach 

consensus on how to move forward in the case 

of an RTA involving a non-Member. 

The enlargement of the EU in May 2004 to 

include ten additional countries (Cyprus, the 

Czech Republic, Estonia, Hungary, Latvia, 

Lithuania, Malta, Poland, the Slovak Republic 

and Slovenia) resulted in the termination of 65 

RTAs previously in force. CRTA review of 

these agreements was terminated – thereby 

reducing considerably its backlog. 

In March 2004, the CRTA reviewed the U.S.-

Jordan FTA. Japan, Australia, the EU, Chile, 

Switzerland and Chinese Taipei were among the 

delegations that sought additional information in 

the review. Questions addressed included the 

extent of liberalization through TRQs in the 

Agreement; its rules of origin on citrus products; 

its provisions on global safeguard measures; its 

provisions on geographical indications and other 

intellectual property issues; and, its schedule of 

commitments in relation to the Parties’ 

commitments under the GATS. In December 

2004, the United States and Australia notified 

the WTO of the U.S.-Australia FTA, which 

entered-into-force on January 1, 2005. 

Prospects for 2005 

During 2005, the Committee will continue to 

review regional trade agreements notified to the 

WTO and referred to the Committee. The 

CRTA reviews of the U.S.-Chile FTA and the 

U.S. Singapore FTA are scheduled for its 

meeting in February 2005. CRTA review of the 

U.S.-Australia FTA is possible as well. The 

second round of the CRTA review of the U.S.-

Jordan FTA is likely in 2005. 

As reflected in paragraph 29 of the Doha 

Declaration, WTO Members agreed to 

negotiations to clarify and improve disciplines 

on regional trade agreements, a mandate that is 

being undertaken by the Rules NG. 

Accordingly, the discussion of systemic issues 

and improving the examination process in the 

CRTA is expected to occur largely in the Rules 

NG. Over the course of 2005, and under the 

guidance from the Rules NG on RTAs, the 

CRTA may experiment with new procedures to 

improve the efficiency and transparency of RTA 

review in the WTO. 

6. Accessions to the World Trade 

Organization 

Status 

By the end of 2004, there were twenty-eight 

accession applicants with established Working 

Parties, many of them least-developed countries 

(LDCs). Nepal and Cambodia, both LDCs, 

became the 147th and 148th WTO Members on 

April 10 and October 13 respectively, based on 

accession packages approved at the Fifth 

Minister Conference at Cancun, Mexico in 2003. 

They are the first LDCs to become WTO 

Members through the accession process, rather 

than as original signatories by virtue of their 

GATT 1947 contracting party status.38 

Intensive work on negotiations with Russia, 

Saudi Arabia, Vietnam, Ukraine, and Tonga 

during 2004 resulted in significant progress. 

These negotiations are the most advanced and 

most likely to be the focus of work in 2005. 

Substantial work was also recorded on the 

accession packages of Kazakhstan, Algeria, and 

Cape Verde. The General Council approved the 

application of Libya to begin accession 

negotiations in July, and of Afghanistan and Iraq 

in December. First working parties convened 

for the accessions of Bhutan, Laos, Tajikistan, 

and Yemen, and conducted an initial review of 

the information submitted by these countries on 

their foreign trade regimes. Azerbaijan, Bosnia 

 

38 There are nine other LDCs pursuing WTO 

accession at this time. Negotiations are ongoing with 

Bhutan, Cape Verde, Laos, Samoa, Sudan, and 

Yemen. Afghanistan and Ethiopia have not yet 

activated their accessions, and Vanuatu has not 

finalized the package approved by its Working Party 

in 2001. 
II. The World Trade Organization| 135 

and Herzegovina, Cape Verde, Sudan and 

Uzbekistan had second Working Parties and 

moved closer to initiating market access 

negotiations. The Working Parties of Belarus 

and Lebanon continued to review their 

respective trade regimes, but noted slow 

progress in market access negotiations and 

legislative implementation of WTO rules. 

Neither the Bahamas nor Ethiopia have yet 

submitted initial descriptions of their trade 

regimes, and the Working Parties of Andorra, 

Samoa, and Seychelles passed another year 

without activity. Serbia and Montenegro 

withdrew its accession request, and the two 

republics have filed to negotiate the terms of 

WTO Membership as separate customs 

territories. Accession applicants are welcome in 

all WTO formal meetings as observers. 

Equatorial Guinea and Sao Tome and Principe 

are observers to the WTO not yet seeking 

accession. The chart included in the Annex to 

this section reports the current status of each 

accession negotiation. 

Countries and separate customs territories 

seeking to join the WTO must negotiate the 

terms of their accession with current Members, 

as provided for in Article XII of the WTO 

Agreement. It is widely recognized that the 

accession process, with its emphasis on 

implementation of WTO provisions and the 

establishment of stable and predictable market 

access for goods and services, provides a proven 

framework for adoption of policies and practices 

that encourage trade and investment and 

promote growth and development. The 

accession process strengthens the international 

trading system by ensuring that new Members 

understand and implement WTO rules from the 

outset. The process also offers current Members 

the opportunity to secure expanded market 

access opportunities and to address outstanding 

trade issues in a multilateral context. 

In a typical accession negotiation, the applicant 

submits an application to the WTO General 

Council, which establishes a Working Party to 

review information on the applicant’s trade 

regime and to conduct the negotiations. 

Accession negotiations can be time consuming 

and technically complex, involving a detailed 

review of the applicant’s entire trade regime by 

the Working Party and bilateral negotiations for 

import market access. Applicants are expected 

to make necessary legislative changes to 

implement WTO institutional and regulatory 

requirements, to eliminate existing WTOinconsistent measures, and to make trade 

liberalizing specific commitments on market 

access for goods, services, and agriculture. 

Most accession applicants take these actions 

prior to accession. 

The terms of accession developed with Working 

Party members in these bilateral and multilateral 

negotiations are recorded in an accession 

“protocol package” consisting of a Working 

Party report and Protocol of Accession, 

consolidated schedules of specific commitments 

on market access for imported goods and foreign 

service suppliers, and agriculture schedules that 

include commitments on export subsidies and 

domestic supports. The Working Party adopts 

the completed protocol package containing the 

negotiated terms of accession and transmits it 

with its recommendation to the General Council 

or Ministerial Conference for approval. After 

General Council approval, accession applicants 

normally submit the package to their domestic 

authorities for ratification. Thirty days after the 

applicant’s instrument of ratification is received 

in Geneva, WTO Membership becomes 

effective. 

The United States provides a broad range of 

technical assistance to countries seeking 

accession to the WTO to help them meet the 

requirements and challenges presented, both by 

the negotiations and the process of 

implementing WTO provisions in their trade 

regimes. This assistance is provided through 

USAID and the Commercial Law Development 

Program (CLDP) of the U.S. Department of 

Commerce. The assistance can include shortterm technical expertise focused on specific 

issues, e.g., Customs, IPR, or TBT, and/or a 

WTO expert in residence in the acceding 

country or customs territory. A number of the 

WTO Members that have acceded since 1995 

received technical assistance in their accession 

process from the United States, e.g., Armenia, 

Bulgaria, Estonia, Georgia, Jordan, Kyrgyz 
II. The World Trade Organization | 136 

Republic, Latvia, Lithuania, Macedonia, 

Moldova and Nepal. Most had U.S.-provided 

resident experts for some portion of the process. 

Among current accession applicants, the United 

States provides a resident WTO expert for the 

accessions of Azerbaijan, Cape Verde, Ethiopia, 

Iraq, Ukraine, and Serbia and Montenegro, and a 

U.S.-funded WTO expert resident in the Kyrgyz 

Republic provides WTO accession assistance to 

Kazakhstan, Uzbekistan, and Tajikistan. The 

United States also offers other forms of technical 

and expert support on WTO accession issues to 

Afghanistan, Algeria, Bosnia and Herzegovia, 

Lebanon, Russia, and Vietnam. 

Cumulative Assessment Since the WTO Was 

Established 

Since the establishment of the World Trade 

Organization in 1995, twenty countries have 

acceded to the WTO39, and twenty-eight 

additional applicants are in accession 

negotiations in various stages.40 There are few 

trading economies of significant size that are not 

Members or in the process of negotiating terms 

for accession. During the period since the 

establishment of the WTO, there have been 

complaints that the accession process is too 

difficult and complex. However, by providing 

the mechanism to require that WTO 

Membership be based on actual adoption of 

WTO provisions and establishment of market 

access schedules comparable or better than 

existing members, the achievements of the 

accession process for the international trading 

system, and for U.S. interests in that system, 

fully justify the time taken to complete the 

 

39 In order of date of accession, Ecuador, Bulgaria, 

Mongolia, Panama, Kyrgyz Republic, Latvia, 

Estonia, Jordan Georgia, Albania, Oman, Croatia, 

Lithuania, Moldova, China, Chinese Taipei, 

Armenia, Former Yugoslav Republic of Macedonia, 

Nepal, and Cambodia. 

40 This total includes Vanuatu, whose completed 

accession package has not yet been approved by the 

General Council, and the state union of Serbia and 

Montenegro as a single applicant, since the 

applications for separate Working Parties by the two 

republics have not yet been reviewed by the General 

Council. 

accession process. The WTO accession process 

has responded constructively and flexibly to 

changing political and economic realities, 

without undermining its basic objective of 

ensuring that accession applicants are ready to 

assume the responsibilities as well as the rights 

of WTO Membership. The United States takes a 

leadership role in all accessions, to ensure a high 

standard of implementation of WTO provisions 

by new Members and to encourage trade 

liberalization in developing and transforming 

economies, as well as to use the opportunities 

provided in these negotiations to expand market 

access for U.S. exports. 

Accession procedures and requirements have 

strongly supported the key concepts of 

transparency, compliance with the rules, and the 

balance of rights and obligations upon which the 

WTO is based, thereby supporting existing rules 

and institutions. Accessions also have been a 

critical part of the international community’s 

response to the historic changes that occurred in 

the early 1990’s with the breakup of the Soviet 

Union and Yugoslavia and the abandonment by 

Eastern Europe of Communist economic 

policies. The accessions of Bulgaria, Mongolia, 

the Kyrgyz Republic, Latvia, Estonia, Georgia, 

Albania, Croatia, Lithuania, Macedonia, 

Armenia and Moldova were a significant factor 

in the integration of these new countries into the 

rules-based, market based international 

economic and trading system. The approval of 

the accessions of Jordan and Oman expanded 

WTO membership in the Middle East on the 

basis of full observance of the rules and trade 

liberalizing market access commitments. These 

principles can be expected to be applied in the 

accessions of other countries in the Middle East, 

including those of Afghanistan, Iraq and Libya, 

initiated in 2004. 

The accession of China in 2001 alongside that of 

Chinese Taipei was also a major development, 

extending WTO rules to two of the preeminent 

participants in global trade. China agreed to 

extensive, far-reaching and often complex 

commitments to change its trade regime, at all 

levels of government. China committed to 

implement a set of sweeping reforms that 

required it to lower trade barriers in virtually 
II. The World Trade Organization| 137 

every sector of the economy, provide national 

treatment and improved market access to goods 

and services imported from the United States 

and other WTO members, and protect 

intellectual property rights. China also agreed to 

special rules regarding subsidies and the 

operation of state-owned enterprises, in light of 

the state’s large role in China’s economy. In 

accepting China as a fellow WTO member, the 

United States also secured a number of 

significant concessions from China that protect 

U.S. interests during China’s WTO 

implementation stage. Chinese Taipei joined 

WTO as a developed Member fully compliant 

with WTO rules from the date of accession and 

with broad market access commitments. 

In 2003, the General Council presided over the 

first accessions of least-developed countries, 

Nepal and Cambodia, based on simplified and 

streamlined procedures intended to use the 

accession process as a tool for economic 

development. The protocols of accession 

developed under these guidelines reflect both the 

goal of full implementation of WTO rules and 

the need to address realistically the difficulties 

faced by LDCs in achieving that objective. 

Major Issues in 2004

Intensified efforts on the accessions of Russia, 

Saudi Arabia, Ukraine, and Vietnam established 

a fast and crowded pace for WTO accession 

activities in 2004, both in the eleven scheduled 

WP sessions that worked on these countries’ 

draft WP reports, and in many more bilateral 

meetings in Geneva and in capitals. A key focus 

of these countries’ work centered on reaching 

agreement bilaterally with as many Members as 

possible on market access commitments. Efforts 

to enact legislation to implement the WTO in 

domestic law were accelerated, to keep pace 

with progress in the Working Party on 

development of the draft report and Protocol of 

Accession. For these countries, the accession 

process cannot be finalized until the legislation 

that actually implements WTO provisions has 

been identified and reviewed by WP Members. 

The Federal Republic of Yugoslavia formally 

changed its name to Serbia and Montenegro in 

its accession documents, reflecting its change in 

status following the promulgation of the 

Constitutional Charter of Serbia and Montenegro 

in 2003. Documentation for a first Working 

Party was circulated, but in December, the state 

union of Serbia and Montenegro withdrew its 

accession application. The constituent republics, 

Serbia and Montenegro, have applied for 

accession as separate customs territories. 

Tonga, a small island economy that shares many 

of the characteristics of LDCs, completed its 

market access negotiations and tabled most of 

the outstanding legislation, either enacted or in 

draft for WP review, setting the stage for its 

likely completion of the accession process in 

2005. 

Efforts to make WTO accession more accessible 

to LDCs continued in 2004 as WP meetings 

were convened for a record number of LDC 

applicants (e.g., for Sudan, Cape Verde, Bhutan, 

Laos, and Yemen). Discussions continued in 

various WTO fora, e.g., the CTD, its 

Subcommittee on LDCs, and the Work Program 

on Small Economies of the DDA, on how the 

WTO guidelines on LDC accessions, approved 

by the General Council in December 2002, were 

being implemented. Using the guidelines, WTO 

Members exercise restraint in seeking market 

access concessions, and are pledged to agree to 

transitional arrangements for implementation of 

WTO Agreements. The United States and other 

developed WTO Members have sought to 

support the transitional goals established in the 

accession process with technical assistance to 

help achieve them, using the framework of 

commitments established in the accession as a 

development tool--an opportunity to mainstream 

trade in the development programs of the LDC 

applicants, to build trade capacity, and to 

provide a better economic environment for 

investment and growth. 

In November, Congress authorized the President 

to remove Armenia from the coverage of the 

provisions of the “Jackson-Vanik” clause and 

the other requirements of Title IV of the Trade 
II. The World Trade Organization | 138 

Act of 1974.41 This allowed the United States to 

dis-invoke the non-application provisions of the 

WTO Agreement contained in Article XIII with 

respect to that country, and to establish full 

WTO relations with Armenia.42

Prospects for 2005 

While significant work remains on the 

accessions of Russia, Saudi Arabia, Ukraine, and 

Vietnam in all aspects of the negotiations, these 

countries have clearly signaled the hope that 

they can conclude accession negotiations in 

2005, or at least make definitive progress 

towards that goal. The quickening pace of work 

on Doha issues and preparations for the Sixth 

Ministerial Conference in Hong Kong, China in 

 

41 Prior to General Council approval of Armenia’s 

accession package in December 2002, the United 

States invoked the non-application provisions of the 

WTO Agreement contained in Article XIII with 

respect to that country. This was necessary because 

the United States must retain the right to withdraw 

“normal trade relations (NTR)” (called “mostfavored-nation” treatment in the WTO) for WTO 

Members that receive NTR with the United States 

subject to the provisions of the “Jackson-Vanik” 

clause and the other requirements of Title IV of the 

Trade Act of 1974. In such cases, the United States 

and the other country do not have “WTO relations” 

which, among other things, prevents the United 

States from bringing a WTO dispute based on a 

violation of the WTO or the country’s commitments 

in its accession package. 

42 In addition to Armenia, seven of the remaining 28 

WTO accession applicants with active Working 

Parties are covered by Title IV. They are: 

Azerbaijan, Belarus, Kazakhstan, Russia, Ukraine, 

Uzbekistan, and Vietnam. For further information on 

this issue, please consult the sections of the report 

that deal with bilateral trade relations with these 

countries. The United States has invoked nonapplication of the WTO five other times, when 

Romania became an original WTO Member in 1995, 

and when the accession packages of Mongolia, the 

Kyrgyz Republic, Georgia and Moldova were 

approved by the WTO General Council in 1996, 

1998, 1999, and 2001, respectively. Congress 

subsequently authorized the President to grant 

Romania, Mongolia, the Kyrgyz Republic, and 

Georgia permanent NTR, and the United States 

withdrew its invocation of non-application in the 

WTO for these countries. 

December 2005 will engage an increasing share 

of WTO Members’ time and resources during 

the year requiring applicants to maximize 

opportunities for progress given the competition 

for meeting times. Efforts to advance the 

accessions of LDCs will also continue. 

M. Plurilateral Agreements 

1. Committee on Trade in Civil Aircraft 

The Agreement on Trade in Civil Aircraft 

(“Aircraft Agreement”), concluded in 1979, is a 

plurilateral agreement. The Aircraft Agreement 

is part of the WTO Agreements, however, it is in 

force only for those WTO Members that have 

accepted it. 

The Aircraft Agreement requires Signatories to 

eliminate tariffs on civil aircraft, their engines, 

subassemblies and parts, ground flight 

simulators and their components, and to provide 

these benefits on a nondiscriminatory basis to 

other Members covered by the Aircraft 

Agreement. The Signatories have also 

provisionally agreed to duty-free treatment for 

ground maintenance simulators, although this is 

not a covered item under the current agreement. 

The Aircraft Agreement also establishes various 

obligations aimed at fostering free market 

forces. For example, signatory governments 

pledge that they will base their purchasing 

decisions strictly on technical and commercial 

factors. 
II. The World Trade Organization| 139 

As of January 1, 2005, there were 30 signatories 

to the Aircraft Agreement. Members include: 

Austria, Belgium, Bulgaria, Canada, Chinese 

Taipei, Egypt, Estonia, the European 

Communities43, Denmark, France, Georgia, 

Germany, Greece, Ireland, Italy, Japan, Latvia, 

Lithuania, Luxembourg, Macau, China, Malta, 

the Netherlands, Norway, Portugal, Romania, 

Spain, Sweden, Switzerland, the United 

Kingdom, and the United States. 

Cumulative Assessment Since the WTO Was 

Established

While the 1979 GATT Agreement on Trade in 

Civil Aircraft was not strengthened through 

renegotiation during the Uruguay Round, civil 

aircraft were brought under the stronger 

disciplines of the WTO Agreement on Subsidies 

and Countervailing Measures. This was the 

major objective of the U.S. aerospace industry, 

whose competitors have in the past benefited 

from huge government subsidies. 

Since the conclusion of the Uruguay Round, 

there have been some additional negotiating 

efforts in Geneva to substantively revise the 

Aircraft Agreement. The United States 

proposed revisions to limit government support 

and clarify provisions of the GATT Aircraft 

Agreement that apply to government 

intervention in aircraft marketing. There has 

been little progress in those negotiations. 

 

The Aircraft Agreement has been incorporated 

without revision into the WTO. Therefore there 

have been efforts by the Signatories to update or 

 

43 At the June 2004 meeting of the Committee on 

Trade in Civil Aircraft, the representative from the 

European Communities announced that the ten 

countries that had become members of the European 

Union on 1 May 2004 were automatically linked by 

the Agreement on Trade in Civil Aircraft Agreement 

by means of the extension of the territory of the 

European Union. However, six of the ten countries 

(Poland, Hungary, Czech Republic, Slovenia, 

Cyprus, and Slovak Republic) have not deposited an 

instrument of accession to the Agreement. The 

United States submitted written questions seeking a 

clarification of this item.

rectify the Agreement to correctly reference 

WTO instruments. The United States supports 

those efforts, so long as the current balance of 

rights and obligations are preserved, and the 

relationship between the Aircraft Agreement and 

other WTO agreements is maintained. 

The United States has used the Committee as a 

forum to seek clarity about allegations of 

financial supports offered by other Signatories to 

competitors, as well as governmental 

inducements to obtain purchase contracts. In 

2003, the United States proposed improvements 

to Article 4 of the Aircraft Agreement to bring 

greater clarity to the term “inducements,” and to 

improve communication between parties by 

creating effective mechanisms to exchange 

information and address concerns. 

Major Issues in 2004 

The Committee on Trade in Civil Aircraft 

(Aircraft Committee), permanently established 

under the Aircraft Agreement, provides the 

Signatories an opportunity to consult on the 

operation of the Aircraft Agreement, to propose 

amendments to the Agreement and to resolve 

any disputes. During 2004, the Aircraft 

Committee met twice. 

The Aircraft Committee continued to consider 

proposals to revise terminology in the Aircraft 

Agreement to conform with the Uruguay Round 

agreements and a Canadian proposal to redefine 

civil vs. military aircraft. The Committee also 

considered a U.S. proposal to consider factors 

that could facilitate the effectiveness of Article 4 

with regard to inducements. 

Prospects for 2005 

The United States will continue to encourage 

observers and other WTO Members to become 

Signatories to the Aircraft Agreement, including 

Oman, Albania and Croatia, which committed to 

become Signatories pursuant to their protocols 

of WTO accession. 
II. The World Trade Organization | 140 

2. Committee on Government 

Procurement 

Status 

The WTO Government Procurement Agreement 

(GPA) is a “plurilateral” agreement included in 

Annex 4 to the WTO Agreement. As such, it is 

not part of the WTO’s single undertaking and its 

membership is limited to WTO Members that 

specifically signed the GPA in Marrakesh or that 

have subsequently acceded to it. WTO 

Members are not required to join the GPA, but 

the United States strongly encourages all WTO 

Members to participate in this important 

Agreement. Thirty-eight WTO Members are 

covered by the Agreement: the United States; 

the European Union and its 25 Member States 

(Austria, Belgium, Czech Republic, Cyprus, 

Denmark, Estonia, Finland, France, Germany, 

Greece, Hungary, Ireland, Italy, Latvia, 

Lithuania, Luxembourg, Malta, the Netherlands, 

Poland, Portugal, Slovak Republic, Slovenia, 

Spain, Sweden, United Kingdom); the 

Netherlands with respect to Aruba; Canada; 

Hong Kong, China; Iceland; Israel; Japan; 

Liechtenstein; Norway; the Republic of Korea; 

Singapore; and Switzerland. 

Nine WTO Members are in the process of 

acceding to the GPA: Albania, Bulgaria, 

Chinese Taipei, Georgia, Jordan, the Kyrgyz 

Republic, Moldova, Oman, and Panama. Five 

additional WTO Members have provisions in 

their respective Protocols of Accession to the 

WTO regarding accession to the GPA: 

Armenia, China, Croatia, the Republic of 

Macedonia, and Mongolia. 

Twenty WTO Members, including those in the 

process of acceding to the GPA, have observer 

status in the Committee on Government 

Procurement: Albania, Argentina, Armenia, 

Australia, Bulgaria, Cameroon, Chile, China, 

Colombia, Croatia, Georgia, Jordan, 

the Kyrgyz Republic, Moldova, Mongolia, 

Oman, Panama, Sri Lanka, Chinese Taipei, and 

Turkey. 

Cumulative Assessment Since the WTO Was 

Established

Since the WTO’s establishment, the number of 

participants to the GPA has increased to cover 

38 WTO Members, with the accessions of 

Iceland and the Netherlands with respect to 

Aruba, and the enlargement of the European 

Union to include 10 new member states: Czech 

Republic, Cyprus, Estonia, Hungary, Latvia, 

Lithuania, Malta, Poland, Slovak Republic, and 

Slovenia. 

The Committee devoted significant time and 

resources in carrying out the directive in GPA 

Article XXIV:7(b) for the Parties to undertake 

further negotiations with a view to improving 

the text of the Agreement. Much of the existing 

text of the GPA was developed in the late 1970s 

during the negotiations on the original GATT 

Government Procurement Code. As a result, the 

Committee has recognized that the GPA text 

needs to be modified to reflect ongoing 

modernization of the Parties’ procurement 

systems and technologies, and to encourage 

other Members to accede to the Agreement. The 

United States has played a principal role in 

advocating significant streamlining and 

clarification of the GPA’s procedural 

requirements, while continuing to ensure full 

transparency and predictable market access. The 

United States’ proposal for a major restructuring 

and streamlining of the GPA has served as the 

framework for the Committee’s subsequent 

work on the revision of the text. The Committee 

has made significant progress in preparing a 

revision of the GPA. 

With the significant advancement of its work on 

improving the GPA text, the Committee has 

developed an ambitious work plan for expanding 

market access under the GPA, which it launched 

at the end of 2004. 

Major Issues in 2004

The Committee held four formal meetings in 

2004 (in April, July, November, and December) 

and five informal meetings (in February, April, 

June, October, and November). The Parties 

focused primarily on the simplification and 
II. The World Trade Organization| 141 

improvement of the GPA, with the overall 

objective of promoting increased membership in 

the GPA by making it more accessible to nonParties. During 2004, the Committee made 

significant progress in its revision of the text, 

and has reached provisional agreement on the 

basic structure and drafting style of the 

Agreement. 

Coverage of the GPA was extended on May 1, 

2004, to 10 additional WTO Members as a result 

of the enlargement of the European Union to 

include the Czech Republic, Cyprus, Estonia, 

Hungary, Latvia, Lithuania, Malta, Poland, 

Slovak Republic, and Slovenia. 

GPA Article XXIV:7(c) calls for the Parties to 

undertake further negotiations with a view to 

achieving the greatest possible extension of its 

coverage among all Parties and eliminating 

remaining discriminatory measures and 

practices. In July 2004, the Committee adopted 

Modalities for the Negotiations on Extension of 

Coverage and Elimination of Discriminatory 

Measures and Practices. It provides that each 

Party will submit requests to the other Parties for 

improvement in coverage by November 30, 

2004, and its initial offer by May 1, 2005. 

Following bilateral negotiations, revised and 

improved offers are to be submitted by the end 

of October 2005. 

Jordan’s accession to the GPA was advanced 

with its submission of a revised entity offer in 

September 2004 and two rounds of informal 

plurilateral consultations between Parties and 

Jordan in April and October 2004. 

The Committee granted Israel an additional year 

to reduce the level of its offsets from 30 percent 

to 20 percent. Israel is now required to reduce 

the level of its offsets to 20 percent by January 

1, 2006. 

As provided for in the GPA, the Committee 

monitors participants’ implementing legislation. 

In 2004, the Committee continued its review of 

the national implementing legislation of the 

Netherlands with respect to Aruba. 

Prospects for 2005 

In 2005, the Committee will hold four informal 

meetings, which will focus on two major 

activities: completion of the major portion of 

the revision of the text of the GPA and the 

initiation of market access negotiations to 

expand the coverage of the GPA. 

The Committee plans to hold informal 

plurilateral consultations with Jordan and 

Georgia as part of efforts to advance their 

respective accessions to the GPA. In 2005, the 

Committee will also continue its review of the 

legislation of the Netherlands with respect to 

Aruba. 

3. Committee of Participants on the 

Expansion of Trade in Information 

Technology Products 

Status 

The Information Technology Agreement (ITA) 

was concluded at the WTO’s First Ministerial 

Conference at Singapore in December 1996. 

The Agreement eliminated tariffs as of January 

1, 2000 on a wide range of information 

technology products. Currently, the ITA has 64 

participants representing more than 95 percent 

of world trade in information technology 

products.44 The Agreement covers computers 

and computer equipment, electronic components 

including semiconductors, computer software 

products, telecommunications equipment, 

 

44 ITA participants are: Albania; Australia; Austria; 

Bahrain; Belgium; Bulgaria; Canada; China; Costa 

Rica; Croatia; Cyprus; Czech Republic; Denmark; 

Egypt; El Salvador; Estonia; European Communities 

(on behalf of 25 Member States); Finland; France; 

Georgia; Germany; Greece; Hong Kong, China; 

Hungary; Iceland; India; Indonesia; Ireland; Israel; 

Italy; Japan; Jordan; Republic of Korea; Krygyz 

Republic; Latvia; Liechtenstein; Lithuania; 

Luxembourg; Macau, China; Malaysia; Malta; 

Mauritius; Moldova; Morocco; Netherlands; New 

Zealand; Norway; Oman; Panama; Philippines; 

Poland; Portugal; Romania; Singapore; Slovak 

Republic; Slovenia; Spain; Sweden; Switzerland; 

Chinese Taipei; Thailand; Turkey; United Kingdom; 

and the United States. 
II. The World Trade Organization | 142 

semiconductor manufacturing equipment and 

computer-based analytical instruments. 

Cumulative Assessment Since the WTO Was 

Established

Since its conclusion in 1996, the Information 

Technology Agreement has grown from 29 to 63 

participants. At its inception, 29 countries or 

separate customs territories signed the 

declaration creating the ITA. At the time, the 29 

signatories to the declaration accounted for only 

83 percent of world trade in information 

technology products, but in the following 

months, a number of other Members agreed to 

participate, bringing the total world trade 

covered by participants to 90 percent. Today, 

the volume of global trade covered by 

participating Members has grown to more than 

95 percent. The creation of the ITA in 1996 

signaled the growing importance of this highlytraded sector and has created a forum for 

Members with an interest in information 

technology to discuss market access issues 

among a group of interested parties. Since its 

first meeting in 1997, the Committee on the 

Expansion of Trade in Information Technology 

Products has undertaken work on non-tariff 

barriers, tariff classification, and discussed 

expansion of the agreement to include new 

technologies. 

 

Major Issues in 2004

The WTO Committee of ITA Participants held 

four formal meetings in 2004, during which the 

Committee reviewed the implementation status 

of the Agreement. While most participants have 

fully implemented tariff commitments, a few 

countries are still awaiting the completion of 

domestic procedural requirements or have not 

yet submitted the necessary documentation. 

Morocco completed its application for 

participation in the ITA in 2004 and as a result 

of EU Enlargement, Hungary and Malta became 

ITA participants upon joining the European 

Union. 

At its meeting in June, the Committee agreed to 

hold an IT Symposium in order to update ITA 

participants and other WTO Members on 

developments in information technology, to 

elicit updated information on the nature of 

non-tariff barriers to trade in IT products, and to 

assess the role of IT trade in supporting 

development in those markets where 

liberalization has occurred. The Symposium 

was held October 18-19, 2004. The Symposium 

was widely attended by both industry and 

government representatives and focused on new 

technologies developed since the agreement was 

established and how to narrow the digital divide 

between developed and developing countries. 

The Committee continued work on the NonTariff Measures (NTMs) Work Programme and 

adopted guidelines on best practices for 

EMC/EMI (electro-magnetic 

compatibility/electro-magneticimmunity) 

conformity assessment procedures. 

The Committee also continued its work to 

reconcile classifications by ITA participants of 

certain information technology products where 

Members have applied divergent Harmonized 

System (HTS) classification. The Secretariat 

updated and categorized its compilation of the 

list of divergences and Committee participants 

were able to significantly narrow the list of 

unresolved products. Customs experts will 

continue to discuss the treatment of each 

category of products through 2005. 

Prospects for 2005 

The Committee’s work program on non-tariff 

measures will continue to be an important focus 

of work in 2005, potentially with more work to 

continue in the EMC/EMI area in the year to 

come. Committee participants will continue to 

determine whether there are other issues that 

should be pursued and how work on non-tariff 

measures in the ITA context can be coordinated 

with the Doha negotiations. Building on the 

success of the October 2004 Symposium, 

participants will continue to discuss how to 

address some of the issues discussed in that 

forum, specifically (1) how to pursue tariff 

liberalization for new technologies in the context 

of the ITA and the Doha Development Agenda 

and (2) how to broaden developing country 
II. The World Trade Organization| 143 

participation in the ITA. Participants will also 

continue to work on reconciling divergent tariff 

classifications for ITA products with an aim to 

narrow the list of products under discussion. 

Throughout 2005, the Committee will continue 

to undertake its mandated work, including 

reviewing new applicants’ tariff schedules for 

ITA participation and addressing further 

technical classification issues. The next formal 

meeting of the Committee will be in February 

2005. A number of additional WTO Members 

are actively working on proposals to join the 

ITA in 2005. 
145 

III. Bilateral and Regional Negotiations 

A. Free Trade Agreements 

1. Australia 

Negotiations on the United States-Australia Free 

Trade Agreement (FTA) began in March 2003, 

and President George W. Bush and Prime 

Minister John Howard made it a priority to 

conclude the agreement as quickly as possible. 

The negotiations were completed on February 8, 

2004, and U.S. Trade Representative Robert B. 

Zoellick and Australia’s Trade Minister Mark 

Vaile signed the agreement on May 18, 2004. 

With strong bipartisan support, the U.S. House 

of Representatives passed the United StatesAustralia Free Trade Agreement Implementation 

Act (H.R. 4759) on July 14, 2004, and the U.S. 

Senate approved the legislation on July 15, 

2004. President Bush signed the measure into 

law on August 3, 2004 (P.L. 108-286). 

Australia’s Parliament approved implementing 

legislation in August 2004, and the Australian 

government took further action to implement the 

intellectual property chapter in December 2004. 

The FTA entered into force on January 1, 2005. 

The United States-Australia FTA is the first 

FTA between the United States and a developed 

country since the United States-Canada Free 

Trade Agreement in 1988. Australia is a large 

and growing trade and investment partner of the 

United States. Two-way annual goods and 

services trade is nearly $29 billion, a 53 percent 

increase since 1994. Australia purchases more 

goods from the United States than from any 

other country. In 2003, the United States 

enjoyed a bilateral goods and services trade 

surplus of $9 billion. 

The FTA chapters cover industrial and 

agricultural goods, services, financial services, 

textiles, rules of origin, customs administration, 

sanitary and phytosanitary (SPS) measures, 

technical barriers to trade, investment, 

telecommunications, competition policy, 

government procurement, electronic commerce, 

intellectual property rights, labor, environment, 

transparency obligations, and dispute settlement. 

Manufactured goods currently account for 93 

percent of the total value of U.S. goods exports 

to Australia. When the FTA entered into force, 

duties on more than 99 percent of tariff lines 

covering industrial and consumer goods were 

eliminated. Duties on remaining manufactured 

goods will be phased out over periods of up to 

10 years. The FTA will bring immediate 

benefits to key U.S. manufacturing sectors, 

including autos and autos parts; chemicals, 

plastics, and soda ash; construction equipment; 

electrical equipment and appliances; fabricated 

metal products; furniture and fixtures; 

information technology products; medical and 

scientific equipment; non-electrical machinery; 

and paper and wood products. For duties on 

textiles and apparel to be eliminated, the goods 

must meet the FTA's yarn-forward rule of origin. 

The agreement also requires the elimination of a 

variety of non-tariff barriers that restrict or 

distort trade flows. 

The FTA achieves a balanced approach for 

agriculture, providing expanded export 

opportunities for a range of U.S. agricultural 

goods, while responding to U.S. import 

sensitivities. Duties on all U.S. agricultural 

exports to Australia, which totaled nearly $700 

million in 2003, were eliminated immediately 

upon entry into force of the Agreement. U.S. 

duties will be maintained on Australian sugar 

and certain dairy products. In addition, for 

certain products imported from Australia, 

including beef, dairy, cotton, peanuts and certain 

horticultural products, the Agreement includes 

other mechanisms, such as preferential tariff-rate 

quotas and safeguards. The Agreement also 

establishes a new forum for scientific 

cooperation between U.S. and Australian 

authorities to resolve specific bilateral animal 

and plant health matters based on science and 

with a view to facilitating trade. 
III. Bilateral and Regional Negotiations| 146 

Services suppliers will enjoy the benefits of 

expanded Australian commitments for access to 

its market, including in the advertising, asset 

management, audio visual, computer and related 

services, education and training, energy, express 

delivery, financial services, professional 

services, telecommunications, and tourism 

sectors. U.S. financial service suppliers already 

enjoy a significant presence in the Australian 

market through subsidiaries, joint ventures and 

branches, and Australia agreed to provide new 

rights for life insurance branching. In addition, 

Australia and the United States agreed to high 

standards for regulatory transparency, including 

procedures applying to licensing systems. 

The FTA also establishes a secure, predictable 

legal framework for U.S. investors operating in 

Australia. Moreover, all U.S. investment in new 

businesses is exempted from screening under 

Australia's Foreign Investment Review Board. 

Thresholds for acquisitions by U.S. investors in 

nearly all sectors are raised significantly, from 

A$50 million to A$800 million, exempting the 

vast majority of transactions from screening. 

Australia also will lock-in existing good practice 

regarding review of acquisitions in the banking 

and insurance sectors. In recognition of the 

unique circumstances of this Agreement – 

including, for example, the longstanding 

economic ties between the United States and 

Australia, their shared legal traditions, and the 

confidence of their investors in operating in each 

others markets – the two countries agreed not to 

adopt procedures in the Agreement that would 

allow investors to access international arbitration 

for disputes with governments. Government-togovernment dispute settlement procedures 

remain available to resolve investment-related 

disputes. 

The FTA has other significant features. On 

electronic commerce, this is the first Agreement 

to include provisions on facilitating 

authentication of electronic signatures, 

encouraging paperless trade and establishing a 

program for cooperation on other electronic 

commerce issues. Regarding intellectual 

property rights, the FTA complements and 

enhances existing international standards for the 

protection of intellectual property and the 

enforcement of intellectual property rights, 

consistent with U.S. law. In addition, under the 

FTA’s government procurement provisions, U.S. 

suppliers are granted non-discriminatory rights 

to bid on contracts to supply Australian 

Government entities, including all major 

procuring entities and administrative and public 

bodies, and tendering procedures must be 

conducted in a transparent, predictable, and fair 

manner. The Agreement also proscribes 

anticompetitive business conduct, and sets out 

basic procedural safeguards and rules against 

harmful conduct by government-designated 

monopolies and establishes special rules 

covering state enterprises to deter abuse that 

may harm the interests of U.S. companies or 

discriminate in the sale of goods and services. 

Under the labor provisions of the FTA, Australia 

and the United States reaffirmed their 

obligations as members of the International 

Labor Organization (ILO) and under the 1998 

ILO Declaration on Fundamental Principles and 

Rights at Work, and agreed to strive to ensure 

that their laws protect the fundamental labor 

principles embodied in the ILO Declaration and 

listed in the Agreement. The FTA’s 

environmental provisions commit Australia and 

the United States to ensure that their domestic 

environmental laws provide for high levels of 

environmental protection and strive to continue 

to improve such laws. 

The FTA contains innovative provisions relating 

to public health and pharmaceuticals, whereby 

the United States and Australia affirmed their 

commitment to several basic principles related 

to their shared objectives of facilitating high 

quality health care and improvements in public 

health. The FTA also requires that federal 

health care programs apply transparent 

procedures in listing new pharmaceuticals for 

reimbursement. In addition, the two countries 

will establish a Medicines Working Group to 

promote discussion and understanding of 

pharmaceutical issues. Government 

procurement of pharmaceuticals is covered by 

the Government Procurement chapter rather than 

by the pharmaceutical-specific provisions of the 

Agreement. Australia will also establish and 

maintain procedures enhancing transparency and 
III. Bilateral and Regional Negotiations| 147 

accountability in the listing and pricing of 

pharmaceuticals under its Pharmaceutical 

Benefits Scheme, including establishment of an 

independent review process for listing decisions. 

Increased access to Australia’s market under the 

FTA will greatly boost trade in both goods and 

services, enhancing employment opportunities in 

both countries. The FTA also will encourage 

additional foreign investment flows between the 

United States and Australia, and streamline 

mutual access in intellectual property, services, 

government procurement, and electronic 

commerce. All 50 U.S. states export to 

Australia, and Australia is among the top 25 

export destinations for 48 of the 50 states. 

2. Morocco 

In April 2002, President Bush and King 

Mohammed VI agreed to pursue a Free Trade 

Agreement (FTA) between the United States and 

Morocco. On June 15, 2004, U.S. Trade 

Representative Robert B. Zoellick and Minister 

Taib Fassi Fihri signed the completed 

Agreement. The U.S. Congress subsequently 

enacted legislation approving and implementing 

the Agreement and in August 2004 the President 

signed this legislation. The Moroccan 

Parliament ratified the Agreement in January 

2005 and the Agreement is expected to enter 

into force in 2005. The FTA with Morocco is 

comprehensive and is part of the 

Administration’s effort to promote more open 

and prosperous Middle Eastern societies. The 

FTA will support the significant economic and 

political reforms underway in Morocco, and 

create improved commercial and market 

opportunities for U.S. exports to Morocco by 

reducing and eliminating trade barriers. It is the 

first FTA to be approved under the President’s 

Middle East Free Trade Area (MEFTA) 

initiative, and is an important step towards 

forming the MEFTA by 2013. 

In support of the economic and political reforms 

undertaken by Morocco, the United States has 

funded $2.95 million in technical assistance 

projects carried out by the International Labor 

Organization (ILO) to strengthen industrial 

relations and labor administration practices. 

Additionally, the United States has funded a $3 

million project aimed to combat child labor 

through education and a $2 million project 

focused on combating exploitative child labor in 

rural areas. 

3. Chile 

Chile has been a recognized leader of economic 

reform and trade liberalization in Latin America 

and currently is the only South American 

country with an investment grade credit rating. 

Real GDP growth averaged 8 percent for the 

decade prior to Chile’s economic slowdown in 

1998-99. Chile’s growth in real GDP estimated 

for 2004 is 5.2 percent,45 up from 3.3 percent in 

2003 and 2.2 percent in 2002. 

Two-way trade in goods (exports plus imports) 

between the United States and Chile totaled an 

estimated $8.1 billion in 2004, 46 with the United 

States in deficit by $1.0 billion. Two-way trade 

in services in 2003 (latest year available) 

amounted to $1.7 billion, with the United States 

in surplus by $0.4 billion. Since 1994, U.S. 

goods trade with Chile has expanded by 77 

percent (to 2004) and services trade by 7 percent 

(to 2003). 

U.S. Trade Representative Robert B. Zoellick 

and Chilean Foreign Minister Soledad Alvear 

signed the United States.-Chile Free Trade 

Agreement (FTA) on June 6, 2003. It was the 

first comprehensive FTA between the United 

States and a South American country. The 

United States-Chile FTA entered into force on 

January 1, 2004. 

The United States-Chile FTA eliminates tariffs 

and opens markets, reduces barriers for services, 

provides cutting-edge protection for intellectual 

property, keeps pace with new technologies, 

ensures regulatory transparency, provides 

explicit guarantees for electronic commerce and 

digital products, commits the Parties to maintain 

competition laws that prohibit anti-competitive 

 

45 Source: Global Insight. 

46 Annualized based on 10 months’ data. 
III. Bilateral and Regional Negotiations| 148 

business conduct, and provides effective labor 

and environmental enforcement. Under the 

FTA, American workers, consumers, investors, 

manufacturers, and farmers enjoy access to one 

of the region’s most stable and fastest growing 

economies, enabling products and services to 

flow between the two economies with no tariffs 

and streamlined customs procedures. 

Under the agreement, more than 85 percent of 

bilateral trade in consumer and industrial goods 

became tariff-free immediately. In less than 

four years, 75 percent of farm production will 

also be duty free. After just ten years, all trade 

in non-agricultural goods will take place without 

tariffs or quotas; for agriculture, the phase out 

will take just 12 years. Key U.S. export sectors 

benefit, including agricultural and construction 

equipment, autos and auto parts, computers and 

other information technology products, medical 

equipment, and paper products. Farmers will 

gain duty-free treatment within four years for 

important U.S. products such as pork and pork 

products, beef and beef products, soybeans and 

soybean meal, durum wheat, feed grains, 

potatoes, and processed food products such as 

french fries, pasta, distilled spirits and breakfast 

cereals. The agreement provides immediate 

duty-free treatment for U.S. apples, pears, 

peaches, cherries, grapes, lettuce, broccoli, 

almonds, pistachios, walnuts, oranges, and 

grapefruit. U.S. exports to Chile have increased 

32 percent from January 2004 through October 

2004 and Chilean exports to the United States 

have increased almost 23 percent in that same 

period. 

This agreement offers new access to a fastgrowing Chilean services market for U.S. banks, 

insurance companies, telecommunications 

companies, security firms, express delivery 

companies, and professionals. U.S. firms may 

offer financial services to participants in Chile’s 

highly successful privatized pension system. 

The agreement offers state of the art and nondiscriminatory protections for digital products 

such as U.S. software, music, text, and videos. 

Protection for U.S. patents, trademarks, and 

trade secrets exceeds that provided for in past 

agreements in the region. 

The agreement establishes a secure, predictable 

legal framework for U.S. investors, and provides 

for anti-corruption measures in government 

contracting. U.S. firms are guaranteed a fair and 

transparent process to sell goods and services to 

a wide range of Chilean government entities, 

including airports and seaports. 

U.S. Trade Representative Robert B. Zoellick 

and Foreign Minister Alvear held the first 

meeting of the United States-Chile Free Trade 

Commission on June 3, 2004. They reviewed 

various aspects of the implementation of the 

FTA. The Agreement provides for the creation 

of a number of specialized committees to resolve 

problems, exchange information, and promote 

trade. The Ministers concluded that good 

progress was being made in establishing those 

groups and in other technical aspects of 

implementation. 

During 2004, the United States and Chile held a 

series of meetings on implementation of Chile’s 

FTA obligations in the area of intellectual 

property, specifically data protection. The 

United States will continue to work with the 

Chilean government to ensure full 

implementation. 

The FTA also requires that both governments 

effectively enforce their own domestic 

environmental laws, and this obligation is 

enforceable through the FTA’s dispute 

settlement procedures. It establishes a 

framework for cooperative environmental 

projects that will help protect wildlife, reduce 

hazards, and promote internationally recognized 

labor laws. The United States and Chile are 

working to implement the eight environmental 

cooperation projects outlined in the FTA. In 

January 2004, the governments sponsored a 

workshop on corporate environmental 

stewardship in Santiago, Chile. In September, 

the U.S. Department of Justice and the Chilean 

Consejo de Defensa del Estado, in cooperation 

with the Environmental Law Institute, held a 

workshop on environmental law enforcement 

focusing on judicial actions to restore and 

recover compensation for damage to the 

environment and natural resources. Both events 
III. Bilateral and Regional Negotiations| 149 

included opportunities for civil society 

participation. 

The FTA requires that both governments 

effectively enforce their own domestic labor 

laws, and this obligation is enforceable through 

the FTA’s dispute settlement procedures. The 

FTA establishes a cooperative mechanism to 

promote respect for the principles embodied in 

the ILO Declaration on Fundamental Principles 

and Rights at Work, and compliance with ILO 

Convention 182 on the Worst Forms of Child 

Labor. The first Labor Affairs Council meeting 

under the FTA was held in Santiago on 

December 15-16, 2004. The meeting provided a 

forum for governments to discuss the 

implementation of the FTA labor provisions and 

the current status of the existing technical 

assistance project to promote compliance with 

labor laws and standards. The governments 

discussed new areas of cooperation and 

approved an activities plan under the Labor 

Cooperation Mechanism. The Council also held 

an open session providing an opportunity to 

explain the FTA implementation process to the 

general public and the press. After the Council 

meeting, a Seminar on Industrial Relations in 

Chile and the United States was held on 

December 17, 2004. The seminar provided an 

opportunity for government officials, business, 

labor, and the general public to increase their 

knowledge of the countries’ systems and 

practices. Both delegations included 

government, worker, and business 

representatives. 

4. Singapore 

 

The United States-Singapore Free Trade 

Agreement, the first comprehensive U.S. FTA 

with an Asian nation, entered into force on 

January 1, 2004. President Bush and then Prime 

Minister Goh had previously signed the 

agreement on May 6, 2003. The United StatesSingapore FTA Implementation Act was passed 

with strong bipartisan support by the U.S. 

Congress and was signed by President Bush on 

September 3, 2003. 

Singapore is our 12th largest trading partner, 

with two-way trade of goods and services 

exceeding $40 billion. The provisions of the 

United States-Singapore FTA build on the WTO 

and NAFTA and make important advances in 

many key areas. Most tariffs were eliminated 

immediately upon entry into force of the 

Agreement, with the remaining tariffs phased 

out over a 3-to-10-year period. More than 97 

percent of U.S.-Singapore trade in goods is now 

free of duty. The FTA chapters cover trade in 

goods, rules of origin, customs administration, 

technical barriers to trade, services, 

telecommunications, financial services, 

temporary entry, competition policy, 

government procurement, investment, 

intellectual property, electronic commerce, 

customs cooperation, transparency, labor and 

environment, and dispute settlement. 

Trade grew during the first year of the FTA. On 

an annualized basis, U.S. exports to Singapore 

grew by more than 16 percent, while U.S. 

imports from Singapore grew by more than 3 

percent. There have been significant increases 

in U.S. exports of chemicals, including plastics, 

cosmetics, and pharmaceuticals; fish; 

construction equipment; building products; 

accessories; paper and other forest products; 

consumer goods; travel goods; scientific 

equipment; infrastructure machinery; and 

medical equipment. Three sectors in particular 

have had very significant increases in exports 

from the United States, including a 62 percent 

increase (valued at $1.7 billion) in exports of 

information technology equipment, an 86 

percent increase (valued at $265 million) in 

exports of minerals and fuel, and a 99 percent 

increase (valued at $7.3 million) in exports of 

furniture. 

The FTA provides strong disciplines in the most 

competitive U.S. services sectors. U.S. firms 

now enjoy improved market access, a more 

transparent regulatory environment and nondiscriminatory treatment across a wide range of 

services, including financial services (banking, 

insurance, securities and related services), 

computer and related services, direct selling, 

telecommunications services, audiovisual 

services, construction and engineering, tourism, 
III. Bilateral and Regional Negotiations| 150 

advertising, express delivery, professional 

services (architects, engineers, accountants, 

etc.), distribution services (such as wholesaling, 

retailing and franchising), adult education and 

training services, environmental services, and 

energy services. 

The FTA has other important features. It 

provides a secure legal environment for U.S. 

investors operating in Singapore, explicit 

guarantees on the treatment of electronic 

commerce and digital products, enhanced 

protection for intellectual property, specific 

commitments regarding the conduct of 

Singapore’s government enterprises, and 

commitments to strong and transparent 

disciplines on government procurement 

procedures. The Agreement also includes strong 

and transparent rules of origin, firm 

commitments to combat illegal transshipments 

of all traded goods and prevent circumvention 

for textiles and apparel, and requirements to 

ensure effective enforcement of domestic labor 

and environmental laws. An innovative 

enforcement mechanism includes monetary 

assessments to enforce commercial, labor, and 

environmental obligations of the FTA. 

Implementation of the provisions of the 

agreement has proceeded during 2004 according 

to the time frames contemplated in the FTA. 

Singapore has made changes to a wide variety of 

laws to implement its commitments. Singapore 

also sought public comment on its draft 

legislation. U.S. industries were particularly 

interested in Singapore’s intellectual property 

and competition legislation and provided 

comments to the Singapore Government on its 

drafts. Extensive government-to-government 

discussions were held in 2004 and will continue 

in 2005 on these issues. 

The FTA with Singapore will foster economic 

growth and create higher paying jobs in the 

United States by reducing and eliminating 

barriers to trade and investment. The FTA will 

not only improve market opportunities for U.S. 

goods and services exports, but it will also 

encourage trade liberalization, regulatory 

reform, and transparency in the region, including 

under the Enterprise for ASEAN Initiative. 

5. Jordan 

The United States and Jordan continued their 

efforts in 2004 to help their business 

communities take advantage of the opportunities 

afforded by the United States-Jordan Free Trade 

Agreement (FTA), which went into effect in 

December 2001. These efforts included a 

meeting in July 2004 of the United States-Jordan 

FTA Joint Committee. The FTA established the 

Joint Committee to bring together senior U.S. 

and Jordanian officials to discuss and act on 

ways to further boost bilateral trade and 

investment. 

While the FTA is a key part of the United 

States-Jordan economic relationship, it is just 

one component of an extensive United StatesJordanian collaboration in economic relations. 

Close economic cooperation between the two 

countries began in earnest with joint efforts on 

Jordan’s accession to the World Trade 

Organization (WTO) in 2000. The United States 

and Jordan continue to work together closely in 

the WTO, particularly on issues of special 

concern to developing nations. U.S. efforts to 

support Jordan’s rapid and successful WTO 

accession were followed on the bilateral front by 

the conclusion of the United States-Jordan Trade 

and Investment Framework Agreement and a 

Bilateral Investment Treaty. Qualifying 

Industrial Zones (QIZs) are another important 

example of successful United States-Jordanian 

efforts to boost Jordan’s economic growth and 

promote peace in the Middle East. 

These measures have played a significant role in 

boosting United States-Jordanian economic ties. 

In 1998, U.S. imports of goods from Jordan 

totaled only $16 million. By 2003, U.S. goods 

imports had increased to $673 million, and are 

expected to top $1 billion in 2004. In 2003, U.S. 

goods exports to Jordan were $492 million, up 

22 percent from 2002. 

6. Israel 

In 2004, the United States and Israel concluded 

negotiations on a new bilateral agreement on 

trade in agricultural products. This new 
III. Bilateral and Regional Negotiations| 151 

agreement supercedes the 1996 Agriculture 

Agreement. As a result of the gains under the 

agreement, an estimated 90 percent of U.S. 

agricultural exports to Israel will be duty-free. 

The balance of U.S. exports will enter Israel 

under preferential tariff-rate quotas or 

preferential tariff rates. The United States and 

Israel undertook negotiations on agricultural 

trade to address problems arising from the two 

sides' disagreement as to whether or not the 

1985 United States-Israel Free Trade Agreement 

permits either party to apply restrictions on 

bilateral trade in this area. 

In July 2004 in Washington, the two countries 

held a meeting of the United States-Israel FTA 

Joint Committee. The FTA established the Joint 

Committee to bring together senior U.S. and 

Israeli officials to discuss and act on ways to 

further boost bilateral trade and investment. 

Issues addressed by the Joint Committee are 

covered in Chapter III, Middle East Overview. 

7. Central America and the 

Dominican Republic 

Free trade agreement negotiations with Central 

America and the Dominican Republic were 

concluded in 2004. In December 2003, the 

United States concluded negotiations with El 

Salvador, Guatemala, Honduras and Nicaragua. 

Talks with Costa Rica continued into 2004, and 

concluded at the end of January, 2004. 

Subsequently, the United States and the 

Dominican Republic held three rounds of market 

access negotiations between January and March 

2004 to integrate the Dominican Republic into 

the free trade agreement. 

The resulting free trade agreement (FTA) with 

Central America and the Dominican Republic 

(CAFTA-DR) is the first FTA between the 

United States and a group of smaller developing 

economies that are important trading partners 

with the United States. The CAFTA-DR is a 

regional trade agreement among all seven 

signatories, and will contribute to the 

transformation of a region that was consumed by 

internal strife and border disputes just a decade 

ago but is now a successful regional economy 

with flourishing democracies. This historic 

agreement will create new economic 

opportunities by eliminating tariffs, opening 

markets, promoting transparency, and 

establishing state-of-the-art rules for 21st century 

commerce. It will facilitate trade and 

investment among the countries and further 

regional integration. The CAFTA-DR will not 

ease U.S. immigration laws and regulations. 

The region covered by this agreement buys more 

than $15 billion in U.S. exports annually. In 

2003, combined total two-way trade between the 

United States and the countries of Central 

America and the Dominican Republic was $32 

billion. 

Throughout the negotiations, U.S. officials 

consulted closely with Congress, industry 

representatives, and labor and environmental 

groups to ensure the FTA advanced U.S. 

interests and reflected the goals contained in the 

Trade Act of 2002. President Bush notified 

Congress of his intent to enter into an FTA with 

Central America on February 20, 2004. On 

March 25, 2004, President Bush formally 

notified Congress of his intent to enter into an 

FTA with the Dominican Republic. 

On August 5, 2004, U.S. Trade Representative 

Robert B. Zoellick signed the CAFTA-DR, 

which integrated the five Central American 

countries and the Dominican Republic into a 

single agreement. The Administration plans to 

submit the CAFTA-DR for congressional 

approval in 2005. El Salvador was the first 

CAFTA-DR partner to ratify the agreement, in 

December 2004. 

Under the CAFTA-DR, more than 80 percent of 

U.S. consumer and industrial goods will enjoy 

tariff-free access to Central America and the 

Dominican Republic immediately upon entry 

into force, with remaining tariffs phased out 

over 10 years. Key U.S. exports, such as 

information technology products, agricultural 

and construction equipment, paper products, 

chemicals, and medical and scientific 

equipment, will gain immediate duty-free access 

to Central America and the Dominican Republic. 

Virtually all Central American and Dominican 
III. Bilateral and Regional Negotiations| 152 

nonagricultural goods will receive immediate 

duty-free access to the U.S. market. 

More than half of current U.S. farm exports to 

Central America and the Dominican Republic 

will become duty-free immediately, including 

high quality cuts of beef, cotton, wheat, 

soybeans, key fruits and vegetables, processed 

food products, and wine. Tariffs on most U.S. 

farm products will be phased out within 15 

years. U.S. farm products that will benefit from 

improved market access include pork, beef, 

poultry, rice, fruits and vegetables, corn, 

processed products and dairy products. Under 

existing law, the United States provides dutyfree treatment to over 99 percent of Central 

American and Dominican Republic agricultural 

exports into the U.S. market. This treatment will 

be maintained under the agreement. Duty-free 

access for other products will be phased in over 

time, with the exception of sugar, where 

liberalization is handled through a slowly 

expanding tariff-rate quota. Approval of the 

CAFTA-DR would not have a destabilizing 

effect on the U.S. sugar program. 

Under the agreement, the Central American 

countries and the Dominican Republic will 

accord substantial market access across their 

entire services regime, subject to very few 

exceptions, including for telecommunications, 

express delivery, and computer and related 

services. The agreement disciplines the use of 

dealer protection regimes, reducing significant 

barriers to distribution in the region. It 

maintains market openness and prohibits crosssubsidies for express delivery services. U.S. 

financial service suppliers will have nondiscriminatory rights to establish subsidiaries, 

joint ventures or branches for banks and 

insurance companies. The agreement offers 

state of the art protections for digital products 

such as software, music, text and video. 

Protection for patents and trade secrets meets or 

exceeds obligations under WTO TRIPS. 

The Agreement establishes a secure, predictable 

legal framework for U.S. investors, sets strong 

anti-corruption rules in government contracting, 

and guarantees U.S. firms transparent 

procurement procedures to sell goods and 

services to Central American and Dominican 

Republic government entities. 

With respect to labor and the environment, all 

Parties commit to not fail to effectively enforce 

their domestic labor and environment laws. An 

innovative enforcement mechanism provides for 

monetary assessments to enforce this obligation 

where a dispute settlement panel finds a Party to 

be in breach and the Party fails to come into 

compliance in a reasonable period of time. 

Under this mechanism, such assessments would 

be expended in the territory of the Party in 

question to help bring it into compliance with its 

labor or environment obligation. The 

commission that oversees implementation of the 

Agreement would decide collectively on the 

projects on which to spend the proceeds of an 

eventual assessment. 

In addition, the agreement establishes a 

framework for cooperative environmental 

projects, and a labor cooperation mechanism, 

and it promotes internationally recognized labor 

standards. CAFTA-DR includes unprecedented 

provisions that improve access to procedures 

that provide for fair, equitable and transparent 

proceedings in the administration of labor laws, 

protecting the rights of workers and employers -- 

including American investors. The language in 

the labor chapter of the CAFTA-DR is stronger 

and more comprehensive than earlier FTAs 

negotiated by the United States, such as Jordan 

and Chile. The CAFTA-DR takes a more proactive approach than the Chile and Singapore 

FTAs obligating the Parties to not fail to 

effectively enforce existing labor laws, working 

to improve practices affecting key labor rights, 

and building local capacity to improve 

protections for workers. As part of the capacitybuilding effort, the U.S. Department of Labor is 

funding a 3-year, $7.75 million project to 

increase public awareness of labor laws, 

improve inspection systems, and promote the 

use of alternative dispute resolution mechanisms 

in the CAFTA-DR countries. 
III. Bilateral and Regional Negotiations| 153 

8. Bahrain 

On May 21, 2003, the United States and Bahrain 

announced their intention to negotiate a Free 

Trade Agreement (FTA). On September 14, 

2004, after four months of negotiations, U.S. 

Trade Representative Robert B. Zoellick signed 

a completed FTA. The FTA will generate 

export opportunities for the United States, 

creating jobs for U.S. farmers and workers, 

while supporting Bahrain’s economic and 

political reforms and enhancing commercial 

relations with an economic leader in the Arabian 

Gulf. The FTA with Bahrain will also promote 

the President’s initiative to advance economic 

reforms and openness in the Middle East and the 

Gulf and to establish a Middle East Free Trade 

Area (MEFTA) by 2013. The U.S. Congress 

and Bahraini Parliament must approve the 

agreement in 2005. The U.S.-Bahrain Bilateral 

Investment Treaty (BIT), which took effect in 

May 2001, covers investment issues between the 

two countries. 

9. Panama 

On November 18, 2003, after consulting with 

relevant congressional committees and the 

Congressional Oversight Group, the Office of 

the United States Trade Representative notified 

the Congress of the President’s intent to initiate 

free trade agreement negotiations with Panama 

and identified specific objectives for these 

negotiations. On April 26, 2004, the United 

States and Panama launched negotiations in 

Panama City to conclude a United StatesPanama Free Trade Agreement. A total of six 

rounds of negotiations were held during 2004. 

Throughout the process, negotiators have 

consulted closely with Congress, industry 

representatives, and labor and environmental 

groups to ensure the FTA advances U.S. 

interests and, that in its final provisions, it will 

reflect the goals contained in Bipartisan Trade 

Promotion Authority Act of 2002. 

10. Andean Countries 

On November 18, 2003, after consulting with 

relevant congressional committees and the 

Congressional Oversight Group, the Office of 

the United States Trade Representative notified 

the Congress of the President’s intent to initiate 

free trade agreement negotiations with 

Colombia, Peru, Ecuador, and Bolivia and 

identified specific objectives. Negotiations on 

the United States-Andean Free Trade Agreement 

were launched on May 18, 2004 in Cartagena, 

Colombia. Through 2004 there were five 

additional negotiating rounds. Currently, the 

United States is negotiating with the 

governments of Colombia, Peru, and Ecuador, 

with Bolivia observing the negotiations. The 

Administration’s intent is to include Bolivia in 

the agreement at an appropriate stage. 

The Andean region is important to the United 

States for a variety of reasons. One is simply its 

size and economic scale. The four countries 

have a combined population of about 93 million 

people, which is about a third of that of the 

United States, and a combined gross domestic 

product, on a purchasing power parity basis, of 

about $453 billion. 

The United States already has significant 

economic ties to the region. Our exports to the 

Andean negotiating partners totaled an estimated 

$9.8 billion in 2004, and our imports $15.3 

billion. Colombia is the largest market for U.S. 

agricultural exports in South America. Energy 

supplies from the Andean region help reduce our 

dependence on Middle East oil. The United 

States has over $7.2 billion (2003 latest data 

available) of foreign direct investment in the 

region. 

The United States has a significant stake in the 

success of the region and stands to gain 

substantially from a lowering of barriers in the 

markets of the Andean countries, as there is 

much unrealized potential for U.S. exports to the 

region. The Administration is addressing these 

issues in the FTA negotiation, to the benefit of 

U.S. companies, workers and farmers. An FTA 

also holds the potential to help the region meet 
III. Bilateral and Regional Negotiations| 154 

its own needs, helping solidify stable 

democracies as allies in facing our many 

common challenges. Throughout the process, 

negotiators have consulted closely with 

Congress, industry representatives, and labor 

and environmental groups to ensure the FTA 

advanced U.S. interests and, that in its final 

provisions, it will reflect the goals contained in 

Bipartisan Trade Promotion Authority Act of 

2002. 

11. United Arab Emirates 

After consulting with Congress in September 

2004, U.S. Trade Representative Robert B. 

Zoellick announced on November 15, 2004, that 

the United States intends to negotiate a Free 

Trade Agreement (FTA) with the United Arab 

Emirates (UAE). The negotiations are expected 

to begin in early 2005. An FTA with the UAE 

will build on existing FTAs to promote the 

President’s Middle East Free Trade Area 

(MEFTA) initiative to advance economic 

reforms and openness in the Middle East and the 

Persian Gulf, and to establish a regional free 

trade area by 2013. The successful conclusion 

of a comprehensive FTA will generate export 

opportunities for the United States, creating jobs 

for U.S. farmers and workers, while solidifying 

the UAE’s trade and investment liberalization. 

The United States plans to pursue an aggressive 

negotiation timetable, building on the highquality FTA reached with Bahrain. 

12. Southern Africa 

On November 4, 2002, U.S. Trade 

Representative Robert B. Zoellick notified 

Congress of President Bush’s decision to 

negotiate a free trade agreement (FTA) with the 

five member countries of the Southern African 

Customs Union (SACU). These nations—

Botswana, Lesotho, Namibia, Swaziland 

(BLNS), and South Africa—comprise the largest 

U.S. export market in sub-Saharan Africa, with 

$2.9 billion in U.S. exports in 2003. The 

negotiations began in Pretoria, South Africa in 

June 2003, and five subsequent rounds have 

been held since then. The last full negotiating 

round was held in June 2004. Since the last full 

round, there have been several high-level 

discussions and meetings on the FTA, including 

a December 2004 Ministerial meeting in Walvis 

Bay, Namibia, that U.S. Trade Representative 

Robert B. Zoellick attended. This FTA – which 

would be the first with any sub-Saharan African 

country – offers an opportunity to craft a 

groundbreaking agreement that will serve as a 

model for similar efforts in the developing 

world. Trade capacity building efforts are being 

undertaken to help these countries participate in 

the negotiations more effectively and will be key 

in helping them implement their commitments 

under the agreement and benefit from free trade. 

By building on the success of AGOA, the SACU 

countries would secure the kind of guaranteed 

access to the U.S. market that supports longterm investment and economic prosperity. The 

FTA would also reinforce ongoing regional 

economic reforms and integration among the 

SACU countries. 

13. Oman 

After consulting with Congress in September 

2004, U.S. Trade Representative Robert B. 

Zoellick formally notified Congress on 

November 15, 2004 that the United States 

intends to negotiate a Free Trade Agreement 

(FTA) with Oman. The negotiations are 

scheduled to begin in early 2005. An FTA with 

Oman will build on existing FTAs to promote 

the President’s initiative to advance economic 

reforms and openness in the Middle East and the 

Persian Gulf and to establish a Middle East Free 

Trade Area (MEFTA) by 2013. The successful 

conclusion of a comprehensive FTA will 

generate export opportunities for the United 

States, creating jobs for U.S. farmers and 

workers, while supporting Oman’s economic 

and political reforms. The United States plans to 

pursue an aggressive negotiation timetable, 

building on the high-quality FTA reached with 

Bahrain. 

14. Thailand 

In October 2003, President Bush announced his 

intent to enter into FTA negotiations with 
III. Bilateral and Regional Negotiations| 155 

Thailand, reaffirming his commitment under the 

Enterprise for ASEAN Initiative (EAI) to 

strengthen trade ties with countries in the 

ASEAN region that are actively pursuing 

economic reforms. The United States and 

Thailand held two rounds of FTA negotiations in 

2004, beginning discussions on all chapters of 

the FTA and making initial progress. FTA 

negotiations will continue in 2005. An 

agreement with Thailand, which is currently the 

United States’ 19th largest trading partner, will 

significantly increase trade in goods and 

services, create more commercial opportunities 

for U.S. exporters, particularly agricultural 

product exporters, and reduce or eliminate 

barriers in many sectors. A United StatesThailand FTA also will enhance investment 

flows by ensuring a stable and predictable 

environment for investors. Significantly, an 

FTA will strengthen longstanding economic and 

security ties between our countries. 

B. Regional Initiatives 

1. Free Trade Area of the 

Americas (FTAA) 

The year 2004 was the second year of the U.S. 

and Brazil Co-Chairmanship of the FTAA 

negotiating process. At a November 2003 Trade 

Ministerial meeting in Miami, Ministers agreed 

to a new framework intended to give negotiators 

more flexibility in handling differences in the 

economic and political situations across the 

hemisphere. Countries participating in the 

FTAA process were subsequently to develop 

guidance for the negotiation of core common 

rights and obligations applicable to all 34 

countries, as well as procedures for negotiating 

additional provisions among interested countries 

beyond that core. 

The United States, Brazil and others participated 

in several formal and informal meetings during 

2004 to achieve consensus on elaborating the 

Miami framework. These included a meeting of 

the vice-ministerial level Trade Negotiations 

Committee (TNC) in February, which recessed 

after several days to allow for further reflection 

and work among groups of key countries; two 

informal group meetings in March and April; 

and U.S.-Brazilian Co-Chair consultations in 

May. While there was some progress, 

discussions on the guidance for the “common 

set” negotiations were marked by disagreement 

about scope and ambition. In these discussions, 

the United States argued for balanced and 

sufficiently robust core rights and obligations to 

ensure the FTAA achieves its economic growth 

and integration objectives, and we have joined 

others in suggesting ways to bridge the gaps and 

accommodate different points of view, 

consistent with the Miami framework. 

In the late Fall of 2004, U.S. Trade 

Representative Robert B. Zoellick again took the 

initiative to suggest to his Brazilian counterpart 

the resumption of discussions on how best to 

achieve consensus among the 34 governments. 

The Brazilian Foreign Minister agreed to 

meetings between the TNC Co-Chairs aimed at 

restarting the FTAA negotiations. 

At their 2003 meeting, Ministers had instructed 

negotiators to continue at a pace that would lead 

to conclusion of market access negotiations by 

September 30, 2004, reaffirmed that negotiations 

should be completed by January 2005, and 

agreed that their next meeting would be hosted 

by Brazil in 2004. Because the negotiations 

were suspended during much of 2004, these 

timelines for the FTAA were likewise 

suspended. When Ministers next meet, they will 

have to review the status of the negotiations and 

consider time lines for the FTAA negotiations. 

In 2004, fourteen countries seeking assistance 

prepared and submitted their national or 

subregional trade capacity building (TCB) 

strategies as part of the implementation of the 

Hemispheric Cooperation Program (HCP). 

Recognizing the role trade plays in promoting 

economic development and reducing poverty 

and that smaller and less developed economies 

require financial support to assist in adjusting to 

hemispheric integration, the HCP was designed 

to assist countries to participate in the 

negotiations, prepare to implement the FTAA 

obligations, and adjust to hemispheric 

integration. The TCB strategies are critical to 
III. Bilateral and Regional Negotiations| 156 

identifying effective programs and appropriate 

funding sources. They are the first steps in 

enhancing the capacity of requesting countries to 

achieve these objectives. 

 

At their November 2003 meeting in Miami, 

Ministers recognized the efforts of the FTAA 

Committee of Government Representatives on 

the Participation of Civil Society (SOC) to 

improve two-way communication with civil 

society by holding two open meetings in 2003 

that focused on agriculture and services 

respectively - issues under discussion in the 

negotiations. Two more issue meetings were 

scheduled for 2004: one in the Dominican 

Republic on intellectual property rights, the 

other in the U.S. on market access, with special 

focus on small businesses. The meeting on 

intellectual property rights was held in the 

Dominican Republic in January 2004. The 

meeting on market access, with special focus on 

small business -- was planned to be held in the 

United States concurrently with the next meeting 

of the SOC, which has not yet been scheduled. 

Ministers also received the Fourth Report of the 

SOC that describes SOC activities as well as the 

contributions received in response to the Open 

and On-Going Invitation for comment on all 

aspects of the FTAA negotiations. Ministers 

instructed the SOC to continue to forward such 

contributions to the relevant FTAA entities. 

Even while the negotiations were in hiatus, 

comments received from civil society were 

forwarded on an ongoing basis to the technical 

negotiators throughout the year. 

Ministers at their 2003 meeting requested that 

the Candidate Cities for the permanent FTAA 

Secretariat provide information responsive to 

elements identified to assist the Ministers in 

their evaluation of sites for the Secretariat. 

Information from candidate cities was received 

by the deadline of March 1, 2004, and circulated 

to the 34 governments. The current U.S. 

candidate cities are: Atlanta, Chicago, 

Galveston, Houston, Miami, and San Juan. 

Countries also continued during 2004 to update 

their information responding to the Ministerial 

mandates for transparency in procedures and 

regulations and with regard to government 

contacts for the negotiations, and some 

inventories available on the public website 

(www.ftaa-alca.org) were updated as well. 

2. Enterprise for ASEAN 

Initiative 

President Bush announced in October 2002 a 

major new initiative, the Enterprise for ASEAN 

Initiative (EAI). The EAI is intended to 

strengthen U.S. trade and investment ties with 

ASEAN both as a region and bilaterally. With 

over $127 billion in two-way trade in 2003, the 

10-member ASEAN group already is the United 

States’ sixth largest trading partner collectively. 

The EAI will further enhance our already close 

relationship with this strategic and commercially 

important region. With continued economic 

growth in the ASEAN countries and a regional 

population of around 500 million, the United 

States anticipates significant opportunities for 

U.S. companies, particularly agricultural 

exporters. For ASEAN, this initiative will help 

boost trade and redirect investment back to the 

ASEAN region. 

Under the EAI, the United States offers the 

prospect of bilateral free trade agreements 

(FTAs) with ASEAN countries that are 

committed to the economic reforms and 

openness inherent in an FTA with the United 

States. Any potential FTA partner must be a 

WTO member and have a trade and investment 

framework agreement (TIFA) with the United 

States. Since the launch of the EAI, the United 

States concluded an FTA with Singapore in 

2003 and began FTA negotiations with Thailand 

in 2004. In addition, the United States and 

Malaysia signed a TIFA in May 2004, and 

announced in the fall of 2004 initiation of 

negotiations on a TIFA with Cambodia. The 

United States also has TIFAs in effect with 

Indonesia, the Philippines, Thailand, and Brunei 

Darussalam. The Administration sees progress 

in addressing bilateral issues under these TIFAs 

as important to laying the groundwork for 

entering into FTA negotiations with the 

confidence that such negotiations can be 

concluded successfully. In carrying out the EAI, 
III. Bilateral and Regional Negotiations| 157 

the key U.S. objective is to create a network of 

bilateral FTAs with ASEAN countries. 

Under the EAI, the United States also actively 

supports the efforts of ASEAN members that do 

not yet belong to the WTO to complete their 

accessions successfully and take other key steps 

to open their economies. With United States 

support, Cambodia became a WTO Member in 

September 2003. In 2004, we continued work 

with Vietnam on its accession to the WTO. We 

also maintained support for Laos’ efforts to 

accede to the WTO. Based on authority 

provided in the Miscellaneous Trade and 

Technical Corrections Act of 2004 we expect to 

extend normal trade relations (NTR) tariff 

treatment to products of Laos in 2005. 

U.S. and ASEAN officials met in August 2003 

and 2004 to discuss progress under the EAI. 

The United States will continue to work with 

ASEAN to advance the U.S.-ASEAN work 

program established in 2002, including efforts 

on intellectual property rights, customs and trade 

facilitation, biotechnology issues, standards 

(TBT) issues, agriculture, human resource 

development and capacity building, small and 

medium enterprises, and information and 

communications technology. 

3. North American Free Trade 

Agreement 

Overview 

On January 1, 1994, the North American Free 

Trade Agreement between the United States, 

Canada and Mexico (NAFTA) entered into 

force. NAFTA created the world’s largest free 

trade area, which now links 431 million people 

producing $12.9 trillion worth of goods and 

services. The dismantling of trade barriers and 

the opening of markets has led to economic 

growth and rising prosperity in all three 

countries. The closer economic relationship 

promoted by NAFTA also includes labor and 

environmental cooperation agreements, which 

are among the most significant that the United 

States has negotiated as part of a trade 

agreement. The NAFTA has dramatically 

improved our trade and economic relations with 

our neighbors. The net result of these efforts is 

more economic opportunity and growth, greater 

fairness in our trade relations, and a coordinated 

effort to better protect worker rights and the 

environment in North America. 

 

The magnitude of our trade relations in North 

America is impressive: U.S. two-way trade with 

Canada and Mexico exceeds U.S. trade with the 

European Union and Japan combined. U.S. 

goods exports to NAFTA partners nearly 

doubled between 1993 and 2003, from $142 

billion to $267 billion, significantly higher than 

export growth of 43 percent for the rest of the 

world over the same period. 

By dismantling barriers, NAFTA has led to 

increased trade and investment, growth in 

employment, and enhanced competitiveness. 

From 1994 to 2003, cumulative Foreign Direct 

Investment in the NAFTA countries has 

increased by over $1.7 trillion. Increased 

investment has brought more and better-paying 

jobs, as well as lower costs and more choices for 

consumers and producers. 

 

Elements of NAFTA 

 

A. Operation of the Agreement 

 

The NAFTA’s central oversight body is the 

NAFTA Free Trade Commission (FTC), chaired 

jointly by the U.S. Trade Representative, the 

Canadian Minister for International Trade, and 

the Mexican Secretary of Economy. The FTC is 

responsible for overseeing implementation and 

elaboration of the NAFTA and for dispute 

settlement. 

The FTC held its most recent annual meeting in 

July 2004, in San Antonio, Texas, and marked 

the tenth anniversary of the entry into force of 

the agreement. At the meeting, the FTC 

reconfirmed its commitment to deepening 

economic integration in North America by 

building on the NAFTA. With virtually all 

tariffs and quotas on North American trade 

eliminated, the FTC considered additional ways 

to enhance trade and investment by lowering 

transaction costs and other administrative 
III. Bilateral and Regional Negotiations| 158 

burdens. Some of these initiatives are outlined 

below. The FTC will explore ways to further 

integrate the NAFTA Parties by considering 

initiatives in certain sectors, including 

manufacturing, services, business facilitation, 

compatibility of standards, and the further 

elimination of non-tariff barriers to trade. 

B. Rules of Origin 

In October 2003, the FTC agreed to pursue 

further liberalization of the NAFTA rules of 

origin. Since nearly all tariffs between the 

NAFTA Parties have been eliminated, reducing 

the costs associated with trade, such as those 

associated with compliance with rules of origin, 

will generate additional benefits for traders. The 

FTC approved a package of changes in July 

2004 covering approximately $20 billion in 

trilateral trade, and asked their officials to work 

towards implementing those changes on January 

1, 2005. In addition, the FTC asked the 

Working Group on Rules of Origin to continue 

considering new requests for changes to the 

rules of origin from consumers and producers; 

and to examine the rules of origin in the free 

trade agreements that each country has 

negotiated subsequent to the NAFTA, to 

determine whether those rules should be applied 

to the NAFTA. 

Officials from the NAFTA Parties are also 

considering changes to the NAFTA textile rules 

of origin that would amend the short supply 

provisions. If made, these would be the first 

changes to the textile rules of origin since the 

NAFTA was implemented. 

C. Transparency 

 

In October 2003, the FTC produced two 

statements to enhance the transparency and 

efficiency of investor-State arbitration under 

Chapter 11 of the NAFTA: 

$ an affirmation of the authority of 

investor-state tribunals to accept written 

submissions (amicus curiae briefs) by 

non-disputing parties, coupled with 

recommended procedures for tribunals 

on the handling of such submissions; 

and 

$ endorsement of a standard form for the 

Notices of Intent to initiate arbitration 

that disputing investors are required to 

submit under Article 1119 of the 

NAFTA. 

Separately, the United States and Canada 

affirmed that they will consent to opening to the 

public hearings in Chapter 11 disputes to which 

either is a Party, and that they will request the 

consent of disputing investors to such open 

hearings. In 2004, a tribunal accepted written 

submissions from a non-disputing party for the 

first time and adopted the procedures that were 

recommended by the FTC in 2003. (The 

submissions were accepted in Methanex 

Corporation v. United States of America.) In 

addition, at the July 2004 FTC meeting, Mexico 

agreed to join the United States and Canada in 

supporting open hearings for investor-state 

disputes. The FTC also agreed that the same 

degree of openness should apply to proceedings 

under the Dispute Settlement provisions of 

Chapter 20 of the NAFTA, and asked officials of 

the Parties to develop rules governing open 

hearings for such proceedings. 

Further, the FTC released the negotiating texts 

of Chapter 11 (i.e., the successive drafts that 

culminated in what is now Chapter 11), and 

agreed to compile the negotiating texts of other 

NAFTA chapters, bearing in mind that this is 

likely to be a time consuming project. The 

negotiating texts of Chapter 11 are now 

available on the USTR website. 

D. Textiles and Apparel 

At its July 2004 meeting, the FTC addressed the 

impending liberalization of international textile 

and apparel trade at the end of 2004 and asked 

officials to continue to consider actions, such as 

cumulation among countries with whom each of 

the three NAFTA Parties have free trade 

agreements, in order to enhance 

competitiveness. The FTC reiterated its 

commitment to strengthening efforts to combat 

illegal transshipment and will continue to 

explore mechanisms to increase trilateral 
III. Bilateral and Regional Negotiations| 159 

cooperation in this area. It encouraged the 

textile and apparel industries of North America 

to work together on identifying areas of common 

interest where private sector cooperation could 

contribute to the development of these sectors. 

Finally, the FTC asked officials of the Parties to 

report back on the prospects and opportunities 

for the North American textile and apparel 

industries. 

E. NAFTA and Labor 

 

The North American Agreement on Labor 

Cooperation (NAALC), a supplemental 

agreement to the NAFTA, promotes effective 

enforcement of domestic labor laws and fosters 

transparency in their administration. Each 

NAFTA Party also has established a National 

Administrative Office (NAO) within its Labor 

Ministry to serve as a contact point for 

information, to examine labor concerns, and to 

coordinate cooperative work programs. In 

addition, the Agreement created a trinational 

Commission for Labor Cooperation, comprised 

of a Ministerial Council and an administrative 

Secretariat. 

The NAALC also provides for the review of 

public submissions related to labor laws in the 

NAFTA Parties. In April 2004, the U.S. NAO 

held public hearings on submission 2003-01, 

related to the enforcement of labor laws by 

Mexico. The issues raised in the submission 

include freedom of association and the right to 

organize, collective bargaining, occupational 

safety and health, minimum employment 

standards (i.e., minimum wage and overtime 

pay), and access to fair and transparent labor 

tribunal proceedings at two garment 

manufacturing plants located in the state of 

Puebla. In September 2004, the U.S. NAO 

issued a report on the submission, and 

recommended ministerial consultations between 

the United States and Mexico. The United 

States requested such consultations in October, 

and Mexico agreed in November. 

In April 2004, the United States, Mexico, and 

Canada formally launched a web site as part of 

the Trinational Occupational Safety and Health 

Working Group. The Web site 

(www.naalcosh.org), which can be navigated in 

English, Spanish or French, contains links to 

each government’s occupational safety and 

health programs and practices; promotes 

education and public involvement; and 

facilitates the dissemination of information 

about the occupational safety and health 

activities of the three governments. 

As part of their ongoing program of trilateral 

cooperation under the NAALC, the United 

States, Mexico, and Canada presented a 

conference on Trafficking in Persons in North 

America, hosted by the U.S. Department of 

Labor in Washington, D.C. The goals of the 

conference were to focus attention on, and raise 

awareness of, trafficking as a growing 

phenomenon in North America, exchange 

information on approaches by governments and 

nongovernmental organizations to combat 

trafficking, and explore opportunities for 

enhanced trilateral cooperation on this important 

issue. 

F. NAFTA and the Environment 

 

A further supplemental accord, the North 

American Agreement on Environmental 

Cooperation (NAAEC), ensures that trade 

liberalization and efforts to protect the 

environment are mutually supportive. The 

NAAEC created the Commission for 

Environmental Cooperation (CEC), which is 

comprised of: (a) the Council, made up of the 

Environmental Ministers from the United States, 

Canada, and Mexico; (b) the Joint Public 

Advisory Committee, made up of five private 

citizens from each of the NAFTA Parties; and 

(c) the Secretariat, made up of professional staff, 

located in Montreal, Canada. At the 2004 

Council Session in Puebla, Mexico, the Council 

pledged to develop a strategic plan to address 

issues related to trade and environment, and to 

continue its cooperation with the NAFTA Free 

Trade Commission. Specific information on the 

CEC’s activities can be found in Chapter V. 

 

In November 1993, Mexico and the United 

States agreed on arrangements to help border 

communities with environmental infrastructure 

projects, in furtherance of the goals of the 
III. Bilateral and Regional Negotiations| 160 

NAFTA and the NAAEC. The Border 

Environment Cooperation Commission (BECC) 

and the North American Development Bank 

(NADB) are working with more than 100 

communities throughout the United StatesMexico border region to address their 

environmental infrastructure needs. As of 

September 30, 2004, the NADB had authorized 

$689.2 million in loans and/or grant resources to 

partially finance 83 infrastructure projects 

certified by the BECC with an estimated cost of 

$2.3 billion. 

4. Middle East Free Trade 

Area (MEFTA) 

The United States Middle East Free Trade Area 

(MEFTA) initiative, announced by President 

Bush in May 2003, seeks to promote trade 

expansion and economic reforms in North 

Africa and the Middle East leading to a Middle 

East Free Trade Area within a decade. To 

reignite economic growth and expand 

opportunity in the Middle East, the United States 

will take a series of graduated steps with 

countries in the region tailored to the level of 

development of each country and building on the 

current FTAs with Israel and Jordan, the FTAs 

concluded with Morocco and Bahrain, and the 

upcoming FTA negotiations with the United 

Arab Emirates and Oman. These steps include 

helping countries that are undertaking reforms 

with their accession to the World Trade 

Organization (WTO), enhancing access to the 

Generalized System of Preferences (GSP) 

program for eligible countries, negotiating Trade 

and Investment Framework Agreements 

(TIFAs), negotiating Bilateral Investment 

Treaties (BITs), negotiating comprehensive 

FTAs, and offering technical assistance to 

improve trade practices. 

5. Asia Pacific Economic 

Cooperation 

Overview 

The Asia Pacific Economic Cooperation (APEC) 

forum has been instrumental in advancing 

regional and global trade and investment 

liberalization, since it was founded in 1989. It 

has provided a forum for Leaders to meet 

annually since 1993, when APEC Leaders met at 

Blake Island in the United States. 

The United States worked closely with Chile, 

the APEC Chair in 2004, to lead APEC 

economies in pursing an ambitious trade agenda. 

APEC helped solidify support for the WTO’s 

July Package to advance the WTO’s Doha 

Development Agenda (DDA), set high standards 

for free trade and regional trade agreements 

(FTAs, RTAs) and other preferential 

arrangements in the Asia-Pacific region, and 

committed to strengthen intellectual property 

protection and enforcement. The United States 

will work with Korea, the APEC Chair in 2005, 

to ensure that APEC takes concrete actions in 

each of these areas. 

The twenty-one APEC economies collectively 

account for 47 percent of world trade and over 

60 percent of global GDP. The growth in U.S. 

good exports to APEC clearly demonstrates the 

benefits of open markets and trade liberalization. 

Since 1994, U.S. exports to APEC increased 

nearly 62 percent. In 2004, two-way trade with 

APEC members totaled nearly $1.5 trillion, an 

increase of 15 percent from 2003. 

2004 Activities 

Leadership in the WTO 

APEC’s contribution to advancing the DDA was 

key in 2004. APEC Trade Ministers’ 

unambiguous support for WTO trade facilitation 

negotiations in June created momentum for the 

breakthrough achieved in Geneva in July, 2004 

to accelerate work on the DDA. APEC also set 

priorities in the core DDA areas in order to 

immediately begin building support for a 

successful Sixth WTO Ministerial Conference in 

Hong Kong in December 2005. 

Leaders and Ministers supported a WTO trade 

facilitation agreement that includes 

transparency, efficiency, simplification, non-
III. Bilateral and Regional Negotiations| 161 

discrimination, procedural fairness, cooperation, 

and capacity building. They also stressed the 

need for substantially greater market access for 

both agricultural and non-agricultural goods, and 

supported the early abolition of agricultural 

export subsidies and export prohibitions and 

restrictions, and the substantial reduction of 

trade-distorting domestic support. They 

recognized the growing importance of services 

trade, and agreed that economies should submit 

improved revised WTO services offers by May 

2005, and that any economies not yet having 

done so should table their initial services offers 

expeditiously. 

The APEC Geneva Caucus emerged in 2004 as 

an important link between APEC and the WTO. 

The Caucus, comprised of ambassadors to the 

WTO from APEC economies, met several times 

in 2004, and became a valuable forum for 

sharing information on APEC’s work and 

drawing Geneva’s attention to specific APEC 

actions. The Caucus, for example, met with 

other WTO Members to explain APEC’s support 

for WTO trade facilitation negotiations and the 

economic benefits that APEC economies have 

experienced from cutting red tape. 

Recognizing that capacity building is a key 

element in advancing the DDA negotiations, 

Leaders and Ministers agreed to increase 

APEC’s capacity building efforts, particularly in 

those areas where APEC can best add value. 

Several capacity building programs were 

conducted in 2004, including: a two-day 

workshop on Best Practices in capacity building 

for addressing WTO issues; a program 

examining environmental assessments of trade 

negotiations; and an APEC capacity building 

seminar on WTO Trade Facilitation. APEC is 

now developing a plan to evaluate the 

effectiveness of its WTO capacity building 

work. 

Advancing Trade Liberalization in the APEC 

Region 

The Santiago Initiative for Expanded Trade in 

APEC

In the Santiago Initiative for Expanded Trade in 

APEC, proposed by the United States, Leaders 

underscored the importance of improving 

regional trade liberalization and trade 

facilitation, and working closely with the 

business community in these areas. On trade 

liberalization, Leaders recognized that 2005 will 

be an important year in light of the DDA 

negotiations, the range of FTA negotiations in 

the region, and a mid-term review of economies’ 

progress in achieving the Bogor Goals of free 

and open trade and investment in the region. 

Leaders will consider taking further actions 

based on developments in each of these areas. 

On trade facilitation, Leaders agreed to take an 

aggressive approach to cutting red tape by 

embracing customs automation, pursuing 

harmonized standards, and eliminating 

unnecessary barriers to trade. APEC will 

continue advancing trade facilitation 

negotiations in the WTO, and will seek 

agreement on trade facilitation best practices 

that economies can follow in their FTAs and 

Regional Trade Agreements. Leaders also 

agreed to better integrate trade security into 

APEC’s work on trade facilitation to ensure 

objectives in both areas remain mutually 

supportive. 

Free Trade Agreements, Regional Trade 

Agreements and Other Preferential 

Arrangements 

An important issue in APEC in 2004 was the 

growing number of FTAs, RTAs and other 

preferential arrangements in the Asia-Pacific 

region, and the need to ensure that economies’ 

agreements are trade-promoting and reflect highstandards. To set a high level of ambition, 

Leaders welcomed a set of “APEC Best 

Practices for RTAs and FTAs” that encourage 

economies to negotiate comprehensive 

agreements that are consistent with APEC 

principles and WTO disciplines. The Best 

Practices provide that economies’ agreements 
III. Bilateral and Regional Negotiations| 162 

should go beyond WTO commitments and 

explore areas not covered by the WTO, so that 

APEC can provide future multilateral leadership. 

They also encourage developing economies’ 

agreements to be consistent with GATT Article 

XXIV and GATS Article V. They foresee use 

by an economy of consistent rules of origin 

across all of its agreements wherever possible, 

and for economies to keep tariff and quota 

phase-outs for sensitive sectors to a minimum 

time frame. 

To enhance transparency, APEC developed a 

new reporting format for economies to share 

information annually on their FTAs and RTAs. 

These reports will be included in the reviews of 

APEC members’ trade and investment regimes. 

APEC will also study the feasibility of 

developing an online FTA/RTA database for the 

benefit of businesses, policy makers and other 

stakeholders. 

APEC’s Work on Trade and Investment 

Liberalization and Facilitation 

APEC Leaders and Ministers took additional 

steps to advance trade and investment 

liberalization and facilitation, and made progress 

implementing past commitments, including 

those agreed to under the 2001 APEC Leaders’ 

Shanghai Accord, a U.S.-led blueprint for 

APEC’s trade agenda. Significant 

accomplishments in 2004 included: 

• recognition of the importance of having 

strong intellectual property regimes in 

the Asia-Pacific region and an 

agreement to prioritize intellectual 

property protection and enforcement by 

taking concrete actions in 2005 to 

reduce piracy, trade in counterfeit goods 

and online piracy, and increase 

cooperation and capacity building; 

• an agreement on a list of three IT 

products (multi-chip integrated circuits, 

digital multifunctional machines, and 

modems totaling upwards of $2 billion 

in trade annually) to forward to the 

WTO for tariff elimination, and an 

agreement by Australia, Canada and 

China to join the Leaders’ Pathfinder 

Statement to Implement APEC Policies 

on Trade and the Digital Economy, 

making Russia the only economy 

remaining a non-participant in this 

Pathfinder; 

• a government/private sector review of 

progress to achieve a 5 percent 

reduction in business transaction costs 

by 2006 that concluded that economies 

are making needed improvements, and 

an agreement on a plan to move to a 

paperless trading environment; 

• an agreement on Transparency 

Standards on Government Procurement, 

for incorporation into the Leaders’ 2003 

Transparency Standards covering 

Services, Investment, Competition Law 

and Policy and Regulatory Reform, 

Standards and Conformance, Intellectual 

Property, Customs Procedures, Market 

Access, and Business Mobility, and an 

agreement by each economy to provide 

annual, detailed reports on steps they 

take to implement the Transparency 

Standards into their domestic legal 

regimes; 

• a commitment to Fight Corruption and 

Ensure Transparency and to a Course of 

Action comprised of specific actions to 

implement this commitment. 

APEC members prepare Individual Action Plans 

(IAPs) annually to report on their actions to 

achieve the Bogor Goals of free trade and 

investment by 2010 among developed APEC 

economies, and by 2020 among all economies. 

The Shanghai Accord called for more strenuous 

reviews of all economies IAPs, culminating in a 

mid-term assessment in 2005 of APEC’s 

progress to achieve the Bogor Goals. Since 

2002, APEC has conducted reviews of the trade 

and investment regimes of most economies. 

Reviews of all economies will be completed by 

early 2005, and Korea, as APEC host economy 

in 2005, has already shown impressive 

leadership in preparing to conduct the mid-term 

stocktaking. Reports of the IAP Peer Reviews 
III. Bilateral and Regional Negotiations| 163 

can be found on the APEC website 

(www.apec.org). 

Private Sector Involvement 

The APEC Business Advisory Council

An important development in 2004 was a 

strengthened partnership between the public and 

private sectors. The APEC Business Advisory 

Council (ABAC) was extremely active in 2004, 

offering recommendations and participating in 

government-business dialogues to advance 

several key APEC priorities, including the DDA 

negotiations, customs and trade facilitation, 

cargo security, standards and conformance, and 

transparency and anti-corruption. ABAC also 

made broad trade liberalization and facilitation 

proposals that contributed to the development of 

the Santiago Initiative for Expanded Trade in 

APEC. 

Life Sciences Innovation Forum

In 2004, APEC Leaders advanced regional 

health and economic priorities by endorsing the 

Strategic Plan to Promote Life Sciences 

Innovation. The Strategic Plan encourages 

investment and innovation in key areas of the 

life sciences industry, including research, 

development, manufacturing and marketing, and 

health services. Under the Strategic Plan, best 

practices will be established for the 

harmonization of regulatory practices and 

policies with international best practices, 

transparency in policies and regulatory 

procedures and intellectual property protection 

for innovations. 

Automotive and Chemical Dialogues

The Automotive Dialogue and Chemical 

Dialogue are public-private sector dialogues in 

which government officials and senior industry 

representatives work together to map out 

strategies for increasing integration and 

liberalizing trade in the automotive and chemical 

sectors in the region. 

In 2004, the Automotive Dialogue contributed to 

the WTO non-agricultural market access 

negotiations by identifying a number of nontariff measures affecting trade in automotive 

products. The Automotive Dialogue also 

developed a package of work programs to better 

integrate the automotive industry in the Asia 

Pacific region, and approved a Model Port 

Project which will develop best practices which, 

if member economies implement them, would 

eliminate customs barriers. The Dialogue 

further approved an automotive standstill 

commitment to refrain from using measures that 

would have the effect of increasing levels of 

protection. It additionally formed a new 

Intellectual Property Rights (IPR) Working 

Group that is currently developing an IPR Best 

Practices paper. 

The Chemical Dialogue examined the potential 

negative impact of the EU’s proposed chemical 

regulations (REACH), with Dialogue Co-Chairs 

sending a letter in June 2004 to the EU 

Competitiveness Council expressing APEC 

economies’ concerns about the proposed 

REACH system. New work programs were 

established to address priority non-tariff 

measures on smuggling/counterfeiting more 

effectively, rules of origin, product registration 

procedures, and treatment of confidential 

business data for chemicals. To facilitate trade 

in the chemical sector, attention was placed on 

implementing the UN Globally Harmonized 

System of Classification and Labeling (GHS), 

and identifying ways to address priority 

customs-related issues for the chemical industry. 

The APEC Privacy Framework 

By endorsing the APEC Privacy Framework, 

Ministers and Leaders brought to fruition key 

work in 2004 important to U.S. industry. The 

Privacy Framework, developed by the ECommerce Steering Group, makes a significant 

contribution to increasing cross-border trade in 

the region by promoting a consistent approach in 

all economies to information privacy protection 

that avoids the creation of unnecessary barriers 

to information flows. Ministers also endorsed 

the Future Work Agenda on International 

Implementation of the Privacy Framework, to 

continue efforts to develop a regional approach 
III. Bilateral and Regional Negotiations| 164 

to privacy, including discussion in 2005 of 

establishing regional privacy codes. 

C. The Americas 

1. Canada 

Canada is the largest trading partner of the 

United States with over $1 billion of two-way 

trade crossing our border daily. At the same 

time, the United States and Canada share one of 

the world's largest bilateral direct investment 

relationships. The stock of U.S. foreign direct 

investment (FDI) in Canada in 2003 was $192.4 

billion, up from $170.2 billion in 2002. U.S. 

FDI in Canada is concentrated largely in the 

manufacturing, finance, and mining sectors. 

a. Softwood Lumber 

The 1996 U.S.-Canada Softwood Lumber 

Agreement expired on March 31, 2001. The 

bilateral agreement was put in place to mitigate 

the harmful effects on the U.S. lumber industry 

of subsidies provided by the Canadian federal 

and provincial governments to Canadian lumber 

producers. Upon expiration of the 1996 

Agreement, U.S. industry filed antidumping and 

countervailing duty petitions regarding imports 

of Canadian softwood lumber. The U.S. 

International Trade Commission 

(ITC) subsequently found that the U.S. industry 

was threatened with material injury by reason of 

dumped and subsidized imports of Canadian 

lumber, and the U.S. Department of Commerce 

(Commerce) found company-specific 

antidumping rates ranging from 2.18 percent to 

12.44 percent and imposed a countrywide 

(except for the Maritime provinces) 

countervailing duty rate of 18.79 percent. On 

December 14, 2004, Commerce announced the 

results of the first administrative review of the 

antidumping and countervailing duty orders, in 

which it assessed antidumping duties ranging 

from 0.92 percent to 10.59 percent, and a 

countervailing duty rate of 17.18 percent. 

To date, Canada has challenged, or has 

announced its intent to challenge, the underlying 

Commerce and ITC findings in the original 

investigation in ten separate proceedings under 

the WTO and NAFTA, and litigation is 

ongoing. The WTO and NAFTA dispute 

settlement processes have confirmed the 

existence of Canada's subsidization of its 

softwood lumber industry and the dumping of 

lumber products into the U.S. market. On 

November 24, 2004, USTR requested the 

formation of an Extraordinary Challenge 

Committee (ECC) to address possible 

deficiencies in the decisions of the NAFTA 

panel regarding the ITC's threat determination. 

The United States continues to believe that it is 

in the interest of both the United States and 

Canada to reach a negotiated solution to their 

longstanding differences over softwood lumber, 

a view shared by many stakeholders on both 

sides of the border. 

The United States is committed to seeking 

such a resolution and remains hopeful that 

we will be able to resume negotiations with 

Canada in the near future. In the meantime, 

the litigation will continue, and the United 

States will vigorously enforce its trade 

remedy laws. 

b. Agriculture 

Canada is the largest market for U.S. food and 

agricultural exports. For fiscal year 2004 

(October 2003 - September 2004), U.S. 

agricultural exports to Canada grew by 4 

percent, to a record-breaking $9.54 billion. 

 

As a result of the 1998 U.S.-Canada Record of 

Understanding on Agricultural Matters (ROU), 

the United States-Canada Consultative 

Committee (CCA) and the Province/State 

Advisory Group (PSAG) were formed to 

strengthen bilateral agricultural trade relations 

and to facilitate discussion and cooperation on 

matters related to agriculture. In 2004, the CCA 

met twice on issues covering livestock, fruits 

and vegetables, grain, seed, processed food, and 

plant trade, as well as pesticide and animal drug 

regulations. 
III. Bilateral and Regional Negotiations| 165 

The United States continues to have concerns 

about the monopolistic marketing practices of 

the Canadian Wheat Board. USTR’s four prong 

approach announced in 2002 to level the playing 

field for American farmers is producing 

important results. Most notably, in WTO 

dispute settlement proceedings against the 

Canadian Wheat Board and the Government of 

Canada, a WTO panel found in favor of the 

United States on claims related to Canada’s 

grain handling and transportation systems. 

Canada now must comply with those findings. 

Canada and the United States have agreed on a 

reasonable time period for compliance, giving 

Canada until August 1, 2005 to make all 

necessary legislative and regulatory changes to 

its grain handling and rail transportation 

regimes. This time frame is consistent with the 

period of time for compliance in comparable 

disputes. 

In addition, the United States is seeking reforms 

to state trading enterprises (STE) as part of the 

WTO agricultural negotiations. The U.S. 

proposal calls for the end of exclusive STE 

export rights to ensure private sector 

competition in markets currently controlled by 

single desk exporters; the establishment of WTO 

requirements to notify acquisition costs, export 

pricing, and other sales information for single 

desk exporters; and the elimination of the use of 

government funds or guarantees to support or 

ensure the financial viability of single desk 

exporters. The United States has succeeded in 

gaining support in the WTO for the elimination 

of trade-distorting practices of agricultural 

STEs. Finally, in October 2003 the Commerce 

Department imposed 8.87 percent antidumping 

and 5.29 percent countervailing duties on 

Canadian hard red spring wheat. 

Canada has long maintained regulations that 

prohibit the entry of bulk shipments of fruits and 

vegetables. Based on a request of the National 

Potato Council, the United States, in December 

2003, requested negotiations with Canada to 

discuss removing its trade distortive regulation 

for U.S. potatoes and other produce. In 2004, 

the United States and Canada held several 

meetings regarding bulk restrictions and will 

continue discussions in 2005. 

c. Intellectual Property Rights 

In March 2004, Canada’s Federal Court of 

Appeal ruled that downloading music from the 

Internet using peer-to-peer (P2P) software does 

not constitute copyright infringement. The court 

denied a motion to compel internet service 

providers (ISPs) to disclose the identities of 

clients who were alleged to be sharing 

copyrighted music files. The recording industry 

is appealing this decision. Canadian ratification 

of the WIPO Copyright Treaty, now under 

consideration by the Parliament, would remedy 

this problem. 

Progress remains stalled on resolving the 

outstanding issue of national treatment for U.S. 

artists in the distribution of proceeds from 

Canada's private copying levy and its 

“neighboring rights” regime. The United States 

regards Canada's reciprocity requirement for 

both the neighboring rights royalty and the blank 

tape levy as denying national treatment to U.S. 

copyright holders. Under this regime, Canada 

may grant some or all of the benefits of the 

regime to other countries, if it considers that 

such countries grant or have undertaken to grant 

equivalent rights to Canadians. Canada has yet 

to grant these benefits with regard to the United 

States. A growing coalition of technology and 

retail companies advocating the elimination of 

the private copy levy has successfully added the 

levy to the list of copyright issues that will be 

examined as a part of the ongoing Parliamentary 

review of the Copyright Act. 

The United States is also concerned about 

Canada’s lax border measures that appear to be 

non-compliant with TRIPS requirements. 

Canada's border enforcement measures have 

been the target of criticism by U.S. intellectual 

property owners who express concern with the 

low rate of prosecution arising from counterfeit 

goods seizures. Deficiencies in border 

enforcement are compounded by the failure of 

law enforcement authorities to conduct followup investigations of many illegal import cases. 
III. Bilateral and Regional Negotiations| 166 

2. Mexico 

Mexico is our second largest single-country 

trading partner and has been among the fastestgrowing major export markets for goods since 

1993, with U.S. exports up 167 percent since 

then. The NAFTA has fostered this enormous 

relationship by virtue of the Agreement’s 

comprehensive, market-opening rules. It is also 

creating a more equitable set of trade rules as 

Mexico’s high trade barriers are being reduced 

or eliminated. 

a. Agriculture 

North American agricultural trade has grown 

significantly since the NAFTA was 

implemented. Mexico is currently the United 

States’ third-largest agricultural export market. 

For 2004, U.S. agricultural exports to Mexico 

increased 9 percent from 2003, to $8.6 billion 

(based on annualized 11 month data). 

On May 20, 2002, after the United States 

prevailed in dispute settlement proceedings 

before the WTO and NAFTA, Mexico removed 

the definitive antidumping duties it had imposed 

on imports of high-fructose corn syrup (HFCS) 

from the United States since 1998. By that time, 

however, the Mexican Congress had imposed a 

20 percent tax on soft drinks made with any 

sweetener other than cane sugar, including 

HFCS, effective January 1, 2002. Although the 

order was temporarily suspended by the Fox 

Administration, the Mexican Supreme Court 

reimposed the tax in July 2002. The tax was 

renewed for 2003 and 2004. In November 2004, 

the Mexican Congress renewed the tax for 2005. 

The tax has eliminated the use of HFCS in the 

Mexican soft drink industry, reduced sales of 

HFCS by U.S. firms, and lowered U.S. exports 

of soft drinks as well as U.S. exports of corn 

used to produce HFCS. In June 2004, the 

United States requested the formation of a WTO 

dispute settlement panel regarding Mexico’s tax. 

The panel is expected to issue a decision in 

2005. 

Separate from, but supporting the goals of 

formal dispute settlement, the United States and 

Mexico, as well as private sector interests, have 

held negotiations concerning the bilateral 

sweeteners trade. 

The United States-Mexico Consultative 

Committee on Agriculture, co-chaired on the 

U.S. side by USTR and USDA, met in April 

2004 to discuss a range of agricultural trade 

issues, including antidumping orders affecting 

U.S. agricultural product exports, and sanitary 

and phytosanitary measures. 

The Administration has worked to address 

problems associated with Mexico’s antidumping 

regime. The U.S. is concerned about the 

procedures applied in the investigation of U.S. 

exports of beef, rice, pork, and apples. Mexico 

imposed antidumping duties on U.S. exports of 

long grain white rice in June 2002. In December 

2002, Mexico passed amendments to its 

antidumping and countervailing duty laws. The 

United States and Mexico held consultations in 

July 2003 on Mexico’s antidumping orders on 

U.S. beef and rice. In November 2003, at the 

request of the United States, the WTO 

established a dispute settlement panel with 

regard to Mexico’s antidumping order on long 

grain white rice. A panel report is expected in 

2005. The United States has also initiated 

separate dispute settlement proceedings against 

the Mexican beef antidumping order under 

NAFTA. Mexico initiated an antidumping 

investigation against U.S. hams and shoulders 

on May 31, 2004, shortly after Mexico 

terminated its investigation on U.S. pork. This 

action presents serious questions regarding its 

consistency with the requirements of the WTO 

Antidumping Agreement. 

On December 29, 2004, Mexico published an 

agreement suspending its antidumping order on 

Northwest apples. Although negotiated with 

Northwest Fruit Exporters (NFE), an association 

of Northwest apple exporters, the published 

agreement contains provisions not agreed to by 

NFE, which could adversely affect exports of 

Northwest golden and red delicious apples. At 

the time of this report, the United States is still 

reviewing the agreement to determine how to 

respond. 
III. Bilateral and Regional Negotiations| 167 

Mexico maintains a number of sanitary and 

phytosanitary measures affecting exports of U.S. 

agricultural products, including avocados, 

cherries, Florida citrus, and stone fruit. Notably, 

in 2004, Mexico removed most restrictions on 

imports of U.S. beef as a result of bovine 

spongiform encephalopathy (BSE) and avian 

influenza restrictions on imports of U.S. poultry. 

Resolving a longstanding concern of Mexico’s, 

the U.S. Department of Agriculture issued 

regulations in November 2004 allowing 

distribution of Mexican avocados to all U.S. 

states after over a two year phase-in period. 

b. Telecommunications 

In April 2004, a WTO panel agreed with the 

United States that Mexico’s international 

telecommunications rules were inconsistent with 

Mexico’s WTO obligations. Mexico’s rules had 

required U.S. carriers to connect with Mexican 

telecommunications providers in order to 

complete calls from the United States to Mexico 

and granted Mexico’s dominant carrier, Telmex, 

the exclusive authority to negotiate the rate for 

connecting calls into Mexico. The elimination 

of all competition within Mexico for 

international interconnection resulted in rates 

significantly above cost and significantly above 

the rates charged in countries with a competitive 

telecommunications market. 

In June 2004, the United States and Mexico 

reached an agreement to implement the 

recommendations included in the WTO panel 

report. Under the terms of the agreement, 

Mexico will remove the provisions of its law 

relating to the proportional return and uniform 

tariff systems, and allow the competitive 

negotiation of settlement rates by all Mexican 

carriers. Mexico will also allow the introduction 

of resale-based international telecommunication 

services in Mexico by July 2005, in a manner 

consistent with its law. 

Comisión Federal de Telecomunicaciones 

(COFETEL) recently proposed a rule that would 

switch mobile phone payment systems to a 

“calling party pays” system, thereby requiring 

those placing international and domestic longdistance calls to mobile phones in Mexico to pay 

for the interconnection and termination of those 

calls. Although the proposed rule encourages 

long-distance and local companies to negotiate 

prices, industry sources expect that COFETEL 

will ultimately establish the new rates. The 

proposed rule could result in significant 

additional costs for U.S. companies and 

consumers. 

 

c. Tequila 

In August 2003, the Mexican Secretariat of 

Economy, citing the need to ensure the quality 

of Mexican tequila, announced that the official 

standard for tequila would be amended to 

require that tequila be “bottled at the source” in 

order to be labeled as tequila. Currently, the 

Mexican standard requires that only “100 

percent agave” tequila be bottled at the source. 

Tequila other than 100 percent agave tequila can 

be sold and exported in bulk form under the 

current official standard. Following 

consultations with the United States, Mexico 

agreed to withdraw the bottling at source 

requirement. The revised draft standard, 

published for public comment on November 15, 

2004, would require all tequila bottlers to 

register with the Mexican government, and be 

subject to inspections. U.S. and Canadian 

officials have been meeting with their Mexican 

counterparts in order to negotiate an agreement 

that would ensure that any action taken by 

Mexico pursuant to the standard is not 

inconsistent with its international obligations. 

3. Brazil and the Southern Cone 

a. Mercosur (Argentina, Brazil, 

Paraguay, and Uruguay) 

The Common Market of the South, referred to as 

“Mercosur” from its Spanish acronym, is the 

largest trade bloc in Latin America. As a 

customs union, Mercosur is a free trade area that 

applies a common external tariff (CET) to 

products of nonmembers. Its members 

(Argentina, Brazil, Paraguay, and Uruguay) 

make up over one-half of Latin America’s gross 

domestic product. Bolivia, Chile, Colombia, 

Ecuador, Peru, and Venezuela are associate 
III. Bilateral and Regional Negotiations| 168 

members. They benefit from certain preferential 

access to MERCOSUR markets, but maintain 

their own external tariff policies. MERCOSUR 

became operative on January 1, 1995, and 

covers some 85 percent of intra-Mercosur trade, 

with each member allowed to maintain a list of 

sensitive products which remain outside the 

duty-free arrangement. Members aim to 

converge their individual tariff schedules to the 

CET by January 1, 2006. The four Mercosur 

countries generally act as a group in the context 

of the negotiations for a Free Trade Area of the 

Americas. 

b. Argentina 

U.S. goods exports to Argentina were an 

estimated $3.5 billion in 2004,47 up 45 percent 

from 2003, continuing their recovery after a 

substantial decline in recent years. The overall 

bilateral trade was an estimated $7.0 billion, and 

the U.S. deficit was estimated to be $170 million 

in 2004, down from a deficit of $730 million in 

2003. A key factor in the Argentine economy is 

its trade with Brazil, Argentina’s number one 

trading partner. 

Intellectual Property Rights (IPR): Argentina’s 

intellectual property rights regime fails to fulfill 

long-standing commitments to the United States 

and concerns remain as to whether their IPR 

regime meets certain TRIPS standards. Failure 

to provide adequate protection for copyright and 

patents has led to Argentina’s placement on the 

Special 301 Priority Watch List through 2004. 

In 1997, the United States withdrew 50 percent 

of Argentina’s benefits under the U.S. GSP 

program primarily due to patent protection 

concerns, and benefits will not be restored 

unless the concerns of the United States are 

addressed adequately. In May 1999, the United 

States initiated a WTO case against Argentina 

because of its failure to protect patents and test 

data. The United States substituted additional 

claims to this case in May 2000, due to the fact 

that the TRIPS Agreement became fully 

applicable for Argentina in the year 2000. The 

establishment of the Bilateral Committee on 

 

47 Annualized based on 10 months’ data. 

Trade and Investment (BCTI) gave the two 

countries a vehicle to address various bilateral 

trade issues. 

As a result of the April 24, 2002 meeting of the 

BCTI, the United States and Argentina finalized 

the elements of a joint notification to the WTO 

regarding the dispute on intellectual property 

matters. In the joint notification, Argentina 

clarified how certain aspects of its intellectual 

property system operate so as to conform to the 

TRIPS Agreement. In addition, Argentina 

amended its patent law to provide for process 

patent protection and to ensure that preliminary 

injunctions are available in intellectual property 

court proceedings, among other amendments. 

Finally, on the remaining issues, including that 

of data protection, the United States retains its 

right to seek resolution under the WTO dispute 

settlement mechanism, and consultations 

continue with respect to these issues. 

c. Brazil 

The United States exported goods valued at an 

estimated $14.2 billion to Brazil in 2004.48 

Brazil’s market accounts for 23 percent of U.S. 

annual exports to Latin America and the 

Caribbean excluding Mexico, and 63 percent of 

U.S. goods exports to Mercosur.49 In September 

2004, the United States and Brazil met under the 

auspices of the Bilateral Consultative 

Mechanism to discuss intellectual property 

rights (see below), WTO negotiations, SPS 

issues, and complaints by U.S. industry 

regarding the ICMS (a value added tax collected 

by individual Brazilian states). 

Intellectual Property Rights (IPR): The United 

States shares concerns, voiced by U.S. industry, 

about the high levels of piracy and 

counterfeiting in Brazil, the lack of effective 

enforcement of copyright protection (especially 

for sound recordings and movies), and the lack 

of significant progress processing the backlog of 

pending patent applications. On June 30, 2004, 

the Administration announced that it would 

 

48 Annualized based on 10 months’ data. 

49 Defined as Merc 6—Argentina, Brazil, Paraguay, 

Uruguay, Bolivia, and Chile. 
III. Bilateral and Regional Negotiations| 169 

continue to review Brazil’s eligibility for GSP 

for a ninety-day period, which concluded on 

September 30, in response to a petition filed by 

the International Intellectual Property Alliance 

(IIPA) to remove Brazil’s GSP benefits due to 

its failure to offer adequate protection to 

copyrighted materials, in particular sound 

recordings. In a series of meetings during that 

period, the United States and Brazil examined 

both steps taken and future plans to strengthen 

and improve copyright enforcement. As a result 

of these discussions, a number of key priorities 

and actions to combat copyright piracy through 

enforcement of existing laws have been 

identified. Accordingly, the United States and 

Brazil expect to maintain a dialogue on 

developments in this critical area. In the 

meantime, the review of the petition has been 

formally extended through March 31, 2005 in 

order to assess Brazil’s progress. 

d. Paraguay 

With a population of just over six million, 

Paraguay is one of the smaller markets in Latin 

America. In 2004, the United States exported an 

estimated $603 million worth of goods to 

Paraguay.50 Paraguay is a major exporter of, 

and a transshipment point for, pirated and 

counterfeit products in the region, particularly to 

Brazil. 

Intellectual Property Rights (IPR): In January 

1998, the USTR identified Paraguay as a 

“Priority Foreign Country” (PFC) under the 

“Special 301" provisions of the Trade Act of 

1974. The USTR initiated an investigation of 

Paraguay in February 1998. 

During investigations under Special 301, 

Paraguay indicated that it had undertaken a 

number of actions to improve IPR protection. In 

November 1998, in light of commitments made 

by Paraguay in a bilateral Memorandum of 

Understanding (MOU), USTR concluded its 

Special 301 investigation. In December 2003, 

the two governments revised and extended the 

term of the MOU. Paraguay has made a 

 

50 Annualized based on 10 months’ data. 

significant effort to implement the MOU, signed 

in March 2004, and met regularly with the 

United States under the auspices of the Bilateral 

Council on Trade and Investment (see below) to 

discuss MOU implementation. 

U.S.-Paraguay Bilateral Council on Trade and 

Investment: In 2004, the Bilateral Council on 

Trade and Investment met four times to discuss 

a wide range of issues including efforts to 

increase transparency in government-business 

relationships, implementation of the IPR MOU, 

and ongoing cooperation toward a strategic plan 

for Paraguay to develop non-traditional exports. 

e. Uruguay 

With the smallest population of Mercosur (3.4 

million), Uruguay nonetheless imported an 

estimated $325 million of goods from the United 

States in 2004.51 The United States has been 

meeting with Uruguay under the auspices of the 

United States-Uruguay Joint Commission on 

Trade and Investment (JCTI) since April 2002. 

The JCTI has been a forum to discuss deepening 

trade relations as well as to work toward 

resolution of bilateral irritants. During JCTI 

meetings in May 2004, the two countries 

discussed sanitary and phytosanitary issues and 

the United States made presentations on the 

Container Security Initiative and U.S. textiles 

trade policy. The decision to negotiate a 

Bilateral Investment Treaty (BIT) sprang from 

the work of the JCTI. The United StatesUruguay BIT, which was signed on October 25, 

2004, was the first BIT concluded by the United 

States on the basis of its 2004 model BIT text. 

Like the investment chapters of recent FTAs, the 

United States-Uruguay BIT includes several key 

provisions that respond to the investment 

negotiating objectives set forth by Congress in 

the Trade Promotion Act of 2002. The core 

provisions of the United States-Uruguay BIT 

will give U.S. investors a number of critical 

protections when they establish businesses in 

Uruguay, including non-discriminatory 

treatment, the ability to transfer funds relating to 

 

51 Annualized based on 10 months’ data. 
III. Bilateral and Regional Negotiations| 170 

their investments, and access to binding 

international arbitration of investment disputes. 

f. Chile 

 

United States -Chile bilateral trade relations in 

2004 were dominated by the implementation of 

an FTA as discussed at the beginning of this 

Chapter. 

4. The Andean Community 

a. The Andean Region 

 The U.S. goods trade deficit with the 

Andean region (comprising Bolivia, Colombia, 

Ecuador, Peru and Venezuela) increased from 

$13.6 billion in 2002 to an estimated $18.5 

billion in 2003 (2003 based on annualized 11 

month data). U.S. goods exports to the region 

were an estimated $9.6 billion in 2003, a decline 

of 15.8 percent from 2002. 

i. U.S.-Andean Free Trade Agreement 

Negotiations 

 

See Chapter III, Section A for discussion of 

these negotiations. 

 

ii. Andean Trade Preference Act 

The U.S. trade relationship with the Andean 

countries is currently conducted in the 

framework of the unilateral trade preferences of 

the Andean Trade Preference Act (ATPA), as 

amended by the Andean Trade Promotion and 

Drug Eradication Act (ATPDEA). Congress 

enacted the ATPA in 1991 in recognition of the 

fact that regional economic development is 

necessary in order for Bolivia, Colombia, 

Ecuador and Peru to provide economic 

alternatives for the illegal drug trade, promote 

domestic development, and thereby solidify 

democratic institutions. The ATPDEA was 

signed into law on August 6, 2002 as part of the 

Trade Act of 2002. The program provides 

enhanced trade benefits for the four ATPA 

beneficiary countries. 

The original ATPA expired in 2001. The 

ATPDEA retroactively restored the benefits of 

the ATPA, providing for retroactive 

reimbursement of duties paid during the lapse. 

In addition, the original ATPA included 

prohibitions on the extension of duty-free 

treatment in several sectors: textiles, apparel, 

footwear, leather, tuna in airtight containers, and 

certain other items. The ATPDEA expanded the 

list of items eligible for duty-free treatment by 

about 700 products. 

 

The most significant expansion of benefits in the 

ATPA, as amended by the ATPDEA, is in the 

apparel sector. Apparel assembled in the region 

from U.S. fabric or fabric components or 

components knit-to-shape in the United States 

may enter the United States duty-free in 

unlimited quantities. Apparel assembled from 

Andean regional fabric or components knit-toshape in the region may enter duty-free subject 

to a cap. The cap is set at 2 percent of total U.S. 

apparel imports, increasing annually in equal 

increments to 5 percent. Apparel imports under 

ATPA accounted for nearly 13 percent of U.S. 

imports under ATPA in January-August 2003 

and for 67 percent of all apparel imports from 

the region during the 2003 period. New 

products benefiting from the program include: 

tuna in pouches, leather products, footwear, 

petroleum and petroleum products, and watches 

and watch parts. 

 

iii. ATPDEA Eligibility 

The ATPA established a number of criteria that 

countries must meet in order to be designated as 

eligible for the program. The ATPDEA added 

further eligibility criteria and provided for an 

annual review of the countries’ eligibility. The 

new criteria relate to issues such as intellectual 

property rights, worker rights, government 

procurement procedures, and cooperation on 

countering narcotics and combating terrorism. 

USTR initiated the 2004 ATPA Annual Review 

through a notice in the Federal Register dated 

August 17, 2004. USTR received petitions to 

review certain practices in certain beneficiary 

developing countries to determine whether such 

countries were in compliance with the ATPA 
III. Bilateral and Regional Negotiations| 171 

eligibility criteria. Petitions were filed to 

address issues in Ecuador and Peru such as 

contract nullification and failure to follow WTO 

rules. In addition, USTR kept under review 

certain of the petitions that had been filed in the 

2003 ATPA Annual Review, as they concerned 

matters for which a resolution was still pending. 

In 2004, the ATPA process helped resolve 

certain investor disputes with Colombia and 

Ecuador worth about $100 million, and fostered 

improved enforcement of laws against child 

labor in Ecuador. 

5. Central America and the 

Caribbean 

a. Free Trade Agreement with Central 

America and the Dominican Republic 

See Chapter III, Section A for a discussion of 

this topic 

b. Central America 

CACM: The United States is Central America's 

principal trading partner. U.S. exports to these 

countries totaled $10.8 billion in 2003. The 

Central American Common Market (CACM) 

consists of Costa Rica, El Salvador, Guatemala, 

Honduras, and Nicaragua, and provides dutyfree trade for most products traded among the 

five countries. Panama, which has observer 

status, and Belize participate in CACM summits, 

but not in regional trade integration efforts. The 

Central American countries focused largely on 

CAFTA-DR negotiations during 2004, but 

continued less actively to pursue a range of 

bilateral and regional trade agreements. Canada 

has an FTA with Costa Rica, and negotiations 

with El Salvador, Guatemala, Honduras and 

Nicaragua made some progress after the 

completion of the CAFTA. Negotiations for a 

Panama-CACM free trade agreement have 

resulted in agreement on common disciplines. 

All of the countries are participants in the FTAA 

negotiations. 

Panama: The United States and Panama have 

strong, long-standing commercial and economic 

ties. Bilateral trade between the United States 

and Panama totaled $2.1 billion in 2003, of 

which U.S. exports accounted for $1.8 billion. 

January-October 2004 figures showed an 

increase in U.S. exports to Panama over the 

same period in 2003, with projected 2004 

exports totaling $1.9 billion. Panama receives 

about fifty percent of its imports from the United 

States. In addition, the United States holds 

approximately $6.5 billion in foreign direct 

investment in Panama, in sectors such as 

finance, maritime and energy. 

As evidence of their mutual commitment to 

deeper trade relations, the United States and 

Panama launched negotiations on a bilateral 

United Sates-Panama Free Trade Agreement in 

April 2004. Six rounds of negotiations were 

held during 2004. 

Throughout 2003, the United States continued to 

meet with Panama under the existing Trade and 

Investment Council (TIC) mechanism, 

advancing the ongoing work program, including 

investment issues. These meetings served to 

prepare the bilateral relationship for the launch 

of FTA negotiations by helping to resolve a 

range of outstanding bilateral issues. 

Panama is a participant in the FTAA and during 

2004 served as chair for the Negotiating Group 

on Investment. 

c. Caribbean Basin Initiative 

During 2004, the trade programs collectively 

known as the Caribbean Basin Initiative (CBI) 

remained a vital element in the U.S. economic 

relations with its neighbors in Central America 

and the Caribbean. CBI was initially launched 

in 1983 through the Caribbean Basin Economic 

Recovery Act (CBERA), and was substantially 

expanded in 2000 through the United States - 

Caribbean Basin Trade Partnership Act 

(CBTPA). The Trade Act of 2002 increased the 

type and quantity of textile and apparel articles 

eligible for the preferential tariff treatment 

accorded to designated beneficiary CBTPA 

countries. Among other actions, the Trade Act of 

2002 extended duty-free treatment for clothing 

made in beneficiary countries from both U.S. 

and regional inputs, and increased the quantity 
III. Bilateral and Regional Negotiations| 172 

of clothing made from regional inputs that 

regional producers can ship duty-free to the 

United States annually. 

In 2004, the Administration continued to work 

with Congress, the private sector, CBI 

beneficiary countries, and other interested 

parties to ensure a faithful and effective 

implementation of this important expansion of 

trade benefits. The United States concluded 

negotiations and signed a free trade agreement 

with several CBI beneficiaries, as called for in 

the legislation, notably El Salvador, Guatemala, 

Honduras, Nicaragua, Costa Rica, and the 

Dominican Republic. The agreement maintains 

the level of access that the Central American 

countries and the Dominican Republic enjoy 

under the CBI program, while simultaneously 

opening their markets to U.S. products. In the 

second quarter of 2004, USTR launched FTA 

negotiations with Panama. 

Since its inception, the CBERA program has 

helped beneficiaries diversify their exports. On 

a region-wide basis, this export diversification 

has led to a more balanced production and 

export base and has reduced the region's 

vulnerability to fluctuations in markets for 

traditional products. Since 1983, the year prior 

to the implementation of the CBI, total CBI 

country non-petroleum exports to the United 

States have more than tripled. Light 

manufactures, principally printed circuit 

assemblies and apparel, but also medical 

instruments and chemicals, account for an 

increasing share of U.S. imports from the region 

and constitute the fastest growing sectors for 

new investment in CBERA countries and 

territories. 

Apparel remains one of the fastest growing 

categories of imports from the CBI countries and 

territories - growing from just 5.5 percent of 

total U.S. imports from the region in 1984, to 

nearly 40 percent in 2003, valued at over $9.7 

billion. The CAFTA-DR provisions for textiles 

and apparel were specifically crafted to 

encourage integration of the North and Central 

American industries to prepare for an 

increasingly competitive global market. 

 

The CBI program currently provides 24 

beneficiary countries and territories with dutyfree access to the U.S. market. They are: 

Antigua and Barbuda, Aruba, The Bahamas, 

Barbados, Belize, British Virgin Islands, Costa 

Rica, Dominica, Dominican Republic, El 

Salvador, Grenada, Guatemala, Guyana, Haiti, 

Honduras, Jamaica, Montserrat, Netherlands 

Antilles, Nicaragua, Panama, St. Kitts and 

Nevis, St. Lucia, St. Vincent and the 

Grenadines, and Trinidad and Tobago. When 

the CAFTA-DR enters into force, Costa Rica, 

the Dominican Republic, El Salvador, 

Guatemala, Honduras, and Nicaragua will 

graduate from the CBI program, although the 

CAFTA-DR will provide market access that is 

the same or better than the access provided 

under the CBI program. On implementation of 

the CAFTA-DR, the Central American countries 

and the Dominican Republic will move to a 

trading relationship with the United States that is 

more comprehensive, liberalizing, and built on 

mutual benefits. 

d. The Caribbean 

The Dominican Republic: The Dominican 

Republic is the largest single U.S. trading 

partner in the CBI region, with bilateral trade of 

$8.7 billion in 2003. Reflecting the importance 

of this trade relationship, the United States 

undertook negotiations with the Dominican 

Republic, between January and March 2004, to 

integrate that country into the free trade 

agreement already negotiated with Central 

America. On August 5, 2004, the United States, 

the Dominican Republic and the five Central 

American countries together signed the CAFTADR. The United States and the Dominican 

Republic had revitalized the Trade and 

Investment Council (TIC) mechanism and held 

productive meetings under the TIC during 2002 

and 2003, covering both bilateral issues and 

cooperation in the FTAA and WTO 

negotiations, which helped prepare both sides to 

begin FTA negotiations in January 2004. 

The Dominican Republic continues to lead all 

countries in taking advantage of CBI, as they 

have done in virtually every year since the 

program became effective, accounting for 25 
III. Bilateral and Regional Negotiations| 173 

percent of U.S. imports under CBI provisions. 

The Dominican Republic does not belong to any 

regional trade association, but has negotiated 

trade agreements with its partners in Central 

America and CARICOM. 

Unilateral liberalization and fiscal reform efforts 

have made the Dominican Republic one of the 

fastest growing economies over the last decade 

and an economic engine in the Caribbean Basin. 

The Dominican Republic’s strong trade relations 

within the Caribbean, (including with 

neighboring Puerto Rico) and with Central 

America, establish it as an economic bridge 

within the region. The CAFTA-DR reflects the 

Dominican Republic’s central role and firm 

commitment to further liberalization of its 

already relatively open trade and investment 

regime. The Dominican Republic has also 

worked with the United States to advance 

common objectives in the FTAA negotiations 

and was chair of the FTAA Negotiating Group 

on Intellectual Property. 

CARICOM: Members of the Caribbean 

Community and Common Market (CARICOM) 

are: Antigua and Barbuda, The Bahamas, 

Barbados, Belize, Dominica, Grenada, Guyana, 

Haiti, Jamaica, Montserrat, Saint Kitts and 

Nevis, Saint Lucia, Saint Vincent and the 

Grenadines, Suriname, and Trinidad and 

Tobago. In theory, CARICOM is a customs 

union rather than a common market. However, 

progress towards a customs union, which would 

involve the elimination of all internal tariffs, 

remains limited. 

CARICOM countries participate in the FTAA 

negotiations and the United States works with 

them on the Doha Development Agenda. In 

addition, the United States works with 

CARICOM countries on trade capacity building 

initiatives. 

D. Europe 

Overview 

The U.S. economic relationship (measured as 

trade plus investment) with Europe is the largest 

and most complex in the world. Due to the size 

and the highly integrated nature of the 

transatlantic economic relationship, serious trade 

issues inevitably arise. Even when small in 

dollar terms, especially compared with the 

overall value of transatlantic commerce, these 

issues can nonetheless take on significance for 

their precedent-setting impact on U.S. trade 

policies. 

U.S. trade relations with Europe are dominated 

by its relations with the European Union (EU). 

From its origins in the 1950s, the EU has grown 

from 6 to 25 Member States, with Cyprus, the 

Czech Republic, Estonia, Hungary, Latvia, 

Lithuania, Malta, Poland, the Slovak Republic 

and Slovenia becoming the newest members on 

May 1, 2004. The addition of these 10 members 

has brought the EU considerably closer to a 

single market encompassing the entire European 

continent, although important EU institutional 

questions associated with enlargement still need 

to be resolved. The EU currently constitutes a 

market of some 450 million consumers with a 

total gross domestic product of more than $11 

trillion. U.S. goods exports in 2004 were $167 

billion and U.S. exports of private commercial 

services (i.e., excluding military and 

government) to the European Union were $101 

billion in 2003 (latest data available). 

The EU has declared its intention to work 

toward the accession of additional European 

countries as long as they meet various political 

and economic criteria for EU membership. In 

this regard, the EU has nearly finished accession 

negotiations with Romania and Bulgaria 

(scheduled to join the Union in 2007), and is 

preparing to launch such negotiations with 

Croatia and Turkey in March and October 2005, 

respectively. 

The other major trade group within Europe is the 

European Free Trade Association (EFTA), 

which now includes Switzerland, Norway, 

Iceland, and Liechtenstein. Formed in 1960, 
III. Bilateral and Regional Negotiations| 174 

EFTA provides for the elimination of tariffs on 

manufactured goods and selected agricultural 

products that originate in, and are traded among, 

the member countries. The EFTA countries are 

linked to the EU through a free trade agreement. 

Norway, Iceland, and Liechtenstein have further 

structured their economic relations with the EU 

through the Agreement on the European 

Economic Area (EEA), which permits the three 

countries to participate in the EU Single Market. 

In practice, the EEA involves the adoption by 

non-EU signatories of approximately 70 percent 

of EU legislation. 

The United States has developed strong trade 

and investment links and actively supported 

political and economic reforms in countries of 

Southeast Europe (Romania, Bulgaria, Croatia, 

Albania, Bosnia-Herzegovina, Macedonia, and 

Serbia and Montenegro). With a strong trade 

framework in place, USTR and its interagency 

colleagues worked during 2004 to ensure that 

Southeast European countries satisfy their 

bilateral and multilateral trade obligations and 

meet the requirements of U.S. trade laws, such 

as those governing eligibility for participation in 

the GSP program. 

As a result of its 1996 Customs Union 

Agreement with the EU, Turkey imposes no 

duty on non-agricultural imports from EU and 

EFTA countries, but applies the EU’s common 

external customs tariff to third country 

(including U.S.) imports. 

 

1. European Union 

 

In 2004, USTR continued to devote considerable 

resources to addressing issues of trade concern 

with the EU and its individual Member States, as 

well as to promoting efforts to enhance the 

transatlantic economic relationship. Key issues 

included: 

a. Subsidies for Large Commercial 

Aircraft 

The United States has long expressed its 

concerns with European government 

subsidization of large commercial aircraft (LCA) 

development by Airbus Industries. The issue 

has acquired new urgency in recent years as 

Airbus sought and received substantial new 

official assistance (so-called “launch aid”) for 

the Airbus A380 super jumbo and has publicly 

stated an interest in further launch aid for its 

proposed A350 passenger jet. At a time when 

Airbus has begun delivering more aircraft than 

its U.S. rival, The Boeing Company, and in a 

difficult global business environment for 

producers of LCA, the United States believes 

that, if ever they were, subsidies to Airbus are no 

longer justified. Through 2004, USTR attempted 

to work with the European Commission to 

establish new trade rules aimed at eliminating 

LCA subsidies. The Commission’s initial 

reluctance to pursue such a goal led the United 

States to request initiation of dispute settlement 

procedures in the WTO (as the United States 

believes Airbus subsidies violate the WTO 

Agreement on Subsidies and Countervailing 

Measures). The EU requested its own WTO 

dispute settlement proceeding in relation to 

alleged U.S. federal and state government 

subsidies to Boeing. Against this backdrop, the 

two sides continued their discussions through 

the end of the year with the aim of exploring 

possibilities for a negotiated resolution. 

b. Geographical Indications 

In a report issued on December 21, 2004, a 

WTO panel agreed with the United States that 

the EU’s regulation on food-related geographical 

indications (GIs) is inconsistent with the EU’s 

obligations under the TRIPS Agreement and the 

GATT 1994. This report results from the United 

States’ long-standing complaint that the EU GI 

system discriminates against foreign products 

and persons – notably by requiring that EU 

trading partners adopt an “EU-style” system of 

GI protection -- and provides insufficient 

protections to trademark owners. In its report, 

the WTO panel agreed that the EC’s GI 

regulation impermissibly discriminates against 

non-EC products and persons. The panle also 

agreed with the United States that Europe could 

not, consistent with WTO rules, deny U.S. 

trademark owners their rights; it found that, 

under the regulation, any exceptions to 

trademark rights for the use of registered GIs 
III. Bilateral and Regional Negotiations| 175 

were narrow, and limited to the actual GI name 

as registered. The panel recommended that the 

EU amend its GI regulation to come into 

compliance with its WTO obligations. The 

United States requested WTO dispute 

consultations on this regulation in June 1999. 

On August 18, 2003, the United States requested 

the establishment of a panel, and panelists were 

appointed on February 23, 2004. The United 

States anticipates that the panel’s report will be 

circulated to WTO Members and the public in 

mid-March 2005. 

Separately, the United States continues to have 

concerns about the EU’s regime concerning 

geographical indications for wine and spirits -- 

including Council Regulation 1493/99. 

c. Agricultural Biotechnology 

Product Approval Moratorium: In May 2003, 

the United States initiated a WTO dispute 

settlement process related to the EU’s de facto 

moratorium on approvals of agricultural 

biotechnology products and the existence of 

individual Member State marketing prohibitions 

on agricultural biotechnology products 

previously approved at the EU level. Since that 

time, an initial round of consultations has been 

held, followed by the formation of a panel to 

consider the case. The first panel meeting was 

in June 2004. A second panel meeting is 

expected in February 2005, with a final report 

expected in the spring or summer of 2005. 

The EC took action on some pending 

agricultural biotechnology crop petitions in 2004 

for products imported for the purposes of 

processing, animal feed, and food use. These 

were the first approvals made by the 

Commission since 1998. The approval process, 

however, is not yet grounded on scientific 

principles. It has not proved possible to 

assemble in the Council of Ministers a qualified 

majority of EU Member States to support 

product approvals, despite the lack of any 

science-based health or safety reason to reject 

them. The Council of Ministers has not acted on 

product applications, which have been approved 

by the relevant scientific committees on the 

Commission. Therefore, after two lengthy 

periods of consideration by the Council, 

petitions have been sent back to the Commission 

for final adjudication (the Commission approved 

both petitions). No approval for cultivation has 

yet made it through the process. 

Several EU Member States, including Austria, 

Luxembourg, and Italy, continue to maintain 

their national marketing bans on some 

biotechnology products despite existing EU 

approvals. After more than five years in some 

cases, the Commission has begun to take steps to 

overturn these bans. Despite the lack of 

scientific justification for the bans, the Council 

regulatory committee refused to lift them in 

December 2004. The bans will be considered by 

the Council of Ministers in early 2005. 

Traceability and Labeling Requirements: In 

April 2004, EC Regulations 1829/2003 and 

1830/2003 governing the traceability and 

labeling of biotechnology food and feed entered 

into force. The regulations include mandatory 

traceability and labeling requirements for all 

agricultural biotechnology and downstream 

products. In some cases, these directives have 

already severely restricted market access for 

U.S. food suppliers, because food producers 

have reformulated their products to exclude 

agricultural biotechnology products inputs. The 

regulations are expected to have a negative 

impact on a wide range of U.S. processed food 

exports. 

d. Customs Administration Procedures 

While the customs law of the EU is set forth in 

the Community Customs Code, the EU does not 

in fact currently operate as a single customs 

administration. Administration of the 

Community Customs Code is the responsibility 

of EU Member State customs administrations, 

which do not have identical working practices 

and are not obliged to follow each other’s 

decisions. 

The difficulties presented by non-uniform 

administration are exacerbated by the absence of 

any forum for prompt EU-wide review and 

correction of customs decisions. Review by the 

European Court of Justice of national decisions 
III. Bilateral and Regional Negotiations| 176 

regarding customs administrative matters may 

be available in some cases, but generally only 

after an affected party proceeds through multiple 

layers of member state domestic court review. 

Obtaining corrections with EU-wide effect for 

administrative actions relating to customs 

matters may take years. 

U.S. concern with these issues has been 

heightened by the May 2004 enlargement of the 

EU from 15 Members to 25 Members. In light 

of this heightened concern, the United States in 

September 2004 asked for consultations under 

the WTO’s dispute settlement rules in an effort 

to address the systemic problems surrounding 

EU customs administration. Consultations were 

held on November 16, 2004, but failed to 

resolve the dispute. On January 13, 2005, the 

United States asked the WTO to form a dispute 

settlement panel. 

e. Enhancing Transatlantic Economic 

Relations 

The huge size, advanced integration, and 

generally robust health of the transatlantic trade 

and investment relationship have provided an 

anchor of prosperity for both sides of the 

Atlantic, even as economic conditions in other 

parts of the world fluctuate. Recognizing the 

benefits of preserving and enhancing these 

productive ties, the United States and the EU for 

some time have been interested in exploring 

ways to create new opportunities for 

transatlantic economic activity. The 1995 New 

Transatlantic Agenda, 1998 Transatlantic 

Economic Partnership and 2002 Positive 

Economic Agenda initiatives, all launched at 

various U.S.-EU Summits, had as their common 

goal the deepening and systematizing of bilateral 

cooperation in the economic field. 

At the June 2004 U.S.-EU Summit at 

Dromoland Castle, Ireland, President Bush, 

Commission President Prodi and Irish Prime 

Minister Ahearn agreed to the Joint Declaration 

on Strengthening Our Economic Partnership, 

which is aimed at promoting a fresh look at 

transatlantic trade and investment ties. The 

immediate objective of the Declaration was to 

initiate a government discourse with business, 

labor, consumer and other elements of civil 

society on concrete ways for governments to 

improve U.S.-EU economic interaction. The 

results of these consultations with stakeholders 

on both sides of the Atlantic will be factored into 

renewed government-to-government discussions 

in advance of the 2005 U.S.-EU Summit. 

Meanwhile, work continues on individual 

components of earlier Summit initiatives; this 

work will provide a foundation on which to base 

additional efforts in the coming months and 

years. (See sections on Regulatory Cooperation 

and Poultry Meat below.) 

f. Regulatory Cooperation

 

As traditional trade and investment barriers have 

declined in recent years, specific trade obstacles 

arising from divergences in U.S. and EU 

regulations and the lack of transparency in the 

EU rulemaking and standardization processes 

have grown relatively greater in importance. 

USTR continued efforts in 2004 to enhance 

U.S.-EU regulatory cooperation and reduce 

unnecessary “technical” barriers to transatlantic 

trade. 

At the June 2004 US-EU Summit, President 

Bush and his EU counterparts welcomed the 

Roadmap for U.S.-EU Regulatory Cooperation. 

This Roadmap builds on the 2002 U.S.-EU 

Guidelines for Regulatory Cooperation and 

Transparency that outlined specific cooperative 

steps for enhanced bilateral dialogues, including 

early and regular consultations, extensive data 

and information exchanges, and sharing of 

contemplated regulatory approaches. The 

Regulatory Cooperation Roadmap provides a 

framework for U.S. and EU officials to 

cooperate on a broad range of important areas 

such as pharmaceuticals, automotive safety, 

information and communications technology, 

cosmetics, consumer product safety, chemicals, 

nutritional labeling, and eco-design of 

electrical/electronic products. Through targeted 

U.S.-EU regulatory consultations, we aim to 

promote better quality regulation, minimize 

regulatory divergences, and facilitate 

transatlantic commerce. 
III. Bilateral and Regional Negotiations| 177 

In February 2004, the United States and the EU 

signed a new, precedent-setting mutual 

recognition agreement (MRA) on marine 

equipment, under which designated U.S. 

equipment which meets all U.S. requirements can 

be marketed in the EU without additional testing. 

This agreement entered into force on July 1, 

2004. The United States also continues to pursue 

implementation of the 1998 U.S.-EU Mutual 

Recognition Agreement (MRA). The annexes on 

telecommunications equipment, electromagnetic 

compatibility (EMC), and recreational craft are 

fully operational. We continue to work with the 

European Commission on bringing the medical 

device annex into operation. 

g. Foreign Sales Corporation Tax Rules 

 

On October 14, 2004, Congress passed the 

American Jobs Creation Act (AJCA), designed 

in part to repeal the Foreign Sales 

Corporation/Extraterritorial Income Exclusion 

Act (FSC/ETI) tax rules that the WTO had 

found to constitute an illegal export subsidy. 

Unfortunately, the European Commission in 

November 2004 asked the WTO once again to 

review the United States’ steps to comply with 

the January 29, 2002 WTO ruling. The 

Commission based its request on its 

dissatisfaction with transition provisions built 

into the ACJA, including a two year phase-out 

of the FSC/ETI rules and the grandfathering of 

certain pre-existing private contracts. These 

transition provisions are standard tools utilized 

in U.S. tax law and are of limited commercial 

value. The General Affairs and External 

Relations Council adopted, without debate, a 

Regulation outlining that additional duties on 

U.S. products will be lifted and as of January 1, 

2005, and will only take effect again on January 

1, 2006 or 60 days after (whichever date is later) 

the DSB rules that the American Jobs Creation 

Act of 2004 is incompatible with WTO law. 

The Regulation entered into force on February 1 

(Council Regulation (EC) No 171 / 2005). The 

Commission’s proposal provides for an 

automatic re-imposition of the sanctions if the 

WTO does find non-compliance. The United 

States believes the AJCA, providing as it does 

for a major reform of U.S. tax rules in order to 

meet WTO requirements, should satisfactorily 

address EU concerns and that EU retaliatory 

sanctions should now be lifted in their entirety. 

(For more information on this dispute, see 

Chapter II.) 

h. Chemicals 

The EU is developing a comprehensive new 

regulatory regime for all chemicals (known as 

REACH) that would impose extensive additional 

testing and reporting requirements on producers 

and downstream users of chemicals. The 

expansive EU proposal could impact virtually all 

industrial sectors, including the majority of U.S. 

manufactured goods exported to the EU. 

While supportive of the EU’s objectives of 

protecting human health and the environment, 

during 2004 the United States continued to stress 

with the EU that this draft regulation adopts a 

particularly complex approach, which appears to 

be neither workable nor cost-effective in its 

implementation, and could adversely impact 

innovation and disrupt global trade. Many of the 

EU’s trading partners have expressed similar 

concerns. The proposal also appears to depart 

from ongoing international regulatory 

cooperation efforts. We will continue to 

monitor closely revisions to this draft regulation, 

and remain engaged constructively with the EU 

to ensure that U.S. interests are protected. 

 

i. Ban on Growth Promoting Hormones in 

Meat Production 

The EU continues to ban the import of U.S. beef 

obtained from cattle treated with growthpromoting hormones. In 1996 the United States 

challenged this ban in the WTO and in June 

1997, a WTO panel ruled in favor of the United 

States on the basis that the EU’s ban was 

inconsistent with the EU’s obligations under the 

WTO Agreement on the Application of Sanitary 

and Phytosanitary Measures (SPS Agreement) 

because the EU failed to provide an adequate 

scientific risk assessment. This finding was 

upheld by a WTO Appellate Body in 1998, and 

in 1999, the WTO authorized U.S. trade 

retaliation because the EU failed to comply with 

the WTO rulings. 
III. Bilateral and Regional Negotiations| 178 

In September 2003, the EU announced the entry 

into force of an amendment to its original 

hormone directive, which recodified the ban on 

the use of estradiol for growth promotion 

purposes and extended the provisional bans on 

the five other growth hormones included in the 

original EU legislation. With enforcement of 

this new Directive, the EU argued that it was 

now in compliance with the earlier WTO ruling. 

 

At present, the United States continues to apply 

100 percent duties on $116.8 million of U.S. 

imports from the EU. The United States 

maintains its WTO-authorized sanctions on EU 

products because the United States fails to see 

how the revised EC measure could be 

considered to implement the recommendations 

and rulings of the DSB in this matter. 

On December 16, 2004, the EU held 

consultations with the United States on this issue 

in Geneva. On January 13, 2005, the EC 

requested establishment of a panel to consider its 

complaint against the United States for 

maintaining its sanctions on EU exports. 

j. Poultry Meat 

U.S. poultry meat exports to the EU have been 

banned since April 1, 1997, because U.S. poultry 

producers currently use washes of lowconcentration chlorine as an anti-microbial 

treatment (AMT) to reduce the level of 

pathogens in poultry meat production, a practice 

not permitted by the EU sanitary regime. U.S. 

concerns with respect to poultry intensified in 

2004 as a result of EU enlargement and the 

application of EU restrictions in new Member 

States that had previously allowed entry of U.S. 

meat. In 2004, the United States made 

significant progress in its work with the EU to 

address differences between U.S. and EU food 

safety rules for poultry meat. The Commission 

audited a number of U.S. poultry plants which 

demonstrated the use of AMTs and the United 

States developed an action plan to demonstrate 

the equivalency of U.S. and EU on-farm 

manufacturing practices. The two sides are 

discussing the final details of a series of steps 

aimed at reopening the EU market to U.S. 

poultry meat products. 

k. Wine

Since the mid-1980s, U.S. wines have been 

permitted entry to the EU market through 

temporary exemptions from certain EU wine 

regulations. One such regulation requires wines 

imported into the EU to be produced using only 

certain wine-making practices. Other 

regulations require extensive certification 

procedures for imported wines and prohibit the 

use of wine names and grape varieties as 

regulated in the United States. Without 

derogations from these regulations, many U.S. 

wines would be immediately barred from 

entering the EU. U.S. wines that are produced 

with practices for which there are no EU 

derogations are already barred. EU derogations 

for U.S. wines were set to expire in December 

2003, but the EU has agreed to further extend 

the current arrangement until December 2005, 

pending conclusion of U.S.-EU wine 

negotiations for an agreement addressing these 

issues. 

Negotiations on a bilateral wine agreement 

continued throughout 2004. The United States 

is pressing the EU to provide U.S. wine makers 

equitable access to the EU wine market, 

particularly in light of Europe’s considerable 

surplus in wine trade with the United States. A 

key U.S. objective is EU acceptance of U.S. 

wine-making practices, to obviate the need for 

future short-term derogations. The United States 

also continues to press for: 1) approval of future 

U.S. wine-making practices; 2) minimizing EU 

wine import certification requirements; and 3) 

allowing the use on U.S. wine labels of certain 

wine terms and names in the EU. 

In 2002, the EU adopted a new wine labeling 

regulation (Commission Regulation No. 

753/2002). The regulation appears to be more 

trade restrictive than necessary to meet any 

legitimate objective, as it would prohibit the 

presentation on imported wine of information 

important for the marketing of wine unless 

certain conditions are met. In addition, the EU 

imposes restrictions on the use of traditional 

terms listed in the regulation, in some instances 

granting exclusive use of a term to an EU wine 
III. Bilateral and Regional Negotiations| 179 

in a manner akin to treating it like intellectual 

property. The United States does not recognize 

the concept of traditional terms as a form of 

intellectual property, nor is this a form of 

intellectual property recognized by the WTO 

Agreement on Trade-Related Intellectual 

Property Rights (TRIPS). EU authorities began 

fully enforcing the new regulation in March 

2004. 

l. Rice -- Margin of Preference 

In mid-2003, the EC notified the United States 

and other WTO Members of its intention to 

withdraw a key market access concession on rice 

made during the Uruguay Round. This 

concession, known as the Margin of Preference 

(MOP), replaced the EU’s pre-1995 variable 

levy system for rice to provide market access 

opportunities for rice imports into the EU. On 

September 1, 2004, the EU withdrew the MOP 

concession and replaced it with a bound tariff 

rate of 65 euros/metric ton for brown rice and 

175 euros/metric ton for milled rice. 

The United States is one of the leading suppliers 

of rice to the EU market, with exports averaging 

$90 million a year. While the EU has the right 

to modify its schedule of commitments under 

GATT Article XXVIII, the EU owes the United 

States compensation for removing the MOP 

concession. The United States entered into 

negotiations with the EC in September 2004 to 

find a resolution to this issue. If a resolution 

cannot be found, the United States may 

withdraw substantially equivalent concessions 

by March 1, 2005. 

m. EU Directive on Wood Packaging 

Material (WPM) 

In March 2005, the European Union (EU) plans 

to implement a new Directive on wood 

packaging material (WPM) that could affect up 

to $80 billion worth of U.S. agricultural and 

commercial exports to the EU that are shipped 

on wooden pallets or in wood packaging 

materials. The Directive, published by the 

European Commission on October 5, 2004, 

would place a debarking requirement in addition 

to heat treatment fumigation on WPM from the 

United States and other countries. The EU 

Directive is more restrictive than the 

international standard established by the 

International Plant Protection Convention 

(IPPC), Guidelines for Regulating Wood 

Packaging Material in International Trade 

(IPSM-15). 

At the October 2004 meeting of the WTO 

Committee on the Application of Sanitary and 

Phytosanitary Measures, the United States raised 

concerns with the EU’s new directive on solid 

wood packaging material. Several other 

members added their concerns to those 

expressed by the United States. The EU 

representative indicated that they would take 

these concerns to Brussels for consideration. 

The EU has not provided the United States with 

any scientific basis for its more restrictive 

standard. WTO Members are obliged under the 

WTO Sanitary and Phytosanitary Agreement to 

have a scientific basis when they impose 

standards that are more restrictive than 

international standards. IPPC members, 

including the EU, approved ISPM-15 to 

harmonize and safeguard WPM requirements in 

world trade. IPPC members approved specific 

treatments and the marking of WPM, but did not 

support a debarking requirement in the absence 

of a scientific justification. USG agencies 

continue to work with the EC and with EU 

Member States to suspend the debarking 

provision and refer the issue to IPPC. 

n. EU Enlargement 

Ten new Member States joined the EU on May 

1, 2004. U.S. concerns related to this 

enlargement include the Member States taking 

action to: (1) increase tariff rates as they apply 

the EU common external tariff; (2) withdraw or 

modify GATS services market access 

commitments and seek changes to various 

GATS MFN exemptions to align them with the 

EU’s existing GATS commitments; and (3) 

begin applying certain EU non-tariff barriers 

(such as sanitary and phytosanitary measures or 

other technical barriers). Further, there is 

continuing uncertainty surrounding how the EU 

will adjust tariff-rate quotas (TRQs) applied to 

EU imports of agricultural and fish products to 
III. Bilateral and Regional Negotiations| 180 

account for the expansion of the EU market as a 

result of enlargement. In 2004, the United 

States entered into negotiations with the EC 

about enlargement-related concerns, including 

within the framework of GATT provisions 

relating to the expansion of customs unions. 

While desiring a rapid and successful conclusion 

of negotiations to provide appropriate trade 

compensation, the U.S. retains its rights under 

GATT Article XXVIII to withdraw concessions 

on a substantially equivalent amount of EU 

products if an agreement cannot be reached. 

2. EFTA 

During 2004, USTR continued its constructive 

engagement with the EFTA States. In 

November 2004, the United States concluded 

negotiation of a mutual recognition agreement 

(MRA) with the EEA EFTA states (i.e., Norway, 

Iceland, and Liechtenstein) that covers 

telecommunications equipment, electromagnetic compatibility (EMC), and recreational 

craft. We expect to sign this agreement in early 

2005. We continue to negotiate a separate MRA 

on marine equipment with the EEA EFTA states 

that we aim to conclude by mid-2005. We are 

also looking to broaden U.S. engagement with 

the EFTA countries and explore ways to foster 

closer U.S.-EFTA trade and economic relations. 

3. Turkey 

a. General 

Although Turkey’s harmonization of its trade 

and customs regulations with those of the EU 

generally benefits third country exporters, 

Turkey maintains high tariff rates on many 

agricultural and food products to protect 

domestic producers. Turkey also levies high 

duties, as well as excise taxes and other 

domestic charges, on imported alcoholic 

beverages that increase wholesale prices by 

more than 200 percent. Turkey does not permit 

any meat or poultry imports. 

b. Investment 

While Turkey’s legal regime for foreign 

investment is liberal, private sector investment is 

often hindered, regardless of nationality, by: 

excessive bureaucracy; political and 

macroeconomic uncertainty; weaknesses in the 

judicial system; high tax rates; a weak 

framework for corporate governance; and 

frequent, sometimes unclear changes in the legal 

and regulatory environment. 

b. Intellectual Property 

While maintaining that it is in full compliance 

with its obligations under the WTO TRIPS 

agreement, Turkey does not have a patent 

linkage system in place to prevent generic drugs 

that infringe the Turkish patents of U.S. 

pharmaceutical companies from receiving 

marketing approval in Turkey. Turkey recently 

instituted a Registration Regulation for 

protecting confidential test data, but it is not 

retroactive to January 2000, when Turkey’s 

TRIPS obligations came into effect and has 

other provisions that may not be consistent with 

TRIPS requirements. Turkey issued a revised 

regulation on January 19, 2005 providing a sixyear term of data exclusivity protection for 

confidential pharmaceuticals test data effective 

January 1, 2005. The regulation contains major 

loopholes, which the United States is addressing 

with Turkey. Improving enforcement against 

copyright piracy and trademark infringement in 

Turkey also remains an issue. 

4. Southeast Europe 

a. EU Accession 

The United States has been strongly supportive 

of the integration of Bulgaria and Romania into 

the EU. As with previous accessions, USTR and 

other U.S. agencies have been working with 

Bulgaria and Romania to ensure that the 

accession process does not adversely affect U.S. 

commercial interests in the region. 

These countries, as well as Croatia, have 

concluded Europe Agreements with the EU, 

which set the stage for their EU membership. 

The Europe Agreements provide for the 
III. Bilateral and Regional Negotiations| 181 

reduction to zero of virtually all tariff rates on 

industrial goods and preferential rates and 

quotas for many agricultural goods traded 

between the EU and these countries. 

Subsequent agricultural agreements (the Zero -

Zero Agreements) have further reduced tariffs 

on the majority of agriculture goods. U.S. goods 

continue to face generally higher MFN tariff 

rates in these countries, creating a tariff 

differential vis a vis EU goods. 

Upon their entry into the European Union, these 

countries will adopt the EUs common external 

tariff rate (CXT), which will reduce some of 

these differentials, but raise tariffs in other areas. 

The United States has been consulting with 

Romania and Bulgaria to minimize the tariff 

differential problem in the interim period prior 

to accession. 

b. Generalized System of Preferences 

Most of the countries in this region participate in 

the U.S. Generalized System of Preferences 

(GSP) program, except Serbia and Montenegro 

which applied for eligibility in 2004. As 

required by the GSP statute, once a country has 

joined the EU, it loses its GSP eligibility. 

The GSP statute provides that a country may not 

receive GSP benefits if it affords preferential 

treatment to the products of a developed 

country, other than the United States, that has a 

significant adverse effect on U.S. commerce. As 

noted above, the United States has consulted 

with several countries concerning their granting 

preferential tariffs to EU exporters compared 

with U.S. exporters, pursuant to their Europe 

Agreements with the EU. USTR and the 

interagency GSP subcommittee are considering 

several petitions filed by U.S. industry groups 

requesting that Bulgaria and Romania be 

removed from the program because of the 

impact of tariff differentials on U.S. commerce. 

c. Intellectual Property Rights 

USTR closely monitors WTO Members=

compliance with the TRIPS Agreement, working 

to have countries improve enforcement of their 

IPR legislation, and counter trends such as 

increasing copyright piracy and trademark 

counterfeiting. The United States has provided 

technical assistance to help improve the level of 

IPR protection. For example, piracy and 

counterfeiting are growing problems in Bulgaria, 

which was placed on the Special 301 Watch List 

in 2004. USTR is working to encourage 

Bulgaria to reestablish the strong IP protection, 

including against optical disc piracy, that was in 

place several years ago. A top USTR priority in 

2004 remained protecting the confidential data 

submitted by pharmaceutical firms to 

government health authorities to obtain 

marketing approval. USTR and other agencies 

pressed Croatia to provide adequate protection 

for confidential test data, a commitment it made 

through a bilateral agreement concluded in 1998 

Memorandum of Understanding Concerning 

Intellectual Property Rights. Copyright piracy is 

a continuing problem in Romania. 

d. Bilateral Investment Treaties 

The United States has Bilateral Investment 

Treaties (BITs) in force with Albania, Bulgaria, 

Romania, and Croatia. 

E. Russia and the Newly 

Independent States 

The United States continues to actively support 

political and economic reforms in the Newly 

Independent States (NIS) (the Russian 

Federation, Ukraine, Armenia, Azerbaijan, 

Belarus, Georgia, Kazakhstan, Kyrgyzstan, 

Moldova, Tajikistan, Turkmenistan, and 

Uzbekistan). 

The United States has been striving to construct 

a framework for the development of strong trade 

and investment links with this region. This 

approach has been pursued both bilaterally and 

multilaterally. Bilaterally, the United States has 

negotiated trade agreements to extend Normal 

Trade Relations (formerly referred to as “mostfavored nation” or “MFN”) tariff treatment to 

these countries and to enhance intellectual 

property rights (IPR) protection. The United 

States also has extended GSP benefits to eligible 

developing countries and has negotiated bilateral 
III. Bilateral and Regional Negotiations| 182 

investment treaties (BITs) to guarantee 

compensation for expropriation, transfers in 

convertible currency, and the use of appropriate 

dispute settlement procedures. Multilaterally, 

the United States has encouraged accession to 

the WTO as an important method of supporting 

economic reform. Now that much of this 

framework is in place, USTR and its interagency 

colleagues are working to ensure that the NIS 

satisfy their bilateral and multilateral trade 

obligations. 

1. Normal Trade Relations Status 

Russia, Ukraine, and seven of the other NIS 

republics within the region receive conditional 

NTR tariff treatment pursuant to the provisions 

of Title IV of the Trade Act of 1974, also known 

as the Jackson-Vanik amendment. Under the 

Jackson-Vanik amendment, the President is 

required to deny NTR tariff treatment to any 

non-market economy that was not eligible for 

such treatment in 1974 and that fails to meet the 

statute’s freedom of emigration requirements 

contained in the legislation. This provision is 

subject to waiver, if the President determines 

that such a waiver will substantially promote the 

legislation’s objectives. Alternatively, through 

semi-annual reports, the President can determine 

that an affected country is in full compliance 

with the legislation’s emigration requirements. 

Affected countries must also have a trade 

agreement with the United States, including 

certain specified elements, in order to obtain 

conditional NTR status. 

The President has determined that Russia, 

Ukraine and all of the other NIS republics, with 

the exception of Belarus and Turkmenistan, are 

in full compliance with Title IV’s freedom of 

emigration requirements. Belarus and 

Turkmenistan receive NTR tariff treatment 

under an annual Presidential waiver. 

Turkmenistan became subject to an annual 

waiver in 2003, following the reimposition of an 

exit visa requirement. 

 

In 2000, pursuant to specific legislation, the 

President terminated application of Title IV to 

Kyrgyzstan, Albania and Georgia. These 

countries now receive permanent normal trade 

relations (PNTR) treatment. In 2004, Congress 

passed the Miscellaneous Trade and Technical 

Corrections Act of 2004 which authorized the 

President to terminate application of JacksonVanik to Armenia. On January 7, 2005, the 

President signed a proclamation terminating 

application of Jackson-Vanik to Armenia and 

granting PNTR tariff treatment to products of 

Armenia. The Administration continues to 

consult with the Congress and interested 

stakeholders with a view to removing Russia and 

the other NIS republics that comply fully with 

Jackson-Vanik ammendment’s freedom of 

emigration provisions from the coverage of Title 

IV’s provisions. 

If a country is still subject to Jackson-Vanik at 

the time of its accession to the WTO, the United 

States has invoked the “non-application” 

provisions of the WTO. In such cases, the 

United States and the other country in effect 

have no “WTO relations.” This situation, 

among other things, prevents the United States 

from bringing a WTO dispute based on a 

country’s violation of the WTO or of 

commitments the country undertook as part of 

its WTO accession package. (See Chapter II for 

further information.) Based on the President’s 

proclamation granting products from Armenia 

PNTR treatment, the United States and Armenia 

can apply the WTO between them and have 

recourse to WTO dispute settlement procedures. 

Among NIS countries still subject to JacksonVanik, Moldova is currently the only WTO 

Member for which the United States has invoked 

the WTO non-application provisions. 

 2. Intellectual Property Rights 

Since the United States has concluded bilateral 

agreements covering IPR protection throughout 

the NIS, USTR works to ensure compliance by 

these countries with their IPR obligations. In 

2000, the transitional period granted developing 

countries and formerly centrally planned 

economies for compliance with the WTO’s 

Agreement on Trade-Related Aspects of 

Intellectual Property Rights (TRIPS Agreement) 

expired. Accordingly, USTR has conducted a 

close examination of compliance of WTO 

Members in the region with the TRIPS 
III. Bilateral and Regional Negotiations| 183 

Agreement. The United States has cooperated 

with, and provided technical assistance to, the 

countries in the region to help improve the level 

of IPR protection. Copyright and trademark 

piracy has been a widespread and serious 

problem throughout much of the NIS. Customs 

and law enforcement authorities in the region are 

making slow progress in upgrading these 

countries’ enforcement efforts, but continued 

close monitoring and technical assistance are 

still warranted. 

Two countries in the region have IPR issues that 

merit special mention: 

a. The Russian Federation – 

Widespread Optical Media Piracy and Other 

Issues 

Piracy of U.S. copyrighted material, including 

films, videos, sound recordings, and computer 

software, is a growing problem in Russia, 

estimated by U.S. industry to exceed $1 billion 

annually. In April 2004, Russia was again placed 

on the Special 301 “Priority Watch List” 

because of deficiencies in both the protection 

and enforcement of IPR. Although Russia has 

revised a number of IPR laws, including those 

on the protection of copyrights, trademarks, 

patents, integrated circuits and plant varieties, 

Russia has not issued regulations on protection 

against unfair commercial use of undisclosed 

test data submitted to obtain marketing approval 

of pharmaceuticals and agricultural chemicals, a 

key requirement of the TRIPS Agreement. In 

addition, Russia needs to change its reciprocitybased system for registration and protection of 

geographic indications. 

Enforcement of IPR remains a pervasive 

problem. The prosecution and adjudication of 

intellectual property cases remains sporadic and 

inadequate; there is a lack of transparency and a 

failure to impose deterrent penalties. Russia’s 

customs administration also needs to 

significantly strengthen its enforcement efforts. 

In October 2002, as a result of U.S. efforts to 

work with Russia to address the growing optical 

media piracy problem, Russia established an 

inter-ministerial task force chaired by the 

Russian Prime Minister. Since the creation of 

this inter-ministerial commission, re-established 

after the March 2004 election, the Russian 

government has taken some steps to remedy the 

optical media piracy problem, including raids on 

several of the illegal plants in operation, but 

piracy remains rampant and the number of plants 

illegally producing optical media continues to 

grow. Immediate adoption of effective 

enforcement measures to address optical media 

piracy is necessary, including vigorous action 

against illegal optical media plants and the 

adoption of a comprehensive regulatory 

framework dealing with the production and 

distribution of optical media. 

 

b. Ukraine – Optical Media Piracy 

In 1999, U.S. industry estimated that Ukrainian 

pirates exported over 35 million pirated compact 

discs (CDs) to Europe and elsewhere. This 

represented over $200 million in lost revenues to 

the industry. In June 2000, Ukrainian President 

Kuchma committed to a plan of action to stop 

the unauthorized production of CDs and to enact 

legislation to outlaw such piracy by November 

1, 2000. However, due to Ukraine’s failure to 

pass an adequate optical disc licensing law, 

USTR designated Ukraine a Priority Foreign 

Country in March 2000 and initiated a Special 

301 investigation. In August 2001, USTR 

withdrew GSP beneficiary status from Ukraine. 

On December 11, 2001, USTR announced that 

the U.S. Government would impose 100 percent 

duties on a list of 23 Ukrainian products with an 

annual trade value of approximately $75 million 

contingent upon the outcome of a vote on an 

optical media licensing law in the Ukrainian 

Parliament scheduled for December 13, 2001. 

When Ukraine failed to adopt the optical media 

licensing law, USTR announced on December 

20, 2001 that the sanctions would take effect 

January 23, 2002. Ukraine has subsequently 

adopted an optical media licensing law, but due 

to flaws in the legislation, the sanctions 

currently remain in effect pending amendment to 

the optical medial licensing law to make it 

effective and further enforcement efforts on the 

part of the Ukrainian Government. 
III. Bilateral and Regional Negotiations| 184 

3. Generalized System of Preferences 

(GSP) 

Most of the NIS (Armenia, Georgia, Moldova, 

Kazakhstan, Kyrgyzstan, Russia and 

Uzbekistan) participate in the GSP program. In 

2004, Azerbaijan submitted an application for 

designation as a beneficiary country under the 

GSP program which is currently under 

consideration. Tajikistan and Turkmenistan 

have not yet applied to be designated as eligible 

to receive the benefits of the GSP program. 

Belarus’ GSP benefits were suspended in 2000 

due to worker rights violations. 

During annual GSP product reviews, the United 

States received several petitions requesting 

changes in the products imported from the NIS 

that are eligible for GSP benefits. In 2004, the 

United States reviewed the continued GSP 

eligibility of wrought titanium, which has been 

included in the GSP program since 1997. GSP 

benefits for wrought titanium were withdrawn 

effective November 8, 2004. 

 

USTR has also conducted annual reviews of 

country practices, in response to petitions from 

the U.S. copyright industry, to determine several 

countries’ eligibility to receive GSP benefits. In 

late 2000, based on significant improvement in 

Moldova’s IPR regime, the U.S. copyright 

industry withdrew its GSP petition with respect 

to Moldova. In August 2001, USTR withdrew 

GSP beneficiary status from Ukraine (see 

subsection on Ukraine - Optical Media Piracy 

above). In 2003, due to improvements made to 

Armenia’s IPR regime, the U.S. Government 

terminated review of the industry’s petition with 

respect to Armenia. The reviews of Kazakhstan, 

Russia and Uzbekistan remain ongoing (see 

subsection on the Russian Federation - 

Widespread Optical Media Piracy above). 

4. WTO Accession 

Prior to the end of 2003, four NIS countries 

(Kyrgyzstan, Georgia, Moldova and Armenia) 

had become members of the WTO. WTO 

accession working parties have been established 

for an additional seven NIS countries (the 

Russian Federation, Ukraine, Azerbaijan, 

Belarus, Kazakhstan, Tajikistan and 

Uzbekistan). Turkmenistan has not yet applied 

for observer status or membership in the WTO. 

The United States supports accession to the 

WTO on commercial terms and on the basis of 

an acceding country’s implementation of WTO 

provisions immediately upon accession. The 

United States has provided technical assistance, 

in the form of short- and long-term advisors, to 

many of the countries in the region in support of 

their bids for WTO accession. (See Chapter II 

for further information on accessions.) 

Since Russia applied for membership, the United 

States has strongly supported Russia’s efforts to 

join the GATT 1947 and then the WTO, through 

active participation in the WTO Working Party 

established to conduct the negotiations and 

through technical assistance to move Russia’s 

trade regime towards conformity with WTO 

rules. Negotiations on Russia’s accession to the 

WTO were particularly active in 2004. 

Although Russia enacted and amended laws and 

regulations to bring its trade regime into 

conformity with WTO provisions, considerable 

work remains to be done in this area. In a series 

of Working Party meetings through November 

2004, Russia continued to describe changes to 

its trade regime, with WTO delegations noting 

specific concerns and areas that require further 

work. The United States and Russia also 

continued bilateral discussions on Russia’s 

offers on goods and services market access 

throughout 2004. 

Reforms undertaken for WTO accession will 

help Russia achieve a market-oriented economy, 

strengthen its trade regime and integrate better 

into the global economy. Adopting WTO 

provisions will give Russia a world-class 

framework for IPR protection, application of 

customs duties and procedures, and other 

requirements to imports that will encourage 

increased investment and economic growth. 

Completion of the accession negotiations will 

depend on how rapidly Russia implements WTO 

rules and concludes negotiations on goods and 

services with current WTO Members. 
III. Bilateral and Regional Negotiations| 185 

5. Bilateral Trade Agreements and 

Bilateral Investment Treaties (BITs) 

The United States has some form of bilateral 

trade agreement with each of the NIS countries. 

The United States currently has BITs in force 

with seven NIS countries (Armenia, Azerbaijan, 

Georgia, Kazakhstan, Kyrgyzstan, Moldova, and 

Ukraine) and has signed BITs with three others 

(Russia, Belarus, and Uzbekistan). Entry into 

force for these three BITs is pending ratification 

by one or both parties and the final exchange of 

instruments of ratification. 

6. Country Specific Issues 

The United States continued to encounter a 

number of additional country specific trade 

issues in the region. The major items are 

discussed below: 

a. Russia – Market Access for Poultry, 

Pork and Beef 

The United States was actively engaged with the 

Russian government throughout 2004 to ensure 

that U.S. producers of poultry, pork and beef 

continue to have access to the Russian market. 

In September 2003, the United States reached an 

agreement in principle with the Russian 

government that establishes market access 

parameters for U.S. exports of poultry, pork and 

beef. USTR continued to work with the Russian 

Government in 2004 to finalize this agreement. 

Technical discussions also continue to resolve 

issues concerning poultry plant inspection and 

certification. 

b. Russia – Product Standards, Testing, 

Labeling and Certification 

U.S. companies still cite product certification 

requirements as a principal obstacle to U.S. trade 

and investment in Russia. In the context of 

Russia’s WTO accession negotiations, we 

continue to urge Russia to bring its product 

regulations and certification requirements into 

compliance with international practice. The 

Russian government is now attempting to put in 

place the necessary legal and administrative 

framework to establish transparent procedures 

for developing and applying standards, technical 

regulations and conformity assessment 

procedures in Russia in order to better comply 

with WTO rules. 

There has been some movement to eliminate 

duplication among regulatory agencies and to 

clarify categories of products subject to 

certification. However, businesses are still 

experiencing difficulties in getting product 

approvals in key sectors. Certification is a 

particularly costly and prolonged procedure in 

the case of pharmaceuticals, alcoholic 

beverages, and telecommunications equipment. 

In many sectors, type certification or selfcertification by manufacturers is currently not 

possible. Veterinary certification is often 

arbitrary and needs to be more transparent and 

based on science. Russian phytosanitary import 

requirements for certain planting seeds (notably 

corn, soybeans and sunflowers) appear to lack 

scientific basis and have blocked imports from 

the United States. Discussions to ease or 

eliminate burdensome Russian requirements are 

ongoing. 

c. Russia – Aircraft Market Access 

Despite continued bilateral assurances that the 

Russian Government would join the Agreement 

on Trade in Civil Aircraft, Russia has expressed 

an unwillingness to join the Agreement in the 

context of WTO accession. We continue to seek 

Russia’s commitment to join the Agreement, 

including a commitment to eliminate tariffs on 

aircraft and parts. 

F. Mediterranean/Middle East 

Overview 

U.S. trade relations with the countries of 

Northern Africa and the Middle East have 

considerable value for both U.S. commercial and 

foreign policy interests. The events of 

September 11, 2001 highlighted the importance 

of supporting peace and stability in the region by 

fostering economic development. The U.S. Free 

Trade Agreements (FTAs) in force with Israel 
III. Bilateral and Regional Negotiations| 186 

and Jordan, the FTAs negotiated with Morocco, 

and Bahrain and the U.S. commitment to 

negotiate FTAs with the United Arab Emirates 

and Oman, together with the Trade and 

Investment Framework Agreements (TIFAs) 

established with most countries in the region, 

provide the context for our bilateral trade policy 

discussions with these countries, which are 

aimed at increasing U.S. exports to the region 

and assisting in the development of intraregional trade. 

Egypt 

In 2004, there was growing momentum in 

several areas of the United States-Egypt trade 

relationship. A new ministerial economic team 

appointed to the Egyptian cabinet in July, 2004 

took significant steps towards implementing 

economic reforms long urged by the United 

States, including in such areas as customs 

administration, tariff rate reductions, and 

banking and tax reform. These measures 

included action to address longstanding issues 

affecting U.S. firms in Egypt. Following a 

United States request for WTO dispute 

settlement consultations, Egypt replaced its 

specific import duties on apparel products with 

ad valorem duties that appear to be consistent 

with Egypt’s WTO commitments. (The United 

States continues to closely monitor Egypt’s 

compliance with agreed rules on apparel 

imports.) As part of its economic reform efforts, 

Egypt committed to reducing high taxes that 

have negatively impacted U.S. soft drink 

companies= operations and investments in Egypt. 

The United States and Egypt also continued to 

seek improved cooperation in the multilateral 

sphere on issues related to the DDA. 

2004 marked a setback in Egypt=s efforts to 

strengthen intellectual property rights (IPR) 

protection. Due to Egyptian marketing 

approvals for locally produced copies of 

patented U.S. pharmaceutical products, as well 

as deficiencies in Egypt=s copyright enforcement 

regime, judicial system and trademark 

enforcement, Egypt was raised to the Special 

301 Priority Watch List. IPR protection is a 

critical component of U.S. Free Trade 

Agreements and improvements in Egypt=s IPR 

regime will be an important part of Egyptian 

efforts to lay the basis for an agreement with the 

United States. 

Israel 

2004 was a period of intense engagement 

between the United States and Israel during 

which the two countries worked to expand their 

bilateral trade relationship. These efforts 

included a series of meetings in Washington and 

Israel between U.S. Trade Representative Robert 

B. Zoellick and Israeli Vice Prime Minister 

Ehud Olmert, as well as a meeting in July of the 

United States-Israel FTA Joint Committee. 

Progress was made in several areas. A 

longstanding IPR issue was resolved, with Israel 

confirming that it will continue to provide 

national treatment for U.S. rights holders of 

sound recordings. As noted in the Free Trade 

Agreements section, the United States and Israel 

concluded a new bilateral agreement on trade in 

agricultural products following nearly three 

years of negotiations. And, as noted below, the 

United States approved Israel’s and Egypt=s 

request to establish Qualifying Industrial Zones. 

While these were constructive developments in 

the bilateral relationship, the United States 

remains concerned by its trade deficit with Israel 

and longstanding market access issues. In 2004, 

the United States worked with Israel, including 

during the July meeting of the FTA Joint 

Committee, to address market access issues in 

areas such as Israeli standards and government 

procurement. Lack of adequate intellectual 

property rights protection in Israel was also a 

U.S. concern. In a series of meetings undertaken 

during a Special 301 Out of Cycle Review of 

Israel, the United States urged Israel to 

implement an effective data protection regime 

for confidential data submitted by innovative 

firms to the Israeli Government for marketing 

approval. Despite extensive efforts by the 

United States, significant differences remained 

at year's end between the two sides regarding the 

steps that Israel needs to take to provide 

adequate and effective data protection. 
III. Bilateral and Regional Negotiations| 187 

Free Trade Agreements 

The FTAs with Morocco and Bahrain, which are 

discussed earlier in this chapter (Section A), will 

support the significant economic and political 

reforms underway in both countries, and create 

improved commercial and market opportunities 

for U.S. exports. The United States also 

announced the intention to negotiate FTAs with 

the United Arab Emirates and Oman. U.S. 

negotiations with Israel on a new bilateral 

agreement on trade in agricultural products are 

discussed earlier in this chapter in the Free 

Trade Agreements section. 

Trade and Investment Framework 

Agreements 

In 2004, the United States concluded Trade and 

Investment Framework Agreements (TIFAs) 

with Kuwait, Yemen, the United Arab Emirates, 

Qatar, and Oman. USTR has previously 

negotiated TIFAs with Tunisia, Algeria, 

Morocco, Bahrain, Egypt, Jordan, and Turkey. 

Each TIFA establishes a bilateral Trade and 

Investment Council that enables representatives 

to meet directly with their counterparts regularly 

to discuss specific trade and investment matters 

and to negotiate the removal of impediments and 

barriers to trade and investment. 

WTO Accession 

Negotiations on the accession to the WTO of 

Saudi Arabia, Algeria, Lebanon, and Yemen 

continued in 2004. The United States supports 

accession to the WTO based on a new Member=s 

implementation of WTO provisions immediately 

upon accession and of a new Member=s 

commercially meaningful market access 

commitments for U.S. goods, services, and 

agricultural products. 

Qualifying Industrial Zones 

a. Egypt 

Qualifying Industrial Zones (QIZs) are 

established pursuant to legislation passed by the 

Congress in October 1996, authorizing the 

President to proclaim elimination of duties on 

articles produced in the West Bank, Gaza Strip, 

and qualifying industrial zones in Jordan and 

Egypt. The President delegated the authority to 

designate QIZs to the USTR. Until December 

2004, all QIZs had been established in Jordan. 

2004 saw the fulfillment of the potential for the 

QIZ initiative to include Egypt. 

In December, 2004, U.S. Trade Representative 

Robert B. Zoellick designated three QIZs in 

Egypt: the Greater Cairo QIZ, the Alexandria 

QIZ and the Suez Canal Zone QIZ. In 

approving Egypt’s request for QIZ designations, 

the United States helped bring to successful 

conclusion months of prolonged efforts by 

Egypt and Israel to reach a QIZ agreement, the 

most significant economic agreement between 

the two countries in twenty years. 

The USTR=s decision to approve Egypt=s and 

Israel=s request to establish QIZs reflects 

continuing U.S. support for expanded economic 

and political ties between the two countries. In 

addition, the QIZs are expected to further 

Egypt=s efforts to liberalize its economy and 

integrate economically with its regional 

neighbors and in the global market. 

b. Jordan 

Qualifying Industrial Zones (QIZs) continue to 

be a bright spot in Jordanian economic 

performance. Thirteen QIZs have been 

established in Jordan since 1998. The duty free 

benefits provided by QIZs remain particularly 

important for Jordanian products for which duty 

free treatment has not yet been phased in under 

the United States-Jordan FTA. QIZs played an 

important role in helping to boost Jordan=s 

exports to the United States from $16 million in 

1998 to $673 million in 2003. Jordanian exports 

to the United States totaled $875 million as of 

October 2004, and will likely top $1 billion for 

the year. Jordan estimates that QIZs have 

created up to 35,000 jobs. Peak QIZ 

employment is forecast at 40,000 to 45,000. 

Investment in the establishment of QIZs is 

approximately $85 million to $100 million, 

which is expected to grow to $180 million to 

$200 million when all projects are completed. 
III. Bilateral and Regional Negotiations| 188 

In 2004, USTR designated two QIZs in Jordan, 

the Resources Company for Development and 

Investment Zone (RCDI) and Al Hallabat 

Industrial Park. The Zarqa Industrial Zone was 

designated in 2001, and five QIZs were 

designated in 2000: The Investors and Eastern 

Arab for Industrial and Real Estate Investments 

Company Ltd. (Mushatta International 

Complex), El Zay Ready Wear Manufacturing 

Company Duty-Free Area, Al Qastal Industrial 

Zone, Aqaba Industrial Estate, and the Industry 

and Information Technology Park Company 

(Jordan CyberCity Company). Four QIZs were 

designated in 1999, Al-Tajamouat Industrial 

City, Ad-Dulayl Industrial Park, Al-Kerak 

Industrial Estate, and Gateway Projects 

Industrial Zone. The first QIZ in Jordan, Irbid, 

opened in 1998. 

The steady growth of QIZs illustrates the 

economic potential of regional economic 

integration. In addition to the competitive 

benefit of duty-free status for QIZ exports to the 

United States, QIZs increasingly offer 

participating companies the advantages of 

modern infrastructure and strong export 

expertise and linkages. This evolution should 

serve to increase the economic benefits of QIZs. 

(For a discussion of the United States-Jordan 

Free Trade Agreement, see Section A on Free 

Trade Agreements earlier in this chapter.) 

Intellectual Property Rights 

Protection of intellectual property rights remains 

a priority in the Middle East region. Egypt, 

Kuwait, Lebanon and Turkey are on the Special 

301 Priority Watch List, while Israel and Saudi 

Arabia are on the Watch List. 

G. Southeast Asia and the 

Pacific 

Overview 

The Southeast Asia and Pacific region continues 

to enjoy significant trade and economic growth. 

This growth is largely the result of a strong 

commitment by many of the regional 

governments to economic reform and 

liberalization. While additional work is needed 

to open markets in Southeast Asia and the 

Pacific, considerable progress has been made. 

The commitment of regional leaders in the Asia 

Pacific Economic Cooperation (APEC) forum to 

make further progress in expanding regional 

trade and investment has been an important 

factor in spurring this regional trend (see 

Chapter III, section B.5 for information on 

APEC). In addition, the Administration remains 

committed to using the Enterprise for ASEAN 

Initiative (EAI) to further open markets of 

interest to American farmers, ranchers, 

manufacturers, and services providers (see 

Chapter III, section B.2 for information on the 

EAI). It also will maintain efforts to ensure 

implementation of bilateral and multilateral 

agreements, including those protecting 

intellectual property, which is critical to U.S. 

exporters in high-technology, entertainment and 

other key sectors. 

Highlights of the achievements in this region 

during 2004: 

 Implementation of the United StatesSingapore Free Trade Agreement. On January 

1, 2004, the United States-Singapore Free Trade 

Agreement entered into force. The FTA’s 

provisions cover not only goods and services, 

but customs procedures and cooperation, 

investment, competition policy, intellectual 

property rights, electronic commerce, 

transparency, labor and environment. This 

agreement with the United States’ 12th largest 

trading partner will eliminate trade barriers 

between the two countries and is already 

spurring bilateral trade and investment. 

 Conclusion of the United StatesAustralia Free Trade Agreement. The United 

States concluded negotiations on an FTA with 

Australia on February 8, 2004, and the 

agreement entered into force on January 1, 2005. 

The FTA with Australia will boost two-way 

trade in goods and services, create employment 

opportunities in both countries, and reduce 

barriers that U.S. exporters face. In addition to 

goods and services, the FTA covers a range of 

issues, including investment, intellectual 
III. Bilateral and Regional Negotiations| 189 

property rights, customs procedures, competition 

policy, government procurement, 

pharmaceuticals, labor, and the environment. 

The United States also sees the FTA as 

deepening the already close cooperation between 

the United States and Australia in the WTO. 

 Progress in Free Trade Agreement 

Negotiations with Thailand. In October 2003, 

President Bush announced his intent to enter into 

FTA negotiations with Thailand, reaffirming his 

commitment under the EAI to strengthen trade 

ties with countries in the ASEAN region that are 

actively pursuing economic reforms. The 

United States and Thailand held two rounds of 

FTA negotiations in 2004, making initial 

progress. An FTA with Thailand, currently the 

United States’ 19th largest trading partner, will 

significantly increase goods and services trade 

and reduce barriers in many sectors. A United 

States-Thailand FTA also will lead to more 

bilateral investment opportunities and strengthen 

longstanding economic and security ties between 

our countries. 

Country Specific Activities in the Region 

The United States advanced regional and 

bilateral trade initiatives in the Southeast Asia 

and Pacific region in 2004 to expand 

opportunities for U.S. industry, farmers, and 

ranchers. The United States pursued FTAs and 

undertook other bilateral work to strengthen 

trade ties with the Southeast Asia and Pacific 

region and eliminate barriers faced by U.S. 

exporters in this region. Regionally, the United 

States continued to work with ASEAN countries 

to make progress on the EAI and with APEC 

members to reaffirm their commitment to 

regional and global trade liberalization and the 

successful conclusion of the DDA. 

1. Australia 

In parallel with the FTA negotiations, which are 

discussed earlier in this chapter in Section A, the 

United States continued the extensive and 

detailed discussions with Australia on sanitary 

and phytosanitary (SPS) issues begun in 2002. 

The two sides continued to make progress on 

specific issues. Notably, Australia issued final 

regulations in 2004 allowing the entry of 

processed pork. Nonetheless, the United States 

remains concerned about the stringency of 

Australia’s SPS regime, particularly for poultry, 

Florida citrus, stone fruit, apples and grapes. 

2. New Zealand 

United States and New Zealand officials met 

several times in 2004 to discuss outstanding 

bilateral trade issues. With respect to improving 

protection of intellectual property rights, the 

New Zealand government in 2003 passed 

legislation banning parallel imports of new 

films. While this legislation was a positive step, 

in 2004 the United States indicated that 

additional action was needed to address 

longstanding concerns related to parallel imports 

of other copyrighted material, such as software 

and sound recordings on optical media. In 

addition, the United States remains concerned 

about pharmaceutical patent protection and a 

government proposal to allow format shifting of 

sound recordings. U.S. manufacturers’ 

representatives have continued to assert that a 

planned joint New Zealand effort with Australia 

to regulate therapeutic products could adversely 

affect the price competitiveness of many U.S. 

medical devices and complementary goods in 

the New Zealand market. 

In 2004, the United States continued to raise 

concerns over New Zealand’s biotechnology 

food labeling requirements. U.S. officials 

continued to discuss with the New Zealand 

government how it might administer its sanitary 

and phytosanitary standards to permit the import 

of additional U.S. agricultural products. U.S. 

officials have also urged the New Zealand 

government to take steps to increase competition 

in its telecommunications market. The United 
III. Bilateral and Regional Negotiations| 190 

States will continue working with New Zealand 

under our TIFA to address these and other 

bilateral trade issues. We will also work with 

the New Zealand government in APEC and the 

WTO to advance our common trade interests. 

3. The Association of Southeast 

Asian Nations (ASEAN) 

a. Indonesia 

i. General 

The United States has worked to bolster its trade 

and investment relationship with Indonesia, 

seeking to help strengthen Indonesia’s economy 

and encourage liberalization and other economic 

reforms that would generate additional trade and 

foreign investment. The United States watched 

with interest as the Administration of newly 

elected President Susilo Bambang Yudhoyono in 

2004 announced its intention to conduct a 

review of Indonesia’s trade policy regime and 

implement reforms to improve the nation’s trade 

and investment climate, and we will closely 

monitor these efforts. Senior U.S. and 

Indonesian trade officials, including at the 

ministerial level, met several times in 2004 to 

discuss the range of outstanding issues affecting 

the U.S.-Indonesian economic relationship and 

other issues covered under our bilateral TIFA. 

They discussed the need to address unresolved 

issues under the TIFA, to resolve bilateral 

issues, and other steps to help lay the 

groundwork for a free trade agreement, as 

envisioned by the EAI. The United States and 

Indonesia also supported in 2003 the launch of a 

private study on the impact of an FTA on the 

two economies. We expect to review its results 

in 2005. Indonesia is the United States’ 28th

largest goods trading partner, with $12 billion in 

two-way trade in 2003. 

ii. Intellectual Property Rights 

The United States has continued to urge 

Indonesia to take steps to strengthen its IPR 

regime. USTR placed Indonesia on the Special 

301 Priority Watch List in 2004 due to concerns 

over continued optical media piracy and 

weaknesses in Indonesia’s IPR enforcement. 

Indonesia took some noteworthy steps to 

strengthen its IPR regime over the past year, but 

significant problems remain. In November 

2003, the Indonesian government submitted new 

draft regulations governing optical media 

production for Presidential approval. In October 

2004, these “Optical Disc Regulations” were 

signed into law by then President Megawati 

Sukarnoputri. The United States is encouraging 

Indonesia to begin enforcing these Optical Disc 

Regulations promptly. 

Overall, protection of intellectual property rights 

remains relatively weak and U.S. industries 

continue to report the presence of illegal optical 

media production lines. U.S. industries also 

have raised serious concerns about 

counterfeiting and trademark violations of a 

wide range of products in Indonesia. While a 

limited number of raids against retail outlets for 

pirated optical media products have occurred, 

long delays remain in prosecuting intellectual 

property cases. Sentences continue to be light 

and insufficient to deter intellectual property 

piracy, further undermining the criminal 

penalties laid out in Indonesia’s copyright law. 

The United States worked with Indonesia under 

our TIFA on an IPR action plan, which the 

United States first provided to Indonesia in May 

2002. The United States continued to encourage 

Indonesia to implement the specific 

recommendations in the IPR action plan, 

including taking steps to improve the legal 

framework and enforcement mechanisms to 

protect IPR. 

iii. Poultry Imports 

Appropriate officials in the United States and 

Indonesia have worked together to ensure that 

U.S. poultry exports meet Indonesian 

requirements for Halal certification, but 

Indonesia is maintaining its ban on imports of 

U.S. poultry parts. The U.S. Government 

continued to raise this issue with the Indonesian 

government in 2005 and will work with 

Indonesia to eliminate the ban. 
III. Bilateral and Regional Negotiations| 191 

iv. Textiles 

In 2004, the United States raised recurring 

concerns about the Indonesian government’s 

2002 Textiles Decree, which effectively 

precludes textile imports into Indonesia other 

than for use as inputs into other products. The 

U.S. government will continue to press the 

Indonesian government to address our concerns 

on this issue. The United States also urged 

Indonesia to prepare its domestic textile 

producers to compete under a post textile quota 

regime, as the WTO Agreement on Textiles and 

Clothing expired on December 31, 2004. 

b. Malaysia 

i. Overview 

The strong United States-Malaysia trade 

relationship was bolstered when U.S. Trade 

Representative Robert B. Zoellick and Malaysian 

Minister of International Trade and Industry 

Rafidah signed a Trade and Investment 

Framework Agreement on May 10, 2004. The 

two partners also committed to greater 

cooperation in regional and multilateral fora. The 

United States will continue to encourage 

Malaysia to further open and liberalize its 

economy, which is heavily trade-dependent. 

Malaysia is the United States’ 10th largest trading 

partner, with $38 billion in two-way goods and 

services trade in 2003. 

 

ii. Intellectual Property Rights 

Malaysia has a strong public commitment to IPR 

enforcement, and has taken steps to strengthen its 

IPR regime over the past several years, including 

determined efforts to eliminate optical media 

piracy. Although Malaysia has made steady 

progress, the United States has continuing 

concerns about production overcapacity, much of 

which appears to make its way to export markets 

illicitly, and over Malaysia’s unwillingness to 

deter piracy and counterfeiting by prosecuting 

IPR offenders and imposing sufficiently deterrent 

penalties. In the summer of 2003, Malaysia 

announced plans to implement price controls on 

optical discs, a proposal about which the United 

States has voiced significant concern. In the 

second half of 2004, U.S. industry and the United 

States Government raised concerns about 

Malaysia’s plan to require hologram labeling of 

pharmaceutical products in an effort to combat 

counterfeiting. Implementation of this plan has 

been delayed to allow further consultation 

between the Malaysian government and 

stakeholders. The U.S. Government will work 

with Malaysia to encourage it to adopt best 

international practices to combat IPR violations 

and to further strengthen its ability to prosecute 

IPR crimes. 

iii. Agriculture 

 

The United States has been addressing several 

agricultural issues with Malaysia, primarily 

related to U.S. exports of almonds and chicken. 

Malaysia detained several shipments of U.S. 

exports of raw and processed almonds after 

Malaysian testing revealed contamination with 

Salmonella enteritidis. Working with U.S. 

industry and Malaysian officials, the United 

States convinced Malaysia in October to 

eliminate the intensified inspection program 

introduced in the summer of 2004 while working 

to discover and eliminate the source of 

contamination. With respect to chicken meat, 

Malaysia operates its import license system to 

control the supply available on the market, and is 

known to deny licenses for imports or limit 

quantities available to importers. The United 

States will continue to work with Malaysia to 

ensure market access for U.S. chicken meat. 

c. Philippines 

i. Overview 

The United States sought to further enhance its 

trade and investment dialogue with the 

Philippines in 2004, holding several rounds of 

consultations under the bilateral TIFA. The two 

sides have used these meetings to make progress 

in addressing outstanding concerns. In addition, 

the United States used these meetings to urge the 

Philippines to resist taking any steps that might 

run counter to continued progress toward 

liberalizing its trade and investment regime. The 

United States also asked the Philippines to 
III. Bilateral and Regional Negotiations| 192 

reaffirm its support for global trade liberalization 

as outlined in the WTO DDA. President Arroyo 

announced in June 2004 a “10 Point Agenda” to 

revitalize the Philippine economy. That agenda 

sets ambitious goals, such as the creation of six 

million jobs in six years, balancing the budget, 

and large investments in infrastructure. The 

United States will continue to consult with the 

Philippines on its plans to prioritize and meet the 

targets in the Agenda. The Philippines is the 

United States’ 24th largest goods trading partner, 

with $18.1 billion in two-way trade in 2003. 

ii. Intellectual Property Rights 

The Philippines made some progress in its efforts 

to strengthen IPR protection in 2004. To support 

the Philippines’ efforts to strengthen its IPR 

regime, the United States in August 2002 

provided recommendations to the government of 

the Philippines on an IPR Action Plan that 

included specific steps on judicial, legislative, 

and enforcement issues. 

In 2004, the Philippines passed the Optical Media 

Act, which was a top U.S. priority. This law 

creates a regulatory regime for optical media 

manufacturing equipment in order to curb 

rampant pirate production of optical media. The 

law also provides a legal basis for enforcement 

activities against IP-infringing optical media, 

such as pirated music, software and film CDs. 

However, we continue to encourage the 

Philippines to issue implementing regulations, 

which must occur in order for the law to be fully 

enforced. 

The Optical Media Board (OMB), the successor 

agency to the Videogram Regulatory Board, has 

significantly increased the number of raids 

against IP pirates. The OMB has specifically 

targeted vendors in shopping malls and worked to 

encourage landlords to agree to include a clause 

in their leases that makes sale of IP-infringing 

goods the basis for eviction. 

In addition, the Philippines’ Bureau of Customs 

(BOC) passed regulations aimed at improved 

enforcement against trade in pirated products and, 

in 2003, BOC established an IP enforcement unit. 

Unfortunately, the IP enforcement unit appears 

not to be fully staffed, perhaps due to the fact that 

it is not funded by its own BOC budget line item. 

Other concerns remain. The Philippines has yet 

to pass copyright amendments that would update 

its domestic law to address electronic commerce 

piracy. In addition, while the increased number 

of raids carried out by the OMB are indeed 

commendable, the Philippines has been slow to 

prosecute IPR offenders and reluctant to impose 

either criminal or civil penalties as permitted 

under its domestic law that would act as a 

deterrent. Consequently, the lack of effective 

IPR enforcement in the Philippines results in tens 

of millions of dollars in losses for U.S. industry 

every year. 

iii. Telecommunications

The U.S. and Philippine governments 

successfully worked together to begin reopening 

U.S. access to the Philippines 

telecommunications networks. In February 2003, 

Philippines telecommunications companies 

blocked access to their networks to incoming call 

traffic from certain U.S. and other foreign 

telecommunications companies that were 

unwilling to agree to tariff increases the 

Philippines companies wanted to impose. Senior 

U.S. Government officials, including from USTR 

and the FCC, raised concerns over this action 

with appropriate Philippine officials. In 

November 2003, some telecommunications 

connections between the two countries were 

restored and ongoing negotiations resulted in a 

complete restoration of telecommunications links 

in 2004. 

iv. Customs 

The Philippines has made progress over the last 

several years toward bringing its customs regime 

into compliance with its WTO obligations, but 

the United States has continued to have concerns 

about inconsistent application of customs rules 

and procedures, undue and costly processing 

delays, and the role of the Philippine private 

sector in the valuation process. The Philippines 

has outlined steps it has taken and plans to take to 

strengthen the enforcement and consistency of its 

customs rules and improve enforcement of IPR 
III. Bilateral and Regional Negotiations| 193 

piracy at the border. The United States will 

continue to closely monitor this issue. 

v. Sanitary and Phytosanitary (SPS) 

Issues 

Throughout 2004, the United States requested 

that the Philippines reform the manner in which it 

administers its Veterinary Quarantine Clearance 

(VQC) certificate program. Currently, VQCs are 

issued in fixed tonnage amounts that do not 

necessarily match the tonnage of a given 

shipment of U.S. meat and poultry exports to the 

Philippines. VQCs issued with fixed tonnage 

assigned to them force importers to waste VQC 

allotments, because excess VQC tonnage cannot 

be reclaimed in any way. This practice impedes 

the flow of U.S. meat and poultry exports that 

otherwise meet Philippine VQC standards. We 

will continue to press the Philippines to permit 

VQCs to be issued to match the tonnage of 

incoming shipments or for importers to be able to 

“carry over” any unused tonnage to subsequent 

shipments of U.S. meat and poultry. 

d. Singapore 

The United States and Singapore negotiated a 

bilateral Free Trade Agreement (FTA), which 

was signed in May 2003 and entered into force 

on January 1, 2004. United States-Singapore 

trade issues, including FTA implementation 

issues, are discussed in the section on bilateral 

and regional negotiations (see Chapter III, 

section A.4). 

The FTA significantly liberalizes trade in goods 

and services, and provides strong protection for 

intellectual property and for U.S. investors. 

Trade grew substantially during the first year of 

the FTA. On an annualized basis, U.S. exports 

to Singapore grew by more than 19 percent, 

while U.S. imports from Singapore grew by 

more than 3 percent. 

e. Thailand 

i. Overview 

The United States continued to strengthen its 

trade ties with Thailand in 2004, making 

progress during the initial two rounds of FTA 

negotiations. This followed President Bush’s 

announcement in October 2003 of his intent to 

enter into FTA negotiations with Thailand, in 

accordance with TPA procedures and guidance. 

Thailand was the United States’ 19th largest 

trading partner, with $21 billion in two-way 

trade in 2003. 

ii. Intellectual Property Rights 

The United States has continued to urge 

Thailand to strengthen its IPR regime. To 

support Thai efforts, the United States in 2003 

recommended implementation of an IPR Action 

Plan that included specific steps on judicial, 

legislative, regulatory, and enforcement issues. 

Thailand made some progress in 2004 to 

implement these recommendations, but 

significant and sustained progress is still needed. 

In 2004, the Thailand passed the Optical Disk 

Plant Control Act, which is intended to enhance 

the authority and capabilities of Thai 

enforcement officials to take action against 

pirate optical disc producers. However, the 

United States has significant concerns with the 

law. Thai authorities are drafting implementing 

regulations to accompany the law, and the 

United States is continuing to strongly urge 

Thailand to remedy the law itself as well as 

ensure that the regulations address some of the 

weaknesses in the current law. In addition, the 

United States is continuing to urge the Thai 

government to amend its copyright law to 

provide more effective copyright protection and 

be consistent with the WIPO Copyright Treaty 

and the WIPO Performance and Phonogram 

Treaty. 

Thailand intensified enforcement efforts in 

2004. However, street-level piracy still appears 

to be widely prevalent. The United States has 

strongly urged Thailand to take additional steps 

to ensure a high level of enforcement on a 
III. Bilateral and Regional Negotiations| 194 

sustained basis, which is critical to any serious 

effort to address intellectual property piracy. 

U.S. industry estimates losses due to piracy at 

over $188 million in 2004. 

iii. Customs 

Thailand continued to take steps to improve its 

customs practices in 2004, building on U.S. 

recommendations proposed in the 2003 Customs 

Action Plan and discussions held during the 

FTA negotiations. While some positive customs 

policy changes are slow in filtering down 

through the bureaucracy, there has been some 

progress to date and the Thai government seems 

committed to improving its customs procedures 

and facilitating trade. 

Thai Customs is taking steps to implement fully 

the transaction value methodology required by 

the WTO Customs Valuation Agreement 

through compliance with related WTO 

requirements, proposed legislation and improved 

procedures and training. Thailand also has 

expanded customs clearance working hours, 

increased the use of electronic and paperless 

customs procedures, and created an Englishlanguage version of the Customs Department 

website. 

Despite this initial progress, the Thai 

government needs to make additional progress 

to enhance the transparency and efficiency of its 

customs regime. Thailand also must continue to 

implement its customs valuation obligations to 

ensure full compliance with WTO rules. The 

United States will continue to monitor 

Thailand’s implementation of its customs 

valuation law and urge it to make further 

improvements this year. 

iv. Market Access 

Although Thailand continues to reduce selected 

duties in line with its WTO and ASEAN FTA 

commitments, its average tariffs remain 

relatively high. The United States will seek to 

address in the FTA negotiations the issues 

relating to Thailand’s relatively high tariffs and 

complicated tariff regime, in particular in the 

agricultural, automotive, alcoholic beverage, 

textile, and electronics sectors. Thailand also 

has implemented non-transparent price controls 

on some products and has significant 

quantitative restrictions, which impede market 

access. In this regard, the United States is 

concerned that access to tariff-rate quotas for 

agricultural products are managed in an arbitrary 

and non-transparent manner and that for some 

products Thailand requires that importers 

purchase a certain amount of domestically 

produced product before being granted licenses 

for imported product. 

Arbitrarily-applied sanitary and phytosanitary 

standards also serve as constraints to the import 

of certain processed foods and agricultural 

products. The United States is concerned that 

testing, certification, and licensing requirements 

and procedures for processed foods and 

agricultural biotechnology products are more 

trade restrictive than necessary and do not have 

a scientific basis. In particular, Thailand 

published new health certification requirements 

on September 20, 2004, as “Decree 11,” which 

were to come into force on December 30, 2004. 

Decree 11 was notified to the WTO/SPS 

Committee on October 21, 2004. At the request 

of a number of countries, including the United 

States, Thailand postponed implementation of 

Decree 11 until April 1, 2005, due to concerns 

that the roughly 90 days between initial 

publication and the entry into force was not 

sufficient time for consideration of other 

countries’ comments. The United States has 

concerns that the provisions of Decree 11 are not 

consistent with international standards and 

require certification by U.S. exporters of the 

absence of certain chemicals that are not 

approved for use in the United States. These 

certifications appear to be more trade restrictive 

then necessary and do not appear to be based on 

scientific information. The United States is 

seeking to address these issues within the 

context of the FTA, as well as bilateral and 

multilateral meetings. 

f. Cambodia 

In September 2003, at the Cancun Ministerial 

Meeting, WTO Members voted to approve 

Cambodia’s accession to the WTO. After 
III. Bilateral and Regional Negotiations| 195 

completing its domestic ratification procedures, 

Cambodia became a WTO Member on October 

13, 2004. 

The United States and Cambodia began 

negotiation of a TIFA agreement shortly after 

Cambodia joined the WTO. These negotiations 

should be completed early in 2005. Cambodia 

has embarked on a process of reform, both to 

support its domestic economy and to implement 

its WTO obligations. The TIFA will provide a 

formal mechanism for the United States and 

Cambodia to engage on economic and trade 

issues of mutual interest, including Cambodia’s 

reform program and WTO implementation. 

The Bilateral Textile Agreement the United 

States and Cambodia concluded in 1998 and 

renewed in 2001, expired on December 31, 

2004. When Cambodia became a WTO 

member, the United States notified the 

agreement to the WTO under the Agreement on 

Textiles and Clothing. 

g. Normalization of Trade Relations with 

Vietnam and Laos 

i. Vietnam 

On July 13, 2000, the United States and Vietnam 

signed an historic bilateral trade agreement 

(BTA), concluding a four-year negotiation to 

normalize trade relations. Upon its entry into 

force on December 10, 2001, the United States 

extended NTR treatment to products of Vietnam. 

Under the BTA, Vietnam committed to make 

sweeping economic reforms, which created trade 

and investment opportunities for both U.S. and 

Vietnamese companies, and has been the 

foundation of United States – Vietnam trade and 

economic relations. Vietnam remains subject to 

the Jackson-Vanik provisions of the Trade Act 

of 1974, however, which link continued 

eligibility for NTR treatment to sufficient 

progress on the issue of free emigration. Each 

year since 1998, the President has granted a 

waiver under Jackson-Vanik for Vietnam, thus 

clearing the way for Vietnam to receive annually 

renewed (as opposed to permanent) NTR 

treatment from the United States. 

The Joint Committee established by the BTA 

has met annually in formal session since 

implementation of the agreement, most recently 

in May 2004. The primary purpose of the Joint 

Committee is to review implementation of the 

provisions of the BTA. While applauding 

Vietnam’s commitment to economic reform, the 

United States underscored the importance of 

Vietnam moving quickly to meet the timetables 

for implementation contained in the BTA. The 

two countries also discussed Vietnam’s pursuit 

of WTO membership and operation of the 

Unites States-Vietnam textile agreement. The 

next meeting of the Joint Committee will be held 

in the first half of 2005, at which we will review 

the first three years of implementation of the 

BTA. 

ii. Laos 

On September 21, 2003, the United States and 

Laos signed a comprehensive bilateral trade 

agreement (BTA), which was originally 

negotiated and initialed in 1997 and aimed at 

normalizing trade relations. Laos, unlike 

Vietnam, is not covered by the “Jackson-Vanik” 

provisions of U.S. trade law. As with the 

Vietnam agreement, however, the Laos 

agreement requires separate legislation 

authorizing the President to grant normal trade 

relations (NTR) status to Laos in order to bring 

into effect the bilateral trade agreement. 

On December 3, 2004, the President signed H.R. 

1047, the Miscellaneous Trade and Tariff Act of 

2004, which included authority for the President 

to extend NTR treatment to products of Laos. 

Laos ratified the BTA on December 23, 2004. 

The United States will work with Laos to 

implement the provisions of the BTA and in its 

efforts to become a WTO Member. NTR for 

Laos became effective on February 4, 2005. 

 

While Laos’ small economy does not yet support 

a large retail market in pirated or counterfeit 

goods, small outlets are spreading. While 

enforcement is weak, some elements of the 

government of Laos are interested in creating 

strong domestic IPR legislation, particularly 

given Laos’ desire to protect the intellectual 
III. Bilateral and Regional Negotiations| 196 

property created through Lao handicrafts and 

native music. 

4. Republic of Korea 

a. Economic and Trade Overview 

The Republic of Korea is the United States’ 7th

largest export market, and 7th largest trading 

partner in terms of two-way goods trade. 

Economic growth and trade liberalization in 

Korea have created many opportunities for U.S. 

exporters and investors. However, protection of 

sensitive sectors and a legacy of government-led 

industrial policies have meant that in many 

areas, U.S. exporters continue to face barriers in 

the Korean market. Since 2002, the 

Administration of President Roh Moo-hyun has 

emphasized liberalization and structural reform 

as a way to boost Korea’s flagging economic 

growth rate, attract foreign investment, and turn 

Korea into a “hub of Northeast Asia.” The 

United States has worked closely with the Roh 

Administration to ensure that Korea’s efforts at 

domestic regulatory reform address the priority 

concerns of U.S. exporters and investors, 

including enhancing regulatory transparency. In 

addition, the Unites States has strongly endorsed 

Korea’s initiative to create an interagency Task 

Force coordinated by the Prime Minister’s 

Office to update and strengthen Korea’s 

intellectual property laws and enforcement 

efforts. 

The United States and Korea meet regularly to 

consult on bilateral trade issues. Meetings held 

on a quarterly basis serve as the primary forum 

for discussing bilateral trade issues; those 

meetings are augmented by a broad range of 

senior-level policy discussions. Throughout 

2004, the United States identified the following 

areas as the highest U.S. trade priorities: 

automotive, telecommunications, intellectual 

property, agriculture, pharmaceuticals, and 

subsidies, as well as the resolution of the screen 

quota issue. In addition, the U.S. and Korea 

have expanded discussions on the cross-cutting 

issue of regulatory reform and transparency. 

With bilateral and other trade agreements 

playing a growing role in both U.S. and Korean 

trade policy, both countries have noted that 

should meaningful progress be made in 

resolving bilateral trade irritants, the United 

States and Korea will want to review what 

further steps are warranted to deepen trade 

relations between our two countries. 

The United States also coordinates with Korea in 

multilateral and regional fora where possible, 

and has encouraged Korea to play a leadership 

role commensurate with its economic and 

commercial strength. Despite differences on the 

issue of liberalization of the agricultural sector, 

the United States sought Korean cooperation in 

other areas of the Doha Development Agenda, 

and has valued Korea’s contributions to WTO 

discussions on non-agricultural market access 

(NAMA) and trade facilitation. In the Asia 

Pacific Economic Cooperation (APEC) forum, 

the U.S. is working closely with Korea to ensure 

that Korea’s APEC Chairmanship in 2005 is 

successful in promoting trade and investment 

liberalization in the Asia Pacific region; we have 

urged Korea to seize this opportunity to cement 

its reputation as one of the leading proponents of 

economic reform in Asia. 

 

b. Regulatory Reform 

U.S. exporters and investors seeking to do 

business in Korea have long cited problems with 

the lack of transparency in Korea’s regulatory 

system. Although Korea’s Administrative 

Procedures Act stipulates that the public 

comment period for draft laws and regulations 

shall be no less than 20 days, ministries do not 

provide more than the 20-day time frame, thus 

making public comment periods unreasonably 

short. In many instances the final version does 

not reflect the comments provided. Regulations 

are applied inconsistently or are reinterpreted 

and applied retroactively, resulting in penalties 

for those companies that sought to follow 

Korean government guidance. 

As more U.S. companies increase their presence 

in Korea’s economy, these administrative 

practices, which frequently involve regulatory 

measures rather than traditional trade measures 

like tariffs or quotas, will have greater impact on 

U.S. firms’ access to the Korean market, and are 
III. Bilateral and Regional Negotiations| 197 

likely to become a greater focus of U.S. trade 

policy with Korea. During bilateral trade 

consultations in 2004, the United States outlined 

for Korean officials how Korea’s administrative 

practices have adversely affected U.S. firms in 

the automotive, pharmaceutical, and agricultural 

sectors, as well as intellectual property right 

holders. The United States pressed for 

improvements, particularly for expanded noticeand-comment procedures, the publication of 

administrative actions, and comment, review and 

appeal procedures for subordinate statutes. 

These bilateral efforts on regulatory 

transparency coincide with a Korean 

government focus on regulatory reform. In 

Korea, the Roh Government has charged the 

Deregulation Taskforce Team, the Corporate 

Difficulties Resolution Center, and the standing 

Regulatory Reform Committee to focus on 

different aspects of regulatory reform, both 

systemic and sector-specific. During trade 

consultations in 2004, the United States was 

briefed on the activities of these three bodies, 

and how they might address regulatory issues of 

concern to the United States. The United States 

expressed interest in working with the U.S. 

business community to submit U.S. 

recommendations to these three bodies on which 

Korean regulations might usefully be eliminated 

or amended. 

c. Telecommunications 

Korean government intervention in commercial 

aspects of the telecommunications sector, 

including in the selection and mandating of 

technologies, licensing procedures, and 

procurement continued to be of significant 

concern to the United States in 2004. Korea 

influences the sector both directly and indirectly 

through industry associations and quasigovernmental commissions or other entities. As 

a result, U.S. firms with leading-edge 

technologies have encountered resistance to their 

efforts to introduce new software and 

technologies to the market, and firms with an 

established presence have lost market share to 

Korean firms in the past few years. By limiting 

technology competition in the Korean 

telecommunications market, Korea is hampering 

the ability of Korean firms to develop globally 

competitive products and best serve Korean 

consumer needs. In addition, such actions run 

counter to the stated economic goals and 

objectives of the Roh Administration. 

A priority issue for the United States and U.S. 

industry in 2004 was the negative effects of 

Korea’s pursuit of mandatory, domestically 

created telecommunications standards 

(“domestic standards”) that would effectively 

exclude the technology of all foreign firms. 

Through concerted effort, the United States was 

able to limit the adoption of two restrictive 

mandatory domestic standards by Korea, thereby 

improving competitive opportunities for U.S. 

technology suppliers. 

In cellular phone services, the United States 

objected to Korea’s stated plans to mandate the 

domestically created Wireless Internet Platform 

for Interoperability (WIPI) standard. The United 

States was concerned that Korea was exercising 

inappropriate influence over the creation, 

standardization, and deployment of WIPI; was 

discouraging Korean telecommunications 

service providers from subscribing to competing 

foreign standards; and was attempting to force 

competing foreign standards out of the market 

by designating WIPI as the sole mandatory 

standard. In April 2004, after a series of 

bilateral government discussions, some of which 

included industry representatives, the United 

States and Korea resolved this issue by agreeing 

that other platforms would be allowed to coexist 

with WIPI in the Korean market. 

In 2003, Korea announced that it would 

reallocate the 2.3 gigahertz spectrum band 

(which had been largely unutilized) to a new 

wireless broadband Internet service and would 

allow only one technology to be deployed in this 

portion of the spectrum. Again, Korea was 

poised to designate a domestic mandatory 

standard even though viable foreign products 

had already been tested in the Korean market. 

In July 2004, after numerous discussions with 

the United States and U.S. industry, Korea 

agreed to drop plans to make a domestic 

standard the single standard and instead decided 

to select a draft international standard (IEEE 
III. Bilateral and Regional Negotiations| 198 

802.16). While this was a step in the right 

direction, the United States sees no justification 

for a government mandated standard. 

Furthermore, the IEEE 802.16 standard is not 

finalized and will not be commercialized until 

2006, at the earliest. The United States will 

continue to urge Korea to allow other 

technologies to be deployed as soon as the 

spectrum is allocated. 

The United States will continue to work with 

Korea to ensure that Korea sets standards and 

licensing requirements consistent with its 

bilateral and multilateral trade obligations, and 

that any such measures do not subject foreign 

firms to discriminatory treatment. 

d. Motor Vehicles 

Access to the Korean market for U.S. 

automobiles remains a major concern. The 

United States continues to work with Korea to 

ensure fair market access for foreign motor 

vehicles, consistent with the letter and spirit of 

the United States-Korea Memorandum of 

Understanding (MOU) on automobiles of 

October 1998. During the June and November 

2004 reviews of the MOU, the United States and 

Korea reviewed progress on implementing the 

MOU commitments, and sought to address new 

issues that arose during the year, particularly in 

the area of standards. While ad hoc standard 

experts meetings continued as the main avenue 

to resolve standards issues, the United States 

emphasized that adequate notice to all 

stakeholders on any standards or regulatory 

changes was essential to full implementation of 

the MOU. 

Some progress was made in areas of concern to 

the United States. In 2004, Korea consulted 

with the United States on a new Korean fuel 

economy standard that will be implemented on 

December 31, 2009, and agreed to further 

consultations if this date proves problematic to 

foreign automobile manufacturers. In addition, 

in 2004, Korea revised a discriminatory 

environmental testing requirement; and 

announced that it would extend a temporary 

reduction of the special consumption tax on 

motor vehicles into the first half of 2005. 

These steps helped to increase the sales of 

foreign vehicles in Korea in 2004. In an 

extremely depressed domestic market, with 

overall auto sales down 17 percent for the year, 

import sales were up 20 percent, reaching a 

record. However, while sales trends are headed 

in the right direction, imported vehicle sales 

continue to represent an unreasonably small 

share of the Korean market – roughly 2 percent 

– and the U.S. automotive trade deficit with 

Korea continues to spiral upward, reaching 

record levels in 2004 ($9.2 billion for the first 

ten months, up 28 percent over 2003). The 

United States will continue to press for more 

proactive measures by Korea to address the 

concerns of U.S. automakers. 

A particular focus for the United States over the 

past year has been Korea's fulfillment of the 

MOU commitment to “steadily reduce the tax 

burden on motor vehicle owners in the ROK in a 

way that advances the objectives of this MOU.” 

Both the United States and U.S. industry have 

made specific suggestions as to how this 

commitment should be met. To date, Korea has 

announced no comprehensive tax reform plans. 

Given the strong negative impact that Korea’s 

taxation system has on import vehicle sales, this 

will continue to be a key focus in the coming 

year. The United States has recognized that this 

is a long-term process, but stressed the 

importance of developing a comprehensive and 

transparent plan to meet this critical objective. 

The United States will also continue to work 

with Korea in the areas of tariff reduction, 

standards, and improving consumer perception 

of imported vehicles. 

e. Steel 

Steel issues are detailed in Chapter V, “Other 

Multilateral Issues.” 

f. Pharmaceuticals 

The United States and Korea have worked 

extensively, from 1999 to the present, to address 

a number of import market access issues in the 

pharmaceutical sector. Over the past year, 

bilateral consultations have focused on 

transparency, pricing and regulatory issues in the 
III. Bilateral and Regional Negotiations| 199 

pharmaceutical sector. In addition to 

governmental consultations, the governmentindustry pharmaceutical working group 

continued to meet in 2004 in an effort to secure 

a larger role for stakeholders in Korea’s 

pharmaceutical regulatory process. 

Transparency: A key focus of United StatesKorea pharmaceuticals’ consultations during 

2004 was the lack of transparency in Korea’s 

procedures for pricing and reimbursing 

innovative medicines under its national health 

insurance system. While progress has been 

made in some areas, there continue to be signs 

that Korea may introduce new health care costcutting measures without adequate consultations 

with stakeholders, and may focus excessively on 

cutting-costs for new patented medicines, a 

policy that would de facto affect only foreign 

research-based pharmaceutical companies. The 

United States has put forward suggestions on 

how Korea’s Health Insurance Review Agency’s 

(HIRA) reimbursement guideline-setting process 

could be improved; these suggestions are still 

under discussion. In addition, the United States 

is carefully watching developments related to a 

Korean government-commissioned health 

insurance reform study released in September 

2004 to ensure that policy changes are made in 

consultation with all domestic and foreign 

stakeholders, including foreign industry and 

governments. 

Pricing: In 1999, the United States and Korea 

reached agreement on how new innovative drugs 

were to be priced (based on A-7 pricing or the 

average ex-factory price of A-7 countries, i.e., 

United States, United Kingdom, Germany, 

France, Italy, Switzerland, and Japan) and 

reimbursed (based on Actual Transaction Price 

[ATP]). Since its implementation, anomalies 

have surfaced. A June 2004 industry survey 

revealed that A-7 prices have only been granted 

to 33 percent of new products since April 2000. 

Because of Korea’s restrictive application of the 

A-7 pricing methodology, U.S. drug companies 

have decided not to introduce at least nine new 

products in Korea from 2000 to the present. In 

December 2004, the United States proposed that 

Korea issue a one-page justification for when it 

decides not to provide A-7 pricing for new 

medicines. The proposal is currently under 

discussion. 

In addition, lack of appropriate enforcement of 

the ATP system has led to market distortion, 

artificially high-priced generic products, and 

incentives for doctors to prescribe medications 

for profit. ATP reimbursement prices are based 

on a weighted average of sales prices from the 

previous quarter. ATP was designed to end 

hospitals’ fraudulent practice of demanding 

discounts from drug makers when buying drugs 

and then pocketing the difference between the 

discounted price and the larger reimbursement 

price provided by the government-operated 

health insurance system. However, ineffective 

enforcement of ATP has allowed such practices 

to continue. In 2005, the United States will 

continue to press Korea to offer A-7 pricing to 

all new innovative medicines produced by U.S. 

companies and to better enforce the ATP 

system. 

Regulatory: In October 2004, a new high 

priority issue of concern to U.S. industry 

emerged in the area of intellectual property 

protection for pharmaceutical firms when the 

Korean Food and Drug Administration (KFDA) 

proposed eliminating Korea’s current system of 

post-marketing surveillance (PMS). This was of 

major concern because PMS provides a de facto 

period of data protection as required by Article 

39.3 of the WTO TRIPS Agreement. During 

November consultations, Korea stated that the 

PMS would not be eliminated and that, even if 

changes were made to the system, they would be 

fully compliant with Korea’s TRIPS obligations. 

The United States will continue to closely 

monitor developments in this area. 

g. Intellectual Property Rights 

The United States has serious concerns 

regarding the adequacy of Korea’s protection of 

intellectual property rights (IPR), particularly for 

copyrighted material over high-speed data 

networks. Korea’s rapid technological 

development in recent years has led to Korea 

having one of the most sophisticated digital 

infrastructures in the world, but Korea’s legal 

protection of copyrighted material has not kept 
III. Bilateral and Regional Negotiations| 200 

pace with technological developments, leading 

to a high piracy rate for U.S. (and Korean) 

content. Due to Korea’s inadequate protection 

of sound recording transmissions and 

unauthorized distribution of U.S. films, Korea 

was elevated to the Special 301 Priority Watch 

List in January 2004. Since then, Korea has 

proceeded with plans to update its intellectual 

property regime through a “Master Plan” under 

the leadership of the Prime Minister’s Office. In 

addition, progress has been made on U.S. 

intellectual property concerns, including 

granting the Standing Inspection Team (SIT) 

police powers to conduct raids on sites suspected 

of intellectual property crimes and establishing 

an improved registration system designed to stop 

film piracy through the Korea Media Review 

Board (KMRB). However, further work will be 

required to ensure that Korea’s intellectual 

property regime provides the necessary tools to 

address the emerging challenges of the digital 

era. 

Perhaps the most striking instance of copyright 

piracy in recent years has involved the digital 

transmission of sound recordings. While the 

United States urged Korea to introduce 

legislation that would create a comprehensive 

right of transmission for sound recordings, the 

legislation passed by the Korean National 

Assembly in September 2004 introduced only a 

limited right of “making available” and not the 

full “right of communication to the public.” 

With sales of legally copyrighted sound 

recordings dropping by over half in recent years, 

the viability of U.S. and Korean sound recording 

businesses in Korea will depend, in part, on 

establishing comprehensive legal rights to 

authorize digital transmissions. 

The United States has also expressed concerns 

as to whether the sentences issued by Korea’s 

courts in cases of intellectual property piracy are 

of sufficient magnitude to constitute a 

meaningful deterrent to criminal behavior and 

has urged Korea to institute some form of 

sentencing guidelines. Other U.S. intellectual 

property priorities with Korea include: 

explicitly recognizing that temporary copies 

(e.g., of software) are a part of the reproduction 

right and constitute a reproduction; combating 

high levels of book piracy, especially in 

university communities; and, for computer 

software, ensuring the full respect for the 

fundamental principle enshrined in international 

law and practice that rights holders have the 

exclusive right to determine the manner in which 

they wish to license their works. The United 

States has also urged Korea to proceed with the 

prompt ratification and implementation of the 

WIPO Performances and Phonograms Treaty 

(WPPT), to which Korea has already committed; 

strengthen and harmonize its laws on 

technological protection measures (for 

copyrighted works) and Internet service provider 

liability (for infringement by users on their 

networks); and to extend the copyright term by 

20 years. 

h. Government Support for Korean 

Industry 

Semiconductor Production and Export: During 

the past few years, the United States has 

expressed strong concerns about instances of 

possible Korean subsidization of semiconductor 

production and exports that could adversely 

affect U.S. trade interests. In particular, the 

United States sought redress by Korea for its 

support of Hynix Semiconductor, Inc., the 

world’s second largest semiconductor 

manufacturer. Korea did not address the 

concerns expressed by the United States and 

continued to provide financial assistance to 

Hynix; as a result, U.S. industry initiated a 

countervailing duty (CVD) investigation, and a 

formal CVD investigation was conducted and 

completed by the U.S. Commerce Department 

and International Trade Commission during 

2003. As a result of this CVD investigation, 

countervailing duties of 44.29 percent, equal to 

the subsidies provided to Hynix by Korea, have 

been put in place with respect to certain U.S. 

imports of semiconductors from Hynix. Korea 

requested WTO consultations on Hynix in June 

2003, and a dispute settlement panel was 

established in January 2004. (For more on this 

case, see the WTO Dispute Settlement section of 

this report.) 

Paper Subsidies: The U.S. paper industry in 

2004 continued to raise its concerns regarding 
III. Bilateral and Regional Negotiations| 201 

Korean government subsidization of the Korean 

coated paper sector. These concerns include 

government subsidies that have been provided in 

the form of directed credit, low-cost facility 

investment loans, tax benefits for facility 

expansion, and direct government financial 

support for industrial expansion. These 

programs have been alleged to keep troubled 

companies afloat and distort international 

competition. The United States sought to 

address these concerns in numerous bilateral and 

multilateral fora in 2004. Included in these fora 

was a special bilateral experts meeting held in 

Seoul in February 2004 to engage Korea in an 

effort to resolve this matter. Korea’s response to 

date has been inadequate, and the United States 

will continue to pursue this issue with Korea in 

2005. 

i. Bilateral Investment Treaty/Screen 

Quota 

In 1998, former Korean President Kim Dae Jung 

proposed the negotiation of a bilateral 

investment treaty (BIT) with the United States. 

The United States’ objective in pursing a BIT 

with Korea, as with other countries, was to 

conclude a comprehensive agreement that 

established a balanced and open investment 

regime and provided protections for U.S. 

investors. While progress was made in early 

negotiations related to the liberalization of 

investment restrictions in a number of sectors, 

the United States and Korea were unable to 

reach agreement on several key issues, led by 

liberalization of Korea’s restrictive screen quota 

system. Under the screen quota system, 

domestic films must be shown in each cinema 

for a minimum of 146 days of the year, with a 

potential discretionary reduction to 106 days. 

Given statements by Korean government 

officials at the highest levels that a reduction to 

the screen quota was desirable, the United States 

was hopeful that this issue would be resolved in 

2004, thereby paving the way for the United 

States and Korea to deepen bilateral economic 

ties through a BIT or some other mechanism. 

While the domestic market share for Korean 

films has, for the last several years, far surpassed 

the 40 percent market share that the Korean 

National Assembly targeted as the prerequisite 

for reduction of the quota, however, Korean 

filmmakers and lawmakers have continued to 

resist modifications to the system. In addition 

to the screen quota, the issue of Korean limits on 

foreign ownership in the telecommunications 

sector remains unresolved. 

j. Agriculture 

Oranges: In April 2004, Korea suspended 

navel orange imports from California’s 

Tulare and Fresno counties (which together 

account for 80 percent of U.S. navel orange 

shipments to Korea). Korea alleged to have 

detected the presence of the fungal infection 

septoria citri in shipments of navel oranges 

from those two counties. The United States 

performed its own tests on the shipments of 

oranges rejected by Korea and did not detect 

the fungus, neither in California orchards nor 

in laboratory tests of samples taken from 

infected shipments identified by Korea 

officials. This made the identification of 

appropriate mitigation measures difficult. 

However, the United States worked 

extensively with the California citrus 

industry to develop proposed mitigation 

measures for septoria citri to present to 

Korean officials. The United States 

submitted this new protocol to Korea in 

August 2004 to serve as the basis for Korea’s 

resumption of navel orange imports, and the 

U.S. officials then participated in a series of 

bilateral technical discussions that followed 

to ensure the new protocol reflected only 

necessary and operationally feasible 

measures. In November 2004 the United 

States and Korea agreed to the new protocol, 

and California navel orange exports resumed 

in December 2004. The agreement is to 

remain in place for two years with a 

provision that refinement of mitigation 

measures may take place after the first year. 

Rice: In the Uruguay Round, Korea received a 

ten-year exception to tariffication of rice 

imports, and instead negotiated a Minimum 

Market Access (MMA) quota, under which rice 

imports grew from zero to four percent of 

domestic consumption. That MMA arrangement 

was set to expire at the end of 2004, but under 
III. Bilateral and Regional Negotiations| 202 

WTO rules, Korea exercised its right to 

negotiate with WTO rice exporting countries, 

including the United States and eight other 

interested parties, to seek an additional ten-year 

extension. Korea’s stated goal was to extend the 

MMA arrangement to coincide with a new tenyear agricultural adjustment program introduced 

in 2004 by the Roh Administration. The United 

States made clear that it would only agree to 

extension of the MMA program if the program 

were amended to significantly expand 

commercial opportunities for U.S. rice exporters 

and offer them a genuine opportunity to develop 

meaningful relationships with Korean rice 

retailers. 

Agreement on a ten-year MMA extension was 

reached in December 2004. For U.S. rice 

exporters, there are three major benefits to this 

agreement: Korea will double its total rice 

imports over the next ten years (from roughly 

four percent to roughly eight percent of domestic 

consumption); Korea has guaranteed at the 

WTO that it will purchase at least 50,076 metric 

tons of rice from the United States in each of the 

next ten years; and for the first time, imported 

rice will be made available to Korean consumers 

at the retail level. This new MMA arrangement 

was notified to the WTO in late December 2004; 

it will be implemented in 2005 once it is 

approved by a consensus of WTO members. 

Beef: Reopening the Korean beef market, the 

second largest after Japan, to U.S. beef exports 

has been a top priority of the Administration on 

the bilateral trade front in 2004. Korea imposed 

a ban on U.S. beef and beef products 

immediately after the December 2003 discovery 

of a single imported cow with Bovine 

Spongiform Encephalopathy (BSE) in 

Washington State. Currently, exports of 

products worth nearly $823 million in 2003 are 

banned. During 2004, the United States engaged 

Korea at all levels, including a visit by Korean 

government technical experts, which occurred in 

May 2004. The United States continued to 

stress the importance of resuming beef and beef 

by-product trade in appropriate bilateral 

meetings in 2004. Despite substantial progress 

and expressed satisfaction by Korea with the 

technical information provided by the United 

States demonstrating the safety of the U.S. beef 

supply, Korea continues to delay actual 

resumption of imports of U.S. beef. 

Avian Influenza: In 2004, in response to 

detection in February 2004 of low pathogenic 

avian influenza (LPAI) in Delaware and a 

subsequent case, also in February 2004 of high 

pathogenic avian influenza (HPAI) in Texas, 

Korea banned – and continues to ban – all 

imports of raw poultry meat from the United 

States. With the United States’ other poultry 

markets now all having lifted any trade 

restrictions imposed in response to the U.S. 

LPAI and HPAI outbreaks, the United States has 

made clear that re-opening the Korean market to 

U.S. poultry exports is a high priority. In 2003, 

U.S. exports of poultry meat to Korea totaled 

$53 million. Due to United States efforts at 

multiple levels, Korea did nominally lift its 

avian influenza ban on U.S. poultry in 

September 2004, but Korea continues to prohibit 

imports of U.S. poultry meat because of new 

animal health and food safety-related 

certification requirements. Despite repeated 

high-level meetings between U.S. and Korean 

officials, Korea insists that the ban on U.S. 

poultry imports will remain until the United 

States agrees to the new requirements. The 

United States will take all appropriate steps to 

ensure the re-opening of this important market. 

Food Standards: On June 28, 2003, KFDA 

announced new "Proposed Standards and 

Specifications for Health Functional Foods” (the 

so called “Functional Food Code”). The United 

States expressed concern that the proposed 

Functional Food Code limited categories of 

functional foods (i.e., health foods and 

nutritional supplements, and nonscience-based 

upper limits on vitamin and mineral content) and 

would restrict entry of U.S. health foods and 

supplements into the Korean market. KFDA 

finalized the Functional Food Code on January 

31, 2004 and addressed U.S. concerns regarding 

KFDA's proposed upper limits on vitamins and 

minerals. However, KFDA has not addressed 

U.S. concerns regarding the limited number of 

functional food categories, which limits imports 

of functional foods that are widely accepted by 

consumers in other countries. Regarding 
III. Bilateral and Regional Negotiations| 203 

inspection of imported functional food, Korea 

required mandatory laboratory testing for every 

shipment of functional food weighing under 100 

kilograms with no rationale. On December 27, 

2004, in response to United States concerns, 

Korea revised testing requirements and 

eliminated mandatory laboratory testing of 

subsequent shipments of the same functional 

food weighing less than 100 kilograms if the 

first shipment passes the laboratory test. 

However, KFDA still maintains restrictions on 

the use of stickers for labeling of functional 

foods unlike pharmaceutical and food products 

in general. 

5. India 

a. General 

In 2004, the United States and India continued 

their efforts to develop a constructive long-term 

trade relationship. The United States continued 

to try to identify areas for cooperation and 

focused on WTO matters as well as bilateral 

trade issues, including India’s tariff and tax 

regime, intellectual property rights, and 

subsidies. India continues to limit market access 

in various areas, including through high taxes 

and tariffs, non-transparent procedures, 

differential treatment of imports, and reference 

prices. The United States advised the 

government of India that U.S. concerns 

regarding outsourcing to India were exacerbated 

by India’s closed markets. 

In May 2004, India - the largest democracy in 

the world - elected a new government. 

Important members of the new government 

(including Prime Minister Dr. Manmohan 

Singh) were responsible for India’s economic 

reforms begun in the early 1990’s. We look 

forward to working with the new government to 

encourage India to assume its rightful place as 

an open and constructive member of the global 

trade community. 

b. Trade Dialogue 

U.S. Trade Representative Robert B. Zoellick 

effectively engaged in dialogue with his Indian 

government counterparts, especially Commerce 

Minister Kamal Nath. Working closely together 

in Geneva during July 2004, U.S. Trade 

Representative Robert B. Zoellick and Minister 

Nath found ways to move the Doha 

Development Agenda forward. U.S. Trade 

Representative Zoellick also found common 

ground with India’s private sector. Under the 

auspices of the United States-India Trade Policy 

Working Group (TPWG), led by USTR and 

India’s Ministry of Commerce, our officials met 

continuously at all levels to find ways to build 

confidence between our two governments and 

achieve open markets. 

c. Intellectual Property Rights 

Pursuant to the WTO TRIPS Agreement, India 

committed to enact a comprehensive patent 

system for pharmaceuticals and agricultural 

chemicals by January 1, 2005 and protection for 

undisclosed test and other data for these 

products by January 1, 2000. On December 26, 

2004, India’s President A.P.J. Abdul Kalam 

signed the Patents (Amendment) Ordinance, 

2004, which includes provisions on product 

patent protection for pharmaceuticals and 

agricultural chemicals. Parliament must enact or 

pass substitute legislation within six months 

(i.e., by June 2005), or the Ordinance will lapse. 

In seeking to ensure that India complies with its 

TRIPS commitments, the United States 

continued to voice concerns about other aspects 

of India’s intellectual property regime, including 

copyrights, trademarks, failure to protect clinical 

trial data or undisclosed data and needed 

improvements in enforcement against piracy, 

counterfeiting and other types of intellectual 

property infringement. 

d. Diammonium Phosphate (DAP)

India’s fertilizer price control and subsidy 

regime have driven U.S. and other foreign 

phosphate fertilizer exports out of India’s 

market. The United States continues to press the 
III. Bilateral and Regional Negotiations| 204 

Indian government to end distorting policies that 

impede U.S. producers of DAP from competing 

in the India’s market. 

e. Agricultural Trade - Sanitary and 

Phytosanitary Issues 

The United States has raised concerns with India 

regarding its failure to notify certain SPS 

measures. India’s lack of transparency in 

promulgating new import requirements has led 

to disruptions in U.S. agricultural trade, 

particularly in exports of U.S. almonds, the 

United States’ second largest agricultural export 

to India. Ongoing bilateral technical level 

discussions have resulted in a one-year 

agreement allowing the entry of U.S. almonds 

into India under previous import requirements. 

The United States continues to impress upon 

India the need to base its SPS measures, on 

science, including those measures affecting 

apples, dairy products, pulses, poultry, pet food, 

and forest products. The United States will 

continue to seek a long-term solution regarding 

almonds and other outstanding SPS issues. 

6. Pakistan 

 

In September 2004, the United States and 

Pakistan held the first Trade and Investment 

Council (TIC) meeting under the auspices of the 

Trade and Investment Framework Agreement 

(TIFA) signed the previous year. The TIC 

discussed measures to improve the protection of 

intellectual property rights in Pakistan and 

Pakistan’s desire for better access to the U.S. 

market for its goods, including requesting FTA 

negotiations and inclusion in the Container 

Security Initiative (CSI). The main focus of the 

meeting was to promote private investment and 

identify impediments to expanding bilateral 

trade and investment. The TIC also discussed 

Pakistan’s access to GSP benefits, visas for 

businessmen, and the travel advisory. 

 

Following the TIFA meeting, U.S. Trade 

Representative Robert B. Zoellick and Pakistani 

Minister of Commerce Humayum Akhtar Khan 

agreed to initiate the negotiation of a Bilateral 

Investment Treaty (BIT). A BIT with the United 

States could help Pakistan attract much-needed 

private investment. The United States and 

Pakistan continued to work closely on 

promoting progress in the Doha Development 

Agenda. 

USTR officials had wide-ranging discussions on 

bilateral and multilateral trade issues; other 

officials, including the Secretary of State also 

addressed economic and trade issues with 

Pakistan on numerous occasions. Intellectual 

property issues remain a priority focus for the 

United States given that Pakistan is reported to 

be one of the world’s largest producers and 

exporters of pirated sound recordings. A special 

301 Priority Watch Listing (PWL) and a 

Generalized System of Preferences (GSP) 

petition on inadequate copyright protection in 

Pakistan have focused United States efforts to 

encourage progress on IP protection, including 

action against Pakistani plants that are producing 

and exporting large volumes of pirated optical 

media. 

7. Afghanistan 

 

Afghanistan and the United States negotiated 

and signed a Trade and Investment Framework 

Agreement (TIFA) in September 2004. USTR 

and the Afghan Ministry of Commerce lead the 

meetings of the Trade and Investment Council 

(TIC) established by the TIFA. This new 

mechanism will facilitate a high-level, regular 

discussion of bilateral and multilateral trade 

issues, and is designed to promote problem 

solving in the trade and investment areas. 

A Working Party on Afghanistan’s accession to 

the WTO was established. The United States is 

considering means of providing technical 

assistance to Afghanistan as it pursues accession 

[see section on WTO accessions]. 
III. Bilateral and Regional Negotiations| 205 

The United States continued to offer trade 

capacity assistance to Afghanistan. In July 

2004, USTR sponsored, and USAID funded and 

organized, a two-day seminar in Nepal for the 

least-developed countries of South Asia, 

including Afghanistan. The seminar was 

designed to provide practical advice and 

strategies to increase and diversify exports. 

Approximately 20 Afghans participated in the 

seminar. 

8. People’s Republic of China 

It has been more than three years since China’s 

accession to the WTO on December 11, 2001. 

That event was in many ways the culmination of 

two decades of economic reform that saw China 

move from a strict command economy to one in 

which market forces have played an increasing 

role. Through an accession agreement founded 

on the key WTO principles of market access, 

non-discrimination, national treatment and 

transparency, China committed to overhaul its 

trade regime and, more fundamentally, to open 

its market to greater competition. 

The United States and other WTO members 

negotiated with China for 15 years over the 

specific terms pursuant to which China would 

enter the WTO. As a result of those 

negotiations, China agreed at all levels of 

government to extensive, far-reaching and often 

complex commitments to change its trade 

regime. China committed to implement a set of 

sweeping reforms that requires it to lower trade 

barriers in virtually every sector of the economy, 

provide national treatment and improved market 

access to goods and services imported from the 

United States and other WTO members, and 

protect intellectual property rights (IPR). China 

also agreed to special rules regarding subsidies 

and the operation of state-owned enterprises, in 

light of the state’s large role in China’s 

economy. In accepting China as a fellow WTO 

member, the United States also secured a 

number of significant concessions from China 

that protect U.S. interests during China’s WTO 

implementation stage. Implementation should 

be substantially completed – if China fully 

adheres to the agreed schedule – by December 

11, 2007. In contrast, the United States did not 

make any specific new concessions to China, 

other than simply to agree to accord China the 

same treatment it accords other members of the 

WTO. 

China deserves due recognition for the 

tremendous efforts made to reform its economy 

to comply with the requirements of the WTO. 

Nevertheless, while China’s efforts to fulfill its 

WTO commitments are impressive, they are far 

from complete and have not always been 

satisfactory, and China at times has had 

difficulty in adhering to WTO rules. 

The first year of China’s WTO Membership saw 

significant progress, as China took steps to 

repeal, revise or enact more than one thousand 

laws, regulations and other measures to bring its 

trading system into compliance with WTO 

standards. However, that year also saw uneven 

implementation of many of China’s WTO 

commitments. 

During the next year, 2003, China’s WTO 

implementation efforts lost a significant amount 

of momentum, and the United States identified 

numerous specific WTO-related problems. As 

those problems mounted in 2003, the 

Administration responded by stepping up its 

efforts to engage China’s senior leaders. The 

Administration’s efforts culminated in 

December 2003, when President George W. 

Bush and Chinese Premier Wen Jiabao 

committed to upgrade the level of economic 

interaction and to undertake an intensive 

program of bilateral contacts with a view to 

resolving problems in the United States-China 

trade relationship. Premier Wen also committed 

separately to facilitate the increase of U.S. 

exports to China. 

This new approach was exemplified by the 

highly constructive Joint Commission on 

Commerce and Trade (JCCT) meeting in April 

2004, with Vice Premier Wu Yi chairing the 

Chinese side and Secretary of Commerce 

Donald Evans and U.S. Trade Representative 

Robert B. Zoellick chairing the U.S. side, with 

leadership from Secretary of Agriculture Ann 

Veneman on agricultural issues. At that 
III. Bilateral and Regional Negotiations| 206 

meeting, which followed a series of frank 

exchanges covering a wide range of issues in 

late 2003 and early 2004, the two sides achieved 

the resolution of no fewer than seven potential 

disputes over China’s WTO compliance. 

In July 2004, the United States successfully was 

able to resolve the first-ever dispute settlement 

case brought against China at the WTO. In that 

case, the United States, with support from four 

other WTO members, challenged discriminatory 

value-added tax (VAT) policies that favored 

Chinese-produced semiconductors over 

imported semiconductors. The United States 

also effectively used other mechanisms at the 

WTO throughout the year, including the 

transitional review process for China, to draw 

attention to a variety of areas where China 

needed to make progress. 

U.S. stakeholders were significantly more 

satisfied with China’s WTO performance in 

2004 than in the previous two years. Many of 

them reported that 2004 was a good year for 

American companies in China, and that China 

demonstrated marked improvement in its efforts 

to comply with its WTO commitments. 

At the same time, U.S. exports to China 

continued to increase dramatically in 2004, as 

they have done in every year since China joined 

the WTO. U.S. exports to China totaled $35 

billion for the most recent twelve-month period, 

more than double the total for 2001. In fact, 

from 1999 to 2004, U.S. exports to China 

increased nearly ten times faster than U.S. 

exports to the rest of the world. As a result, 

China has risen from our 11th largest export 

market five years ago to our fifth largest export 

market today. 

The reports from the private sector and 

improved export statistics are heartening. 

Nevertheless, serious problems remain, and new 

problems regularly emerge. Most seriously, 

China’s implementation of its WTO 

commitments has lagged in many areas of U.S. 

competitive advantage, particularly where 

innovation or technology play a key role. 

Separately from the WTO issues, the 

Administration, with the Treasury Department 

as the lead, remains committed to working 

closely with China to help them to move to a 

more flexible market-based exchange rate. The 

Treasury Department is raising the issue 

bilaterally and engaging our trading partners in 

multilateral fora such as the G-7, IMF, and 

APEC, and has established a Technical 

Cooperation Program to assist China in 

addressing what it perceives as regulatory and 

market infrastructure obstacles to greater 

exchange rate flexibility. Treasury's technical 

dialogue included three sessions in 2004 focused 

on such issues as supervising banks' 

management of exchange rate risks and 

regulation of foreign currency derivatives 

markets. The Administration will continue this 

approach in 2005. Further, it should be noted 

that China is considered a non-market economy 

(NME) for purposes of U.S. antidumping law; to 

be designated a "market economy", China must 

meet the six statutory criteria set forth in Section 

771(18) of the Tariff Act of 1930: the extent of 

a country's currency convertibility; wage 

determination; foreign investment; government 

ownership or control of production; government 

control over the allocation of resources; and 

other appropriate factors. 

A summary of the WTO compliance issues of 

the most concern to the United States follows. 

For a more detailed discussion, see USTR’s 2004 

Report to Congress on China’s WTO 

Compliance, dated December 11, 2004. 

Intellectual Property Rights 

Upon joining the WTO, China agreed to 

overhaul its legal regime to ensure the protection 

of intellectual property rights in accordance with 

the WTO’s Agreement on Trade-Related 

Aspects of Intellectual Property Rights (TRIPs 

Agreement). China has undertaken substantial 

efforts in this regard, as it has revised or adopted 

a wide range of laws, regulations and other 

measures. While some problems remain, China 

did a relatively good job of overhauling its legal 

regime. 
III. Bilateral and Regional Negotiations| 207 

However, China has been much less successful 

in ensuring effective IPR protection, as IPR 

enforcement remains problematic. Indeed, 

counterfeiting and piracy in China are at 

epidemic levels and cause serious economic 

harm to U.S. businesses in virtually every sector 

of the economy. One U.S. trade association 

reports that counterfeiting and piracy rates in 

China remain among the highest in the world, 

exceeding 90 percent for virtually every form of 

intellectual property. 

The Administration places the highest priority 

on improving the protection of IPR in China. At 

the April 2004 JCCT meeting, in response to 

concerns raised by the United States, Vice 

Premier Wu presented an “action plan” to 

address the IPR problem in China. Intended to 

“substantially reduce IPR infringement,” this 

action plan calls for improved legal measures to 

facilitate increased criminal prosecution of IPR 

violations, increased enforcement activities and 

a national education campaign. The 

Administration is monitoring implementation of 

this action plan closely and began conducting an 

out-of-cycle review in December 2004 under the 

Special 301 provisions of U.S. trade law to 

assess China’s implementation of its IPR 

commitments. The Administration called on 

U.S. companies to submit a range of information 

to enhance its monitoring of China’s 

enforcement efforts in every industry and in all 

regions of China. In addition, the 

Administration has taken comprehensive action 

– under the Strategy Targeting Organized Piracy 

(STOP!) – to block trade in counterfeit and 

pirated goods, regardless of their origin. The 

Administration will take whatever action is 

necessary at the conclusion of the out-of-cycle 

review to ensure that China develops and 

implements an effective system for IPR 

enforcement, as required by the TRIPS 

Agreement. 

Trading Rights and Distribution Services 

Of key importance during 2004 was China’s 

implementation of its commitments to full 

liberalization of trading rights and distribution 

services, including wholesaling services, 

commission agents’ services, retail services and 

franchising services, as well as related services. 

As agreed at the JCCT meeting in April 2004, 

China implemented its trading rights 

commitments nearly six months ahead of 

schedule, permitting companies and individuals 

to import and export goods directly without 

having to use a middleman. While China issued 

regulations that call for timely implementation 

of its distribution services commitments by 

December 11, 2004, China has not made clear 

the precise means by which foreign enterprises 

will actually be able to apply for approval to 

provide these services. In addition, China has 

not yet fulfilled its commitment to open its 

market for sales away from a fixed location, or 

direct selling, by December 11, 2004, as none of 

the measures necessary to allow foreign 

participants have been issued. The 

Administration will pay particular attention to 

these areas over the coming months to ensure 

that China fully meets these important WTO 

commitments. 

Services 

The United States enjoys a substantial surplus in 

trade in services with China, and the market for 

U.S. service providers in China is increasingly 

promising. However, the expectations of the 

United States and other WTO members when 

agreeing to China’s commitments to open 

China’s service sectors have not been fully 

realized in all sectors. Indeed, through an 

opaque regulatory process, overly burdensome 

licensing and operating requirements, and other 

means, Chinese regulatory authorities continue 

to frustrate efforts of U.S. providers of 

insurance, express delivery, telecommunications 

and other services to achieve their full market 

potential in China. At the April 2004 JCCT 

meeting, China committed to abandon 

problematic proposed express delivery 

restrictions and to resume a dialogue on 

insurance issues, although it has been slow to 

follow through on these commitments. 

 

Agriculture 

With U.S. agricultural exports totaling $5.4 

billion in 2003, China has become one of the 

fastest growing overseas markets for U.S. 
III. Bilateral and Regional Negotiations| 208 

farmers. U.S. soybeans, cotton and other 

agricultural commodities have found ready 

customers in China, largely fulfilling the 

potential recognized by U.S. negotiators during 

the years leading up to China’s WTO accession. 

Despite the impressive export figures, China’s 

WTO implementation in the agricultural sector 

is beset by uncertainty. Capricious practices by 

Chinese customs and quarantine officials can 

delay or halt shipments of agricultural products 

into China, while sanitary and phytosanitary 

standards with questionable scientific bases and 

a generally opaque regulatory regime frequently 

bedevil traders in agricultural commodities. 

Like all commodity markets, agricultural trade 

requires as much predictability and transparency 

as possible in order to reduce the already 

substantial risks involved and preserve margins. 

Agricultural trade with China, however, remains 

among the least transparent and predictable of 

the world’s major markets. 

In 2004, the United States was able to make 

substantial headway on a number of key issues 

in agricultural trade, particularly in the area of 

biotechnology approvals and the removal of 

problematic sanitary and phytosanitary measures 

that had been curtailing trade. Given past 

experiences, however, maintaining and 

improving China’s adherence to WTO rules in 

the area of agriculture will require continued 

high-level attention in the months and years to 

come. 

Industrial Policies 

Since acceding to the WTO, China has 

increasingly resorted to policies that limit 

market access by non-Chinese origin goods and 

that aim to extract technology and intellectual 

property from foreign rights-holders. The 

objective of these policies seems to be to support 

the development of Chinese industries that are 

higher up the economic value chain than the 

industries that make up China’s current laborintensive base, or simply to protect lesscompetitive domestic industries. 

Prime examples of these industrial policies in 

2004 included China’s discriminatory 

semiconductor VAT policies, China’s efforts to 

promote unique Chinese standards for wireless 

encryption and third generation (3G) wireless 

telephony and, more recently, a government 

procurement policy that mandates purchases of 

Chinese-produced software. These are among 

an array of steps that China has taken to 

encourage or coerce technology transfer or the 

use of domestic content across many sectors. 

Some of these policies stray dangerously close 

to conflict with China’s WTO commitments in 

the areas of market access, national treatment 

and technology transfer. 

In 2004, the United States and China made 

important progress toward resolving conflicts 

over a number of these and other industrial 

policies, such as China’s export restrictions on 

coke, a key steel input. However, more work 

needs to be done, and the advent of new or 

similar policies in the future will require 

continued vigilance by the United States and 

other WTO members. 

Transparency 

The foundation of WTO compliance is 

transparency, which permits markets to function 

effectively and reduces opportunities for 

officials to engage in trade-distorting practices 

behind closed doors. China has not traditionally 

operated according to the WTO’s transparency 

principles, and thus its commitments in this area 

in many ways represent a profound historical 

shift. By that scale, China has come a great 

distance toward achieving transparency in its 

official decision-making and regulatory regimes. 

Indeed, in the last several years, China has made 

important strides to improve transparency across 

a wide range of national and provincial 

authorities. China’s Ministry of Commerce is 

most notable for its impressive moves toward 

adopting WTO transparency norms. However, 

many other ministries and agencies have made 

less than impressive efforts to improve their 

transparency. As a result, China’s regulatory 

regimes continue to suffer from systemic 

opacity, frustrating efforts of foreign – and 

domestic – businesses to achieve the potential 

benefits of China’s WTO accession. 
III. Bilateral and Regional Negotiations| 209 

Conclusion 

Most of China’s key commitments – including 

trading rights and distribution services – were 

scheduled to be phased in fully by December 11, 

2004. This year – 2005 – will therefore provide 

a critical glimpse at what to expect of China as a 

WTO member once its full range of 

commitments are in place. 

In 2005, the Administration will continue to be 

relentless in its efforts to ensure China’s full 

compliance with its WTO commitments, with 

particular emphasis on ensuring effective 

protection of U.S. patents, trademarks and 

copyrights in China. This work will be 

facilitated by additional funding from the 

Congress in 2004 that has allowed USTR and 

other agencies to increase their level of 

engagement and enforcement vis-a-vis China. 

With this additional funding, USTR established 

a separate office focused solely on China trade 

issues and doubled the resources devoted to 

those issues, while other agencies increased 

staffing levels in Washington and Beijing. 

As in 2004, the Administration is committed to 

working with China to ensure that all of the 

benefits of China’s WTO Membership are fully 

realized by U.S. workers, businesses, farmers, 

service providers and consumers. The 

Administration is also committed to working 

with China to resolve problems in our trade 

relationship before they become broader 

bilateral irritants. When this process is not 

successful, however, the Administration will not 

hesitate to employ the full range of dispute 

settlement and other tools available through 

China’s WTO accession agreement. At the 

same time, the Administration will continue to 

strictly enforce its trade laws to ensure that U.S. 

interests are not harmed by unfair trade 

practices. 

9. Japan 

The United States continues to place a high 

priority on promoting structural and regulatory 

reform in Japan, improving market access for 

U.S. goods and services, and supporting procompetitive policies throughout the Japanese 

economy. The United States welcomes Japan’s 

improving economy as well as Prime Minister 

Junichiro Koizumi's continuing commitment to 

structural and regulatory reform. Indeed, Japan 

has made significant progress on the economic 

reform front, particularly in regard to dealing 

with non-performing loans and deflation. 

Nevertheless, persistent structural rigidities, 

excessive regulation, and market access barriers 

remain and should be addressed to help ensure 

the Japanese economy achieves long-term 

growth. The U.S. Government therefore worked 

with the Japanese government throughout 2004 

to develop and implement concrete steps for 

Japan to take to promote sustainable growth and 

further open and deregulate markets. The 

United States also has been cooperating closely 

with Japan to address the growing challenges 

involved in regional trade and economic issues. 

The two governments have, for example, begun 

consultations on developing ways to promote 

greater protection of intellectual property rights 

in Asia. 

In addition to bilateral approaches, the United 

States relied on a wide range of regional and 

multilateral fora in 2004, including the WTO 

and APEC, to advance its trade agenda with 

Japan. The United States is working to ensure 

that our trade priorities in these fora are well 

coordinated with our bilateral agenda so that the 

various initiatives are complementary and 

mutually reinforcing. 
III. Bilateral and Regional Negotiations| 210 

Overview of Accomplishments in 2004 

U.S.-Japan Economic Partnership for 

Growth 

The U.S.-Japan Economic Partnership for 

Growth (the Partnership) is the primary 

mechanism for managing our bilateral trade and 

economic relations with Japan. Under the 

Partnership, the United States has been working 

with Japan to promote sustainable growth in 

both countries by addressing such issues as 

sound macroeconomic policies, structural and 

regulatory reform, financial and corporate 

restructuring, foreign direct investment, and 

open markets. The various Partnership fora 

established to address these areas are the: 

Subcabinet Economic Dialogue, Regulatory 

Reform and Competition Policy Initiative, 

Investment Initiative, Private 

Sector/Government Commission, Financial 

Dialogue, and Trade Forum. Highlights of 

Partnership activities in 2004 include: 

• In July 2004 the Subcabinet Economic 

Dialogue convened in Washington where 

deputy-level officials from both 

Governments addressed a variety of global, 

regional, and bilateral trade and economic 

issues, including the WTO Doha 

Development Agenda, protection of 

intellectual property, macroeconomic 

developments in both countries, bilateral 

beef trade, and plans for Japan Post 

privatization. 

• Throughout the year, numerous Working 

Groups and a High-Level Officials Group 

met under the Regulatory Reform and 

Competition Policy Initiative (Regulatory 

Reform Initiative) to discuss reform 

proposals that culminated in the Third 

Report to the Leaders, which was conveyed 

to President Bush and Prime Minister 

Koizumi on June 8, 2004. That report 

detailed a myriad of regulatory reform 

measures that Japan implemented or would 

implement in key areas such as 

telecommunications, information 

technologies, medical devices and 

pharmaceuticals, energy, competition policy, 

and the privatization of Japan Post. 

• In April 2004, the United States and Japan 

convened a meeting of the Investment 

Initiative and raised a number of topics, 

including mergers and acquisitions, medical 

services, and education services. This 

Initiative includes co-sponsored investment 

promotion seminars in both countries to 

bring about better understanding and support 

for FDI from regional government and 

business leaders. 

a. Regulatory Reform 

In the June 2004 Report to the Leaders under the 

Regulatory Reform Initiative, Japan agreed to 

undertake many important regulatory reforms. 

Significant achievements were made in various 

sectors, including telecommunications, 

information technologies, energy, medical 

devices and pharmaceuticals, and financial 

services. Other important progress was made in 

key areas such as competition policy, 

transparency and other government practices, 

legal system reform, revision of Japan's 

commercial law, and distribution. 

Building on progress achieved in the first three 

years of the Regulatory Reform Initiative, the 

United States presented Japan on October 14, 

2004 with 63 pages of recommendations calling 

on Japan to adopt a wide range of additional 

regulatory reforms. Consistent with the overall 

objective of the Partnership, these 

recommendations include reform measures 

intended to help Japan continue to grow and 

open markets. Furthermore, the United States 

placed a special emphasis on issues that Japan 

has identified as priorities for reform, such as 

postal privatization and competition policy. 

The October 2004 recommendations act as the 

basis for bilateral discussions in a High-level 

Officials Group and the various Working 

Groups established under the Regulatory Reform 

Initiative. The Working Groups have already 

begun meeting to discuss the recommendations. 

These discussions will in turn serve as the basis 

for a fourth annual report to the President and 
III. Bilateral and Regional Negotiations| 211 

Prime Minister in mid-2005 detailing the 

progress made under this Initiative, including 

specific measures to be taken by each 

Government. 

Highlights of the Third Report to the Leaders 

and key reform recommendations submitted in 

October are as follows: 

i. Sectoral Regulatory Reform 

Telecommunications: The establishment of a 

pro-competitive telecommunications services 

market in Japan based on transparent regulation 

is the primary focus of the United States in 

pursuing regulatory reform for this sector. 

Despite significant progress, Japan's 

telecommunications regulator, the Ministry of 

Internal Affairs and Communications (MIC), 

continues to defer to the interests of NTT at the 

expense of business and residential users and to 

the detriment of promoting competition in the 

telecommunications services market. While the 

competitive provision of broadband services is 

encouraging, the inability of new entrants to 

make inroads into NTT's control of 98 percent of 

subscriber telephone lines and 58 percent of 

mobile customers continues to impair the 

introduction of innovative, low-cost services to 

business and residential users in Japan's 

telecommunications market, one of the world's 

largest. 

The June 2004 Report to the Leaders highlighted 

measures taken by Japan to promote further 

competition in this sector. These measures 

included the introduction of a new system under 

the Telecommunications Business Law (TBL) 

that eliminated obsolete licensing categories and 

filing requirements. Other significant 

accomplishments in the Report to the Leaders 

included measures to promote testing of Radio 

Frequency Identification (RFID) technology in 

the UHF band and modification of the 1990 

Exchange of Letters on Network Channel 

Terminating Equipment (NCTE) to reflect 

changes in the marketplace and the increased use 

of international standards for new technology. 

MIC continues to grapple with how to set 

wireline interconnection rates at efficient levels 

in the face of NTT’s loss of business to wireless 

and voice-over-the-Internet. MIC approved a 

plan in October 2004 to move to a more rational 

rate structure, which should lower competitors’ 

costs. MIC is, however, allowing NTT a fiveyear transition period, which delays the muchneeded reductions in interconnection rates for 

competitors. The mobile wireless sector also 

remains an area of concern. While NTT 

DoCoMo, designated since 2002 as a "dominant 

carrier," has reduced its interconnection rates by 

22 percent over the past three years, rate 

reductions slowed dramatically last year to only 

4 percent, and overall rate levels in Japan remain 

high. Potential new entrants, which have yet to 

be assigned spectrum, have announced their 

intention to lower such rates, as well as provide 

more consumer choice in this concentrated 

market. 

In the October 2004 Regulatory Reform 

submission, the United States urged Japan to 

take bold steps to improve competition in this 

sector, including: strengthen regulatory 

independence, transparency, and accountability; 

reinforce dominant carrier safeguards; conduct 

an objective and transparent review of 

interconnection rates; investigate mobile 

termination rates to ensure reasonable rates and 

competitive neutrality; and ensure transparency, 

competition, and technological neutrality in 

Japan’s spectrum management policies and 

practices (such as licensing, allocation, testing, 

and fees). In addition, the United States 

proposed establishment of an Agreement on 

Mutual Recognition of Conformity Assessment 

Procedures for Telecommunications Equipment 

with Japan that would facilitate more efficient 

trade in telecommunications products. These 

U.S. recommendations were discussed at a 

meeting of the Telecommunications Working 

Group, which took place in December 2004 in 

Tokyo. 

Information Technologies: The primary 

objective of the Information Technologies (IT) 

Working Group under the Regulatory Reform 

Initiative is to work with Japan to establish 

vibrant and competitive IT and electronic 

commerce sectors that can benefit both the U.S. 

and Japanese economies, as well as provide 
III. Bilateral and Regional Negotiations| 212 

global leadership in this area. Japan has made 

important progress over the last few years in 

removing numerous regulatory barriers in the IT 

sector, a primary objective of the Japanese 

government’s bold plan to promote IT called the 

e-Japan Strategy. This progress has helped 

transform the landscape in Japan into one where 

broadband utilization is widespread and can be 

enjoyed at some of the fastest speeds and lowest 

costs in the world. Japan has also increased the 

use of IT and online processes in the private and 

public sectors and is now one of the largest 

electronic commerce markets in the world. The 

June 2004 “e-Japan Priority Policy Program 

2004" (2004 Priority Policies) prioritizes steps to 

achieve Japan’s goals, such as ensuring secure 

and reliable networks, focusing on IT adoption, 

protecting intellectual property, encouraging 

development of content, increasing use of egovernment, and acknowledging the private 

sector’s leadership role in promoting IT usage 

and the global nature of electronic commerce. 

At the same time, the Japanese government 

recognized in its 2004 Priority Policies that legal 

and other barriers persist that prevent faster 

growth of IT usage. As Japan responds to the 

challenges that lie ahead in this pivotal sector, 

the U.S. Government is working with Japan to 

establish a regulatory framework that ensures 

competition and technological neutrality, 

promotes innovation, allows private sector-led 

regulation where appropriate, and protects 

intellectual property rights in the digital age. 

Establishing such a framework will promote the 

development of Japan’s IT-related businesses 

and massive electronic commerce market, and 

thus provide significant opportunities for U.S. 

firms and their leading technology products and 

services. 

Throughout 2004, discussions in the IT Working 

Group focused on protecting intellectual 

property; removing regulatory and nonregulatory barriers to electronic commerce; 

promoting electronic commerce via privatesector self-regulatory mechanisms and 

technologically neutral, market-driven solutions; 

and expanding IT procurement opportunities. 

The specific measures Japan has taken in these 

areas to promote growth in the IT sector are 

summarized in the June 2004 Third Report to 

the Leaders under the Regulatory Reform 

Initiative. 

With regard to protecting intellectual property, 

Japan in early 2004 put into effect legislation to 

extend the term of copyright protection for 

cinematographic works from 50 years to 70 

years. Japan is now examining extending the 

term of copyright protection for sound 

recordings and all other subject matter protected 

under the Copyright Law. In addition, Japan is 

considering whether to adopt a statutory 

damages system that would act as a deterrent 

against infringing activities, ensure that rights 

holders are fairly compensated for the losses 

suffered by infringement, and enhance judicial 

efficiency by eliminating the costly burden of 

having to establish and calculate actual damages 

and profits. Japan’s Intellectual Property 

Strategy Headquarters also revised in 2004 its 

“IP Strategic Program,” which is designed to 

meet the challenges of strengthening the 

protection and enforcement of intellectual 

property rights in the digital age. In addition, 

the United States and Japan have begun actively 

working to develop ways to promote greater 

protection of intellectual property rights 

worldwide, especially in Asia. 

Japan reinforced the leadership role of the 

private sector by agreeing to support the 

development of private-sector self-regulatory 

mechanisms for online consumer protection and 

management of personal data. Indeed, the U.S. 

and Japanese Governments convened a publicprivate sector roundtable in May 2004 that 

provided U.S. and Japanese industry a timely 

opportunity to offer valuable input on Japan’s 

forthcoming implementation of its Law for the 

Protection of Personal Information (Privacy 

Law). Since that meeting, various Japanese 

ministries released for public comment draft 

guidelines on how to comply with the Privacy 

Law, which goes into effect in April 2005. 

In addition, recognizing that e-government also 

promotes growth in the IT sector, Japan 

reaffirmed that all ministries will implement 

reforms of procurement procedures for 

information systems in a consistent and timely 
III. Bilateral and Regional Negotiations| 213 

manner. The reforms are expected to improve 

market access by ensuring non-discriminatory, 

transparent, and fair procurement. Finally, 

Japan is developing network security guidelines 

and standards for local and central government 

entities, and affirmed the importance of 

involving the private sector in this process. 

Japan further affirmed that such guidelines and 

standards will, where appropriate, be open (nonproprietary) and consistent with standards 

developed by voluntary standardization bodies 

constituted upon consensus in industry, 

including the International Standards 

Organization (ISO). 

Building on these accomplishments and the 

progress achieved over the past year, the United 

States made numerous recommendations in the 

Regulatory Reform submission of October 2004 

designed to foster Japan’s IT sector and create 

greater opportunities for U.S. interests. This 

year’s recommendations focus on: (1) removing 

persistent legal and other barriers that hinder 

electronic commerce; (2) allowing maximum 

private-sector flexibility, innovation, selfregulation, and leadership; (3) expanding 

private-sector input into the development of ITrelated policy, regulations, and procurement 

reforms; (4) creating a legal structure that 

enhances efficiency and security and facilitates 

online transactions in all areas of the economy; 

(5) developing coordinated policies compatible 

with international practice; and (6) protecting 

and promoting intellectual property. The United 

States discussed with Japan these 

recommendations in detail during a December 

2004 meeting of the IT Working Group in 

Tokyo. 

Energy: Japan continued this year to make 

progress in implementing energy liberalization 

reforms adopted by the Diet in 2003. These 

reforms should expand liberalization of the retail 

electricity sector from 26 percent to 63 percent 

of the market by 2005 and expand liberalization 

of the natural gas sector from 40 percent to 50 

percent of the market by 2007. The reforms 

should also bring the government’s regulation of 

utilities substantially closer to practices of other 

developed countries. Japan also took steps to 

enhance confidence in the reform process by 

soliciting public comments on related draft 

implementing regulations and ordinances. In its 

Regulatory Reform submission of October 2004, 

the United States urged Japan to adopt additional 

measures that would help foster the development 

of truly competitive Japanese electricity and gas 

sectors. These steps should spur domestic 

economic growth and increase opportunities for 

U.S. firms to produce, sell, and trade energy 

products and services for Japan’s market. 

The June 2004 Report to the Leaders outlined 

areas of progress in the electricity sector, 

including Japan’s preparations to launch in April 

2005 a wholesale power exchange to facilitate 

electricity trading. Additional steps were taken 

by the government to designate and prepare to 

supervise a Neutral System Organization that, 

when operations are launched in April 2005, 

should help ensure smooth operation of 

transmission and distribution functions by 

companies in the market. Japan was also 

preparing guidelines and rules to govern the 

behavior of market participants in order to help 

safeguard the development of a competitive 

market and prevent abuses of market position. 

In its October 2004 Regulatory Reform 

submission, the United States made a number of 

additional recommendations aimed at helping to 

ensure adequate supervision, transparency, and 

fairness as Japan’s electricity market evolves. 

These include the implementation of detailed 

ordinances and regulations to ensure transparent 

interconnection procedures and charges for 

transmission, regulations and guidelines to 

enforce rules against discrimination by market 

participants, and rules to enable the regulator to 

step in where needed to enforce fairness and 

transparency in the structure of the Neutral 

System Organization. The United States also 

urged Japan to expand competition in the market 

by creating a legal framework to allow new 

sources of electricity, such as from cogeneration facilities, to sell excess electricity via 

the electricity grid. 

Progress was also made in promoting greater 

competition in Japan’s natural gas sector. As 

reflected in the June 2004 Report to the Leaders, 

Japan took steps to encourage third-party access 
III. Bilateral and Regional Negotiations| 214 

to pipelines, including setting out rules for 

accounting separation in companies that both 

own pipelines and distribute natural gas, revising 

competition guidelines to ensure fair trade, and 

establishing rules to help encourage the further 

development of a pipeline network in Japan. A 

key focus of the U.S. Government’s Regulatory 

Reform submission of October 2004 

recommendations on energy was to urge Japan 

to take additional steps to bolster third-party 

access to Japan’s liquefied natural gas (LNG) 

terminals. Meaningful and reliable access to 

LNG import terminals by third parties is 

important for two reasons: LNG imports are the 

only source of natural gas for customers in 

Japan, and natural gas is an important fuel 

source for companies wishing to build new 

electricity generating facilities. Access to LNG 

terminals thus has important implications for 

continued liberalization and opportunities for 

new market entry in both the natural gas and 

electricity sectors. 

In addition, the United States also urged in its 

2004 Regulatory Reform recommendations that 

Japan strengthen its ability to monitor and assess 

the state of competition in the electricity and 

natural gas markets. Such steps will help ensure 

that Japan’s regulators have timely information 

about market developments in order to make 

adjustments in regulations and guidelines, 

including taking additional structural and 

liberalization steps to further promote 

competition. The United States also 

recommended that Japan bolster resources for 

the government’s relevant gas and electricity 

regulatory offices and take steps to ensure 

independence in decision making by regulators. 

The United States commends Japan for its 

evolving efforts to further liberalize its 

electricity and gas sectors. Much still needs to 

be done, however, to bring domestic energy 

costs down to a range closer to the average 

among developed countries. Moreover, greater 

liberalization does not always mean greater 

market access unless a regulatory regime is 

established that genuinely encourages new 

players to enter the market. The United States 

therefore continues to discuss energy reform 

recommendations with Japan, including at a 

meeting of our Energy Working Group held in 

December 2004. 

Medical Devices and Pharmaceuticals: Japan's 

regulatory and reimbursement pricing systems 

slow the introduction of innovative U.S. medical 

devices and pharmaceuticals in Japan. The 

United States therefore continues to advocate 

regulatory and pricing reform to speed the 

introduction of new devices and drugs and create 

incentives for development of innovative 

products. The United States raised these issues 

with Japan throughout 2004 in the Medical 

Devices and Pharmaceuticals Working Group 

under the Regulatory Reform Initiative. That 

Working Group also meets under the 1986 

Market-Oriented, Sector-Selective (MOSS) 

Agreement. 

Japan is in the process of implementing 

significant reforms to the regulatory side of its 

healthcare system that will become fully 

effective in April 2005 and are expected to 

speed the introduction of innovative devices and 

drugs in the Japanese market. Japan, for 

example, established in April 2004 the 

Pharmaceuticals and Medical Devices Agency 

(PMDA), which is in part intended to speed 

approvals of drugs and devices and improve 

safety measures. The U.S. Government is 

urging Japan to ensure the increase in user fees 

paid by drug and device manufacturers (that 

took effect in April 2004) expands the PMDA’s 

review staff and thereby facilitates faster 

approvals. In addition, the United States is 

carefully monitoring Japan’s implementation 

measures specified in the Third Report to the 

Leaders to set targets for faster product 

approvals and to publish annual progress reports. 

Among Japan's targets is a goal (to be attained 

by 2009) to conclude approvals for 90 percent of 

new medical device applications and 80 percent 

of new drug applications within one year. 

The United States presented new regulatory 

proposals to Japan through the Regulatory 

Reform Initiative in October 2004 and discussed 

them with Japan at a meeting of the Medical 

Devices and Pharmaceuticals Working Group in 

December 2004 in Tokyo. The U.S. proposals 
III. Bilateral and Regional Negotiations| 215 

also urge Japan to ensure that overseas audits or 

factory inspections not delay approvals of new 

products. 

As for pricing reform, the Japanese 

government's plan for a comprehensive 

approach is outlined in Japan's "Industry Vision" 

proposals to improve the competitiveness of its 

medical device and pharmaceutical sectors by, 

among other steps, implementing pricing 

policies that recognize the value of innovation. 

In the Third Report to the Leaders, Japan 

committed to deciding more frequently whether 

to grant reimbursement prices to innovative 

medical devices and to introducing two 

important new premium pricing rules for 

particularly effective drugs. 

In its October 2004 Regulatory Reform 

submission and the December 2004 Working 

Group meeting in Tokyo, the United States 

encouraged Japan to reform pricing rules to 

assess accurately the value of innovative 

products to Japan's healthcare system, and apply 

pricing premiums more appropriately to reward 

and stimulate advances in drug research and 

medical technology. The United States also 

urges Japan to consider the unique 

characteristics of the Japanese market that lead 

to a much higher cost structure than in other 

countries. 

Financial Services: Japan has achieved many of 

the goals of making Tokyo's financial markets 

"free, fair and global", as introduced under the 

“Big Bang” financial deregulation initiative. 

More specifically, Japan has made significant 

progress in allowing new financial products, 

increasing competition within and between 

financial industry segments, and enhancing 

accounting and disclosure standards. “Big 

Bang” liberalization has substantially improved 

the ability of foreign financial service providers 

to reach customers in most segments of the 

Japanese financial system. 

There was additional progress in financial sector 

deregulation in 2004. On April 1, 2004, the 

Diet's securities market reform package went 

into effect. The new law aims to diversify 

corporate stock and bond distribution channels 

and increase the number of intermediaries. The 

legislation specifically reduces minimum capital 

requirements for securities companies, 

investment trust management companies, and 

investment advisory companies. Shareholder 

rule revisions, designed to prevent abuse by 

brokers, were also implemented. The new rules 

authorize the Financial Services Agency (FSA) 

to inspect major shareholders of brokerage 

houses, including non-financial corporations and 

individuals. Finally, a new sales agent system 

was established to permit Certified Public 

Accountants, licensed tax accountants, and 

financial planners to sell corporate stocks to 

investors as agents of security brokerage houses. 

Also in 2004, Japan revised its Securities and 

Exchange Law to allow private financial 

institutions, such as banks and insurance 

companies, to engage in securities brokerage 

businesses. The amendments introduced a 

system of fines to combat unfair trading 

practices. In addition, the law governing 

paperless stock transactions was revised to 

permit companies to stop issuing physical stock 

certificates. In December 2004, the Diet passed 

legislation to allow foreign exchange trading on 

margin. That legislation, which will take effect 

in July 2005, is designed to protect investors by 

setting forth specific criteria for margin foreign 

exchange trading. Also in December 2004, 

Japan enacted legislation to remove a ban on 

sales of mutual funds at post offices. Japan Post 

will start selling mutual funds in October 2005 

at 550 of its 24,700 post offices. 

The United States welcomes Japan's progress in 

increasing the efficiency and competitiveness of 

its financial markets. In its October 2004 

Regulatory Reform recommendations, the 

United States put forward proposals to support 

further opening and development of the 

Japanese financial markets, which will allow 

Japan to take full advantage of international 

financial expertise and support future Japanese 

growth. 

These recommendations include: (1) taking the 

measures necessary to make the No-Action 

Letter process an effective means for promoting 
III. Bilateral and Regional Negotiations| 216 

regulatory transparency in the financial services 

sector; (2) putting foreign bank branches on 

equal footing with domestic banks by allowing 

them to engage in trust and banking businesses 

concurrently; (3) harmonizing the regulatory 

framework governing investment advisory and 

investment trust management activities and 

eliminating inconsistencies or duplication; (4) 

allowing mergers and reducing obstacles to the 

early termination of investment trusts; (5) 

increasing the defined contribution (DC) pension 

plan contribution limits; (6) revising the ENotification Law to include lenders subject to 

the Money Lending Business Law; (7) working 

closely with the private financial services 

community to review current reporting and 

record-keeping requirements; and (8) subjecting 

all financial legislative action to full public 

notice and comment. These issues will be 

discussed in February 2005 at the fourth meeting 

of the U.S.-Japan Financial Services Working 

Group. 

ii. Structural Regulatory Reform 

Competition Policy: A key goal of our 

regulatory reform efforts is to ensure that steps 

to deregulate and introduce competition into 

Japan's economy are not undone by 

anticompetitive actions by firms and trade 

associations resistant to such steps. An active 

and strong antitrust enforcement policy in Japan 

is needed to eliminate and deter anticompetitive 

behavior, including stronger measures to 

dismantle Japan's bid rigging (dango) system 

and active enforcement against anticompetitive 

exclusionary practices by dominant firms in 

deregulated industries. 

 

Japan undertook some important steps in 2004 

aimed at strengthening its antitrust enforcement 

regime. Most importantly, it submitted 

legislation to the Diet to substantially strengthen 

the effectiveness of Antimonopoly Act (AMA) 

enforcement. Specifically, the legislation would 

increase the administrative fine (surcharge) for 

AMA violations by most companies to 10 

percent of the sales involved in the conspiracy 

(up from the current rate of 6 percent), with a 

further increase of the fine to 15 percent for 

repeat offenders. The legislation would also 

authorize the Japan Fair Trade Commission 

(JFTC) to adopt a corporate leniency program 

that would eliminate administrative fines and 

criminal penalties for the first company to report 

to the JFTC its participation in an unlawful 

cartel and cooperate in the JFTC's investigation, 

and would reduce the surcharges for the second 

and third companies to enter the JFTC's leniency 

program. In addition, the legislation would give 

the JFTC criminal investigation powers similar 

to those already enjoyed by the National Tax 

Agency, would strengthen criminal penalties for 

interference with JFTC investigations or for 

non-compliance with JFTC cease and desist 

orders, and would extend the statute of 

limitations for AMA violations to three years 

after the conduct stopped. It is expected this 

legislation will be enacted during the next Diet 

session in the spring of 2005. 

 

With regard to measures to strengthen sanctions 

against bid rigging, in September 2003, the 

Ministry of Land, Infrastructure and Transport 

(MLIT) extended the maximum period of 

suspension of designation (debarment) for 

companies that engage in bid rigging to one 

year, and undertook to subject firms to 

nationwide debarment if the company's top 

executives or board members were complicit in 

bid-rigging activities. The new measures by 

MLIT specify that the period of debarment will 

be made more severe where the bid rigging 

involved "government-led bid-rigging" and the 

company tried to induce public officials to be 

complicit in the conspiracy or when the 

company denied the allegations of a 

whistleblower. 

Transparency and Other Government Practices: 

The United States’ work with Japan on 

transparency continues to focus on improving 

the Public Comment Procedure (PCP) in an 

effort to make it more effective and to encourage 

more widespread use of this potentially 

important mechanism. In the June 2004 Report 

to the Leaders, Japan took a useful step forward 

by affirming that it would work to improve the 

PCP by considering various reform measures 

that include putting in place measures to help 

ensure more PCP periods are at least 30 days, 

compelling Ministries and Agencies to make 
III. Bilateral and Regional Negotiations| 217 

public detailed explanations when they do not 

incorporate submitted comments, and improving 

reviews of PCP implementation and 

effectiveness. As 2004 concluded, Japan was 

considering several concrete measures to 

improve the PCP, but it remains unclear if those 

measures will prove meaningful. 

 

The June 2004 Report to the Leaders also 

includes a section on Japan’s initiative to 

encourage deregulation at the local level within 

Special Zones for Structural Reform. To date, 

Prime Minister Koizumi has approved nearly 

400 of these zones since the first zones were 

established in early 2003. This new, innovative 

approach to deregulation and structural reform 

can provide important opportunities for Japan to 

ensure economic growth is sustained over the 

long-term. In the Third Report to the Leaders, 

Japan pledged to continue to take steps to ensure 

transparency in implementation of the zones 

initiative, to expand market-entry opportunities 

in the zones, and to apply successful regulatory 

exemptions in the zones on a national basis as 

expeditiously as possible. 

The June 2004 Report to the Leaders includes a 

number of other steps taken in this area. 

Importantly, the Council for the Promotion of 

Regulatory Reform was established in 2004 with 

a strengthened mandate as a successor to the 

Council for Regulatory Reform, which over the 

years worked to effectively improve the 

regulatory environment in Japan. The Japanese 

government also broadened in March 2004 the 

scope of its No-Action Letter Procedures, which 

clarified that firms in all industries subject to 

government regulation may seek written 

clarification of those regulations, not merely 

firms in “new industries such as IT, finance, 

etc.” 

Building on these measures, the United States 

recommended in its October 2004 Regulatory 

Reform recommendations that Japan undertake 

additional improvements to its regulatory system 

to support its overall reform efforts. The United 

States is urging Japan to: (1) ensure the PCP is 

reformed in ways that make it a more 

meaningful process for the public to input into 

policymaking; (2) work jointly with the United 

States to achieve full implementation of the 

APEC Transparency Standards in the domestic 

regimes of countries in the Asia-Pacific region; 

(3) apply successful regulatory exemptions in 

the Special Zones on a national basis as 

expeditiously as possible; (4) take additional 

steps to facilitate public input into draft 

legislation before it is submitted to the Diet; (5) 

ensure that the process to restructure and 

privatize public corporations is transparent and 

that the private sector has opportunities to 

provide sufficient input; and (6) implement 

measures and practices to strengthen the 

effectiveness of the No-Action Letter system. 

Based on these recommendations, discussions 

on transparency issues took place in December 

2004 in the Cross-Sectoral Working Group. 

Privatization: Also included in this year’s 

Regulatory Reform recommendations is a new, 

separate section on privatization, which 

underscores the importance the United States 

attaches to this ongoing process in Japan, 

particularly in regard to the privatization of 

Japan Post. Over the years, the United States 

has continued to take interest in Prime Minister 

Koizumi’s efforts to restructure and privatize 

Japan’s public corporations. The United States 

also recognizes that, if implemented vigorously, 

this reform effort can have a major impact on the 

Japanese economy, stimulating competition and 

leading to a more productive use of resources. 

As reform of the public corporations advances, 

the United States has been urging Japan to: (1) 

conduct the restructuring and privatization in a 

transparent manner; and (2) ensure that domestic 

and foreign private sector entities that will or 

may be affected by the reform have meaningful 

opportunities to provide input in the 

privatization process, such as through use of the 

Public Comment Procedure. 

In the Regulatory Reform recommendations in 

October 2004, the United States specifically 

recommends that privatization of Japan Post be 

ambitious and market-oriented to achieve 

maximum economic benefits for the Japanese 

economy. A truly market-oriented approach 

must include the establishment of undistorted 

competition in Japan’s insurance, banking, and 

express delivery markets through, among other 
III. Bilateral and Regional Negotiations| 218 

measures, the elimination of all advantages 

accorded to Japan Post over its private sector 

competitors. These advantages have long been 

of concern to U.S. and Japanese companies 

alike. (For detailed discussion of Japan Post 

privatization, please see the Insurance section 

under Bilateral Consultations, as well as 

Financial Services under Regulatory Reform.) 

Legal Services and Judicial System Reform: 

The creation of a legal environment in Japan that 

supports regulatory and structural reform and 

meets the needs of international business is a 

critical element for Japan's economic recovery 

and restructuring. The Japanese legal system 

must be able to respond to the market's need for 

the efficient provision of international legal 

services, and provide a sound and effective 

foundation for the conduct of business 

transactions in an increasingly deregulated 

environment. 

 

In the area of legal services, Japan announced 

that the 2003 amendments of the law regulating 

foreign lawyers that will allow them to enter into 

partnership arrangements with Japanese lawyers 

and to hire Japanese lawyers as associates will 

come into effect on April 1, 2005. The United 

States has been closely monitoring the adoption 

of implementing rules by the Japan Federation 

of Bar Associations from the perspective of 

ensuring that those rules are consistent with both 

the letter and liberalizing spirit of the 2003 

amendments. Japan also has agreed to study 

whether foreign lawyers should be permitted to 

form professional corporations and to establish 

multiple branch offices in Japan as Japanese 

lawyers are currently permitted to do. 

 

In the area of judicial system reform, the United 

States has been urging Japan to strengthen 

judicial oversight of administrative agency 

actions, including by modifying standing 

requirements to increase the number of persons 

eligible to seek judicial review of administrative 

actions. In 2004, Japan enacted legislation 

amending the Administrative Case Litigation 

Law that expands the standing of third parties to 

challenge administrative actions, facilitates and 

speeds up administrative litigation, and provides 

relief pending review of a judicial decision on 

the merits of an appeal of administrative actions. 

Japan also passed in late 2004 legislation to 

create a government certification system for 

Alternative Dispute Resolution (ADR) 

providers. While the United States generally 

supported Japan’s recent efforts to strengthen 

and revitalize ADR, this certification system, 

although voluntary, will effectively discourage 

parties from choosing non-certified ADR 

providers. This in turn does not seem to support 

Japan’s commitment to create a flexible and 

open legal environment that facilitates the 

development of ADR services in Japan. 

Commercial Law: Reform of Japan's 

commercial law to permit the use of modern 

merger techniques is necessary to facilitate 

merger and acquisition activities by both foreign 

and domestic firms in Japan. The Japanese 

economy also will benefit from additional 

measures to improve corporate governance, 

since good corporate governance systems 

encourage increased productivity and 

economically sound business decisions as 

management strives to maximize shareholder 

value. However, good corporate governance 

requires active shareholder participation, 

particularly by large institutional investors such 

as pension funds and mutual funds, and the 

encouragement of good information flows 

through effective whistleblower protection 

measures. 

 

Japan took some important steps in 2004 toward 

the introduction of modern merger techniques 

into Japanese law. The responsible 

subcommittee of the Legislative Council 

announced that it was recommending revising 

the Commercial Code to permit triangular 

mergers, cash mergers, and short form (squeeze 

out) mergers. Japan also said it was studying 

ways to facilitate corporate restructuring and 

investment including the appropriate tax 

treatment of such modern merger techniques. 

In the area of strengthening corporate 

governance, Japan enacted general 

whistleblower legislation in 2004 that protects 

whistleblowers who report crimes or violations 

of a broad range of laws, including violations of 
III. Bilateral and Regional Negotiations| 219 

the Securities and Exchange Law. Japan also 

indicated its support for the promotion of proxy 

voting by managers of public and private 

pension funds and by mutual fund and 

investment trust managers. The Ministry of 

Health, Labor and Welfare is studying whether 

to make public the proxy voting policies of its 

fund managers, and the Financial Services 

Agency will encourage the relevant trade 

association to require members to publicly 

disclose their actual proxy voting records. 

Distribution: Japan's generally rigid and 

inefficient distribution and customs systems 

restrict market access for imported products and 

undermine the competitiveness of foreign-made 

products. With regard to customs, the United 

States urges Japan to continue modernizing its 

clearance procedures to fully open its market to 

imported goods. The demand for the rapid 

delivery of goods and information has produced 

a number of new industries, including the 

express carrier industry, that are now seen as 

vital for the smooth development of the global 

economy. It is important therefore, to minimize 

the regulations, procedures, and costs that could 

inhibit the free exchange of goods and 

information through the express carrier industry. 

While more remains to be done, the Japanese 

government has implemented several measures 

and provided a number of assurances under the 

Regulatory Reform Initiative that will enhance 

the ability of U.S. express carriers to provide an 

efficient, speedy exchange of goods and 

information to benefit the Japanese economy. 

 

The Third Report to the Leaders included a 

number of steps intended to have a positive 

impact on this sector. Customs overtime 

charges, for example, were reduced nationwide 

by 50 percent on April 1, 2004. The Japanese 

government also specified that the mid-term 

management plan created by the Narita 

International Airport Corporation aims to reduce 

landing fees as soon as possible, which would in 

turn lower the cost of doing business in Japan. 

In addition, the Japanese government took note 

of the request by the U.S. Government to 

promote the use of credit and debit cards as 

means of payment for government services. 

U.S. reform recommendations to the Japanese 

government in October 2004 again urged Japan 

to lower landing fees at its international airports, 

decrease government regulations on airline 

pricing and filing requirements, and continue to 

improve customs processes and procedures. In 

addition, the submission recommended that 

Japan further increase acceptance and security of 

credit and debit cards as payment for goods and 

services in order to foster tourism and increase 

economic efficiency. In December 2004, the 

Cross-Sectoral Working Group met to discuss 

these and other related issues. 

b. Bilateral Consultations 

i. Insurance 

Japan took significant steps under the 1994 and 

1996 bilateral insurance agreements to 

deregulate its insurance market. These steps 

included sweeping measures that brought 

meaningful improvements in the product 

approval process, greater use of direct sales of 

insurance products, and a diversification of 

allowable product offerings. As a result, U.S. 

insurance companies continue to visibly and 

substantially increase their presence in both the 

life and non-life insurance sectors in Japan. 

There remain, however, issues of serious 

concern to U.S. insurers that include competitive 

matters related to Japan Post’s insurance arm 

(Kampo), the review and reform of the Life 

Insurance Policyholder Protection Corporation 

(PPC), the status of unregulated and regulated 

insurance cooperatives (kyosai), and 

liberalization of the sale of insurance products 

through banks. Bilateral consultations under the 

two insurance agreements were held in Tokyo in 

August 2004 where these and other issues were 

raised that have been highlighted by U.S. 

industry. The talks also included the 

participation of the National Association of 

Insurance Commissioners. 

The United States expressed its continuing 

concern with the unequal competitive conditions 

that exist between Kampo and its private sector 

competitors, and continued to call for a standstill 

on new product offerings by Kampo until its 

advantages over the private sector are 
III. Bilateral and Regional Negotiations| 220 

eliminated. These concerns were also discussed 

in the context of preparations within the 

Japanese government to develop legislation to 

privatize Japan Post over a 10-year period 

beginning in 2007. The insurance talks were 

held just prior to the release and endorsement by 

the Cabinet of a blueprint to guide the drafting 

of legislation, providing a timely opportunity for 

detailed discussions on how privatization can 

achieve equal competitive conditions between 

Japan Post and its competitors. Subsequently, 

the Cabinet’s blueprint included the following 

changes that had been recommended by the 

United States: (1) make Japan Post meet the 

same tax obligations as private companies; (2) 

terminate government guarantees on Japan 

Post’s insurance products; (3) require full 

participation by Japan Post in Japan’s insurance 

safety net system; and (4) require that Japan 

Post’s insurance operations fall under the same 

legal and regulatory obligations as those applied 

to private companies. The United States called 

on Japan to take additional steps to ensure that 

the privatization process puts Japan Post on the 

same footing as other private companies. The 

United States also indicated its favorable view of 

the high degree of transparency achieved in the 

privatization process, including the willingness 

of relevant Japanese officials to exchange views 

with interested private sector parties. The 

United States urged Japan to maintain the high 

degree of transparency of this process. 

During the insurance talks, the United States 

also raised the issue of the future of the Life 

Insurance PPC. The United States urged Japan 

to carry out its commitment that the Financial 

System Council conduct a thorough review of 

the safety net system and ensure that subsequent 

legislation is enacted in time to establish a more 

efficient, sustainable safety net system before 

current stopgap measures expire in March 2006. 

Through the reform process, the United States 

urged Japan to take steps to improve 

policyholder protection while minimizing 

reliance on the PPC and the burden borne by the 

contributors to the system. The United States 

stressed that the deliberations and subsequent 

drafting of legislation should be transparent and 

allow for opportunities for input by interested 

parties, including foreign insurance companies. 

The United States also raised its concerns about 

regulated and unregulated kyosai. These 

insurance cooperatives provide a range of 

insurance products that compete directly with 

the private sector yet are not required to meet the 

same tax, legal, supervisory, and regulatory 

obligations as private companies. This state of 

affairs has allowed kyosai to develop a 

significant share of the Japanese insurance 

market. The United States commended Japan 

for initiating a review of unregulated kyosai by a 

government advisory body as a first step, 

underscoring that appropriate steps be taken 

following the review to remedy this unequal 

competitive situation. The United States also 

expressed concern about product expansions by 

major regulated kyosai and called for measures 

to equalize competitive conditions as soon as 

possible. 

In addition, the United States urged Japan to 

fully liberalize the sale of insurance products 

through banks within a three-year period 

identified by a government advisory panel. It 

called on Japan to ensure that the liberalization 

process is undertaken in a fair and balanced 

manner across insurance market sectors. The 

United States also asked Japan to revise privacy 

rules that hinder sales of insurance products 

through banks. 

The United States raised the issue of draft 

reserve requirements for variable annuity 

products, asking Japan to ensure that the new 

regulations provide for reserves that are 

actuarially sound and not excessive, which 

otherwise would create an unnecessary barrier to 

companies. The United States also expressed 

concerns about Japan’s case agent system. 

In addition to the annual insurance consultations, 

the United States utilizes the U.S.-Japan 

Regulatory Reform Initiative to put forward 

numerous recommendations to promote further 

reform in Japan's insurance market. The United 

States included specific recommendations in its 

2004 Regulatory Reform submission to Japan to 

address the concerns identified above related to 

postal insurance, the Life PPC, kyosai, and bank 

sales of insurance. 
III. Bilateral and Regional Negotiations| 221 

ii. Government Procurement 

Construction/Public Works: U.S. firms remain 

largely excluded from Japan’s massive ($190 

billion) public works market, obtaining far less 

than one percent of projects awarded. 

Problematic practices inhibit the full 

involvement of U.S. design and construction 

firms in this sector, which has become 

increasingly competitive due to decreases in 

public works spending. These practices 

continue despite the existence of the 1994 U.S.-

Japan Public Works Agreement (Action Plan), 

under which Japan is obligated to use specified 

open and competitive procedures for public 

works procurements valued at or above specified 

thresholds. The requirements set by these 

procedures go above and beyond those called for 

under the WTO Agreement on Government 

Procurement (GPA). Problematic practices 

include failure to address rampant bid rigging, 

use of arbitrary qualification and evaluation 

criteria to exclude U.S. firms, and unreasonable 

restrictions on the formation of joint ventures. 

During the Expert Level Meeting on Public 

Works in 2004, the United States urged Japan to 

eliminate the obstacles that prevent U.S. 

companies from full and fair participation in its 

public works sector. The United States 

welcomed Japan’s confirmation that Action Plan 

procedures would be used for Urban Renewal 

and Private Finance Initiative projects that were 

commissioned by Action Plan entities and above 

the specified thresholds. The United States also 

urged Japan to increase the use of Construction 

Management, Project Management technology 

and design architect procurements for all public 

works projects. In addition, the United States 

urged the Japanese government to ensure that 

the procurement procedures set forth in the 1988 

U.S.-Japan Major Projects Arrangement (MPA) 

are used for all outstanding MPA projects. In 

November 2004, Japanese private sector 

organizations hosted the sixth U.S.-Japan 

Construction Cooperation Forum (CCF), which 

focused on facilitating the formation of joint 

ventures between U.S. and Japanese 

design/consulting and construction companies 

for Urban Renewal projects. 

iii. Investment 

Prime Minister Koizumi's January 2003 pledge 

to double Japan's cumulative foreign direct 

investment (FDI) in the next five years builds on 

Japan’s earlier reforms to encourage FDI. 

Shifting Japanese attitudes toward inward FDI, 

depressed asset values, and improvement in the 

regulatory environment enabled U.S. and other 

foreign firms to continue to gain significant new 

footholds in the Japanese economy, mostly 

through mergers and acquisitions (M&A). 

Although FDI in Japan as a share of GDP 

remains the lowest among OECD countries, 

foreign investment has risen in recent years, 

especially in the banking/insurance, 

telecommunications, and machinery sectors. 

Japanese and foreign businesses continue to be 

significantly affected by the implementation of 

several recent legal changes. The Securities 

Exchange Law, for example, now mandates 

consolidated and market-value accounting for 

listed firms and a new bankruptcy law (Civil 

Reconstruction Law) encourages business 

reorganization, including spin-offs, rather than 

forced liquidation of assets. In addition, the 

concept of corporate governance, such as the 

role of boards of directors, is changing in ways 

that bode well for increased investments, and 

M&A. Amendments to the Commercial Law 

now allow large-scale corporations to choose 

either Japan's traditional statutory auditor system 

or executive committee system (i.e., U.S.-style 

corporate governance). Although the Diet in 

2003 amended the Industrial Revitalization Law 

(IRL) to allow triangular mergers and cash 

mergers, using parent company stock as merger 

consideration, for those companies covered by 

the IRL, it did not address tax considerations for 

foreign companies involved in such mergers. 

The Diet is considering revisions to the 

Commercial Code which would allow greater 

use of modern M&A tools by foreign investors 

effective in 2006. The Ministry of Finance is 

considering changes in the tax treatment of 

M&As involving foreign investors. 

Despite the progress achieved over recent years, 

government and business observers from both 

countries recognize that much remains to be 

done to increase FDI in Japan, and the U.S. and 

Japanese Governments have agreed to continue 
III. Bilateral and Regional Negotiations| 222 

to consult on investment issues. The Initiative 

meets regularly throughout the year and presents 

an annual report to the President and Prime 

Minister on the year's accomplishments. 

Businesses in both Japan and the United States 

agree that two new bilateral agreements – an 

income tax treaty which entered into force in 

2004, and a social security totalization 

agreement which was signed in 2004 – will 

benefit investors in both countries. 

c. Sectoral Issues 

i. Agriculture 

Japan remains the United States' second largest 

export market (behind Canada) for food and 

agriculture products. Despite this, Japan 

maintains many barriers to imports of these 

products. 

Beef: Reopening the Japanese market to U.S. 

beef continued to be a top priority of the 

Administration on the bilateral trade front in 

2004. Japan imposed a ban on U.S. beef after 

the December 2003 discovery of a 

single imported cow with Bovine Spongiform 

Encephalopathy in Washington State. Before 

the ban, U.S. beef exports to Japan (the largest 

export market for U.S. beef) totaled roughly 

$1.3 billion annually. Since April 2004, the 

U.S. Government has engaged the Japanese 

government in a high-level effort to reopen the 

Japanese market to U.S. beef. After prolonged 

negotiations to determine the conditions under 

which the trade would be resumed, the two 

Governments reached a framework agreement 

on October 23, 2004 designed to pave the way 

for resumption of beef trade between Japan and 

the United States. More specifically, that 

agreement was developed to enable U.S. beef 

trade to resume under a special marketing 

program. That program would then be 

reviewed, with a view toward returning trade to 

more normal patterns. 

Despite the October agreement and official 

involvement at the highest levels, a continued 

lack of significant progress in reopening the 

Japanese market is causing serious harm to the 

U.S. beef industry. The United States has gone 

to great lengths to demonstrate to Japan 

the ongoing safety of the U.S. beef supply, 

which includes an enhanced surveillance 

program of animals and changes to slaughter and 

feed processes to further ensure that potentially 

infected material cannot enter the food chain. At 

the highest levels of government, the 

Administration is pressing Japan to 

expeditiously reopen this critical market for U.S. 

beef. The United States will take all 

appropriate steps to ensure that this occurs. 

Other Sanitary and Phytosanitary (SPS ) 

Measures: Japan's use of sanitary and 

phytosanitary measures continues to create many 

barriers to U.S. food and agricultural goods. 

The United States is increasingly concerned that 

Japan applies certain SPS measures without 

scientific justification or documentation. 

This was the clear conclusion of a WTO dispute 

settlement panel and the WTO Appellate Body 

in a case involving Japan's requirements on U.S. 

apple exports, including orchard inspections. 

The panel and Appellate Body reports that these 

requirements (ostensibly to protect Japanese 

orchards against fire blight disease) were 

unjustified. The reports ruled that Japan’s 

measures did not have a scientific basis and 

were not based on a valid risk assessment. 

Another example is Japan's fumigation 

requirement on U.S. fruits and vegetables for 

cosmopolitan pests, which is imposed despite 

the fact that these pests are widely distributed in 

Japan and are not under official control. The 

fumigation requirement is particularly 

detrimental to the quality of these products, 

many of which do not survive fumigation and 

must be destroyed. The United States has raised 

this issue in the WTO Committee on the 

Sanitary and Phytosanitary Measures. 

The United States continues to work with Japan 

to resolve these and other SPS concerns in 

bilateral and multilateral fora. In addition, the 

United States will monitor closely Japan's newly 

established Food Safety Agency and will take 

every opportunity to ensure that this agency 

operates in a manner consistent with Japan's 
III. Bilateral and Regional Negotiations| 223 

international obligations and to ensure that 

policies and practices are supported by science. 

 

Rice: The United States continues to express 

ongoing concerns over U.S. access to Japan's 

rice market. Although the United States has 

supplied about half of Japan's rice import needs 

since 1995 when it opened its market under its 

WTO minimum market access agreement, only a 

minor share of U.S. rice imported under the 

tariff rate quota (TRQ) is allowed to be sold into 

the private sector immediately upon entry. In 

addition, very small quantities are occasionally 

released from government stocks and eventually 

permitted to enter the industrial food-processing 

sector. Since Japan tariffied rice imports in 

1999, only a minuscule amount has been 

imported outside of the TRQ, because such 

imports are subject to a duty of 341 yen per 

kilogram, equivalent to about 1100 percent ad 

valorem at January 2005 prices and exchange 

rates. 

ii. Steel 

Steel Issues are detailed in Chapter IV. 

10. Taiwan 

In 2004, the United States and Taiwan continued 

to work together to address shortcomings in 

several areas related to Taiwan’s WTO 

commitments, including ensuring market access 

for rice, improving intellectual property rights 

protection, and further opening Taiwan’s 

telecommunications services market. In 

addition, the United States worked with Taiwan 

bilaterally to ensure market access for 

pharmaceutical products. As a result of these 

joint efforts, the United States and Taiwan 

resumed bilateral discussions in November 2004 

under an existing Trade and Investment 

Framework Agreement. 

a. Rice 

The United States continued to consult with 

Taiwan throughout the year regarding concerns 

with its rice import system. By the end of 2004, 

Taiwan agreed to modify its rice import system 

based on consultations with the United States, 

but other interested rice suppliers to the Taiwan 

market did not approve some of the proposed 

modifications to Taiwan’s WTO tariff-rate quota 

schedule. Taiwan is a leading Asian market for 

U.S. rice exports and, despite concerns 

associated with the rice tender process, U.S. 

suppliers won a majority of the tenders 

conducted in 2004. The United States will 

continue to work with Taiwan and other 

interested suppliers to the Taiwan market to 

achieve improvements to the rice import system. 

b. Intellectual Property Rights (IPR) 

The United States continued in 2004 to urge 

Taiwan to further improve its enforcement of 

IPR and legal framework for IPR protection. 

U.S. concerns with the level of IPR piracy in 

Taiwan were serious enough to warrant 

continued placement of Taiwan on the Special 

301 Priority Watch List in April 2004. The 

United States subsequently determined that 

Taiwan should be moved to the Special 301 

Watch List in an out-of-cycle review during the 

fall of 2004 as a result of sustained enforcement 

activities and improvements to Taiwan’s legal 

infrastructure to protect IPR. 

As a result of concerted efforts by the United 

States, industry, and the Taiwan executive 

branch, Taiwan’s legislature in August 2004 

passed additional amendments to its copyright 

law to address some U.S. concerns, including 

instituting technological protection measures, 

establishing heavier penalties for infringement, 

and providing Taiwan Customs the authority to 

take ex officio action. In addition, Taiwan 

continued to take measures to improve 

enforcement of IPR, including conducting raids 

against manufacturing and retail outlets and 

formalizing previously ad hoc task forces. The 

United States will continue to monitor Taiwan’s 

progress in combating piracy, focusing in 

particular on whether Taiwan continues to 
III. Bilateral and Regional Negotiations| 224 

aggressively enforce its laws, take measures to 

improve the judicial systems ability to address 

intellectual property cases, and take other 

concrete actions to reduce all types of IPR 

violations, particularly in the area of internet 

piracy and illegal peer-to-peer downloading. 

In January 2005, Taiwan’s Legislative Yuan 

passed an amendment to the pharmaceutical law 

that will provide for protection of undisclosed 

test or other data related to pharmaceutical 

products. Data submitted to Taiwan for 

marketing approval is required by TRIPS to be 

protected against disclosure and “unfair 

commercial use.” While implementing 

regulations remain to be drafted, the new law 

should allow Taiwan to fulfill this commitment. 

c. Telecommunications 

As 2004 came to a close, and nearly three years 

after WTO accession, Taiwan's legislature had 

approved one of two bills necessary to establish 

a new National Communications Commission, 

an independent telecommunications regulatory 

authority. With respect to market access, 

partially due to repeated U.S. requests, Taiwan’s 

current telecommunications authority began in 

September 2004 to accept applications for 

carriers interested in providing fixed line 

services and shared plans in November 2004 to 

implement a new licensing regime to permit 

foreign carriers to apply for authorization to 

supply local, long-distance, and international 

services under less restrictive conditions by 

March 2005. The United States will continue to 

monitor Taiwan’s progress toward the market 

opening of its telecommunications sector in a 

WTO-consistent manner. 

d. Pharmaceuticals 

Taiwan’s pharmaceutical registration process 

continues to slow market entry for new drugs 

that have already been approved in developed 

countries. Taiwan’s Department of Health 

implemented a requirement for firms to submit 

validation data as part of the registration and 

approval process for both new drugs and those 

already on the market. The United States 

worked closely with Taiwan in 2004 to identify 

and resolve outstanding concerns with these 

requirements in order to help eliminate market 

access barriers for pharmaceutical products. The 

United States will continue to do so in 2005. 

Another area of concern in this sector involves 

pricing, whereby hospitals and doctors in 

Taiwan buy domestically-manufactured generic 

drugs at discounted prices and are then 

disproportionately reimbursed by Taiwan at a 

fixed higher rate, contrary to regulations 

requiring that reimbursements be made at the 

purchase price. This practice favors local 

generic manufacturers over innovative, usually 

foreign, producers. The United States will 

continue to work with Taiwan officials and 

industry to develop ways in which this systemic 

problem can be addressed. Pharmaceutical 

pricing issues are exacerbated by the Taiwan 

health care system, which allows doctors to both 

prescribe and dispense pharmaceuticals. 

Research-based pharmaceutical companies see 

separating these functions as essential to 

resolving the long-term pricing problem. 

11. Hong Kong (Special 

Administrative Region) 

a. Intellectual Property Rights 

In 2004, Hong Kong continued to maintain a 

robust intellectual property rights (IPR) 

protection regime, especially in the area of 

public education, sustained enforcement, and 

imposition of deterrent sentences, including 

incarceration. Hong Kong has sustained public 

education efforts to encourage respect for IPR 

and has re-launched its “no fakes” campaign 

with local retailers who pledge to sell no 

counterfeit or pirated goods. Hong Kong 

authorities also continue to conduct aggressive 

raids at the production and retail sales levels and 

to act against vendors who advertise illegal 

products over the Internet. In February 2004, 

Hong Kong enacted an amendment to its 

Copyright Ordinance that provided tougher 

measures against illicit copy shops. These 

provisions took effect on September 1, 2004. 

However, those who pirate printed works are 

not subject to criminal liability in Hong Kong. 
III. Bilateral and Regional Negotiations| 225 

In December 2004, Hong Kong initiated public 

consultation on another proposed amendment to 

the Copyright Ordinance that will deal with 

various aspects of end-use piracy. The United 

States continues to monitor the situation to 

ensure that Hong Kong’s IPR protection efforts 

are sustained and that problem areas are 

addressed. 

b. Telecommunications 

Hong Kong completed its liberalization of local 

fixed telecommunications network services 

(FTNS) on January 1, 2003. There are no limits 

on the number of licenses issued and no time 

limit for submitting license applications. In July 

2004, Hong Kong announced that it would 

withdraw its interconnection policy for local 

fixed-line telecommunications services by June 

30, 2008. Interconnection charges will then be 

subject to commercial negotiation between the 

operators concerned. In October 2004, Hong 

Kong began a two-month public consultation on 

the regulation of Internet Protocol (IP) 

Telephony. The objectives of the consultation 

were to seek views on whether the existing 

regulatory requirements for traditional voice 

telephony service should be applied to the new 

services and whether Internet Service Providers 

should be allowed to operate IP Telephony 

services. In November 2004, the government 

decided to take back in 2008 a CDMA (code 

division multiple access) license and a TDMA 

(time division multiple access) license from two 

local operators. The United States will continue 

to closely monitor developments in this sector. 

12. Sri Lanka 

 

In October 2004, the United States and Sri 

Lanka held their fourth Trade and Investment 

Council (TIC) meeting pursuant to the United 

States–Sri Lanka Trade and Investment 

Framework Agreement (ITIFA). The Sri 

Lankan delegation was led by Trade Minister 

Jeyaraj Fernandopulle. The TIC meetings have 

become an essential element of our bilateral 

trade relations and have established a record for 

problem solving. 

 Minister Fernandopulle, as well as Sri Lanka’s 

Finance and Foreign Ministers, met with U.S. 

Trade Representative Robert B. Zoellick during 

the year. Progress in advancing goals of mutual 

interest slowed somewhat, however, due to Sri 

Lanka’s national elections. A new government 

took office at the start of the year. 

 

Sri Lanka is focused on the challenge of 

adapting its apparel industry to the end of the 

international quota system. It is trying to 

improve the industry’s competitiveness and 

diversify. 

The United States has offered advice and 

facilitated linkages with our textile industry. 

U.S. exports to Sri Lanka remain insignificant, 

but Sri Lanka announced a liberalization of its 

wheat import regime, which may prove 

beneficial for U.S. wheat exporters. Sri Lanka 

also made efforts to make its government 

procurement system more transparent. The 

United States, however, is concerned that Sri 

Lanka’s new government raised some tariffs and 

took other actions that reversed some of the 

trade and investment liberalization the former 

government had undertaken. In addition, Sri 

Lanka has made limited progress concerning the 

protection of intellectual property, including 

enforcement against piracy and counterfeiting. 

Legislation enacted in 2004 that is designed to 

meet WTO TRIPS commitments is a step in the 

right direction, however, remaining TRIPS 

deficiencies need to be addressed. 

 Sri Lanka continues to advocate the initiation of 

a Free Trade Agreement negotiation with the 

United States. The matter remains under 

consideration. 

13. Iraq 

 

USTR participated in the first two meetings of 

the new Joint Economic Council, with senior 

USTR officials traveling to Baghdad for the 

inaugural session. The Members of the WTO 

agreed to begin the process for Iraqi accession, 

establishing a Working Party to conduct 

negotiations. The United States will continue 

providing technical assistance to Iraq as it 

pursues accession. USTR contributed to a two-
III. Bilateral and Regional Negotiations| 226 

week trade capacity building session in 

Washington, conducted by the Department of 

Commerce and funded by USAID, with experts 

speaking on subjects such as standards, 

intellectual property and the U.S. Generalized 

System of Preferences. 

H. Africa 

1. AGOA 

The African Growth and Opportunity Act 

(AGOA), enacted in May 2000 as part of the 

Trade and Development Act of 2000, is the 

centerpiece of U.S. trade policy for sub-Saharan 

Africa. AGOA provides a number of key 

economic benefits and incentives to promote 

economic reform and trade expansion in subSaharan Africa, including duty-free access to the 

U.S. market for almost all products made in 

beneficiary sub-Saharan African countries. The 

Act also institutionalizes a process for 

strengthening U.S. trade relations with subSaharan African countries by establishing a 

regular ministerial-level forum with AGOAeligible countries. 

The AGOA Acceleration Act of 2004 (“the 

Act”), which President Bush signed into law on 

July 13, 2004, amended several key provisions 

of AGOA. It extended the authorization of the 

overall AGOA program from 2008 to 2015, as 

President Bush proposed to the second AGOA 

Forum in Mauritius in January 2003. The Act 

also extended AGOA’s special third-country 

fabric provision by three years, to September 30, 

2007. Under this provision, less-developed 

beneficiary countries are permitted to use 

regional or third-country fabric in apparel 

imported into the United States under AGOA, 

subject to an overall cap. The cap will remain at 

the FY2004 level in years one and two of the 

extension and be reduced 50 percent in year 

three. The Act amended several technical 

aspects of AGOA’s apparel provisions to allow 

broader eligibility for products incorporating 

certain inputs. The Act also encouraged the 

Administration to develop policies that enhance 

trade capacity, support infrastructure projects 

and the ecotourism industry and expressed the 

Sense of Congress that African countries should 

participate in and support multilateral trade 

liberalization under the auspices of the WTO. 

AGOA requires the President to determine 

annually whether sub-Saharan African countries 

are, or remain, eligible for benefits based on 

their progress in meeting criteria set out in the 

Act. These criteria include establishment of a 

market-based economy and the rule of law, the 

elimination of barriers to U.S. trade and 

investment, implementation of economic 

policies to reduce poverty, the protection of 

internationally recognized worker rights, and 

establishment of a system to combat corruption. 

Additionally, countries cannot engage in: (1) 

violations of internationally recognized human 

rights; (2) support for acts of international 

terrorism; or (3) activities that undermine U.S. 

national security or foreign policy interests. 

An interagency AGOA Implementation 

Subcommittee, chaired by USTR, conducts the 

annual eligibility review, drawing on 

information from the public, non-governmental 

organizations, the private sector, and the 

prospective beneficiary governments. Following 

the eligibility review in the fall of 2004 and 

based on the recommendation of the U.S. Trade 

Representative, on December 21, 2004 the 

President signed a Proclamation listing the 3752

sub-Saharan African countries that meet the 

Act’s requirements for eligibility in 2005. Cote 

d’Ivoire was removed from eligibility for 2005 

due to a failure to meet the AGOA eligibility 

criteria described above. In a separate 

Proclamation dated December 10, 2004, 

President Bush added Burkina Faso to the list of 

AGOA beneficiary countries. 

As of December 2004, 24 AGOA-eligible 

countries had instituted acceptable customs 

measures to prevent illegal trans-shipment and, 

 

52 The list of eligible countries for AGOA and of 

those that have met requirements for textiles and 

apparel benefits can be found at 

http://www.agoa.gov.
III. Bilateral and Regional Negotiations| 227 

accordingly, had been certified for AGOA’s 

textile and apparel benefits. 

AGOA establishes a U.S.-Sub-Saharan Africa 

Trade and Economic Cooperation Forum -- 

informally known as “the AGOA Forum” -- to 

discuss expanding trade and investment relations 

between the United States and sub-Saharan 

African countries, and implementation of 

AGOA. The third meeting of the Forum was 

held in Washington, D.C. in December 2003 and 

included participation by the President, the 

United States Trade Representative, the 

Secretaries of State, Treasury, Commerce, and 

Agriculture, the Administrators of USAID and 

the U.S. Trade and Development Agency, and 

ministerial-level officials from almost all 

AGOA-eligible countries. It is expected that the 

next AGOA Forum will be held in mid-2005. 

AGOA continues to have a significant impact on 

growth and economic development in several 

beneficiary countries. Since 2000, AGOA has 

created tens of thousands of jobs and sparked 

hundreds of millions of dollars in new 

investment in Africa. In the first nine months of 

2004, AGOA imports exceeded $18.3 billion, up 

77 percent over the same period in 2003, largely 

due to the addition of Angola to the AGOA 

program and an increase in the value of oil 

imports. Over 92 percent of U.S. imports from 

AGOA-eligible countries now enter the United 

States duty-free under AGOA, GSP, or zeroduty NTR/MFN rates. While most U.S. imports 

from the region continue to be in the energy 

sector, AGOA has begun to result in 

diversification of United States-African trade. 

For example, in the first nine months of 2004, 

non-fuel AGOA imports exceeded $2.5 billion, 

with apparel imports totaling $1.2 billion, a 33 

percent increase over the same period in 2001. 

AGOA minerals and metal imports were up 65 

percent, to $490 million, and AGOA agricultural 

imports increased 23 percent, to $197 million. 

AGOA successes are also creating new 

commercial opportunities for U.S. exporters, as 

African exporters explore new input sources in 

the United States. U.S. exports to sub-Saharan 

Africa increased 30 percent in the first nine 

months of 2004, with especially notable gains in 

agricultural goods, machinery, and 

transportation equipment. In an effort to help 

African countries and businesses meet U.S. 

sanitary and phytosanitary standards, the United 

States posted to sub-Saharan Africa three U.S. 

agricultural standards experts from the USDA’s 

Animal and Plant Health Inspection Service -- 

one at each of the three USAID-administered 

regional competitiveness hubs in 2004. 

See Chapter VI for information on trade capacity 

building activities related to AGOA. 

2. South Africa 

The United States and South Africa enjoy a 

broad and mutually beneficial trade and 

investment relationship. This relationship has 

been encouraged by a TIFA, signed in February 

1999, and the start of free trade agreement 

negotiations with the Southern African Customs 

Union (SACU), of which South Africa is a 

member, in June 2003. Two-way trade increased 

22.6 percent in the first ten months of 2004, to 

$7.4 billion. During the same period, U.S. 

imports from South Africa under AGOA and 

related GSP provisions increased by 2.7 percent, 

with increased imports of minerals and metals, 

agricultural products, and chemicals offsetting 

decreases in transportation equipment, textiles, 

and apparel. South Africa is the largest U.S. 

supplier of non-fuel AGOA-eligible products 

(including GSP items), with sales worth more 

than $1.4 billion in the first ten months of 2004. 

Leading imports include platinum group metals, 

diamonds, ferroalloys, and motor vehicles. 

Leading U.S. exports to South Africa include 

motor vehicles, aircraft, machinery, and medical 

equipment. Primary agricultural imports from 

South Africa are fresh citrus fruits and wines, 

increasing by 4 percent and 67 percent, 

respectively, in the first ten months of 2004. 

The primary U.S. agricultural export is wheat. 

South Africa and the United States continue to 

consult closely on issues related to the WTO 

DDA, despite some differences in certain areas. 

South Africa was a founding member of the G-
III. Bilateral and Regional Negotiations| 228 

20 coalition of countries formed prior to the 

September 2003 WTO Ministerial in Cancun. 

The United States is the largest single-country 

source of new foreign investment in South 

Africa since South Africa’s 1994 transition to 

democracy. More than 900 U.S. companies and 

more than 400 U.S. subsidiaries and franchises 

are operating in South Africa. As with any trade 

and investment relationship as diverse and 

vibrant as this one, certain disputes have arisen 

between the United States and South Africa. 

These include concerns related to South Africa’s 

December 2000 antidumping order against 

imports of certain U.S. poultry products, as well 

as ongoing problems related to South Africa’s 

basic telecommunications monopoly, Telkom, 

and its failure to provide facilities necessary for 

U.S. value-added network services (VANS) 

providers to operate and expand. 

The United States also has some concerns 

about South Africa’s Black Economic 

Empowerment (BEE) policies, which are 

intended to promote the economic 

empowerment of the historically 

disadvantaged majority population in South 

Africa. U.S. companies generally support 

the objectives of BEE, particularly its 

emphasis on development and on moving 

historically disadvantaged people into the 

mainstream of the national and global 

economy, but some have expressed concern 

about the evolution of BEE policies. For 

example, there are concerns about BEE 

policies requiring the transfer of equity to 

historically disadvantaged individuals, 

particularly among wholly-owned U.S. 

subsidiaries which have no equity to 

transfer. Further, many aspects of BEE 

implementation, interpretation, and policy 

are still unclear and unanswered. Indeed, 

foreign investors in South Africa have cited 

the uncertainty of South African policy as 

the number one risk of doing business in the 

country. The United States continued to 

discuss all of these issues with South Africa 

in 2004. 

3. Nigeria 

Nigeria is the United States’ largest trading 

partner in sub-Saharan Africa, based mainly 

on the high level of U.S. petroleum imports 

from Nigeria. Total two-way trade was 

valued at $14.6 billion in the first ten 

months of 2004, a 52 percent increase over 

the same period in 2003, due to an increase 

in both exports and imports. Nigeria was 

the United States’ fifth largest supplier of 

petroleum and the fourth largest purchaser 

of U.S. wheat in 2003. Nigerian exports to 

the United States under AGOA, including its 

GSP provisions, were valued at $10.7 billion 

during the first nine months of 2004, a 57 

percent increase over the same period in 

2003, due mainly to a surge in oil exports. 

However, Nigeria is seeking to utilize 

AGOA to diversify its export base, 

especially in the area of manufactured 

goods. Nigeria became eligible for AGOA’s 

textile and apparel benefits in July 2004, 

though it has yet to export apparel items 

under AGOA. The United States is the 

largest foreign investor in Nigeria with an 

estimated $2.1 billion in existing assets. 

The United States is working closely with 

Nigeria, through the United States-Nigeria TIFA 

and other initiatives, to promote expanded trade 

and investment and a more diversified economy. 

At the last United States-Nigeria TIFA Council 

meeting in November 2004, the United States 

and Nigeria pledged to work together on critical 

issues such as market access, the WTO DDA, 

AGOA implementation, and trade capacity 

building. The United States is concerned about 

Nigeria’s use of protective import bans on 

certain products, including sorghum, millet, 

wheat flour, bulk vegetable oil, and a range of 

textiles and apparel products. The United States 

is also concerned about high tariffs on various 

products, including rice and meats. 
III. Bilateral and Regional Negotiations| 229 

4. Ghana 

Total two-way trade between Ghana and the 

United States was valued at $367 million in the 

first ten months of 2004, a 46 percent increase 

over the same period in 2003. Ghana is the sixth 

largest sub-Saharan African market for U.S. 

goods. The leading U.S. exports to Ghana are 

machinery, wheat, and motor vehicles. U.S. 

imports from Ghana are primarily timber, oil, 

cocoa, and apparel. In the first three quarters of 

2004, U.S. imports from Ghana under AGOA, 

including its GSP provisions, were valued at 

$48.7 million, up 34 percent from the same 

period in 2003. 

Ghana and the United States enjoy a longstanding commercial relationship despite 

occasional commercial disputes involving 

United States companies. A number of 

commercial issues have been resolved or 

addressed within the United States-Ghana TIFA. 

At the last United States-Ghana TIFA Council 

meeting, in July 2002, discussions focused on 

outstanding commercial disputes, WTO issues, 

AGOA implementation, and trade capacity 

building. 

5. COMESA53 

The United States and the Common Market for 

Eastern and Southern Africa (COMESA) signed 

a TIFA in October 2001 and have subsequently 

held two United States-COMESA TIFA Council 

meetings, most recently in June 2003. 

COMESA is the largest regional economic 

organization in Africa, with nineteen member 

states and a population of over 385 million. It is 

making great strides in advancing economic 

integration in the sub-region, including via 

implementation of the COMESA Free Trade 

Area, in which eleven COMESA members 

participate. Thirteen COMESA members are 

AGOA-eligible and nine qualify for textile and 

apparel benefits. In 2004, Deputy U.S. Trade 

Representative Shiner and other USTR officials 

met with COMESA Secretary General Mwencha 

and representatives of the COMESA Secretariat 

on several occasions. Among the topics 

discussed were implementation of AGOA, 

measures to enhance agricultural trade, WTO 

issues, and trade capacity building activities. 

The AUSTR for Africa attended the COMESA 

Business Summit in Kampala, Uganda in June 

2004. 

6. UEMOA54

The eight-member West African Economic and 

Monetary Union (known by its French acronym, 

UEMOA) represents one of the most successful 

efforts to date toward regional integration in 

Africa. UEMOA has established a customs 

union, eliminated internal duties, and is 

addressing key non-tariff barriers. There is a 

UEMOA central bank and a regional stock 

exchange. Six of the eight UEMOA member 

countries are eligible for AGOA. As noted 

above in the AGOA section, UEMOA member 

 

53 COMESA members are Angola, Burundi, 

Comoros, Democratic Republic of Congo, Djibouti, 

Egypt, Eritrea, Ethiopia, Kenya, Madagascar, 

Malawi, Mauritius, Rwanda, Seychelles, Sudan, 

Swaziland, Uganda, Zambia, and Zimbabwe. 

54 UEMOA members are Benin, Burkina Faso, Cote 

d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and 

Togo. 
III. Bilateral and Regional Negotiations| 230 

Burkina Faso became AGOA-eligible in 2004, 

while Cote d’Ivoire was removed from the list of 

AGOA-eligible countries as of January 1, 2005. 

Four UEMOA countries – Benin, Mali, Niger, 

and Senegal – are eligible to receive AGOA’s 

textile and apparel benefits. 

UEMOA entered into a TIFA with the United 

States in April 2002. At the most recent TIFA 

Council meeting in Washington in December 

2003, Deputy U.S. Trade Representative Shiner 

and UEMOA Commission President Toure 

discussed AGOA implementation, means to 

increase trade and investment flows, issues 

related to the Doha Development Agenda, and 

trade capacity building. During a December 

2004 visit to UEMOA member countries 

Senegal, Benin, and Mali, U.S. Trade 

Representative Robert B. Zoellick discussed 

issues related to AGOA, export diversification, 

and the ongoing DDA, including the handling of 

cotton in these negotiations. 

7. Africa and the WTO 

Supporting Africa’s integration into the global 

economy is one of the key elements of the 

Administration’s Africa trade policy. Increased 

and more effective participation, including 

undertaking greater commitments, of subSaharan African countries in multilateral trade 

discussions is an important step toward this end. 

Accordingly, the United States continues to 

consult closely with sub-Saharan African 

Members of the WTO and is providing technical 

assistance to help facilitate African participation 

in the WTO. 

WTO issues were key agenda items during each 

of U.S. Trade Representative Robert B. 

Zoellick’s three trips to sub-Saharan Africa in 

2004 – to South Africa and Kenya in February, 

to Mauritius in July, and to Senegal, Benin, 

Mali, Namibia, and Lesotho in December. 

Extensive consultations on WTO topics were 

also held in Geneva, Washington, and in African 

capitals. The thirty-eight sub-Saharan African 

WTO members are the largest single bloc in the 

WTO, representing 26 percent of all WTO 

membership. Seven other sub-Saharan African 

countries have observer status. 

One of the most important WTO issues for the 

WTO Africa Group in 2004 was cotton, 

especially for the so-called “Cotton-4” countries 

of Benin, Burkina Faso, Mali, and Chad. These 

and other African countries sought special 

attention for cotton in the DDA as an issue 

separate from the agriculture negotiations, 

although cotton was not a specific agenda point 

on the WTO DDA. Following lengthy 

negotiations prior to and at the July 2004 WTO 

General Council meeting, the Cotton-4, the 

United States, and other WTO Members agreed 

on a framework to allow the agriculture 

negotiations to move forward, while at the same 

time establishing a special subcommittee on 

cotton to review progress in that sector. (See 

also Section II on the WTO.) Among other 

WTO topics that the United States and the 

Africa Group consulted closely on in 2004 were 

non-agricultural market access, trade facilitation, 

development issues, and TRIPS and public 

health. 
231 

IV. Other Multilateral Activities 

The United States pursues its trade and traderelated interests in a wide range of other 

international fora. In addition to opening new 

trade opportunities, such efforts focus on 

establishing an infrastructure for international 

trade that is transparent, predictable and 

efficient, and prevents corrupt practices and 

other impediments to expanded trade and 

sustainable economic growth and prosperity. 

These efforts also are aimed at ensuring that 

U.S. strategies and objectives relating to 

international trade, environment, labor and other 

trade-related interests are balanced and mutually 

supportive. 

A. Trade and the Environment 

As President Bush stated when he signed the 

Trade Act of 2002, “history shows that as 

nations become more prosperous, their citizens 

will demand, and can afford, a cleaner 

environment.” The United States, understanding 

that advancing trade and environmental 

objectives are mutually supportive, has been 

very active in promoting a trade policy agenda 

that pursues economic growth in a manner that 

integrates economic, social, and environmental 

policies. 

To help maximize the complementary effect of 

our trade and environmental policies, the Bush 

Administration announced in April 2001 that it 

would continue the policy of conducting 

environmental reviews of trade agreements 

under Executive Order 13141 (1999) and 

implementing guidelines. The Order and 

implementing guidelines require careful 

assessment and consideration of the 

environmental impacts of trade agreements, 

including detailed written reviews of 

environmentally significant trade agreements. 

The reviews are the product of rigorous 

interagency consultations. During 2004, as part 

of its ongoing review policy, USTR continued 

its work on the environmental reviews of FTAs 

under negotiation with Morocco, Bahrain, five 

Central American countries and the Dominican 

Republic, Australia, and the members of the 

Southern African Customs Union. Interim 

reviews of the Bahrain and Central American 

agreements have now been issued. USTR also 

completed a final review of the FTAs with 

Australia and Morocco. The review process for 

each of these agreements made important 

contributions to the negotiations and to the 

content of the final agreements. USTR also 

continued its work on an environmental review 

of the WTO Doha Development Agenda 

negotiations and an environmental review of the 

Free Trade Area of the Americas (FTAA) and 

commenced reviews for FTAs with the Andean 

countries, Thailand and Panama. 

The United States continues to take an active 

role in the WTO Committee on Trade and 

Environment (CTE) to put into effect our 

commitment to the simultaneous promotion of 

expanded trade, environmental improvement, 

and economic growth and development. 

The Congress specified certain objectives with 

respect to trade and environment in the Trade 

Act of 2002, and USTR took these into account 

in coordinating interagency development of 

negotiating positions. Also during 2004, USTR 

consulted closely with Congress on the 

environmental provisions of each FTA 

throughout the negotiations. 

In addition, USTR has participated both in 

multilateral and regional economic fora and in 

international environmental agreements, in 

conjunction with other U.S. agencies. USTR 

also has worked bilaterally with U.S. trading 

partners to avert or minimize potential trade 

frictions arising from foreign and U.S. 

environmental regulations. 
IV. Other Multilateral Activities | 232 

1. Multilateral Fora 

As described in more detail in the WTO section 

of this report, the United States was active on all 

aspects of the Doha trade and environment 

agenda. The United States introduced a paper in 

the CTE in Special Session, which was wellreceived, highlighting its experiences related to 

specific trade obligations (STOs) set out in three 

Multilateral Environmental Agreements 

(MEAs): the Convention on International Trade 

in Endangered Species of Wild Fauna and Flora 

(CITES); the Stockholm Convention on 

Persistent Organic Pollutants (POPs); and the 

Rotterdam Convention on the Prior Informed 

Consent Procedure for Certain Hazardous 

Chemicals and Pesticides in International Trade 

(PIC). The United States also identified 

increased market access for environmental 

goods and services as an effective means to 

enhance access to environmental technologies 

around the world and continued to advance 

innovative ideas for developing modalities in 

negotiations on environmental goods. In the 

Rules Negotiating Group, the United States 

continued to be a leader in pressing for stronger 

disciplines on fisheries subsidies, including the 

prohibition of the most harmful subsidies. With 

respect to the Doha trade and environment 

agenda that does not specifically involve 

negotiations, the United States played an active 

role, particularly in emphasizing the importance 

of capacity-building, including with respect to 

environmental reviews of trade negotiations, and 

the role of the CTE in Regular Session in 

discussing the environmental implications of all 

areas under negotiation in the Doha 

Development Agenda. 

USTR co-chairs United States participation in 

the OECD Joint Working Party on Trade and 

Environment (JWPTE), which met twice in 

2004. Work has focused on trade, environment 

and development issues with an emphasis on the 

role of environmental goods and services 

liberalization in promoting “win-win-win” 

scenarios. These activities are discussed further 

in the OECD section of this report (Chapter V, 

Section C). 

USTR participates in U.S. policymaking 

regarding the implementation of various 

multilateral environmental agreements to ensure 

that the activities of these organizations are 

compatible with both U.S. environmental and 

trade policy objectives. Examples include the 

Convention on International Trade in 

Endangered Species of Wild Fauna and Flora, 

the Montreal Protocol on Substances that 

Deplete the Ozone Layer, the Basel Convention 

on the Control of Transboundary Movements of 

Hazardous Wastes and their Disposal, the United 

Nations Framework Convention on Climate 

Change, international fisheries management 

schemes, the Cartagena Protocol on Biosafety 

and the Stockholm Convention on Persistent 

Organic Pollutants. USTR also continues to be 

involved in the trade-related aspects of 

international forest policy deliberations, 

including in the newly formed permanent United 

Nations’ Forum on Forests – the successor to the 

Commission on Sustainable Development’s ad 

hoc Intergovernmental Forum on Forests – and 

in the International Tropical Timber 

Organization. In addition, USTR has 

participated extensively in U.S. policymaking 

regarding the International Commission for the 

Conservation of Atlantic Tuna’s revision of its 

compliance regime. 

2. The North American Free Trade 

Agreement (NAFTA) 

USTR continues to work actively with the 

agencies that lead U.S. participation in the 

institutions created by the NAFTA 

environmental side agreements, the North 

American Agreement on Environmental 

Cooperation (NAAEC) and the border 

environmental infrastructure agreement. These 

institutions were designed to enhance the 

mutually supportive nature of expanded North 

American trade and environmental 

improvement. The Border Environment 

Cooperation Commission and the North 
III. Bilateral and Regional Negotiations| 233 

American Development Bank develop and 

finance needed environmental infrastructure 

projects along the U.S.-Mexico border. 

In August 2004, the CEC Secretariat released an 

Article 13 report, “Maize and Biodiversity: The 

Effects of Transgenic Maize in Mexico: Key 

Findings and Recommendations," that, 

unfortunately, ignored key science about 

biotechnology and failed to focus on efforts that 

will preserve maize genetic diversity. The three 

NAFTA governments are working with the 

Secretariat to improve procedures for 

implementing Article 13. 

 

The CEC is also preparing for its third North 

American Symposium on Assessing the 

Environmental Effects of Trade, which will be 

held in the Fall of 2005. In August 2004, the 

CEC issued a public call for papers examining 

trade and environment issues related to 

investment and growth in North America. The 

final papers will be presented by the authors at 

the symposium. 

3. The Western Hemisphere 

U.S. negotiators continued to identify and 

pursue relevant trade-related environmental 

issues within the framework of the FTAA. 

Complementary environmental elements in the 

overall Summit of the Americas Plans of Action 

are intended to further regional cooperation. 

The United States also has continued to support 

efforts by the FTAA Civil Society Committee to 

expand opportunities for two-way 

communication with members of civil society 

throughout the Hemisphere. The Committee 

carefully considered civil society’s submissions 

on the full range of issues, including 

environmental concerns. 

4. Bilateral Activities 

The Bush Administration has advanced the 

policy of using the deepened economic 

relationship that comes from new trade 

agreements to enhance environmental policy 

cooperation with our new FTA partners. To 

compliment negotiation of FTAs, the 

Department of State leads interagency efforts to 

negotiate parallel environmental cooperation 

mechanisms. For example, as a complement to 

the Morocco FTA negotiations, the United 

States and Morocco negotiated a Joint Statement 

on Environmental Cooperation that establishes a 

Working Group on Environmental Cooperation 

to set priorities for future environment-related 

projects. The United States completed a similar 

arrangement associated with the FTA with 

Bahrain, and has already begun to implement 

cooperative activities with both partners. An 

Environmental Cooperation Agreement (ECA) 

with the Dominican Republic and Central 

America will also be linked to the CAFTA-DR. 

This ECA identifies several areas, such as 

enactment and enforcement of environmental 

laws, for priority projects and is innovative in 

providing mechanisms to establish benchmarks 

for measuring progress in environmental 

protection and to monitor achievements in 

meeting benchmarks. 

USTR has included in all of its recent FTAs 

environment chapters containing core 

obligations to promote high levels of 

environmental protection, ensure effective 

enforcement of environmental laws and restrict 

FTA partner governments from inappropriately 

derogating from these laws to encourage 

increased trade or investment. Additionally, all 

FTA environment chapters include provisions to 

advance public participation, remedial action for 

violations of environmental laws and measures 

to enhance environmental performance. 

CAFTA-DR, in particular, includes an 

innovative public submissions mechanism that 

allows members of the public to have 

independent review of their written submissions 

on enforcement matters and promote action by 

the Environmental Cooperation Commission 

under the ECA to build capacity to address 

enforcement problems. USTR is currently 
IV. Other Multilateral Activities | 234 

negotiating FTA environment chapters with the 

five countries of SACU, the Andeans, Thailand, 

and Panama. 

With respect to implementation of recently 

concluded FTAs, USTR is working with other 

agencies to ensure that environmental provisions 

have an immediate impact in advancing 

environmental protection. For example, the 

United States and Chile are working to 

implement the eight environmental cooperation 

projects outlined in their FTA. In January 2004, 

the governments sponsored a workshop on 

corporate environmental stewardship in 

Santiago. In September, the U.S. Department of 

Justice and the Chilean Consejo de Defensa del 

Estado, in cooperation with the Environmental 

Law Institute, held a workshop on 

environmental law enforcement focusing on 

judicial actions to restore and recover 

compensation for damage to the environment 

and natural resources. Both events included 

opportunities for civil society participation. 

B. Trade and Labor 

The trade policy agenda of the United States 

includes a strong commitment to protecting the 

rights of workers, both in American and in our 

trading partners, and ensuring that American 

workers remain the most competitive, best 

trained workforce in the world. Expanded trade 

benefits all Americans through lower prices and 

greater choices in products available to 

consumers. Many American workers benefit 

from expanded employment opportunities 

created by trade liberalization. The Bush 

Administration has consistently supported 

workers through both trade negotiations and the 

use of safeguard trade laws to ensure a level 

international playing field. A concerted focus 

on worker training and education policies will 

continue to ensure that the American workforce 

can compete with anyone. In pursuing trade 

liberalization, we rely on the congressional 

guidance contained in the Bipartisan Trade 

Promotion Authority Act of 2002 (“TPA”) to 

bring the benefits of trade and open markets to 

America and the rest of the world. During this 

past year, USTR continued to consult with 

Congress on the labor provisions of each 

agreement throughout the negotiations. USTR 

also continued to work cooperatively with other 

U.S. agencies in multilateral, regional and 

bilateral fora to promote respect for core labor 

standards, including the abolition of the worst 

forms of child labor, in pursuing labor 

provisions in numerous trade agreements 

consistent with the bipartisan guidance 

contained in the Trade Act of 2002. 

 

1. Bipartisan Trade Promotion Authority 

Act of 2002 (TPA) Guidance on Trade and 

Labor 

The importance of the linkage between trade and 

labor is underscored by the fact that the 

Bipartisan Trade Promotion Authority Act of 

2002 (TPA) contains labor-related clauses in 

three sections of the legislation: overall trade 

negotiating objectives; principal negotiating 

objectives; and the promotion of certain 

priorities to address U.S. competitiveness in the 

global economy. 

The overall labor-related U.S. trade negotiating 

objectives are threefold. The first objective is to 

promote respect for worker rights and the rights 

of children consistent with the core labor 

standards of the International Labor 

Organization (ILO). TPA defines core labor 

standards as: (1) the right of association; (2) the 

right to organize and bargain collectively; (3) a 

prohibition on the use of forced or compulsory 

labor; (4) a minimum age for the employment of 

children; and (5) acceptable conditions of work 

with respect to minimum wages, hours of work, 

and occupational safety and health. The second 

objective is to strive to ensure that parties to 

trade agreements do not weaken or reduce the 

protections of domestic labor laws as an 

encouragement for trade. The third objective is 

to promote the universal ratification of and full 

compliance with ILO Convention 182 – which 
III. Bilateral and Regional Negotiations| 235 

the United States has ratified – concerning the 

elimination of the worst forms of child labor. 

The principal trade negotiating objectives in 

TPA include, most importantly for labor, the 

provision that a party to a trade agreement with 

the United States should not fail to effectively 

enforce its labor laws in a manner affecting 

trade. TPA recognizes that the United States 

and its trading partners retain the sovereign right 

to establish domestic labor laws, and to exercise 

discretion with respect to regulatory and 

compliance matters, and to make resource 

allocation decisions with respect to labor law 

enforcement. To strengthen the capacity of our 

trading partners to promote respect for core 

labor standards is an additional principal 

negotiating objective, as is to ensure that labor, 

health or safety policies and practices of our 

trading partners do not arbitrarily or 

unjustifiably discriminate against American 

exports or serve as disguised trade barriers. A 

final principal negotiating objective is to seek 

commitments by parties to trade agreements to 

vigorously enforce their laws prohibiting the 

worst forms of child labor. 

In addition to seeking greater cooperation 

between the WTO and the ILO, other laborrelated priorities in TPA include the 

establishment of consultative mechanisms 

among parties to trade agreements to strengthen 

their capacity to promote respect for core labor 

standards and compliance with ILO Convention 

182. The Department of Labor is charged with 

consulting with any country seeking a trade 

agreement with the United States concerning 

that country’s labor laws, and providing 

technical assistance if needed. Finally, TPA 

mandates a series of labor-related reviews and 

reports to Congress in connection with the 

negotiation of new trade agreements. These 

include an employment impact review of future 

trade agreements, the procedures for which are 

modeled after the Executive Order establishing 

environmental impact reviews of trade 

agreements. A meaningful labor rights report, 

and a report describing the extent to which there 

are laws governing exploitative child labor, are 

also required for each of the countries with 

which we are negotiating. 

2. Multilateral Efforts 

At the WTO Ministerial meetings in Singapore 

(1996) and Seattle (1999), the United States was 

among a group of countries supporting the 

creation of a WTO working party to examine the 

interrelationships between trade and labor 

standards. At the 2001 Doha WTO Ministerial, 

we supported a similar proposal which was put 

forth by the EU, but a vocal group of developing 

countries adamantly opposed this proposal. The 

text of the Doha Ministerial Declaration, 

adopted by consensus, therefore, includes the 

following: 

“We affirm our declaration made at the 

Singapore Ministerial Conference regarding 

internationally recognized core labor standards. 

We take note of work underway in the 

International Labor Organization (ILO) on the 

social dimensions of globalization.” 

The 2003 Cancun WTO Ministerial focused 

solely on the Doha negotiating agenda, and 

adopted no declaration. 

In an effort to address the social dimensions of 

globalization, the ILO established the “World 

Commission on the Social Dimension of 

Globalization.” in February 2002. In February 

2004, the Commission issued its report, “A Fair 

Globalization: Creating Opportunities for All.” 

The report made three major groups of 

suggestions on how all countries of the world 

could take advantage of the benefits of 

globalization: national measures that countries 

could implement to build and strengthen 

democracy and good government; international 

measures to reform the international economic 

system; and suggestions concerning specific 

issues, such as migration, gender and regional 

integration. Since the report was issued, the ILO 

has been engaged in a discussion about how it 
IV. Other Multilateral Activities | 236 

might implement some of the labor-relevant 

conclusions. During 2004 USTR met with the 

Director-General of the ILO to discuss the 

implications of the work of the World 

Commission on United States trade policy. 

The United States remains the largest donor to 

the work of the ILO. The United States has been 

particularly supportive of the ILO initiative--the 

International Program on the Elimination of 

Child Labor (IPEC). Recognizing that all child 

labor will never be eliminated until poverty is 

eliminated, IPEC/ILO efforts have focused on 

the means to eliminate the worst forms of child 

labor, including child prostitution and 

pornography, forced or bonded child labor, and 

work in hazardous or unhealthy conditions. 

ILO/IPEC activities continued in 2004 in many 

of our trading partners. 

3. Regional Activities

The Thirteenth (XIII) Inter-American 

Conference of Ministers of Labor (IACML), 

hosted by Brazil in September 2003, continued 

the implementation of the labor-related 

mandates of the Third Summit of the Americas 

that began with the Ottawa IACML meeting in 

2001. The Salvador Declaration, endorsed by 

labor ministers at the XIII IACML, is 

groundbreaking regarding the need for greater 

integration of economic and labor policies. The 

XIV meeting of the IAMCL will be hosted by 

Mexico in September 2005. 

The Salvador Plan of Action provides for the 

continued examination of the impacts of trade 

and integration on labor within IACML 

Working Group 1, chaired by Argentina and 

vice-chaired by the United States. A second 

working group focuses on capacity-building of 

Labor Ministries, including improving the 

ability of Ministries to effectively promote the 

ILO Declaration on Fundamental Principles and 

Rights at Work. Each of these working groups 

involve the ILO, the Organization of American 

States, the Inter-American Development Bank, 

the UN’s Economic Commission for Latin 

America and the Caribbean, the Business 

Technical Advisory Committee on Labor 

Matters and the Trade Union Technical 

Advisory Committee in their work. 

The North American Agreement on Labor 

Cooperation (NAALC) Secretariat, along with 

the IACML and the OAS, sponsored a workshop 

in 2004 entitled Supporting Economic Growth 

through Effective Employment Services, to 

provide a forum for discussion on the 

fundamentals of employment service systems as 

a support to economic growth. The workshop 

marked the first North American contribution to 

the implementation of the Action Plan of the 

XIII IACML. Other NAALC activities are 

described in the NAFTA section of this report. 

In their November 2002 Quito Declaration, the 

hemisphere’s Trade Ministers not only renewed 

the commitment to observe the ILO Declaration, 

but also noted the IACML Working Group’s 

examination of the question of globalization 

related to labor and requested that the results of 

that work be shared with them. In response to 

this request, the IACML “troika” leadership, the 

Ministers of Labor from Canada, Brazil and 

Mexico, attended the FTAA Trade Ministerial in 

Miami in November 2003 to report on the 

IACML’s work on labor and integration. The 

Labor Ministers called for the strengthening of 

social dialogue in the Summit of the Americas 

process so that economic integration under the 

Summit process is pursued in a satisfactory 

manner. 

During the January 2004 special Summit held in 

Monterrey, Mexico, in the Declaration of Nuevo 

Leon, governments reaffirmed their dedication 

to observe the ILO Declaration and recognized 

the importance of achieving poverty reduction 

and job creation while protecting the rights of 

workers: 

“We are committed to the principles of decent 

work proclaimed by the International Labour 

Organization, and we will promote the 

implementation of the Declaration on the 

Fundamental Principles and Rights at Work in 
III. Bilateral and Regional Negotiations| 237 

the conviction that respect for workers' rights 

and dignity is an essential element to achieving 

poverty reduction and sustainable social and 

economic development for our peoples. 

Additionally, we agree to take measures to fight 

the worst forms of child labor. We recognize and 

support the important work of the InterAmerican Conference of Ministers of Labor 

toward achieving these vital objectives.” 

The Fourth Summit of the Americas, to be held 

in Argentina in 2005, will build upon the theme 

of job creation to fight poverty and strengthen 

democratic governance. 

 

Other regional trade and labor activities carried 

out under NAFTA/NAALC and the OECD are 

noted in those sections of this report. 

4. Bilateral Activities 

i. FTAs 

The Administration continued to negotiate 

bilateral trade agreements that fully incorporated 

congressional guidance on trade and labor 

contained in TPA. During 2004, USTR signed 

and Congress approved FTAs with Morocco and 

Australia. The FTA with Australia entered into 

force on January 1, 2005 and we expect that the 

FTA with Morocco will enter into force in the 

spring of 2005. The United States has also 

negotiated TPA consistent labor chapters in FTA 

agreements with the Central American countries 

and the Dominican Republic (CAFTA-DR) and 

Bahrain which we expect to submit for 

congressional approval in 2005. 

In each of these FTAs the parties reaffirm their 

obligations as ILO members and commit to 

strive to ensure that core labor standards, 

including the ILO Declaration and ILO 

Convention 182 concerning elimination of the 

worst forms of child labor, are recognized and 

protected by domestic labor laws. Each Party is 

also obligated not to fail to effectively enforce 

its labor laws, recognizing the discretion Parties 

have in matters such as allocation of resources. 

Cooperation and consultations are the preferred 

means to resolve differences over a Party’s 

compliance with obligations under an FTA’s 

labor chapter. If cooperation and consultations 

fail to resolve such a disagreement, our FTAs 

permit a Party to ask a dispute settlement panel 

to determine whether the other Party has 

violated its obligation not to fail to effectively 

enforce its labor laws in a manner affecting 

trade. If a panel determines that the respondent 

Party has violated this obligation, and if the 

Parties are unable to agree on an action plan for 

bringing that Party into compliance, then the 

panel may establish a monetary assessment to be 

paid by that Party, based on criteria such as the 

trade effect and pervasiveness of the violation. 

The proceeds of an assessment would go into a 

fund, established under the Agreement, and 

expended only upon the direction of a joint 

commission (consisting of representatives of 

both Parties to the Agreement). The intention is 

for the funds to be used to address the 

underlying labor problem. The assessment must 

be paid each year until the respondent Party 

comes into compliance with its obligations. 

If a Party fails to pay an assessment within a 

reasonable period, the other party may take 

appropriate steps to collect the assessment, 

including suspending tariff benefits under the 

FTA sufficient to collect the assessment, bearing 

in mind the Agreement’s objective of 

eliminating barriers to bilateral trade while 

seeking to avoid unduly affecting parties or 

interests not party to the dispute. 

On December 17, 2004, the Bureau of 

International Labor Affairs of the U.S. 

Department of Labor renamed its National 

Administrative Office as the Office of Trade 

Agreement Implementation, and designated it as 

the Contact Point for Labor Provisions of Trade 

Agreements. 
IV. Other Multilateral Activities | 238 

In approaching labor issues in the context of 

negotiations with Central America and the 

Dominican Republic, the United States carried 

out a three-pronged strategy. The first element 

is a labor chapter fully consistent with TPA as 

well as guidance received in consultations with 

House and Senate Committees. The language in 

the labor chapter - stronger and more 

comprehensive than in earlier FTAs such as 

Chile and Jordan - requires that in each country 

tribunals for the enforcement of labor laws be 

fair, equitable, transparent, and that proceedings 

before such tribunals not entail unwarranted 

delays. In addition, the Labor Cooperation and 

Capacity Building Mechanism in the CAFTADR provides opportunities for public 

participation in the development and 

implementation of labor cooperation activities. 

 

A second, equally important element has been 

intensive bilateral consultations with each of our 

negotiating partners focused on assessing – and 

addressing where necessary – key labor issues in 

each country. While negotiations were ongoing, 

the five CAFTA countries and the Dominican 

Republic asked the ILO to conduct a review of 

their labor laws relating to fundamental 

principles and rights at work. The ILO report 

makes clear that all six countries have laws 

giving effect to all of the ILO’s fundamental 

principles and rights at work, but the report also 

pointed out that enforcement of those laws needs 

additional attention and resources. 

The third element of our strategy is the design 

and implementation of labor cooperation and 

capacity building programs to strengthen the 

capacity of our partners to better protect worker 

rights once the agreement takes effect. These 

initiatives include a regional project in Central 

America that was expanded to include the 

Dominican Republic. The program is funded 

through two grants from the U.S. Department of 

Labor for $7.75 million to increase workers’ and 

employers’ knowledge of their national labor 

laws, strengthen labor inspections systems, and 

bolster alternative dispute resolution 

mechanisms. FY2005 appropriations by 

Congress provide an additional $20 million for 

labor and environmental capacity building 

activities related to the agreement in the Central 

American countries and the Dominican 

Republic. The United States is in the process of 

identifying activities at this time. Several 

programs are also being carried out in Morocco 

aiming to train workers on worker rights issues, 

enhance the Labor Ministry’s capacity to 

increase compliance with labor laws, and to help 

eradicate the worst forms of child labor. 

As noted above, in 2005 we intend to seek 

congressional approval of legislation 

implementing the Bahrain FTA. This FTA 

further builds the foundation for the President’s 

Middle East Peace Initiative, which calls for a 

free trade area in the Middle East by 2013. The 

President has also notified Congress of his intent 

to negotiate FTAs in 2005 with Oman and the 

United Arab Emirates. 

Trade negotiations will continue in 2005 with 

the South African Customs Union (SACU), 

Thailand, Panama, and the Andean countries and 

will follow the same approach to include TPA 

consistent labor provisions 

ii. Other Bilateral Agreements and Programs 

Our bilateral textile agreement with Cambodia, 

which terminated at the end of 2004, had a 

unique aspect in that import quotas could be 

increased dependent upon the efforts of the 

Cambodian government to effectively enforce its 

labor laws and protect the fundamental rights of 

Cambodian workers. With funds jointly 

provided by the U.S. Department of Labor, the 

Government of Cambodia and the apparel 

manufacturers association, the ILO monitored 

working conditions in Cambodian enterprises 

and reported on the results of that monitoring. 

Although the quota mechanism under the 

Agreement is no longer in effect, as that 

mechanism was linked to rights and obligations 

under the WTO Agreement on Textiles and 

Clothing, which expired at the end of 2004, 

Cambodia has pledged to financially contribute 
III. Bilateral and Regional Negotiations| 239 

to sustaining the ILO garment sector monitoring 

project after the U.S. Department of Labor 

funding expires at the end of 2005. The ILO has 

already secured commitments for funding 

beyond that date, including from the 

Government of Cambodia, the French 

Government, and USAID. Other donors such as 

the World Bank have also expressed an interest 

in helping fund the proposed three year 

transition from ILO monitoring to monitoring 

conducted by a Cambodian institution beginning 

in 2009 to ensure credible and transparent 

monitoring in the long run. The United States 

will continue to monitor how Cambodia follows 

through on its commitments, including funding 

for the ILO monitoring project, whether labor 

policies are applied to other industries, and 

capacity building of the Ministry of Labor and 

Vocational Training. 

The U. S. bilateral textile agreement with 

Vietnam, which terminated at the end of 2004, 

also included a labor provision. Both Parties 

reaffirmed their commitments as members of the 

ILO, and also indicated their support for 

implementation of codes of corporate social 

responsibility as one way of improving working 

conditions in the textile sector. The agreement 

also called for a review of progress on the goal 

of improving working conditions in the textile 

sector when the U.S. Department of Labor and 

the Ministry of Labor, Invalids and Social 

Affairs of the Socialist Republic of Vietnam 

meet annually to review the implementation of a 

Memorandum of Understanding between the 

two ministries signed in November 2000. 

A final aspect of trade and labor bilateral 

activities relates to the worker rights provisions 

of U.S. trade preference programs, such as the 

African Growth and Opportunity Act (AGOA), 

the Andean Trade Promotion and Drug 

Eradication Act (ATPDEA), as amended, the 

Caribbean Basin Trade Preferences Act 

(CBTPA), and the Generalized System of 

Preferences (GSP). The 2004 Annual ATPA 

Review is the second such review to be 

conducted pursuant to the ATPA regulations on 

the eligibility of countries for the benefits of the 

ATPA. The TPSC continued to review worker 

rights conditions in Ecuador. Any modifications 

to the list of beneficiary developing countries or 

eligible articles resulting from this review of 

progress will be published in the Federal 

Register. 

During 2004, USTR continued its reviews of a 

number of petitions requesting that GSP trade 

benefits be withdrawn from countries for not 

taking steps to afford internationally recognized 

worker rights. The GSP review of Guatemala 

was terminated as a result of the progress 

Guatemala made during the CAFTA-DR 

negotiations to address worker rights. The GSP 

country practice review of Bangladesh, 

originally accepted in 1999, was also terminated 

in recognition of the passage of a new law 

providing for worker representation committees 

in Bangladesh’s export processing zones. As the 

year ended, a review of Swaziland was still in 

progress. GSP country practice petitions were 

filed in 2004 against Costa Rica, El Salvador, 

Honduras, Guatemala, Panama, Oman, and a 

petition was filed to remove AGOA and GSP 

benefits from Uganda. Decisions on whether to 

accept these cases for review are pending. 

C. Organization for Economic 

Cooperation and Development 

Thirty democracies in Europe, North America, 

and the Pacific Rim comprise the Organization 

for Economic Cooperation and Development 

(OECD), established in 1961 and headquartered 

in Paris. In 2001, these countries accounted for 

59 percent of world GDP (in purchasing-powerparity terms), 76 percent of world trade, 95 

percent of world official development 

assistance, and 19 percent of the world's 

population. The OECD is not just a grouping of 

these economically significant nations, but also a 

policy forum covering a broad spectrum of 

economic, social, and scientific areas, from 

macroeconomic analysis to education to 
IV. Other Multilateral Activities | 240 

biotechnology. The OECD helps countries - 

both OECD members and non-members - reap 

the benefits and confront the challenges of a 

global economy by promoting economic growth, 

free markets, and efficient use of resources. 

Each substantive area is covered by a committee 

of member government officials, supported by 

Secretariat staff. The emphasis is on discussion 

and peer review, rather than negotiation, though 

some OECD instruments are legally binding, 

such as the Anti-Bribery Convention. OECD 

decisions require consensus among member 

governments. In the past, analysis of issues in 

the OECD often has been instrumental in 

forging a consensus among OECD countries to 

pursue specific negotiating goals in other 

international fora, such as the WTO. 

The OECD conducts wide-ranging outreach 

activities to non-member countries and to 

business and civil society, in particular through 

its series of workshops and "Global Forum" 

events held around the world each year. Nonmembers may also participate as observers of 

committees when members believe that 

participation will be mutually beneficial. The 

OECD carries out a number of regional and 

bilateral cooperation programs. The Russia 

program, for instance, supports Russia's efforts 

to establish a market economy and eventually 

join the OECD. 

1. Trade Committee Work Program 

In 2004, the OECD Trade Committee, its 

subsidiary Working Party, and its joint working 

groups on environment, competition, and 

agriculture, continued to address a number of 

issues of significance to the multilateral trading 

system. Members asked the Secretariat to focus 

its analytical resources on work that would 

advocate freer trade and facilitate WTO 

negotiations, deepening understanding of the 

rationale for continued progressive trade 

liberalization in a rules-based environment. The 

Trade Homepage on the OECD website 

(www.oecd.org/trade) contains up-to-date 

information on published analytical work and 

other trade-related activities. 

Major analytical pieces completed under the 

Trade Committee during 2004 included studies 

on “The Global Economic Impact of China’s 

Accession to the WTO” and on “International 

Licensing and the Strengthening of Intellectual 

Property Rights in Developing Countries.” The 

OECD published its study, “A New World Map 

in Textiles and Clothing: Adjusting to Change,” 

examining the implications for developed and 

developing countries of the elimination at the 

end of 2004 of quantitative import restrictions in 

textiles and clothing. Reflecting the needs of 

WTO negotiators in Geneva, additional work 

completed in 2004 analyzed the costs of 

introducing and implementing trade facilitation 

measures, in order to address developing country 

concerns in this area; looked at the economic 

impact of barriers to trade in services; reviewed 

the use by WTO Members of import 

prohibitions and quotas; and examined the links 

between domestic regulatory reform and market 

openness, demonstrating that trade-related 

regulatory reform enables countries to take 

better advantage of trade liberalization and of 

open global markets. The Trade Committee 

reviewed an interim report on a major on-going 

project looking at trade and structural 

adjustment and discussed aspects of the work 

with representatives of civil society, including 

members of the OECD’s Business and Industry 

Advisory Council and Trade Union Advisory 

Council. Work advanced on studies expected to 

be helpful in addressing some developing 

countries’ concerns related to trade 

liberalization: one on the potential impacts of the 

erosion of trade preferences, a second on the 

impacts of tariff cuts on developing countries’ 

government revenues. 

The Committee also laid the groundwork for a 

meeting of OECD member country trade 

ministers in May 2004. Ministers from a 

number of key non-members also participated. 

Those discussions made a positive contribution 
III. Bilateral and Regional Negotiations| 241 

to the WTO negotiations leading to the August 

agreement on a framework for the DDA. 

In accordance with the OECD’s adoption of 

biennial output-based budgeting, the Trade 

Committee determined what should be its 

priority activities during 2005-06. The 

Committee agreed that analysis and dialogue to 

support and facilitate the ongoing WTO 

negotiations should remain a priority, as should 

work that focuses on the development dimension 

of trade and the benefits of trade liberalization. 

2. Competition Policy and Trade 

The Joint Group on Trade and Competition (JG) 

continued work on issues at the intersection of 

trade and competition policy, with the aim of 

providing an improved analytical foundation for 

the consideration of this topic in the OECD and 

other fora. The JG has helped to promote 

mutual understanding and interaction between 

the trade and antitrust "cultures," as well as 

better clarity and coherence of approaches 

toward issues of common interest. The JG met 

in February and October 2004, and agreed to 

pursue a study on regional trade agreements with 

competition provisions. The JG also discussed a 

series of case studies of developing countries 

that had faced competition problems that also 

affected development and export 

competitiveness. The case studies included the 

privatization of Mexico's railroads, Telmex and 

the related U.S. WTO case, ocean shipping in 

Turkey, telecommunications in Romania, and 

cement in Zambia. The case studies will be 

assembled into a booklet for use in a Joint 

Global Forum on Trade and Competition 

scheduled for February 2006, to which many 

non-OECD countries will be invited. 

3. The OECD Anti-Bribery Convention: 

Deterring Bribery of Foreign Public 

Officials 

The OECD Convention on Combating Bribery 

of Foreign Public Officials in International 

Business Transactions entered into force in 

February 1999. The Convention was adopted by 

the then 29 members of the OECD and five nonmembers in 1997. The non-members were 

Argentina, Brazil, Chile, Bulgaria, and Slovakia 

(now an OECD member). In 2001, non-member 

Slovenia became a party to the Antibribery 

Convention, and in 2004, Estonia, also a nonmember, acceded to the Convention. 

The Convention requires the parties to 

criminalize the bribery of foreign public officials 

in executive, legislative, and judicial branches, 

impose dissuasive penalties on those who offer, 

promise or pay bribes, and implement adequate 

accounting procedures to make it harder to hide 

illegal payments. All 36 parties have adopted 

legislation to implement the Convention. 

Prior to the entry into force of the Convention, 

the United States was alone in criminalizing the 

bribery of foreign public officials. As a result, 

U.S. firms had lost international contracts with 

an estimated value of billions of dollars every 

year due to bribery payments to corrupt officials. 

Such payments also distort investment and 

procurement decisions in developing countries, 

undermine the rule of law and create an 

unpredictable environment for business, 

consequences that can be particularly damaging 

in developing countries. 

By the end of 2004, all parties except Slovenia, 

which will be reviewed in January 2005, and 

Estonia had undergone a review of their 

respective national legislation implementing the 

Convention (i.e., Phase 1 review). The parties to 

the Convention commenced the second phase 

(i.e., Phase 2) of peer monitoring – the 

evaluation of enforcement – in November 2001. 

By end of 2004, a review had been completed 

for fifteen countries. Information on these 

reviews is available on the internet at 

www.export.gov/tcc and www.oecd.org. The 

United States has successfully pressed for an 

accelerated Phase 2 monitoring schedule and 

ensured that there are sufficient OECD budget 

funds to support it. The Working Group on 
IV. Other Multilateral Activities | 242 

Bribery will undertake seven more country 

reviews in 2005 with the goal of completing the 

first country review cycle in 2007. The United 

States is working to ensure continuation of a 

robust peer-review monitoring process beyond 

2007. The OECD Antibribery Convention 

parties will also continue to study whether the 

coverage of the Convention should be expanded 

to include several related issues, such as 

explicitly covering the bribery of foreign 

political parties and candidates. 

4. Dialogue with Non-OECD Members 

The OECD has continued its contacts with nonmember countries to encourage the integration 

into the multilateral trade regime of developing 

and transition economies, such as the countries 

of Eastern Europe and Central Asia, leading 

developing economies in South America and 

Asia, and sub-Saharan African countries. 

In July 2004 OECD members adopted a new, 

more pro-active strategy for outreach to nonmembers. The Trade Committee, like all 

committees, was instructed to decide which nonmembers could contribute most positively to its 

work and to consider inviting those economies 

to be observers, on a longer-term or an ad hoc 

basis. As a first step, the Trade Committee is 

undertaking a review of its mandate, which dates 

back to the Committee’s creation some forty 

years ago, and has extended the observer status 

of Argentina, Brazil, Chile, Hong Kong, and 

Singapore through December 2005. These five 

observers, plus China, Guyana, India, Kenya, 

Russia, and South Africa, also accepted the 

OECD’s invitation to participate in the trade 

ministers’ meeting at the May 2004 Ministerial 

Council Meeting. That meeting focused on 

advancing the WTO DDA. 

Russia, Estonia, Latvia, and Lithuania all 

participated as ad hoc observers in specific 

meetings of the Trade Committee’s Working 

Party during 2004. Russia’s attendance 

followed upon its participation in a peer review 

of its trade-related regulatory reform efforts. 

The Working Party has undertaken 20 such 

reviews in the past few years, but this was the 

first involving a non-member. The Working 

Party discussed with the Baltic countries a study 

on the impact of their accession to the EU on 

their trade in services. Estonia, Latvia, and 

Lithuania, as well as the countries of South East 

Europe and Russia, also benefited from OECD 

work on the impact of barriers in their services 

regimes, the culmination of a multi-year project 

on services trade in the transition economies. 

Within the framework of that project, the 

OECD, both alone and in conjunction with other 

international organizations (the WTO, World 

Bank, and the International Trade Centre), held 

seminars in all the Southeast European countries 

in the first half of 2004 aimed at training 

government officials and the business 

community in the region to plan more effective 

national trade policies in the area of services. 

The OECD organized several other events in 

2004 connected to its ongoing trade policy 

dialogue with non-member economies. In June, 

the OECD held a regional workshop in Almaty, 

Kazakhstan, on the economic and trade 

implications of WTO accession. While the main 

audience was officials from Russia, China, 

Central Asia, and other Asian nations, 

representatives from business and international 

organizations also attended the meeting. The 

main objectives of the meeting were to share 

experiences with the implementation of 

multilateral and regional trade disciplines, 

exchange views on the relevance of different 

methods for analyzing changes in trade policy, 

and consider alternative approaches employed 

by governments to implement WTO 

commitments and maximize the benefits of 

integration into the international trading system. 

In October, Lesotho hosted an OECD regional 

workshop on deeper integration of African 

countries into the global economy. The meeting 

focused on agriculture, services, and trade 

facilitation issues, and brought together 

representatives from African business, research 

institutions, civil society, and governments, as 
III. Bilateral and Regional Negotiations| 243 

well as from OECD member countries and 

international organizations. 

The biggest trade-related outreach event in 2004 

was the Global Forum held in Bangkok, 

Thailand, in November. The OECD organized 

this event in conjunction with the United 

Nations Economic and Social Commission for 

Asia and the Pacific (ESCAP), with support 

from the World Bank and the Government of 

Thailand. The meeting provided an opportunity 

for members and non-members to exchange 

views and share experiences on policies 

intended to promote competitiveness and 

facilitate domestic economic adjustment to 

trade-related changes. Participants focused 

particularly on the textiles/clothing and motor 

vehicles sectors. Attendees came from 28 

economies, as well as from the European 

Commission and a dozen international 

organizations, non-governmental organizations, 

and private businesses. 

5. Environment and Trade 

The OECD Joint Working Party on Trade and 

Environment (JWPTE) met twice in 2004 to 

continue its analysis of the effects of 

environmental policies on trade and the effects 

of trade policies on the environment, as well as 

its efforts to promote mutually supportive trade 

and environmental policies. During the year, the 

JWPTE contributed important work on 

environmental goods and services to support the 

DDA. The JWPTE began work on a paper 

exploring the synergies between liberalization of 

environmental goods and environmental 

services, which is expected to be published in 

early 2005. The JWPTE also continued its 

examination of complementary measures that 

can ensure the maximum realization of benefits 

from the liberalization of environmental goods 

and services markets. The JWPTE also 

compiled studies on the environmental 

effectiveness and economic efficiency of 

national eco-labeling schemes. The United 

States provided information on its analysis of the 

Energy Star program, and other OECD members 

provided similar information for the report, 

which should be published in early 2005. The 

JWPTE continued work to support the trade and 

environment-related elements of the September 

2002 World Summit for Sustainable 

Development plan of implementation, focusing 

on successful transfer of environmentally-sound 

technologies. The JWPTE agreed to begin new 

work in 2005 on environmental aspects of 

regional trade agreements. The JWPTE hosted 

an outreach event for interested nongovernmental organizations in December 2004, 

continuing its tradition of promoting dialogue 

with interested stakeholders. 

6. Export Credits 

The OECD Arrangement on Guidelines for 

Officially Supported Export Credits (the 

Arrangement) places limitations on the terms 

and conditions of government-supported export 

credit financing so that competition among 

exporters is based on the price and quality of the 

goods and services being exported, rather than 

on the terms of government-supported financing. 

It also limits the ability of governments to tie 

their foreign aid to procurement of goods and 

services from their own countries (tied aid). The 

Participants to the Arrangement (Participants), a 

stand-alone policy-level body of the OECD, are 

responsible for implementing the 26-year-old 

Arrangement and for negotiating further 

disciplines to reduce subsidies in official export 

credit support. 

The Administration estimates that the 

Arrangement saves U.S. taxpayers about $800 

million annually because the Export-Import 

Bank of the United States (Ex-Im Bank), the 

U.S. export credit agency, no longer has to offer 

loans with low interest rates and long repayment 

terms to compete with such practices by other 

governments. In addition, the "level playing 

field" created by the Arrangement's tied aid 

disciplines has created conditions for U.S. 

exporters to increase their exports by about $1 
IV. Other Multilateral Activities | 244 

billion a year. These exports could have cost 

taxpayers about $300 million, if the United 

States had to create its own tied aid program. 

In 2004, the Participants in the Arrangement 

agreed to a U.S. proposal to open the bidding 

process for projects in developing countries that 

are financed with untied aid credits. Untied aid 

credits are bilateral aid loans for which proceeds 

are supposed to be available to finance 

procurement from all countries. However, the 

U.S. Government and U.S. exporters have been 

concerned that this type of aid was used to 

promote exports from donor countries outside 

the tied aid rules, rather than provide financing 

to all exporters for aid projects. 

Partly in response to a request from Congress, 

the Administration has been working to 

negotiate OECD rules governing these aid loans 

over the past two years. In November 2004, the 

Administration successfully concluded pathbreaking requirements for participant 

governments to publicly announce the details of 

their untied aid projects 30 days before the 

bidding period begins, as well as report the 

outcome of each bidding competition. These 

requirements will help U.S. exporters identify 

and bid for these foreign contracts and ensure 

that the bids are administered fairly. The new 

two-year pilot agreement entered into force on 

January 1, 2005. The Treasury Department will 

carefully monitor the implementation of this 

agreement to insure proper compliance by untied 

aid donor governments. The values of untied aid 

credits covered by this agreement have averaged 

over $7 billion annually since 1995, and were as 

high as $14 billion in 1996. 

The OECD tied aid rules continue to reduce tied 

aid dramatically and redirect it from capital 

projects, where it has had trade-distorting 

effects, toward rural and social sector projects. 

Tied aid levels were nearly $10 billion in 1991 

before the rules were adopted, but were reduced 

to $2.6 billion in 2003 (compared to $2.1 billion 

in 2002 -- its lowest level on record). Data for 

the first half of 2004 indicate that tied aid levels 

may have increased to approximately $4 billion 

for 2004; however, the types of projects being 

financed remain within the tied aid rules. 

The Administration is addressing a number of 

other issues through the Arrangement 

Participants including a review of market 

window institutions. Market windows are quasigovernmental financial institutions that support 

national exports and yet are unbound by 

multilateral rules. Despite claims by 

government operators that market windows 

provide purely market-based financing, concerns 

have been raised that these institutions are 

providing export financing that is beyond what 

commercial banks or export credit agencies can 

provide due to a wide range of government 

subsidies. In response to a congressional 

request, Treasury submitted a report detailing 

the Arrangement Participants’ work on market 

windows to Congress in June 2004. Lacking 

documented evidence of anticompetitive 

behavior by these institutions, little progress has 

been made to negotiate rules for market 

windows. Making market window operations 

more transparent is clearly necessary. The 

Administration continues to monitor market 

window activity, with Ex-Im Bank working to 

develop comprehensive data on market window 

financing. 

Another important issue being worked on by the 

Arrangement Participants involves WTO 

activities related to export credits. After hearing 

complaints by developing countries that the 

Arrangement provides an unfair benefit to 

Arrangement Participants, Participants began a 

concerted effort to assure that the Arrangement 

rules equitably address the trade finance needs 

of both developing countries and Arrangement 

Participants. The major portion of this work was 

achieved in a redrafting of the Arrangement to 

address specific issues and principles identified 

in the course of WTO dispute settlement 

proceedings. More specifically, the goal of the 

redrafting exercise was to improve the 

consistency of the text with regard to relevant 

international obligations (i.e., the WTO 
III. Bilateral and Regional Negotiations| 245 

Agreement on Subsidies and Countervailing 

Measures), to enhance the clarity and userfriendliness of the Arrangement (i.e., to draft it 

for all official export credit providers and not 

just the OECD countries), and to increase 

transparency vis-à-vis non-Participants. The 

new Arrangement text was implemented in 

January 2004. 

The Arrangement Participants will continue to 

work with non-OECD members to improve and 

refine the Arrangement rules to ensure a level 

playing field for all governments providing 

official export credit support. Participants are 

currently focused on closing some loopholes to 

ensure coherence in the rules for all users. 

The biggest challenge facing Arrangement 

Participants is on how to address developing 

country concerns that the Participants - viewed 

as rich countries making the rules - are not 

taking developing country concerns into account 

when setting the rules for the provision of export 

credits. For example, the recent Brazil-Canada 

WTO dispute and counter disputes over export 

credits for aircraft have highlighted the need for 

aircraft-manufacturing Arrangement Participants 

to consult with Brazil, which is not an OECD 

member, on aircraft trade. This has led to an 

agreement by Arrangement Participants to 

launch a formal review of the OECD agreement 

on aircraft, with Brazil participating as a full 

partner in the negotiations. The Administration 

is coordinating closely with U.S. exporters on 

these negotiations. 

7. Investment 

International investment issues are studied and 

discussed in several OECD bodies. These 

discussions help build international consensus 

on the importance of investment protection and 

on the meaning of particular standards of 

protection; promote voluntary adherence by 

multinational enterprises to appropriate business 

practices; and strengthen understanding of the 

ways in which investment can promote 

development. The United States plays a major 

role in shaping investment-related work within 

the OECD. 

In 2004, the Committee on International 

Investment and Multinational Enterprises 

merged with the Capital Movements and 

Invisible Transactions Committee to form the 

Investment Committee, which plays the leading 

role in the analysis of international investment 

issues within the OECD. The Investment 

Committee is also responsible for monitoring 

and implementing the OECD Codes of 

Liberalization and the OECD Declaration on 

International Investment and Multinational 

Enterprises. 

The Investment Committee examined several 

investment issues in 2004. An ad hoc meeting 

of legal experts considered systemic issues 

concerning investment dispute resolution – 

including transparency, enforcement, and the 

possibility of an international appellate 

mechanism – and specific substantive provisions 

of international agreements. These provisions 

included “most-favored-nation treatment,” “fair 

and equitable treatment,” and “indirect 

expropriation.” Synergies between official 

development assistance and foreign direct 

investment were also examined, and the 2004 

model U.S. bilateral investment treaty was 

presented to committee members. 

In 2004 OECD continued to expand its outreach 

on investment issues to non-members. Member 

countries considered the establishment of a more 

detailed work plan for the Mideast and North 

Africa Initiative, which was launched in 

November 2004. The proposed new work plan 

would cover a three-year period, and include 

initiatives on governance and investment. Major 

outreach efforts for China and Russia also 

continued in 2004. The OECD published a 

second analysis of challenges facing Russia’s 

investment regime. It also examined the 

investment regime in Romania, which is seeking 

to become an adherent to the Declaration on 
IV. Other Multilateral Activities | 246 

International Investment and Multinational 

Enterprises. The Investment Committee 

discussed ways to enhance the participation of 

non-members in its work through observerships, 

adherence to the Declaration, and ad hoc

participation. 

Finally, the Investment Committee continued to 

play an active role in promoting corporate social 

responsibility through its oversight of the 

voluntary OECD Guidelines for Multinational 

Enterprises. In June 2004, the Investment 

Committee hosted the fourth annual meeting of 

National Contact Points (NCPs), the government 

agencies designated by each OECD member 

country to monitor implementation of the 

guidelines within its territory. The NCP annual 

meeting provided an opportunity to review the 

fourth year of implementation activity under the 

revised guidelines. In addition, the 2004 OECD 

Roundtable on Corporate Responsibility, held in 

conjunction with the NCP annual meeting, 

focused on the environment and the contribution 

of private enterprises to its protection. The 

Investment Committee is also examining the 

role of private firms in countries characterized 

by weak governance. 

8. Labor and Trade 

The Trade Union Advisory Committee (TUAC) 

to the OECD, made up of over 56 national trade 

union centers from OECD member countries, 

has played a consultative role to the OECD and 

its various committees since 1962. In February 

2004, the OECD Trade Committee had an 

informal consultation with TUAC members, 

discussing the state of the play of the WTO 

DDA, as well as exchanging views on the topic 

of structural adjustment and trade liberalization. 

TUAC submitted a statement to the May 2004 

OECD Ministerial Council meeting, providing a 

number of recommendations for governments to 

help address the problems raised by 

globalization. In October 2004, the Trade 

Committee held its sixth informal consultation 

with civil society organizations. TUAC was one 

of the organizations participating in the 

consultation, submitting a paper entitled “Trade, 

Offshoring of Jobs and Structural Adjustment: 

The Need for a Policy Response,” which 

advocated a “whole of government” strategy for 

responding to the employment consequences of 

offshoring. TUAC’s paper also noted the key 

role of the ongoing project in the OECD Trade 

Committee studying Trade and Structural 

Adjustment, and called for the OECD and the 

International Labour Organization to step up 

cooperation on these issues. As previously 

noted, in November 2004, the OECD convened 

a Global Forum on Trade in Bangkok, Thailand 

on this topic, focusing in particular on structural 

adjustment in the motor vehicle and 

textile/apparel sectors. 

9. Regulatory Reform 

Since 1998, the OECD Trade Committee has 

contributed to OECD work on domestic 

regulatory governance with country reviews of 

regulatory reform efforts. The United States has 

supported this work on the grounds that targeted 

regulatory reforms, e.g., those aimed at 

increasing transparency, can benefit domestic 

and foreign stakeholders alike by improving the 

quality of regulation and enhancing market 

openness. 

The Trade Committee's work on regulatory 

reform has two aspects: country reviews and 

product standards. In conducting country 

reviews, the Committee evaluates regulatory 

reform efforts in light of six principles of market 

openness: transparency and openness of 

decision-making; non-discrimination; avoidance 

of unnecessary trade restrictions; use of 

internationally harmonized measures where 

available/appropriate; recognition of the 

equivalence of other countries' procedures for 

conformity assessment where appropriate; and 

application of competition principles. 

The Trade Committee undertook its first review 

of a non-member – Russia – in 2004. It had 

previously reviewed twenty OECD Members, 

including all the G7 countries. The Committee 
III. Bilateral and Regional Negotiations| 247 

was also briefed on the monitoring exercise for 

Mexico and Japan, which is intended to review 

progress and challenges since the initial reviews 

of those countries in 1999. The OECD’s Trade 

Directorate contributed to two papers: “Policy 

Recommendations for Better Regulations,” 

which will be presented to the OECD Council in 

2005 as a proposed revision of the Policy 

Recommendations on Regulatory Reform 

adopted in 1997, and “Taking Stock of 

Regulatory Reform: A Multi-disciplinary 

Synthesis,” which serves as background 

information emerging from the regulatory 

reform country reviews undertaken to date. The 

Trade Directorate also prepared and released a 

study on “Regulatory Reform and Market 

Openness: Understanding the Links to Enhance 

Economic Performance,” which summarizes 

what has been learned about trade-relevant “best 

regulatory practices” since the program began 

and extends it to some non-OECD countries. 

Finally, in May, in Chile, the APEC-OECD 

Cooperative Initiative on Regulatory Reform 

held its sixth and seventh annual workshops 

aimed at developing an integrated checklist to 

help countries assess their progress in 

implementing the common principles on 

regulatory reform. The May workshop, held in 

Chile, focused on “Enhancing Market Openness 

through Regulatory Reform.” The November 

workshop, held in Thailand, discussed how to 

put the checklist into practice. 

10. Services 

Work in the OECD on trade in services has 

continued to provide analysis and background 

relevant to WTO negotiations, with emphasis on 

issues of importance to developing countries in 

the negotiations. 

In 2004, the Secretariat produced papers on: (1) 

identifying opportunities and gains with respect 

to service trade liberalization, focusing on 

developing countries; (2) managing request offer 

negotiations under the GATS, focusing on the 

case of legal services (a study done in 

cooperation with UNCTAD); and (3) measuring 

services barriers and their economic impact, 

focusing on examples of banking and 

telecommunications services in selected 

transition economies. Preparations also 

advanced for the OECD’s fifth “services 

experts” meeting, organized jointly with the 

World Bank, to be held in Paris in February 

2005. 

11. Steel 

As noted in the “Steel Trade Policy” section of 

this report, the Administration continued its 

efforts to eliminate market-distorting steel 

subsidies, negotiating with the world's major 

steel-producing countries at the OECD. While 

significant progress towards a steel subsidies 

agreement was made, the talks reached an 

impasse in early 2004 due to the differences that 

exist among participants in key areas. Those 

differences include the nature and extent of any 

exceptions to the overall subsidies prohibition, 

preferential treatment for developing countries, 

and whether any excepted subsidies should 

continue to be countervailable under national 

trade laws. In June 2004, the OECD High Level 

Group on Steel reaffirmed its commitment to the 

ultimate goal of stronger subsidy disciplines in 

the global steel sector, and decided to shift the 

focus of the talks to informal bilateral and 

plurilateral consultations to explore possibilities 

for bridging differences on the key issues. The 

High Level Group also agreed to reconvene in 

2005 to evaluate prospects for a steel subsidies 

agreement. 

The participants in the OECD discussions noted 

that while global steel demand and consumption 

increased significantly in 2003 and 2004, 

interest in new steelmaking capacity was also 

increasing due to the current strong market. The 

Administration joined other OECD steelmaking 

countries in agreeing that despite the upturn in 

the steel market the cyclical nature of the steel 

market, continued subsidies in the steel sector, 

and a slower rate of growth in China, the 
IV. Other Multilateral Activities | 248 

world’s largest steel producer and consumer, 

warrant continued attention by policymakers. 

To that end, the Administration, along with 

industry, supported the efforts of the OECD to 

organize a Global Steel Conference in January 

2005 to better understand the changing situation 

in the steel sector, including the raw materials 

markets. The conference was well attended by 

the world’s major steel producers and 

participants agreed that it was a useful exercise. 

Following the conference, the permanent OECD 

Steel Committee met for the first time since the 

beginning of the High Level process and decided 

on a program of work for 2005-2006. The 

committee plans to meet again in early 

November. The ongoing work at the OECD 

represents the most sustained and 

comprehensive commitment of any 

Administration, and any country, to address the 

root causes of ongoing market distortions in the 

world steel market. 

12. Developing Countries 

The OECD Trade Committee gave special focus 

in 2004 to issues of particular concern to 

developing countries, mindful that addressing 

these issues is essential to making progress on 

DDA. The OECD issued a major publication in 

2004 on adjusting to the changes resulting from 

the expiration at year-end 2004 of the WTO 

Agreement on Textiles and Clothing. It also 

issued a paper on “Trade Facilitation Reforms in 

the Service of Development,” illustrating the 

costs and benefits of trade facilitation measures 

taken in a number of developing countries, and 

concluding that holistic customs reforms tend to 

yield better results than a piece-meal approach. 

The Trade Committee and its Working Party 

discussed on-going OECD analytical work on 

revenue losses associated with the lowering of 

tariffs, the impact of preference erosion, and 

non-tariff barriers of particular importance to 

developing countries. In October 2004, the 

Trade Committee held a joint session with the 

OECD Development Assistance Committee 

(DAC) to review on-going work and discuss 

how best to enhance coherence between trade 

policy and development strategies, including 

through a possible future high-level meeting of 

trade officials and development officials. 

The Trade Committee built on its previous work 

with the DAC to make available current OECD 

work helpful to trade negotiators, particularly to 

those from developing countries. In 2004, the 

OECD issued an updated version of the CDROM it had distributed free of charge to all 

WTO Member governments at the WTO 

Ministerial Conference in Cancun in 2003. This 

“Tool Kit III” includes the full texts of over 35 

OECD analytical papers and publications on 

trade policy issues, selected on the basis of their 

relevance to the DDA. It also contains the 

analytical reports and presentations that were 

made available to participants in the three 

OECD Workshops held in Nairobi, Kenya in 

December 2003, Pucón, Chile in May 2004, and 

Almaty, Kazakhstan in June 2004. Other efforts 

to engage developing countries in the work of 

the OECD by holding outreach events in those 

regions and by inviting some countries to 

participate as observers at Trade meetings are 

described above in the section on Dialogue with 

Non-OECD Members. 

D. Semiconductor Agreement 

 

On June 10, 1999, the United States, Japan, 

Korea and the European Commission announced 

a multilateral Joint Statement on 

Semiconductors designed to ensure fair and 

open global trade in semiconductors. Chinese 

Taipei subsequently endorsed the objectives of 

the Joint Statement and became the Agreement’s 

fifth party. The 1999 Joint Statement reflected 

over a decade of progress under three previous 

semiconductor agreements toward opening up 

the Japanese market to foreign semiconductors, 

improving cooperation between Japanese users 

and foreign semiconductor suppliers, and 

eliminating tariffs in the top five semiconductor 

producers (the United States, Japan, Korea, the 

European Union, and Chinese Taipei). The 

1999 Joint Statement also broadened discussions 
III. Bilateral and Regional Negotiations| 249 

beyond the Japanese market to cover a broad 

range of issues aimed at promoting the growth 

of the global semiconductor market through 

improved mutual understanding between 

industries and governments and cooperative 

efforts to respond to challenges facing the 

semiconductor industry. 

 

In May 2004, industry CEOs representing all 

five 1999 Joint Statement parties held their fifth 

World Semiconductor Council (WSC) meeting. 

The WSC was created under the 1996 Joint 

Statement to provide a forum for industry 

representatives to discuss and engage in 

cooperation concerning global issues such as 

standardization, environmental concerns, worker 

health and safety, intellectual property rights, 

trade and investment liberalization, and 

worldwide market development. 

National/regional industry associations may 

become members of the WSC only if their 

governments have eliminated semiconductor 

tariffs or committed to eliminate these tariffs 

expeditiously. Reflecting China’s increasing 

importance as a producer and consumer of 

semiconductors, the WSC has invited China to 

become a party to the 1999 Joint Statement. 

China is expected to become the second-largest 

market for semiconductors, behind the United 

States, by 2010. 

 

The 1999 Joint Statement also calls for the 

parties to hold a Government/Authorities 

Meeting on Semiconductors (GAMS) at least 

once a year to receive and discuss the 

recommendations of the WSC regarding policies 

that may affect the future outlook and 

competitive conditions within the global 

semiconductor industry. The fifth GAMS was 

held in September 2004, hosted by the European 

Commission. At that meeting, the WSC 

recommended that government authorities 

pursue the following policies: elimination of the 

duty on multichip integrated circuits (MCPs); 

strengthened protection of intellectual property 

rights; elimination of discrimination against 

foreign products; promotion of fair and effective 

antidumping rules; discouragement of the use of 

copyright levies on digital equipment; expanded 

participation in the Information Technology 

Agreement (ITA); and adoption of product 

regulations that are based on sound and widely 

accepted scientific principles and do not impede 

the effective functioning of the market. In 

November 2004, GAMS members met again to 

discuss a proposed agreement to eliminate 

applied duties on MCPs. The GAMS 

mechanism was particularly useful in 2004 in 

building broad support among the major 

semiconductor producers for the prompt 

resolution of the WTO case filed by the United 

States on China’s VAT rebate policy for 

semiconductors. 

E. Steel Trade Policy 

In 2004, the Administration continued to 

implement the President’s comprehensive 

strategy to respond to the challenges facing the 

United States steel industry. The strategy 

yielded positive results as the steel industry 

achieved unprecedented restructuring and 

consolidation and returned to profitability. 

The Administration’s steel initiative, announced 

on June 5, 2001, contains three elements. First, 

the President directed the USTR to request that 

the USITC initiate an investigation, under 

Section 201 of the Trade Act of 1974, of serious 

injury to the steel industry caused by increasing 

imports of steel products. Following the 

USITC’s finding of serious injury, in March 

2002, the President imposed temporary 

safeguards: tariffs on ten steel product groups 

and a tariff-rate quota (TRQ) on steel slab. 

Second, the President directed the USTR, in 

cooperation with the Secretaries of Commerce 

and Treasury, to work with our trading partners 

to eliminate inefficient excess capacity in the 

steel industry worldwide. Finally, the President 

directed the USTR, together with the Secretaries 

of Commerce and Treasury, to initiate 

negotiations on the rules that will govern steel 

trade in the future, so as to eliminate the 
IV. Other Multilateral Activities | 250 

underlying market-distorting subsidies that led 

to the oversupply conditions of the global steel 

industry in 2001. 

 

After 21 months of the steel safeguards, 

President Bush concluded that the safeguard 

measures had achieved their purpose, and as a 

result of changed economic circumstances, 

maintaining the measures was no longer 

warranted. In his proclamation terminating the 

safeguards, the President continued the 

Administration’s steel import monitoring and 

analysis (SIMA) program, established in 2002 

concurrently with the steel safeguards. The 

SIMA program is not a trade restriction, but 

facilitates dissemination of information 

regarding the steel market. It is an easy-to-use, 

automatic, web-based licensing system for steel 

imports that provides timely, clear information 

on the steel market published on the Department 

of Commerce SIMA website. The program will 

remain in effect until March 2005 or until a 

replacement program is established. In August 

2004, the Department of Commerce published a 

Federal Register notice requesting comments on 

whether the current program should be extended 

or expanded to include more products or 

whether it should be allowed to expire. The 

Administration is considering the more than 70 

submissions received before deciding the future 

of the SIMA. 

In the year following termination of the 

safeguards, U.S. steel market conditions 

continued to improve. Prices for many steel 

products were driven to historically high levels 

by increased demand both in the United States 

and globally. U.S. steel shipments and imports 

increased. The pace of restructuring of the U.S. 

steel industry continued, increasing the ability of 

U.S. steel producers and workers to compete in 

the global market. Despite increased costs for 

energy and raw materials, U.S. steel company 

profitability and stock prices in the steel sector 

increased significantly. The impact of higher 

steel prices upon U.S. steel-using manufacturers, 

however, became a significant concern. 

Aware that foreign government restrictions on 

the export of raw material inputs to steelmaking 

may contribute to elevated prices for raw 

materials and steel in the United States, the 

Administration pressed foreign governments to 

eliminate these practices. The Administration 

pressed Russia and Ukraine, traditionally large 

exporters of steel scrap, to eliminate export 

duties each country maintains on this important 

steel input. In January 2004, Russia removed a 

customs order prohibiting scrap exports from 

many Russian ports. Russia’s removal of these 

port restrictions contributed to a record level of 

scrap exports in 2004. Ukraine’s scrap exports 

also increased significantly in 2004. The 

Administration is continuing its efforts to obtain 

removal of these export taxes in our negotiations 

on each country’s accession to the WTO. 

The Administration was also concerned about 

the impact of high prices for Chinese blast 

furnace coke as a result of China’s reduced 

export quota level for 2004 and high export 

license fees. The seriousness of this situation 

increased in early 2004 as it became evident that 

last year’s coke export levels to the United 

States were not sufficient to meet increased U.S. 

demand for imported coke in 2004. The 

Administration raised concerns about the export 

quotas with Chinese officials, and after a series 

of contacts, China increased the amount of coke 

to be exported in 2004. Further, China did not 

institute formal changes that would have 

guaranteed the EU a set portion of China’s 2004 

coke exports, and expanded its enforcement 

efforts to eliminate the practice of charging high 

fees for coke export licenses. As a result, export 

prices of coke from China have declined 

significantly since their peak in April 2004, and 

U.S. industry has been able to obtain a 

substantially larger quantity of China’s coke in 

2004. 

The Administration continued its efforts to 

eliminate market-distorting steel subsidies, 

negotiating with the world's major steelproducing countries at the OECD. While 

significant progress towards a steel subsidies 
III. Bilateral and Regional Negotiations| 251 

agreement was made, the talks reached an 

impasse early in 2004 due to the differences that 

exist among participants in key areas, 

particularly the nature of any exceptions to the 

overall subsidies prohibition, special and 

differential treatment for developing countries, 

and whether any excepted subsidies should 

continue to be countervailable under national 

trade laws. In June 2004, the OECD High Level 

Group on Steel reaffirmed their commitment to 

the ultimate goal of stronger subsidy disciplines 

in the global steel sector, and decided to shift the 

focus of the talks to bilateral and plurilateral 

consultations to explore bridging the differences 

on the key issues. The High Level Group also 

agreed to reconvene in 2005 to evaluate 

prospects for a steel subsidies agreement. 

The participants in the OECD discussions noted 

that while global steel demand and consumption 

increased significantly in 2003 and 2004, the 

current strong market was also increasing 

interest in new steelmaking capacity. The 

Administration joined other OECD steelmaking 

countries in agreeing that despite the upturn in 

the steel market, the cyclical nature of the steel 

market, continued subsidies in the steel sector, 

and a slower rate of growth in China, the 

world’s largest steel producer and consumer, 

warrant continued attention by policymakers. 

To that end, the Administration worked with 

industry and the OECD to organize a Global 

Steel Conference in January 2005 to better 

understand the changing situation in the steel 

sector, including the raw materials markets. The 

ongoing work at the OECD represents the most 

sustained and comprehensive commitment of 

any Administration, and any country, to address 

the root causes of ongoing market distortions in 

the world steel market. 
253 

V. Trade Enforcement Activities 

 

 A. Enforcing U.S. Trade 

Agreements 

1. Overview 

USTR coordinates the Administration’s active 

monitoring of foreign government compliance 

with trade agreements and pursues enforcement 

actions, using dispute settlement procedures and 

applying the full range of U.S. trade laws when 

necessary. Vigorous investigation efforts by 

relevant agencies, including the Departments of 

Agriculture, Commerce, and State, help ensure 

that these agreements yield the maximum 

advantage in terms of ensuring market access for 

Americans, advancing the rule of law 

internationally, and creating a fair, open, and 

predictable trading environment. In the broad 

sense, ensuring full implementation of U.S. trade 

agreements is one of the Administration’s 

strategic priorities. We seek to achieve this goal 

through a variety of means, including: 

• Asserting U.S. rights through the 

mechanisms in the World Trade Organization 

(WTO), including the stronger dispute 

settlement mechanism created in the Uruguay 

Round, and the WTO Bodies and 

Committees charged with monitoring 

implementation and with surveillance of 

agreements and disciplines; 

• Vigorously monitoring and enforcing 

bilateral agreements; 

• Invoking U.S. trade laws in conjunction with 

bilateral and WTO mechanisms to promote 

compliance 

• Providing technical assistance to trading 

partners, especially in developing countries, to 

ensure that key agreements like the Agreement 

on Basic Telecommunications and the 

Agreement on Trade-Related Aspects of 

Intellectual Property Rights (TRIPS) are 

implemented on schedule; and 

• Promoting U.S. interests under FTAs, 

through FTA work programs, tariff acceleration, 

and use, or threat of use, of FTA dispute 

settlement mechanisms, including using its labor 

and environmental side agreements to promote 

fairness for workers and effective environmental 

protection. 

Through vigorous application of U.S. trade laws 

and active use of WTO dispute settlement 

procedures, the United States has effectively 

opened foreign markets to U.S. goods and 

services. The United States also has used the 

incentive of preferential access to the U.S. 

market to encourage improvements in workers’ 

rights and reform of intellectual property laws 

and practices in other countries. These 

enforcement efforts have resulted in major 

benefits for U.S. firms, farmers, and workers. 

To ensure the enforcement of WTO agreements, 

the United States has been one of the world’s 

most frequent users of WTO dispute settlement 

procedures. Since the establishment of the 

WTO, the United States has filed 69 complaints 

at the WTO, thus far successfully concluding 40 

of them by settling 22 cases favorably and 

prevailing on 18 others through litigation in 

WTO panels and the Appellate Body. The 

United States has obtained favorable settlements 

and favorable rulings in virtually all sectors, 

including manufacturing, intellectual property, 

agriculture, and services. These cases cover a 

number of WTO agreements – involving rules 

on trade in goods, trade in services, and 
V. Trade Enforcement Activities| 254 

intellectual property protection – and affect a 

wide range of sectors of the U.S. economy. 

Satisfactory settlements. Our hope in filing 

cases, of course, is to secure U.S. benefits rather 

than to engage in prolonged litigation. 

Therefore, whenever possible the United States 

has sought to reach favorable settlements that 

eliminate the foreign breach without having to 

resort to panel proceedings. The United States 

has been able to achieve this preferred result in 

22 of the 44 cases concluded so far, involving: 

Argentina’s protection and enforcement of 

patents; Australia’s ban on salmon imports; 

Belgium’s duties on rice imports; Brazil’s auto 

investment measures; Brazil’s patent law; 

China’s value-added tax on integrated circuits; 

Denmark’s civil procedures for intellectual 

property enforcement; the EU’s market access 

for grains; an EU import surcharge on corn 

gluten feed; Greece’s protection of copyrighted 

motion pictures and television programs; 

Hungary’s agricultural export subsidies; 

Ireland’s protection of copyrights; Japan’s 

protection of sound recordings; Korea’s shelflife standards for beef and pork; Mexico’s 

restrictions on hog imports; Pakistan’s 

protection of patents; the Philippines’ market 

access for pork and poultry; the Philippines’ 

auto regime; Portugal’s protection of patents; 

Romania’s customs valuation regime; Sweden’s 

enforcement of intellectual property rights; and 

Turkey’s box-office taxes on motion pictures. 

Litigation successes. When the United States 

trading partners have not been willing to 

negotiate settlements, we have pursued our cases 

to conclusion, prevailing in 18 cases so far, 

involving: Argentina’s tax and duties on 

textiles, apparel, and footwear; Australia’s 

export subsidies on automotive leather; 

Canada’s barriers to the sale and distribution of 

magazines; Canada’s export subsidies and an 

import barrier on dairy products; Canada’s law 

protecting patents; the EU’s import barriers on 

bananas; the EU’s ban on imports of beef; 

India’s import bans and other restrictions on 

2,700 items; India’s protection of patents on 

pharmaceuticals and agricultural chemicals; 

India’s and Indonesia’s measures that 

discriminated against imports of U.S. 

automobiles; Japan’s restrictions affecting 

imports of apples, cherries, and other fruits; 

Japan’s barriers to apple imports; Japan’s and 

Korea’s discriminatory taxes on distilled spirits; 

Korea’s beef imports; Mexico’s antidumping 

duties on high-fructose corn syrup; and 

Mexico’s telecommunications barriers. 

 USTR also works to ensure the most effective 

use of U.S. trade laws to complement its 

litigation strategy and to address problems that 

are outside the scope of the WTO and U.S. free 

trade agreements. USTR has effectively applied 

Section 301 of the Trade Act of 1974 to address 

unfair foreign government measures, “Special 

301” for intellectual property rights 

enforcement, and Section 1377 of the Omnibus 

Trade and Competitiveness Act of 1988 for 

telecommunications trade problems. The 

application of these trade law tools is described 

further below. 

2. WTO Dispute Settlement 

2004 Activities 

 

In 2004, the United States filed four new 

complaints under WTO dispute settlement 

procedures involving China’s value-added tax 

on integrated circuits, the European Union’s 

administration of its customs laws, the European 

Union’s aircraft subsidies, and Mexico’s tax 

measures on soft drinks and other beverages. 

The United States also initiated compliance 

panel proceedings on a case involving Japan’s 

restrictions on apple imports relating to fire 

blight. 

The cases described in Chapter II further 

demonstrate the importance of the dispute 

settlement process in opening foreign markets 

and securing other countries’ compliance with 

their WTO obligations. Further information on 

WTO disputes to which the United States is a 
V. Trade Enforcement Activities | 255 

party is available on the USTR website 

(http://www.ustr.gov). 

3. Other Monitoring and 

Enforcement Activities 

a. Subsidies Enforcement 

The WTO Agreement on Subsidies and 

Countervailing Measures (Subsidies Agreement) 

establishes multilateral disciplines on subsidies. 

Among its various disciplines, the Subsidies 

Agreement provides remedies for subsidies 

affecting competition not only domestically, but 

also in the subsidizing government’s market and 

in third country markets. Previously, the U.S. 

countervailing duty law was the only practical 

mechanism for U.S. companies to address 

subsidized foreign competition. However, the 

countervailing duty law focuses exclusively on 

the effects of foreign subsidized competition in 

the United States. Although the procedures and 

remedies are different, the multilateral remedies 

of the Subsidies Agreement provide an 

alternative tool to address distortive foreign 

subsidies that affect U.S. businesses in an 

increasingly global market place. 

Section 281 of the Uruguay Round Agreements 

Act of 1994 (URAA) sets out the responsibilities 

of USTR and the Department of Commerce 

(Commerce) in enforcing the United States’ 

rights in the WTO under the Subsidies 

Agreement. USTR coordinates the development 

and implementation of overall U.S. trade policy 

with respect to subsidy matters, represents the 

United States in the WTO, including the WTO 

Committee on Subsidies and Countervailing 

Measures, and leads the interagency team on 

matters of policy. The role of Commerce’s 

Import Administration (IA) is to enforce the 

countervailing duty law and, in accordance with 

responsibilities assigned by the Congress in the 

URAA, to spearhead the subsidies enforcement 

activities of the United States with respect to the 

disciplines embodied in the Subsidies 

Agreement. Import Administration’s Subsidies 

Enforcement Office (SEO) is the specific office 

charged with carrying out these duties. 

The primary mandate of the SEO is to examine 

subsidy complaints and concerns raised by U.S. 

exporting companies and to monitor foreign 

subsidy practices to determine whether they are 

impeding U.S. exports to foreign markets and 

are inconsistent with the Subsidies Agreement. 

Once sufficient information about a subsidy 

practice has been gathered to permit the matter 

to be reliably evaluated, USTR and Commerce 

will confer with an interagency team to 

determine the most effective way to proceed. It 

is frequently advantageous to pursue resolution 

of these problems through a combination of 

informal and formal contacts, including, where 

warranted, dispute settlement action in the 

WTO. Remedies for violations of the Subsidies 

Agreement may, under certain circumstances, 

involve the withdrawal of a subsidy program or 

the elimination of the adverse effects of the 

program. 

During this past year, USTR and IA staff have 

handled numerous inquiries and met with 

representatives of U.S. industries concerned with

the subsidization of foreign competitors. These 

efforts continue to be importantly enhanced by 

IA officers stationed overseas (in China and 

Korea), who help gather, clarify and check the 

accuracy of information concerning foreign 

subsidy practices. 

The SEO's electronic subsidies database 

continues to fulfill the goal of providing the U.S. 

trading community with a centralized location to 

obtain information about the remedies available 

under the Subsidies Agreement and much of the 

information that is needed to develop a 

countervailing duty case or a WTO subsidies 

complaint. The website 

(http://ia.ita.doc.gov/esel/index.html) includes 

information on all the foreign subsidy programs 

that have been investigated in U.S. 

countervailing duty cases since 1980, covering 

more than 50 countries and over 2,000 

government practices. This database is updated 
V. Trade Enforcement Activities| 256 

monthly, making information on subsidy 

programs investigated or reviewed quickly 

available to the public. 

b. Monitoring Foreign Antidumping and 

Countervailing Duty Actions 

The WTO Agreement on Implementation of 

Article VI (Antidumping Agreement) and the 

WTO Agreement on Subsidies and 

Countervailing Measures (Subsidies Agreement) 

permit WTO Members to impose antidumping 

or countervailing duties to offset injurious 

dumping or subsidization of products exported 

from one Member country to another. The 

United States closely monitors antidumping and 

countervailing duty proceedings initiated against 

U.S. exporters to ensure that foreign 

antidumping and countervailing duty actions are 

administered fairly and in full compliance with 

the WTO Agreements. 

To this end, IA tracks foreign antidumping and 

countervailing duty actions involving U.S. 

exporters and gathers information collected from 

U.S. embassies worldwide, enabling U.S. 

companies and U.S. Government agencies to 

watch other Members’ administration of 

antidumping and countervailing duty actions 

involving U.S. companies. Information about 

foreign antidumping and countervailing duty 

actions affecting U.S. exports is accessible to the 

public via IA’s website at

http://ia.ita.doc.gov/trcs/index.html. The 

stationing of IA officers to certain overseas 

locations, as noted above, has contributed 

importantly to the Administration’s efforts to 

monitor the application of foreign trade remedy 

laws with respect to U.S. exports. 

Based in part on this monitoring activity, the 

United States has filed a WTO dispute 

settlement case against Mexico’s antidumping 

measure on U.S. exports of rice, as well as 

certain changes to Mexico’s foreign trade laws. 

Among other antidumping investigations of U.S. 

goods that were closely monitored in the past 

year are Canada’s continued measures on 

potatoes, Mexico’s antidumping investigations 

of pork products (rescinded in May 2004 due to 

a lack of evidence of injury) and its ex officio

investigation of pork legs and shoulders/hams 

(initiated in May 2004) and China’s 

investigations of optical fiber, kraft linerboard 

and several chemical products. Import 

Administration personnel have also participated 

in technical exchanges with the administering 

authorities of Canada, Egypt, and India to obtain 

a better understanding of these countries’ 

administration of trade remedy laws and 

compliance with WTO obligations. 

Members must notify on an ongoing basis 

without delay their preliminary and final 

determinations to the WTO. Twice a year, 

WTO Members must also notify the WTO of all 

antidumping and countervailing duty actions 

they have taken during the preceding six-month 

period. The actions are identified in semiannual reports submitted for discussion in 

meetings of the relevant WTO committees. 

Finally, Members are required to notify the 

WTO of changes in their antidumping and 

countervailing duty laws and regulations. These 

notifications are accessible through the USTR 

and IA website “links” to the WTO’s website 

B. U.S. Trade Laws 

1. Section 301 

Section 301 of the Trade Act of 1974, as 

amended (the Trade Act), is designed to address 

foreign unfair practices affecting U.S. exports of 

goods or services. Section 301 may be used to 

enforce U.S. rights under bilateral and 

multilateral trade agreements and also may be 

used to respond to unreasonable, unjustifiable, 

or discriminatory foreign government practices 

that burden or restrict U.S. commerce. For 

example, Section 301 may be used to obtain 

increased market access for U.S. goods and 

services, to provide more equitable conditions 

for U.S. investment abroad, and to obtain more 

effective protection worldwide for U.S. 

intellectual property. 
V. Trade Enforcement Activities | 257 

a. Operation of the Statute 

The Section 301 provisions of the Trade Act 

provide a domestic procedure whereby 

interested persons may petition the USTR to 

investigate a foreign government policy or 

practice and take appropriate action. The USTR 

also may self-initiate an investigation. In each 

investigation the USTR must seek consultations 

with the foreign government whose acts, 

policies, or practices are under investigation. If 

the consultations do not result in a settlement 

and the investigation involves a trade agreement, 

Section 303 of the Trade Act requires the USTR 

to use the dispute settlement procedures that are 

available under that agreement. 

If the matter is not resolved by the conclusion of 

the investigation, Section 304 of the Trade Act 

requires the USTR to determine whether the 

practices in question deny U.S. rights under a 

trade agreement or whether they are 

unjustifiable, unreasonable, or discriminatory 

and burden or restrict U.S. commerce. If the 

practices are determined to violate a trade 

agreement or to be unjustifiable, the USTR must 

take action. If the practices are determined to be 

unreasonable or discriminatory and to burden or 

restrict U.S. commerce, the USTR must 

determine whether action is appropriate and, if 

so, what action to take. The time period for 

making these determinations varies according to 

the type of practices alleged. Investigations of 

alleged violations of trade agreements with 

dispute settlement procedures must be concluded 

within the earlier of 18 months after initiation or 

30 days after the conclusion of dispute 

settlement proceedings, whereas investigations 

of alleged unreasonable, discriminatory, or 

unjustifiable practices (other than the failure to 

provide adequate and effective protection of 

intellectual property rights) must be decided 

within 12 months. 

The range of actions that may be taken under 

Section 301 is broad and encompasses any 

action that is within the power of the President 

with respect to trade in goods or services or with 

respect to any other area of pertinent relations 

with a foreign country. Specifically, the USTR 

may: (1) suspend trade agreement concessions; 

(2) impose duties or other import restrictions; (3) 

impose fees or restrictions on services; (4) enter 

into agreements with the subject country to 

eliminate the offending practice or to provide 

compensatory benefits for the United States; 

and/or (5) restrict service sector authorizations. 

After a Section 301 investigation is concluded, 

the USTR is required to monitor a foreign 

country’s implementation of any agreements 

entered into, or measures undertaken, to resolve 

a matter that was the subject of the investigation. 

If the foreign country fails to comply with an 

agreement or the USTR considers that the 

country fails to implement a WTO dispute panel 

recommendation, the USTR must determine 

what further action to take under Section 301. 

During 2004, there were ongoing actions in the 

following Section 301 investigations, and USTR 

received three petitions seeking the initiation of 

new investigations: 

Intellectual Property Laws and Practices of 

the Government of Ukraine (301-121) 

On March 12, 2001, the Trade Representative 

identified Ukraine as a priority foreign country 

under section 182 of the Trade Act (known as 

Special 301 – see below), and simultaneously 

initiated a Section 301 investigation of the 

intellectual property laws and practices of the 

Government of Ukraine. The priority foreign 

country identification was based on: (1) 

deficiencies in Ukraine's acts, policies and 

practices regarding the protection of intellectual 

property rights, including the lack of effective 

action enforcing intellectual property rights, as 

evidenced by high levels of compact disc piracy; 

and (2) the failure of the Government of Ukraine 

to enact adequate and effective intellectual 

property legislation addressing optical media 

piracy. 
V. Trade Enforcement Activities| 258 

The United States consulted repeatedly with 

Ukraine regarding the matters under 

investigation. However, the Government of 

Ukraine made very little progress in addressing 

two key issues: its failure to use existing law 

enforcement tools to stop optical media piracy, 

and its failure to adopt an optical media 

licensing regime. On August 2, 2001, the 

USTR determined that the acts, policies and 

practices of Ukraine with respect to the 

protection of intellectual property rights were 

unreasonable and burdened or restricted U.S. 

commerce, and were thus actionable under 

Section 301(b). The USTR determined that 

appropriate and feasible action in response 

included the suspension of duty-free treatment 

accorded to the products of Ukraine under the 

GSP program, effective with respect to goods 

entered on or after August 24, 2001. The USTR 

also announced that further action could include 

the imposition of prohibitive duties on certain 

Ukrainian products, and the office of the USTR 

sought public comment on a preliminary product 

list. On December 11, 2001, the USTR 

determined that appropriate additional action 

included the imposition of 100 percent ad 

valorem duties on a list of 23 Ukrainian products 

with an annual trade value of approximately $75 

million. The increased duties went into effect on 

January 23, 2002. 

Consultations with Ukraine have continued, but 

Ukraine failed to take all of the steps needed to 

stop high levels of optical media piracy. 

Accordingly, the suspension of GSP benefits and 

increased duties on certain Ukrainian products 

remained in effect throughout 2004. 

EC - Measures Concerning Meat and Meat 

Products (Hormones) (301-62a) 

An EC directive prohibits the import of animals, 

and meat from animals, to which certain 

hormones had been administered (the “hormone 

ban”). This measure has the effect of banning 

nearly all imports of beef and beef products 

from the United States. A WTO panel and the 

Appellate Body found that the hormone ban was 

inconsistent with the EC’s WTO obligations 

because the ban was not based on scientific 

evidence, a risk assessment, or relevant 

international standards. Under WTO 

procedures, the EC was to have come into 

compliance with its obligations by May 13, 

1999, but failed to do so. Accordingly, in May 

1999 the United States requested authorization 

from the DSB to suspend the application to the 

EC, and Member States thereof, of tariff 

concessions and related obligations under the 

GATT. The EC did not contest that it had failed 

to comply with its WTO obligations but objected 

to the level of suspension proposed by the 

United States. 

On July 12, 1999, WTO arbitrators determined 

that the level of nullification or impairment 

suffered by the United States as a result of the 

EC’s WTO-inconsistent hormone ban was 

$116.8 million per year. Accordingly, on July 

26, 1999, the DSB authorized the United States 

to suspend the application to the European 

Community’s and its Member States of tariff 

concessions and related obligations under the 

GATT covering trade up to $116.8 million per 

year. In a notice published in July 1999, the 

USTR announced that the United States was 

exercising this authorization by imposing 100 

percent ad valorem duties on certain products of 

certain EC Member States. The increased duties 

remained in place throughout 2004. 

Talks were held during 2004 with the aim of 

reaching a mutually satisfactory solution to the 

dispute, but no resolution was reached. In 

November 2004, the EC sought consultations 

under the WTO DSU claiming that the EC had 

brought its hormone ban into compliance with 

the EC’s WTO obligations and that the increased 

duties imposed by the United States were no 

longer covered by the DSB authorization. (The 

section of this report addressed to WTO dispute 

settlement contains further information on this 

matter). 
V. Trade Enforcement Activities | 259 

b. Petitions filed in 2004 

During 2004, USTR received three petitions 

seeking the initiation of new investigations. 

One petition alleged that certain labor policies 

and practices of the Government of China with 

respect to Chinese manufacturing workers are 

unreasonable, as defined in section 301(d) of the 

Trade Act, and burden or restrict U.S. 

commerce. The USTR determined not to initiate 

an investigation under section 302 of the Trade 

Act with respect to the petition because the 

Government of the United States is involved in 

ongoing efforts to address with China many of 

the labor issues raised in the petition, and 

because initiation of an investigation would not 

be effective in addressing the policies and 

practices covered in the petition. 

Two substantially similar petitions alleged that 

the policies and practices of the Government of 

China with respect to the valuation of Chinese 

currency deny and violate international legal 

rights of the United States, are unjustifiable, and 

burden or restrict U.S. commerce. The USTR 

determined not to initiate investigations with 

respect to the petitions because the United States 

is involved in ongoing efforts to address with 

China the currency valuation issues raised in the 

petitions, and because initiation of investigations 

would not be effective in addressing the policies 

and practices covered in the petitions. 

2. Special 301

During the past year, the United States 

continued to implement vigorously the Special 

301 program, resulting in continued 

improvement in the global intellectual property 

environment. Publication of the Special 301 

lists indicates those trading partners whose 

intellectual property protection regimes most 

concern the United States, and alerts those 

considering trade or investment relationships 

with such countries that their intellectual 

property rights (IPR) may not be adequately 

protected. Pursuant to Section 182 of the Trade 

Act of 1974, as amended by the Omnibus Trade 

and Competitiveness Act of 1988 and the 

Uruguay Round Agreements Act (enacted in 

1994) , under Special 301 provisions, USTR 

must identify those countries that deny adequate 

and effective protection for IPR or deny fair and 

equitable market access for persons that rely on 

intellectual property protection. Countries that 

have the most onerous or egregious acts, 

policies, or practices and whose acts, policies, or 

practices have the greatest adverse impact 

(actual or potential) on the relevant U.S. 

products must be designated as “Priority Foreign 

Countries.” 

Priority Foreign Countries are potentially subject 

to an investigation under the Section 301 

provisions of the Trade Act of 1974. USTR may 

not designate a country as a Priority Foreign 

Country if it is entering into good faith 

negotiations or making significant progress in 

bilateral or multilateral negotiations to provide 

adequate and effective protection of IPR. 

USTR must decide whether to identify countries 

within 30 days after issuance of the annual 

National Trade Estimate Report. In addition, 

USTR may identify a trading partner as a 

Priority Foreign Country or remove such 

identification whenever warranted. 

USTR has created a “Priority Watch List” and 

“Watch List” under Special 301 provisions. 

Placement of a trading partner on the Priority 

Watch List or Watch List indicates that 

particular problems exist in that country with 

respect to IPR protection, enforcement, or 

market access for persons relying on intellectual 

property. Countries placed on the Priority 

Watch List are the focus of increased bilateral 

attention concerning the problem areas. 

Additionally, under Section 306, USTR 

monitors a country’s compliance with bilateral 

intellectual property agreements that are the 

basis for resolving an investigation under 

Section 301. USTR may apply sanctions if a 
V. Trade Enforcement Activities| 260 

country fails to satisfactorily implement an 

agreement. 

a. 2004 Special 301 Review 

Announcements 

On May 3, 2004, U.S. Trade Representative 

Robert B. Zoellick announced the results of the 

2004 Special 301 annual review, which 

examined in detail the adequacy and 

effectiveness of intellectual property protection 

in approximately 85 countries. Under the 

Special 301 provisions of the Trade Act of 1974, 

as amended, USTR identified 52 trading partners 

that deny adequate and effective protection of 

intellectual property and/or equitable market 

access to U.S. artists and industries that rely 

upon intellectual property protection. 

In the report, USTR noted the continued 

designation of Ukraine as a Priority Foreign 

Country due to its persistent failure to take 

effective action against significant levels of 

optical media piracy and to implement 

intellectual property laws that provide adequate 

and effective protection. As a result, the $75 

million in sanctions imposed on Ukrainian 

products on January 23, 2002, remain in place. 

This continued failure to adequately protect 

intellectual property rights could seriously 

undermine its efforts to attract trade and 

investment. The U.S. Government remains 

actively engaged with Ukraine in encouraging 

the nation to combat piracy and enact the 

necessary intellectual property rights legislation 

and regulations. 

China and Paraguay continued to be designated 

for Section 306 monitoring to ensure both 

countries comply with their commitments to the 

United States under bilateral intellectual 

property agreements. 

Addressing weak IPR protection and 

enforcement in China is one of the 

Administration’s top priorities. At the April 

2004 meeting of the Joint Commission on 

Commerce and Trade (JCCT), the United States 

secured a commitment from China’s Vice 

Premier Wu Yi that China will undertake a 

series of actions to significantly reduce IPR 

infringements throughout the country. These 

actions, outlined in the China section of this 

report, are critical in light of the rampant 

counterfeiting and piracy problems that plague 

China’s domestic market and the fact that China 

has become a leading exporter of counterfeit and 

pirated goods to the world. The United States 

will be monitoring implementation of these 

commitments closely through a Joint IPR 

Working Group formed through the JCCT, and 

USTR will assess China’s progress on their 

commitments through an out-of-cycle review in 

early 2005. With regard to Paraguay, 2004 was 

the first year that a new agreement, which was 

renegotiated in late 2003, was under Section 306 

monitoring. 

Fifteen trading partners were placed on the 

“Priority Watch List”: Argentina, Bahamas, 

Brazil, Egypt, the EU, India, Indonesia, Korea, 

Kuwait, Lebanon, Pakistan, the Philippines, 

Russia, Taiwan and Turkey. An additional 34 

trading partners were placed on the “Watch 

List.” USTR also announced “out-of-cycle” 

(OCR) reviews for China, Israel, Malaysia, 

Poland and Taiwan. 

In addition to the primary focus on intellectual 

property protection, the 2004 Special 301 Report 

also noted the importance of understanding how 

certain types of regulatory barriers -- such as 

non-transparent and cumbersome administrative 

regimes and decision-making that lacks 

scientific basis -- impede R&D funding and 

innovation in IP-based industries such as the 

pharmaceutical industry. 

b. New Initiatives 

Recognizing the growing problem of trade in 

pirated and counterfeit goods in the global 

economy, USTR began working with agencies 

across the federal government and trading 

partners around the world to develop a new 

approach and solutions to this serious problem. 
V. Trade Enforcement Activities | 261 

In October 2004, USTR together with the 

Departments of Commerce, Justice, and 

Homeland Security launched a major new 

government-wide initiative in partnership with 

U.S. companies and IPR owners, the Strategy 

Targeting Organized Piracy (STOP!), to fight 

billions of dollars in global trade in pirated and 

counterfeit goods that cheat American 

innovators and manufacturers, hurt the U.S. 

economy and endanger consumers worldwide. 

The STOP! Initiative is designed to help 

businesses enforce their rights, stop fakes at 

borders, dismantle criminal enterprises, build an 

international coalition against piracy and 

counterfeiting. The STOP! Initiative 

incorporates and builds on the Special 301 

Review process to help achieve these objectives. 

c. Ongoing Initiatives

i. Global Scourge of Counterfeiting and 

Piracy 

Counterfeiting and digital piracy have increased 

dramatically in recent years and were areas of 

particular concern in the 2004 Special 301 

Report. Unfortunately, in the area of 

counterfeiting what was once a localized 

industry concentrated on the copying of highend designer goods has now become a massive, 

sophisticated global business involving the 

manufacturing and sale of counterfeit versions 

of everything from soaps, shampoos, razors and 

batteries to cigarettes, alcoholic beverages and 

automobile parts, as well as medicines and 

health care products. 

Counterfeiting of such a broad range of products 

on a global scale affects more than just the 

companies that produce legitimate products. 

While it has a direct impact on the sales and 

profits of those companies, counterfeits also hurt 

the consumers who waste their money and 

sometimes put themselves at risk by purchasing 

fake goods. It also hurts the countries concerned 

by decreasing tax revenues and deterring 

investments. In addition, counterfeiters pay no 

taxes or duties and do not comply with basic 

manufacturing standards for the health and 

safety of workers or product quality and 

performance. 

Piracy of products in digital, print (e.g., books, 

journals and other printed materials) and other 

analog formats, as well as counterfeiting of all 

types of trademarked products, have grown to 

such a scale because these illegal activities offer 

enormous profits and little risk for the criminal 

element of society. Criminals can get into the 

counterfeiting business with little capital 

investment, and even if caught and charged with 

a crime, the penalties actually imposed in many 

countries are so low that they offer no deterrent. 

The most significant piracy and counterfeiting 

problems require measures that may go beyond 

the minimum standards of TRIPS to ensure 

effective enforcement at the national and local 

levels, including free trade zones in countries 

such as Belize, Panama and the United Arab 

Emirates. The global scourge of piracy and 

counterfeiting requires stronger and more 

effective border enforcement to stop the import, 

export, and transit of pirated and counterfeit 

goods. 

This is why USTR continues to seek through our 

FTAs and our bilateral consultations to ensure 

that criminal penalties are high enough to have a 

deterrent effect, both in the law and as imposed 

by the courts and administrative bodies, as well 

as to ensure that pirated and counterfeit 

products, and the equipment used to make them, 

are seized and destroyed. These products can be 

produced and sold at prices much lower than 

legitimate products, but still deliver attractive 

profit margins for the infringer because the 

counterfeit and pirated products maybe made 

with substandard materials, and undergo little or 

no quality control or even basic health and 

safety testing. The economic damage caused by 

counterfeiting to the legitimate companies 

whose products are counterfeited is enormous. 
V. Trade Enforcement Activities| 262 

ii. Controlling Optical Media Production 

Over the past year some of our trading partners, 

such as the Philippines and Poland, have taken 

important steps toward implementing, or have 

committed to adopt, much-needed controls on 

optical media production. We await news of 

aggressive enforcement of these laws. However, 

others that are in urgent need of such controls, 

including India, Indonesia, Lithuania, Pakistan, 

Russia, Thailand and Ukraine, have not made 

sufficient progress in this regard. 

Governments that implemented optical media 

controls in previous years, such as those of Hong 

Kong and Macau, have clearly demonstrated 

their commitment to continue to enforce these 

measures. Taiwan and Malaysia are steadily 

improving their enforcement as well. The 

effectiveness of such measures is underscored 

by the direct experience of these governments in 

successfully reducing pirate production of 

optical media. We continue to urge our trading 

partners facing the threat of pirate optical media 

production within their borders to adopt similar 

controls or aggressively enforce existing 

regulations in the coming year. 

iii. Implementation of the WTO TRIPS 

Agreement 

One of the most significant achievements of the 

Uruguay Round was the negotiation of the 

TRIPS Agreement, which requires all WTO 

Members to provide certain minimum standards 

of protection for patents, copyrights, trademarks, 

trade secrets, geographical indications and other 

forms of intellectual property. The Agreement 

also requires countries to provide effective IPR 

enforcement. The TRIPS Agreement is the first 

broadly-subscribed multilateral intellectual 

property agreement that is enforceable between 

governments, allowing them to resolve disputes 

through the WTO dispute settlement 

mechanism. 

Developed countries were required to implement 

fully TRIPS as of January 1, 1996, while 

developing countries were given a transition 

period – until January 1, 2000. Ensuring that 

developing countries are in full compliance with 

the Agreement now that this transition period 

has come to an end is one of this 

Administration’s highest IPR priorities. With 

respect to least developed countries, and with 

respect to the protection of pharmaceuticals and 

agriculture chemicals in certain developing 

countries, even longer transitions are provided. 

Developing countries continue to make progress 

toward full implementation of their TRIPS 

obligations. Nevertheless, certain countries are 

still in the process of finalizing implementing 

legislation and establishing adequate 

enforcement mechanisms. Every year the 

United States provides extensive technical 

assistance and training on the implementation of 

the TRIPS Agreement, as well as other 

international intellectual property agreements, to 

a large number of U.S. trading partners. Such 

assistance is provided by a number of U.S. 

Government agencies, including the U.S. Patent 

and Trademark Office, the U.S. Copyright 

Office, the State Department, the U.S. Agency 

for International Development, U.S. Customs 

and Border Protection, the Justice Department, 

and the Commerce Department’s Commercial 

Law Development Program on a country-bycountry basis, as well as in group seminars, 

including those co-sponsored with the World 

Intellectual Property Organization (WIPO) and 

the WTO. Technical assistance involves review 

of, and drafting assistance on, laws concerning 

intellectual property and enforcement. Training 

programs usually cover the substantive 

provisions of the TRIPS Agreement, as well as 

enforcement. The United States will continue to 

work with WTO Members and expects further 

progress in the near term to complete the TRIPS 

implementation process. However, in those 

instances where additional progress is not 

achieved in the near term, the United States will 

pursue our rights through WTO dispute 

settlement proceedings. 

One of the key implementation priorities that we 

have focused on in this year’s review is the 
V. Trade Enforcement Activities | 263 

implementation of Article 39.3 of the TRIPS 

Agreement, which requires WTO Members to 

protect test data submitted by drug companies to 

health authorities55 against disclosure of that 

data and against “unfair commercial use” of that 

data. 

Most countries, including the United States, 

impose stringent regulatory testing requirements 

on companies seeking to market a new drug or 

agricultural chemical product. Many countries 

have recognized, however, the value of allowing 

abbreviated approval procedures for secondcomers seeking to market an identical product to 

one that has already been approved. Generally, 

these second applicants may be required to 

demonstrate only the bioequivalence of their 

products with the product of the first company, 

and will not be required to repeat all of the 

expensive and laborious clinical tests conducted 

by the first company to prove the safety of the 

product. 

However, because of the expense involved in 

producing the safety and efficacy data needed to 

obtain marketing approval, the TRIPS 

Agreement recognizes that the original applicant 

should be entitled to a period of exclusivity 

during which second-comers may not rely on the 

data that the innovative company has created to 

obtain approval for their copies of the product. 

During this period of exclusive use, the data 

cannot be relied upon by regulatory officials to 

approve similar products. This period of 

exclusivity is generally five years in the United 

States and six to ten years in the EC Member 

States. Other countries that provide a period of 

exclusivity against reliance on data include 

Australia, China, Colombia, the Czech Republic, 

Estonia, Japan, Jordan, Korea, Mexico, New 

Zealand, Slovenia, and Switzerland. We urge all 

WTO members to swiftly complete their 

implementation of Article 39.3, including Israel 

and Turkey. 

 

55 Such data is typically required by authorities in order to 

establish the safety and efficacy of a drug, and obtain government 

approval to market the drug. 

As more countries fulfill their implementation 

obligations, we will adjust our focus to 

determine whether our trading partners are 

providing adequate and effective enforcement as 

required by the TRIPS enforcement provisions. 

iv. Internet Piracy and the WIPO Copyright 

Treaties 

The Internet has undergone explosive growth 

and, coupled with increased availability of 

broadband connections, serves as an extremely 

efficient global distribution network for pirate 

products. The explosive growth of copyright 

piracy on the Internet is a serious problem. We 

are continuing to work with other governments, 

and consult with U.S. industry, to develop the 

best strategy to address Internet piracy. 

An important first step in the fight against 

Internet piracy was achieved at WIPO when it 

concluded two copyright treaties in 1996: the 

WIPO Copyright Treaty and the WIPO 

Performances and Phonograms Treaty, referred 

to as the WIPO Internet Treaties. These treaties 

help raise the minimum standards of intellectual 

property protection around the world, 

particularly with respect to Internet-based 

delivery of copyrighted works. They clarify 

exclusive rights in the on-line environment and 

specifically prohibit the devices and services 

intended to circumvent technological protection 

measures for copyrighted works. Both treaties 

entered into force in 2002. 

These treaties represent the consensus view of 

the world community that the vital framework of 

protection under existing agreements, including 

the TRIPS Agreement, should be supplemented 

to eliminate any remaining gaps in copyright 

protection on the Internet that could impede the 

development of electronic commerce. 

In order to realize the enormous potential of the 

Internet, a growing number of countries are 

implementing the WIPO Internet Treaties and 

creating a legal environment conducive to 

investment and growth in Internet-related 
V. Trade Enforcement Activities| 264 

businesses and technologies. In the competition 

for foreign direct investment, these countries 

now hold a decided advantage. The 

Administration urges other governments to ratify 

and implement the two WIPO Internet Treaties. 

v. Other Initiatives Regarding Internet 

Piracy 

The United States is seeking to incorporate the 

highest standards of protection for intellectual 

property into appropriate bilateral and regional 

trade agreements that we negotiate. The United 

States has been successful in this effort by 

incorporating the standards of the WIPO Internet 

Treaties as substantive obligations in all our 

FTAs to date, and continues to pursue this goal 

in other FTAs. Moreover, U.S. proposals in 

these negotiations will further update copyright 

and enforcement obligations to reflect the 

technological challenges we face today as well 

as those that may exist at the time negotiations 

are concluded. 

vi. Government Use of Software 

In October 1998, the United States announced 

an Executive Order directing U.S. Government 

agencies to maintain appropriate and effective 

procedures to ensure legitimate use of software. 

In addition, USTR was directed to undertake an 

initiative to work with other governments, 

particularly those in need of modernizing their 

software management systems or about which 

concerns have been expressed, regarding 

government use of illegal software. 

The United States has achieved considerable 

progress under this initiative. Countries and 

territories that have issued decrees mandating 

the use of only authorized software by 

government ministries include Bolivia, Chile, 

China, Colombia, Costa Rica, the Czech 

Republic, France, Greece, Hong Kong, Hungary, 

Ireland, Israel, Jordan, Korea, Lebanon, Macau, 

Paraguay, Peru, the Philippines, Spain, Taiwan, 

Thailand, Turkey, and the United Kingdom. 

U.S. Trade Representative Robert B. Zoellick 

was pleased that these governments have 

recognized the importance of setting an example 

in this area and expects that these decrees will be 

fully implemented. The United States looks 

forward to the adoption of similar decrees, with 

effective and transparent procedures that ensure 

legitimate use of software, by additional 

governments in the coming year. 

3. Section 1377 Review of 

Telecommunications Agreements

Section 1377 of the Omnibus Trade and 

Competitiveness Act of 1988 requires USTR to 

review by March 31 of each year the operation 

and effectiveness of U.S. telecommunications 

trade agreements. The purpose of the review is 

to determine whether any act, policy, or practice 

of a foreign country that has entered into a 

telecommunications-related agreement with the 

United States: (1) is not in compliance with the 

terms of the agreement; or (2) otherwise denies, 

within the context of the agreement, mutually 

advantageous market opportunities to 

telecommunications products and services of 

U.S. firms in that country. 

The 2004 Section 1377 Review focused on the 

following issues: (1) the introduction of 

mandatory, discriminatory standards in relation 

to telecommunications services and equipment, 

notably in China, Korea, and Japan; (2) 

unreasonably high fixed-to-mobile termination 

rates, a factor identified as negatively impacting 

U.S. companies in a large number of markets, 

including Australia, Germany, Japan, New 

Zealand, and Switzerland; (3) a lack of 

reasonable access to leased lines and submarine 

cable capacity in Germany, India, Switzerland, 

and Singapore, where the absence of clear rules 

supported by the adequate enforcement powers 

of a regulator has allowed incumbent operators 

to succeed in blocking long-term access 

solutions; (4) efforts to undermine the 

effectiveness of independent regulators through 

political interference or legislative proposals in 

China, Japan, France, Mexico, and South Africa; 

and (5) slow implementation by South Africa 
V. Trade Enforcement Activities | 265 

and Mexico of their WTO commitments to 

permit resale of basic telecommunications 

services. 

USTR has urged national regulators to fulfill 

their responsibility to address such problems, 

and initial signs are promising: On the issue of 

mandatory, discriminatory standards, significant 

progress was made in China with the successful 

resolution of the Wireless LAN Authentication 

and Privacy Infrastructure (WAPI) issue, and in 

Korea with a reduction in restrictions on mobile 

wireless software standards (WIPI) and mobile 

wireless broadband transmission standards 

(WIBRO). In addition, Singapore’s regulator 

introduced a transitional regime to ensure 

competitively-priced wholesale leased lines, 

which should greatly improve competitive 

access, if fully implemented. Both the French 

and Japanese regulators made improvements in 

their regulatory functions, by taking steps to 

liberalizing markets and addressing anticompetitive behavior. South Africa has 

announced its intention to open its 

telecommunications sector to competition by 

February 1, 2005. While this is a welcome plan, 

we remain concerned that there may be 

additional delays in the liberalization of that 

market. USTR also remains concerned with the 

lack of clear regulatory independence in many 

countries, and will continue to monitor 

developments in this area in the future. Finally, 

while efforts to address mobile termination rates 

were undertaken in some markets during 2004 

(e.g., by the governments of Australia, New 

Zealand, and Israel), additional effort may be 

necessary in 2005 to address the concerns of 

certain U.S. companies. 

Mexico 

As a result of a dispute settlement proceeding 

brought by the United States in 2002, Mexico 

instituted much-needed reform to its 

international rules. Pursuant to an agreement 

reached with the United States regarding 

implementation of the recommendations 

included in the WTO panel report adopted on 

June 1, 2004, Mexico removed in June 2004 the 

provisions of Mexican Law that created the 

uniform tariff and proportional return systems, 

and the requirement that the carrier with the 

greatest proportion of outgoing traffic to a 

country negotiate the settlement rate on behalf of 

all Mexican carriers. Mexico also committed to 

allowing the introduction of resale-based 

international telecommunications services in 

Mexico by July 2005. Mexico, however, 

continues to prevent foreign carriers from using 

leased lines to bring calls directly into the 

domestic network. 

4. Antidumping Actions 

Under the antidumping law, duties are imposed 

on imported merchandise when the Department 

of Commerce determines that the merchandise is 

being dumped (sold at "less than fair value" 

(LTFV)) and the U.S. International Trade 

Commission (USITC) determines that there is 

material injury or threat of material injury to the 

domestic industry, or material retardation of the 

establishment of an industry, "by reason of" 

those imports. The antidumping law’s 

provisions are incorporated in Title VII of the 

Tariff Act of 1930 and have been substantially 

amended by the l979, 1984, and 1988 trade acts 

as well as by the 1994 Uruguay Round 

Agreements Act. 

 An antidumping investigation usually starts 

when a U.S. industry, or an entity filing on its 

behalf, submits a petition alleging with respect 

to certain imports the dumping and injury 

elements described above. If the petition meets 

the applicable requirements, Commerce initiates 

an antidumping investigation. Commerce also 

may initiate an investigation on its own motion. 

 After initiation, the USITC decides, generally 

within 45 days of the filing of the petition, 

whether there is a "reasonable indication" of 

material injury or threat of material injury to a 

domestic industry, or material retardation of an 

industry’s establishment, "by reason of" the 

LTFV imports. If this preliminary determination 

by the USITC is negative, the investigation is 
V. Trade Enforcement Activities| 266 

terminated; if it is affirmative, Commerce will 

make preliminary and final determinations 

concerning the alleged LTFV sales into the U.S. 

market. If Commerce’s preliminary 

determination is affirmative, Commerce will 

direct U.S. Customs to suspend liquidation of 

entries and require importers to post a bond or 

cash deposit equal to the estimated weighted 

average dumping margin. 

 If Commerce’s final determination of LTFV 

sales is negative, the investigation is terminated. 

If affirmative, the USITC makes a final injury 

determination. If the USITC determines that 

there is material injury or threat of material 

injury, or material retardation of an industry’s 

establishment, by reason of the LTFV imports, 

an antidumping order is issued. If the USITC’s 

final injury determination is negative, the 

investigation is terminated and the Customs 

deposits released. 

 Upon request of an interested party, Commerce 

conducts annual reviews of dumping margins 

pursuant to Section 751 of the Tariff Act of 

1930. Section 751 also provides for Commerce 

and USITC review in cases of changed 

circumstances and periodic review in conformity 

with the five-year "sunset" provisions of the 

U.S. antidumping law and the WTO 

antidumping agreement. 

Most antidumping determinations may be 

appealed to the U.S. Court of International 

Trade, with further judicial review possible in 

the U.S. Court of Appeals for the Federal 

Circuit. For certain investigations involving 

Canadian or Mexican merchandise, appeals may 

be made to a binational panel established under 

the NAFTA. 

The numbers of antidumping investigations 

initiated in and since 1986 are as follows: 83 in 

1986; 16 in 1987; 42 in 1988; 24 in 1989; 35 in 

1990; 66 in 1991; 84 in 1992; 37 in 1993; 51 in 

1994; 14 in 1995; 21 in 1996; 15 in 1997; 36 in 

1998; 46 in 1999; 45 in 2000; 77 in 2001; 35 in 

2002; 37 in 2003; and 26 in 2004. The numbers 

of antidumping orders (not including suspension 

agreements) imposed in and since 1986 are: 26 

in 1986; 53 in 1987; 12 in 1988; 24 in 1989; 14 

in 1990; 19 in 1991; 16 in 1992; 42 in 1993; 16 

in 1994; 23 in 1995; 9 in 1996; 11 in 1997; 9 in 

1998; 19 in 1999; 20 in 2000; 31 in 2001; 27 in 

2002; 16 in 2003; and 14 in 2004. Under its 

sunset review procedures, Commerce revoked 

57 antidumping duty orders and continued 72 

orders in 2000; revoked 7 antidumping duty 

orders and continued 19 orders in 2001; revoked 

9 antidumping duty orders and continued 2 

orders in 2002; revoked 2 antidumping duty 

orders and continued 5 orders in 2003; and 

revoked 12 antidumping duty orders and 

continued 17 orders in 2004. 

5. Countervailing Duty Actions 

The U.S. countervailing duty (CVD) law dates 

back to late 19th century legislation authorizing 

the imposition of CVDs on subsidized sugar 

imports. The current CVD provisions are 

contained in Title VII of the Tariff Act of 1930, 

as amended effective January 1, 1995 by the 

Uruguay Round Agreements Act. As with the 

antidumping law, the USITC and the 

Department of Commerce jointly administer the 

CVD law. 

The CVD law’s purpose is to offset certain 

foreign government subsidies benefitting 

imports into the United States. CVD procedures 

under Title VII are very similar to antidumping 

procedures, and CVD determinations by 

Commerce and the USITC are subject to the 

same system of judicial review as are 

antidumping determinations. Commerce 

normally initiates investigations based upon a 

petition submitted by a representative of the 

interested party(ies). The USITC is responsible 

for investigating material injury issues. The 

USITC must make a preliminary finding of a 

reasonable indication of material injury or threat 

of material injury, or material retardation of an 

industry’s establishment, by reason of the 

imports subject to investigation. If the USITC’s 

preliminary determination is negative, the 

investigation terminates; otherwise, Commerce 
V. Trade Enforcement Activities | 267 

issues preliminary and final determinations on 

subsidization. If Commerce’s final 

determination of subsidization is affirmative, the 

USITC proceeds with its final injury 

determination. 

The numbers of CVD investigations initiated 

in and since 1986 are as follows: 28 in 1986; 

8 in 1987; 17 in 1988; 7 in 1989; 7 in 1990; 

11 in 1991; 22 in 1992; 5 in 1993; 7 in 1994; 

2 in 1995; 1 in 1996; 6 in 1997; 11 in 1998; 

10 in 1999; 7 in 2000; 18 in 2001; 3 in 2002; 

5 in 2003; and 3 in 2004. The numbers of 

CVD orders imposed in and since 1986 are: 

13 in 1986; 14 in 1987; 7 in 1988; 6 in 1989; 

2 in 1990; 2 in 1991; 4 in 1992; 16 in 1993; 1 

in 1994; 2 in 1995; 2 in 1996; 0 in 1997; 1 in 

1998; 6 in 1999; 6 in 2000; 6 in 2001; none 

in 2002; 2 in 2003; and 3 in 2004. Under its 

sunset review procedures, Commerce 

revoked 8 countervailing duty orders and 

continued 22 orders in 2000; revoked 1 

countervailing duty order and continued 5 

orders in 2001; revoked no countervailing 

duty orders and continued no orders in 2002; 

revoked no countervailing duty orders and 

continued no orders in 2003; and revoked 1 

countervailing duty order and continued none 

in 2004. 

6. Other Import Practices 

a. Section 337 

Section 337 of the Tariff Act of 1930 makes it 

unlawful to engage in unfair acts or unfair 

methods of competition in the importation or 

sale of imported goods. Most Section 337 

investigations concern alleged infringement of 

intellectual property rights, such as U.S. patents 

and trademarks. 

The USITC conducts Section 337 investigations 

through adjudicatory proceedings under the 

Administrative Procedure Act. The proceedings 

normally involve an evidentiary hearing before a 

USITC administrative law judge who issues an 

Initial Determination that is subject to review by 

the Commission. If the USITC finds a violation, 

it can order that imported infringing goods be 

excluded from the United States and/or issue 

cease and desist orders requiring firms to stop 

unlawful conduct in the United States, such as 

the sale or other distribution of imported goods 

in the United States. Many Section 337 

investigations are terminated after the parties 

reach settlement agreements or agree to the entry 

of consent orders. 

In cases in which the USITC finds a violation of 

Section 337, it must decide whether certain 

public interest factors nevertheless preclude the 

issuance of a remedial order. Such public 

interest considerations include an order’s effect 

on the public health and welfare, U.S. 

consumers, and the production of similar U.S. 

products. 

If the USITC issues a remedial order, it 

transmits the order, determination, and 

supporting documentation to the President for 

policy review. Importation of the subject goods 

may continue during this review process, if the 

importer pays a bond set by the USITC. If the 

President does not disapprove the USITC’s 

action within 60 days, the USITC’s order 

becomes final. Section 337 determinations are 

subject to judicial review in the U.S. Court of 

Appeals for the Federal Circuit with possible 

appeal to the U.S. Supreme Court. 

The USITC also is authorized to issue temporary 

exclusion or cease and desist orders prior to 

completion of an investigation if the USITC 

determines that there is reason to believe a 

violation of Section 337 exists. 

In 2004, the USITC instituted 25 new Section 

337 investigations and one enforcement 

proceeding relating to a previously issued 

USITC remedial order. During the year, the 

USITC issued four general exclusion orders, 

four limited exclusion orders and 12 cease and 

desist orders covering imports from foreign 

firms, as follows: Inv. No. 337-TA-489, Certain 

Sildenafil or Any Pharmaceutically Acceptable 
V. Trade Enforcement Activities| 268 

Salt Thereof, Such as Sildenafil Citrate, and 

Products Containing Same (general exclusion 

order); Inv. No. 337-TA-487, Certain 

Agricultural Vehicles and Components Thereof 

(general exclusion order, two limited exclusion 

orders, and 11 cease and desist orders); Inv. No. 

337-TA-492, Certain Plastic Grocery and Retail 

Bags (general exclusion order); Consolidated 

Inv. Nos. 337-TA-481 and 337-TA-491, Certain 

Display Controllers with Upscaling 

Functionality and Products Containing Same 

and Certain Display Controllers and Products 

Containing Same (limited exclusion order); Inv. 

No. 337-TA-498, Certain Insect Traps (limited 

exclusion order and cease and desist order); and 

Inv. No. 337-TA-500, Certain Purple Protective 

Gloves (general exclusion order). A limited 

exclusion order covers only certain imports from 

particular named sources, while a general 

exclusion order covers certain products from all 

sources. The President permitted all the 

exclusion orders and cease and desist orders that 

reached him during 2004 to become final with 

the exception of the last two above-listed orders 

(Certain Insect Traps and Certain Purple 

Protective Gloves), both of which reached the 

President late in the year and remained under 

review at the time of preparation of this report. 

b. Section 201 

Section 201 of the Trade Act of 1974 provides a 

procedure whereby the President may grant 

temporary import relief if increased imports are 

a substantial cause of serious injury or the threat 

of serious injury. Relief may be granted for an 

initial period of up to four years, with the 

possibility of extending the relief to a maximum 

of eight years. Import relief is designed to 

redress the injury and to facilitate positive 

adjustment by the domestic industry and may 

consist of increased tariffs, quantitative 

restrictions, or other forms of relief. Section 201 

also authorizes the President to grant provisional 

relief in cases involving "critical circumstances" 

or certain perishable agricultural products. 

For an industry to obtain relief under Section 

201, the USITC must first determine that a 

product is being imported into the United States 

in such increased quantities as to be a substantial 

cause (a cause which is important and not less 

than any other cause) of serious injury, or the 

threat thereof, to the U.S. industry producing a 

like or directly competitive product. If the 

USITC makes an affirmative injury 

determination (or is equally divided on injury) 

and recommends a remedy to the President, the 

President may provide relief either in the amount 

recommended by the USITC or in such other 

amount as he finds appropriate. The criteria for 

import relief in Section 201 are based on Article 

XIX of the GATT 1994 – the so-called "escape 

clause" – and the WTO Agreement on 

Safeguards. 

As of January 1, 2004, the United States had no 

safeguard measures in place. The United States 

did not impose any safeguard measures during 

2004, and did not commence any safeguard 

investigations. On September 19, 2003, the 

USITC issued its midterm report on the steel 

safeguard measures. In view of the information 

provided in the USITC’s report, and after 

seeking advice from the Secretary of Commerce 

and the Secretary of Labor, the President, taking 

into account that the measure had achieved their 

purpose, determined that the effectiveness of the 

steel safeguard measures had been impaired by 

changed economic circumstances, and that 

termination of the measures was warranted. 

Accordingly, the steel safeguard measures 

terminated on December 5, 2003 

c. Section 421 

The terms of China’s accession to the WTO 

include a unique, China-specific safeguard 

mechanism. The mechanism allows a WTO 

member to limit increasing imports from China 

that disrupt or threaten to disrupt its market, if 

China does not agree to take action to remedy or 

prevent the disruption. The mechanism applies 

to all industrial and agricultural goods and will 

be available until December 11, 2013. 
V. Trade Enforcement Activities | 269 

Section 421 of the Trade Act of 1974, as 

amended by the U.S.-China Relations Act of 

2000, implements this safeguard mechanism in 

U.S. law. For an industry to obtain relief under 

Section 421, the USITC must first make a 

determination that products of China are being 

imported into the United States in such increased 

quantities or under such conditions as to cause 

or threaten to cause market disruption to the 

domestic producers of like or directly 

competitive products. The statute directs that if 

the USITC makes an affirmative determination, 

the President shall provide import relief, unless 

the President determines that provision of relief 

is not in the national economic interest of the 

United States or, in extraordinary cases, that the 

taking of action would cause serious harm to the 

national security of the United States. 

China’s terms of accession also permit a WTO 

Member to limit imports where a China-specific 

safeguard measure imposed by another Member 

causes or threatens to cause significant 

diversions of trade into its market. The trade 

diversion provision is implemented in U.S. law 

by Section 422 of the Trade Act of 1974, as 

amended. 

Through the end of 2004, five petitions have 

been filed under Section 421. During 2004, 

there was activity on two Section 421 petitions. 

On March 3, 2004, the President issued his 

determination with respect to a petition filed in 

September 2003 concerning certain ductile iron 

waterworks fittings from China. The President 

determined that providing import relief was not 

in the national economic interest of the United 

States. On January 6, 2004, the American 

Innerspring Manufacturers filed a petition 

regarding uncovered innerspring units from 

China. On March 8, 2004, the USITC issued a 

negative market disruption determination 

regarding those products and the investigation 

was terminated. 

On June 3, 2004, the U.S. Court of International 

Trade rejected a challenge to the President’s 

determination, in January 2003, to deny relief to 

the U.S. pedestal actuators industry based on a 

national economic interest determination. The 

suit had been brought by Motion Systems 

Corporation, the petitioner in the first Section 

421 investigation. Motion Systems Corporation 

appealed the ruling. The case is pending before 

the U.S. Federal Court of Appeals for the 

Federal Circuit. 

China Textile Safeguard 

The terms for China’s accession to the WTO 

(“Accession Agreement”) also include a special 

textiles safeguard, which is available for WTO 

members until December 31, 2008. This 

safeguard covers all products subject to the 

WTO Agreement on Textiles and Clothing as of 

January 1, 1995. 

Paragraph 242 of the Accession Agreement 

(“Paragraph 242”) allows WTO members that 

believe imports of Chinese-origin textile or 

apparel products are, due to market disruption, 

threatening to impede the orderly development 

of trade in these products to request 

consultations with China with a view to easing 

or avoiding such market disruption. Under 

Paragraph 242, the importing country must 

supply data which in its view shows the 

“existence or threat” of market disruption and 

the role of Chinese-origin products in that 

disruption. Upon receipt of a request for 

consultations, China must impose specified 

limits on its exports of such products to the 

member country. If the consultations fail to 

yield a solution to the threat or existence of 

market disruption, the WTO member may 

continue such limits on imports of Chineseorigin textile or apparel products. 

In late 2003, after the consideration of requests 

made by representatives of the U.S. textile and 

apparel industry, the interagency Committee for 

the Implementation of Textile Agreements 

(“CITA”) determined that imports of Chineseorigin knit fabric (Category 222), cotton and 

man-made fiber brassieres and other body 

supporting garments (Category 349/649), and 
V. Trade Enforcement Activities| 270 

cotton and man-made fiber dressing gowns and 

robes (Category 350/650) were, due to market 

disruption and the threat of market disruption, 

threatening to impede the orderly development 

of trade in these products, and that imports of 

these products from China played a significant 

role in the existence and threat of such market 

disruption. The United States requested 

consultations with China pursuant to Paragraph 

242 on December 24, 2003. 

The United States held consultations with China 

on two occasions, but no mutually satisfactory 

solution was reached. Limits on imports of 

these products went into effect on December 24, 

2003 and remained in effect through December 

23, 2004. 

In November and December 2004, U.S. textile 

and apparel industry representatives applied to 

CITA for further application of Paragraph 242 

safeguards on these three products. The requests 

were premised on the argument that an 

anticipated increase in imports of these products 

after the expiration of the one-year period of 

import restrictions threatened to disrupt the U.S. 

market for such products. CITA accepted the 

requests for consideration and commenced the 

periods of public comment and internal review, 

pursuant to its published procedures. 

In addition, from October to December 2004, 

U.S. industry representatives submitted nine 

requests for the imposition of Paragraph 242 

safeguards on the basis of a threat of market 

disruption from Chinese-origin textile or apparel 

imports. In particular, these requests concerned: 

(1) cotton trousers (Category 347/348); (2) manmade fiber trousers (Category 647/648); (3) 

man-made fiber knit shirts and blouses 

(Category 638/639); (4) men’s and boys’ cotton 

and man-made fiber shirts, not knit (category 

340/640); (5) cotton knit shirts and blouses 

(Category 338/339); (6) cotton and man-made 

fiber underwear (Category 352/652); (7) combed 

cotton yarn (Category 301); (8) other synthetic 

filament fabric (Category 620); and (9) wool 

trousers (Category 447). Again pursuant to its 

published procedures calling for public comment 

followed by internal review, CITA decided to 

consider each of those requests. 

On December 1, 2004, the U.S. Association of 

Importers of Textiles and Apparel (“USA-ITA”) 

filed a motion for preliminary injunction in the 

Court of International Trade (“CIT”), seeking to 

bar CITA from further accepting, considering, or 

otherwise proceeding to review requests based 

solely on a threat of market disruption. USAITA argued that CITA had acted outside of its 

legal authority by accepting and considering 

requests based on a threat of market disruption 

for products still under WTO-authorized quotas, 

and that its members would suffer irreparable 

harm if CITA were able to continue accepting 

and considering such requests. Among other 

things, the Administration responded that 

Paragraph 242 allows for safeguards based on a 

threat of market disruption, that CITA followed 

its valid published procedures in applying 

Paragraph 242, and in any event that USA-ITA’s 

members could not have suffered irreparable 

harm as the result of CITA’s actions. 

Furthermore, the Administration asserted, the 

Court’s consideration of the substantive basis for 

CITA’s actions would be an impermissible 

incursion into the President’s exclusive authority 

to conduct foreign relations. 

On December 30, 2004, the Court issued an 

order granting the motion for a preliminary 

injunction and enjoining CITA from further 

accepting, considering, or otherwise proceeding 

to review safeguard requests based on a threat of 

market disruption, or from self-initiating 

consideration of whether to impose safeguards 

under CITA procedures based on a threat of 

market disruption. The Administration has 

announced that it will appeal this ruling to the 

U.S. Court of Appeals for the Federal Circuit. 

On June 28, 2004, U.S. textile and apparel 

industry representatives requested Paragraph 

242 safeguard action on imports of Chineseorigin socks (Category 332/432/632 part), 

alleging that such imports were, due to market 
V. Trade Enforcement Activities | 271 

disruption, threatening to impede the orderly 

development of trade in this product. CITA 

determined that the request provided the 

information necessary to be considered and 

solicited public comments on the request. 

Following the close of the public comment 

period, CITA determined that Chinese sock 

imports were, due to market disruption and the 

threat of market disruption, threatening to 

impede the orderly development of trade in 

socks, and that imports of socks from China play 

a significant role in the existence of and threat of 

such disruption. The United States requested 

consultations with China pursuant to Paragraph 

242 on October 29, 2004. 

The United States held consultations with China 

on November 23, 2004, but no mutually 

satisfactory solution was reached. Limits on 

imports of these products went into effect on 

October 29, 2004. 

7. Trade Adjustment Assistance 

a. Assistance for Workers 

The Trade Adjustment Assistance (TAA) 

program for workers, established under Title II, 

chapter 2, of the Trade Act of 1974, as amended, 

provides assistance for workers affected by 

foreign trade. Available assistance includes job 

retraining, trade readjustment allowances 

(TRA), job search assistance, relocation 

assistance, a health insurance tax credit, and 

other re-employment services. The program was 

most recently amended by the Trade Adjustment 

Assistance Reform Act (TAA Reform Act), 

which was part of the Trade Act of 2002, 

enacted on August 6, 2002. 

The TAA Reform Act expanded the TAA 

program and superceded the North America Free 

Trade Agreement Transitional Adjustment 

Assistance (NAFTA-TAA) program. The TAA 

Reform Act also raised the statutory cap on 

funds that may be allocated to the States for 

training from $110 million to $220 million per 

year. Workers covered under certifications 

issued pursuant to NAFTA-TAA petitions filed 

on or before November 3, 2002, will continue to 

be covered under the provisions of the NAFTATAA program that were in effect on September 

30, 2001. Amendments to the TAA program 

apply to petitions for adjustment assistance that 

were filed on or after November 4, 2002. 

The TAA Reform Act expanded eligibility for 

the TAA program. For workers to be eligible to 

apply for TAA, the Secretary of Labor must 

certify that a significant number or proportion of 

the workers in a firm (or appropriate subdivision 

of the firm) have become totally or partially 

separated or threatened with such separation 

and: (1) increased imports contributed 

importantly to a decline in sales or production 

and to the separation or threatened separation of 

workers; or (2) there has been a shift in 

production to a country that has a free trade 

agreement with the United States or is a 

beneficiary country under a U.S. trade 

preference program; or (3) there has been a shift 

in production to another country, and there has 

been or is likely to be an increase in imports of 

like or directly competitive articles; or (4) loss 

of business as a supplier or downstream 

producer for a TAA certified firm contributed 

importantly to worker layoffs. The fourth basis 

for certification is designed to cover certain 

secondarily-affected workers. 

The U.S. Department of Labor administers the 

TAA program through the Employment and 

Training Administration (ETA). Workers 

certified as eligible to apply for adjustment 

assistance may apply for TAA benefits and 

services at the nearest state One Stop Career 

Center or office of the State Workforce Agency. 

In order to be eligible for TAA, workers must be 

enrolled in approved training within eight weeks 

of the issuance of the Department of Labor 

certification or within 16 weeks of the worker’s 

most recent qualifying separation (whichever is 

later) or must have successfully completed 

approved training. A state may waive this 

requirement under six specific conditions. 
V. Trade Enforcement Activities| 272 

The TAA Reform Act created a program of 

health coverage tax credits (HCTC) for certain 

trade-impacted workers and others. Covered 

individuals may be eligible to receive a tax 

credit equal to 65 percent of the amount they 

paid for qualifying coverage under qualified 

health insurance. The tax credit may be claimed 

at the end of the year, or, beginning in August 

2003, a qualified individual may receive the 

credit in the form of monthly advance payments 

to the health insurance provider. 

In addition, the TAA Reform Act of 2002 

created an Alternative Trade Adjustment 

Assistance (ATAA) program for older workers 

who are not likely to find suitable reemployment 

in their local labor market. This program was 

implemented on August 6, 2003 and provides 

qualified trade-impacted workers who are over 

50 years of age and find other work within 26 

weeks of separation with a wage supplement of 

up to half the difference between their old and 

new salaries, in lieu of retraining. The maximum 

amount payable is $10,000 over a two year 

period, and workers must earn less than $50,000 

per year in the new employment to qualify for 

the program. 

The Government Accountability Office (GAO) 

recently issued two reports on TAA: a report of 

September 22, 2004, on progress since the TAA 

Reform Act of 2002, and a report of September 

30, 2004 on the Health Care Tax Credit 

provision of TAA. The reports found that 

workers are interested in the new wage 

insurance provision created by ATAA and are 

enrolling in services more rapidly due to a new 

40-day time limit the Department of Labor must 

meet when processing a request for TAA 

coverage and a new deadline requiring workers 

to be enrolled in training 8 weeks after TAA 

certification or 16 weeks after a worker’s layoff. 

Of the 2,918 petitions for TAA eligibility 

received in FY2004, 1,734 certifications were 

issued, covering an estimated 147, 956 workers. 

The Labor Department recently began a new 5-

year study of the implementation and 

effectiveness of the TAA program, which it 

expects will provide more useful findings. The 

Labor Department expects the first of several 

interim reports will be issued by mid- 2005 and 

expects to issue the final report in 2009. 

 

The Trade Act of 2002 also contains a provision 

for Trade Adjustment Assistance for Farmers, 

with an appropriation of not more than $90 

million for each fiscal year 2003 through 2007 

to be administered by the U.S. Department of 

Agriculture. The Secretary of Agriculture 

delegated authority for this program to the 

Administrator of the Foreign Agricultural 

Service. 

The regulation to implement Trade Adjustment 

Assistance for Farmers was published in the 

Federal Register on August 20, 2003 (and is now 

codified at 7 C.F.R. § 1580). Primary 

requirements for a farmer to be eligible are that 

the price of the basic agricultural commodity 

produced by the farmer in the most recent year is 

less than 80 percent of the average price over the 

previous five years, and that imports contributed 

importantly to the price decline. 

If a group of farmers is certified as eligible for 

benefits, individual producers can then apply to 

the Farm Service Agency for technical 

assistance and/or cash benefits. A producer 

must receive technical assistance to become 

eligible for cash benefits. Cash benefits are 

subject to certain personal and farm income 

limits, and cannot exceed $10,000 per year to an 

individual producer. The cash benefit per unit is 

one-half of the gap between the most recent 

year’s price and the previous five-year average 

price. If the funding authorized by Congress is 

insufficient to pay 100 percent of all claims 

during the fiscal year, payments will be prorated. 

b. Assistance for Firms and Industries 

The Office of Strategic Initiatives of the 

Department of Commerce's Economic 

Development Administration (EDA) managed 

the TAA program for firms and industries during 
V. Trade Enforcement Activities | 273 

FY 2004. (In FY 2005, EDA will transfer 

administration of this program to its six regional 

offices.) The program is authorized by Title II, 

Chapter 3, of the Trade Act of 1974, as 

amended, and was extended by the Trade Act of 

2002 through September 30, 2007. Under the 

firms and industries TAA program, EDA funds a 

network of eleven Trade Adjustment Assistance 

Centers (TAACs). These TAACs are sponsored 

by nonprofit organizations, institutions of higher 

education, and a state agency. In FY 2004, EDA 

awarded $11.874 million in funding to the 

TAACs. TAACs assist firms in completing 

petitions for certification of eligibility. To be 

certified as eligible to apply for TAA, a firm 

must show that increased imports of articles like 

or directly competitive with those produced by 

the firm contributed importantly to declines in 

its sales, production, or both, and to the 

separation or threat of separation of a significant 

portion of the firm's workers. In FY 2004, EDA 

certified 162 firms under the TAA program. 

Once EDA has certified a firm, the TAAC 

assists the firm in assessing its competitive 

situation and in developing an adjustment 

proposal. The adjustment proposal must show 

that the firm is aware of its strengths and 

weaknesses and must present a clear and rational 

strategy for achieving economic recovery. 

EDA's Adjustment Proposal Review Committee 

(APRC) must approve the firm's adjustment 

proposal. During FY 2004, the APRC approved 

165 adjustment proposals from certified firms. 

(Some of these adjustment proposals were 

received in FY 2003, but were not approved 

until FY 2004.) 

 

After the ARC approves an adjustment proposal, 

the firm may request technical assistance from 

the TAAC to implement its strategy. Using 

funds provided by the TAA program, the TAAC 

contracts with consultants to provide the 

technical assistance identified in the firm's 

proposal. The firm must typically pay 50 

percent of the cost of each consultant contract, 

and the maximum amount of technical 

assistance available to a firm under the TAA 

program is $75,000. Common types of technical 

assistance that firms request include the 

development of marketing materials, the 

identification of new products for the firm to 

produce, the completion of a quality assurance 

program such as ISO 9000/2000, and the 

identification of appropriate management 

information systems. 

EDA is authorized to provide funding to trade 

associations and other organizations 

representing trade-injured industries to 

undertake technical assistance activities, which 

will generally benefit all firms in that industry. 

Since FY 1996, EDA has used the available 

program resources to support the TAAC 

network, which provides technical assistance to 

individual trade-injured firms. 

8. Generalized System of 

Preferences 

The Generalized System of Preferences (GSP) is 

a program that grants duty-free treatment to 

specified products that are imported from more 

than 140 designated developing countries and 

territories. The program began in 1976, when 

the United States joined 19 other industrialized 

in granting tariff preferences to promote the 

economic growth of developing countries 

through trade expansion. Currently, more than 

4,000 products or product categories (defined at 

the eight-digit level in the Harmonized Tariff 

Schedule of the United States) are eligible for 

duty-free entry from countries designated as 

beneficiaries under GSP. In 1997, an additional 

1,783 products were made duty-free under GSP 

for countries designated as least developed 

beneficiary developing countries (LDBDCs). 

The premise of GSP is that the creation of trade 

opportunities for developing countries is an 

effective, cost-efficient way of encouraging 

broad-based economic development and a key 

means of sustaining the momentum behind 

economic reform and liberalization. In its 

current form, GSP is designed to integrate 

developing countries into the international 

trading system in a manner commensurate with 
V. Trade Enforcement Activities| 274 

their development. The program achieves these 

ends by making it easier for exporters from 

developing economies to compete in the U.S. 

market with exporters from industrialized 

nations while at the same time excluding from 

duty-free treatment under GSP those products 

determined by the President to be “importsensitive.” The value of duty-free imports in 

2001 was approximately $15.7 billion. 

In addition, the GSP program works to 

encourage beneficiaries to eliminate or reduce 

significant barriers to trade in goods, services, 

and investment, to afford all workers 

internationally recognized worker rights, and to 

provide adequate and effective means for 

foreign nationals to secure, exercise, and enforce 

property rights, including intellectual property 

rights. 

An important attribute of the GSP program is its 

ability to adapt, product by product, to changing 

market conditions and the changing needs of 

producers, workers, exporters, importers and 

consumers. Modifications can be made in the 

list of articles eligible for duty-free treatment by 

means of an annual review. The process begins 

with a Federal Register Notice requesting the 

submission of petitions for modifications in the 

list of eligible articles. For those petitions that 

are accepted, public hearings are held, a U.S. 

International Trade Commission study of the 

“probable economic impact” of granting the 

petition is prepared, and all relevant materials 

are reviewed by the GSP interagency committee. 

Following completion of the review, the 

President announces his decision on which 

petitions are granted. 

The program was originally authorized for ten 

years and subsequently reauthorized for eight 

years. For several years thereafter, Congress 

renewed the program for only brief periods of 

one or two years. The GSP program has lapsed 

temporarily several times – September 30, 1994; 

July 31, 1995; May 31, 1997; June 30, 1998; 

July 1, 1999; and September 30, 2001. Each 

time it was reauthorized after a delay and 

applied retroactively to the previous expiration 

date, thus maintaining the continuity of the 

program benefits. The program was most 

recently reauthorized on August 6, 2002; it will 

expire again on December 31, 2006. 

On February 24, 2004, a notice was published in 

the Federal Register announcing the decision of 

the Trade Policy Staff Committee (TPSC) to 

initiate a full review of selected submitted 

product petitions but not to initiate a full review 

of submitted country practices. 

On March 1, 2004, the president issued a 

proclamation making Algeria a GSP beneficiary 

country, effective 15 days after the date of the 

proclamation. The proclamation also terminated 

the designation of GSP beneficiary developing 

country for the Czech Republic, Estonia, 

Hungary, Latvia, Lithuania, Poland, and 

Slovakia; termination to be effective on or after 

the day on which a country becomes a European 

Union member state. Finally, the proclamation 

graduated from GSP eligibility Antigua, 

Barbuda, Bahrain, and Barbados, effective 

January 1, 2006. On May 18, 2004, a notice was 

published in the Federal Register, announcing 

the termination of GSP eligibility, for the Czech 

Republic, Estonia, Hungary, Latvia, Lithuania, 

Poland, and Slovakia, as a result of their 

accessions to the European Union on May, 1, 

2004. 

On June 30, 2004, the president issued a 

proclamation modifying the duty-free treatment 

of certain GSP-eligible products and certain 

beneficiary developing countries under the 

Generalized System of Preferences. On July 6, 

2004, a Federal Register notice announced the 

disposition of product petitions accepted for 

review in the 2003 GSP Annual Product 

Review, the 2002 GSP Country Practices 

Review, the 2003 De Minimis Waiver and 

Redesignation Reviews, the 2003 Competitive 

Need Limitation removals, and certain 

previously-deferred product and country practice 

decisions. 
V. Trade Enforcement Activities | 275 

On September 7, 2004, the president issued a 

proclamation designating (among other matters) 

Iraq a beneficiary developing country, effective 

September 15, 2004, and removed imported 

Russian titanium from receiving GSP-eligibility, 

effective 60 days after the date of the 

proclamation. 

On September 10, 2004, a notice in the Federal 

Register announced the initiation of a review to 

consider the designation of Serbia and 

Montenegro as a beneficiary developing country 

under the GSP; while on November 5, 2004, a 

Federal Register notice announced initiation of a 

review to consider Azerbaijan as a beneficiary 

developing country under the GSP. 

On November 15, 2004, a notice in the Federal 

Register announced the extension of the 

deadline for submitting petitions for the 2004 

annual product and country practices review to 

December 13, 2004. 
277 

VI. Trade Policy Development 

A. Trade Capacity Building 

(TCB) 

Trade Capacity Building (TCB) is a critical part 

of the United States’ strategy of enabling 

developing countries to negotiate and implement 

market-opening and reform-oriented trade 

agreements. It is important to improve the 

linkage between trade and development by 

providing developing countries with the tools to 

maximize trade opportunities. Many developing 

countries lack a framework for understanding 

how agreements to reciprocally lower trade 

barriers vitally serve their development interests. 

Furthermore, they may need assistance to 

implement their trade commitments in a full and 

timely manner, and to build the human and 

institutional capacity needed to take full 

advantage of the opportunities to spur economic 

growth and combat poverty that their 

participation in the global, rules-based trading 

system create. 

Trade agreements can drive positive internal 

reforms that: (a) challenge the frequently 

protected and failed domestic status quo with a 

breath of competition from abroad; and (b) result 

in better use of current developing country 

resources and movement onto a path of more 

rapid economic growth. 

The evidence for this proposition is clear. 

World Bank research shows, for example, that 

income per capita in globalizing developing 

countries grew more than three times faster than 

in other developing countries in the 1990s. 

Absolute poverty rates for globalizing countries 

also have fallen sharply over the last 20 years. 

The World Bank also finds that trade barrier 

elimination in conjunction with related 

development policies would accelerate the 

decline in the number of people in poverty in 

2015 by an additional 300 million -- more than 

the whole population of the United States. 

Developing countries that generate growth 

through trade will be less dependent on official 

aid over time. 

Many developing countries, particularly the 

least-developed countries, still need help to take 

advantage of the opportunities offered in 

existing trade preference programs such as the 

African Growth and Opportunity Act, let alone 

the new opportunities that would arise from 

successful accomplishment of the DDAor a new 

bilateral trade agreement. 

Total U. S. funding for TCB activities in 

FY2004 was $903 million, up 19 percent from 

FY2003. Regionally, TCB was distributed as 

follows: 

• Asia: $132 million, up 41 percent 

from FY2003 ($94 million). 

• Central and Eastern Europe: $72 

million, up 9 percent from FY2003 ($66 

million). 

• Former Soviet Republics: $63 

million, down 25 percent from FY2003 ($85 

million). 

• Latin America and Caribbean: $225 

million, up 44 percent from FY2003 ($156 

million). 

• Middle East and North Africa: $187 

million, up 5 percent from FY2003 ($179 

million). 

• Sub-Saharan Africa: $181 million, 

up 36 percent from FY2003 ($133 million). 

Coherence. The United States was the largest 

single-country contributor to the World Bank 

and other multilateral development banks. 

These institutions provide an increasingly broad 

range of TCB assistance related to the DDA, the 

Free Trade Area of the America’s Hemispheric 

Cooperation Program, and other technical 

assistance frameworks. The United States 

recognizes that coherence among the WTO, 
VI. Trade Policy Development | 278 

World Bank and the International Monetary 

Fund not only involves consistent global 

economic policy making, but also coordination 

with regard to technical assistance activities. 

For this reason, the United States closely 

coordinates with these and other donors, whether 

on initiatives like the Development Aspects of 

Cotton or the Integrated Framework, to avoid 

duplication and to identify and take advantage of 

donor complementarities in programming. In 

the future, the United States will work with these 

organizations to explore new ways to increase 

coherence – such as complementary work on 

sector-wide initiatives – while maintaining 

flexibility to react to new obstacles arising 

during trade negotiations and taking full 

advantage of existing U.S. resources in the field. 

WTO Trade-Related Technical Assistance.

(TRTA) The United States directly supports the 

WTO’s TRTA (see Chapter II). For example, in 

May of 2004, U.S. Trade Representative Robert 

B. Zoellick announced that the United States 

would contribute approximately $1 million for 

trade-related technical assistance to the WTO. 

This latest contribution brought total U.S. TRTA 

for the DDA to almost $4 million since the 

launch of negotiations in November 2001. 

This money was in direct support of programs 

like the annual WTO Technical Assistance Plan. 

In 2004, the WTO introduced a new approach to 

technical assistance designed to ensure a 

“sustainable footprint” of capacity in developing 

countries, so their participation in the 

negotiations and implementation would be more 

effective. This involved having assistance go 

beyond introductory level instruction as well as 

increasing the number of advanced courses for 

recipients. The WTO’s Institute for Training 

and Technical Cooperation (ITTC) spent much 

of 2004 meeting with donors and recipients to 

design the 2005 plan to be more oriented toward 

quality, product, process and program, 

development, impact and results while being 

more geographically balanced. The 2005 Plan 

would have broader and deeper coverage, be 

more simple and flexible, and designed to build 

and strengthen strategic partnerships and 

coherence. The result has been a much 

improved, streamlined plan that presents a good 

framework for WTO assistance. The challenge 

now is to implement the programs in a way that 

meets these goals, particularly the goal of being 

as flexible as possible. The Plan takes into 

account the Decision adopted by the General 

Council on August 1, 2004 (the “July 

Framework Agreement”). As a result, there is 

an emphasis on issues like trade facilitation, 

which will be an area of particular importance in 

2005. 

The Integrated Framework (IF) is a multiagency multi-donor program aimed to 

coordinate technical assistance to the least 

developed countries (LDC) to assist them in 

enhancing their trade opportunities. Its main 

objective is to assist LDCs to identify the main 

barriers to the expansion of trade and provide 

trade-related technical assistance in a 

coordinated way to remove these barriers. Of 

the 49 LDCs that are members of the WTO, 311

are in the program and another 52

 are being 

actively considered, with more applicants 

expected. 

The United States is a strong supporter of the IF, 

and currently joins Switzerland as one of the two 

bilateral donor coordinators in the Integrated 

Framework Working Group (IFWG). In 

addition, the USAID missions in Mali and 

Mozambique are currently serving as IF donor 

facilitators in the field, and several other 

 

1 Current IF countries are Angola, Benin, 

Burkino Faso, Burundi, Cambodia, Chad, 

Djibouti, Eritrea, Ethiopia, Guinea, Lao PDR, 

Lesotho, Malawi, Maldives, Mali, Madagascar, 

Mauritania, Mozambique, Nepal, Niger, 

Rwanda, Sao Tome and Principe, Senegal, 

Sierra Leone, Yemen and Zambia. Tanzania, the 

Gambia, Haiti, and Uganda had gained entry 

under an old form of the IF and are now being 

transitioned into the current IF process. 

Bangladesh entered under the old IF and has not 

asked to participate under the current IF process. 

2 Central African Republic, Comoros, Equatorial 

Guinea, Liberia, and Sudan. 
VI. Trade Policy Development | 279 

missions have offered to assume this role in 

other IF countries. 

As bilateral donor coordinator in the IFWG, the 

United States is spearheading efforts to improve 

the IF process so that delivery of assistance 

flows even more smoothly. Priority issues that 

are being addressed include disbursement of 

Window II projects (transitional projects that 

bridge the time it takes donors to operationalize 

programs), fully engaging donors’ field missions 

in both the diagnostic and follow up stages of 

the IF process, strengthening the IF Secretariat, 

and coordinating between the IF and other 

international initiatives. The United States has 

contributed funds for the past few years to the 

Integrated Framework Trust Fund to finance 

Diagnostic Trade Integration Studies (DTIS) and 

Window II projects. Further, USAID’s bilateral 

assistance to LDC participants supports 

initiatives both to integrate trade into national 

economic and development strategies and to 

address high priority “behind the border” 

capacity building needs designed to accelerate 

integration into the global trading system. The 

total FY2004 bilateral TCB assistance to the 31 

IF countries was $79 million. These countries 

could also be benefiting from part of $161 

million in regional funding 

Cotton. The United States fully mobilized its 

development agencies in 2004 to address the 

obstacles faced by West African countries -- 

particularly Benin, Burkina Faso, Chad, Mali 

and Senegal -- in this sector. The Millennium 

Challenge Corporation (MCC), USAID, the 

Agriculture Department, and the United States 

Trade and Development Agency (USTDA) all 

worked together to come up with a coherent 

long-term development program based on the 

priorities of the West Africans. The United 

States will continue to coordinate with the 

WTO, World Bank, the African Development 

Bank, and others to be a part of the multilateral 

effort to address the development aspects of 

cotton. This includes active participation in the 

WTO Secretariat’s monthly meetings with 

donors and recipient countries to discuss the 

development aspects of cotton. 

There were consistent activities on the 

development aspects of cotton throughout 2004: 

• In March, representatives from USAID, 

USTR and USDA participated in the WTO 

African Regional Workshop on Cotton in 

Cotonou, Benin. At this meeting, the United 

States committed itself to supporting the efforts 

of African countries, in particular the West 

African countries, as they seek to address the 

development obstacles of their cotton sectors 

and their ability to participate profitably in world 

trade. 

• In support of the momentum created at 

Cotonou, USDA and Burkina Faso sponsored a 

ministerial conference on science and 

technology in June of 2004, where heads of 

West African regional agricultural research 

centers, representatives from West African 

universities and intergovernmental organizations 

met with U.S. technical experts to discuss 

technology, water and soil management, and 

policy frameworks. 

• In July of 2004, USDA sponsored the 

U.S. cotton industry orientation program for 

agriculture, commerce and environment 

ministers and ambassadors from Benin, Burkina 

Faso, Chad, Mali and Senegal. During this ten 

day tour, the ministers gained valuable exposure 

to the National Cotton Council, research 

universities engaged in world class cotton and 

agricultural research, and U.S. corporations 

doing business across the entire cotton value 

chain. 

• From September 25 to October 15, 

2004, an assessment team led by USAID and 

including the Agriculture Department, Tuskegee 

University, the National Cotton Council and Abt 

Associates visited Benin, Mali, and Chad to 

assess the qualities and constraints of cotton 

production, transformation, utilization and 

commercialization in these countries. 
VI. Trade Policy Development | 280 

• In December, USTR Zoellick traveled to 

Senegal, Benin, and Mali as a follow-up to a 

commitment he made in Geneva in July to learn 

more about the factors affecting the cotton sector 

in West Africa. 

 

• A high-level U.S. delegation comprised 

of officials from USDA, USAID, State and the 

National Cotton Council traveled to Bamako, 

Mali, January 11-13, 2005, to discuss a 

preliminary assessment of problems and issues 

with respect to the cotton sectors for the West 

African countries. Comments from the ministers 

will guide assistance that can be offered by 

USAID within the next three years. 

Benin, Mali and Senegal were among seventeen 

countries selected by the Board of the 

Millennium Challenge Corporation to negotiate 

compacts for potential funding from FY2004 

and FY2005 funds. The Millennium Challenge 

Corporation is a new Presidential initiative in 

which development assistance is provided to 

those countries that are committee to the rule of 

law, investing in their people, and encouraging 

economic freedom. These countries have the 

opportunity to identify their greatest barriers to 

growth and to develop proposals to address 

selected priorities through a consultative process 

involving the private sector, civil society and 

government. Countries may decide to use MCC 

to increase the productivity of their agricultural 

sector, including cotton. Burkina Faso was 

selected as an FY2005 “Threshold” Country, 

entitling it to submit a proposal to improve 

performance on the following indicators so that 

it might become eligible for the full program in 

the near future: Days to Start a Business, Trade 

Policy, Fiscal Policy and Girls’ Primary 

Education Completion. 

Accession. The United States also supports 

countries that are in the process of acceding to 

the WTO. For example, USAID provided WTO 

accession and implementation services to Nepal, 

which officially became a WTO member in 

2003, and Cape Verde. In 2004, USAID 

responded to Ethiopia’s request for assistance in 

its accession process by initiating a major, threeyear project there. In addition, Ukraine and a 

number of other countries in Eastern Europe and 

the former Soviet Union have benefited from 

USAID support in this area. In 2004, the United 

States provided general accession support to Iraq 

and Afghanistan. 

Services. One area of particular potential for 

developing countries is services. According to 

the World Bank, the services industry 

represented 54 percent of the GDP in low and 

middle income countries in 2000, up from 46 

percent in 1990. To support requests for support 

in this area, the United States has reached an 

agreement with the International Trade Centre 

extending a grant which would, among other 

things, fund services capacity assessments in 

four countries: Bangladesh, Indonesia, Kenya, 

and Rwanda. In FY2004, the United States 

spent $25 million on activities on services trade 

development, up from $17 million in FY2003. 

TCB Working Groups. Although the WTO 

and the Integrated Framework are priorities, they 

are only part of the U.S. TCB effort. In order to 

help our FTA partners participate in 

negotiations, implement the rules, and benefit 

over the long-term, USTR has created TCB 

working groups in free trade negotiations with 

developing countries. USAID, its field 

missions, and a number of other U.S. 

Government assistance providers actively 

participate in those working groups, so that the 

TCB needs identified can be quickly and 

efficiently incorporated into ongoing regional 

and country assistance programs. In the 

Dominican Republic-Central America-United 

States Free Trade Agreement (CAFTA-DR), the 

Committee on TCB also invites non-government 

organizations, representatives from the private 

sector and international institutions such as the 

Inter-American Development Bank and the 

World Bank to join in building the trade 

capacity of Costa Rica, the Dominican Republic, 

El Salvador, Guatemala, Honduras, and 

Nicaragua. Trade capacity building is also a 

fundamental feature of bilateral cooperation in 

support of our planned free trade agreements 

with the SACU countries (for Botswana, 

Lesotho, Namibia, and Swaziland) and with the 

Andean FTA negotiating countries (Colombia, 

Ecuador and Peru; Bolivia is also a full member 
VI. Trade Policy Development | 281 

of the TCB Working Group although it is still an 

observer in the FTA process). 

1. Hemispheric Cooperation 

Program 

The Hemispheric Cooperation Program (HCP), 

launched by the United States and its FTAA 

partners at the November 2002 Quito Ministerial 

Meeting, is a special trade capacity building 

initiative to assist FTAA countries in benefiting 

fully from hemispheric free trade. The 

Hemispheric Cooperation Program gives donors 

the opportunity to find innovative ways to work 

with other resource partners to integrate trade 

into development strategies such as the Poverty 

Reduction Strategies. 

U.S. trade-related technical assistance in the 

hemisphere reached $225 million in FY2004, up 

from $156 million in FY2003. 

 

2. Central America

 

The United States and other international 

institutions have continued to work with the 

Central American countries (CA-5) via the 

CAFTA-DR TCB Working Group in 2004 on 

mutual goals. USG assistance from the TCB 

Working Group for these countries has increased 

from $66 million in 2003 to over $80 million in 

2004. The establishment and function of the 

TCB Committee has helped funding levels in 

2004 despite other demanding pressures faced 

this year. The existence of the TCB Committee 

has also provided Congress a tangible 

mechanism to support. This resulted in 

Congress setting aside $20 million for the 

Central American countries on labor and 

environment in 2005. 

The TCB Working Group held two CAFTA 

Committee meetings in 2004, fulfilling the goal 

set during CAFTA negotiations. The second 

CAFTA Committee meeting was recently 

completed in December in Guatemala. During 

these Committee meetings, the TCB Working 

Group continued to work on CA-5 requests for 

assistance, such as rural diversification programs 

for agricultural products (e.g. coffee), market 

linkages for goods and services, food industry 

development, strengthening of labor and 

customs systems, and combating exploitive child 

labor, to name a few. The United States also 

provided an in-depth summary to each Central 

American country reflecting detailed TCB 

assistance in 2004, including specific project 

summaries for the entire year -- a useful tool 

during the process leading up to approval of the 

agreement. Plans are already underway for the 

United States to host the next CAFTA-DR TCB 

Committee meeting in Washington, D.C. in 

Spring 2005. 

3. Panama 

In 2004, the TCB working group addressed 

Panama’s request for assistance on civil society 

outreach and labor programs. The USG provided 

$3 million in TCB assistance to Panama in 

FY2004. Panama and the United States envision 

the creation of a Committee on TCB upon 

completion of the negotiations to build on the 

work done during negotiations. The Committee 

on TCB would continue its work as Panama 

develops its National Action Plan. Plans are 

currently underway for a TCB Committee 

meeting in Spring 2005. 

3. Andean Countries 

The United States, international institutions, 

non-government organizations, and private 

sector participants are actively working with 

Colombia, Peru, Ecuador, and Bolivia on TCB 

efforts during the current United States-Andean 

FTA negotiations. The TCB Working Group 

continues to address the Andeans’ request for 

assistance on civil society outreach, small and 

medium enterprise development, transition to 

free trade and competitiveness, and technical 

assistance on trade topics (e.g. customs and 

services). The U.S. provided $82 million in TCB 

assistance to the Andean countries in FY2004, 

up from $30 million in FY2003. 

The Andean partners and the United States 

envision the creation of a Committee on TCB 

upon completion of the negotiations to build on 

work done during negotiations. The Committee 
VI. Trade Policy Development | 282 

on TCB would continue to work with the 

Andean partners on TCB assistance as the 

Andean partners work to further refine and 

implement their national TCB strategies. This 

committee will continue to foster critical 

assistance in promoting economic growth, 

reducing poverty, and adjusting to liberalized 

trade. 

4. Africa 

A. Southern African Customs Union (SACU) 

The cooperative group supporting the U.S.-

SACU FTA underscores the Administration’s 

position that providing SACU with demanddriven assistance will ultimately result in an 

agreement that is beneficial for all involved. 

TCB in the SACU process has included: 

• Buying computers for Botswana, Lesotho, 

Namiba, and Swaziland (BLNS) Trade 

Ministries to better facilitate intra-SACU 

coordination. 

• Hiring and supporting a Trade Capacity 

Building Facilitator in each BLNS Trade 

Ministry to work with the negotiators, other 

ministries, the private sector, and civil 

society to identify needs and coordinate 

assistance. 

• Using BLNS experts to support workshops 

and studies in areas such as general trade 

policy, services, tariff setting, rules of 

origin, and environmental negotiations. 

• Supporting the BLNS to complete in depth 

TCB needs assessments for each individual 

country. 

United States TCB funding for SACU and its 

members was divided as follows: 

• Bilateral U.S. support for SACU 

countries in FY2004 was $6.7 million, up from 

$6.6 million in FY2003. Most TCB support for 

SACU comes out of $34.3 million in regional 

funding. 

• Bilateral U.S. funding for TCB activities 

in Botswana for FY2004 was $594,000, down 

from FY2003 funding of $618,000. Most TCB 

support for Botswana comes out of $34.3 

million in regional funding. 

• Bilateral U.S. funding support for TCB 

activities Lesotho comes out of regional funding 

that cannot be broken down by country only -- 

there is no bilateral support. The regional 

funding is $34.3 million. 

• Bilateral U.S. funding for TCB activities 

in Namibia for FY2004 was $556,000, down 

from FY2003 funding of $1.2 million. Most 

TCB support for Namibia comes out of $34.3 

million in regional funding. 

• Bilateral U.S. funding for TCB activities 

in South Africa for FY2004 was $4.8 million, up 

from FY2003 funding of $4.2 million. South 

Africa has access to regional funding of $34.3 

million. 

• Bilateral U.S. funding for TCB activities 

in Swaziland comes out of regional funding that 

cannot be broken down by country. The 

regional funding is about $34.3 million. 

b. African Growth and Opportunity Act 

(AGOA) 

 

Trade capacity building is an important element 

of AGOA implementation. Several U.S. 

agencies -- including USAID, Homeland 

Security’s Customs and Border Protection, and 

the Departments of State, Agriculture, and 

Commerce -- have conducted technical 

assistance and outreach programs designed to 

assist beneficiary countries to maximize their 

AGOA benefits. AGOA implementation is a 

major focus of the three USAID-funded 

Regional Hubs for Global Competitiveness in 

sub-Saharan Africa (in Botswana, Kenya, and 

Ghana). 

Animal Plant and Health Inspection Service 

(APHIS) experts are being posted to the three 

Hubs to assist government in complying with 

U.S. regulations relating to imports. The APHIS 
VI. Trade Policy Development | 283 

expert posted to the Botswana Hub paid early 

dividends: by early 2004, the APHIS expert 

helped Southern African nations complete pest 

lists on products such as Namibian table grapes. 

In addition, APHIS completed pest mitigation 

recommendations for Zambian baby carrots and 

baby squash, to which the Zambian Ministry of 

Agriculture has agreed, paving the way for 

export of these products to the United States. 

Other examples of TCB successes under AGOA 

include: 

$ The Hub in Botswana assisted the 

Zambian government in complying with 

AGOA=s export visa regulations. As a result, 

Swarp Spinning Mills has exported nearly $6 

million worth of yarn to Botswana, Mauritius, 

and South Africa for producing garments for the 

AGOA market. 

$ Through USAID funded assistance, the 

Mozambican Customs and the Ministry of Trade 

passed critical regulations required by the 

United States for garment imports under AGOA. 

USAID support to the Mozambican Employers' 

Federation also helped in the establishment of 

the government=s AGOA visa system. Within a 

year, two Mozambican factories were shipping a 

total of over 200,000 garments a month to the 

United States. 

• USAID also assisted Uganda in 

complying with AGOA=s visa requirements. In 

early 2003, Uganda sent its first ever shipment 

of apparel to the United States. 

In FY2004, the United States provided $97.9 

million in trade-related technical assistance to 

AGOA-beneficiary countries, up 41 percent 

($69.3 million) from FY2003. 

The United States and Thailand have recently 

created the “Group on SME and Other 

Cooperation” that coordinates cooperation 

between the two countries on small business 

issues as well as on general trade capacity 

building issues. Over the next year, the group 

will look to draw in private sector and other 

partners in cooperation efforts. 

Other 

For more details on TCB efforts for APEC, 

Middle Eastern countries and the WTO, please 

see corresponding sections. 

B. Congressional Affairs 

In 2004, USTR worked closely with the 108th

Congress to move forward the President’s 

bilateral, regional and multilateral trade agenda. 

Using guidance from the Bipartisan Trade 

Promotion Authority Act of 2002, USTR held 

meaningful consultations before and after each 

round of negotiations. These consultations 

provided the Administration with valuable 

advice on agreements that were launched, 

concluded, and approved by the Congress in 

2004. 

Consultations with the Congress enabled USTR 

to conclude free trade negotiations with 

Australia and the Kingdom of Morocco. 

Congress enacted legislation approving and 

implementing these agreements with strong 

bipartisan support. 

USTR also worked closely with Congress on the 

successful conclusion of negotiations on 

agreements with Bahrain and Central America 

and the Dominican Republic, which await 

congressional consideration this year. 

Congressional consultations also were important 

with respect to the initiation of talks with 

Panama, Thailand and the Andean nations of 

Colombia, Ecuador and Peru, as well as ongoing 

negotiations with the Southern African Customs 

Union (SACU) and the Free Trade Area of the 

Americas (FTAA). In November 2004, after 

meeting with the Congressional Oversight 

Group (COG), USTR also announced the 

President’s intent to enter into negotiations with 

Oman and the United Arab Emirates (UAE). 
VI. Trade Policy Development | 284 

In addition to free trade agreements, USTR 

maintained an ongoing dialogue with the 

Congress on multilateral initiatives in 2004. 

USTR consulted with the Congress on the WTO 

DDA and on legislation that brought the United 

States into compliance with WTO rulings with 

respect to the Foreign Sales Corporation and the 

1916 Act. 

USTR also worked with the Congress to 

successfully implement enhancements to the 

African Growth and Opportunity Act. 

C. Private Sector Advisory System and 

Intergovernmental Affairs 

USTR’s Office of Intergovernmental Affairs and 

Public Liaison (IAPL) administers the federal 

trade advisory committee system and provides 

outreach to, and facilitates dialogue with, state 

and local governments, the business and 

agricultural communities, labor, environmental, 

consumer, and other domestic groups on trade 

policy issues. 

The advisory committee system, established by 

the U.S. Congress in 1974, falls under the 

auspices of IAPL. The advisory committee 

system was created to ensure that U.S. trade 

policy and trade negotiating objectives 

adequately reflect U.S. public and private sector 

interests. The advisory committee system 

consists of 27 advisory committees, with a total 

membership of more than 700 advisors. It is 

managed by IAPL, in cooperation with other 

agencies including the Departments of 

Agriculture, Commerce Labor, and the 

Environmental Protection Agency. 

IAPL also has been designated as the NAFTA 

and WTO State Coordinator. As such, the office 

serves as the liaison to all state and local 

governments on the implementation of the 

NAFTA and the WTO, bilateral free trade 

agreements (FTAs), and other trade issues of 

interest. 

Finally, IAPL also coordinates USTR’s outreach 

to the public and private sector through 

notification of USTR Federal Register Notices 

soliciting written comments from the public, 

consulting with and briefing interested 

constituencies, holding public hearings, 

speaking at conferences and meetings around the 

country, and meeting frequently with a broad 

spectrum of groups at their request. 

1. The Advisory Committee System 

The advisory committees provide information 

and advice with respect to U.S. negotiating 

objectives and bargaining positions before 

entering into trade agreements, on the operation 

of any trade agreement once entered into, and on 

other matters arising in connection with the 

development, implementation, and 

administration of U.S. trade policy. 

In 2004, the number of industry committees at 

the technical level was streamlined and 

consolidated to better reflect the composition of 

the U.S. economy, in response to 

recommendations by the U.S. Government 

Accountability Office (GAO). 

The system currently consists of 27 advisory 

committees. Currently, there are approximately 

700 advisors and membership can grow to a 

total of up to 1,000 advisors. Recommendations 

for candidates for committee membership are 

collected from a number of sources including 

Members of Congress, associations and 

organizations, publications, other federal 

agencies, and individuals who have 

demonstrated an interest or expertise in U.S. 

trade policy. Membership selection is based on 

qualifications, geography, and the needs of the 

specific committee. Members pay for their own 

travel and other related expenses. 

The system is arranged in three tiers: the 

President’s Advisory Committee for Trade 

Policy and Negotiations (ACTPN); four policy 

advisory committees; and 22 technical and 

sectoral advisory committees. Additional 

information on the advisory committee can be 

found on the USTR website 

(http://www.ustr.gov/outreach/advise.shtml). 

Private sector advice is both a critical and 

integral part of the trade policy process. USTR 
VI. Trade Policy Development | 285 

maintains an ongoing dialogue with interested 

private sector parties on trade agenda issues. 

The advisory committee system is unique, 

however, since the committees meet on a regular 

basis and receive sensitive information about 

ongoing trade negotiations and other trade 

policy issues and developments. Committee 

members are required to have a security 

clearance. 

USTR in 2003 introduced a significant 

improvement to facilitate the work of the 

advisory committees, by creating, for the first 

time, a secure encrypted advisors’ website with 

password protection. Confidential draft texts of 

FTA agreements were posted throughout 2004 

to the secure website on an ongoing basis to 

allow advisors to provide comments to U.S. 

officials in a timely fashion during the course of 

negotiations. This has enhanced the quality and 

quantity of input from cleared advisors, 

especially from those advisors who reside 

outside of Washington, DC and have had 

difficulty accessing documents. 

In 2004, USTR introduced additional procedural 

innovations to improve the operation of the 

advisory committee system. This included a 

single monthly advisory committee Chairs 

teleconference call for all 27 committees. This 

keeps Chairs apprised of ongoing developments 

and important dates on the trade negotiations 

calendar and facilitates greater transparency. 

Additionally, USTR and the Department of 

Commerce instituted periodic plenary sessions 

of all 16 technical and sectoral committees, in 

order to make more efficient use of negotiators’ 

time with the committees and allow the further 

exchange of ideas. 

a. President’s Advisory Committee on 

Trade Policy and Negotiations 

The ACTPN consists of no more than 45 

members who are broadly representative of the 

key economic sectors affected by trade. The 

President appoints ACTPN members for twoyear renewable terms. The ACTPN is the 

highest-tier committee in the system that 

examines U.S. trade policy and agreements from 

the broad context of the overall national interest. 

b. Policy Advisory Committees 

At the second tier, the members of the four 

policy advisory committees are appointed by the 

USTR alone or in conjunction with other 

Cabinet officers. The Intergovernmental Policy 

Advisory Committee (IGPAC) is appointed and 

managed solely by USTR. Those policy 

advisory committees managed jointly with the 

Departments of Agriculture, Labor, and the 

Environmental Protection Agency are, 

respectively, the Agricultural Policy Advisory 

Committee (APAC), Labor Policy Advisory 

Committee (LAC), and Trade and Environment 

Policy Advisory Committee (TEPAC). 

Members serve two-year renewable terms or 

until the committee’s charter expires. Each 

committee provides advice based upon the 

perspective of its specific area. 

c. Technical and Sectoral Committees 

At the third tier, the 22 technical and sectoral 

advisory committees are organized into two 

areas: industry and agriculture. Representatives 

are appointed jointly by the USTR and the 

Secretaries of Commerce and Agriculture, 

respectively. Each sectoral or technical 

committee represents a specific sector or 

commodity group and provides specific 

technical advice concerning the effect that trade 

policy decisions may have on its sector or issue. 

There are six agricultural technical committees 

co-chaired by USTR and Agriculture. 

In 2004, the industry trade advisory committee 

system was streamlined and consolidated by 

USTR and Commerce to ensure that the 

committees reflect today's U.S. economy and 

vision for the future, since the original 

committees were put in place more than twentyfive years ago. The new structure reflects 

important changes in the U.S. economy since 

then. As of spring 2004, sixteen new Industry 

Trade Advisory Committees (ITACs) replaced 

the existing twenty-one committees. The 

restructuring is consistent with 

recommendations in a recent U.S. Government 

Accountability Office Report, "International 

Trade: Advisory Committee System Should be 
VI. Trade Policy Development | 286 

Upgraded to Better Serve U.S. Policy Needs" 

(GAO 02-876), and reflects the commitment of 

Commerce and the USTR to improve the trade 

advisory committee system. All current 

members of the industry advisory committee 

system were invited to continue their service 

within the new structure. 

2. State and Local Government 

Relations 

With the passage of the NAFTA Implementation 

Act in 1993, and the Uruguay Round 

Agreements Act in 1994, the United States 

created expanded consultative procedures 

between federal trade officials and state and 

local governments. Under both agreements, 

USTR’s Office of IAPL is designated as the 

“Coordinator for State Matters.” IAPL carries 

out the functions of informing the states, on an 

ongoing basis, of trade-related matters that 

directly relate to or that may have a direct effect 

on them. U.S. territories may also participate in 

this process. IAPL also serves as a liaison point 

in the Executive Branch for state and local 

government and federal agencies to transmit 

information to interested state and local 

governments, and relay advice and information 

from the states on trade-related matters. This is 

accomplished through a number of mechanisms: 

a. State Point of Contact System 

For day-to-day communications, pursuant to the 

NAFTA and Uruguay Round implementing 

legislation and Statements of Administrative 

Action, USTR created a State Single Point of 

Contact (SPOC) system. The Governor’s office 

in each State designates a single contact point to 

disseminate information received from USTR to 

relevant state and local offices and assist in 

relaying specific information and advice from 

the states to USTR on trade-related matters. The 

SPOC network ensures that state governments 

are promptly informed of Administration trade 

initiatives so their companies and workers may 

take full advantage of increased foreign market 

access and reduced trade barriers. It also 

enables USTR to consult with states and 

localities directly on trade matters which affect 

them. SPOCs regularly receive USTR press 

releases, Federal Register notices, and other 

pertinent information. 

 

b. Intergovernmental Policy Advisory 

Committee 

For advice from states and localities on trade 

policy matters, USTR has established an 

Intergovernmental Policy Advisory Committee 

on Trade (IGPAC). It is one of the four policy 

advisory committees discussed above. The 

IGPAC is comprised entirely of state and local 

officials and associations. Appointed on a 

bipartisan basis, the committee makes 

recommendations to the USTR and the 

Administration on trade policy matters. In 2004, 

USTR took important steps to improve and 

reenergize the IGPAC and USTR’s partnership 

with states and localities. These include holding 

more frequent IGPAC meetings and briefings; 

inviting permanent staff liaisons from the 

National Governors’ Association (NGA), 

National Conference of State Legislatures 

(NCSL), National Association of Attorneys 

General (NAAG), Council of State Governments 

(CSG), National Association of Counties 

(NACo), and National League of Cities (NLC) 

to become full IGPAC members; and extending 

an invitation to all of USTR’s State Points of 

Contact to obtain the security clearance 

necessary to join the IGPAC. Augmenting 

IGPAC’s membership will greatly expand 

opportunities for state and local governments, 

including U.S. territories, to provide comments 

and advice on trade agreements, since cleared 

advisors are allowed access to a secure advisors’ 

website in order to review draft negotiating 

texts. In 2004, IGPAC was briefed and 

consulted on trade priorities of interest to states 

and localities, including: voluntary government 

procurement commitments in FTAs (such as 

Australia, Central America, and Morocco), and 

services trade, and investment issues in the 

WTO, FTAA, and bilateral FTA negotiations. 

c. Meetings of State and Local 

Associations 

USTR officials participate frequently in 

meetings of state and local government 

associations to apprise them of relevant trade 
VI. Trade Policy Development | 287 

policy issues and solicit their views. 

Associations include the NGA, NCSL, CSG, 

NACo, U.S. Conference of Mayors, National 

League of Cities, National Association of State 

Procurement Officials and other associations. 

 

d. Consultations Regarding Specific 

Trade Issues 

USTR initiates consultations with particular 

states and localities on issues arising under the 

WTO and other U.S. trade agreements, and 

frequently responds to requests for information 

from state and local governments. Topics of 

interest included the WTO Government 

Procurement Agreement (GPA); WTO services 

issues; Free Trade Area of the Americas, 

bilateral FTA negotiations; NAFTA investment 

issues, and others. 

 

On the issue of voluntary coverage of state 

government procurement under the GPA and 

FTAs, USTR consults extensively with 

governor’s offices and other state officials. 

USTR also prepared a “Trade Facts” sheet to 

address various concerns and dispel 

misunderstandings. In particular, the factsheet 

emphasized the voluntary nature of 

commitments, and the ability of states to 

maintain practices such as environmentallyfriendly procurement, preferences for minorityand small-businesses, and other state 

sensitivities. 

USTR also consulted extensively with states on 

the WTO internet gaming services case brought 

by Antigua and Barbuda. USTR arranged 

frequent conference calls and email updates for 

interested State Points of Contact and a wide 

group of other state officials to seek their input, 

comments, and advice in the U.S. preparation of 

the case. 

3. Public and Private Sector 

Outreach 

It is important to recognize that the advisory 

committee system is but one of a variety of 

mechanisms through which the Administration 

obtains advice from interested groups and 

organizations on the development of U.S. trade 

policy. In formulating specific U.S. objectives 

in major trade negotiations, USTR also routinely 

solicits written comments from the public via 

Federal Register notices, consults with and 

briefs interested constituencies, holds public 

hearings, and meets with a broad spectrum of 

private sector and non-governmental groups. 

a. 2004 Outreach Efforts 

The 2004 trade agenda provided many 

opportunities for USTR to conduct outreach to, 

and consultations with, diverse trade policy 

stakeholders including the advisory committees, 

state and local governments, private sector and 

non-governmental groups. 

i. World Trade Organization 

Throughout 2004, USTR continued to solicit 

advice from cleared advisors, other domestic 

stakeholders, and the general public regarding 

U.S. objectives for the DDA in areas such as 

agriculture, non-agriculture market access, 

services, and trade facilitation. At the July 

General Council meeting in Geneva, advisors 

received frequent teleconference briefing 

updates, and advisors and the public received 

timely e-mail notifications and fact sheets 

regarding progress in the negotiations. In the 

fall of 2004, technical and sectoral advisory 

committees held plenary meetings focused on 

key aspects of the Doha agenda. During the 

year, USTR also held public briefings on the 

WTO and issued several notices in the Federal 

Register seeking public comments on WTO 

matters including dispute settlement, 

government procurement, and other issues. 

ii. Free Trade Area of the Americas 

In 2004, USTR briefed and facilitated 

consultations with advisory committees, other 

stakeholders, and the general public on the 

FTAA agenda following the November 2003 

Trade Ministerial meeting in Miami. 

The Ministers at Miami recognized the efforts of 

the FTAA Committee of Government 

Representatives on the Participation of Civil 

Society (SOC) to improve two-way 
VI. Trade Policy Development | 288 

communication with civil society by holding 

open public meetings on issues under discussion 

in the negotiations. The SOC held its third 

public issue meeting in January 2004 in the 

Dominican Republic focused on intellectual 

property rights, with active participation from 

U.S. private sector and NGO representatives. 

In Miami, Ministers also received the Fourth 

Report of the SOC summarizing public 

comments on all aspects of the FTAA 

negotiations. Comments received from U.S. 

and hemispheric civil societies were forwarded 

on an ongoing basis to the FTAA technical 

negotiators throughout the year. Also, advisory 

committees and interested domestic stakeholders 

were briefed by USTR on the status of informal 

meetings and consultations among FTAA 

countries. 

iii. Bilateral Trade Agreements 

In 2004, USTR briefed and facilitated 

consultations with advisory committees and 

other stakeholders on the negotiations to 

conclude free trade agreements with Australia, 

Morocco, Bahrain, five Central American 

countries and the Dominican Republic. This 

included frequent teleconference briefings on the 

progress of negotiations, issuing public fact 

sheets, and making materials widely available on 

the USTR website. Advisory committee reports 

on the FTAs, as required under the Trade Act of 

2002, were delivered to the President, USTR, 

and Congress, and made public on USTR’s 

website well in advance of congressional 

consideration of the FTAs to enable informed 

public discussion. Throughout the year, USTR 

also consulted with advisors and other 

stakeholders regarding other FTA negotiations 

in progress, including the SACU; Thailand; 

Panama; and the Andean countries. 

iv. Monitoring and Compliance Activities 

USTR briefed and facilitated consultations with 

advisors, state officials, and other stakeholders 

on disputes such as the WTO civil aircraft 

subsidies case, Continued Dumping and Subsidy 

Offset case (Byrd Amendment), China ValueAdded Tax, Mexico beverage tax, Antigua and 

Barbuda internet gaming services case, and other 

items. Other issues of interest to advisors and 

domestic groups included the Bush 

Administration’s Strategy Targeting Organized 

Piracy (STOP!); the protection of U.S. 

intellectual property rights, and agriculture and 

biotechnology issues. 

 

v. Public Trade Education 

USTR continues its efforts to promote and 

educate the public on trade issues. USTR has 

participated in education efforts regarding the 

range of trade activities and benefits through 

speeches, publications, and briefings. In 2004, 

USTR continued its new e-mail service, called 

Trade Facts, to update interested parties on 

important U.S. trade initiatives. This service 

provides USTR press releases, fact sheets, and 

background information to advisors and to the 

general public. USTR’s Internet homepage also 

serves as a vehicle to communicate to the public. 

During 2004, IAPL assisted in efforts to revise 

the USTR website, including improving the 

organization of the website and adding a search 

engine, buttons, and links to make the site more 

user-friendly. The USTR internet address is 

http://www.ustr.gov. 

D. Policy Coordination 

USTR leads the Executive Branch in the 

development of policy on trade and trade-related 

investment. Under the Trade Expansion Act of 

1962, the Congress established an interagency 

trade policy mechanism to assist with the 

implementation of these responsibilities. This 

organization, as it has evolved, consists of three 

tiers of committees that constitute the principal 

mechanism for developing and coordinating 

U.S. Government positions on international 

trade and trade-related investment issues. 

The Trade Policy Review Group (TPRG) and 

the Trade Policy Staff Committee (TPSC), 

administered and chaired by USTR, are the 

subcabinet interagency trade policy coordination 

groups that are central to this process. The 

TPSC is the first line operating group, with 

representation at the senior civil servant level. 

Supporting the TPSC are more than 80 
VI. Trade Policy Development | 289 

subcommittees responsible for specialized 

issues. The TPSC regularly seeks advice from 

the public on its policy decisions and 

negotiations through Federal Register notices 

and public hearings. In 2004, the TPSC held 

five public hearings on the following proposals: 

United States-Andean Free Trade Agreement 

(March 17, 2004); United States-Panama Free 

Trade Agreement (March 23, 2004); United 

States-Thailand Free Trade Agreement (March 

30 2004); China’s Compliance with WTO 

Commitments (September 23, 2004); and EU 

Rice Tariffs (September 25, 2004) The 

transcripts of these hearings are available on 

http://www.ustr.gov/outreach/transcripts/index.h

tm 

Through the interagency process, USTR assigns 

responsibility for issue analysis to members of 

the appropriate TPSC subcommittee or task 

force. The conclusions and recommendations of 

this group are then presented to the full TPSC 

and serve as the basis for reaching interagency 

consensus. If agreement is not reached in the 

TPSC, or if particularly significant policy 

questions are being considered, issues are 

referred to the TPRG (Deputy USTR/Under 

Secretary level). 

Member agencies of the TPSC and the TPRG 

consist of the Departments of Commerce, 

Agriculture, State, Treasury, Labor, Justice, 

Defense, Interior, Transportation, Energy, 

Health and Human Services, Homeland 

Security, the Environmental Protection Agency, 

the Office of Management and Budget, the 

Council of Economic Advisers, the Council on 

Environmental Quality, the International 

Development Cooperation Agency, the National 

Economic Council, and the National Security 

Council. The USITC is a non-voting member of 

the TPSC and an observer at TPRG meetings. 

Representatives of other agencies also may be 

invited to attend meetings depending on the 

specific issues discussed. 
ANNEX I 
Annex I. U.S. Trade in 2004 

I. 2004 Overview

U.S. trade (exports and imports of goods and services, and the receipt and payment of earnings on foreign 

investment)1

 increased by 16 percent in 2004 to a value of approximately $3.7 trillion.2 This was the 

largest yearly increase in trade since 2000 (up 17 percent). The increase in trade in 2004 largely reflected 

a strong U.S. economy (real GDP up over 4 percent) as well as improved economic conditions in a 

number of U.S. trade partners. U.S. trade of goods and services increased by 14 percent, while U.S. trade 

of goods alone increased 15 percent and U.S. trade of services alone increased by 12 percent. Both 

exports of goods and services, and earnings on investment and imports of goods and services and 

payments on investment increased by 16 percent in 2004. 

In 2003, the latest year in which data is available, the United States was the world’s largest trading nation 

for both exports and imports of goods and services.3

 The United States accounts for roughly 17 percent 

of world goods trade and for roughly 14 percent of world services trade.4

 Through 2004, the value of 

U.S. trade has increased 28-fold since 1970, and 97 percent since 1994, the year before the start of the 

Uruguay Round implementation (figure 1).5

 U.S. trade expansion was more rapid in the 1970-2004 

period than the growth of the overall U.S. economy, in both nominal and real terms. In nominal terms, 

trade has grown at an annual average rate of 10.2 percent per year since 1970, compared to U.S. gross 

domestic product (GDP) whose average annual growth over the same period was 7.4 percent. In real 

terms, the average annual growth in trade was nearly double the pace of GDP growth, 6.2 percent versus 

3.2 percent. 

The value of trade in goods and services, including earnings and payments on investment, was 31.5 

percent of the value of U.S. GDP in 2004 (figure 2). This represented an increase from the corresponding 

figure in 2003 (29 percent), but down from its high point in 2000 (34 percent).6

 For goods and services, 

excluding investment earnings and payments, U.S. trade represented 25.1 percent of the value of GDP in 

2004, up from 23.5 percent in 2003, but down from its high of 26 percent in 2000.7

 

1

 Earnings on foreign investment are considered trade because they are conceptually the payment made 

to foreign residents for the service rendered by the use of foreign capital. Beyond the overview section, 

however, this chapter deals with goods and services trade, excluding foreign investment earnings. All 

trade values are nominal unless otherwise indicated. 

2

 In this Chapter, 2004 is estimated based on partial year data (January-November). 

3 However, Germany surpassed the United States as the largest goods exporter in 2003. 

4

 Goods trade excluding intra-EU trade. 

5

 Trade in goods and services alone has increased 26-fold since 1970 and 92 percent since 1994. 

6

 Thirteen percent of the value of GDP in 1970 and 27 percent in 1994. 

7

 Eleven percent of the value of GDP in 1970 and 22 percent in 1994.
Figure 2: 

Growing Importance of Trade in the U.S. Economy

0

5

10

15

20

25

30

35

40

197019721974197619781980198219841986198819901992199419961998200020022004

Relative to U.S. GDP (%

Goods and services and payments and earnings on investment

Goods and services only

Total exports + imports as a percentage of the value of U.S. GDP

Source: U.S. Department of Commerce

Figure 1: 

U.S. Trade Growth

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Billions of Dollars

Goods and services and payments and earnings on investment

Goods and services only

Total exports + Imports

Source: U.S. Department of Commerce
Figure 3: 

U.S. Goods Exports

0

100

200

300

400

500

600

700

800

900

1994 2002 2003 2004*

Billions of Dollar

s

Food, feeds, and beverages Industrial supplies and materials

Capital goods, except autos Autos and auto parts

Consumer goods Other

* Annulalized based on January-November 2004 

Source: U.S. Department of Commerce, Census d t

This growth in trade has occurred in both U.S. exports and imports. U.S. exports of goods and services 

(including investment earnings) in 2004 are 22-fold greater than 1970 and 75 percent greater than 1994. 

U.S. imports of goods and services are 34-fold greater than 1970 and 117 percent greater than 1994. 

With the value of U.S. exports increasing less than that of imports, the total deficit on goods and services 

trade (excluding earnings and payments on foreign investment) increased by approximately $119 billion 

from $497 billion in 2003 (4.5 percent of GDP) to $616 billion in 2004 (5.5 percent of GDP). The U.S. 

deficit in goods trade alone increased by $98 billion from $548 billion in 2003 (5.0 percent of GDP) to 

$664 billion in 2004 (5.9 percent of GDP). The services trade surplus declined by $3 billion from $51 

billion in 2003 (0.5 percent of GDP) to $48 billion in 2004 (0.4 percent of GDP). 
 II. Goods Trade 

A. Export Growth 

U.S. goods exports increased by 13 percent in 2004, as compared to the 5 percent increase in the 

preceding year (table 1). Manufacturing exports, which account for 87 percent of total goods exports, 

were up 13 percent, while agriculture exports, which account for 8 percent of total goods exports, were up 

by 4 percent. High technology exports, a subset of manufacturing exports, accounted for 25 percent of 

total goods exports and were up 12 percent in 2004. U.S. goods 

exports increased for every major end-use category in 2004, with the largest increase in the industrial 

supplies and materials category, up 17 percent. 

Since 1994, U.S. goods exports are up 60 percent. Manufacturing exports increased 64 percent, while 

high technology exports increased 67 percent, and agriculture exports increased 39 percent. Exports of 

consumer goods have risen by 70 percent, while industrial supplies and materials and capital goods have 

increased by more than 60 percent. Of the $304 billion increase in goods exports since 1994, capital 

goods accounted for 42 percent of the increase, industrial supplies and materials accounted for 27 percent, 

and consumer goods accounted for 14 percent. 

U.S. goods exports increased to all major markets in 2004 (table 2), led by a growth rate of 26 percent to 

China, and 18 percent to Latin America, excluding Mexico. U.S. exports increased 10 percent to high 

income countries and 17 percent to middle and low income countries. Since 1994, U.S. goods exports to 

low and middle income countries exhibited higher growth rates than that to high income countries, 75 

percent compared to 48 percent. However, the United States still exports the majority of its goods to high 

income countries, roughly 55 percent in 2004. 

Goods exports to China continued to increase in 2004, up 26 percent, the 5th straight year of double-digit 

growth. U.S. exports of industrial supplies and materials to China exhibited the largest growth, up 38 

percent, while U.S. exports of agriculture products to China increased by 21 percent, rising to nearly $6 

billion. Exports of capital goods and industrial supplies accounted for 82 percent of U.S. exports to China 

in 2004, while agriculture exports accounted for 16 percent. U.S. exports to China have nearly 

quadrupled since 1994 (up 284 percent through 2004). 
Table 1 

U.S. Goods Exports

1994 2002 2003 2004* 03-04* 94-04* 

Exports: 

Billions of Dollars Percent Change 

Total (BOP basis) 502.9 681.8 713.1 804.2 12.8 59.9 

 Food, feeds, and beverages 42.0 49.6 55.0 56.0 1.7 33.4 

 Industrial supplies and materials 121.4 156.8 173.0 202.0 16.7 66.4 

 Capital goods, except autos 205.0 290.4 293.6 330.6 12.6 61.2 

 Autos and auto parts 57.8 78.9 80.7 87.8 8.9 52.1 

 Consumer goods 60.0 84.4 89.9 102.0 13.4 70.0 

 Other 26.5 32.9 32.5 37.1 14.1 39.9 

 Addendum: Agriculture 45.9 54.8 61.4 63.9 4.1 39.1 

 Addendum: Manufacturing 431.1 606.3 627.1 707.2 12.8 64.1 

 Addendum: High technology 120.7 178.6 180.2 202.0 12.1 67.3 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Balance of Payments Basis for Total, Census Basis for Sectors.

Table 2: 

U.S. Goods Exports to Selected Countries/Regions

1994 2002 2003 2004* 03-04* 94-04* 

Exports to: 

Billions of Dollars Percent Change 

Canada 114.4 160.9 169.9 188.1 10.7 64.4 

European Union (EU15) 107.8 143.7 151.7 167.5 10.4 55.5 

Japan 53.5 51.4 52.0 54.6 5.1 2.1 

Mexico 50.8 97.5 97.4 111.0 14.0 118.4 

China 9.3 22.1 28.4 35.6 25.6 283.7 

Asian Pacific Rim, except Japan and 

China 

85.0 105.0 108.1 121.0 12.0 42.3 

Latin America, except Mexico 41.7 51.6 51.9 61.2 17.8 46.7 

Addendum: High Income Countries 299.6 386.8 404.5 443.8 9.7 48.1 

Addendum: Low to Middle Income 

 Countries 

212.8 306.1 319.3 372.1 16.5 74.9 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Census Basis.
Exports to our NAFTA partners increased 12 percent in 2004, and have increased 111 percent since 1993, 

the year before the start of NAFTA=s implementation. Approximately 37 percent of aggregate U.S. goods 

exports went to NAFTA countries in 2004 (nearly $300 billion), up from nearly 33 percent in 1993 ($142 

billion). 

U.S. exports to Canada, the largest U.S. export market, accounting for 23 percent of U.S. exports, 

increased by 11 percent in 2004. Growth areas of U.S. exports to Canada include industrial supplies (up 

16 percent), and capital goods, except autos (up 11 percent). Overall, U.S. exports to Canada are up by 

64 percent since 1994. 

U.S. exports to Mexico, the second largest country export market, accounting for 14 percent of U.S. 

exports, increased by 14 percent in 2004. This marked the first increase in U.S. exports to Mexico since 

2000. U.S. exports were up 19 percent in industrial supplies and materials and 16 percent in capital goods 

(excluding autos). However, U.S. exports of consumer goods were down 1 percent. Since 1994, U.S. 

exports to Mexico have increased nearly 120 percent. 

U.S. exports to the European Union were up 10 percent in 2004. Exports increased in consumer goods 

(up 22 percent), industrial supplies (up 10 percent), and capital goods (up 9 percent). In 2004, the EU 

accounted for 21 percent of aggregate U.S. exports. Since 1994, U.S. exports to the EU have increased 

by 56 percent. 

U.S. exports to Latin America (excluding Mexico) and the Asian Pacific Rim (excluding China and 

Japan) increased 18 percent and 12 percent, respectively, in 2004. Although U.S. exports to Japan 

increased only 5 percent in 2004, this growth was still nearly 5 times larger than the growth rate in 2003. 

U.S. exports to Japan have declined in 5 of the last 8 years, and are only up 2 percent since 1994. U.S. 

exports to Latin America (excluding Mexico) and the Asian Pacific Rim (excluding China and Japan) 

have increased 47 percent and 42 percent, respectively, since 1994. 

B. Import Growth

U.S. goods imports increased 17 percent in 2004 (table 3 and figure 4), doubling the 8 percent growth 

rate in 2003. Manufacturing imports, accounting for 80 percent of total goods imports, increased 15 

percent in 2004. High technology imports, accounting for 16 percent of total goods imports, increased by 

16 percent, while agriculture imports, accounting for 4 percent of total goods imports, increased by 15 

percent in 2004. U.S. goods imports increased for every major end-use category in 2004, with the largest 

increases in industrial supplies (including petroleum) (up 31 percent), and capital goods (up 16 percent). 

The three largest end-use categories for U.S. imports together accounted for 76 percent of total U.S. 

imports (industrial supplies - 28 percent; consumer goods - 25 percent; and capital goods - 23 percent). 

Since 1994, U.S. goods imports are up nearly 120 percent, nearly doubling the growth by U.S. exports. 

U.S. imports of manufactured products and agriculture products increased by 111 percent and 110 

percent, respectively. U.S. imports of advanced technology products increased by 145 percent. For the 

major end-use categories, U.S. imports of consumer goods and industrial supplies each have grown by 

153 percent since 1994. Of the $807 billion increase in goods imports since 1994, industrial supplies and 

materials accounted for 31 percent of the increase, Consumer goods accounted for 28 percent, capital 

goods for 20 percent, and autos and auto parts for 14 percent. 
Table 3: 

U.S. Goods Imports

1994 2002 2003 2004* 03-04* 94-04* 

Imports: 

Billions of Dollars Percent Change 

Total (BOP Basis) 668.7 1,164.

7 

1,260.

7 

1,468.

3 

16.5 119.6 

 Food, feeds, and beverages 31.0 49.7 55.8 62.0 11.1 100.3 

 Industrial supplies and materials 162.1 267.7 313.8 409.9 30.6 152.8 

 Capital goods, except autos 184.4 283.3 295.8 343.6 16.1 86.4 

 Autos and auto parts 118.3 203.7 210.2 228.7 8.8 93.4 

 Consumer goods 146.3 307.8 333.9 370.7 11.0 153.5 

 Other 21.3 49.1 47.6 50.4 5.9 136.9 

 Addendum: Agriculture 26.0 42.0 47.5 54.4 14.7 109.7 

 Addendum: Manufacturing 557.3 974.6 1,027.

4 

1,176.

7 

14.5 111.1 

 Addendum: High technology 98.1 195.2 207.0 240.0 15.9 144.6 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Balance of Payments Basis for Total, Census Basis for 

Sectors. 
Table 4: 

U.S. Goods Imports from Selected Countries/Regions

1994 2002 2003 2004* 03-04* 94-04* 

Imports from: Billions of Dollars Percent Change 

Canada 128.4 209.1 221.6 256.3 15.7 99.6 

European Union (EU15) 119.5 225.8 244.8 273.6 11.8 129.0 

Japan 119.2 121.4 118.0 129.5 9.7 8.7 

Mexico 49.5 134.6 138.1 156.1 13.1 215.5 

China 38.8 125.2 152.4 196.2 28.7 405.7 

Asian Pacific Rim, except Japan and 

China 

103.2 146.9 148.5 166.7 12.3 61.6 

Latin America, except Mexico 38.5 69.5 78.8 98.7 25.2 156.6 

Addendum: High Income Countries 384.9 589.2 621.9 703.6 13.1 82.8 

Addendum: Low to Middle Income 

 Countries 

278.3 572.1 637.8 769.3 20.6 176.4 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Census Basis. 

Figure 4: 

U.S. Goods Imports

0

200

400

600

800

1000

1200

1400

1600

1994 2002 2003 2004*

Billions of Dollars

Food, feeds, and beverages Industrial supplies and materials

Capital goods, except autos Autos and auto parts

Consumer goods Other

* Annulalized based on January-November 2004 

Source: U.S. Department of Commerce, Census d t
On a regional basis, U.S. goods imports increased from all the major markets from 2003 to 2004, led by a 

growth rate of 29 percent from China, and 25 percent from Latin America excluding Mexico. U.S. 

imports increased by 21 percent from low and middle income countries and by 13 percent from high 

income countries. Since 1994, U.S. goods imports from low and middle income countries exhibited 

higher growth (more than double) than that from high income countries, 176 percent compared with 83 

percent. Accordingly, the share of U.S. imports from low and middle income countries has increased 

from 42 percent in 1994 to 52 percent in 2004. 

U.S. goods imports continued its strong growth from China in 2004, even surpassing the significant 

growth rate of 2003 (29 percent as compared to 22 percent). U.S. imports from China have increased by 

over 400 percent since 1994. As such, China has become the second largest single country supplier of 

goods to the United States. Thirteen percent of total U.S. imports were sourced from China in 2004, up 

from 6 percent in 1994. When imports from China, Japan, and the other Asian-Pacific Rim countries are 

considered together, however, the region’s share of U.S. imports has actually declined from 39 percent in 

1994 to 33 percent in 2004. Imports from China accounted for 20 percent of the overall increase in U.S. 

imports from the world since 1994 (second to NAFTA=s 29 percent and just greater than the EU’s 19 

percent). Much of U.S. imports from China are low value-added consumer goods, such as toys, 

footwear, apparel and some areas of consumer electronics. Consumer goods made up 54 percent of U.S. 

imports from China in 2004. U.S. imports of capital goods, industrial supplies, and autos and parts, 

however, exhibited strong growth in 2004, each above 40 percent. 

Imports from Latin America (excluding Mexico) increased by 25 percent in 2004, and have increased by 

157 percent since 1994. Roughly 60 percent of the increase in imports from Latin America was in the 

mineral fuel category. U.S. import prices for crude oil through the first 11 months of 2004 were up 27 

percent over the same period of 2003. U.S. imports from Latin America accounted for 7 percent of total 

U.S. imports in 2004. 

U.S. goods imports from the EU, accounting for 19 percent of total U.S. imports, increased by 12 percent 

in 2004, surpassing the 8 percent growth rate in 2003. More than half of U.S. imports from the EU were 

consumer goods and capital goods, each accounting for 27 percent of total imports. Import categories that 

exhibited the largest growth in 2004 included industrial supplies (up 22 percent), capital goods (up 13 

percent), and consumer goods (up 9 percent). U.S. imports from the EU have increased by 129 percent 

since 1994. 

Imports from our NAFTA partners increased 15 percent in 2004 and are up 173 percent since NAFTA 

started implementation. NAFTA imports accounted for 28 percent of aggregate U.S. goods imports in 

2004, down slightly from 29 percent in 2003, but up from 27 percent in 1994. 

U.S. imports from Canada, the largest single country supplier of goods to the United States, accounting 

for 18 percent of U.S. imports, increased by 16 percent in 2004. U.S. imports of industrial supplies from 

Canada were up 21 percent in 2004, while automotive vehicles and parts were up 13 percent. U.S. 

imports from Canada have nearly doubled since 1994. 

U.S. imports from Mexico, the third largest single country supplier of goods to the United States, 

increased by 13 percent in 2004. U.S. imports of industrial supplies increased by 31 percent, while 

imports of agriculture products increased by 15 percent. U.S. imports from Mexico have grown 216 

percent since 1994. 

 

Imports from the Pacific Rim (excluding Japan and China) increased 12 percent in 2004, and were up 62 

percent since 1994. Imports from Japan increased 10 percent in 2004, but were only up by 9 percent 

since 1994. Purchases from Japan in 2004 accounted for 9 percent of total U.S. imports, as compared to 

18 percent in 1994. 
III. Services Trade

A. Export Growth

U.S. exports of services grew roughly 11 percent in 2004 to $340 billion, and since 1994, U.S. services 

exports have increased by approximately 70 percent. U.S. services exports accounted for 30 percent of 

the level of U.S. goods and services exports in 2004, compared to 29 percent in 1994. 

Table 5: 

U.S. Services Exports

1994 2002 2003 2004* 03-04* 94-04* 

Exports: Billions of Dollars Percent Change 

Total (BOP basis) 200.4 294.1 307.4 339.9 

10.6 

69.6 

 Travel 58.4 66.7 64.5 75.4 16.8 29.0 

 Passenger Fares 17.0 17.0 15.7 18.9 20.7 11.5 

 Other Transportation 23.8 29.2 31.8 37.4 17.6 57.5 

 Royalties and Licensing Fees 26.7 44.2 48.2 51.1 6.0 91.4 

 Other Private Services 60.8 124.2 133.8 142.6 6.6 134.4 

 Transfers under U.S. Military 

 Sales Contracts 

12.8 11.9 12.5 13.7 9.9 7.3 

 U.S. Government Miscellaneous 

 Services 

0.9 0.8 0.8 0.7 -8.1 -16.1 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Balance of Payments Basis. 
The growth in U.S. services exports in 2004 was largely driven by travel and the other private services 

categories. Of the $32 billion increase in U.S. services exports in 2004, the travel category accounted for 

33 percent while the other private services category accounted for 27 percent. Categories exhibiting the 

largest export growth rates in 2004 were the passenger fares, other transportation, and travel categories 

(up 21 percent, 18 percent, and 17 percent respectively). 

Since 1994, nearly all of the major services export categories have grown. Export growth has been led by 

the other private services category, up 134 percent, and the royalties and licensing fees category, up 91 

percent. The other transportation and travel categories also were up 58 percent and 29 percent, 

respectively. Of the $139 billion increase in U.S. services exports between 1994 and 2004, the other 

private services category accounted for 59 percent of the increase, the royalties and licensing fees 

category accounted for 18 percent, and the travel category accounted for 12 percent. 

Detailed sectoral breakdowns for exports of the other private services category are available only through 

2003. In 2003, other private services exports totaled $134 billion. Of this, U.S. exports to business 

related parties (to a foreign parent or affiliate) accounted for $48 billion, or 36 percent of total other 

private services exports. The largest categories for U.S. exports of other private services to related and 

unrelated parties, in 2003 were: business, professional and technical services, $70 billion; financial 

services, $23 billion; education, $13 billion; film and television tape rentals, $10 billion; 

telecommunications, $5 billion; and insurance, $5 billion. The business, professional and technical 

services category were led by the computer and information services ($7.6 billion), research and 

development and testing services ($6.8 billion), operational leasing ($6.3 billion), installation, 

maintenance, and repair of equipment ($5.0 billion); and management and consulting services ($4.2 

billion).8

 

 

8

 Installation, maintenance, and repair of equipment services value for unaffiliated sales only. 

Figure 5: 

U.S. Services Exports

0

50

100

150

200

250

300

350

400

1994 2002 2003 2004*

Billions of Dollars

Travel Passenger Fares

Other Transportation Royalties and Licensing Fees

Other Private Services Military Sales

Govt Miscellaneous

* Annulalized based on January-November 2004 

Source: U.S. Department of Commerce, Balance of Payments d t
The United Kingdom was the largest purchaser of U.S. private services exports in 2003, accounting for 12 

percent of total U.S. private services exports (latest data available). The top 5 purchasers of U.S. private 

services exports in 2003 were: the United Kingdom ($35 billion), Japan ($30 billion), Canada ($27 

billion), Germany ($18 billion), and Mexico ($17 billion). 

Regionally, in 2003, the United States exported $101 billion to the EU, $78 billion to the Asia/Pacific 

Region ($42 billion excluding Japan and China), $43 billion to NAFTA countries, and $21 billion to 

Latin America (excluding Mexico). 

B. Import Growth

Services imports by the United States increased in 2004 by 14 percent to $292 billion (table 6, figure 6). 

While import growth was greater than export growth in 2004 (14 percent compared to 12 percent) the 

United States remained a net exporter of services. Three services import categories each accounted for 

roughly 25 percent of the $35 billion growth in U.S. imports of services between 2003 and 2004: other 

private services, other transportation, and travel. 

Table 6: 

U.S. Services Imports

1994 2002 2003 2004* 03-04* 94-04* 

Imports: Billions of Dollars Percent Change 

Total (BOP basis) 132.9 232.9 256.3 291.6 13.8 119.4 

 Travel 43.8 58.0 56.6 65.6 15.8 49.7 

 Passenger Fares 13.1 20.0 21.0 23.2 10.8 77.8 

 Other Transportation 26.0 38.4 44.8 53.7 19.9 106.4 

 Royalties and Licensing Fees 5.9 19.2 20.0 22.8 13.8 289.9 

 Other Private Services 31.5 75.3 85.8 94.6 10.2 200.6 

 Direct Defense Expenditures 10.2 19.1 25.1 28.5 13.6 179.4 

 U.S. Government Miscellaneous 

 Services 

2.6 2.9 3.0 3.2 7.7 26.3 

Source: U.S. Department of Commerce, Balance of Payments Basis. 
Since 1994, services imports grew 119 percent or $159 billion. This growth was driven by the other 

private services category (accounting for 40 percent of the increase) and the other transportation category 

(accounting for 17 percent of the increase). All of the major service categories grew since 1994. U.S. 

imports of royalties and licensing fees have nearly quadrupled, while imports of other private services and 

direct defense expenditures have increased 201 percent and 179 percent, respectively. 

As with exports, detailed sectoral breakdowns for imports of other private services are available only 

through 2003. In 2003, other private services imports totaled $86 billion. Of this, U.S. imports from 

business related parties (from a foreign parent or affiliate) accounted for $35 billion or 41 percent of total 

other private service imports. The largest categories for U.S. imports of other private services from 

related and unrelated parties in 2003 were: business professional and technical services, $41 billion; 

insurance services, $27 billion; financial services, $10 billion; and telecommunications, $5 billion. The 

business, professional and technical services category were led by the computer and data processing 

services ($5.2 billion), management, consulting, and public relations services ($3.6 billion), research, 

development, and testing services ($2.9 billion), and miscellaneous disbursements ($1.7 billion).9

 

In the import sector, the United Kingdom remained our largest supplier of private services, providing $31 

billion to the United States in 2003. This accounted for 13 percent of total U.S. imports of private 

services in 2003. The United States imported $19 billion from Canada, our second largest supplier, and 

 

Figure 6: 

U.S. Services Imports

0

50

100

150

200

250

300

350

1994 2002 2003 2004*

Billions of Dollar

s

Travel Passenger Fares

Other Transportation Royalties and Licensing Fees

Other Private Services Direct Defense Expenditures

Govt Miscellaneous

* Annulalized based on January-November 2004 

Source: U.S. Department of Commerce, Balance of Payments d t
$17 billion from Japan, our third largest supplier. Bermuda and Germany were our fourth and fifth 

largest import suppliers, both exporting $16 billion worth of services to the U.S., respectively, in 2003. 

Regionally, the U.S. imported $87 billion of services from the EU, $48 billion from the Asia/Pacific 

region ($27 billion excluding Japan and China), $31 billion from NAFTA, and $11 billion from Latin 

America (excluding Mexico). 

IV. The U.S. Trade Deficit 

The U.S. goods and services deficit increased by $119 billion in 2004 to a level of $616 billion (table 7). 

The U.S. goods trade deficit alone increased by $117 billion to $664 billion in 2004. The services trade 

surplus declined by $3 billion to $48 billion in 2004. 

As a share of U.S. GDP, the goods and services trade deficit was 5.5 percent of GDP in 2004, an increase 

of 1.0 percentage points from the level in 2003 (table 8). The goods trade deficit was 5.9 percent of GDP 

in 2004, up from 5.0 percent in 2003. The services trade surplus was 0.4 percent of GDP in 2004, down 

from 0.5 percent in 2003. 

The regional distribution of the goods trade deficit for 1994 and the past 3 years is shown in table 9. 

Table 7 

U.S. Trade Balances with the World 

1994 2002 2003 2004* 

Balance: 

Billions of Dollars 

Goods and Services (BOP Basis) -97.2 -421.7 -496.5 -615.9 

Goods (BOP Basis) -165.8 -482.9 -547.6 -664.2 

Services (BOP Basis) 67.5 61.2 51.0 48.3 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Balance of Payments Basis for World. 

9

 Miscellaneous disbursements include transactions such as outlays to fund news-gathering costs of 

broadcasters, disbursements to fund production costs of motion pictures companies, and fees to maintain 

government tourism and business promotion offices. 
Table 8 

U.S. Trade Balances as a share of GDP 

1994 2002 2003 2004* 

Share of GDP: 

Percent 

Goods and Services (BOP Basis) -1.4 B4.0 -4.5 -5.5 

Goods (BOP Basis) -2.3 -4.6 -5.0 -5.9 

Services (BOP Basis) 1.0 0.6 0.5 0.4 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce. 

Table 9 

U.S. Goods Trade Balances with Selected Countries/Regions 

1994 2002 2003 2004* 

Balance: 

Billions of Dollars 

Canada -14.0 -48.2 -51.7 -68.2 

European Union (EU15) -11.7 -82.1 -93.1 -106.1 

Japan -65.7 -70.0 -66.0 -74.9 

Mexico 1.4 -37.1 -40.6 -45.1 

China -29.5 -103.1 -124.1 -160.5 

Asian Pacific Rim, except Japan and 

China 

-18.2 -41.9 -40.4 -45.7 

Latin America, except Mexico 3.2 -18.0 -26.9 -37.5 

Addendum: High Income Countries -85.4 -202.4 -217.4 -259.8 

Addendum: Low to Middle Income 

 Countries 

-65.5 -266.0 -318.5 -397.1 

* Annualized based on January-November 2004 data. 

Source: U.S. Department of Commerce, Census Basis. 
ANNEX II 
 Background Information on the WTO 

Doha Development Agenda 

Doha Ministerial Declaration 

Doha Declaration on the TRIPS Agreement and Public Health 

Doha Declaration on Implementation-Related Issues and Concerns 

Doha Work Programme 

U.S. Submissions to the WTO in Support of the Doha Development Agenda 

Institutional Issues

Membership of the WTO 

2004 WTO Budget Contributions 

2004 Budget for the WTO Secretariat 

Waivers Currently in Force 

WTO Secretariat Personnel Statistics 

WTO Accession Application and Status 

Indicative List of Governmental and Non-Governmental Panellists 

Appellate Body Membership 

Where to Find More Information on the WTO 
WORLD TRADE

ORGANIZATION

WT/MIN(01)/DEC/1 

20 November 2001 

(01-5859) 

MINISTERIAL CONFERENCE 

Fourth Session 

Doha, 9 - 14 November 2001 

MINISTERIAL DECLARATION 

Adopted on 14 November 2001

1. The multilateral trading system embodied in the World Trade Organization has contributed 

significantly to economic growth, development and employment throughout the past fifty years. We are 

determined, particularly in the light of the global economic slowdown, to maintain the process of reform and 

liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth 

and development. We therefore strongly reaffirm the principles and objectives set out in the Marrakesh 

Agreement Establishing the World Trade Organization, and pledge to reject the use of protectionism. 

2. International trade can play a major role in the promotion of economic development and the alleviation 

of poverty. We recognize the need for all our peoples to benefit from the increased opportunities and welfare 

gains that the multilateral trading system generates. The majority of WTO Members are developing countries. 

We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. 

Recalling the Preamble to the Marrakesh Agreement, we shall continue to make positive efforts designed to 

ensure that developing countries, and especially the least-developed among them, secure a share in the growth 

of world trade commensurate with the needs of their economic development. In this context, enhanced market 

access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building 

programmes have important roles to play. 

3. We recognize the particular vulnerability of the least-developed countries and the special structural 

difficulties they face in the global economy. We are committed to addressing the marginalization of leastdeveloped countries in international trade and to improving their effective participation in the multilateral 

trading system. We recall the commitments made by Ministers at our meetings in Marrakesh, Singapore and 

Geneva, and by the international community at the Third UN Conference on Least-Developed Countries in 

Brussels, to help least-developed countries secure beneficial and meaningful integration into the multilateral 

trading system and the global economy. We are determined that the WTO will play its part in building 

effectively on these commitments under the Work Programme we are establishing. 

4. We stress our commitment to the WTO as the unique forum for global trade rule-making and 

liberalization, while also recognizing that regional trade agreements can play an important role in promoting the 

liberalization and expansion of trade and in fostering development. 

5. We are aware that the challenges Members face in a rapidly changing international environment cannot 

be addressed through measures taken in the trade field alone. We shall continue to work with the Bretton 

Woods institutions for greater coherence in global economic policy-making.

6. We strongly reaffirm our commitment to the objective of sustainable development, as stated in the 

Preamble to the Marrakesh Agreement. We are convinced that the aims of upholding and safeguarding an open 

and non-discriminatory multilateral trading system, and acting for the protection of the environment and the 

promotion of sustainable development can and must be mutually supportive. We take note of the efforts by 

Members to conduct national environmental assessments of trade policies on a voluntary basis. We recognize 

that under WTO rules no country should be prevented from taking measures for the protection of human, animal 
or plant life or health, or of the environment at the levels it considers appropriate, subject to the requirement that 

they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination 

between countries where the same conditions prevail, or a disguised restriction on international trade, and are 

otherwise in accordance with the provisions of the WTO Agreements. We welcome the WTO ́s continued 

cooperation with UNEP and other inter-governmental environmental organizations. We encourage efforts to 

promote cooperation between the WTO and relevant international environmental and developmental 

organizations, especially in the lead-up to the World Summit on Sustainable Development to be held in 

Johannesburg, South Africa, in September 2002. 

7. We reaffirm the right of Members under the General Agreement on Trade in Services to regulate, and 

to introduce new regulations on, the supply of services. 

8. We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally 

recognized core labour standards. We take note of work under way in the International Labour Organization 

(ILO) on the social dimension of globalization. 

9. We note with particular satisfaction that this Conference has completed the WTO accession procedures 

for China and Chinese Taipei. We also welcome the accession as new Members, since our last Session, of 

Albania, Croatia, Georgia, Jordan, Lithuania, Moldova and Oman, and note the extensive market-access 

commitments already made by these countries on accession. These accessions will greatly strengthen the 

multilateral trading system, as will those of the 28 countries now negotiating their accession. We therefore 

attach great importance to concluding accession proceedings as quickly as possible. In particular, we are 

committed to accelerating the accession of least-developed countries.

10. Recognizing the challenges posed by an expanding WTO membership, we confirm our collective 

responsibility to ensure internal transparency and the effective participation of all Members. While emphasizing 

the intergovernmental character of the organization, we are committed to making the WTO’s operations more 

transparent, including through more effective and prompt dissemination of information, and to improve dialogue 

with the public. We shall therefore at the national and multilateral levels continue to promote a better public 

understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system. 

11. In view of these considerations, we hereby agree to undertake the broad and balanced Work 

Programme set out below. This incorporates both an expanded negotiating agenda and other important 

decisions and activities necessary to address the challenges facing the multilateral trading system. 

WORK PROGRAMME

IMPLEMENTATION-RELATED ISSUES AND CONCERNS

12. We attach the utmost importance to the implementation-related issues and concerns raised by Members 

and are determined to find appropriate solutions to them. In this connection, and having regard to the General 

Council Decisions of 3 May and 15 December 2000, we further adopt the Decision on Implementation-Related 

Issues and Concerns in document WT/MIN(01)/17 to address a number of implementation problems faced by 

Members. We agree that negotiations on outstanding implementation issues shall be an integral part of the 

Work Programme we are establishing, and that agreements reached at an early stage in these negotiations shall 

be treated in accordance with the provisions of paragraph 47 below. In this regard, we shall proceed as follows: 

(a) where we provide a specific negotiating mandate in this Declaration, the relevant implementation issues shall 

be addressed under that mandate; (b) the other outstanding implementation issues shall be addressed as a matter 

of priority by the relevant WTO bodies, which shall report to the Trade Negotiations Committee, established 

under paragraph 46 below, by the end of 2002 for appropriate action.

AGRICULTURE

13. We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 

of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a 

total of 121 Members. We recall the long-term objective referred to in the Agreement to establish a fair and 

market-oriented trading system through a programme of fundamental reform encompassing strengthened rules 
and specific commitments on support and protection in order to correct and prevent restrictions and distortions 

in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried 

out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive 

negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all 

forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that 

special and differential treatment for developing countries shall be an integral part of all elements of the 

negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the 

rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to 

effectively take account of their development needs, including food security and rural development. We take 

note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that 

non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on 

Agriculture. 

14. Modalities for the further commitments, including provisions for special and differential treatment, 

shall be established no later than 31 March 2003. Participants shall submit their comprehensive draft Schedules 

based on these modalities no later than the date of the Fifth Session of the Ministerial Conference. The 

negotiations, including with respect to rules and disciplines and related legal texts, shall be concluded as part 

and at the date of conclusion of the negotiating agenda as a whole. 

SERVICES

15. The negotiations on trade in services shall be conducted with a view to promoting the economic growth 

of all trading partners and the development of developing and least-developed countries. We recognize the 

work already undertaken in the negotiations, initiated in January 2000 under Article XIX of the General 

Agreement on Trade in Services, and the large number of proposals submitted by Members on a wide range of 

sectors and several horizontal issues, as well as on movement of natural persons. We reaffirm the Guidelines 

and Procedures for the Negotiations adopted by the Council for Trade in Services on 28 March 2001 as the basis 

for continuing the negotiations, with a view to achieving the objectives of the General Agreement on Trade in 

Services, as stipulated in the Preamble, Article IV and Article XIX of that Agreement. Participants shall submit 

initial requests for specific commitments by 30 June 2002 and initial offers by 31 March 2003.

MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS

16. We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate 

eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well 

as non-tariff barriers, in particular on products of export interest to developing countries. Product coverage shall 

be comprehensive and without a priori exclusions. The negotiations shall take fully into account the special 

needs and interests of developing and least-developed country participants, including through less than full 

reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of 

GATT 1994 and the provisions cited in paragraph 50 below. To this end, the modalities to be agreed will 

include appropriate studies and capacity-building measures to assist least-developed countries to participate 

effectively in the negotiations. 

TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS

17. We stress the importance we attach to implementation and interpretation of the Agreement on TradeRelated Aspects of Intellectual Property Rights (TRIPS Agreement) in a manner supportive of public health, by 

promoting both access to existing medicines and research and development into new medicines and, in this 

connection, are adopting a separate Declaration. 

18. With a view to completing the work started in the Council for Trade-Related Aspects of Intellectual 

Property Rights (Council for TRIPS) on the implementation of Article 23.4, we agree to negotiate the 

establishment of a multilateral system of notification and registration of geographical indications for wines and 

spirits by the Fifth Session of the Ministerial Conference. We note that issues related to the extension of the 

protection of geographical indications provided for in Article 23 to products other than wines and spirits will be 

addressed in the Council for TRIPS pursuant to paragraph 12 of this Declaration. 
19. We instruct the Council for TRIPS, in pursuing its work programme including under the review of 

Article 27.3(b), the review of the implementation of the TRIPS Agreement under Article 71.1 and the work 

foreseen pursuant to paragraph 12 of this Declaration, to examine, inter alia, the relationship between the TRIPS 

Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, 

and other relevant new developments raised by Members pursuant to Article 71.1. In undertaking this work, the 

TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS 

Agreement and shall take fully into account the development dimension. 

RELATIONSHIP BETWEEN TRADE AND INVESTMENT

20. Recognizing the case for a multilateral framework to secure transparent, stable and predictable 

conditions for long-term cross-border investment, particularly foreign direct investment, that will contribute to 

the expansion of trade, and the need for enhanced technical assistance and capacity-building in this area as 

referred to in paragraph 21, we agree that negotiations will take place after the Fifth Session of the Ministerial 

Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of 

negotiations. 

21. We recognize the needs of developing and least-developed countries for enhanced support for technical 

assistance and capacity building in this area, including policy analysis and development so that they may better 

evaluate the implications of closer multilateral cooperation for their development policies and objectives, and 

human and institutional development. To this end, we shall work in cooperation with other relevant 

intergovernmental organisations, including UNCTAD, and through appropriate regional and bilateral channels, 

to provide strengthened and adequately resourced assistance to respond to these needs. 

22. In the period until the Fifth Session, further work in the Working Group on the Relationship Between 

Trade and Investment will focus on the clarification of: scope and definition; transparency; nondiscrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; 

development provisions; exceptions and balance-of-payments safeguards; consultation and the settlement of 

disputes between Members. Any framework should reflect in a balanced manner the interests of home and host 

countries, and take due account of the development policies and objectives of host governments as well as their 

right to regulate in the public interest. The special development, trade and financial needs of developing and 

least-developed countries should be taken into account as an integral part of any framework, which should 

enable Members to undertake obligations and commitments commensurate with their individual needs and 

circumstances. Due regard should be paid to other relevant WTO provisions. Account should be taken, as 

appropriate, of existing bilateral and regional arrangements on investment. 

INTERACTION BETWEEN TRADE AND COMPETITION POLICY

23. Recognizing the case for a multilateral framework to enhance the contribution of competition policy to 

international trade and development, and the need for enhanced technical assistance and capacity-building in 

this area as referred to in paragraph 24, we agree that negotiations will take place after the Fifth Session of the 

Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on 

modalities of negotiations. 

24. We recognize the needs of developing and least-developed countries for enhanced support for technical 

assistance and capacity building in this area, including policy analysis and development so that they may better 

evaluate the implications of closer multilateral cooperation for their development policies and objectives, and 

human and institutional development. To this end, we shall work in cooperation with other relevant 

intergovernmental organisations, including UNCTAD, and through appropriate regional and bilateral channels, 

to provide strengthened and adequately resourced assistance to respond to these needs. 

25. In the period until the Fifth Session, further work in the Working Group on the Interaction between 

Trade and Competition Policy will focus on the clarification of: core principles, including transparency, nondiscrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary 

cooperation; and support for progressive reinforcement of competition institutions in developing countries 

through capacity building. Full account shall be taken of the needs of developing and least-developed country 
participants and appropriate flexibility provided to address them. 

TRANSPARENCY IN GOVERNMENT PROCUREMENT

26. Recognizing the case for a multilateral agreement on transparency in government procurement and the 

need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take 

place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit 

consensus, at that Session on modalities of negotiations. These negotiations will build on the progress made in 

the Working Group on Transparency in Government Procurement by that time and take into account 

participants' development priorities, especially those of least-developed country participants. Negotiations shall 

be limited to the transparency aspects and therefore will not restrict the scope for countries to give preferences 

to domestic supplies and suppliers. We commit ourselves to ensuring adequate technical assistance and support 

for capacity building both during the negotiations and after their conclusion. 

TRADE FACILITATION

27. Recognizing the case for further expediting the movement, release and clearance of goods, including 

goods in transit, and the need for enhanced technical assistance and capacity building in this area, we agree that 

negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be 

taken, by explicit consensus, at that Session on modalities of negotiations. In the period until the Fifth Session, 

the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles 

V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in 

particular developing and least-developed countries. We commit ourselves to ensuring adequate technical 

assistance and support for capacity building in this area. 

WTO RULES

28. In the light of experience and of the increasing application of these instruments by Members, we agree 

to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of 

Article VI of the GATT 1994 and on Subsidies and Countervailing Measures, while preserving the basic 

concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into 

account the needs of developing and least-developed participants. In the initial phase of the negotiations, 

participants will indicate the provisions, including disciplines on trade distorting practices, that they seek to 

clarify and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to 

clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to 

developing countries. We note that fisheries subsidies are also referred to in paragraph 31. 

29. We also agree to negotiations aimed at clarifying and improving disciplines and procedures under the 

existing WTO provisions applying to regional trade agreements. The negotiations shall take into account the 

developmental aspects of regional trade agreements. 

DISPUTE SETTLEMENT UNDERSTANDING

30. We agree to negotiations on improvements and clarifications of the Dispute Settlement Understanding. 

The negotiations should be based on the work done thus far as well as any additional proposals by Members, 

and aim to agree on improvements and clarifications not later than May 2003, at which time we will take steps 

to ensure that the results enter into force as soon as possible thereafter.

TRADE AND ENVIRONMENT

31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to 

negotiations, without prejudging their outcome, on: 

 (i) the relationship between existing WTO rules and specific trade obligations set out in 
multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to 

the applicability of such existing WTO rules as among parties to the MEA in question. The 

negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA 

in question; 

(ii) procedures for regular information exchange between MEA Secretariats and the relevant 

WTO committees, and the criteria for the granting of observer status; 

(iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental 

goods and services. 

We note that fisheries subsidies form part of the negotiations provided for in paragraph 28. 

32. We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda 

within its current terms of reference, to give particular attention to: 

 (i) the effect of environmental measures on market access, especially in relation to 

developing countries, in particular the least-developed among them, and those situations in 

which the elimination or reduction of trade restrictions and distortions would benefit trade, the 

environment and development; 

 (ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual 

Property Rights; and 

 (iii) labelling requirements for environmental purposes. 

Work on these issues should include the identification of any need to clarify relevant WTO rules. The 

Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where 

appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work 

as well as the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and nondiscriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of 

Members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and 

Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the 

needs of developing and least-developed countries. 

33. We recognize the importance of technical assistance and capacity building in the field of trade and 

environment to developing countries, in particular the least-developed among them. We also encourage that 

expertise and experience be shared with Members wishing to perform environmental reviews at the national 

level. A report shall be prepared on these activities for the Fifth Session. 

ELECTRONIC COMMERCE

34. We take note of the work which has been done in the General Council and other relevant bodies since 

the Ministerial Declaration of 20 May 1998 and agree to continue the Work Programme on Electronic 

Commerce. The work to date demonstrates that electronic commerce creates new challenges and opportunities 

for trade for Members at all stages of development, and we recognize the importance of creating and 

maintaining an environment which is favourable to the future development of electronic commerce. We instruct 

the General Council to consider the most appropriate institutional arrangements for handling the Work 

Programme, and to report on further progress to the Fifth Session of the Ministerial Conference. We declare 

that Members will maintain their current practice of not imposing customs duties on electronic transmissions 

until the Fifth Session.

SMALL ECONOMIES

35. We agree to a work programme, under the auspices of the General Council, to examine issues relating 

to the trade of small economies. The objective of this work is to frame responses to the trade-related issues 

identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not 
to create a sub-category of WTO Members. The General Council shall review the work programme and make 

recommendations for action to the Fifth Session of the Ministerial Conference. 

TRADE, DEBT AND FINANCE

36. We agree to an examination, in a Working Group under the auspices of the General Council, of the 

relationship between trade, debt and finance, and of any possible recommendations on steps that might be taken 

within the mandate and competence of the WTO to enhance the capacity of the multilateral trading system to 

contribute to a durable solution to the problem of external indebtedness of developing and least-developed 

countries, and to strengthen the coherence of international trade and financial policies, with a view to 

safeguarding the multilateral trading system from the effects of financial and monetary instability. The General 

Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination. 

TRADE AND TRANSFER OF TECHNOLOGY 

37. We agree to an examination, in a Working Group under the auspices of the General Council, of the 

relationship between trade and transfer of technology, and of any possible recommendations on steps that might 

be taken within the mandate of the WTO to increase flows of technology to developing countries. The General 

Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination. 

TECHNICAL COOPERATION AND CAPACITY BUILDING

38. We confirm that technical cooperation and capacity building are core elements of the development 

dimension of the multilateral trading system, and we welcome and endorse the New Strategy for WTO 

Technical Cooperation for Capacity Building, Growth and Integration. We instruct the Secretariat, in 

coordination with other relevant agencies, to support domestic efforts for mainstreaming trade into national 

plans for economic development and strategies for poverty reduction. The delivery of WTO technical assistance 

shall be designed to assist developing and least-developed countries and low-income countries in transition to 

adjust to WTO rules and disciplines, implement obligations and exercise the rights of membership, including 

drawing on the benefits of an open, rules-based multilateral trading system. Priority shall also be accorded to 

small, vulnerable, and transition economies, as well as to Members and Observers without representation in 

Geneva. We reaffirm our support for the valuable work of the International Trade Centre, which should be 

enhanced. 

39. We underscore the urgent necessity for the effective coordinated delivery of technical assistance with 

bilateral donors, in the OECD Development Assistance Committee and relevant international and regional 

intergovernmental institutions, within a coherent policy framework and timetable. In the coordinated delivery 

of technical assistance, we instruct the Director-General to consult with the relevant agencies, bilateral donors 

and beneficiaries, to identify ways of enhancing and rationalizing the Integrated Framework for Trade-Related 

Technical Assistance to Least-Developed Countries and the Joint Integrated Technical Assistance Programme 

(JITAP). 

40. We agree that there is a need for technical assistance to benefit from secure and predictable funding. 

We therefore instruct the Committee on Budget, Finance and Administration to develop a plan for adoption by 

the General Council in December 2001 that will ensure long-term funding for WTO technical assistance at an 

overall level no lower than that of the current year and commensurate with the activities outlined above.

41. We have established firm commitments on technical cooperation and capacity building in various 

paragraphs in this Ministerial Declaration. We reaffirm these specific commitments contained in paragraphs 16, 

21, 24, 26, 27, 33, 38-40, 42 and 43, and also reaffirm the understanding in paragraph 2 on the important role of 

sustainably financed technical assistance and capacity-building programmes. We instruct the Director-General 

to report to the Fifth Session of the Ministerial Conference, with an interim report to the General Council in 

December 2002 on the implementation and adequacy of these commitments in the identified paragraphs. 
LEAST-DEVELOPED COUNTRIES

42. We acknowledge the seriousness of the concerns expressed by the least-developed countries (LDCs) in 

the Zanzibar Declaration adopted by their Ministers in July 2001. We recognize that the integration of the 

LDCs into the multilateral trading system requires meaningful market access, support for the diversification of 

their production and export base, and trade-related technical assistance and capacity building. We agree that the 

meaningful integration of LDCs into the trading system and the global economy will involve efforts by all WTO 

Members. We commit ourselves to the objective of duty-free, quota-free market access for products originating 

from LDCs. In this regard, we welcome the significant market access improvements by WTO Members in 

advance of the Third UN Conference on LDCs (LDC-III), in Brussels, May 2001. We further commit ourselves 

to consider additional measures for progressive improvements in market access for LDCs. Accession of LDCs 

remains a priority for the Membership. We agree to work to facilitate and accelerate negotiations with acceding 

LDCs. We instruct the Secretariat to reflect the priority we attach to LDCs' accessions in the annual plans for 

technical assistance. We reaffirm the commitments we undertook at LDC-III, and agree that the WTO should 

take into account, in designing its work programme for LDCs, the trade-related elements of the Brussels 

Declaration and Programme of Action, consistent with the WTO's mandate, adopted at LDC-III. We instruct 

the Sub-Committee for Least-Developed Countries to design such a work programme and to report on the 

agreed work programme to the General Council at its first meeting in 2002. 

43. We endorse the Integrated Framework for Trade-Related Technical Assistance to Least-Developed 

Countries (IF) as a viable model for LDCs' trade development. We urge development partners to significantly 

increase contributions to the IF Trust Fund and WTO extra-budgetary trust funds in favour of LDCs. We urge 

the core agencies, in coordination with development partners, to explore the enhancement of the IF with a view 

to addressing the supply-side constraints of LDCs and the extension of the model to all LDCs, following the 

review of the IF and the appraisal of the ongoing Pilot Scheme in selected LDCs. We request the DirectorGeneral, following coordination with heads of the other agencies, to provide an interim report to the General 

Council in December 2002 and a full report to the Fifth Session of the Ministerial Conference on all issues 

affecting LDCs.

SPECIAL AND DIFFERENTIAL TREATMENT

44. We reaffirm that provisions for special and differential treatment are an integral part of the WTO 

Agreements. We note the concerns expressed regarding their operation in addressing specific constraints faced 

by developing countries, particularly least-developed countries. In that connection, we also note that some 

Members have proposed a Framework Agreement on Special and Differential Treatment (WT/GC/W/442). We 

therefore agree that all special and differential treatment provisions shall be reviewed with a view to 

strengthening them and making them more precise, effective and operational. In this connection, we endorse the 

work programme on special and differential treatment set out in the Decision on Implementation-Related Issues 

and Concerns.

ORGANIZATION AND MANAGEMENT OF THE WORK PROGRAMME 

45. The negotiations to be pursued under the terms of this Declaration shall be concluded not later than 1 

January 2005. The Fifth Session of the Ministerial Conference will take stock of progress in the negotiations, 

provide any necessary political guidance, and take decisions as necessary. When the results of the negotiations 

in all areas have been established, a Special Session of the Ministerial Conference will be held to take decisions 

regarding the adoption and implementation of those results. 

46. The overall conduct of the negotiations shall be supervised by a Trade Negotiations Committee under the 

authority of the General Council. The Trade Negotiations Committee shall hold its first meeting not later than 31 

January 2002. It shall establish appropriate negotiating mechanisms as required and supervise the progress of the 

negotiations. 

47. With the exception of the improvements and clarifications of the Dispute Settlement Understanding, 

the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a 

single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a 

definitive basis. Early agreements shall be taken into account in assessing the overall balance of the 

negotiations. 
48. Negotiations shall be open to: 

 (i) all Members of the WTO; and 

 (ii) States and separate customs territories currently in the process of accession and those 

that inform Members, at a regular meeting of the General Council, of their intention to 

negotiate the terms of their membership and for whom an accession working party is 

established. 

Decisions on the outcomes of the negotiations shall be taken only by WTO Members. 

49. The negotiations shall be conducted in a transparent manner among participants, in order to facilitate 

the effective participation of all. They shall be conducted with a view to ensuring benefits to all participants and 

to achieving an overall balance in the outcome of the negotiations. 

50. The negotiations and the other aspects of the Work Programme shall take fully into account the 

principle of special and differential treatment for developing and least-developed countries embodied in: Part 

IV of the GATT 1994; the Decision of 28 November 1979 on Differential and More Favourable Treatment, 

Reciprocity and Fuller Participation of Developing Countries; the Uruguay Round Decision on Measures in 

Favour of Least-Developed Countries; and all other relevant WTO provisions. 

51. The Committee on Trade and Development and the Committee on Trade and Environment shall, within 

their respective mandates, each act as a forum to identify and debate developmental and environmental aspects 

of the negotiations, in order to help achieve the objective of having sustainable development appropriately 

reflected. 

52. Those elements of the Work Programme which do not involve negotiations are also accorded a high 

priority. They shall be pursued under the overall supervision of the General Council, which shall report on 

progress to the Fifth Session of the Ministerial Conference. 

_________
WORLD TRADE

ORGANIZATION

WT/MIN(01)/DEC/2 

20 November 2001 

(01-5860) 

MINISTERIAL CONFERENCE 

Fourth Session 

Doha, 9 - 14 November 2001 

DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH 

Adopted on 14 November 2001

1. We recognize the gravity of the public health problems afflicting many developing and least-developed 

countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics. 

2. We stress the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 

(TRIPS Agreement) to be part of the wider national and international action to address these problems. 

3. We recognize that intellectual property protection is important for the development of new medicines. 

We also recognize the concerns about its effects on prices. 

4. We agree that the TRIPS Agreement does not and should not prevent Members from taking measures 

to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm 

that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' 

right to protect public health and, in particular, to promote access to medicines for all. 

 In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the 

TRIPS Agreement, which provide flexibility for this purpose. 

5. Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS 

Agreement, we recognize that these flexibilities include: 

In applying the customary rules of interpretation of public international law, each provision of 

the TRIPS Agreement shall be read in the light of the object and purpose of the 

Agreement as expressed, in particular, in its objectives and principles. 

Each Member has the right to grant compulsory licences and the freedom to determine the 

grounds upon which such licences are granted. 

Each Member has the right to determine what constitutes a national emergency or other 

circumstances of extreme urgency, it being understood that public health crises, 

including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can 

represent a national emergency or other circumstances of extreme urgency. 

The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of 

intellectual property rights is to leave each Member free to establish its own regime 

for such exhaustion without challenge, subject to the MFN and national treatment 

provisions of Articles 3 and 4. 

6. We recognize that WTO Members with insufficient or no manufacturing capacities in the 

pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS 

Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to 

the General Council before the end of 2002. 
7. We reaffirm the commitment of developed-country Members to provide incentives to their enterprises 

and institutions to promote and encourage technology transfer to least-developed country Members pursuant to 

Article 66.2. We also agree that the least-developed country Members will not be obliged, with respect to 

pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to 

enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of leastdeveloped country Members to seek other extensions of the transition periods as provided for in Article 66.1 of 

the TRIPS Agreement. We instruct the Council for TRIPS to take the necessary action to give effect to this 

pursuant to Article 66.1 of the TRIPS Agreement. 

_________
WORLD TRADE

ORGANIZATION

WT/MIN(01)/17 

20 November 2001 

(01-5858) 

MINISTERIAL CONFERENCE 

Fourth Session 

Doha, 9 - 14 November 2001 

IMPLEMENTATION-RELATED ISSUES AND CONCERNS 

Decision of 14 November 2001

The Ministerial Conference, 

Having regard to Articles IV.1, IV.5 and IX of the Marrakesh Agreement Establishing the World 

Trade Organization (WTO); 

Mindful of the importance that Members attach to the increased participation of developing countries in 

the multilateral trading system, and of the need to ensure that the system responds fully to the needs and 

interests of all participants; 

Determined to take concrete action to address issues and concerns that have been raised by many 

developing-country Members regarding the implementation of some WTO Agreements and Decisions, 

including the difficulties and resource constraints that have been encountered in the implementation of 

obligations in various areas; 

Recalling the 3 May 2000 Decision of the General Council to meet in special sessions to address 

outstanding implementation issues, and to assess the existing difficulties, identify ways needed to resolve them, 

and take decisions for appropriate action not later than the Fourth Session of the Ministerial Conference; 

 Noting the actions taken by the General Council in pursuance of this mandate at its Special Sessions in 

October and December 2000 (WT/L/384), as well as the review and further discussion undertaken at the Special 

Sessions held in April, July and October 2001, including the referral of additional issues to relevant WTO 

bodies or their chairpersons for further work; 

 Noting also the reports on the issues referred to the General Council from subsidiary bodies and their 

chairpersons and from the Director-General, and the discussions as well as the clarifications provided and 

understandings reached on implementation issues in the intensive informal and formal meetings held under this 

process since May 2000; 

Decides as follows: 

 1. General Agreement on Tariffs and Trade 1994 (GATT 1994)

1.1 Reaffirms that Article XVIII of the GATT 1994 is a special and differential treatment 

provision for developing countries and that recourse to it should be less onerous than to 

Article XII of the GATT 1994. 
 1.2 Noting the issues raised in the report of the Chairperson of the Committee on Market 

Access (WT/GC/50) concerning the meaning to be given to the phrase "substantial interest" in 

paragraph 2(d) of Article XIII of the GATT 1994, the Market Access Committee is directed to 

give further consideration to the issue and make recommendations to the General Council as 

expeditiously as possible but in any event not later than the end of 2002. 

2. Agreement on Agriculture

2.1 Urges Members to exercise restraint in challenging measures notified under the green box by 

developing countries to promote rural development and adequately address food security 

concerns. 

 2.2 Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the 

implementation of the Decision on Measures Concerning the Possible Negative Effects of the 

Reform Programme on Least-Developed and Net Food-Importing Developing Countries, and 

approves the recommendations contained therein regarding (i) food aid; (ii) technical and 

financial assistance in the context of aid programmes to improve agricultural productivity and 

infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) 

review of follow-up. 

2.3 Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the 

implementation of Article 10.2 of the Agreement on Agriculture, and approves the 

recommendations and reporting requirements contained therein. 

 

 2.4 Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the 

administration of tariff rate quotas and the submission by Members of addenda to their 

notifications, and endorses the decision by the Committee to keep this matter under review. 

3. Agreement on the Application of Sanitary and Phytosanitary Measures 

 3.1 Where the appropriate level of sanitary and phytosanitary protection allows scope for 

the phased introduction of new sanitary and phytosanitary measures, the phrase "longer timeframe for compliance" referred to in Article 10.2 of the Agreement on the Application of 

Sanitary and Phytosanitary Measures, shall be understood to mean normally a period of not 

less than 6 months. Where the appropriate level of sanitary and phytosanitary protection does 

not allow scope for the phased introduction of a new measure, but specific problems are 

identified by a Member, the Member applying the measure shall upon request enter into 

consultations with the country with a view to finding a mutually satisfactory solution to the 

problem while continuing to achieve the importing Member's appropriate level of protection. 

3.2 Subject to the conditions specified in paragraph 2 of Annex B to the Agreement on the 

Application of Sanitary and Phytosanitary Measures, the phrase "reasonable interval" shall be 

understood to mean normally a period of not less than 6 months. It is understood that 

timeframes for specific measures have to be considered in the context of the particular 

circumstances of the measure and actions necessary to implement it. The entry into force of 

measures which contribute to the liberalization of trade should not be unnecessarily delayed. 

3.3 Takes note of the Decision of the Committee on Sanitary and Phytosanitary Measures 

(G/SPS/19) regarding equivalence, and instructs the Committee to develop expeditiously the 

specific programme to further the implementation of Article 4 of the Agreement on the 

Application of Sanitary and Phytosanitary Measures. 

3.4 Pursuant to the provisions of Article 12.7 of the Agreement on the Application of Sanitary and 

Phytosanitary Measures, the Committee on Sanitary and Phytosanitary Measures is instructed 

to review the operation and implementation of the Agreement on Sanitary and Phytosanitary 

Measures at least once every four years. 

 
 3.5 (i) Takes note of the actions taken to date by the Director-General to facilitate the 

increased participation of Members at different levels of development in the work of the 

relevant international standard setting organizations as well as his efforts to coordinate with 

these organizations and financial institutions in identifying SPS-related technical assistance 

needs and how best to address them; and 

 (ii) urges the Director-General to continue his cooperative efforts with these 

organizations and institutions in this regard, including with a view to according priority to the 

effective participation of least-developed countries and facilitating the provision of technical 

and financial assistance for this purpose. 

 3.6 (i) Urges Members to provide, to the extent possible, the financial and technical 

assistance necessary to enable least-developed countries to respond adequately to the 

introduction of any new SPS measures which may have significant negative effects on their 

trade; and 

 (ii) urges Members to ensure that technical assistance is provided to least-developed 

countries with a view to responding to the special problems faced by them in implementing 

the Agreement on the Application of Sanitary and Phytosanitary Measures. 

 

4. Agreement on Textiles and Clothing 

Reaffirms the commitment to full and faithful implementation of the Agreement on Textiles and 

Clothing, and agrees: 

 4.1 that the provisions of the Agreement relating to the early integration of products and 

the elimination of quota restrictions should be effectively utilised. 

 4.2 that Members will exercise particular consideration before initiating investigations in 

the context of antidumping remedies on textile and clothing exports from developing 

countries previously subject to quantitative restrictions under the Agreement for a period of 

two years following full integration of this Agreement into the WTO. 

 4.3 that without prejudice to their rights and obligations, Members shall notify any 

changes in their rules of origin concerning products falling under the coverage of the 

Agreement to the Committee on Rules of Origin which may decide to examine them. 

 Requests the Council for Trade in Goods to examine the following proposals: 

 4.4 that when calculating the quota levels for small suppliers for the remaining years of 

the Agreement, Members will apply the most favourable methodology available in respect of 

those Members under the growth-on-growth provisions from the beginning of the 

implementation period; extend the same treatment to least-developed countries; and, where 

possible, eliminate quota restrictions on imports of such Members; 

 4.5 that Members will calculate the quota levels for the remaining years of the 

Agreement with respect to other restrained Members as if implementation of the growth-ongrowth provision for stage 3 had been advanced to 1 January 2000; 

 and make recommendations to the General Council by 31 July 2002 for appropriate action. 

 

5. Agreement on Technical Barriers to Trade 

 

 5.1 Confirms the approach to technical assistance being developed by the Committee on 

Technical Barriers to Trade, reflecting the results of the triennial review work in this area, and 

mandates this work to continue. 
5.2 Subject to the conditions specified in paragraph 12 of Article 2 of the Agreement on Technical 

Barriers to Trade, the phrase "reasonable interval" shall be understood to mean normally a 

period of not less than 6 months, except when this would be ineffective in fulfilling the 

legitimate objectives pursued. 

5.3 (i) Takes note of the actions taken to date by the Director-General to facilitate the increased 

participation of Members at different levels of development in the work of the relevant 

international standard setting organizations as well as his efforts to coordinate with these 

organizations and financial institutions in identifying TBT-related technical assistance needs 

and how best to address them; and 

 (ii) urges the Director-General to continue his cooperative efforts with these 

organizations and institutions, including with a view to according priority to the effective 

participation of least-developed countries and facilitating the provision of technical and 

financial assistance for this purpose. 

 5.4 (i) Urges Members to provide, to the extent possible, the financial and technical 

assistance necessary to enable least-developed countries to respond adequately to the 

introduction of any new TBT measures which may have significant negative effects on their 

trade; and 

 (ii) urges Members to ensure that technical assistance is provided to least-developed 

countries with a view to responding to the special problems faced by them in implementing 

the Agreement on Technical Barriers to Trade. 

6. Agreement on Trade-Related Investment Measures

 6.1 Takes note of the actions taken by the Council for Trade in Goods in regard to 

requests from some developing-country Members for the extension of the five-year 

transitional period provided for in Article 5.2 of Agreement on Trade-Related Investment 

Measures. 

 6.2 Urges the Council for Trade in Goods to consider positively requests that may be 

made by least-developed countries under Article 5.3 of the TRIMs Agreement or Article IX.3 

of the WTO Agreement, as well as to take into consideration the particular circumstances of 

least-developed countries when setting the terms and conditions including time-frames. 

 

7. Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 

 7.1 Agrees that investigating authorities shall examine with special care any application 

for the initiation of an anti-dumping investigation where an investigation of the same product 

from the same Member resulted in a negative finding within the 365 days prior to the filing of 

the application and that, unless this pre-initiation examination indicates that circumstances 

have changed, the investigation shall not proceed. 

 

 7.2 Recognizes that, while Article 15 of the Agreement on the Implementation of 

Article VI of the General Agreement on Tariffs and Trade 1994 is a mandatory provision, the 

modalities for its application would benefit from clarification. Accordingly, the Committee on 

Anti-Dumping Practices is instructed, through its working group on Implementation, to 

examine this issue and to draw up appropriate recommendations within twelve months on how 

to operationalize this provision. 

 7.3 Takes note that Article 5.8 of the Agreement on the Implementation of Article VI of 

the General Agreement on Tariffs and Trade 1994 does not specify the time-frame to be used 

in determining the volume of dumped imports, and that this lack of specificity creates 

uncertainties in the implementation of the provision. The Committee on Anti-Dumping 

Practices is instructed, through its working group on Implementation, to study this issue and 
draw up recommendations within 12 months, with a view to ensuring the maximum possible 

predictability and objectivity in the application of time frames. 

 7.4 Takes note that Article 18.6 of the Agreement on the Implementation of Article VI of 

the General Agreement on Tariffs and Trade 1994 requires the Committee on Anti-Dumping 

Practices to review annually the implementation and operation of the Agreement taking into 

account the objectives thereof. The Committee on Anti-dumping Practices is instructed to 

draw up guidelines for the improvement of annual reviews and to report its views and 

recommendations to the General Council for subsequent decision within 12 months. 

8. Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994

 

8.1 Takes note of the actions taken by the Committee on Customs Valuation in regard to the 

requests from a number of developing-country Members for the extension of the five-year 

transitional period provided for in Article 20.1 of Agreement on the Implementation of Article 

VII of the General Agreement on Tariffs and Trade 1994. 

 8.2 Urges the Council for Trade in Goods to give positive consideration to requests that 

may be made by least-developed country Members under paragraphs 1 and 2 of Annex III of 

the Customs Valuation Agreement or under Article IX.3 of the WTO Agreement, as well as to 

take into consideration the particular circumstances of least-developed countries when setting 

the terms and conditions including time-frames. 

 

 8.3 Underlines the importance of strengthening cooperation between the customs 

administrations of Members in the prevention of customs fraud. In this regard, it is agreed 

that, further to the 1994 Ministerial Decision Regarding Cases Where Customs 

Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value, when 

the customs administration of an importing Member has reasonable grounds to doubt the truth 

or accuracy of the declared value, it may seek assistance from the customs administration of 

an exporting Member on the value of the good concerned. In such cases, the exporting 

Member shall offer cooperation and assistance, consistent with its domestic laws and 

procedures, including furnishing information on the export value of the good concerned. Any 

information provided in this context shall be treated in accordance with Article 10 of the 

Customs Valuation Agreement. Furthermore, recognizing the legitimate concerns expressed 

by the customs administrations of several importing Members on the accuracy of the declared 

value, the Committee on Customs Valuation is directed to identify and assess practical means 

to address such concerns, including the exchange of information on export values and to 

report to the General Council by the end of 2002 at the latest. 

 9. Agreement on Rules of Origin 

9.1 Takes note of the report of the Committee on Rules of Origin (G/RO/48) regarding progress 

on the harmonization work programme, and urges the Committee to complete its work by the 

end of 2001. 

9.2 Agrees that any interim arrangements on rules of origin implemented by Members in the 

transitional period before the entry into force of the results of the harmonisation work 

programme shall be consistent with the Agreement on Rules of Origin, particularly Articles 2 

and 5 thereof. Without prejudice to Members' rights and obligations, such arrangements may 

be examined by the Committee on Rules of Origin. 

 

10. Agreement on Subsidies and Countervailing Measures 

 10.1 Agrees that Annex VII(b) to the Agreement on Subsidies and Countervailing 

Measures includes the Members that are listed therein until their GNP per capita reaches US 
$1,000 in constant 1990 dollars for three consecutive years. This decision will enter into 

effect upon the adoption by the Committee on Subsidies and Countervailing Measures of an 

appropriate methodology for calculating constant 1990 dollars. If, however, the Committee 

on Subsidies and Countervailing Measures does not reach a consensus agreement on an 

appropriate methodology by 1 January 2003, the methodology proposed by the Chairman of 

the Committee set forth in G/SCM/38, Appendix 2 shall be applied. A Member shall not leave 

Annex VII(b) so long as its GNP per capita in current dollars has not reached US $1000 based 

upon the most recent data from the World Bank. 

 10.2 Takes note of the proposal to treat measures implemented by developing countries 

with a view to achieving legitimate development goals, such as regional growth, technology 

research and development funding, production diversification and development and 

implementation of environmentally sound methods of production as non-actionable subsidies, 

and agrees that this issue be addressed in accordance with paragraph 13 below. During the 

course of the negotiations, Members are urged to exercise due restraint with respect to 

challenging such measures. 

 10.3 Agrees that the Committee on Subsidies and Countervailing Measures shall continue 

its review of the provisions of the Agreement on Subsidies and Countervailing Measures 

regarding countervailing duty investigations and report to the General Council by 31 July 

2002. 

 10.4 Agrees that if a Member has been excluded from the list in paragraph (b) of 

Annex VII to the Agreement on Subsidies and Countervailing Measures, it shall be reincluded in it when its GNP per capita falls back below US$ 1,000. 

 10.5 Subject to the provisions of Articles 27.5 and 27.6, it is reaffirmed that leastdeveloped country Members are exempt from the prohibition on export subsidies set forth in 

Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures, and thus have 

flexibility to finance their exporters, consistent with their development needs. It is understood 

that the eight-year period in Article 27.5 within which a least-developed country Member 

must phase out its export subsidies in respect of a product in which it is export-competitive 

begins from the date export competitiveness exists within the meaning of Article 27.6. 

 10.6 Having regard to the particular situation of certain developing-country Members, 

directs the Committee on Subsidies and Countervailing Measures to extend the transition 

period, under the rubric of Article 27.4 of the Agreement on Subsidies and Countervailing 

Measures, for certain export subsidies provided by such Members, pursuant to the procedures 

set forth in document G/SCM/39. Furthermore, when considering a request for an extension 

of the transition period under the rubric of Article 27.4 of the Agreement on Subsidies and 

Countervailing Measures, and in order to avoid that Members at similar stages of development 

and having a similar order of magnitude of share in world trade are treated differently in terms 

of receiving such extensions for the same eligible programmes and the length of such 

extensions, directs the Committee to extend the transition period for those developing 

countries, after taking into account the relative competitiveness in relation to other 

developing-country Members who have requested extension of the transition period following 

the procedures set forth in document G/SCM/39. 

11. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

 11.1 The TRIPS Council is directed to continue its examination of the scope and 

modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of 

Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the 

Ministerial Conference. It is agreed that, in the meantime, Members will not initiate such 

complaints under the TRIPS Agreement. 

 11.2 Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are 

mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the 

monitoring and full implementation of the obligations in question. To this end, developed-
country Members shall submit prior to the end of 2002 detailed reports on the functioning in 

practice of the incentives provided to their enterprises for the transfer of technology in 

pursuance of their commitments under Article 66.2. These submissions shall be subject to a 

review in the TRIPS Council and information shall be updated by Members annually. 

12. Cross-cutting Issues

 12.1 The Committee on Trade and Development is instructed: 

(i) to identify those special and differential treatment provisions that are already 

mandatory in nature and those that are non-binding in character, to consider the legal 

and practical implications for developed and developing Members of converting 

special and differential treatment measures into mandatory provisions, to identify 

those that Members consider should be made mandatory, and to report to the General 

Council with clear recommendations for a decision by July 2002; 

(ii) to examine additional ways in which special and differential treatment provisions can 

be made more effective, to consider ways, including improved information flows, in 

which developing countries, in particular the least-developed countries, may be 

assisted to make best use of special and differential treatment provisions, and to 

report to the General Council with clear recommendations for a decision by 

July 2002; and 

(iii) to consider, in the context of the work programme adopted at the Fourth Session of 

the Ministerial Conference, how special and differential treatment may be 

incorporated into the architecture of WTO rules. 

 The work of the Committee on Trade and Development in this regard shall take fully into 

consideration previous work undertaken as noted in WT/COMTD/W/77/Rev.1. It will also be without 

prejudice to work in respect of implementation of WTO Agreements in the General Council and in 

other Councils and Committees. 
12.2 Reaffirms that preferences granted to developing countries pursuant to the Decision of the 

Contracting Parties of 28 November 1979 ("Enabling Clause")1

 should be generalised, nonreciprocal and non-discriminatory. 

13. Outstanding Implementation Issues2

 Agrees that outstanding implementation issues be addressed in accordance with paragraph 12 of the 

Ministerial Declaration (WT/MIN(01)/DEC/1). 

14. Final Provisions 

 Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration 

(WT/MIN(01)/DEC/1), to ensure that WTO technical assistance focuses, on a priority basis, on assisting 

developing countries to implement existing WTO obligations as well as on increasing their capacity to 

participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO 

Secretariat should cooperate more closely with international and regional intergovernmental organisations so as 

to increase efficiency and synergies and avoid duplication of programmes. 

__________ 

 1

 BISD 26S/203. 

2

A list of these issues is compiled in document Job(01)/152/Rev.1. 
WORLD TRADE

ORGANIZATION

WT/L/579 

2 August 2004 

(04-3297) 

Doha Work Programme 

Decision Adopted by the General Council on 1 August 2004 

1. The General Council reaffirms the Ministerial Declarations and Decisions adopted at Doha and the full 

commitment of all Members to give effect to them. The Council emphasizes Members' resolve to complete the 

Doha Work Programme fully and to conclude successfully the negotiations launched at Doha. Taking into 

account the Ministerial Statement adopted at Cancún on 14 September 2003, and the statements by the Council 

Chairman and the Director-General at the Council meeting of 15-16 December 2003, the Council takes note of 

the report by the Chairman of the Trade Negotiations Committee (TNC) and agrees to take action as follows: 

a. Agriculture: the General Council adopts the framework set out in Annex A to this document. 

b. Cotton: the General Council reaffirms the importance of the Sectoral Initiative on Cotton and takes 

note of the parameters set out in Annex A within which the trade-related aspects of this issue will be 

pursued in the agriculture negotiations. The General Council also attaches importance to the development 

aspects of the Cotton Initiative and wishes to stress the complementarity between the trade and 

development aspects. The Council takes note of the recent Workshop on Cotton in Cotonou on 23-24 

March 2004 organized by the WTO Secretariat, and other bilateral and multilateral efforts to make progress 

on the development assistance aspects and instructs the Secretariat to continue to work with the 

development community and to provide the Council with periodic reports on relevant developments. 

Members should work on related issues of development multilaterally with the international financial 

institutions, continue their bilateral programmes, and all developed countries are urged to participate. In 

this regard, the General Council instructs the Director General to consult with the relevant international 

organizations, including the Bretton Woods Institutions, the Food and Agriculture Organization and the 

International Trade Centre to direct effectively existing programmes and any additional resources towards 

development of the economies where cotton has vital importance. 

c. Non-agricultural Market Access: the General Council adopts the framework set out in Annex B to 

this document. 

d. Development: 

Principles: development concerns form an integral part of the Doha Ministerial Declaration. The General 

Council rededicates and recommits Members to fulfilling the development dimension of the Doha 

Development Agenda, which places the needs and interests of developing and least-developed countries at 

the heart of the Doha Work Programme. The Council reiterates the important role that enhanced market 

access, balanced rules, and well targeted, sustainably financed technical assistance and capacity building 

programmes can play in the economic development of these countries. 

Special and Differential Treatment: the General Council reaffirms that provisions for special and 

differential (S&D) treatment are an integral part of the WTO Agreements. The Council recalls Ministers' 

decision in Doha to review all S&D treatment provisions with a view to strengthening them and making 

them more precise, effective and operational. The Council recognizes the progress that has been made so 

far. The Council instructs the Committee on Trade and Development in Special Session to expeditiously 

complete the review of all the outstanding Agreement-specific proposals and report to the General Council, 

with clear recommendations for a decision, by July 2005. The Council further instructs the Committee, 

within the parameters of the Doha mandate, to address all other outstanding work, including on the crosscutting issues, the monitoring mechanism and the incorporation of S&D treatment into the architecture of 

WTO rules, as referred to in TN/CTD/7 and report, as appropriate, to the General Council. 
The Council also instructs all WTO bodies to which proposals in Category II have been referred to 

expeditiously complete the consideration of these proposals and report to the General Council, with clear 

recommendations for a decision, as soon as possible and no later than July 2005. In doing so these bodies 

will ensure that, as far as possible, their meetings do not overlap so as to enable full and effective 

participation of developing countries in these discussions. 

Technical Assistance: the General Council recognizes the progress that has been made since the Doha 

Ministerial Conference in expanding Trade-Related Technical Assistance (TRTA) to developing countries 

and low-income countries in transition. In furthering this effort the Council affirms that such countries, 

and in particular least-developed countries, should be provided with enhanced TRTA and capacity 

building, to increase their effective participation in the negotiations, to facilitate their implementation of 

WTO rules, and to enable them to adjust and diversify their economies. In this context the Council 

welcomes and further encourages the improved coordination with other agencies, including under the 

Integrated Framework for TRTA for the LDCs (IF) and the Joint Integrated Technical Assistance 

Programme (JITAP).

Implementation: concerning implementation-related issues, the General Council reaffirms the mandates 

Ministers gave in paragraph 12 of the Doha Ministerial Declaration and the Doha Decision on 

Implementation-Related Issues and Concerns, and renews Members' determination to find appropriate 

solutions to outstanding issues. The Council instructs the Trade Negotiations Committee, negotiating 

bodies and other WTO bodies concerned to redouble their efforts to find appropriate solutions as a priority. 

Without prejudice to the positions of Members, the Council requests the Director-General to continue with 

his consultative process on all outstanding implementation issues under paragraph 12(b) of the Doha 

Ministerial Declaration, including on issues related to the extension of the protection of geographical 

indications provided for in Article 23 of the TRIPS Agreement to products other than wines and spirits, if 

need be by appointing Chairpersons of concerned WTO bodies as his Friends and/or by holding dedicated 

consultations. The Director-General shall report to the TNC and the General Council no later than May 

2005. The Council shall review progress and take any appropriate action no later than July 2005. 

Other Development Issues: in the ongoing market access negotiations, recognising the fundamental 

principles of the WTO and relevant provisions of GATT 1994, special attention shall be given to the 

specific trade and development related needs and concerns of developing countries, including capacity 

constraints. These particular concerns of developing countries, including relating to food security, rural 

development, livelihood, preferences, commodities and net food imports, as well as prior unilateral 

liberalisation, should be taken into consideration, as appropriate, in the course of the Agriculture and 

NAMA negotiations. The trade-related issues identified for the fuller integration of small, vulnerable 

economies into the multilateral trading system, should also be addressed, without creating a sub-category 

of Members, as part of a work programme, as mandated in paragraph 35 of the Doha Ministerial 

Declaration. 

Least-Developed Countries: the General Council reaffirms the commitments made at Doha concerning 

least-developed countries and renews its determination to fulfil these commitments. Members will 

continue to take due account of the concerns of least-developed countries in the negotiations. The Council 

confirms that nothing in this Decision shall detract in any way from the special provisions agreed by 

Members in respect of these countries. 

e. Services: the General Council takes note of the report to the TNC by the Special Session of the 

Council for Trade in Services1

 and reaffirms Members' commitment to progress in this area of the 

negotiations in line with the Doha mandate. The Council adopts the recommendations agreed by the 

Special Session, set out in Annex C to this document, on the basis of which further progress in the services 

negotiations will be pursued. Revised offers should be tabled by May 2005. 

f. Other negotiating bodies: 

Rules, Trade & Environment and TRIPS: the General Council takes note of the reports to the TNC by 

the Negotiating Group on Rules and by the Special Sessions of the Committee on Trade and Environment 

 1

 This report is contained in document TN/S/16. 
and the TRIPS Council.2

 The Council reaffirms Members' commitment to progress in all of these areas of 

the negotiations in line with the Doha mandates. 

Dispute Settlement: the General Council takes note of the report to the TNC by the Special Session of the 

Dispute Settlement Body3

 and reaffirms Members' commitment to progress in this area of the negotiations 

in line with the Doha mandate. The Council adopts the TNC's recommendation that work in the Special 

Session should continue on the basis set out by the Chairman of that body in his report to the TNC. 

g. Trade Facilitation: taking note of the work done on trade facilitation by the Council for Trade in 

Goods under the mandate in paragraph 27 of the Doha Ministerial Declaration and the work carried out 

under the auspices of the General Council both prior to the Fifth Ministerial Conference and after its 

conclusion, the General Council decides by explicit consensus to commence negotiations on the basis of 

the modalities set out in Annex D to this document. 

Relationship between Trade and Investment, Interaction between Trade and Competition Policy and 

Transparency in Government Procurement: the Council agrees that these issues, mentioned in the Doha 

Ministerial Declaration in paragraphs 20-22, 23-25 and 26 respectively, will not form part of the Work 

Programme set out in that Declaration and therefore no work towards negotiations on any of these issues 

will take place within the WTO during the Doha Round. 

h. Other elements of the Work Programme: the General Council reaffirms the high priority Ministers 

at Doha gave to those elements of the Work Programme which do not involve negotiations. Noting that a 

number of these issues are of particular interest to developing-country Members, the Council emphasizes 

its commitment to fulfil the mandates given by Ministers in all these areas. To this end, the General 

Council and other relevant bodies shall report in line with their Doha mandates to the Sixth Session of the 

Ministerial Conference. The moratoria covered by paragraph 11.1 of the Doha Ministerial Decision on 

Implementation-related Issues and Concerns and paragraph 34 of the Doha Ministerial Declaration are 

extended up to the Sixth Ministerial Conference. 

2. The General Council agrees that this Decision and its Annexes shall not be used in any dispute 

settlement proceeding under the DSU and shall not be used for interpreting the existing WTO Agreements. 

3. The General Council calls on all Members to redouble their efforts towards the conclusion of a 

balanced overall outcome of the Doha Development Agenda in fulfilment of the commitments Ministers took at 

Doha. The Council agrees to continue the negotiations launched at Doha beyond the timeframe set out in 

paragraph 45 of the Doha Declaration, leading to the Sixth Session of the Ministerial Conference. Recalling its 

decision of 21 October 2003 to accept the generous offer of the Government of Hong Kong, China to host the 

Sixth Session, the Council further agrees that this Session will be held in December 2005. 

_______________ 

 2

 The reports to the TNC referenced in this paragraph are contained in the following documents: 

Negotiating Group on Rules - TN/RL/9; Special Session of the Committee on Trade and Environment - 

TN/TE/9; Special Session of the Council for TRIPS - TN/IP/10. 3

 This report is contained in document TN/DS/10. 
Annex A 

Framework for Establishing Modalities in Agriculture 

1. The starting point for the current phase of the agriculture negotiations has been the mandate set out in 

Paragraph 13 of the Doha Ministerial Declaration. This in turn built on the long-term objective of the 

Agreement on Agriculture to establish a fair and market-oriented trading system through a programme of 

fundamental reform. The elements below offer the additional precision required at this stage of the negotiations 

and thus the basis for the negotiations of full modalities in the next phase. The level of ambition set by the Doha 

mandate will continue to be the basis for the negotiations on agriculture. 

2. The final balance will be found only at the conclusion of these subsequent negotiations and within the 

Single Undertaking. To achieve this balance, the modalities to be developed will need to incorporate 

operationally effective and meaningful provisions for special and differential treatment for developing country 

Members. Agriculture is of critical importance to the economic development of developing country Members 

and they must be able to pursue agricultural policies that are supportive of their development goals, poverty 

reduction strategies, food security and livelihood concerns. Non-trade concerns, as referred to in Paragraph 13 

of the Doha Declaration, will be taken into account. 

3. The reforms in all three pillars form an interconnected whole and must be approached in a balanced 

and equitable manner. 

4. The General Council recognizes the importance of cotton for a certain number of countries and its vital 

importance for developing countries, especially LDCs. It will be addressed ambitiously, expeditiously, and 

specifically, within the agriculture negotiations. The provisions of this framework provide a basis for this 

approach, as does the sectoral initiative on cotton. The Special Session of the Committee on Agriculture shall 

ensure appropriate prioritization of the cotton issue independently from other sectoral initiatives. A 

subcommittee on cotton will meet periodically and report to the Special Session of the Committee on 

Agriculture to review progress. Work shall encompass all trade-distorting policies affecting the sector in all 

three pillars of market access, domestic support, and export competition, as specified in the Doha text and this 

Framework text. 

5. Coherence between trade and development aspects of the cotton issue will be pursued as set out in 

paragraph 1.b of the text to which this Framework is annexed. 

DOMESTIC SUPPORT 

6. The Doha Ministerial Declaration calls for "substantial reductions in trade-distorting domestic 

support". With a view to achieving these substantial reductions, the negotiations in this pillar will ensure the 

following: 

• Special and differential treatment remains an integral component of domestic support. Modalities to be 

developed will include longer implementation periods and lower reduction coefficients for all types of 

trade-distorting domestic support and continued access to the provisions under Article 6.2. 

• There will be a strong element of harmonisation in the reductions made by developed Members. 

Specifically, higher levels of permitted trade-distorting domestic support will be subject to deeper cuts. 

• Each such Member will make a substantial reduction in the overall level of its trade-distorting support 

from bound levels. 

• As well as this overall commitment, Final Bound Total AMS and permitted de minimis levels will be 

subject to substantial reductions and, in the case of the Blue Box, will be capped as specified in 

paragraph 15 in order to ensure results that are coherent with the long-term reform objective. Any 

clarification or development of rules and conditions to govern trade distorting support will take this 

into account. 

Overall Reduction: A Tiered Formula 
7. The overall base level of all trade-distorting domestic support, as measured by the Final Bound Total 

AMS plus permitted de minimis level and the level agreed in paragraph 8 below for Blue Box payments, will be 

reduced according to a tiered formula. Under this formula, Members having higher levels of trade-distorting 

domestic support will make greater overall reductions in order to achieve a harmonizing result. As the first 

instalment of the overall cut, in the first year and throughout the implementation period, the sum of all tradedistorting support will not exceed 80 per cent of the sum of Final Bound Total AMS plus permitted de minimis

plus the Blue Box at the level determined in paragraph 15. 

8. The following parameters will guide the further negotiation of this tiered formula: 

• This commitment will apply as a minimum overall commitment. It will not be applied as a ceiling on 

reductions of overall trade-distorting domestic support, should the separate and complementary 

formulae to be developed for Total AMS, de minimis and Blue Box payments imply, when taken 

together, a deeper cut in overall trade-distorting domestic support for an individual Member. 

• The base for measuring the Blue Box component will be the higher of existing Blue Box payments 

during a recent representative period to be agreed and the cap established in paragraph 15 below.

Final Bound Total AMS: A Tiered Formula 

9. To achieve reductions with a harmonizing effect: 

• Final Bound Total AMS will be reduced substantially, using a tiered approach. 

• Members having higher Total AMS will make greater reductions. 

• To prevent circumvention of the objective of the Agreement through transfers of unchanged domestic 

support between different support categories, product-specific AMSs will be capped at their respective 

average levels according to a methodology to be agreed. 

• Substantial reductions in Final Bound Total AMS will result in reductions of some product-specific 

support. 

10. Members may make greater than formula reductions in order to achieve the required level of cut in 

overall trade-distorting domestic support. 

De Minimis 

11. Reductions in de minimis will be negotiated taking into account the principle of special and differential 

treatment. Developing countries that allocate almost all de minimis support for subsistence and resource-poor 

farmers will be exempt. 

12. Members may make greater than formula reductions in order to achieve the required level of cut in 

overall trade-distorting domestic support. 
Blue Box 

13. Members recognize the role of the Blue Box in promoting agricultural reforms. In this light, Article 6.5 

will be reviewed so that Members may have recourse to the following measures: 

• Direct payments under production-limiting programmes if: 

- such payments are based on fixed and unchanging areas and yields; or 

- such payments are made on 85% or less of a fixed and unchanging base level of production; or 

- livestock payments are made on a fixed and unchanging number of head. 

Or 

• Direct payments that do not require production if: 

- such payments are based on fixed and unchanging bases and yields; or 

- livestock payments made on a fixed and unchanging number of head; and 

- such payments are made on 85% or less of a fixed and unchanging base level of production. 

14. The above criteria, along with additional criteria will be negotiated. Any such criteria will ensure that 

Blue Box payments are less trade-distorting than AMS measures, it being understood that: 

• Any new criteria would need to take account of the balance of WTO rights and obligations. 

• Any new criteria to be agreed will not have the perverse effect of undoing ongoing reforms. 

15. Blue Box support will not exceed 5% of a Member’s average total value of agricultural production 

during an historical period. The historical period will be established in the negotiations. This ceiling will apply 

to any actual or potential Blue Box user from the beginning of the implementation period. In cases where a 

Member has placed an exceptionally large percentage of its trade-distorting support in the Blue Box, some 

flexibility will be provided on a basis to be agreed to ensure that such a Member is not called upon to make a 

wholly disproportionate cut. 

Green Box 

16. Green Box criteria will be reviewed and clarified with a view to ensuring that Green Box measures 

have no, or at most minimal, trade-distorting effects or effects on production. Such a review and clarification 

will need to ensure that the basic concepts, principles and effectiveness of the Green Box remain and take due 

account of non-trade concerns. The improved obligations for monitoring and surveillance of all new disciplines 

foreshadowed in paragraph 48 below will be particularly important with respect to the Green Box. 

EXPORT COMPETITION 

17. The Doha Ministerial Declaration calls for "reduction of, with a view to phasing out, all forms of 

export subsidies". As an outcome of the negotiations, Members agree to establish detailed modalities ensuring 

the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent 

effect by a credible end date. 

End Point 

18. The following will be eliminated by the end date to be agreed: 

• Export subsidies as scheduled. 

• Export credits, export credit guarantees or insurance programmes with repayment periods beyond 180 

days. 
• Terms and conditions relating to export credits, export credit guarantees or insurance programmes with 

repayment periods of 180 days and below which are not in accordance with disciplines to be agreed. 

These disciplines will cover, inter alia, payment of interest, minimum interest rates, minimum 

premium requirements, and other elements which can constitute subsidies or otherwise distort trade. 

• Trade distorting practices with respect to exporting STEs including eliminating export subsidies 

provided to or by them, government financing, and the underwriting of losses. The issue of the future 

use of monopoly powers will be subject to further negotiation. 

• Provision of food aid that is not in conformity with operationally effective disciplines to be agreed. The 

objective of such disciplines will be to prevent commercial displacement. The role of international 

organizations as regards the provision of food aid by Members, including related humanitarian and 

developmental issues, will be addressed in the negotiations. The question of providing food aid 

exclusively in fully grant form will also be addressed in the negotiations.

19. Effective transparency provisions for paragraph 18 will be established. Such provisions, in accordance 

with standard WTO practice, will be consistent with commercial confidentiality considerations. 

Implementation 

20. Commitments and disciplines in paragraph 18 will be implemented according to a schedule and 

modalities to be agreed. Commitments will be implemented by annual instalments. Their phasing will take into 

account the need for some coherence with internal reform steps of Members. 

21. The negotiation of the elements in paragraph 18 and their implementation will ensure equivalent and 

parallel commitments by Members. 

Special and Differential Treatment 

22. Developing country Members will benefit from longer implementation periods for the phasing out of 

all forms of export subsidies. 

23. Developing countries will continue to benefit from special and differential treatment under the 

provisions of Article 9.4 of the Agreement on Agriculture for a reasonable period, to be negotiated, after the 

phasing out of all forms of export subsidies and implementation of all disciplines identified above are 

completed. 

24. Members will ensure that the disciplines on export credits, export credit guarantees or insurance 

programs to be agreed will make appropriate provision for differential treatment in favour of least-developed 

and net food-importing developing countries as provided for in paragraph 4 of the Decision on Measures 

Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net FoodImporting Developing Countries. Improved obligations for monitoring and surveillance of all new disciplines as 

foreshadowed in paragraph 48 will be critically important in this regard. Provisions to be agreed in this respect 

must not undermine the commitments undertaken by Members under the obligations in paragraph 18 above. 

25. STEs in developing country Members which enjoy special privileges to preserve domestic consumer 

price stability and to ensure food security will receive special consideration for maintaining monopoly status. 

Special Circumstances 

26. In exceptional circumstances, which cannot be adequately covered by food aid, commercial export 

credits or preferential international financing facilities, ad hoc temporary financing arrangements relating to 

exports to developing countries may be agreed by Members. Such agreements must not have the effect of 

undermining commitments undertaken by Members in paragraph 18 above, and will be based on criteria and 

consultation procedures to be established. 
MARKET ACCESS 

27. The Doha Ministerial Declaration calls for "substantial improvements in market access". Members also 

agreed that special and differential treatment for developing Members would be an integral part of all elements 

in the negotiations. 

The Single Approach: a Tiered Formula 

28. To ensure that a single approach for developed and developing country Members meets all the 

objectives of the Doha mandate, tariff reductions will be made through a tiered formula that takes into account 

their different tariff structures. 

29. To ensure that such a formula will lead to substantial trade expansion, the following principles will 

guide its further negotiation: 

• Tariff reductions will be made from bound rates. Substantial overall tariff reductions will be achieved 

as a final result from negotiations. 

• Each Member (other than LDCs) will make a contribution. Operationally effective special and 

differential provisions for developing country Members will be an integral part of all elements. 

• Progressivity in tariff reductions will be achieved through deeper cuts in higher tariffs with flexibilities 

for sensitive products. Substantial improvements in market access will be achieved for all products. 

30. The number of bands, the thresholds for defining the bands and the type of tariff reduction in each band 

remain under negotiation. The role of a tariff cap in a tiered formula with distinct treatment for sensitive 

products will be further evaluated. 

Sensitive Products 

Selection

31. Without undermining the overall objective of the tiered approach, Members may designate an 

appropriate number, to be negotiated, of tariff lines to be treated as sensitive, taking account of existing 

commitments for these products. 

Treatment

32. The principle of ‘substantial improvement’ will apply to each product. 

33. ‘Substantial improvement’ will be achieved through combinations of tariff quota commitments and 

tariff reductions applying to each product. However, balance in this negotiation will be found only if the final 

negotiated result also reflects the sensitivity of the product concerned. 

34. Some MFN-based tariff quota expansion will be required for all such products. A base for such an 

expansion will be established, taking account of coherent and equitable criteria to be developed in the 

negotiations. In order not to undermine the objective of the tiered approach, for all such products, MFN based 

tariff quota expansion will be provided under specific rules to be negotiated taking into account deviations from 

the tariff formula. 

Other Elements 

35. Other elements that will give the flexibility required to reach a final balanced result include reduction 

or elimination of in-quota tariff rates, and operationally effective improvements in tariff quota administration for 

existing tariff quotas so as to enable Members, and particularly developing country Members, to fully benefit 

from the market access opportunities under tariff rate quotas. 
36. Tariff escalation will be addressed through a formula to be agreed. 

37. The issue of tariff simplification remains under negotiation. 

38. The question of the special agricultural safeguard (SSG) remains under negotiation. 

Special and differential treatment 

39. Having regard to their rural development, food security and/or livelihood security needs, special and 

differential treatment for developing countries will be an integral part of all elements of the negotiation, 

including the tariff reduction formula, the number and treatment of sensitive products, expansion of tariff rate 

quotas, and implementation period.

40. Proportionality will be achieved by requiring lesser tariff reduction commitments or tariff quota 

expansion commitments from developing country Members. 

41. Developing country Members will have the flexibility to designate an appropriate number of products 

as Special Products, based on criteria of food security, livelihood security and rural development needs. These 

products will be eligible for more flexible treatment. The criteria and treatment of these products will be 

further specified during the negotiation phase and will recognize the fundamental importance of Special 

Products to developing countries. 

42. A Special Safeguard Mechanism (SSM) will be established for use by developing country Members. 

43. Full implementation of the long-standing commitment to achieve the fullest liberalisation of trade in 

tropical agricultural products and for products of particular importance to the diversification of production from 

the growing of illicit narcotic crops is overdue and will be addressed effectively in the market access 

negotiations. 

44. The importance of long-standing preferences is fully recognised. The issue of preference erosion will 

be addressed. For the further consideration in this regard, paragraph 16 and other relevant provisions of 

TN/AG/W/1/Rev.1 will be used as a reference. 

LEAST- DEVELOPED COUNTRIES 

45. Least-Developed Countries, which will have full access to all special and differential treatment 

provisions above, are not required to undertake reduction commitments. Developed Members, and developing 

country Members in a position to do so, should provide duty-free and quota-free market access for products 

originating from least-developed countries. 

46. Work on cotton under all the pillars will reflect the vital importance of this sector to certain LDC 

Members and we will work to achieve ambitious results expeditiously. 

RECENTLY ACCEDED MEMBERS 

47. The particular concerns of recently acceded Members will be effectively addressed through specific 

flexibility provisions. 

MONITORING AND SURVEILLANCE 

48. Article 18 of the Agreement on Agriculture will be amended with a view to enhancing monitoring so as 

to effectively ensure full transparency, including through timely and complete notifications with respect to the 

commitments in market access, domestic support and export competition. The particular concerns of developing 

countries in this regard will be addressed. 

OTHER ISSUES 
49. Issues of interest but not agreed: sectoral initiatives, differential export taxes, GIs. 

50. Disciplines on export prohibitions and restrictions in Article 12.1 of the Agreement on Agriculture will 

be strengthened. 
Annex B 

Framework for Establishing Modalities in 

Market Access for Non-Agricultural Products 

1. This Framework contains the initial elements for future work on modalities by the Negotiating Group 

on Market Access. Additional negotiations are required to reach agreement on the specifics of some of these 

elements. These relate to the formula, the issues concerning the treatment of unbound tariffs in indent two of 

paragraph 5, the flexibilities for developing-country participants, the issue of participation in the sectorial tariff 

component and the preferences. In order to finalize the modalities, the Negotiating Group is instructed to 

address these issues expeditiously in a manner consistent with the mandate of paragraph 16 of the Doha 

Ministerial Declaration and the overall balance therein. 

2. We reaffirm that negotiations on market access for non-agricultural products shall aim to reduce or as 

appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff 

escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. We 

also reaffirm the importance of special and differential treatment and less than full reciprocity in reduction 

commitments as integral parts of the modalities. 

3. We acknowledge the substantial work undertaken by the Negotiating Group on Market Access and the 

progress towards achieving an agreement on negotiating modalities. We take note of the constructive dialogue 

on the Chair's Draft Elements of Modalities (TN/MA/W/35/Rev.1) and confirm our intention to use this 

document as a reference for the future work of the Negotiating Group. We instruct the Negotiating Group to 

continue its work, as mandated by paragraph 16 of the Doha Ministerial Declaration with its corresponding 

references to the relevant provisions of Article XXVIII bis of GATT 1994 and to the provisions cited in 

paragraph 50 of the Doha Ministerial Declaration, on the basis set out below. 

4. We recognize that a formula approach is key to reducing tariffs, and reducing or eliminating tariff 

peaks, high tariffs, and tariff escalation. We agree that the Negotiating Group should continue its work on a 

non-linear formula applied on a line-by-line basis which shall take fully into account the special needs and 

interests of developing and least-developed country participants, including through less than full reciprocity in 

reduction commitments. 

5. We further agree on the following elements regarding the formula: 

- product coverage shall be comprehensive without a priori exclusions; 

- tariff reductions or elimination shall commence from the bound rates after full implementation 

of current concessions; however, for unbound tariff lines, the basis for commencing the tariff 

reductions shall be [two] times the MFN applied rate in the base year; 

- the base year for MFN applied tariff rates shall be 2001 (applicable rates on 14 November); 

- credit shall be given for autonomous liberalization by developing countries provided that the 

tariff lines were bound on an MFN basis in the WTO since the conclusion of the Uruguay 

Round; 

- all non-ad valorem duties shall be converted to ad valorem equivalents on the basis of a 

methodology to be determined and bound in ad valorem terms; 

- negotiations shall commence on the basis of the HS96 or HS2002 nomenclature, with the 

results of the negotiations to be finalized in HS2002 nomenclature; 

- the reference period for import data shall be 1999-2001. 

6. We furthermore agree that, as an exception, participants with a binding coverage of non-agricultural 

tariff lines of less than [35] percent would be exempt from making tariff reductions through the formula. 

Instead, we expect them to bind [100] percent of non-agricultural tariff lines at an average level that does not 

exceed the overall average of bound tariffs for all developing countries after full implementation of current 

concessions. 

7. We recognize that a sectorial tariff component, aiming at elimination or harmonization is another key 

element to achieving the objectives of paragraph 16 of the Doha Ministerial Declaration with regard to the 

reduction or elimination of tariffs, in particular on products of export interest to developing countries. We 

recognize that participation by all participants will be important to that effect. We therefore instruct the 

Negotiating Group to pursue its discussions on such a component, with a view to defining product coverage, 
participation, and adequate provisions of flexibility for developing-country participants. 

8. We agree that developing-country participants shall have longer implementation periods for tariff 

reductions. In addition, they shall be given the following flexibility: 

 a) applying less than formula cuts to up to [10] percent of the tariff lines provided that the cuts are no 

less than half the formula cuts and that these tariff lines do not exceed [10] percent of the total value of 

a Member's imports; or 

 b) keeping, as an exception, tariff lines unbound, or not applying formula cuts for up to [5] percent of 

tariff lines provided they do not exceed [5] percent of the total value of a Member's imports. 

We furthermore agree that this flexibility could not be used to exclude entire HS Chapters. 

9. We agree that least-developed country participants shall not be required to apply the formula nor 

participate in the sectorial approach, however, as part of their contribution to this round of negotiations, they are 

expected to substantially increase their level of binding commitments. 

10. Furthermore, in recognition of the need to enhance the integration of least-developed countries into the 

multilateral trading system and support the diversification of their production and export base, we call upon 

developed-country participants and other participants who so decide, to grant on an autonomous basis duty-free 

and quota-free market access for non-agricultural products originating from least-developed countries by the 

year [...]. 

11. We recognize that newly acceded Members shall have recourse to special provisions for tariff 

reductions in order to take into account their extensive market access commitments undertaken as part of their 

accession and that staged tariff reductions are still being implemented in many cases. We instruct the 

Negotiating Group to further elaborate on such provisions. 

12. We agree that pending agreement on core modalities for tariffs, the possibilities of supplementary 

modalities such as zero-for-zero sector elimination, sectorial harmonization, and request & offer, should be kept 

open. 

13. In addition, we ask developed-country participants and other participants who so decide to consider the 

elimination of low duties. 

14. We recognize that NTBs are an integral and equally important part of these negotiations and instruct 

participants to intensify their work on NTBs. In particular, we encourage all participants to make notifications 

on NTBs by 31 October 2004 and to proceed with identification, examination, categorization, and ultimately 

negotiations on NTBs. We take note that the modalities for addressing NTBs in these negotiations could 

include request/offer, horizontal, or vertical approaches; and should fully take into account the principle of 

special and differential treatment for developing and least-developed country participants. 

15. We recognize that appropriate studies and capacity building measures shall be an integral part of the 

modalities to be agreed. We also recognize the work that has already been undertaken in these areas and ask 

participants to continue to identify such issues to improve participation in the negotiations. 

16. We recognize the challenges that may be faced by non-reciprocal preference beneficiary Members and 

those Members that are at present highly dependent on tariff revenue as a result of these negotiations on nonagricultural products. We instruct the Negotiating Group to take into consideration, in the course of its work, 

the particular needs that may arise for the Members concerned. 

17. We furthermore encourage the Negotiating Group to work closely with the Committee on Trade and 

Environment in Special Session with a view to addressing the issue of non-agricultural environmental goods 

covered in paragraph 31 (iii) of the Doha Ministerial Declaration. 
Annex C 

Recommendations of the Special Session of the Council for Trade in Services 

(a) Members who have not yet submitted their initial offers must do so as soon as possible. 

(b) A date for the submission of a round of revised offers should be established as soon as feasible. 

(c) With a view to providing effective market access to all Members and in order to ensure a substantive 

outcome, Members shall strive to ensure a high quality of offers, particularly in sectors and modes of 

supply of export interest to developing countries, with special attention to be given to least-developed 

countries. 

(d) Members shall aim to achieve progressively higher levels of liberalization with no a priori exclusion of 

any service sector or mode of supply and shall give special attention to sectors and modes of supply of 

export interest to developing countries. Members note the interest of developing countries, as well as 

other Members, in Mode 4. 

(e) Members must intensify their efforts to conclude the negotiations on rule-making under GATS Articles 

VI:4, X, XIII and XV in accordance with their respective mandates and deadlines. 

(f) Targeted technical assistance should be provided with a view to enabling developing countries to 

participate effectively in the negotiations. 

(g) For the purpose of the Sixth Ministerial meeting, the Special Session of the Council for Trade in 

Services shall review progress in these negotiations and provide a full report to the Trade Negotiations 

Committee, including possible recommendations. 
Annex D 

Modalities for Negotiations on Trade Facilitation 

1. Negotiations shall aim to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 

1994 with a view to further expediting the movement, release and clearance of goods, including goods in 

transit.1

 Negotiations shall also aim at enhancing technical assistance and support for capacity building in this 

area. The negotiations shall further aim at provisions for effective cooperation between customs or any other 

appropriate authorities on trade facilitation and customs compliance issues. 

2. The results of the negotiations shall take fully into account the principle of special and differential 

treatment for developing and least-developed countries. Members recognize that this principle should extend 

beyond the granting of traditional transition periods for implementing commitments. In particular, the extent 

and the timing of entering into commitments shall be related to the implementation capacities of developing and 

least-developed Members. It is further agreed that those Members would not be obliged to undertake 

investments in infrastructure projects beyond their means. 

3. Least-developed country Members will only be required to undertake commitments to the extent 

consistent with their individual development, financial and trade needs or their administrative and institutional 

capabilities. 

4. As an integral part of the negotiations, Members shall seek to identify their trade facilitation needs and 

priorities, particularly those of developing and least-developed countries, and shall also address the concerns of 

developing and least-developed countries related to cost implications of proposed measures. 

5. It is recognized that the provision of technical assistance and support for capacity building is vital for 

developing and least-developed countries to enable them to fully participate in and benefit from the 

negotiations. Members, in particular developed countries, therefore commit themselves to adequately ensure 

such support and assistance during the negotiations.2

6. Support and assistance should also be provided to help developing and least-developed countries 

implement the commitments resulting from the negotiations, in accordance with their nature and scope. In this 

context, it is recognized that negotiations could lead to certain commitments whose implementation would 

require support for infrastructure development on the part of some Members. In these limited cases, developedcountry Members will make every effort to ensure support and assistance directly related to the nature and scope 

of the commitments in order to allow implementation. It is understood, however, that in cases where required 

support and assistance for such infrastructure is not forthcoming, and where a developing or least-developed 

Member continues to lack the necessary capacity, implementation will not be required. While every effort will 

be made to ensure the necessary support and assistance, it is understood that the commitments by developed 

countries to provide such support are not open-ended. 

7. Members agree to review the effectiveness of the support and assistance provided and its ability to 

support the implementation of the results of the negotiations. 

8. In order to make technical assistance and capacity building more effective and operational and to 

ensure better coherence, Members shall invite relevant international organizations, including the IMF, OECD, 

UNCTAD, WCO and the World Bank to undertake a collaborative effort in this regard. 

9. Due account shall be taken of the relevant work of the WCO and other relevant international 

organizations in this area. 

10. Paragraphs 45-51 of the Doha Ministerial Declaration shall apply to these negotiations. At its first 

meeting after the July session of the General Council, the Trade Negotiations Committee shall establish a 

Negotiating Group on Trade Facilitation and appoint its Chair. The first meeting of the Negotiating Group shall 

agree on a work plan and schedule of meetings. 

__________ 

 1

 It is understood that this is without prejudice to the possible format of the final result of the 

negotiations and would allow consideration of various forms of outcomes. 2

 In connection with this paragraph, Members note that paragraph 38 of the Doha Ministerial 

Declaration addresses relevant technical assistance and capacity building concerns of Members. 
 

U.S. SUBMISSIONS TO THE WTO IN SUPPORT 

OF THE DOHA DEVELOPMENT AGENDA 

(WTO Document Symbol in Parentheses) 

Committee on Agriculture, Special Session

• Export Competition, Market Access and Domestic Support (JOB(02)/122) 

• Joint EC-US Paper on Agriculture (JOB(03)/157) 

• Proposal for Tariff Rate Quota Reform (G/AG/NG/W/58) 

• Proposal for Comprehensive Long-Term Agricultural Trade Reform (G/AG/NG/W/15) 

• Note on Domestic Support Reform (G/AG/NG/W/16) 

 

Council on Trade in Services, Special Session 

• Framework for Negotiation (S/CSS/W/4) 

• Proposals for Negotiation (Job(00)/8376) 

• Accounting Services (S/CSS/W/20) 

• Audiovisual and Related Services (S/CSS/W/21) 

• Distribution Services (S/CSS/W/22) 

• Higher (Tertiary) Education, Adult Education and Training (S/CSS/W/23) 

• Energy Services (S/CSS/W/24) 

• Environmental Services (S/CSS/W/25) 

• Express Delivery Services (S/CSS/W/26) 

• Financial Services (S/CSS/W/27) 

• Legal Services (S/CSS/W/28) 

• Movement of Natural Persons (S/CSS/W/29) 

• Market Access in Telecommunications and Complementary Services (S/CSS/W/30) 

• Tourism and Hotels (S/CSS/W/31) 

• Transparency in Domestic Regulation (S/CSS/W/102) 

• Advertising and Related Services (S/CSS/W/100) 

• Desirability of a Safeguard Mechanism for Services: Promoting Liberalization of Trade in Services 

(S/WPGR/W/37) 

• Modalities for the Special Treatment For Least-Developed Country Members in the Negotiations 

on Trade In Services – JOB (03)/133 

• US Government Points of Contact in Least-Developed Country Members (JOB (03)/33) 

• Small and Medium Sized Enterprises (TN/S/W/5) 

• Initial Offer (TN/S/O/USA) 

• An Assessment of Services Trade and Liberalization in the United States and Developing 

Economies (TN/S/W/12) 

• Joint Statement on Market Access in Services (JOB(04)/176) 

• U.S. Proposal for Transparency Disciplines in Domestic Regulation: Building on Existing International 

Disciplines and Proposals (JOB(04)/128) 

Negotiating Group on Market Access

• Tariffs & Trade Data Needs Assessment (TN/MA/W/2) 

• Negotiations on Environmental Goods (TN/MA/W/3 and TN/TE/W/8) 

• Modalities Proposal (TN/MA/W/18) 

• Proposal on modalities for addressing Non-Tariff Barriers (NTBs) (TN/MA/W/18/Add.1) 

• Revenue Implications of Trade Liberalization (TN/MA/W/18/Add.2) 

• Vertical NTB Modality (TN/MA/W/18/Add.3) 

• Contribution on an Environmental Goods Modality (TN/TE/W/38) & (TN/MA/W/18/Add.5) 
 

• Liberalizing Environmental Goods In The WTO: Approaching The Definition Issue 

(TN/TE/W/34) & (TN/MA/W/18/Add.4) 

• Non-Tariff Barrier Notifications (TN/MA/W/46/Add.8) 

• Non-Tariff Barrier Notifications – Revision (TN/MA/W/46/Add.8/Rev.1)

• Non-Agricultural Market Access: Modalities (TN/MA/W/44) 

• Contribution by Canada, European Communities and United States, Non-Agricultural Market 

Access: Modalities (JOB(03)/163) 

Negotiating Group on Rules

• Fisheries Subsidies Joint communication from the United States, Australia, Chile, Ecuador, 

Iceland, New Zealand, Peru, and the Philippines (TN/RL/W/3) 

• Fisheries Subsidies (TN/RL/W/21) 

• OECD Steel Paper (TN/RL/W/24) 

• Questions on Papers Submitted to Rules Negotiating Group (TN/RL/W/25) 

• Basic Concepts of the Trade Remedies Rules (TN/RL/W/27)

• Special and Differential Treatment and the Subsidies Agreement (TN/RL/W/33)

• Second Set of Questions from the United States on Papers Submitted to the Rules Negotiating 

Group (TN/RL/W/34) 

• Investigatory Procedures Under The Antidumping and Subsidies Agreements (TN/RL/W/35) 

• Communication From The United States Attaching A Communiqué From The Organization For 

Economic Cooperation And Development (OECD) (TN/RL/W/49) 

• Circumvention (TN/RL/W/50) 

• Replies To Questions Presented To The United States On Submission TN/Rl/W/27 

(TN/RL/W/53) 

• Third Set Of Questions From The United States On Papers Submitted To The Rules Negotiating 

Group (TN/RL/W/54) 

• Responses By The United States To Questions From Australia On Investigatory Procedures 

Under The Anti-Dumping And Subsidies Agreements (TN/RL/W/71) 

• Identification Of Certain Major Issues Under The Anti-Dumping And Subsidies Agreements 

(TN/RL/W/72) 

• Possible Approaches To Improved Disciplines On Fisheries Subsidies (TN/RL/W/77) 

• Subsidies Disciplines Requiring Clarification And Improvement (TN/RL/W/78) 

• Elements Of A Steel Subsidies Agreement (TN/RL/W/95) 

• Identification of Additional Issues under the Anti-dumping and Subsidies Agreements 

(TN/RL/W/98) 

• Fourth Set Of Questions From The United States On Papers Submitted To The Rules Negotiating 

Group (TN/RL/W/103)

• Further Issues Identified Under The Anti-Dumping And Subsidies Agreements For Discussion By 

the Negotiating Group On Rules (TN/RL/W/130)

• Replies to the Questions from India on TN/RL/W/35 (TN/RL/W/147) 

• Three Issues Identified by the United States (TN/RL/W/153) 

• Accrual of Interest (TN/RL/W/168) 

• Additional Views on the Structure of the Fisheries Subsidies Negotiations (TN/RL/W/169) 

• Allocation of Subsidy Benefits Over Time (TN/RL/GEN/4) 

• Exchange Rates (TN/RL/W/GEN/5) 

• New Shipper Reviews (TN/RL/GEN/11) 

• Allocation Periods for Subsidy Benefits (TN/RL/GEN/12) 

• Prompt Access to Non-Confidential Information (TN/RL/GEN/13) 

• Conduct of Verifications (TN/RL/GEN/15) 

• All-Others Rate (TN/RL/GEN/16) 

• Expensing Versus Allocating Subsidy Benefits (TN/RL/GEN/17/Rev.1) 

• Preliminary Determinations (TN/RL/GEN/25) 
 

Committee on Antidumping Practices

• Proposal for Operationalization of Art. 15 (G/ADP/AHG/W/138) 

• Draft Recommendation on Operationalizing Art. 15 (G/ADP/AHG/W/143) 

• Para. 7.4: Annual Reviews of the Antidumping Agreement (G/ADP/W/427) 

Committee on Subsidies and Countervailing Measures 

• Approval of Qualifying Requests under SCM Article. 27.4, Joint communication from the United 

States, Australia, Canada, the EU, Japan and Switzerland (G/SCM/W/521) 

 Dispute Settlement Body, Special Session 

• Contribution of the United States to the Improvement of the Dispute Settlement Understanding of 

the WTO-Related to Transparency (TN/DS/W/13) 

• Negotiations on Improvements And Clarifications of the Dispute Settlement Understanding on 

Improving Flexibility and Member Control in WTO Dispute Settlement (TN/DS/W/28)

• Further Contribution of The United States to The Improvement of The Dispute Settlement 

Understanding of the WTO Related to Transparency (TN/DS/W/46) 

• Negotiations on Improvements and Clarifications of the Dispute Settlement Understanding on Improving 

Flexibility and Member Control in WTO Dispute Settlement, Joint communication from United States and 

Chile (TN/DS/W/52) 

Trade Facilitation 

• Article VIII - Fees and Formalities (G/C/W/384) 

• Article X - Publication and Administration (G/C/W/400) 

• Integrated and Comprehensive Approach to Special and Differential Treatment (G/C/W/451) 

• Communication on Trade Facilitation (JOB(04)/103) 

Committee on Trade and Environment, Regular and Special Session 

• Sub-Paragraph (i) of the Doha Declaration (TN/TE/W/20 and TN/TE/W/40) 

• Contribution of the United States on Para. 31 (ii) of the Doha Ministerial 

Declaration(TN/TE/W/5) 

• Paragraph 33 of the Doha Declaration (WT/CTE/W/227)

• Sub-Paragraph 31(i) of the Doha Declaration (TN/TE/W/70)

(Three dual submissions on Environmental Goods to the Committee on Trade and Environment ( 

Regular and Special Session) and the Negotiating Group on Market Access are listed under the 

Negotiating Group on Market Access.) 

Council on TRIPS, Regular & Special Session 

• Questions and Answers: Comparison of Proposals (TN/IP/W/1) 

• Issues for Discussion, Article 23.4 (TN/IP/W/2) 

• Proposal for a Multilateral System of Registration and Protection of Geographic Indications for 

Wine & Spirits Based on Article 23.4 of the TRIPS Agreement (TN/IP/W/5) 

• Multilateral System of Registration and Protection of Geographic Indications for Wine & Spirits 

(TN/IP/W/6) 
 

• Paragraph 6 of the Doha Declaration on TRIPS and Public Health (IP/C/W/340) 

• Second Submission on Paragraph 6 of the Doha Declaration on TRIPS and Public Health 

(IP/C/W/358) 

• Implications of Article 23 Extension (IP/C/W/386) 

• Moratorium to Address Needs of Developing and Least-Developed Members With No or 

Insufficient Manufacturing Capacities in the Pharmaceutical Sector (IP/C/W/396) 

• Joint Proposal for a Multilateral System of Notification and Registration of Geographical 

Indications for Wines and Spirits (TN/IP/W/9) 

• Article 27.3(B), Relationship between the Trips Agreement and the CBD, and the Protection of 

Traditional Knowledge and Folklore (IP/C/W/434) 

• Technology Transfer Practices of the U.S. National Cancer Institute's Departmental Therapeutics 

Program (IP/C/W/341) 

• Access to Genetic Resources Regime of the United States’ National Parks (IP/C/W/393) 

Committee on Trade and Development, Special Session 

• Remarks on the review of Special and Differential Treatment (TN/CTD/W/9) 

• Monitoring Mechanism (TN/CTD/W/19)

• Approach to Agreement-Specific Proposals (TN/CTD/W/27)

Working Group on Transparency in Government Procurement 

• Capacity Building Questions (WT/WGTGP/W/34) 

• Workplan Proposal (WT/WGTGP/W/35)

• Considerations Related to Enforcement of an Agreement on Transparency in Government

Procurement (WT/WGTGP/W/38)

Work Program on Electronic Commerce 

• Work Program on Electronic Commerce (WT/GC/W/493/Rev.1) 

Working Group on the Relationship between Trade and Investment 

• Covering FDI & Portfolio Investment in an Agreement (WT/WGTI/W/142) 

Working Group on the Interaction between Trade and Competition Policy 

• Technical Assistance (WT/WGTCP/W/185) 

• Hardcore Cartels (WT/WGTCP/W/203) 

• Voluntary Cooperation (WT/WGTCP/W/204) 

• Transparency & Non-discrimination (WT/WGTCP/W/218) 

• Procedural Fairness (WT/WGTCP/W/219) 

• The Benefits of Peer Review in the WTO Competition Context (WT/WGTCP/W/233) 
 

MEMBERSHIP OF THE WORLD TRADE ORGANIZATION

as of January 1, 2005 (148 Members)

Government Entry into Force/ Government Entry into Force/

 Membership Membership

Albania September 8, 2000 Dominican Republic March 9, 1995

Angola November 23, 1996 Ecuador January 21, 1996

Antigua and Barbuda January 1, 1995 Egypt June 30, 1995

Argentina January 1, 1995 El Salvador May 7, 1995

Australia January 1, 1995 Estonia November 13, 1999

Austria January 1, 1995 European Union January 1, 1995

Bahrain January 1, 1995 Fiji January 14, 1996

Bangladesh January 1, 1995 Finland January 1, 1995

Barbados January 1, 1995 France January 1, 1995

Belgium January 1, 1995 Gabon January 1, 1995

Belize January 1, 1995 Georgia June 14, 2000

Benin February 22, 1996 Germany January 1, 1995

Bolivia September 12, 1995 Ghana January 1, 1995

Botswana May 31, 1995 Greece January 1, 1995

Brazil January 1, 1995 Grenada February 22, 1996

Brunei Darussalam January 1, 1995 Guatemala July 21, 1995

Bulgaria December 1, 1996 Guinea October 25, 1995

Burkina Faso June 3, 1995 Guinea Bissau May 31, 1995

Burundi July 23, 1995 Guyana January 1, 1995

Cameroon December 13, 1995 Haiti January 30, 1996

Canada January 1, 1995 Honduras January 1, 1995

Central African

Republic

May 31, 1995 Hong Kong, China January 1, 1995

Chad October 19, 1996 Hungary January 1, 1995

Chile January 1, 1995 Iceland January 1, 1995

China December 11, 2001 India January 1, 1995

Colombia April 30, 1995 Indonesia January 1, 1995

Congo March 27, 1997 Ireland January 1, 1995

Costa Rica January 1, 1995 Israel April 21, 1995

Côte d'Ivoire January 1, 1995 Italy January 1, 1995

Croatia November 30, 2000 Jamaica March 9, 1995

Cuba April 20, 1995 Japan January 1, 1995

Cyprus July 30, 1995 Jordan April 11, 2000

Czech Republic January 1, 1995 Kenya January 1, 1995

Democratic Republic of

the Congo

January 1, 1997 Korea, Republic of January 1, 1995

Denmark January 1, 1995 Kuwait January 1, 1995

Djibouti May 31, 1995 Kyrgyz Republic December 20, 1998

Dominica January 1, 1995 Latvia February 10, 1999

Government Entry into Force/ Government Entry into Force/

 Membership Membership

Lesotho May 31, 1995 Rwanda May 22, 1996

Liechtenstein September 1, 1995 Saint Kitts and Nevis February 21, 1996 
 

Lithuania May 31, 2001 Saint Lucia January 1, 1995

Luxembourg January 1, 1995 Saint Vincent and the

Grenadines

January 1, 1995

Macao, China January 1, 1995 Senegal January 1, 1995

Madagascar November 17, 1995 Sierra Leone July 23, 1995

Malawi May 31, 1995 Singapore January 1, 1995

Malaysia January 1, 1995 Slovak Republic January 1, 1995

Maldives May 31, 1995 Slovenia July 30, 1995

Mali May 31, 1995 Solomon Islands July 26, 1996

Malta January 1, 1995 South Africa January 1, 1995

Mauritania May 31, 1995 Spain January 1, 1995

Mauritius January 1, 1995 Sri Lanka January 1, 1995

Moldova July 26, 2001 Suriname January 1, 1995

Mongolia January 29, 1997 Swaziland January 1, 1995

Morocco January 1, 1995 Sweden January 1, 1995

Mozambique August 26, 1995 Switzerland July 1, 1995

Myanmar January 1, 1995 Taiwan (referred to in

the WTO as Chinese

Taipei)

January 1, 2002

Namibia January 1, 1995 Tanzania January 1, 1995

Netherlands - For the

Kingdom in Europe and

Netherlands Antilles 

January 1, 1995 Thailand January 1, 1995

New Zealand January 1, 1995 The Gambia October 23, 1996

Nicaragua September 3, 1995 Togo May 31, 1995

Niger December 13, 1996 Trinidad and Tobago March 1, 1995

Nigeria January 1, 1995 Mexico January 1, 1995

Norway January 1, 1995 Tunisia March 9, 1995

Oman November 9, 2000 Turkey March 26, 1995

Pakistan January 1, 1995 Uganda January 1, 1995

Panama September 6, 1997 United Arab Emirates April 10, 1996

Papua New Guinea June 9, 1996 United Kingdom January 1, 1995

Paraguay January 1, 1995 United States January 1, 1995

Peru January 1, 1995 Uruguay January 1, 1995

Philippines January 1, 1995 Venezuela January 1, 1995

Poland July 1, 1995 Zambia January 1, 1995

Portugal January 1, 1995 Zimbabwe March 5, 1995

Qatar January 13, 1996 

Romania January 1, 1995 
 

PROPOSED REVISED SCALE OF WTO CONTRIBUTIONS FOR 2005 

(Minimum contribution of 0.015 per cent) 

2004 

Contribution 

2005 

Contribution 

Interest 

Earned3

2005 net 

MEMBERS Contribution 

CHF % CHF CHF CHF 

Albania 24,084 0.015 25,110 20 25,090 

Angola 128,448 0.077 128,898 122 128,776 

Antigua and Barbuda 24,084 0.015 25,110 25,110 

Argentina 741,787 0.409 684,666 684,666 

Armenia 24,084 0.015 25,110 25,110 

Australia 1,852,862 1.126 1,884,924 2,374 1,882,550 

Austria 2,209,306 1.377 2,305,098 2,793 2,302,305 

Bahrain 117,209 0.075 125,550 71 125,479 

Bangladesh 168,588 0.106 177,444 72 177,372 

Barbados 30,506 0.019 31,806 29 31,777 

Belgium 4,306,219 2.648 4,432,752 4,902 4,427,850 

Belize 24,084 0.015 25,110 25,110 

Benin 24,084 0.015 25,110 6 25,104 

Bolivia 40,140 0.024 40,176 40,176 

Botswana 56,196 0.035 58,590 51 58,539 

Brazil 1,525,320 0.913 1,528,362 1,528,362 

Brunei Darussalam 65,830 0.039 65,286 60 65,226 

Bulgaria 155,743 0.101 169,074 190 168,884 

Burkina Faso 24,084 0.015 25,110 15 25,095 

Burundi 24,084 0.015 25,110 25,110 

Cambodia 0.027 45,198 45,198 

Cameroon 41,746 0.034 56,916 45 56,871 

Canada 6,326,064 3.921 6,563,754 7,616 6,556,138 

Central African Republic 24,084 0.015 25,110 25,110 

Chad 24,084 0.015 25,110 25,110 

Chile 499,342 0.300 502,200 224 501,976 

China, People's Republic of 5,235,862 3.599 6,024,726 441 6,024,285 

Colombia 351,626 0.207 346,518 346,518 

Congo 38,534 0.025 41,850 41,850 

Costa Rica 162,166 0.102 170,748 169 170,579 

Côte d'Ivoire 101,153 0.062 103,788 103,788 

Croatia 221,573 0.139 232,686 125 232,561 

Cuba 102,758 0.065 108,810 159 108,651 

Cyprus 97,942 0.063 105,462 79 105,383 

Czech Republic 818,856 0.536 897,264 999 896,265 

Democratic Republic of the 

Congo 30,506 0.015 25,110 25,110 

Denmark 1,531,742 0.966 1,617,084 2,068 1,615,016 

Djibouti 24,084 0.015 25,110 25,110 

 3

 Interest earned in 2003 under the Early Payment Encouragement Scheme (L/6384) and to be deducted 

from the 2005 contribution. 
 

2004 

Contribution 

2005 

Contribution 

Interest 

Earned3

2005 net 

MEMBERS Contribution 

CHF % CHF CHF CHF 

Dominica 24,084 0.015 25,110 25,110 

Dominican Republic 200,700 0.126 210,924 210,924 

Ecuador 131,659 0.081 135,594 86 135,508 

Egypt 414,245 0.250 418,500 197 418,303 

El Salvador 96,336 0.061 102,114 102,114 

Estonia 102,758 0.067 112,158 145 112,013 

European Communities 0 0.000 0 0 

Fiji 25,690 0.015 25,110 26 25,084 

Finland 1,019,556 0.622 1,041,228 1,425 1,039,803 

Former Yugoslav Republic of 

Macedonia 40,140 0.024 40,176 40,176 

France 8,368,387 5.152 8,624,448 10,097 8,614,351 

Gabon 56,196 0.034 56,916 56,916 

Gambia 24,084 0.015 25,110 25,110 

Georgia 24,084 0.015 25,110 25,110 

Germany 14,265,756 8.872 14,851,728 8,783 14,842,945 

Ghana 61,013 0.037 61,938 61,938 

Greece 656,690 0.438 733,212 448 732,764 

Grenada 24,084 0.015 25,110 29 25,081 

Guatemala 101,153 0.065 108,810 87 108,723 

Guinea 24,084 0.015 25,110 25,110 

Guinea-Bissau 24,084 0.015 25,110 25,110 

Guyana 24,084 0.015 25,110 25,110 

Haiti 24,084 0.015 25,110 25,110 

Honduras 61,013 0.039 65,286 44 65,242 

Hong Kong, China 5,131,498 3.122 5,226,228 7,171 5,219,057 

Hungary 685,591 0.501 838,674 594 838,080 

Iceland 69,041 0.044 73,656 98 73,558 

India 1,282,874 0.922 1,543,428 578 1,542,850 

Indonesia 1,302,142 0.773 1,294,002 610 1,293,392 

Ireland 1,844,834 1.246 2,085,804 2,729 2,083,075 

Israel 903,953 0.563 942,462 1,062 941,400 

Italy 6,672,874 4.087 6,841,638 6,162 6,835,476 

Jamaica 88,308 0.054 90,396 39 90,357 

Japan 10,266,206 6.125 10,253,250 7,693 10,245,557 

Jordan 102,758 0.064 107,136 65 107,071 

Kenya 72,252 0.044 73,656 80 73,576 

Korea, Republic of 3,877,524 2.387 3,995,838 4,818 3,991,020 

Kuwait 314,698 0.193 323,082 56 323,026 

Kyrgyz Republic 24,084 0.015 25,110 2 25,108 

Latvia 80,280 0.051 85,374 100 85,274 

Lesotho 24,084 0.015 25,110 31 25,079 

Liechtenstein 40,140 0.025 41,850 56 41,794 

Lithuania 130,054 0.084 140,616 133 140,483 
 

2004 

Contribution 

2005 

Contribution 

Interest 

Earned3

2005 net 

MEMBERS Contribution 

CHF % CHF CHF CHF 

Luxembourg 550,721 0.355 594,270 712 593,558 

Macao, China 102,758 0.065 108,810 128 108,682 

Madagascar 24,084 0.015 25,110 25,110 

Malawi 24,084 0.015 25,110 25,110 

Malaysia 2,090,491 1.277 2,137,698 2,555 2,135,143 

Maldives 24,084 0.015 25,110 12 25,098 

Mali 24,084 0.015 25,110 16 25,094 

Malta 75,463 0.047 78,678 62 78,616 

Mauritania 24,084 0.015 25,110 25,110 

Mauritius 62,618 0.038 63,612 78 63,534 

Mexico 3,582,094 2.317 3,878,658 2,204 3,876,454 

Moldova 24,084 0.015 25,110 22 25,088 

Mongolia 24,084 0.015 25,110 20 25,090 

Morocco 248,868 0.157 262,818 154 262,664 

Mozambique 24,084 0.015 25,110 3 25,107 

Myanmar, Union of 52,985 0.032 53,568 32 53,536 

Namibia 43,351 0.022 36,828 38 36,790 

Nepal 0.019 31,806 31,806 

Netherlands, Kingdom of the 5,494,363 3.388 5,671,512 6,543 5,664,969 

New Zealand 401,400 0.244 408,456 490 407,966 

Nicaragua 30,506 0.019 31,806 45 31,761 

Niger 24,084 0.015 25,110 25,110 

Nigeria 306,670 0.187 313,038 313,038 

Norway 1,372,788 0.844 1,412,856 1,787 1,411,069 

Oman 178,222 0.107 179,118 120 178,998 

Pakistan 252,079 0.153 256,122 236 255,886 

Panama 184,644 0.110 184,140 130 184,010 

Papua New Guinea 48,168 0.029 48,546 48,546 

Paraguay 81,886 0.044 73,656 73,656 

Peru 208,728 0.125 209,250 209,250 

Philippines 902,347 0.532 890,568 890,568 

Poland 1,125,526 0.725 1,213,650 1,493 1,212,157 

Portugal 910,375 0.558 934,092 965 933,127 

Qatar 112,392 0.091 152,334 123 152,211 

Romania 282,586 0.188 314,712 306 314,406 

Rwanda 24,084 0.015 25,110 25,110 

Saint Lucia 24,084 0.015 25,110 7 25,103 

Senegal 35,323 0.021 35,154 50 35,104 

Sierra Leone 24,084 0.015 25,110 25,110 

Singapore 3,246,523 1.995 3,339,630 3,179 3,336,451 

Slovak Republic 306,670 0.184 308,016 416 307,600 

Slovenia 255,290 0.160 267,840 328 267,512 

Solomon Islands 24,084 0.015 25,110 25,110 

South Africa 783,533 0.469 785,106 814 784,292 
 

2004 

Contribution 

2005 

Contribution 

Interest 

Earned3

2005 net 

MEMBERS Contribution 

CHF % CHF CHF CHF 

Spain 3,871,102 2.460 4,118,040 3,705 4,114,335 

Sri Lanka 149,321 0.091 152,334 55 152,279 

St. Kitts and Nevis 24,084 0.015 25,110 29 25,081 

St. Vincent and the Grenadines 24,084 0.015 25,110 17 25,093 

Suriname 24,084 0.015 25,110 25,110 

Swaziland 25,690 0.016 26,784 30 26,754 

Sweden 2,243,023 1.363 2,281,662 2,505 2,279,157 

Switzerland 2,348,993 1.452 2,430,648 3,207 2,427,441 

Chinese Taipei 3,211,200 1.947 3,259,278 1,201 3,258,077 

Tanzania 38,534 0.024 40,176 40,176 

Thailand 1,591,150 0.972 1,627,128 1,903 1,625,225 

Togo 24,084 0.015 25,110 25,110 

Trinidad and Tobago 64,224 0.050 83,700 80 83,620 

Tunisia 207,122 0.129 215,946 231 215,715 

Turkey 1,188,144 0.718 1,201,932 680 1,201,252 

Uganda 27,295 0.016 26,784 12 26,772 

United Arab Emirates 839,729 0.602 1,007,748 425 1,007,323 

United Kingdom of Great 

 Britain and Northern Ireland 9,134,258 5.704 9,548,496 12,260 9,536,236 

United States of America 25,264,116 15.798 26,445,852 3,011 26,442,841 

Uruguay 91,519 0.050 83,700 83,700 

Venezuela 523,426 0.325 544,050 544,050 

Zambia 25,690 0.016 26,784 26,784 

Zimbabwe 70,646 0.032 53,568 53,568 

TOTAL 160,560,000 100.000 167,400,000 128,493 167,271,507 
 

2004 PROPOSED CONSOLIDATED REVISED BUDGET FOR THE WTO SECRETARIAT AND THE 

APPELLATE BODY AND ITS SECRETARIAT 

(in Swiss francs) 

 

2004 Budget 

Part Section Item Original 

Proposal 2004 Reductions 

Revised Proposal 

2004 

A Sect 1 Work Years (a)Salary 73,390,500 (691,600) 72,698,900 

 (b)Pension 14,771,500 (154,200) 14,617,300 

 (c)Common Staff Costs 14,175,800 (455,300) 13,720,500 

 Sect 2 Temporary Assistance 16,964,950 (1,165,800) 15,799,150 

B Sect 3 Communications (a) Telecommunications 784,500 (30,000) 754,500 

 (b) Postal Charges 1,585,000 (130,000) 1,455,000 

 Sect 4 Building Facilities (a) Rental 312,400 (10,000) 302,400 

 (b) Utilities 1,645,500 (13,000) 1,632,500 

 (c) Maintenance and Insurance 1,228,000 (30,000) 1,198,000 

 Sect 5 Permanent Equipt 3,617,350 (374,500) 3,242,850 

 Sect 6 Expendable 1,410,000 (37,000) 1,373,000 

 Sect 7 Contractual Serv. (a) Reproduction 1,445,000 (50,000) 1,395,000 

 (b) Office Automation 2,253,800 (61,000) 2,192,800 

 (c)Other 267,000 0 267,000 

C Sect 8 Staff Overheads (a) Training 545,000 (30,000) 515,000 

 (b) Insurance 1,906,000 (35,300) 1,870,700 

 (c) Joint Services 647,000 (15,000) 632,000 

 (d) Miscellaneous 118,500 (30,000) 88,500 

 Sect 9 Missions (a)Missions Official 1,191,100 0 1,191,100 

 (b)Missions Technical 1,383,200 0 1,383,200 

 Sect 10 TPTC 3,881,000 0 3,881,000 

 Sect 11 Various (a) Representation and Hospitality 284,000 0 284,000 

 (b) Dispute Settlement Panels 1,287,000 (70,000) 1,217,000 

 (d) Appellate Body Members 620,000 0 620,000 

 (e) Library 617,000 (30,100) 586,900 

 (f) Publications 285,000 (10,000) 275,000 

 (g) Public Information Activities 210,000 0 210,000 

 (h) External Auditors 50,000 (10,000) 40,000 

 (i) Ministerial Operating Fund 700,000 (100,000) 600,000 

 (j) ISO 57,000 0 57,000 

 (k) Other 90,000 0 90,000 

 (l) Appellate Body Operating Fund 1,696,800 (100,000) 1,596,800 

 Sect 12 Unforeseen 100,000 0 100,000 

D Sect 13 ITC 16,125,250 (235,850) 15,889,400 

Grand Total 165,645,150 (3,868,650) 161,776,500 

 
 

2004 PROPOSED REVISED BUDGET FOR THE WTO SECRETARIAT 

(in Swiss francs) 

 

2004 

Budget 

 

 

Part Section Item Original Proposal 

2004 Reductions 

Revised Proposal 

2004 

A Sect 1 Work Years (a)Salary 71,705,600 (691,600) 71,014,000 

 (b)Pension 14,421,400 (154,200) 14,267,200 

 (c)Common Staff Costs 13,885,300 (455,300) 13,430,000 

 Sect 2 Temporary Assistance 16,928,950 (1,165,800) 15,763,150 

B Sect 3 Communications (a) Telecommunications 778,000 (30,000) 748,000 

 (b) Postal Charges 1,585,000 (130,000) 1,455,000 

 Sect 4 Building Facilities (a) Rental 312,400 (10,000) 302,400 

 (b) Utilities 1,632,500 (13,000) 1,619,500 

 (c) Maintenance and Insurance 1,223,000 (30,000) 1,193,000 

 Sect 5 Permanent Equipt 3,594,350 (374,500) 3,219,850 

 Sect 6 Expendable 1,390,000 (37,000) 1,353,000 

 Sect 7 Contractual Serv. (a) Reproduction 1,430,000 (50,000) 1,380,000 

 (b) Office Automation 2,253,800 (61,000) 2,192,800 

 (c)Other 267,000 0 267,000 

C Sect 8 Staff Overheads (a) Training 520,000 (30,000) 490,000 

 (b) Insurance 1,897,000 (35,300) 1,861,700 

 (c) Joint Services 647,000 (15,000) 632,000 

 (d) Miscellaneous 116,500 (30,000) 86,500 

 Sect 9 Missions (a)Missions Official 1,181,100 0 1,181,100 

 (b)Missions Technical 1,383,200 0 1,383,200 

 Sect 10 TPTC 3,881,000 0 3,881,000 

 Sect 11 Various (a) Representation and Hospitality 283,000 0 283,000 

 (b) Dispute Settlement Panels 1,287,000 (70,000) 1,217,000 

 (e) Library 609,000 (30,100) 578,900 

 (f) Publications 285,000 (10,000) 275,000 

 (g) Public Information Activities 210,000 0 210,000 

 (h) External Auditors 50,000 (10,000) 40,000 

 (i) Ministerial Operating Fund 700,000 (100,000) 600,000 

 (j) ISO 57,000 0 57,000 

 (k) Other 90,000 0 90,000 

 Sect 12 Unforeseen 100,000 0 100,000 

D Sect 13 ITC 16,125,250 (235,850) 15,889,400 

Grand Total 160,829,350 (3,768,650) 157,060,700 

 
 

2005 PROPOSED CONSOLIDATED REVISED BUDGET FOR THE WTO SECRETARIAT AND THE 

APPELLATE BODY AND ITS SECRETARIAT 

(in Swiss francs) 

Part Section Item 

Original 

2005 Budget 

(WT/BFA/70) 

Proposed 

2005 

Revision 

Reductions/

Adjustments 

Revised 

proposal 

2005 

A Sect 1 Work Years (a)Salary 77,152,000 77,171,000 (566,000) 76,605,000 

 (b)Pension 15,570,700 15,407,800 (143,400) 15,264,400 

 (c)Common Staff Costs 13,775,800 14,709,200 709,500* 15,418,700 

 Sect 2 Temporary Assistance 15,283,150 14,222,750 0 14,222,750 

B Sect 3 Communications (a) Telecommunications 754,500 764,500 0 764,500 

 (b) Postal Charges 1,455,000 1,355,000 (50,000) 1,305,000 

 Sect 4 Building Facilities (a) Rental 302,400 362,400 0 362,400 

 (b) Utilities 1,632,500 1,632,500 0 1,632,500 

 (c) Maintenance and Insurance 1,198,000 1,171,000 0 1,171,000 

 Sect 5 Permanent Equipment 3,170,850 2,811,100 (120,000) 2,691,100 

 Sect 6 Expendable 1,373,000 1,379,000 0 1,379,000 

 Sect 7 Contractual Services (a) Reproduction 1,395,000 1,425,000 (30,000) 1,395,000 

 (b) Office Automation 2,184,800 2,227,200 0 2,227,200 

 (c)Other 267,000 332,000 0 332,000 

 

(d) Security Outsourcing 

Contract 0 2,125,100 0 2,125,100 

C Sect 8 Staff Overheads (a) Training 515,000 1,020,000 (505,000) 515,000 

 (b) Insurance 1,952,700 1,982,700 0 1,982,700 

 (c) Joint Services 632,000 177,600 0 177,600 

 (d) Miscellaneous 48,500 48,500 0 48,500 

 Sect 9 Missions (a)Missions Official 1,191,100 1,191,100 0 1,191,100 

 (b)Missions Technical 1,383,200 1,383,200 0 1,383,200 

 Sect 10 TPTC 3,881,000 3,671,000 0 3,671,000 

 Sect 11 Various 

(a) Representation and 

Hospitality 284,000 284,000 0 284,000 

 (b) Dispute Settlement Panels 1,217,000 1,217,000 0 1,217,000 

 (d) Appellate Body Members 620,000 620,000 68,100 688,100 

 (e) Library 586,900 586,900 0 586,900 

 (f) Publications 275,000 425,000 0 425,000 

 

(g) Public Information 

Activities 210,000 210,000 0 210,000 

 (h) External Auditors 40,000 40,000 0 40,000 

 (i) Ministerial Operating Fund 600,000 600,000 0 600,000 

 (j) ISO 57,000 57,000 0 57,000 

 (k) Other 90,000 90,000 0 90,000 

 

(l) Appellate Body Operating 

Fund 1,596,800 1,509,500 (368,100) 1,141,400 

 

(m) Security Enhancement 

Programme 0 1,805,300 (686,300) 1,119,000 

 Sect 12 Unforeseen Unforeseen 100,000 100,000 0 100,000 

D Sect 13 ITC ITC 16,009,300 16,977,850 (697,600) 16,280,250 

Grand Total 166,804,200 171,092,200 (2,388,800) 168,703,400 

 

* amount is strictly earmarked for separation costs related to the Security Enhancement Programme 
 

2005 PROPOSED REVISED BUDGET FOR THE WTO SECRETARIAT 

(in Swiss francs) 

Part Section Item 

2005 Budget 

(WT/BFA/70) 

Proposed 

2005 

Revision 

Reductions/

Adjustments 

Revised 

Proposal 

2005 

A Sect 1 Work Years (a)Salary 75,426,800 75,315,500 (566,000) 74,749,500 

 (b)Pension 15,212,800 15,039,600 (143,400) 14,896,200 

 (c)Common Staff Costs 13,479,400 14,363,500 709,500* 15,073,000 

 Sect 2 Temporary Assistance 15,247,150 14,186,750 0 14,186,750 

B Sect 3 Communications (a) Telecommunications 748,000 758,000 0 758,000 

 (b) Postal Charges 1,455,000 1,355,000 (50,000) 1,305,000 

 Sect 4 Building Facilities (a) Rental 302,400 362,400 0 362,400 

 (b) Utilities 1,619,500 1,619,500 0 1,619,500 

 (c) Maintenance and Insurance 1,193,000 1,166,000 0 1,166,000 

 Sect 5 Permanent Equipment 3,147,850 2,788,100 (120,000) 2,668,100 

 Sect 6 Expendable 1,353,000 1,359,000 0 1,359,000 

 

Sect 7 Contractual 

Services (a) Reproduction 1,380,000 1,410,000 (30,000) 1,380,000 

 (b) Office Automation 2,184,800 2,227,200 0 2,227,200 

 (c)Other 267,000 332,000 0 332,000 

 

(d) Security Outsourcing 

Contract 0 2,125,100 0 2,125,100 

C Sect 8 Staff Overheads (a) Training 490,000 995,000 (505,000) 490,000 

 (b) Insurance 1,943,700 1,973,700 0 1,973,700 

 (c) Joint Services 632,000 177,600 0 177,600 

 (d) Miscellaneous 46,500 46,500 0 46,500 

 Sect 9 Missions (a)Missions Official 1,181,100 1,181,100 0 1,181,100 

 (b)Missions Technical 1,383,200 1,383,200 0 1,383,200 

 Sect 10 TPTC 3,881,000 3,671,000 0 3,671,000 

 Sect 11 Various 

(a) Representation and 

Hospitality 283,000 283,000 0 283,000 

 (b) Dispute Settlement Panels 1,217,000 1,217,000 0 1,217,000 

 (e) Library 578,900 578,900 0 578,900 

 (f) Publications 275,000 425,000 0 425,000 

 

(g) Public Information 

Activities 210,000 210,000 0 210,000 

 (h) External Auditors 40,000 40,000 0 40,000 

 (i) Ministerial Operating Fund 600,000 600,000 0 600,000 

 (j) ISO 57,000 57,000 0 57,000 

 (k) Other 90,000 90,000 0 90,000 

 

(m) Security Enhancement 

Programme 0 1,805,300 (686,300) 1,119,000 

 Sect 12 Unforeseen Unforeseen 100,000 100,000 0 100,000 

D Sect 13 ITC ITC 16,009,300 16,977,850 (697,600) 16,280,250 

Grand Total 162,034,400 166,219,800 (2,088,800) 164,131,000 

 

* amount is strictly earmarked for separation costs related to the Security Enhancement Programme 
 

 2005 PROPOSED REVISED BUDGET FOR THE APPELLATE BODY AND ITS SECRETARIAT 

(in Swiss francs) 

P

a 

r 

t Section Item 

Original 2005 

Budget 

(WT/BFA/70) 

Proposed 

2005 

Revision 

Reductions/

Adjustments 

Revised 

Proposal 

2005 

A Sect 1 Work Years (a)Salary 1,725,200 1,855,500 0 1,855,500 

 (b)Pension 357,900 368,200 0 368,200 

 (c)Common Staff Costs 296,400 345,700 0 345,700 

 Sect 2 Temporary Assistance 36,000 36,000 0 36,000 

B Sect 3 Communications (a) Telecommunications 6,500 6,500 0 6,500 

 Sect 4 Building Facilities (b) Utilities 13,000 13,000 0 13,000 

 (c) Maintenance and Insurance 5,000 5,000 0 5,000 

 Sect 5 Permanent Equipment 23,000 23,000 0 23,000 

 Sect 6 Expendable 20,000 20,000 0 20,000 

 Sect 7 Contractual Services. (a) Reproduction 15,000 15,000 0 15,000 

C Sect 8 Staff Overheads (a) Training 25,000 25,000 0 25,000 

 (b) Insurance 9,000 9,000 0 9,000 

 (d) Miscellaneous 2,000 2,000 0 2,000 

 Sect 9 Missions (a)Missions Official 10,000 10,000 0 10,000 

 Sect 11 Various (a) Representation and Hospitality 1,000 1,000 0 1,000 

 (d) Appellate Body Members 620,000 620,000 68,100 688,100 

 (e) Library 8,000 8,000 0 8,000 

 

(l) Appellate Body Operating 

Fund 1,596,800 1,509,500 (368,100) 1,141,400 

Grand Total 4,769,800 4,872,400 (300,000) 4,572,400 

 
 

Waivers Currently in Force

The following waivers, granted under Article IX: 3 of the Agreement Establishing the World Trade 

Organization, are currently in effect. Waivers granted for a period exceeding one year are reviewed 

annually by the General Council. The General Council may extend, modify, or terminate a waiver as part 

of the annual review process. The last review of multi-year waivers took place on December 20, 2001. 

WTO Member/Waiver Valid Through Date Granted 

Kimberly Process: Brazil, Bulgaria, Canada, Croatia, Czech 

Republic, EU, Hungary, Israel, Japan, Korea, Malaysia, Mauritius, 

Mexico, Norway, Philippines, Romania, Sierra Leone, Slovenia, 

Switzerland, Thailand, United Arab Emirate, United States, 

Uruguay: allows for the implementation of the Kimberly Process 

Certification Scheme for Rough Diamonds. 

December 31 2006 May 15 2003 

El Salvador - Customs Valuation: Waiver was granted for the 

Agreement on the Implementation of Article VII of GATT 1994 for 

goods listed in Annex 1 and Annex 2. 

March 7, 2003 

 (Annex 1) 

March 7, 2005 

(Annex 2) 

July 7, 2002 

Harmonized System (HS) 1996 changes: Malaysia and Panama 

were granted individual waivers for the introduction of HS 1996 

changes to WTO Schedules of Tariff Concessions. 

April 30, 2003 May 13, 2002 

Senegal: Waiver on minimum values in regard to the Agreement 

on the implementation of Article VII of GATT 1994 

June 30, 2005 May 17, 2004 

Albania: Waiver of implementation of specific commitments in 

telecom services. 

December 31, 2004 May 17, 2004 

HS 2002 changes: A collective waiver was granted to Argentina, 

Australia, Brazil, Bulgaria, Canada, China, Chinese Taipei, Costa 

Rica, Croatia, El Salvador, European Communities, Hong Kong, 

Hungary, Iceland, India, Korea, Macau, Mexico, New Zealand, 

Nicaragua, Norway, Romania, Singapore, Switzerland, Thailand, 

United States, Uruguay for the introduction of HS 2002 changes to 

WTO Schedules of Tariff Concessions. 

December 31, 2005 December 13, 

2004 

EC Transitional Regime: for the EC Autonomous Tariff Rate 

Quotas on Imports of Bananas. 

December 31, 2005 November 14, 

2001 

US - Caribbean Basin Economic Recovery Act: To allow the 

United States to extend tariff preferences to eligible Caribbean 

countries under CBERA. 

December 31, 2005 November 15, 

1995 

Canada - CARIBCAN: To allow Canada to extend tariff 

preferences to CARIBCAN nations. 

December 31, 2006 October 14, 

1996 

 
 

WTO Member / Waiver Valid Through Date Granted 

Cuba - Article XV:6: To allow Cuba not to have a special exchange 

arrangement, which is required for those WTO Members that are 

not IMF members. 

December 31, 2006 December 20, 

2001 

European Community - Western Balkans: To allow the EC to 

extend tariff preferences to Albania, Bosnia-Herzegovina, Croatia, 

the Federal Republic of Yugoslavia and the former Republic of 

Macedonia. 

December 31, 2006 December 8, 

2000 

Turkey -Bosnia: To allow Turkey to provide tariff preferences to 

Bosnia-Herzegovina. 

December 31, 2006 December 8, 

2000 

US - Former Trust Territory of the Pacific Islands: To allow the 

United States to extend historical tariff preferences to the Mariana 

Islands, Palau, the Marshall Islands and Micronesia. 

December 31, 2006 October 14, 

1996 

ACP-EC Partnership Agreement: To allow waivers to Article I for 

the maintenance of preferential trade between the EC and ACP 

countries. 

December 31, 2007 November 14, 

2001 

Preferential Tariff Treatment for Least Developed Countries: To 

allow developing countries to extend unilateral tariff preferences to 

least developed countries. 

June 30, 2009 June 15, 1999 

LDC - Article 70.9 of the TRIPS Agreement with respect to 

pharmaceutical products. 

January 1, 2016 July 8, 2002
 

WTO SECRETARIAT PERSONNEL STATISTICS 

Number of Staff Members by Job Category 

Country Senior Professional Support Total 

Argentina 4 3 7

Australia 8 3 11

Austria 4 1 5

Bangladesh 1 1

Belgium 4 2 6

Benin 1 1

Bolivia 2 1 3

Brazil 1 3 2 6

Bulgaria 1 1

Canada 26 2 28

Chile 2 4 6

China 6 1 7

Colombia 6 1 7

Congo, The Democratic Republic of the 1 1

Costa Rica 2 2

Cote d'Ivoire 1 1

Cuba 1 1 2

Denmark 1 1 2

Ecuador 1 1

Egypt 5 5

Estonia 1 1

Fiji 1 1

Finland 2 2 4

France 49 116 165

Germany 15 2 17

Ghana 3 3

Greece 4 4

Guatemala 1 1

Honduras 1 1

Hong Kong 1 1

Hungary 1 1 2

India 9 3 12

Ireland 4 8 12

Italy 10 2 12

Japan 4 4

Kenya 1 1

Korea, Republic of 2 2

Lao People's Democratic Republic 1 1

 
 

Number of Staff Members by Job Category 

Country Senior Professional Support Total 

Lebanon 1 1

Malawi 1 1

Malaysia 1 1 2

Mauritius 1 1 2

Mexico 6 6

Morocco 2 2

Netherlands 6 1 7

New Zealand 3 1 4

Nigeria 1 1

Norway 1 1 2

Paraguay 1 1

Peru 1 6 7

Philippines 8 8

Poland 3 2 5

Portugal 1 1 2

Romania 1 1 2

Rwanda 1 1

Senegal 1 1

Slovenia 1 1

South Africa 1 1

Spain 25 22 47

Sri Lanka 2 2 4

Sweden 3 2 5

Switzerland 22 14 36

Thailand 1 4 5

Tunisia 3 2 5

Turkey 3 3

United Kingdom 1 27 54 82

United States 1 22 4 27

Uruguay 6 3 9

Venezuela 4 4

Zimbabwe 1 1

Total 6 347 279 632

Notes: Senior Management includes the Director General and Deputies Director General 

Annual Average Salary

Senior Management 249,354 CHF 

Professional staff 138,203 CHF 

Support 87,801 CHF 

Source: WTO Secretariat as of January 1, 2004 

 
 

WTO ACCESSION APPLICATIONS AND STATUS (as of 12-31-04)1

Applicant Status of Multilateral and Bilateral Work 

Afghanistan* 

(2004) 

Application for accession to the WTO accepted at December 2004 General Council meeting; 

has not yet submitted initial documentation to activate the accession negotiations. 

Algeria 

(1987) 

Seventh Working Party (WP) meeting held June 25, 2004 to review draft WP report and status 

of market access negotiations. Next WP meeting expected in early 2005. 

Andorra 

(1997)

WP meeting on October 13, 1999 reviewed legislative implementation schedule and goods and 

services market access offers. Awaiting information on legislative implementation and 

circulation of revised market access offers.

Azerbaijan 

(1997)

Second WP meeting held October 14, 2004 to review additional documentation. No market 

access offers to date. 

Bahamas 

(2001)

Application accepted at July 2001 General Council meeting; has not yet submitted initial 

documentation to activate the accession negotiations. 

Belarus 

(1993)

Sixth WP meeting held September 30, 2004, continued review of outstanding issues and status 

of bilateral negotiations on goods and services market access. Revised offers circulated August 

2004. Factual Summary is under review. Next meeting possible in early 2005. 

Bosnia 

Herzegovina 

(1999)

Second WP meeting held December 6, 2004 to review additional documentation and initiate 

work on market access commitments.. 

Bhutan * 

(1999)

First WP meeting held November 8, 2004 to review initial documentation. No market access 

offers to date. 

Cambodia * 

(1995)

Cambodia became the 148th Member of the WTO on October 13, 2004. 

Cape Verde * 

(2000)

Second WP meeting held December 8, 2004 to review factual summary, additional 

documentation, and initial market access offers. Additional work expected on the 

margins of Geneva Week meetings in April 2005. 

Ethiopia* 

(2003) 

Application accepted at February 2003 General Council meeting; has not yet submitted initial 

documentation to activate the accession negotiations. 

Iraq 

(2004) 

Application for accession to the WTO accepted at December 2004 General Council meeting; 

has not yet submitted initial documentation to activate the accession negotiations. 

Iran Application for accession to the WTO circulated in September 1996; under consideration in the 

General Council since July 2001.

Kazakhstan 

(1996)

Eighth WP meeting held November 3, 2004 to review legislative implementation and action 

plans for removal of WTO-inconsistent measures. Revised goods and services market access 

offers circulated September 2004. Next meeting likely in first quarter of 2005 to review draft 

WP report text. 

Laos * 

(1998)

First WP meeting held October 28, 2004 to review initial documentation. No market access 

offers to date.

Lebanon 

(1999)

Third WP meeting held July 8, 2004 to review legislative implementation and plans for 

removal of WTO-inconsistent measures. Revised offers tabled in June 2004. 

Libya 

(2004) 

Application accepted at July 2004 General Council meeting. No documentation or market 

access offers circulated to date. 

Nepal * 

(1989)

Nepal became the 147th Member of the WTO on April 10, 2004.

Russia 

(1993)

Third revised draft WP report text issued October 15, 2004 and reviewed at November 14-17, 

2004 WP. Next meeting likely in first quarter of 2005. Intensive bilateral and multilateral 

work on protocol, agriculture, and goods and services market access continues. Russia’s 

legislative implementation ongoing. 

Samoa * 

(1998)

Next informal WP meeting to review revised draft WP report and continue negotiations on 

market access offers on goods and services. Meetings likely during first half of 2005. 

 

* Designates “least developed country” applicant. 

 “Applicant”column Includes date the Working Party was formed. Pre-1995 dates indicate that the original WP was formed under

the GATT 1947, but was reformed as a WTO Working Party in 1995. 
 

Applicant Status of Multilateral and Bilateral Work 

Saudi Arabia 

(1993)

Last WP meeting held in Geneva June 14, 2004, followed by comprehensive bilaterals in 

Washington in September 2004. Further revised draft WP report in development to be issued 

in early 2005. Work continues on Saudi legislative implementation. Significant progress 

achieved to date in bilateral goods and services market access negotiations. Next WP meeting 

expected during first half of 2005. 

Serbia and 

Montenegro 

(2001) 

Initial documentation submitted in June 2002. Responses to initial questions and other 

documentation circulated in 2004. First WP meeting delayed pending deliberations by Serbia 

and Montenegro on the extent to which customs and other trade measures were applied 

uniformly within the state union. In December 2004, Serbia and Montenegro applied 

individually for accession to the WTO as separate customs territories.

Seychelles 

(1995) 

WP meeting held in March 1998. No recent activity recorded in WP, legislative 

implementation, or bilateral goods and services negotiations. 

Sudan* 

(1995)

Second WP meeting held March 10, 2004. No market access offers to date. 

Syria Application for accession to the WTO first circulated in October 2001. No Council review to 

date.

Tajikistan 

(2001)

First WP meeting held March 18, 2004. Second meeting expected in early 2005. Initial market 

access offers under review. 

Tonga 

(1995)

Informal WP meeting held November 2004 to further revise draft WP report and complete 

bilateral goods and services market access negotiations. Closeout meetings expected in April 

2005, on the margins of Geneva Week meetings. 

Ukraine 

(1993)

Last WP meeting held on September 21, 2004 to review draft WP report text and information 

on legislative implementation. Bilateral discussions in September and December on WP report. 

Goods and Services market access discussions well advanced, with focus on elimination of 

remaining nontariff barriers to trade in goods and outstanding sectoral issues in services. Next 

WP meeting likely early in first quarter of 2005.

Uzbekistan 

(1995)

Second WP meeting held June 29, 2004 to review additional documentation. No market access 

offers to date.

Vanuatu * 

(1995)

Formal WP meeting October 29, 2001 adopted the protocol package. General Council 

approval delayed pending reconsideration of status by ni-Vanuatu Government. Request from 

Vanuatu to revise package awaiting response. 

Vietnam 

(1995)

Last WP meeting held on December 17, 2004 to review status of action plans for legislative 

implementing of WTO provisions and additional information on measures in place. Goods and 

services market access negotiations underway. Bilateral meetings to be arranged when revised 

offers transmitted. Next WP meeting likely in early 2005. 

Yemen * 

(2000) 

First WP meeting held November 30, 2004 to review initial documentation. No market access 

offers to date. 
 

WORLD TRADE

ORGANIZATION

WT/DSB/33 

6 March 2003 

(03-1283) 

INDICATIVE LIST OF GOVERNMENTAL AND 

NON-GOVERNMENTAL PANELISTS 

To assist in the selection of panelists, the DSU provides in Article 8.4 that the Secretariat shall 

maintain an indicative list of governmental and non-governmental individuals. 

In accordance with the proposals for the administration of the indicative list of panelists approved by 

the DSB on 31 May 1995, the list should be completely updated every two years. For practical 

purposes, the proposals for the administration of the indicative list approved by the DSB on 

31 May 1995 are reproduced as an Annex to this document. 

The attached is an updated consolidated list of governmental and non-governmental panelists.4

 The 

list contains the names included in the previous indicative list (WT/DSB/19 and Add.1 through Add.5) 

and takes into account all the modifications made to that list by Members, in accordance with the 

requirement that the list should be updated every two years. The new names approved by the DSB in 

the period between 19 December 2002 and 19 February 2003 are also included in the attached list. 

 4

Curricula vitae containing more detailed information are available on request from the WTO 

Secretariat (Council and TNC Division – Room 3105). The curricula vitae which have been submitted on 

diskette are also available on the Document Dissemination Facility. 
 

COUNTRY NAME SECTORAL EXPERIENCE 

 

ARGENTINA NISCOVOLOS, Mr. L.P. Trade in Services 

MAKUC, Mr. A. Trade in Goods and Services 

PÉREZ GABILONDO, Mr. J.L. Trade in Goods; TRIPS 

RUIZ, Mr. J.A. Trade in Goods and Services 

 

AUSTRALIA ARNOTT, Mr. R.J. Trade in Goods 

 CHESTER, Mr. D.O. TRIPS 

 CHURCHE, Mr. M. Trade in Goods 

 GASCOINE, Mr. D.F. Trade in Goods 

 HAWES, Mr. D.C. Trade in Goods and Services 

 HIRD, Miss J.M. Trade in Goods 

 HUSSIN, Mr. P.A. Trade in Goods 

 KENYON, Mr. D. Trade in Goods and Services 

 MAY, Mr. P.H. Trade in Goods 

 O'CONNOR, Mr. P.R. Trade in Goods 

 SMITH, Mr. P.A. TRIPS 

 THOMSON, Mr. G.A. Trade in Goods and Services 

 WAINCYMER, Mr. J. Trade in Goods 

 YOUNG, Ms. E. Trade in Goods 

 

BRAZIL ABREU, Mr. M. Trade in Goods and Services 

ARAUJO, Mr. J.T. Trade in Goods 

BARRAL, Mr. W.O. Trade in Goods 

BASSO, Ms. M. Trade in Goods; TRIPS 

LEMME, Ms. M.C. Trade in Goods 

MAGALHÃES, Mr. J.C. Trade in Goods 

MARCONINI, Mr. M. Trade in Services 

MOTTA VEIGA, Mr. P.L.C. Trade in Goods and Services 

MOURA ROCHA, Mr. B. Trade in Services 

NAIDIN, Ms. L.C. Trade in Goods 

OLIVEIRA FILHO, Mr. G.J. Trade in Goods 

RIOS, Ms. S.M. Trade in Goods 

SOARES, Mr. G.F. TRIPS 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

BRAZIL (cont'd) THORSTENSEN, Ms. V.H. Trade in Goods 

 

CANADA BERNIER, Mr. I. Trade in Goods and Services 

 BRADFORD, Mr. M.V.M. Trade in Goods and Services 

 BROWN, Ms. C.A. Trade in Goods and Services; TRIPS 

 CLARK, Mr. P.J. Trade in Goods and Services 

 CLOSE, Ms. P. Trade in Goods 

 DE MESTRAL, Mr. A. Trade in Goods 

 EYTON, Mr. A.T. Trade in Goods 

 GHERSON, Mr. R. Trade in Goods 

 GOODWIN, Ms. K.M. Trade in Goods and Services; TRIPS 

 HALLIDAY, Mr. A.L. Trade in Goods and Services 

 HERMAN, Mr. L.L. Trade in Goods 

 HINES, Mr. W.R. Trade in Goods 

 MACMILLAN, Ms. K.E. Trade in Goods 

MCRAE, Mr. D. Trade in Goods 

 OSTRY, Ms. S. Trade in Goods 

 RICHIE, Mr. G. Trade in Goods 

 THOMAS, Mr. J.C. Trade in Goods and Services 

WINHAM, Mr. M.M. Trade in Goods 

 

CHILE BIGGS, Mr. G. Trade in Goods 

 JARA, Mr. A. Trade in Goods and Services 

 MATUS, Mr. M. Trade in Goods 

 PEÑA, Ms. G. Trade in Goods 

 SAEZ, Mr. S. Trade in Goods and Services 

 SATELER, Mr. R. TRIPS 

 TIRONI, Mr. E. Trade in Goods 

 

COLOMBIA BARBERI, Mr. F. Trade in Goods 

 CÁRDENAS, Mr. M.J. Trade in Goods and Services; TRIPS 

 IBARRA PARDO, Mr. G. Trade in Goods 

 JARAMILLO, Mr. F. Trade in Goods and Services 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

COLOMBIA (cont'd) LEAL ANGARITA, Mr. M. Trade in Goods and Services 

 OROZCO, Ms. A.M. Trade in Goods 

 OROZCO JARAMILLO, Ms. C.Y. Trade in Goods 

 

CÔTE D'IVOIRE GOSSET, Mme. M. Trade in Goods; TRIPS 

 

CROATIA ŠARČEVIĆ, Mr. P Trade in Goods and Services 

 

CUBA CABALLERO RODRÍGUEZ, Mr. E. Trade in Goods and Services 

HERNÁNDEZ, Mr. A. Trade in Goods and Services 

MARZIOTA DELGADO, Mr. E.A Trade in Goods and Services 

 

CZECH REP. JUNG, Mr. Z. Trade in Goods and Services 

PALEĈKA, Mr. P. Trade in Goods and Services 

 PRAVDA, Mr. M. Trade in Goods 

 ŠRONĔK, Mr. I. TRIPS 

 

ECUADOR PINOARGOTE CEVALLOS, Mr. A. Trade in Goods 

 

EGYPT ABOUL-ENEIN, Mr. M.I.M. Trade in Goods and Services 

 HATEM, Mr. S.A. Trade in Goods and Services 

 RIAD, Mr. T.F. Trade in Goods and Services; TRIPS 

 SHAHIN, Ms. M. Trade in Goods and Services; TRIPS 

 SHARAFELDIN, Mr. A. Trade in Goods; TRIPS 

 ZAHRAN, Mr. M.M. Trade in Goods and Services; TRIPS 

 

EUROPEAN COMMUNITIES 

 AUSTRIA BENEDEK, Mr. W. Trade in Goods 

 MARTINS, Mr. R. Trade in Goods 

 REITERER, Mr. M.G.K. Trade in Goods and Services; TRIPS 

 WAAS, Mr. G. Trade in Goods and Services; TRIPS 

 WEISS, Mr. J.F. Trade in Goods and Services; TRIPS 

 ZEHETNER, Mr. F. Trade in Goods 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

EUROPEAN COMMUNITIES 

(cont'd)

 

 BELGIUM DASSESSE, Mr. M.P.A. Trade in Goods and Services 

 DIDIER, Mr. P. Trade in Goods 

 VAN DER BORGHT, Mr. K. Trade in Goods 

 VANDER SCHUEREN, Ms. P. Trade in Goods and Services 

 ZONNEKEYN, Mr. G.A. Trade in Goods 

 

 DENMARK BOESGAARD, Mr. H. Trade in Goods 

 

 FINLAND BERGHOLM, Mr. K.A. Trade in Goods 

 JULIN, Mr. J.K.J. Trade in Goods and Services 

 LUOTONEN, Mr. Y.K.D. Trade in Goods 

 PULLINEN, Mr. M.Y. Trade in Goods 

 RANTANEN, Mr. P.I. Trade in Goods 

 

 FRANCE ARMAIGNAC, Ms. M.-C. Trade in Services; TRIPS 

 BEAURAIN, Mr. C. Trade in Services 

 COMBALDIEU, Mr. J.C. TRIPS 

 DELLEUR, Mr. P. Trade in Services 

 JENNY, Mr. F.Y. Trade in Goods and Services; TRIPS 

 METZGER, Mr. J-M. Trade in Goods 

 PHAN VAN PHI, Mr. R. Trade in Goods 

 STERN, Mme. B. Trade in Goods and Services 

 

 GERMANY BARTH, Mr. D. Trade in Services 

 BARTKOWSKI, Mr. D.H.H. Trade in Services 

 DELBRÜCK, Mr. K. Trade in Goods 

HILF, Mr. M. Trade in Goods and Services 

MENG, Mr. W. Trade in Goods, TRIPS 

MÖHLER, Mr. R. Trade in Goods 

 von MÜHLENDAHL, Mr. A. TRIPS 

 OPPERMANN, Mr. T. Trade in Goods; TRIPS 

 PETERSMANN, Mr. E-U Trade in Goods and Services; TRIPS 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

EUROPEAN COMMUNITIES 

(cont'd)

 

GERMANY (cont'd) TANGERMANN, Mr. S. Trade in Goods 

WITT, Mr. P.J. Trade in Goods 

 

 GREECE MYROGIANNIS, Mr. G. Trade in Goods 

 STANGOS, Mr. P.N. Trade in Goods and Services; TRIPS 

 

 IRELAND LONG, Mr. R. Trade in Goods; TRIPS 

 MATTHEWS, Mr. A.H. Trade in Goods 

 MOCKLER, Mr. T.F. Trade in Goods 

 

 ITALY GERBINO, Mr. M. Trade in Goods 

 GIARDINA, Mr. A. Trade in Goods and Services 

 SCHIRATTI, Mr. G. Trade in Goods 

 

 NETHERLANDS BLOKKER, Mr. N.M. Trade in Goods 

BRONCKERS, Mr. M. Trade in Goods and Services; TRIPS 

ENGERING, Mr. F.A. Trade in Goods and Services 

 HOEKMAN, Mr. B.M. Trade in Goods and Services; TRIPS 

 van de LOCHT, Mr. P. Trade in Goods and Services 

 

 SPAIN CASTILLO URRUTIA, Mr. J.A. Trade in Goods 

DÍAZ MIER, Mr. M.Á. Trade in Services 

 LÓPEZ DE SILANES MARTÍNEZ 

Mr. J.P. 

Trade in Goods and Services 

 

 SWEDEN ANDERSSON, Mr. T.M. Trade in Goods 

 ANELL, Mr. L. Trade in Goods; TRIPS 

 FALLENIUS, Mr. C.H. Trade in Goods 

 HÅKANSSON, Mr. G.P.-O. Trade in Services 

HOLGERSSON, Mr. J. Trade in Goods and Services 

KLEEN, Mr. P. Trade in Goods 

 LINDSTRÖM, Mr. J.M. Trade in Goods 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

EUROPEAN COMMUNITIES 

(cont'd)

 

 SWEDEN (cont'd) MANHUSEN, Mr. C. Trade in Goods and Services 

 RISINGGÅRD, Mr. A.B. Trade in Goods 

 RODIN, Mr. A. Trade in Goods; TRIPS 

 STÅLBERG, Mr. L.A. Trade in Goods 

 

 UNITED KINGDOM ARKELL, Mr. J. Trade in Services 

 CROFT, Mr. R.H.F. Trade in Services 

 HINDLEY, Mr. B.V. Trade in Goods and Services 

 JOHNSON, Mr. M.D.C. Trade in Goods 

MUIR, Mr. T. Trade in Goods and Services; TRIPS 

 PLENDER, Mr. R. Trade in Goods 

 QURESHI, Mr. A.H. Trade in Goods 

ROBERTS, Mr. C.W. Trade in Goods and Services 

TOULMIN, Mr. J.K. Trade in Services 

 

HONG KONG, CHINA CARTLAND, Mr. M.D. Trade in Goods and Services 

CHEUNG, Mr. P.K.F. TRIPS 

 LEUNG, Ms. A.K.L. TRIPS 

 LITTLE, Mr. D. Trade in Goods and Services 

 MILLER, Mr. J.A. Trade in Goods and Services 

 SELBY, Mr. S.R. TRIPS 

 

HUNGARY FURULYÁS, Mr. F. Trade in Goods 

 LAKATOS, Mr. A. Trade in Goods and Services 

 

ICELAND BJÖRGVINSSON, Mr. D.T. Trade in Goods and Services 

 JÓHANNSSON, Mr. E.M. Trade in Goods 

 SANDHOLT, Mr. B. Trade in Goods 

 

INDIA AGARWAL, Mr. V.K. Trade in Goods; TRIPS 

AGRAWAL, Mr. R.P. Trade in Goods and Services; TRIPS 

BHATTACHARYA, Mr. G.C. Trade in Goods 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

INDIA (cont'd) CHANDRASEKHAR, Mr. K.M Trade in Goods and Services; TRIPS 

 CHAUDHURI, Mr. S. Trade in Goods and Services; TRIPS 

 DAS, Mr. B.L. Trade in Goods 

DASGUPTA, Mr. J. Trade in Goods 

 GOYAL, Mr. A. Trade in Services 

 KAUSHIK, Mr. A. Trade in Goods; TRIPS 

 KUMAR, Mr. M. Trade in Goods and Services 

 MOHANTY, Mr. P.K. Trade in Goods 

MUKERJI, Mr. A. Trade in Goods and Services; TRIPS 

 NARAYANAN, Mr. S. Trade in Goods; TRIPS 

 PRABHU, Mr. P.P. Trade in Goods; TRIPS 

 PRASAD, Ms. A. Trade in Goods and Services; TRIPS 

RAI, Mr. P. TRIPS 

 RAMAKRISHNAN, Mr. N. Trade in Goods 

RAO, Mr. P.S. Trade in Goods 

REGE, Mr. N.V. Trade in Goods 

 SAJJANHAR, Mr. A. Trade in Goods 

SHARMA, Mr. L. Trade in Goods and Services; TRIPS 

VENUGOPAL, Mr. K. Trade in Goods; TRIPS 

WATAL, Mrs. J. TRIPS 

 ZUTSHI, Mr. B.K. Trade in Goods and Services; TRIPS 

 

ISRAEL ALTUVIA, Mr. M. Trade in Goods 

 GABAY, Mr. M. TRIPS 

 HARAN, Mr. E.F. Trade in Services 

 HOROVITZ, Mr. D. Trade in Goods and Services 

 POLINER, Mr. H.Z. TRIPS 

 SEMADAR, Mr. M. Trade in Goods 

 SHATON, Mr. M. Trade in Goods and Services 

 TALBAR, Mr. M.A. Trade in Goods 

 WEILER, Mr. J. Trade in Goods 

 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

JAPAN ARAKI, Mr. I Trade in Goods and Services; TRIPS 

 ASAKURA, Mr. H. Trade in Goods 

 ISHIGURO, Mr. K. Trade in Goods and Services; TRIPS 

 IWASAWA, Mr. Y. Trade in Goods 

 KANDA, Mr. H. Trade in Services 

 KEMMOCHI, Mr. N. Trade in Goods and Services 

 KOTERA, Mr. A. Trade in Goods and Services 

 OHARA, Mr. Y. Trade in Goods; TRIPS 

SHIMIZU, Mr. A. Trade in Goods 

 TAKASE, Mr. T. Trade in Goods and Services 

TSURUOKA, Mr. K. Trade in Services 

 

KOREA CHANG, Mr. S.W. Trade in Goods 

 CHO, Mr. D.Y. Trade in Goods and Services 

 CHO, Mr. T-U Trade in Goods 

 CHOI, Mr. B.I. Trade in Services 

 KIM, Mr. J.B. Trade in Goods 

 LEE, Mr. J. Trade in Goods 

PARK, Mr. N. Trade in Goods 

 YUN, Mr. Y. G. Trade in Goods 

 

MADAGASCAR ANDRIANARIVONY, Mr. M. Trade in Goods and Services; TRIPS 

 

MAURITIUS BEEKARRY, Mr. N. Trade in Goods and Services 

 BHUGLAH, Mr. A. Trade in Goods and Services 

 

MEXICO AGUILAR ÁLVAREZ, Mr. G. Trade in Goods and Services; TRIPS 

AMIGO CASTAÑEDA, Mr. J. TRIPS 

DE MATEO VENTURINI, Mr. F. Trade in Services 

JASSO TORRES, Mr. H. Trade in Goods 

ORTEGA GÓMEZ, Mr. A. Trade in Goods and Services; TRIPS 

PEREZCANO DÍAZ, Mr. H. Trade in Goods and Services; TRIPS 

RAMÍREZ HERNÁNDEZ, Mr. R. Trade in Goods and Services 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

MEXICO (cont'd) REYES, Ms. L.H. Trade in Goods 

TRASLOSHEROS HERNÁNDEZ, 

Mr. J.G. 

Trade in Goods and Services; TRIPS 

ZABLUDOVSKY KUPER, Mr. J. Trade in Goods and Services; TRIPS 

NEW ZEALAND ARMSTRONG, Mr. W.M.V. Trade in Goods; TRIPS 

CARSON, Mr. C.B. Trade in Goods 

 FALCONER, Mr. C.D. Trade in Goods 

 FALCONER, Mr. W.J. Trade in Goods and Services; TRIPS 

 FARRELL, Mr. R. Trade in Goods 

 GROSER, Mr. T. Trade in Goods 

 HAMILTON, Mr. P.W Trade in Goods 

 HARVEY, Mr. M.W. Trade in Goods 

 HIGGIE, Ms. D.C. Trade in Goods 

 KENNEDY, Mr. P.D. Trade in Goods 

 MACEY, Mr. A. Trade in Goods; TRIPS 

 MCPHAIL, Mr. A.H. Trade in Goods 

 NOTTAGE, Mr. M.J. Trade in Goods 

 SLADE, Ms. M. Trade in Goods and Services; TRIPS 

 TRAINOR, Mr. M.J. Trade in Goods; TRIPS 

 WALKER, Mr. D.J. Trade in Goods and Services 

 WOODFIELD, Mr. E.A. Trade in Goods 

 

NIGER TANKOANO, Mr. A. Trade in Goods and Services; TRIPS 

 

NORWAY LILLERUD, Mr. K. Trade in Goods 

 LUNDBY, Mr. O. Trade in Goods and Services; TRIPS 

 SELAND, Mr. H.A. Trade in Goods and Services; TRIPS 

 TØNSETH, Mr. D. Trade in Goods and Services; TRIPS 

 

PAKISTAN NAYYAR, Mr. S.I.M. Trade in Goods; TRIPS 

 

PANAMA FRANCIS LANUZA, Ms. Y. Trade in Goods and Services 

GONZALEZ, Mr. C.E. Trade in Goods and Services 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

PANAMA (cont'd) HARRIS ROTKIN, Mr. N. Trade in Goods and Services 

SALAZAR FONG, Ms. D. Trade in Goods 

 

PERU DIEZ LIZARDO, Mr. J. Trade in Goods 

 

POLAND PIETRAS, Mr. J. Trade in Services 

 

QATAR MAKKI, Mr. F. Trade in Goods and Services 

 

SRI LANKA JAYASEKERA, Mr. D. Trade in Goods; TRIPS 

 

SWITZERLAND ADDOR, Mr. F. TRIPS 

 BREINING, Ms. Ch. Trade in Services 

CHAMBOVEY, Mr. D. Trade in Goods 

 COTTIER, Mr. Th. Trade in Goods and Services; TRIPS 

GETAZ, Mr. H.A. Trade in Services 

 HÄBERLI, Mr. C Trade in Goods 

INEICHEN-FLEISCH, Ms. M.-G. Trade in Goods and Services 

 KRAFFT, Mr. M-C. Trade in Goods 

TSCHÄNI, Mr. H. Trade in Goods 

WASESCHA, Mr. L. Trade in Goods and Services; TRIPS 

 WEBER, Mr. R. Trade in Services 

 

TURKEY KAÇAR, Mr. B. Trade in Goods 

 

UNITED STATES BIRENBAUM, Mr. D.E. Trade in Goods 

BROWN-WEISS, Ms. E. Trade in Goods and Services 

GANTZ, Mr. D. Trade in Goods 

 GORDON, Mr. M.W. Trade in Goods 

GREENWALD, Mr. J.A. Trade in Goods; TRIPS 

HELFER, Ms. R.T. Trade in Services 

 HUDEC, Mr. R.E. Trade in Goods and Services 

KASSINGER, Mr. T.W. Trade in Goods and Services 

 

 
 

COUNTRY NAME SECTORAL EXPERIENCE 

UNITED STATES (cont'd) KIRK, Mr. M.K. TRIPS 

LAYTON, Mr. D. Trade in Goods 

 LICHTENSTEIN, Ms. C.C. Trade in Services 

 McGINNIS, Mr. J. Trade in Goods; TRIPS 

PARTAN, Mr. D.G. Trade in Goods 

REYNA, Mr. J.V. Trade in Goods and Services 

 SHERMAN, Mr. S. Trade in Goods 

 VERRILL, Jr. Mr. C.O. Trade in Goods 

 

URUGUAY AMORÍN, Mr. C. Trade in Goods; TRIPS 

 ROSSELLI, Mr. A.O. Trade in Goods 

 VANERIO, Mr. G. Trade in Goods and Services 

 WHITELAW, Mr. J.A. Trade in Goods 

 

VENEZUELA ESCOBAR, Mr. J.B. Trade in Services 

 MARQUEZ, Mr. G. Trade in Services 

 
 

ANNEX 

Administration of the Indicative List

To assist in the selection of panelists, the DSU provides in Article 8.4 that the Secretariat shall 

maintain an indicative list of qualified governmental and non-governmental individuals. Accordingly, 

the Chairman of the DSB proposed at the 10 February meeting that WTO Members review the roster 

of non-governmental panelists established on 30 November 1984 (BISD 31S/9) (hereinafter referred to 

as the “1984 GATT Roster”) and submit nominations for the indicative list by mid-June 1995. On 

14 March, The United States delegation submitted an informal paper discussing, amongst other issues, 

what information should accompany the nomination of individuals, and how names might be removed 

from the list. The DSB further discussed the matter in informal consultations on 15 and 24 March, and 

at the DSB meeting on 29 March. This note puts forward some proposals for the administration of the 

indicative list, based on the previous discussions in the DSB. 

General DSU requirements

2. The DSU requires that the indicative list initially include “the roster of governmental and nongovernmental panelists established on 30 November 1984 (BISD 31S/9) and other rosters and indicative lists 

established under any of the covered agreements, and shall retain names of persons on those rosters and indicative 

lists at the time of entry into force of the WTO Agreement” (DSU 8.4). Additions to the indicative list are to be 

made by Members who may “periodically suggest names of governmental and non-governmental individuals for 

inclusion on the indicative list, providing relevant information on their knowledge of international trade and of the 

sectors or subject matter of the covered agreements.” The names “shall be added to the list upon approval by the 

DSB” (DSU 8.4). 

Submission of information

3. As a minimum, the information to be submitted regarding each nomination should clearly reflect the 

requirements of the DSU. These provide that the list “shall indicate specific areas of experience or expertise of the 

individuals in the sectors or subject matter of the covered agreements” (DSU 8.4). The DSU also requires that 

panelists be “well-qualified governmental and/or non-governmental individuals, including persons who have 

served on or presented a case to a panel, served as a representative of a Member or of a contracting party to GATT 

1947 or as a representative to the Council or Committee of any covered agreement or its predecessor agreement, or 

in the Secretariat, taught or published on international trade law or policy, or served as a senior trade policy official 

of a Member” (DSU 8.1). 

4. The basic information required for the indicative list could best be collected by use of a standardized 

form. Such a form, which could be called a Summary Curriculum Vitae, would be filled out by all nominees to 

ensure that relevant information is obtained. This would also permit information on the indicative list to be stored 

in an electronic database, making the list easily updateable and readily available to Members and the Secretariat. 

As well as supplying a completed Summary Curriculum Vitae form, persons proposed for inclusion on the 

indicative list could also, if they wished, supply a full Curriculum Vitae. This would not, however, be entered into 

the electronic part of the database. 

Updating of indicative list

5. The DSU does not specifically provide for the regular updating of the indicative list. In order to maintain 

the credibility of the list, it should however be completely updated every two years. Within the first month of each 

two-year period, Members would forward updated Curricula Vitae of persons appearing on the indicative list. At 

any time, Members would be free to modify the indicative list by proposing new names for inclusion, or 

specifically requesting removal of names of persons proposed by the Member who were no longer in a position to 

serve, or by updating the summary Curriculum Vitae. 

6. Names on the 1984 GATT Roster that are not specifically resubmitted, together with up-to-date summary 

Curriculum Vitae, by a Member before 31 July 1995 would not appear after that date on the indicative list. 

Other rosters
 

7. The Decision on Certain Dispute Settlement Procedures for the GATS (S/L/2 of 4 April 1995), adopted 

by the Council for Trade in Services on 1 March 1995, provides for a special roster of panelists with sectoral 

expertise. It states that "panels for disputes regarding sectoral matters shall have the necessary expertise relevant to 

the specific services sectors which the dispute concerns." It directs the Secretariat to maintain the roster and 

"develop procedures for its administration in consultation with the Chairman of the Council." A working 

document (S/C/W/1 of 15 February 1995) noted by the Council for Trade in Services states that “the roster to be 

established under the GATS pursuant to this Decision would form part of the indicative list referred to in the 

DSU.” The specialized roster of panelists under the GATS should therefore be integrated into the indicative list, 

taking care that the latter provides for a mention of any service sectoral expertise of persons on the list. 

8. A suggested format for the Summary Curriculum Vitae form for the purposes of maintaining the 

Indicative List is attached as an Annex. 
 

Summary Curriculum Vitae 

for Persons Proposed for the Indicative List 

1. Name: full name 

2. Sectoral Experience 

List here any particular sectors of expertise: (e.g. 

technical barriers, dumping, financial services, 

intellectual property, etc.) 

3. Nationality(ies) all citizenships 

4. Nominating Member: the nominating Member 

5. Date of birth: full date of birth 

6. Current occupations: year beginning, employer, title, 

responsibilities 

7. Post-secondary education year, degree, name of institution 

8. Professional qualifications year, title 

9. Trade-related experience in Geneva in 

the WTO/GATT system 

a. Served as a panelist 

b. Presented a case to a panel 

c. Served as a representative of a contracting party or 

member to a WTO or GATT body, or as an officer 

thereof 

d. Worked for the WTO or GATT Secretariat 

year, dispute name, role as 

chairperson/member 

year, dispute name, representing 

which party 

year, body, role 

year, title, activity 

10. Other trade-related experience 

a. Government trade work 

b. Private sector trade work 

year, employer, activity 

year, employer, activity 

11. Teaching and publications 

a. Teaching in trade law and policy 

b. Publications in trade law and policy 

year, institution, course title 

year, title, name of periodical/book, 

author/editor (if book) 

__________ 
WORLD TRADE

ORGANIZATION

WT/DSB/33/Add.1 

27 May 2004 

(04-2281) 

INDICATIVE LIST OF GOVERNMENTAL AND 

NON-GOVERNMENTAL PANELISTS 

Addendum

 At its meetings on 18 March, 15 April, 24 June, 21 July and 29 August 2003 as well as on 17 February, 

20 April and 19 May 2004, the Dispute Settlement Body approved the following names for inclusion on the 

Indicative List of Governmental and Non-Governmental Panelists.1

MEMBER NAME SECTORAL EXPERIENCE 

 

BRAZIL BARTHEL-ROSA, Mr. P. Trade in Goods 

 

BOLIVIA ZELADA CASTEDO, Mr. A. Trade in Goods 

 

CHINA ZENG, Mr. L. Trade in Goods 

 ZHANG, Mr. Y. Trade in Goods; TRIPS 

 ZHU, Ms. L. Trade in Services; TRIPS 

 

EUROPEAN COMMUNITIES 

 SWEDEN AHNLID, Mr. A.G. Trade in Goods and Services; TRIPS 

BÄVERBRANT, Mr. J.C. Trade in Goods and Services; TRIPS 

BECKER, Ms G.M. Trade in Goods and Services; TRIPS 

DAHLIN, Ms K.E. Trade in Goods and Services; TRIPS 

OLOFSGÅRD, Ms E.-K. Trade in Goods and Services; TRIPS 

RAHLEN, Ms Ch. Trade in Goods and Services; TRIPS 

TAURIAINEN, Mr. T.M. Trade in Goods and Services; TRIPS 

 

 UNITED KINGDOM ROBERTS, Mr. D.F. Trade in Goods 

 

LIECHTENSTEIN Ziegler, Mr. A.R. Trade in Services; TRIPS 

 1

 WT/DSB/33. 
 

MEMBER NAME SECTORAL EXPERIENCE 

 

PERU Belaúnde G., Mr. V.A. TRIPS 

 

SWITZERLAND PANNATIER, Mr. S.N. Trade in Goods 

 

THE SEPARATE CUSTOMS 

TERRITORY OF TAIWAN, 

PENGHU, KINMEN AND 

MATSU 

LO, Mr. C.F. 

YANG, Ms G.H. 

Trade in Goods and Services 

Trade in Goods and Services 

 

__________ 
WORLD TRADE

ORGANIZATION

WT/DSB/W/264 

20 August 2004 

(04-3501) 

Dispute Settlement Body 

31 August 2004 

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF 

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS 

 The following additional name has been proposed for inclusion on the Indicative List of Governmental 

and Non-Governmental Panelists in accordance with Article 8.4 of the DSU.1

_______________ 

NOMINATING MEMBER NAME SECTORAL EXPERIENCE 

 

EUROPEAN COMMUNITIES 

 PORTUGAL CALHERIOS DA GAMA, Mr. J.S. TRIPS 

 

__________

 1

Curricula Vitae containing more detailed information is available on request from the WTO 

Secretariat (Council and Trade Negotiations Committee Division – Room 3105). 
WORLD TRADE

ORGANIZATION

WT/DSB/W/266 

17 September 2004 

(04-3919) 

Dispute Settlement Body 

27 September 2004 

PROPOSED NOMINATIONS FOR THE INDICATIVE LIST OF 

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS 

 The following additional names have been proposed for inclusion on the Indicative List of 

Governmental and Non-Governmental Panelists, in accordance with Article 8.4 of the DSU.1

_______________ 

NOMINATING MEMBER NAME SECTORAL EXPERIENCE 

 

NIGERIA NNONA, Mr. G.C. Trade in Goods and Services; TRIPS 

 

VENEZUELA ROJAS PENSO, Mr. J.F. Trade in Goods and Services 

 

__________

 1

Curricula Vitae containing more detailed information are available on request from the WTO 

Secretariat (Council and Trade Negotiations Committee Division – Room 3105). 
WORLD TRADE

ORGANIZATION

WT/DSB/W/270 

11 November 2004 

(04-4808) 

Dispute Settlement Body 

24 November 2004 

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF 

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS 

 The following additional name has been proposed for inclusion on the Indicative List of Governmental 

and Non-Governmental Panelists in accordance with Article 8.4 of the DSU.1

_______________ 

NOMINATING MEMBER NAME SECTORAL EXPERIENCE 

 

URUGUAY CAYRÚS MAURÍN, Mr. H. Trade in Goods and Services 

 

__________

 1

Curriculum Vitae containing more detailed information is available on request from the WTO 

Secretariat (Council and Trade Negotiations Committee Division – Room 3105). 
 

WORLD TRADE

ORGANIZATION

WT/DSB/W/272 

7 December 2004 

(04-5369) 

Dispute Settlement Body 

17 December 2004 

PROPOSED NOMINATIONS FOR THE INDICATIVE LIST OF 

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS 

 The following additional names have been proposed for inclusion on the Indicative List of Governmental 

and Non-Governmental Panelists, in accordance with Article 8.4 of the DSU.14

_______________ 

NOMINATING MEMBER NAME SECTORAL EXPERIENCE 

 

NEPAL SUBEDI, Mr. S.P. 

PANDEY, Mr. P.R. 

Trade in Goods and Services; TRIPS 

Trade in Goods and Services 

__________ 

 14Curricula Vitae containing more detailed information are available on request from the WTO Secretariat 

(Council and Trade Negotiations Committee Division – Room 3105). 
 

MEMBERSHIP OF THE WTO APPELLATE BODY 

The membership of the WTO Appellate Body is as follows: 

Mr. G M Abi-Saab (Egypt), Professor Luiz Olavo Baptisa (Brazil), 

Mr. A V Ganesan (India), Mr. John S. Lockhart (Australia), 

Professor Merit E. Janow (United States), Professor Giorgio Sacerdoti (Italy), 

Mr. Yasuhei Taniguchi (Japan) 

 

BIOGRAPHICAL NOTES: 

Georges Michel Abi-Saab 

Born in Egypt on 9 June 1933, Georges Michel Abi-Saab is Honorary Professor of International Law at the Graduate 

Institute of International Studies in Geneva (having taught there from 1963 to 2000); Honorary Professor at Cairo 

University’s Faculty of Law; and a Member of the Institute of International Law. 

Professor Abi-Saab served as consultant to the Secretary-General of the United Nations for the preparation of two 

reports on “Respect of Human Rights in Armed Conflicts” (1969 and 1970), and for the report on “Progressive 

Development of Principles and Norms of International Law Relating to the New International Economic Order” 

(1984). He represented Egypt in the Diplomatic Conference on the Reaffirmation and Development of International 

Humanitarian Law (1974 to 1977), and acted as advocate and Counsel for several governments in cases before the 

International Court of Justice (ICJ) as well as in international arbitrations. He has also served twice as judge ad hoc 

on the ICJ and as Judge on the Appeals Chamber of the International Criminal Tribunals for the Former Yugoslavia 

and for Rwanda. He is a Commissioner of the United Nations Compensation Commission and a Member of the 

Administrative Tribunal of the International Monetary Fund and of various international arbitral tribunals. 

Professor Abi-Saab is the author of numerous books and articles, including “Les exceptions préliminaires dans la 

procédure de la Cour internationale: Etude des notions fondamentales de procédure et des moyens de leur mise en 

oeuvre” (Paris, Pedone, 1967); “International Crises and the Role of Law: The United Nations Operation in Congo 

1960-1964” (Oxford University Press, 1978); “The Concept of International Organization” (as editor) (Paris, 

UNESCO, 1981; French edition, 1980); and of two courses at the Hague Academy of International Law: “Wars of 

National Liberation in the Geneva Conventions and Protocols” (Recueil des cours, vol. 165 (1979-IV)) and the 

“General Course of Public International Law”(in French) (Recueil des cours, vol. 207 (1987-VII)). 

 

Luiz Olavo Baptista 

 

Born in Brazil in 1938, Luiz Olavo Baptista is currently Professor of International Trade Law at the University of 

São Paulo Law School. 

He has been a Member of the Permanent Court of Arbitration at The Hague since 1996, and of the International 

Chambre of Commerce (ICC) Institute for International Trade Practices and of its Commission on Trade and 

Investment Policy, since 1999. In addition, he has been one of the arbitrators designated under Mercosur's Protocol 

of Brasilia since 1993. 

Professor Baptista is also senior partner at the L.O. Baptista Law Firm, in São Paulo, Brazil, where he concentrates 

his practice on corporate law, arbitration and international litigation. He has been practicing law for almost 40 years 

advising governments, international organizations and large corporations in Brazil and in other jurisdictions. 

Professor Baptista has been an arbitrator at the United Nations Compensation Commission (E4A Panel) in several 

private commercial disputes and State-investor proceedings, as well as in disputes under Mercosur's Protocol of 

Brasilia. In addition, he has participated as a legal advisor in diverse projects sponsored by the World Bank, the 

United Nations Conference on Trade and Development (UNCTAD), the United Nations Center on Transnational 

Corporations (UNCTC), and the United Nations Development Programme (UNDP). 

He obtained his law degree from the Catholic University of São Paulo, pursued post-graduate studies at Columbia 
 

University Law School and The Hague Academy of International Law, and received a Ph.D in International Law 

from the University of Paris II. He was Visiting Professor at the University of Michigan (Ann Arbor) in 1978-1979, 

and at the University of Paris I and the University of Paris X between 1996 and 2000. Professor Baptista has 

published extensively on various issues in Brazil and abroad. 

 

Arumugamangalam Venkatachalam Ganesan 

 

Born in Tirunelveli, Tamil Nadu, India on 7 June 1935, Arumugamangalam Venkatachalam Ganesan was a 

distinguished civil servant of India. He was appointed to the Indian Administrative Service, a premier civil service 

of India in May 1959, and served in that service until June 1993. In a career spanning over 34 years, he has held a 

number of high level assignments, including Joint Secretary (Investment), Department of Economic Affairs, 

Government of India (1977-1980); Inter-Regional Adviser, United Nations Centre on Transnational Corporations 

(UNCTC), United Nations Headquarters, New York (1980-1985); Additional Secretary, Department of Industrial 

Development, Government of India (1986-1989); Chief Negotiator of India for the Uruguay Round of Multilateral 

Trade Negotiations and Special Secretary, Ministry of Commerce, Government of India (1989-1990); Civil Aviation 

Secretary of the Government of India (1990-1991); and Commerce Secretary of the Government of India (1991-

1993). He represented India on numerous occasions in bilateral, regional and multilateral negotiations in the areas of 

international trade, investment and intellectual property rights. Between 1989 and 1993, he represented India at the 

various stages of the Uruguay Round of Multilateral Trade Negotiations. 

After his retirement from civil service, Mr. Ganesan served as an expert and consultant to various agencies of the 

United Nations system, including the United Nations Conference on Trade and Development (UNCTAD), the 

United Nations Industrial Development Organization (UNIDO) and the United Nations Development Programme 

(UNDP), in the field of international trade, investment and intellectual property rights. He has also spoken 

extensively to the business, managerial, scientific and academic communities in India on the scope and substance of 

the Uruguay Round negotiations and Agreements and their implications. Until his appointment to the Appellate 

Body of the WTO in 2000, he was a Member of the Government of India’s High Level Trade Advisory Committee 

on Multilateral Trade Negotiations. He was also a Member of the Permanent Group of Experts under the WTO 

Agreement on Subsidies and Countervailing Measures, and a Member of a Dispute Settlement Panel of the WTO in 

1999-2000 in the United States — Section 110(5) of the US Copyright Act case. 

Mr. Ganesan has written numerous newspaper articles and monographs dealing with various aspects of the Uruguay 

Round Agreements and their implications. He is also the author of many papers on trade, investment and intellectual 

property issues for UNCTAD and UNIDO, and has contributed to books published in India on matters concerning 

the Uruguay Round, including intellectual property right issues. Mr. Ganesan holds M.A and M.Sc degrees from the 

University of Madras, India. 

 

Merit E. Janow 

Born in the United States on 13 May 1958, Ms Merit E. Janow has been since 1994 Professor in the Practice of 

International Economic Law and International Affairs at the School of International and Public Affairs of Columbia 

University. She teaches advanced law courses in international trade and comparative antitrust law along with 

courses on international trade policy. 

Before joining Columbia's faculty in 1994, Ms Janow was Deputy Assistant US Trade Representative for Japan and 

China (1990-93), and worked as a corporate lawyer specializing in mergers and acquisitions with the law firm 

Skadden, Arps, Slate, Meagher & Flom in New York (1988-90). 

Ms Janow is the author of several books and has contributed chapters to more than a dozen books. She grew up in 

Tokyo, Japan, and speaks Japanese. Ms Janow served as a WTO panellist from September 2001 to May 2002 in the 

dispute European Communities — Trade Description of Sardines (WT/DS231). 

 

John S. Lockhart 
 

Born in Australia on 2 October 1935, John S. Lockhart was Executive Director at the Asian Development Bank in 

the Philippines (ADB) from July 1999 to 2002, working closely with developing member countries on the 

development of programmes directed to poverty alleviation through the promotion of economic growth. His other 

duties for the ADB included the development of law reform programmes and assisting in the provision of advice on 

legal questions, notably the interpretation of the ADB's Charter, international treaties and United Nations 

instruments. 

Prior to joining the ADB, Mr. Lockhart served as Judicial Reform Specialist at the World Bank focusing on 

strengthening legal and judicial institutions and working closely with developing countries and economies in 

transition in their projects of judicial and legal reform. 

Since graduating in arts and law from the University of Sydney in 1958, Mr. Lockhart's professional experience has 

included Judge, Federal Court of Australia (1978-1999); President of the Australian Competition Tribunal (1982-

1999); Deputy President of the Australian Copyright Tribunal (1981-1997); and Queen's Counsel, Australia and the 

United Kingdom Privy Council (1973-1978). He was appointed an Officer of the Order of Australia in 1994 for 

services to the law, education and the arts. 

 

Giorgio Sacerdoti 

Born on 2 March 1943, Giorgio Sacerdoti is Professor of International Law and European Law at Bocconi 

University, Milan, Italy, since 1986. 

Professor Sacerdoti has held various posts in the public sector including Vice-Chairman of the Organisation for 

Economic Cooperation and Development (OECD) Working Group on Bribery in International Business 

Transactions until 2001 where he was one of the drafters of the “Anticorruption Convention of 1997”. He has acted 

as consultant to the Council of Europe, the United Nations Conference on Trade and Development (UNCTAD) and 

the World Bank in matters related to foreign investments, trade, bribery, development and good governance. In the 

private sector, he has often served as arbitrator in international commercial disputes and at the International Centre 

for Settlement of Investment Disputes. Professor Sacerdoti has published extensively on international trade law, 

investments, international contracts and arbitration. 

After graduating from the University of Milan with a law degree summa cum laude in 1965, Professor Sacerdoti 

gained a Master in Comparative Law from Columbia University Law School as a Fulbright Fellow in 1967. He was 

admitted to the Milan bar in 1969 and to the Supreme Court of Italy in 1979. He is a Member of the Committee on 

International Trade Law of the International Law Association. 

 

Yasuhei Taniguchi 

Born in Japan on 26 December 1934, Yasuhei Taniguchi is currently Professor of law at Tokyo Keizai University, 

and Attorney at Law in Tokyo. He obtained a law degree from Kyoto University in 1957 and was fully qualified as a 

jurist in 1959. His graduate degrees include LL.M., University of California at Berkeley (1963) and J.S.D., Cornell 

University (1964). He taught at Kyoto University for 39 years and has been Professor Emeritus since 1998. He also 

has taught as Visiting Professor of Law in the United States (University of Michigan, University of California at 

Berkeley, Duke University, Stanford University, Georgetown University, Harvard University, New York University, 

and University of Richmond), in Australia (Murdoch University and University of Melbourne), at the University of 

Hong Kong and at the University of Paris XII. 

Professor Taniguchi is former president of the Japanese Association of Civil Procedure and currently vice-president 

of the International Association of Procedural Law. He is affiliated with various academic societies and arbitral 

organizations as arbitrator, including the International Council for Commercial Arbitration; the International Law 

Association; the American Law Institute; the Japan Commercial Arbitration Association; the Chartered Institute of 

Arbitrators; the American Arbitration Association; the Hong Kong International Arbitration Centre; the Chinese 

International Economic and Trade Arbitration Commission; the Korean Commercial Arbitration Board; and the 

Cairo Regional Centre of Commercial Arbitration. He has also been an active arbitrator in the International Chamber 
 

of Commerce (ICC) Court of International Arbitration. 

Professor Taniguchi has written numerous books and articles in the fields of civil procedure, arbitration, insolvency, 

the judicial system and legal profession, as well as comparative and international law related to these fields. His 

publications have been published in Japanese, Chinese, English, French, Italian, German, and Portuguese. 

Source: WTO Secretariat 
 

Where to Find More Information on the WTO 

Information about the WTO and trends in international trade is available to the public at the following websites: 

The USTR home page: http://www .ustr.gov

The WTO home page: http://www .wto.org

U.S. submissions are available electronically on the WTO website using Documents Online, which can retrieve an 

electronic copy by the “document symbol”. Electronic copies of U.S. submissions are also available at the USTR website. 

Examples of information available on the WTO home page include: 

Descriptions of the Structure and Operations of the WTO, such as:

• WTO Organizational Chart 

• Biographic backgrounds 

• Membership 

• General Council activities 

WTO News, such as:

• Status of dispute settlement cases 

• Press Releases on Appointments to WTO 

Bodies, Appellate Body Reports and Panel 

Reports, and others 

• Schedules of future WTO meetings 

• Summaries of Trade Policy Review 

Mechanism reports on individual Members’ 

trade practices 

Resources including Official Documents, such as:

• Notifications required by the Uruguay Round 

Agreements 

• Working Procedures for Appellate Review 

• Special Studies on key WTO issues 

• On-line document database where one can find 

and download official documents 

• Legal Texts of the W TO agreements 

• WTO Annual Reports 

Community/Forums, such as:

• Media and NGOs • General public news and chat rooms 

Trade Topics, such as:

• Briefing Papers on WTO activities in individual sectors, including goods, services, intellectual property, other 

topics 

• Disputes and Dispute Reports 

WTO publications may be ordered directly from the following sources: 

1. The World Trade Organization 

Publications Services 

Centre William Rappard 

Rue de Lausanne 154 

CH - 1211 Geneva 21 

Switzerland 

Tel: (41-22) 739 52 08 / 739 53 08 

Fax: (41-22) 739 57 92 

email: publications@wto.org 

2. Berman Associates 

4611-F Assembly Drive 

Lanham, MD 20706-4391 

Tel: 301/459-7666 

Toll Free: 800/274-4888 

fax: 301/459-0056 

Toll Free: 800/865-3450 

e-mail: query@bernan.com 

e-mail: order@bernan.com 
ANNEX III
 U.S. TRADE-RELATED AGREEMENTS

I. Agreements That Have Entered Into Force

Following is a list of trade agreements entered into by the United States since 1984 and monitored by the 

Office of the United States Trade Representative for compliance. 

Multilateral Agreements

< Marrakesh Agreement Establishing the World Trade Organization (signed April 15, 1994) and 

the Ministerial Decisions and Declarations adopted by the Uruguay Round Trade Negotiations 

Committee on December 15, 1993 

a. Multilateral Agreements on Trade in Goods 

i. General Agreement on Tariffs and Trade 1994 

ii. Agreement on Agriculture 

iii. Agreement on the Application of Sanitary and Phytosanitary Measures 

iv. Agreement on Textiles and Clothing1

v. Agreement on Technical Barriers to Trade 

vi. Agreement on Trade-Related Investment Measures 

vii. Agreement on Implementation of Article VI of the General Agreement on Tariffs 

and Trade 1994 

viii. Agreement on Implementation of Article VII of the General Agreement on 

Tariffs and Trade 1994 

ix. Agreement on Preshipment Inspection 

x. Agreement on Rules of Origin 

xi. Agreement on Import Licensing Procedures 

xii. Agreement on Subsidies and Countervailing Measures 

xiii. Agreement on Safeguards 

 xiv. Information Technology Agreement (ITA) (March 26, 1997) 

b. General Agreement on Trade in Services 

 i. Basic Telecommunications Services Agreement (February 15, 1997) 

 ii. Financial Services Agreement (March 1, 1999) 

c. Agreement on Trade-Related Aspects of Intellectual Property Rights 

 

 

1

 Members with whom the United States maintains bilateral quota arrangements under the provisions of the 

Agreement on Textiles and Clothing are: Bahrain, Bangladesh, Brazil, Bulgaria, Burma/Myanmar, Colombia, Costa 

Rica, Czech Republic, Dominican Republic, Egypt, El Salvador, Fiji, Guatemala, Hong Kong/China, Hungary, 

India, Indonesia, Jamaica, Kenya, Kuwait, Macau, Malaysia, Mauritius, Pakistan, Philippines, Poland, Qatar, 

Romania, Singapore, Slovak Republic, Sri Lanka, Thailand, Turkey, United Arab Emirates and Uruguay. 
d. Plurilateral Trade Agreements 

i. Agreement on Trade in Civil Aircraft (April 12, 1979; amended in 1986) 

ii. Agreement on Government Procurement (April 15, 1994) 

< International Tropical Timber Agreement (successor to the 1983 International Tropical Timber 

Agreement; signed January 26, 1994; entered into force January 1, 1997) 

< North American Free Trade Agreement (signed December 17, 1992; implementing legislation 

signed December 8, 1993) 

i. Agreement with Mexico and Canada to a first round of NAFTA Accelerated Tariff 

Elimination (March 26, 1997) 

ii. Agreement with Mexico and Canada to a second round of NAFTA Accelerated Tariff 

Elimination (July 27, 1998) 

iii. Agreement with Mexico and Canada to adjustments to the NAFTA Rules of Origin 

(November 27, 2002) 

iv. Agreement with Mexico and Canada to adjustments to the NAFTA Rules of Origin 

(October 8, 2004) 

< Agreement with Mexico to a third round of NAFTA Accelerated Tariff Elimination 

(November 29, 2000) 

< Agreement with Mexico to a fourth round of NAFTA Accelerated Tariff Elimination 

(December 5, 2001) 

< Joint Statement Concerning Semiconductors by the European Commission and the Governments 

of the United States, Japan, and Korea. (June 10, 1999) 

< Asia Pacific Economic Cooperation (APEC) Mutual Recognition Arrangement for Conformity 

Assessment of Telecommunication Agreement (June 5, 1998) 

< Agreement on Mutual Acceptance of Oenological Practices (December 18, 2001) 

Bilateral Agreements

Albania

< Agreement on Bilateral Trade Relations (May 14, 1992) 

< Bilateral Investment Treaty (January 4, 1998) 
Argentina

< Private Courier Mail Agreement (May 25, 1989) 

< Bilateral Investment Treaty (October 20, 1994) 

Armenia

< Agreement on Bilateral Trade Relations (April 7, 1992) 

< Bilateral Investment Treaty (March 29, 1996)

Australia

< Settlement on Leather Products Trade (November 25, 1996) 

< Understanding on Automotive Leather Subsidies (June 20, 2000) 

< U.S. Australia Agreement on the Establishment of a Free Trade Area (signed May 18, 2004; entry 

into force January 1, 2005)

Azerbaijan

< Agreement on Bilateral Trade Relations (April 21, 1995) 

< Bilateral Investment Treaty (August 2, 2001) 

Bahrain

< Bilateral Investment Treaty (May 30, 2001) 

Bangladesh

< Bilateral Investment Treaty (July 25, 1989) 

Belarus

< Agreement on Bilateral Trade Relations (February 16, 1993) 

< Agreement regarding Imports of Certain Fiberglass Fabric (February 17, 2000) 

Bolivia

< Bilateral Investment Treaty (June 6, 2001) 

Brazil

< Memorandum of Understanding between the Government of Brazil and the Government of the 

United States Concerning Trade Measures in the Automotive Sector (March 16, 1998) 
Bulgaria

< Agreement on Trade Relations (November 22, 1991) 

< Bilateral Investment Treaty (June 2, 1994) 

 

< Agreement Concerning Intellectual Property Rights (July 6, 1994) 

Cambodia

< Agreement Between the United States of America and the Kingdom of Cambodia on Trade 

Relations and Intellectual Property Rights Protection (October 8, 1996) 

< Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products 

(December 31, 2001)

Cameroon

< Bilateral Investment Treaty (April 6, 1989) 

Canada

< Agreement on Salmon & Herring (May 11, 1993) 

< Agreement Regarding Tires (May 25, 1993) 

< Memorandum of Understanding on Provincial Beer Marketing Practices (August 5, 1993) 

 

< Agreement on Ultra-High Temperature Milk (September 1993) 

< Agreement on Beer Market Access in Quebec and British Columbia Beer Antidumping Cases 

(April 4, 1994) 

< Agreement on Salmon & Herring (April 1994) 

< Agreement on Barley Tariff-Rate Quota (September 8, 1997) 

< Record of Understanding on Agriculture (December 1998) 

< Agreement on Magazines (Periodicals) (May 1999) 

< Agreement on Implementation of the WTO Decision on Canada’s Dairy Support Programs 

 (December 1999) 

< Memorandum of Understanding Regarding the Implementation of the Decision of the WTO 

General Council of August 30, 2003, on “Implementation of Paragraph 6 of the Doha Declaration 

on the TRIPS Agreement and Public Health” as Interpreted by the Accompanying Statement of 

the Chairman of the General Council of the Same Date (July 16, 2004) 
150

Chile 

< U.S.-Chile Free Trade Agreement (January 1, 2004)

China

< Accord on Industrial and Technological Cooperation (January 12, 1984) 

< Memorandum of Understanding on the Protection of Intellectual Property Rights (January 17, 

1992) 

< Memorandum of Understanding on Prohibiting Import and Export in Prison Labor Products (June 

18, 1992) 

< Memorandum of Understanding Concerning Market Access (October 10, 1992) 

< Agreement on Trade Relations Between the United States of America and the People’s Republic 

of China (signed July 7, 1979; entered into force February 1, 1980; renewed February 1, 2001) 

< Agreement on Providing Intellectual Property Rights Protection (February 26, 1995) 

< Report on China’s Measures to Enforce Intellectual Property Protections and Other Measures 

(June 17, 1996) 

< Interim Agreement on Market Access for Foreign Financial Information Companies (Xinhua) 

(October 24, 1997) 

< Bilateral Agriculture Agreement (April 10, 1999) 

Colombia

< Memorandum of Understanding on Trade in Bananas (January 9, 1996) 

Congo, Democratic Republic of the (formerly Zaire)

< Bilateral Investment Treaty (July 28, 1989) 

Congo, Republic of the 

< Bilateral Investment Treaty (August 13, 1994) 

Costa Rica

< Memorandum of Understanding on Trade in Bananas (January 9, 1996) 
Croatia

< Memorandum of Understanding on Intellectual Property Rights (May 26, 1998) 

< Bilateral Investment Treaty (June 20, 2001) 

Czech Republic

< Agreement on Bilateral Trade Relations (April 12, 1990) 

< Bilateral Investment Treaty (December 19, 1992) 

Ecuador

< Agreement on Intellectual Property Rights Protection (October 15, 1993) 

< Bilateral Investment Treaty (May 11, 1997) 

Egypt

< Bilateral Investment Treaty (June 27, 1992) 

Estonia

< Bilateral Investment Treaty (February 16, 1997)

European Union 

< Wine Accord (July 1983)

< Agreement for the Conclusion of Negotiations Between the United States and the European 

Community under GATT Article XXIV:6 (January 30, 1987) 

< Agreement on Exports of Pasta with Settlement, Annex and Related Letter 

 (September 15, 1987) 

< Agreement on Canned Fruit (updated) (April 14, 1992) 

< Agreement Concerning the Application of the GATT Agreement on Trade in Civil Aircraft (July 

17, 1992) 

< Agreement on Meat Inspection Standards (November 13, 1992) 

< Corn Gluten Feed Exchange of Letters (December 4 and 8, 1992) 

< Malt-Barley Sprouts Exchange of Letters (December 4 and 8, 1992) 

< Oilseeds Agreement (December 4 and 8, 1992) 
< Agreement on Recognition of Bourbon Whiskey and Tennessee Whisky as Distinctive U.S. 

Products (March 28, 1994) 

< Memorandum of Understanding on Government Procurement (April 15, 1994) 

< Letter on Financial Services Confirming Assurances to Provide Full MFN and National 

Treatment (July 14, 1995) 

< Agreement on EU Grains Margin of Preference (signed July 22, 1996; retroactively effective 

December 30, 1995) 

< Exchange of Letters Concerning Implementation of the Marrakesh Agreement Establishing the 

World Trade Organization and Related Matters (June 26, 1996) 

< Exchange of Letters between the United States of America and the European Community on a 

Settlement for Cereals and Rice, and Accompanying Exchange of Letters on Rice Prices (July 22, 

1996) 

< Agreement for the Conclusion of Negotiations between the United States of America and the 

European Community under GATT Article XXIV:6, and Accompanying Exchange of Letters 

(signed July 22, 1996; retroactively effective December 30, 1995) 

< Tariff Initiative on Distilled Spirits (February 28, 1997) 

< Agreement on Global Electronic Commerce (December 9, 1997) 

< Agreed Minute on Humane Trapping Standards (December 18, 1997) 

< Agreement on Mutual Recognition Between the United States of America and the European 

Community (signed May 18, 1997; entered into force December 1, 1998) 

< Agreement between the United States and the European Community on Sanitary Measure to 

Protect Public and Animal Health in Trade in Live Animals and Animal Products (July 20, 1999) 

< Understanding on Bananas (April 11, 2001) 

< Agreement on the Mutual Acceptance of Oenological Practices (December 18, 2001) 

< Agreement between the United States of America and the European Community on the Mutual 

Recognition of Certificates of Conformity for Marine Equipment (July 1, 2004) 

Georgia

< Agreement on Bilateral Trade Relations (August 13, 1993) 

< Bilateral Investment Treaty (August 17, 1997) 

Grenada
< Bilateral Investment Treaty (March 3, 1989) 

Honduras

< Memorandum of Understanding on Worker Rights (November 15, 1995) 

< Bilateral Investment Treaty (July 11, 2001) 

Hungary

< Agreement on Trade Relations (July 7, 1978) 

< Agreement on Intellectual Property Rights Protection (September 29, 1993) 

< Agreement on Comprehensive Trade Package on Tariff Reduction (April, 2002) 

India

< Agreement Regarding Indian Import Policy for Motion Pictures (February 5, 1992) 

< Reduction of Tariffs on In-Shell Almonds (May 27, 1992) 

< Agreement on Intellectual Property Rights Protection (March 1993) 

< Agreement on Import Restrictions (December 28, 1999) 

< Agreement on Textile Tariff Bindings (September 15, 2000) 

Indonesia

< Conditions for Market Access for Films and Videos into Indonesia (April 1992) 

Israel

< U.S.-Israel Free Trade Agreement (August 19, 1985) 

< U.S.-Israel Agreement on Trade in Agriculture (December 4, 1996) 

< U.S.-Israel Agreement on Almonds and Certain Other Agricultural Trade Issues (November 30, 

1997)

Jamaica

< Agreement on Intellectual Property (February 1994) 

< Bilateral Investment Treaty (March 7, 1997) 

Japan
< Market-Oriented Sector-Selective (MOSS) Agreement on Medical Equipment and 

Pharmaceuticals (January 9, 1986) 

< Exchange of Letters Regarding Tobacco (October 6, 1986) 

< Science and Technology Agreement (June 20, 1988; extended June 16, 1993) 

< Measures Concerning Cellular Telephone and Third Party Radio System Telecommunications 

Issues (June 28, 1989) 

< Procedures to Introduce Supercomputers (June 15, 1990) 

< Measures Relating to Wood Products (June 15, 1990) 

< Policies and Procedures Regarding Satellite Research and Development/Procurement (June 15, 

1990) 

< Policies and Procedures Regarding International Value-Added Network Services and Network 

Channel Terminating Equipment (July 31, 1990) 

< Joint Announcement on Amorphous Metals (September 21, 1990) 

< Measures Further to 1990 Policies and Procedures regarding International Value-Added Network 

Services (April 27, 1991) 

< Measures Regarding International Value-Added Network Services Investigation Mechanisms 

(June 25, 1991) 

< U.S.-Japan Major Projects Arrangement (July 31, 1991; originally negotiated 1988) 

< Measures Related to Japanese Public Sector Procurement of Computer Products and Services 

(January 22, 1992) 

< U.S.-Japan Framework for a New Economic Partnership (July 10, 1993) 

< Exchange of Letters Regarding Apples (September 13, 1993) 

< U.S.-Japan Public Works Agreement (January 18, 1994) 

< Mutual Understanding on Intellectual Property Rights between the Japanese Patent Office and the 

U.S. Patent and Trademark Office (January 20, 1994) 

< Exchange of Letters Regarding Implementation of the Measures Regarding Cellular Telephone 

and Third-Party Radio Systems (March 12, 1994) 

< Rice (April 15, 1994) 

< Harmonized Chemical Tariffs (April 15, 1994) 
< Copper (April 15, 1994) 

< Market Access (April 15, 1994) 

< Actions to be Taken by the Japanese Patent Office and the U.S. Patents and Trademark Office 

pursuant to the January 20, 1994, Mutual Understanding on Intellectual Property Rights (August 

16, 1994) 

< Measures by the Government of the United States and the Government of Japan Regarding 

Insurance (October 11, 1994) 

< Measures on Japanese Public Sector Procurement of Telecommunications Products and Services 

(November 1, 1994) 

< Measures Related to Japanese Public Sector Procurement of Medical Technology Products and 

Services (November 1, 1994) 

< Measures Regarding Financial Services (February 13, 1995) 

< Policies and Measures Regarding Inward Direct Investment and Buyer-Supplier Relationships 

(June 20, 1995) 

< Exchange of Letters on Financial Services (July 26 and 27, 1995) 

< Interim Understanding for the Continuation of Japan-U.S. Insurance Talks (September 30, 1996) 

< U.S.-Japan Insurance Agreement (December 24, 1996) 

< Japan’s Recognition of U.S.-Grademarked Lumber (January 13, 1997) 

< Resolution of WTO dispute with Japan on Sound Recordings (January 13, 1997) 

< National Policy Agency Procurement of VHF Radio Communications System (March 31, 1997) 

< U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy (June 19, 1997) 

< U.S.-Japan Agreement on Distilled Spirits (December 17, 1997) 

< First Joint Status Report on Deregulation and Competition Policy (May 29, 1998) 

< U.S.-Japan Joint Report on Investment (April 28, 1999) 

< Second Joint Status Report on Deregulation and Competition Policy (May 3, 1999) 

< U.S.-Japan Agreement on NTT Procurement Procedures (July 1, 1999) 

< Third Joint Status Report on Deregulation and Competition Policy (July 19, 2000) 

< Fourth Joint Status Report on Deregulation and Competition Policy (June 30, 2001) 
< U.S.-Japan Economic Partnership for Growth (June 30, 2001) 

< First Report to the Leaders on the U.S.-Japan Regulatory Reform and Competition Policy 

Initiative (June 25, 2002) 

< Second Report to the Leaders on the U.S.-Japan Regulatory Reform and Competition Policy 

Initiative (May 23, 2003) 

Jordan

< Agreement Between U.S. and Hashemite Kingdom of Jordan on the Establishment of a Free 

Trade Area (December 17, 2001) 

< Bilateral Investment Treaty (June 12, 2003) 

Kazakstan

< Agreement on Bilateral Trade Relations (February 18, 1993) 

< Bilateral Investment Treaty (January 12, 1994) 

Korea

< Record of Understanding on Intellectual Property Rights (August 28, 1986) 

< Agreement on Access of U.S. Firms to Korea's Insurance Markets (August 28, 1986) 

< Record of Understanding Concerning Market Access for Cigarettes (May 27, 1988; amended 

October 16, 1989) 

< Agreement Concerning the Korean Capital Market Promotion Law (September 1, 1988) 

< Agreement on the Importation and Distribution of Foreign Motion Pictures 

 (December 30, 1988) 

< Agreement on Market Access for Wine and Wine Products (January 18, 1989) 

< Investment Agreement (May 19, 1989) 

< Agreement on Liberalization of Agricultural Imports (May 25, 1989) 

< Record of Understanding on Telecommunications (January 23, 1990) 

< Record of Understanding on Telecommunications (February 15, 1990) 

< Exchange of Letters Regarding the 1986 Intellectual Property Rights Agreement: Product 

Pipeline Protection (February 22, 1990) 
< Record of Understanding on Beef (March 21, 1990) 

< Exchange of Letters on Beef (April 26 and 27, 1990) 

< Agreement on Wine Access (December 19, 1990) 

< Record of Understanding on Telecommunications (February 7, 1991) 

< Agreement on International Value-Added Services (June 20, 1991) 

< Understanding on Telecommunications (February 17, 1992) 

< Exchange of Letters Relating to Korea Telecom Company's Procurement of AT&T Switches 

(March 31, 1993) 

< Beef Agreements (June 26, 1993; December 29, 1993) 

< Record of Understanding on Agricultural Market Access in the Uruguay Round (December 13, 

1993) 

< Exchange of Letters on Telecommunications Issues Relating to Equipment Authorization and 

Korea Telecom Company's Procurement (March 29, 1995) 

< Agreement on Steel (July 14, 1995) 

< Shelf-Life Agreement (July 20, 1995) 

< Revised Cigarette Agreement (August 25, 1995) 

< Memorandum of Understanding to Increase Market Access for Foreign Passenger Vehicles in 

Korea (September 28, 1995) 

< Exchange of Letters on Implementation of the 1992 Telecommunications Agreement (April 12, 

1996) 

< Korean Commitments on Trade in Telecommunications Goods and Services (July 23, 1997) 

< Agreement on Korean Motor Vehicle Market (October 20, 1998) 

< Exchange of Letters Regarding Tobacco Sector Related Issues (June 14, 2001) 

< Exchange of Letters on Data Protection (March 12, 2002) 

Kyrgyzstan

< Agreement on Bilateral Trade Relations (August 21, 1992) 

< Bilateral Investment Treaty (January 12, 1994) 
Laos 

< Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products 

 (August 4, 2000) 

Latvia

< Agreement on Trade & Intellectual Property Rights Protection (January 20, 1995) 

< Bilateral Investment Treaty (December 26, 1996) 

Lithuania 

< Bilateral Investment Treaty (November 22, 2001)

Macedonia 

< Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products 

 (June 2, 2000) 

< Memorandum of Understanding Establishing Outward Processing Program (September 17, 1999) 

Mexico

< Agreement with Mexico on Tire Certification (March 8, 1996) 

< Memorandum of Understanding Between the United States and Mexico Regarding Areas of Food 

and Agriculture Trade (April 4, 2002) 

< U.S.-Mexico Exchange of Letters Regarding Mexico’s NAFTA Safeguard on Certain Poultry 

Products (July 24-25, 2003) 

Moldova

< Agreement on Bilateral Trade Relations (July 2, 1992) 

< Bilateral Investment Treaty (November 25, 1994) 

Mongolia

< Agreement on Bilateral Trade Relations (January 23, 1991) 

< Bilateral Investment Treaty (January 1, 1997) 

Morocco

< Bilateral Investment Treaty (May 29, 1991) 

Mozambique 
< Bilateral Investment Treaty (exchange of instruments took place February 2, 2005 and enters into 

force March 2, 2005) 

Nepal 

< Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products (July 

13, 2000) 

Nicaragua

< Bilateral Intellectual Property Rights Agreement with Nicaragua (December 22, 1997) 

Norway

< Agreement on Procurement of Toll Equipment (April 26, 1990) 

Panama

< Bilateral Investment Treaty (May 30, 1991) 

< Agreement on Bilateral Trade Relations (1994) 

Paraguay

< Memorandum of Understanding on Intellectual Property Rights (March 30, 2004) 

Peru

< Memorandum of Understanding on Intellectual Property Rights (May 23, 1997) 

Philippines

< Protection and Enforcement of Intellectual Property Rights (April 6, 1993) 

< Agreement regarding Pork and Poultry Meat (February 13, 1998) 

Poland

< Business and Economic Treaty (August 6, 1994) 

< Bilateral Investment Treaty (August 6, 1994) 

< Agreement on Comprehensive Trade Package on Tariff Reduction (September, 2002)

Romania

< Agreement on Bilateral Trade Relations (April 3, 1992) 

< Bilateral Investment Treaty (January 15, 1994) 
< Memorandum of Understanding Establishing Outward Processing Program (September 10, 1999) 

Russia

< Trade Agreement Concerning Most Favored Nation and Nondiscriminatory Treatment (June 17, 

1992) 

< Joint Memorandum of Understanding on Market Access for Aircraft (January 30, 1996) 

< Agreed Minutes regarding exports of poultry products from the United States to Russia (March 

15, March 25, and March 29, 1996) 

< Protocol of the Negotiations between the Experts of Russia and the United States of America on 

the Issue of U.S. Poultry Meat Imports into the Russian Federation (March 31, 2002) 

< Agreement on Russian Firearms & Ammunition (April 3, 1996) 

< Exchange of notes extending bilateral agreement on Trade in Textiles and Textile Products 

(February 26, 2001) 

Senegal

< Bilateral Investment Treaty (October 25, 1990) 

Singapore

< Agreement on Intellectual Property Rights Protection (April 27, 1987) 

< U.S.-Singapore Free Trade Agreement (January 1, 2004) 

Slovakia

< Agreement on Bilateral Trade Relations (April 12, 1990) 

< Bilateral Investment Treaty (December 19, 1992) 

Sri Lanka

< Agreement on the Protection and Enforcement of Intellectual Property Rights 

 (September 20, 1991) 

< Bilateral Investment Treaty (May 1, 1993) 

Suriname

< Agreement on Bilateral Trade Relations (1993) 

Switzerland
< Exchange of Letters on Financial Services (November 9 and 27, 1995) 

Taiwan

< Agreement on Customs Valuation (August 22, 1986) 

< Agreement on Export Performance Requirements (August 1986) 

< Agreement Concerning Beer, Wine, and Cigarettes (1987) 

< Agreement on Turkeys and Turkey Parts (March 16, 1989) 

< Agreement on Beef (June 18, 1990) 

< Agreement on Intellectual Property Protection (June 5, 1992) 

< Agreement on Intellectual Property Protection (Trademark) (April 1993) 

< Agreement on Intellectual Property Protection (Copyright) (July 16, 1993) 

< Agreement on Market Access (April 27, 1994) 

< Telecommunications Liberalization by Taiwan (July 19, 1996) 

< U.S.-Taiwan Medical Device Issue: List of Principles (September 30, 1996) 

< Agreement on Market Access (February 20, 1998) 

< Understanding on Government Procurement (August 23, 2001) 

Tajikistan

< Agreement on Bilateral Trade Relations (November 24, 1993) 

Thailand

< Agreement on Cigarette Imports (November 23, 1990) 

< Agreement on Intellectual Property Protection and Enforcement (December 19, 1991) 

Trinidad and Tobago

< Agreement on Intellectual Property Protection and Enforcement (September 26, 1994) 

< Bilateral Investment Treaty (December 26, 1996) 
Tunisia

< Bilateral Investment Treaty (February 7, 1993) 

Turkey

< Bilateral Investment Treaty (May 18, 1990) 

< WTO Settlement Concerning Taxation of Foreign Film Revenues (July 14, 1997) 

Turkmenistan

< Agreement on Bilateral Trade Relations (October 25, 1993) 

Ukraine

< Agreement on Bilateral Trade Relations (June 23, 1992) 

< Bilateral Investment Treaty (November 16, 1996) 

< Agreement on Trade in Textiles and Textile Products (January 15, 2001) 

Uzbekistan

< Agreement on Bilateral Trade Relations (January 13, 1994) 

Vietnam

< Agreement between the United States and Vietnam on Trade Relations (December 10, 2001) 

< Copyright Agreement (June 27, 1997) 

< Agreement on Trade in Textiles and Textile Products (July 17, 2003; renewed July 22, 2004) 
II. Agreements That Have Been Negotiated But Have Not Yet 

 Entered Into Force

Following is a list of trade agreements concluded by the United States since 1984 that have not yet 

entered into force. 

Multilateral Agreements

< OECD Agreement on Shipbuilding (December 21, 1994; interested parties evaluating 

implementing legislation) 

< Inter-American Mutual Recognition Agreement for Conformity Assessment of 

Telecommunications Equipment (October 29, 1999) 

Bilateral Agreements

Bahrain 

< U.S. - Bahrain Agreement on the Establishment of a Free Trade Area (signed September 14, 

2004) 

Belarus

< Bilateral Investment Treaty (signed January 15, 1994; pending exchange of instruments) 

Dominican Republic/Central America 

< U.S. - Dominican Republic - Central America Agreement on the Establishment of a Free Trade 

Area (signed August 5, 2004) 

El Salvador

< Bilateral Investment Treaty (signed March 10, 1999; pending exchange of instruments) 

Estonia

< Trade and Intellectual Property Rights Agreement (April 19, 1994; requires approval by Estonian 

legislature) 

Laos

< Bilateral Trade Agreement (initialed August 13, 1997) 

Lithuania

< Trade and Intellectual Property Rights Agreement (April 26, 1994; requires approval by 

Lithuanian legislature) 
Morocco 

< U.S.- Morocco Agreement on the Establishment of a Free Trade Area (agreement signed on May 

18, 2004; entry into force pending)

Mozambique 

< Bilateral Investment Treaty (exchange of instruments took place February 2, 2005 and enters into 

force March 2, 2005) 

Nicaragua

< Bilateral Investment Treaty (signed July 1, 1995; pending ratification by United States and 

exchange of instruments of ratification.) 

Russia

< Bilateral Investment Treaty (signed June 17, 1992; pending approval by Russian Parliament and 

exchange of instruments of ratification) 

Uzbekistan

< Bilateral Investment Treaty (signed December 16, 1994; pending exchange of instruments) 
III. Other Trade-Related Agreements and Declarations

Following is a list of other trade-related agreements and declarations negotiated by the Office of the 

United States Trade Representative from January 1993 through February 2002. These documents provide 

the framework for negotiations leading to future trade agreements or establish mechanisms for structured 

dialogue in order to develop specific steps and strategies for addressing and resolving trade, investment, 

intellectual property and other issues among the signatories. 

Multilateral Agreements and Declarations

< Second Ministerial of the World Trade Organization, Ministerial Declaration on Global 

Electronic Commerce (May 20, 1998) 

< WTO Guidelines for the Negotiation of Mutual Recognition Agreements on Accountancy (May 

29, 1997) 

< Free Trade Area of the Americas 

< First Summit of the Americas, Declaration of Principles and Plan of Action, Miami, 

Florida (December 11, 1994) 

< Trade Ministerial Joint Declaration, Denver, USA(June 30, 1995) 

< Second Ministerial Trade Meeting Joint Declaration, Cartagena, Colombia(March 21, 

1996) 

< Third Trade Ministerial Meeting Joint Declaration, Belo Horizonte, Brazil (May 16, 

1997) 

< Fourth Trade Ministerial Joint Declaration, San Jose, Costa Rica (March 19, 1998) 

< Second Summit of the Americas Declaration of Principles and Plan of Action, Santiago, 

Chile (April 19, 1998) 

< Fifth Trade Ministerial Meeting, Declaration of Ministers, Toronto, Canada Joint 

Declaration (November 4, 1999) 

< Sixth Meeting of Ministers of Trade of the Hemisphere Ministerial Declaration, Buenos 

Aires, Argentina (April 7, 2001) 

< Third Summit of the Americas Declaration of Principles and Plan of Action, Quebec 

City, Canada (April 22, 2001) 

< Seventh Meeting of Ministers of Trade of the Hemisphere Ministerial Declaration, Quito, 

Ecuador (November 1, 2002) 

< Eighth Ministerial Meeting, Ministerial Declaration, Miami, USA (November 20, 2003) 
166

< Asia Pacific Economic Cooperation 

< Declaration of Common Resolve (November 15, 1994) 

< Declaration for Action (November 19, 1995) 

< Declaration on an APEC Framework for Strengthening Economic Cooperation and 

Development (November 22-23, 1996) 

< Declaration on Connecting the APEC Community (November 25, 1997) 

< Declaration on Strengthening the Foundations for Growth (November 18, 1998) 

< Declaration: the Auckland Challenge (September 13, 1999) 

< Declaration: Delivering to the Community (November 16, 2000) 

< Declaration: Meeting New Challenges in the New Century (October 21, 2001) 

< Declaration: Leaders Declaration (October 27, 2002) 

< Declaration: Partnership for the Future (October 21, 2003) 

< U.S.-Andean Community Trade and Investment Council Agreement (October 30, 1998) 

< United States-Central American Regional Trade and Investment Framework Agreement (March 

20, 1998) 

Bilateral Agreements and Declarations

Algeria

< U.S.-Algeria Trade and Investment Framework Agreement (July 13, 2001) 

Bahrain

< Trade and Investment Framework Agreement (June 18, 2002) 

Brunei Darussalam 

< Trade and Investment Framework Agreement (December 16, 2002) 

Central Asian Economies 

< U.S.-Central Asian Trade and Investment Framework Agreement (June 1, 2004) 
Chile

< U.S.-Chile Joint Commission on Trade and Investment (May 19, 1998) 

China 

< U.S.-China Joint Commission on Commerce and Trade Agreements (April 21, 2004) 

Common Market for Eastern and Southern Africa 

< Trade and Investment Framework Agreement (October, 2001) 

Egypt

< U.S.-Egypt Trade and Investment Framework Agreement (July 1, 1999) 

European Union

< U.S.-EU Transatlantic Economic Partnership (May 18, 1998) 

< U.S.-EU Joint Action Plan for the Transatlantic Economic Partnership (November 9, 1998) 

Ghana

< U.S.-Ghana Trade and Investment Framework Agreement (February 26, 1999) 

Indonesia

< U.S.-Indonesia Understanding on a Trade and Investment Council (1996) 

Japan

< U.S.-Japan Joint Statement on the Bilateral Steel Dialogue (September 24, 1999) 

Kuwait 

< U.S.-Kuwait Trade and Investment Framework Agreement (February 6, 2004) 

Malaysia 

< U.S.-Malaysia Trade and Investment Framework Agreement (May 10, 2004) 

Mongolia 

< U.S.-Mongolia Trade and Investment Framework Agreement (July 15, 2004) 
Morocco

< U.S.-Morocco Trade and Investment Framework Agreement (March 16, 1995) 

Nigeria

< U.S.-Nigeria Trade and Investment Framework Agreement (February 16, 2000) 

Oman

< U.S.-Oman Trade and Investment Framework Agreement (July 7, 2004) 

Philippines 

< Trade and Investment Framework Agreement (1989) 

Qatar 

< U.S.-Qatar Trade and Investment Framework Agreement (March 19, 2004) 

Saudi Arabia 

< Trade and Investment Framework Agreement (July 31, 2003)

South Africa

< U.S.-South Africa Trade and Investment Framework Agreement (February 18, 1999) 

Sri Lanka

< Trade and Investment Framework Agreement (July 25, 2002) 

Taiwan 

< Trade and Investment Framework Agreement (September 19, 1994) 

Thailand 

< Trade and Investment Framework Agreement (October 23, 2002) 

Tunisia 

< U.S.-Tunisia Trade and Investment Framework Agreement (October 2, 2002) 

Turkey

< U.S.-Turkey Trade and Investment Framework Agreement (September 29, 1999) 

United Arab Emirates (UAE) 
< U.S.-UAE Trade and Investment Framework Agreement (March 15, 2004) 

Uruguay

< U.S.-Uruguay Bilateral and Commercial Trade Review (May 20, 1999) 

West African Economic and Monetary Union

< Trade and Investment Framework Agreement (April 24, 2002) 

Yemen 

< U.S-Yemen Trade and Investment Framework Agreement (February 6, 2004)